| Thu 29 Mar 2001, 0:00 | | Nail - Preliminary Results |
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NEW AFRICA INVESTMENTS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1993/002467/06)
("NAIL")
Preliminary Results for the 15 months ended 31 December 2000
* Special dividend declared of 10 cents per share
* Annualised headline earnings up 29%
* Annualised headline earnings per share up 29%
* Net asset value per share up 30%
* NAIL and Metropolitan convergence announced
CONSOLIDATED INCOME STATEMENT
Continuing operations Unbundled operations Enterprise as a whole
Audited Audited Audited Audited Audited Audited
15 months 12 months 15 months 12 months 15 months 12 months
31/12/00 30/9/99 31/12/00 30/9/99 31/12/00 30/9/99
R 000 R 000 R 000 R 000 R 000 R 000
Income before
exceptional
items 1 056 759 659 866 413 200 846 714 1 469 959 1 506 580
Exceptional
items 43 042 421 293 (21 529) 43 042 399 764
Income before
taxation 1 099 801 1 081 159 413 200 825 185 1 513 001 1 906 344
Taxation 416 444 155 975 77 315 195 039 493 759 351 014
Income after
taxation 683 357 925 184 335 885 630 146 1 019 242 1 555 330
Income from
associates 10 331 3 304 15 359 9 247 25 690 12 551
Minority
interest (293 062) (250 261) (179 920) (317 049) (472 982) (567 310)
Income
attributable
to ordinary
shareholders 400 626 678 227 171 324 322 344 571 950 1 000 571
DETERMINATION OF HEADLINE EARNINGS
Income
attributable to
ordinary
shareholders 400 626 678 227 171 324 322 344 571 950 1 000 571
Exceptional
items net of
minority
portion (44 971) (427 993) 0 14 132 (44 971) (413 861)
Insurance transitional
tax net of minority
portion 47 481 47 481
HEADLINE
EARNINGS 403 136 250 234 171 324 336 476 574 460 586 710
Headline earnings per
share (cents) 16,6 10,3 7,1 13,8 23,7 24,2
Earnings per share
(cents) 16,5 28,0 7,1 13,3 23,5 41,2
No of shares
taken into
account in
calculating
EPS (000) 2 429 576 2 425 744 2 429 576 2 425 744 2 429 576 2 425 744
CONSOLIDATED BALANCE SHEET
Continuing operations Unbundled operations Enterprise as a whole
Audited Audited Audited Audited Audited Audited
15 months 12 months 15 months 12 months 15 months 12 months
31/12/00 30/9/99 31/12/00 30/9/99 31/12/00 30/9/99
R 000 R 000 R 000 R 000 R 000 R 000
ASSETS
Property,
plant and
equipment
and
intangible
assets 363 876 294 551 62 214 363 876 356 765
Goodwill 3 757 305 3 598 676 7 266 858 3 757 305 10 865 534
Investments -
insurance
assets 27 662 000 20 616 000 247 616 27 662 000 20 863 616
Investments
- other 160 472 122 466 870 743 160 472 993 209
Current
assets 2 396 384 2 190 970 6 343 580 2 396 384 8 534 550
TOTAL
ASSETS 34 340 037 26 822 663 14 791 011 34 340 037 41 613 674
TOTAL EQUITY AND LIABILITIES
Share capital
and premium 3 558 603 3 558 603 6 680 844 3 558 603 10 239 447
Reserves 2 019 614 1 847 831 404 862 2 019 614 2 252 693
Minority
interest 1 304 330 1 070 496 2 317 098 1 304 330 3 387 594
Long-term
insurance
fund 25 763 000 19 044 000 25 763 000 19 044 000
Long-term
liabilities 38 198 48 617 2 433 773 38 198 2 482 390
Current
liabilities 1 656 292 1 253 116 2 954 434 1 656 292 4 207 550
TOTAL EQUITY
AND
LIABILITIES 34 340 037 26 822 663 14 791 011 34 340 037 41 613 674
Listed
investments
at market
value and
unlisted
investments
at directors
valuation
(R000) 5 027 979 3 874 526 3 352 920 5 027 979 7 227 446
Net asset
value (cents) 207 159 138 207 297
No of shares
in issue
at the end of
period (000)2 429 576 2 429 576 2 429 576 2 429 576 2 429 576
ABRIDGED CONSOLIDATED CASH FLOW
Enterprise as a whole
15 months 12 months
31/12/00 30/9/99
R 000 R 000
Cash retained from operating activities 3 361 700 2 564 710
Cash effects of investing activities (3 062 916) (2 394 472)
Cash effects of financing activities 99 781 883 394
Net increase in cash and cash equivalents 398 565 1 053 632
Cash and cash equivalents at beginning of 1 310 050 256 418
Cash unbundled AMB and ABIL (471 863)
Cash and cash equivalents at end of per 1 236 752 1 310 050
Note: Metropolitan holds cash and near cash of R2 294 million (1999: R1 412
million) as an asset class within the Life Fund. Movements in these balances
are shown as investing activities.
