| Wed 12 Dec 2001, 0:00 | | Hci - Group Interim Report |
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Hosken Consolidated Investments Limited
(Incorporated in the Republic of South Africa)
(Registration number 1973/007111/06)
Share code: HCI ISIN: ZAE000003257
("HCI" or "the company")
Group interim report for the six months ended 30 September 2001
ABRIDGED CONSOLIDATED INCOME STATEMENTS
Six months ended Year ended
30 September 31 March
2001 2000 2001
R'000 R'000 R'000
(unaudited) (unaudited) (audited)
Operating loss (4 909) (7 368) (11 707)
Investment income 39 439 9 753 8 494
Share of profits/(losses) (50 904) (75 489) (125 595)
Non-consolidated subsidiaries (62 648) (79 867) (155 858)
Associated companies 11 744 4 378 30 263
Investment surplus 12 663 9 536 10 946
Loss before taxation (3 711) (63 568) (117 862)
Taxation 3 317 385 9 860
Loss before preference dividends (7 028) (63 953) (127 722)
Attributable to minorities - - (59)
Preference dividends payable (21 053) (4 773) (75 647)
Loss attributable to
ordinary shareholders (28 081) (68 726) (203 428)
Reconciliation of
headline earnings/(loss):
Loss attributable to
ordinary shareholders (28 081) (68 726) (203 428)
Adjusted for:
Goodwill amortised 11 917 - 4 907
Investment surplus (12 663) (9 536) (10 946)
Headline loss (28 827) (78 262) (209 467)
Loss per share(cents)
- Headline (7,44) (20,7) (54,9)
- Basic (7,25) (18,2) (53,3)
Weighted average number of shares
in issue ('000) 387 417 377 766 381 724
Actual number of shares in issue at
end of period ('000) 376 768 381 129 389 588
ABRIDGED CONSOLIDATED BALANCE SHEETS
Six months ended Year ended
30 September 31 March
2001 2000 2001
R'000 R'000 R'000
(unaudited) (unaudited) (audited)
ASSETS
Non-current assets 3 580 362 3 533 574 3 486 049
Investments 3 580 291 3 533 445 3 485 950
Equipment 71 129 99
Current assets 194 374 61 460 14 167
Total assets 3 774 736 3 595 034 3 500 216
EQUITY AND LIABILITIES
Ordinary shareholders' equity 2 792 118 3 386 482 2 865 181
Minority shareholder interest
and preference shares 767 610 75 375 467 610
Non-current liabilities 17 698 84 505 -
Current liabilities 197 310 48 672 167 425
Total equity and liabilities 3 774 736 3 595 034 3 500 216
Net asset value per share at
market/directors' valuation at
11 December 2001 (cents) 795 920 755
BRIDGED CONSOLIDATED CASH FLOW STATEMENTS
Six months ended Year ended
30 September 31 March
2001 2000 2001
R'000 R'000 R'000
(unaudited) (unaudited) (audited)
Cash flow from operating activities 37 361 (35 973) (1 176)
Cash flow from investing activities (132 582) 52 (79 238)
Cash flow from financing activities 272 716 114 539 83 268
Increase in cash and cash equivalents 177 495 78 618 2 854
Cash and cash equivalents
At beginning of year (63 210) (66 064) (66 064)
At end of year 114 285 12 554 (63 210)
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share capital Revaluation Investment Retained
and premium Surplus surplus income Total
R'000 R'000 R'000 R'000 R'000
Balances
1 April 2000 1 108 116 1 859 512 484 737 (52 976) 3 399 389
Ordinary shares
issued 98 444 98 444
Loss attributable
to ordinary
shareholders (203 428) (203 428)
Transfer on
realiazation of
investments 10 946 (10 946)
Current
revaluation
deficit (429 224) (429 224)
Balances
31 March 2001 1 206 560 1 430 288 495 683 (267 350) 2 865 181
Ordinary shares
repurchased (44 982) (44 982)
Loss
attributable to
ordinary
shareholders (28 081) (28 081)
Transfer on
realiazation of
investments 12 663 (12 663)
Balances
30 Sept. 2001 1 161 578 1 430 288 508 346 (308 094) 2 792 118
COMMENTARY
EVENTS AND DEVELOPMENTS
Vodacom Group (Pty) Ltd
The group's 5% interest in unlisted Vodacom Group (Pty) Ltd ("Vodacom")
remained unchanged during the period under review. Vodacom continued its
exceptional performance during the period under review showing strong growth
in all aspects of its business. Vodacom increased its headline earnings for
the six months ended 30 September 2001 by 41% to R965,3 million.
The company continues to remain the leading cellular network operator on
the African continent with a subscriber base in excess of 5,8 million and a
major share of its revenues from the South African market.
