| Wed 19 Sep 2001, 0:00 | | New Africa Investments Limited - Interim Report Fo |
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June 2001
(Incorporated in the Republic of South Africa)
(Registration number 1993/002467/06)
("NAIL")
ISIN CODE : ZAE000012134
SHARE CODE : NAI
INTERIM REPORT FOR THE 6 MONTHS ENDED 30 JUNE 2001
FINANCIAL SERVICES
- NEW AFRICA CAPITAL CREATED
- ASSETS UNDER MANAGEMENT R39 BILLION
- POSITIVE NET CASH FLOWS R2 BILLION
MEDIA
- STERLING PERFORMANCE OF RADIO ASSETS
- PRINT ASSETS AFFECTED BY ADVERTISING SLOWDOWN
- START UP OPERATIONS SHOW IMPROVEMENT
CONSOLIDATED INCOME STATEMENT
Group including
Metropolitan
Proforma(1) excluding ABIL and AMB
Unaudited Unaudited
6 months 6 months
30/6/01 30/06/01
Unaudited Audited
6 months 15 months
31/3/00 31/12/00
R 000 R 000 R 000 R 000
Income before 30 141 392 141 495 014 1 056 759
exceptional items
Exceptional items (120 999) (216 358) 385 (205 813)
(Loss)/income before (90 858) 175 783 495 399 850 946
taxation
Taxation 8 831 103 831 115 279 416 444
(Loss)/income after (99 689) 71 952 380 120 434 502
taxation
Income from associates 3 915 3 915 4 412 10 331
Minority interest 2 483 (126 347) (173 025) (269 578)
(Loss)/income (93 291) (50 480) 211 507 175 255
attributable to
ordinary shareholders
Headline earnings
Income attributable to (93 291) (50 480) 211 507 175 255
ordinary shareholders
Exceptional items net 120 799 205 965 (9 778) 180 400
of minority portion
Insurance transitional - - - 47 481
tax net of minority
portion
27 508 155 485 201 729 403 136
Headline earnings per 1,1 6,4 8,3 16,6
share (cents)
Earnings per share (3,8) (2,1) 8,7 7,2
(cents)
No of shares taken 2 429 576 2 429 576 2 429 576 2 429 576
into account in
calculating EPS (000)
Proforma headline 1,1 - 1,0 -
earnings excluding
Metropolitan per share
(cents)
Proforma headline 22,6 - 20,4 -
earnings after share
consolidation per
share (cents)
CONTRIBUTION TO HEADLINE EARNINGS
Group including
Metropolitan
Proforma(1) excluding ABIL and AMB
Unaudited Unaudited
6 months 6 months
30/6/01 30/06/01
R 000 R 000
Unaudited Audited
6 months 15 months
31/3/00 31/12/00
R 000 R 000
FINANCIAL SERVICES 127 977 176 917 351 938
MEDIA
Publishing (1 374) (1 374) 8 339 4 853
Radio 4 851 4 851 4 060 11 895
Film and television (190) (190) 2 822 3 026
Exhibitions (409) (409)
TOTAL MEDIA 2 878 2 878 15 221 19 774
OTHER
Hertz (4 727) (4 727) (1 008) (10 016)
Head Office 29 357 29 357 10 599 41 440
TOTAL GROUP 27 508 155 485 201 729 403 136
EXCEPTIONAL ITEMS
Group including
Metropolitan
Proforma(1) excluding ABIL and AMB
Unaudited Unaudited
6 months 6 months
30/6/01 30/06/01
R 000 R 000
Unaudited Audited
6 months 15 months
31/3/00 31/12/00
R 000 R 000
Provision for loss on (71 000) (71 000) - (40 000)
Johnnic put option
Profit on sale of 1 300 1 300 121 213 111 990
investments
Restraint of trade (400) (400) (500) (3 625)
payments
Restructuring fees (45 117) (45 117) (20 786) (25 323)
Amortisation of (5 782) (101 141) (99 542) (248 855)
goodwill
(120 999) (216 358) 385 (205 813)
(1) proforma figures assume that the unbundling of Metropolitan was
effective on 1 January 2001
CONSOLIDATED BALANCE SHEET
Group including
Metropolitan
Proforma(2) excluding ABIL and AMB
Unaudited Unaudited
6 months 6 months
30/6/01 30/06/01
R 000 R 000
Unaudited Audited
6 months 15 months
31/3/00 31/12/00
R 000 R 000
Assets
Property, plant and 205 626 394 626 273 764 363 876
equipment and
intangible assets
Goodwill 199 545 2 896 083 3 083 921 3 028 820
Investments - - 29 403 000 25 314 000 27 662 000
insurance assets
Investments - other 513 558 162 487 115 804 160 472
Current assets 955 034 2 446 034 2 508 949 2 417 195
Total assets 1 873 763 35 302 230 31 296 438 33 632 363
Share capital and 841 050 3 558 603 3 558 603 3 558 603
premium
Reserves 719 801 1 276 386 1 600 433 1 326 866
Minority interest (2 188) 1 440 141 1 186 495 1 268 593
Long-term insurance - 27 483 000 23 519 000 25 763 000
fund
Long-term liabilities 96 053 96 053 10 731 38 198
Current liabilities 219 047 1 448 047 1 421 176 1 677 103