CONTRIBUTION TO HEADLINE EARNINGS
Continuing operations Unbundled operations Enterprise as a whole
Audited Audited Audited Audited Audited Audited
15 months 12 months 15 months 12 months 15 months 12 months
31/12/00 30/9/99 31/12/00 30/9/99 31/12/00 30/9/99
R 000 R 000 R 000 R 000 R 000 R 000
FINANCIAL SERVICES
Metlife 351 938 272 835 0 0 351 938 272 835
BAIL 0 0 142 359 266 589 142 359 266 589
AMB 0 0 28 965 69 887 28 965 69 887
TOTAL FINANCIAL
SERVICES 351 938 272 835 171 324 336 476 523 262 609 311
Financial Services share
of Group income 87,2% 109,0% 91,0% 103,9%
MEDIA
New Africa
Publications 5 216 10 914 5 216 10 914
Urban Brew 3 975 4 292 3 975 4 292
Jacaranda/
Radmark 11 320 7 894 11 320 7 894
Rapid Phase/
Nam Films
/Philo Films (949) (1 134) (949) (1 134)
KFM/KAYA FM 575 575
New Africa Educational
Publishing (363) (363)
TOTAL MEDIA 19 774 21 966 19 774 21 966
Media share of Group
income 4,9% 8,8% 3,4% 3,7%
IT SERVICES AND OTHER
Hertz (10 016) (9 143) (10 016) (9 143)
Nath 0 (10 439) 0 (10 439)
0 (11 217) 0 (11 217)
Head Office 41 440 (13 768) 41 440 (13 768)
TOTAL GROUP 403 136 250 234 171 324 336 476 574 460 586 710
STATEMENT OF CHANGES IN EQUITY
Share capital
and premium Reserves Total
R 000 R 000 R 000
Balance at 30 Septem 10 239 447 2 247 050 12 486 497
Change in accounting policy 5 643 5 643
Restated 30 September 1999 10 239 447 2 252 693 12 492 140
Unbundling of AMB (563 960) (117 124) (681 084)
Unbundling of ABIL (6 116 884) (444 947) (6 561 831)
Net Profit for the period 571 950 571 950
Dividend declared (242 958) (242 958)
Balance at 31 December 2000 3 558 603 2 019 614 5 578 217
EXCEPTIONAL ITEMS
Enterprise as a whole
Audited Audited
15 months 12 months
31/12/00 30/9/99
R 000 R 000
Realised and unrealised profits
and losses on investments 71 990 526 368
Restraint of trade payments (3 625) (80 229)
Restructuring fees (25 323) (3 588)
NYSE listing fees - (14 787)
Executive severance packages - (28 000)
43 042 399 764
COMMENTARY
CHANGE IN FINANCIAL YEAR-END
The financial year-end of the Group was changed from 30 September to 31
December. The rationale for the change in the year-end was to align the Group
with that of its peers in the life assurance industry. The current financial
period covers 15 months and therefore the comparative information covering the
12-month period prior is not directly comparable.
REPORTING
The consolidated financial statements are prepared in accordance with
Statements of Generally Accepted Accounting Practice in South Africa, and
comply with the requirements of the South African Companies Act, 1973 and the
disclosure requirements of the JSE Securities Exchange of South Africa.
The consolidated statements are prepared on the going concern basis. The
principal accounting policies are consistent with those of the prior year
except that deferred tax assets were raised in subsidiaries where the directors
were of the opinion that those subsidiaries will become profitable and utilise
the tax losses in the near future, and the amortisation of trade marks. The
comparative figures have been appropriately restated.
The Group has decided against the amortisation of goodwill arising on
consolidation. The major portion of goodwill arising on consolidation is
attributable to the investment in Metropolitan Life Limited (Metropolitan). The
restructuring announcement issued on 5 March 2001 dealt with the creation of a
holding company in the form of New Africa Capital and the subsequent unbundling
out of NAIL on fulfilment of empowerment shareholding targets being reached in
a 90-day time frame. This unbundling would have the effect of eliminating the
majority of goodwill carried in the NAIL balance sheet.
There has been no material change to the contingent liabilities as reported in
last years annual financial statements 30 September 1999. A R40 million
provision has been made against the contingent liability in respect of the
Johnnic put options.
RESTRUCTURING
The Group has achieved the following restructuring initiatives in the current
reporting period:
* The adoption of the Empowerment Code and the Corporate Governance Code by
both NAIL and Metropolitan
* The unbundling of AMB Holdings Limited by way of a capital reduction
* The unbundling of African Bank Investments Limited by way of a capital
reduction
* The sale of New Africa Technology Holdings (Pty) Limited
* Facilitation of the sale of NAIL shares held by BOE Limited, 234 million "N"
shares to Metropolitan Policyholders Funds and 212 million "N" shares to
Newinvest 154 (Pty) Limited, a company funded by Sanlam specifically for
on-placing with empowerment parties
* Together with Metropolitan developed an internal restructuring plan for
Metropolitan.