Despite the entry of Cell C into the local cellular market, your directors
remain confident that this investment will continue to deliver satisfactory
returns in the future.
Midi TV (Pty) Ltd ("e-TV")
e-TV continued its satisfactory progress over the last year. Its audience
share is now almost 16% during the evening and more on a 24-hour basis.
Its revenues have been tracking its audience growth, though the current
world economic slowdown is starting to make itself felt in the growth of the
station. We believe the station remains on target to break even during the
second half of our next financial year (2003).
e-TV has successfully negotiated a put and call option in respect of
Warner Bros. shares in the station as well as suitably adjusting its
programme licensing arrangements, both of which are subject to Exchange
Control approval. If forthcoming, the put and call option will be subject to
ICASA approval. As previously announced this is not expected to have any
negative effect on the station.
HCI anticipates committing further resources to e-TV until its turnaround
is effected.
Regulatory difficulties in relation to ICASA remain outstanding and HCI
remains committed to resolving the matter amicably with ICASA.
Gaming
Progress towards the commencement of operations in the route business has
continued slowly. We anticipate the roll-out will only effectively commence
at the beginning of our next financial year.
The group has decided to convert about half of it debts with Online Gaming
Systems Limited ("OGAM") to ordinary equity. This conversion will give the
group about 81% of the ordinary equity. The investment remains speculative
and the company continues to lose money. Nevertheless your directors believe
there is great potential in Internet gaming and that this company has good
prospects of concluding contracts which over time will make OGAM profitable.
Mettle Limited ("Mettle")
The Mettle listing was highly disappointing. Notwithstanding a
comprehensive buyback plan of its own shares by Mettle, the share price fell
to unacceptably low levels which began creating difficulties in the
business. HCI has resolved to support the delisting of the company. It is
anticipated Mettle may well become a subsidiary of HCI as a result of the
delisting.
OPERATIONS AND RESULTS FOR THE PERIOD
Business operations
The business operations of HCI entail the making of investments in
opportunities as identified by the board of directors and to add value to
these investments over time. As such, HCI has consciously established itself
and pursued an investment policy in terms of which it has endeavoured to
maintain significant equity and capital participation in entrepreneurially
run companies with significant growth potential. The investments are
constantly reviewed and new ones sought to complement them. The directors
are confident that the group will continue to deliver satisfactory growth.
Accounting policies
The accounting policies in respect of the financial year ended 31 March
2001 have been consistently applied to the results for the period ended 30
September 2001. The policies conform with South African Generally Accepted
Accounting Practices.
Interim results
Earnings per share incorporates only the results of those companies equity
accounted together with interest and dividends received from investments.
Accordingly, earnings per share is not always indicative of the performance
and value of all the underlying companies in which investments are held.
Headline loss per share decreased from 20,7 cents to 7,44 cents mainly due
to the improved performance from e-TV.
The investment surplus arose mainly from the sale of certain of the
group's non-core investments.
The group has historically not consolidated various investments in which
it has a majority stake and this practice is continued in this interim
report for the same reason as previously stated. However, a review of this
practice will be made in our year-end accounts once the results of our
application to regularise ownership in e-TV have been finalized and the
results of the Mettle delisting proposal have been obtained.
DISTRIBUTIONS TO SHAREHOLDERS
The directors have decided not to declare a dividend for the six months
ended 30 September 2001. The company requires its cash resources for further
investments.
PROSPECTS FOR THE FUTURE
The prospects for the group over the next year remain concentrated on
consolidating and extracting value from its interests in the various sectors
invested. The group has invested in certain start-up businesses that have
significant blue-sky potential. The directors are confident that the group
will continue to deliver satisfactory returns in the near future.
STRATE
The company's shares commenced trading on the JSE Securities Exchange
South Africa in uncertificated form on Monday, 3 September 2001 with the
first electronic settlement under STRATE occurring on Monday, 10 September
2001. Those shareholders who have as yet not deposited their shares with a
Central Securities Depository Participant or qualifying broker are reminded
to do so. Enquirers in this regard may be referred to STRATE on 0800 004 727
or Mercantile Registrars Limited on (011) 370 - 5000.
For and on behalf of the board of directors
M A Golding Chairman
J A Copelyn Chief Executive officer
11 December 2001
Durban
Registered office:
3rd Floor, MB House, 641 Ridge Road, Durban, 4001
(PO Box 18881, Dalbridge, 4014)
Transfer secretaries:
Mercantile Registrars Limited,
8th Floor, 11 Diagonal Street, Johannesburg, 2001,
(PO Box 1053, Johannesburg, 2000)
Directors:
M A Golding (Chairman), J A Copelyn (Chief Executive Officer),
M F Magugu, V E Mphande
Company secretary:
T G Govender