Total equity and 1 873 763 35 302 230 31 296 438 33 632 363
liabilities
Listed investments at 1 623 820 4 598 870 4 492 070 5 028 000
market value and
unlisted investments
at directors valuation
(R000)
Net asset value 66,8 189,3 184,9 206,9
(cents)
Net asset value after 1 336,7 - - -
consolidation(cents)
No of shares in issue 2 429 576 2 429 576 2 429 576 2 429 576
at the end of period
(000)
No of shares in issue 121 479 - - -
at the end of period
after consolidation
(000)
(2) proforma figures assume that the unbundling of Metropolitan was
effective 30 June 2001
CONSOLIDATED CASH FLOW
Group including Metropolitan
excluding ABIL and AMB
Unaudited
6 months
30/06/01
R 000
Unaudited Audited
6 months 15 months
31/3/00 31/12/00
R 000 R 000
Cash retained from 1 222 405 1 429 756 3 361 700
operating activities
Cash effects of investing (1 456 093) (1 186 973) (3 062 916)
activities
Cash effects of financing 121 167 55 396 99 783
activities
Net increase/decrease in (112 521) 298 179 398 567
cash and cash equivalents
Cash held by unbundled (471 863) (471 863)
companies
Cash and cash equivalents 1 236 754 1 310 050 1 310 050
at beginning of period
Cash and cash equivalents 1 124 233 1 136 366 1 236 754
at end of period
STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2001
Share capital
and premium Reserves Total
R 000 R 000 R 000
Balance at 3 558 603 2 019 614 5 578 217
31 December 2000
Change in accounting - (692 748) (692 748)
policy
Restated 31 December 2000 3 558 603 1 326 866 4 885 469
Net loss for the period - (50 480) (50 480)
Balance at 30 June 2001 3 558 603 1 276 386 4 834 989
MEDIA
TOTAL
Unaudited Unaudited
6 months 6 months
30/6/01 30/6/00
R 000 R 000
HEADLINE EARNINGS 2 878 4 510
Less: NAIL's after tax interest (2 323) (2 790)
Restraint of trade (400) -
Income from associates (36) (30)
Add: Minorities 277 1 309
Depreciation and amortisation 12 527 12 459
Interest 3 018 4 542
Taxation 1 956 2 340
Total earnings before interest, taxation 17 897 22 340
depreciation and amortisation
Turnover 162 630 155 142
RADIO
Unaudited Unaudited
6 months 6 months
30/6/01 30/6/00
R 000 R 000
HEADLINE EARNINGS 4 851 2 030
Less: NAIL's after tax interest (273) (736)
Restraint of trade - -
Income from associates - -
Add: Minorities 483 (554)
Depreciation and amortisation 7 380 7 194
Interest 850 2 670
Taxation 2 727 392
Total earnings before interest, taxation 16 018 10 996
depreciation and amortisation
Turnover 48 400 37 594
PUBLISHING
Unaudited Unaudited
6 months 6 months
30/6/01 30/6/00
R 000 R 000
HEADLINE EARNINGS (1 374) 576
Less: NAIL's after tax interest (2 050) (2 054)
Restraint of trade - -
Income from associates (36) (30)
Add: Minorities (395) (155)
Depreciation and amortisation 2 755 3 149
Interest 2 684 2 245
Taxation (982) 23
Total earnings before interest, taxation 602 3 754
depreciation and amortisation
Turnover 97 215 95 475
FILM AND TELEVISION
Unaudited Unaudited
6 months 6 months
30/6/01 30/6/00
R 000 R 000
HEADLINE EARNINGS (190) 1 904
Less: NAIL's after tax interest - -
Restraint of trade (400) -
Income from associates - -
Add: Minorities 461 2 018
Depreciation and amortisation 2 392 2 116
Interest (516) (373)
Taxation 503 1 925
Total earnings before interest, taxation 2 250 7 590
depreciation and amortisation
Turnover 17 015 22 073
EXHIBITIONS
Unaudited Unaudited
6 months 6 months
30/6/01 30/6/00
R 000 R 000
HEADLINE EARNINGS (409) -
Less: NAIL's after tax interest - -
Restraint of trade - -
Income from associates - -
Add: Minorities (272) -
Depreciation and amortisation - -
Interest - -
Taxation (292) -
Total earnings before interest, taxation (973) -
depreciation and amortisation
Turnover - -
Note: Associates have been proportionately consolidated
DIRECTORS' STATEMENT
Your directors take pleasure in presenting the interim results of the Group
for the six months ended 30 June 2001. These results comply in all material
respects with the requirements of AC 127 of the South African Statements of
Generally Accepted Accounting Practice, as well as the South African
Companies Act of 1973, as amended.