The next phase of the restructuring was announced on 5 March 2001 which will
have the effect of:
* Separation of the financial services assets from the media assets thereby
creating two operating entities in financial services (New Africa Capital) and
media (New Africa Media)
* Ensuring significant direct operational ownership in both entities
* The de facto enfranchisement of the "N" shareholders with regard to NAIL's
financial services assets
* Unlocking of the NAIL holding company discount in respect of the financial
services assets
* The creation of a holding company for Metropolitan.
REVIEW OF OPERATIONS
FINANCIAL SERVICES
* Metropolitan (effective 50% shareholding)
Highlights of Metropolitan results
* R3,1 billion net cash inflows
* Excess of assets over liabilities increase 21% annualised growth from R4 643
million to R5 917 million largely due to investment returns
* Embedded value per share showed 19% annualised growth from R8,17 (restated)
to R10,18
* Employee benefits premium income showed a 45% growth.
The proposed reorganisation of the Metropolitan and NAIL Groups will ensure an
efficient structure for capital allocation and management thereof. New Africa
Capital will assume the corporate brand and Metropolitan will continue as the
operational brand. The holding company structures allow for the separation of
the life and the non-life interests and will reduce the regulatory compliance
burden over the latter.
Metropolitan in conjunction with NAIL executive management has embarked on a
process of implementing internal restructuring and management changes.
MEDIA
The following acquisitions were made during the year under review:
* 70% of KFM, a radio station which broadcasts in the Cape Town Metropolitan
area and the area from Knysna on the East Coast to Alexander Bay on the West
Coast, effective 1 October 1999
* 22,4% of Kaya FM, a radio station which broadcasts in the Johannesburg
Metropolitan area and Gauteng, effective 1 June 2000.
The following businesses were started up during the year under review:
* New Africa Educational Publishing which is a publishing house for educational
publications for curriculum based and non-curriculum based markets
* New Africa Media Films which produces theatrical films for the American and
overseas markets
* Thengisa Media which is a sales house focusing on the sale of advertising
space within print publications.
New Africa Media obtained management control over the Sowetan Sunday World
which has seen weekly circulation increase to 90 000 copies. Significant
increase in advertising revenue is to be expected in the next financial year.
New Africa Publications (effective 90,5% shareholding) has produced reduced
earnings due to investments at the Sowetan Sunday World and the Magazine
division which have been expensed through the income statement. The creation of
the internal sales house for the print media overcomes the conflict of a
competitor which was selling the Sowetan's advertising. This initiative should
produce positive results and increased advertising revenues.
The radio assets continue to perform well. The radio assets were strengthened
by the addition of KFM and Kaya FM, which enabled Radmark to have total
national presence.
OTHER INVESTMENTS
* HERTZ
Unitrans via its subsidiary Unitrans Motors acquired management's 40% stake in
Hertz effective 1 October 2000. This allows the synergistic benefits between
Unitrans Motors and Hertz to be extracted and the combination of Unitrans
Motors and NAIL as shareholders provides two strong and complementary groups
which will be able to position Hertz to take advantage of significant growth in
the future and allow Hertz to break even within a short period. A shareholders
agreement between NAIL and Unitrans Motors governs the relationship between the
parties vis-a-vis Hertz and the sharing of synergistic benefits.
RETURN OF CAPITAL
The directors have resolved that the announced return of R400 million capital
will be effected in the following manner:
* A special dividend of 10 cents per share announced today, and
* A share buy back which will be done on market, provided the market conditions
are conducive. The shares will be held in a subsidiary which will place the
shares to ensure empowerment shareholding is enhanced.
DIVIDEND DECLARATION
A final dividend of 10 cents per share has been declared. The dividend is
payable on 4 May 2001 to shareholders registered on 20 April 2001.
ANNUAL GENERAL MEETING
The annual general meeting of NAIL shareholders will be held at 17h00 on
Tuesday, 26 June 2001 at The Parktonian Hotel, Braamfontein, Johannesburg.
D MOSENEKE Z SISULU
Acting Chairman and Group Chief Executive Chief Executive - New Africa
Media
29 March 2001
Visit our website for our preliminary results at www.nail.co.za
Directors D Moseneke (Acting Chairman and Group Chief Executive), Z Sisulu
(Executive Director), R Kevan (Executive Director), K Setzin (Executive
Director), S Zungu (Executive Director), T Curtis, N N Gobodo, Prof M M Katz, A
S Mabogoane, S Macozoma, J T Mdlalose, G T Serobe, G Snelgar, Prof G Williams
COMPANY SECRETARY
D D Qwelane
CORPORATE HEAD OFFICE
1st Floor Fulham House, Hampton Park, 20 Georgian Cresent, Bryanston. PO Box
782922 Sandton 2146. Telephone 27 11 463 1744 Fax 27 11 463 8233
Web address www.nail.co.za