The financial year-end of the Group has been changed from 30 September to 31
December with effect from the financial year-end 31 December 2000. The
comparative results published for the six months to 31 March 2000 are not
necessarily comparable to the current interim results published for the six
months ended 30 June 2001 due to the seasonality of the underlying business
operations. Where possible, comparative figures for the six months ended 30
June 2000 have been provided.
The principal accounting policies are consistent with those applied at 31
December 2000, with the exception of:
- Goodwill arising on consolidation has been amortised in terms of AC 131
of the South African Statements of Generally Accepted Accounting Practice.
The amortisation period has been set at twenty years. The statement has been
retroactively applied as a prior period adjustment. The prior period
adjustment amounts to R692 748 000 of which
R666 679 000 is attributable to the investment in Metropolitan and
R26 069 000 to the residual NAIL.
- Dividends proposed or declared after the balance sheet date and the
secondary tax on companies (STC) related thereto have not been recognised as
a liability or the accrual as an asset at the balance sheet date in terms of
AC 107 of the South African Statements of Generally Accepted Accounting
Practice. The change has not been applied retroactively and the comparative
figures have not been restated. Metropolitan Life declared an interim
dividend of R108 million or 15,5 cents per share on 7 September 2001, of
which R55 million accrues to NAIL.
DIRECTORSHIP CHANGES
Nonkululeko Gobodo tendered her resignation with effect from 31 March 2001.
Dikgang Moseneke tendered his resignation from NAIL effective 30 July 2001.
Saki Macozoma assumed the role of Chief Executive Officer with effect from 1
August 2001. Zwelakhe Sisulu assumed the role of Non Executive Chairman with
effect from 17 August 2001.
Louisa Mojela, Gavin Chadwick and Moses Ngoasheng were appointed to the Nail
board with effect from 20 August 2001.
POST BALANCE SHEET EVENTS
- NAIL announced on 6 August 2001 the intended mechanism to achieve the
separation of NAIL's financial services interests, focused on Metropolitan
and the separate listing of the non-financial services interests. The
shareholders of NAIL approved on 6 September 2001, the unbundling of
approximately 320 million New Africa Capital shares on the basis of 13,15268
New Africa Capital shares for every 100 Nail ordinary and "N" ordinary
shares. NAIL will transfer to the media sector of the JSE on 21 September
2001 and trade ex unbundling from that date.
- The shareholders of NAIL approved on 6 September 2001, the consolidation
of NAIL's ordinary and "N" ordinary share capital on the basis of one
consolidated share for every 20 NAIL ordinary and "N" ordinary shares. The
consolidated shares will trade from 21 September 2001.
- The scheme of arrangement proposed by New Africa Capital between
Metropolitan and its shareholders, including New Africa Finance Holdings
Limited (the wholly owned subsidiary of NAIL which holds NAIL's interests in
Metropolitan) has been approved with all the necessary authorising bodies.
In terms of the scheme New Africa Capital will acquire 100% of Metropolitan
for an issue of shares. Metropolitan will delist and New Africa Capital will
be listed on 21 September 2001.
- NAIL placed approximately R377 million in an escrow account to meet its
commitment in terms of the acquisition of the Kagiso Media assets. At the
general meeting of Kagiso Media, held on 13 September 2001, the shareholders
approved the sale of the relevant business operations of Kagiso Media to
NAIL.
The remaining outstanding conditions precedent to this transaction are:
- NAIL accepting the effective date accounts of Kagiso Media for the year
ended 30 June 2001;
- The waiver, to the extent required, by the relevant parties of any pre-
emptive rights in respect of the business operations to be acquired by NAIL
as part of the sale;
- The consent, to the extent required, of any relevant third parties to the
transfer to NAIL of all material contracts, licences and intellectual
property rights forming part of the business operations to be acquired by
NAIL as part of the sale;
- The approval by the Independent Communications Authority of South Africa;
and
- The approval of the Competition Commission South Africa.
It is an expressed term of the sale that the above conditions are fulfilled
no later than 31 December 2001.
CONTINGENT LIABILITIES
There has been no material change to the contingent liabilities as reported
in the Annual Financial Statements for the fifteen months ended 31 December
2000. A further provision of R71 million has been made against the
contingent liability in respect of the Johnnic put options making the total
provision R111 million as at 30 June 2001.
REVIEW OF OPERATIONS
FINANCIAL SERVICES
METROPOLITAN RESULTS
The highlights of the Metropolitan results are:
- Positive net cash flows of R2 billion
- Strong growth in Employee benefits division
- Increased profits from Health business
- Creation of New Africa Capital
- Total assets under management R39 billion
- Board empowerment credentials enhanced
Persal and lower investment returns negatively affected earnings. The
creation of New Africa Capital will allow for the effective separation of
the life and non-life operating entities. This will allow for more pro-
active and effective capital management and allow for greater transparency
of capital allocation.
MEDIA OVERVIEW
Due to the economic slow down worldwide and the effect on the South African
media industry, where the advertising spend has reduced appreciably, the
results for the traditionally weak first six months of the year have been
disappointing.
The results for the equivalent period January to June 2000 have been
provided for comparison. However the current interim numbers include three
companies, New Africa Media Exhibitions, New Africa Educational Publishing
and New Africa Media Films established after June 2000. All three companies
are trading inline or ahead of expectations but start up losses distort the
comparison on the two six month periods.
Management are of the opinion that for the above reason and because of the
cyclical nature of the business a greater proportion of the earnings will be
generated in the second half of the year.
DIVISIONAL REPORT
RADIO
NAIL's radio assets continued to be the star performers within the media
division. KFM 94.5 reflected the strong performance with revenue up 36% over
the equivalent period last year. NAIL only obtained management control of
the station in October 2000, after the ICASA ruling, and since then the
station has started to out perform its competitors. Kaya FM, which was
purchased in June 2000, continues its turnaround with revenue up 40% over
the equivalent period last year. Although the station is still loss making,
management remains positive on its future prospects and the station is on
track to reflect a profit in the financial year end 31 December 2002.
Jacaranda 94.2 fm and our radio sales house Radmark performed in line with
expectations which reflects a solid performance based on the weaker economic
trading environment which was not envisaged at the start of the year.
PUBLISHING
New Africa Publications experienced a disappointing period as a direct
result of the softer advertising trends where the impact was particularly
felt at the Sowetan, which reflected a weaker performance than the
equivalent period last year. The establishment of the Sowetan's sales house,
Thengisa Media, has been slower than originally anticipated, but it is
expected to do better in the second half of this year.
The Sowetan Sunday World continues to perform above expectations.
Circulation is growing on a weekly basis and has reached levels in excess of
125 000 copies per week. This reflects a 67% growth on the prior year. The
start up losses of the publication have been contained and are significantly
lower than the same period last year.
Leadership magazine continues to perform poorly and NAIL is currently
reviewing strategy for magazines.
New Africa Educational Publishing is well positioned to take advantage of
the opportunities arising from the changes in the school curriculum.
FILM AND TELEVISION
Urban Brew and Rapid Phase have experienced difficult trading conditions as
a result of restructuring the SABC. This has had a negative effect on the
interim performance of the companies. An improved performance is expected in
the second half of the year.
New Africa Media Films is on track to produce its first film, and generate
revenue, in the last quarter of 2001. Costs have been kept at a minimum but
start up losses have however impacted on the interim numbers.
EXHIBITIONS
New Africa Exhibitions, which is a joint venture with Reed Exhibitions South
Africa, was launched in March 2001. The company will only start generating
revenue in the second six months of the year.
OTHER INVESTMENTS
HERTZ
The company is well positioned to improve its results in the following six-
month period because of reduced interest rates, inroads made into obtaining
corporate business and synergies extracted from the shareholding
relationship with Unitrans Motors.
DIVIDEND
The directors have decided not to declare an interim dividend.
Z SISULU S MACOZOMA
Non-Executive Chairman Chief Executive Officer
19 September 2001
Directors Z Sisulu (Non-Executive Chairman), S J Macozoma* (Chief Executive
Officer), G K Chadwick, P T W Curtis, M M Katz, R Kevan*,
A S Mabogoane, J T Mdlalose, L M Mojela, M M Ngoasheng, G T Serobe,
K Setzin*, G Snelgar, G Williams, S Zungu*
*Executive Director
COMPANY SECRETARY D D Qwelane
CORPORATE HEAD OFFICE 1st Floor Fulham House, Hampton Park, 20 Georgian
Crescent, Bryanston. PO Box 782922 Sandton 2146. Telephone 27 11 463 1744
Fax 27 11 463 8233. Web address www.nail.co.za
