| Thu 28 Mar 2002, 0:00 | | New Africa Investments Limited - Preliminary Resul |
|
year ended 31 December 2001
ISIN: ZAE000033346 for the ordinary N shares
ZAE000033338 for the ordinary shares
Alpha Code: NAN for the ordinary N shares
NAI for the ordinary shares
New Africa Investments Limited
Incorporated in the Republic of South Africa
Registration number 1993/02467/06
COMMENTARY ON PRELIMINARY RESULTS OF THE GROUP
FOR THE YEAR ENDED 31 DECEMBER 2001
HIGHLIGHTS
" SEPARATION OF MEDIA AND FINANCIAL SERVICES ASSETS COMPLETED
" CASH AND NEAR-CASH OF NEARLY R1-BILLION
" STERLING PERFORMANCE OF RADIO ASSETS
DIRECTORS' STATEMENT
Your directors take pleasure in presenting the preliminary results for the
year ended 31 December 2001. The financial statements have been presented on
a going concern basis, using fair value, in accordance with South African
Statements of Generally Accepted Accounting Practice and the South African
Companies Act, 1973.
The comparative period was for the financial year 1 October 1999 to 31
December 2000 representing a fifteen month trading period and therefore the
income statement and the statement of changes in equity are not directly
comparable. The enterprise as a whole includes New Africa Capital for period
held until the unbundling was effected on 21 September 2001. The continuing
business reflects Nail as a media company.
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 AC131
of the South African Statements of Generally Accepted Accounting Practice.
The amortisation period has been set at twenty years. The statement has been
applied retroactively as a prior year adjustment.
" 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
AC107 of the South African Statements of Generally Accepted Accounting
Practice.
DIRECTORATE
With the resignation of Mr Zwelakhe Sisulu from the Board of Nail the
Chairmanship of the company became vacant. The board has appointed Mr Ashley
Mabogoane as the new Chairman of Nail with effect from 1 March 2002. Mr
Mabogoane has been on the board of Nail since 1 July 1999.
The following changes to the board were made during the year under review:
APPOINTMENTS
M Ngoasheng 6 August 2001
L Mojela 6 August 2001
G Chadwick 6 August 2001
RESIGNATIONS
N Gobodo 31 March 2001
D Moseneke 30 July 2001
S Zungu 30 November 2001
Z Sisulu 31 December 2001
UNBUNDLING OF NEW AFRICA CAPITAL
" The shareholders of Nail approved on 6 September 2001, the unbundling
of approximately 320 million New Africa Capital shares in the ratio of
13.15268 New Africa Capital shares for every 100 Nail ordinary and "N"
ordinary shares. The Nail share commenced trading ex unbundling on 21
September 2001.
" The shareholders of Nail approved on 6 September 2001, the
consolidation of Nail ordinary and "N" ordinary shares on the basis of one
consolidated share for every 20 Nail ordinary and "N" ordinary share. The
consolidated shares commenced trading on 21 September 2001.
" Nail transferred its JSE listing to the media sector on 21 September
2001.
KAGISO MEDIA TRANSACTION
Nail was informed by the Independent Communications Authority of South
Africa ("ICASA") on 31 December 2001, that it had resolved not to grant the
application for exemption under section 49(6) of the IBA Act.
Kagiso Media indicated that it would not pursue the sale of its assets
following the ICASA ruling and hence all negotiations were terminated.
POST BALANCE SHEET EVENTS
Nail acquired 100% of Natanya Outdoor and 70% of Natanya Africa with effect
from 1 January 2002 as its entry into the outdoor advertising business.
These companies have been rebranded Nail Outdoor. The business is well
positioned to grow organically by securing landmark sites. Sites have been
secured at Cape Town International Airport and on national roads.
JOHNNIC PUT OPTIONS
Nail facilitated the funding of certain empowerment companies to acquire
shares in Johnnic during 1996, by providing put options to various
institutions. The funders of the various special purpose vehicles to hold
the Johnnic shares exercised these put options against Nail. Nail
consequently holds 2.5 million Johnnic shares as a result of these put
options being exercised.
CONTINGENT LIABILITES
Pursuant to the sale of African Bank Limited to African Bank Investments
Limited, Nail, New Africa Capital and BoE assumed responsibility for the
collection, management and funding of the Afbank debtors book. Nail has a
contingent liability at 31 December 2001 of R125.7 million (2000 :
R148.5 million), in the event that the total mortgage and loan book was
unrecoverable. The net book amounts to R476 million (2000 : R562 million)
after making provisions of R199 million (2000 : R199
million). No loss is expected from the book as the provisions are considered
adequate to meet the unrecoverable portion of the book.
REVIEW OF OPERATIONS
RADIO
Nail's radio assets continue to be the star performers. The headline
earnings for 2001 are up 49% on annualised 2000 earnings.
Jacaranda 94.2FM continues to set the benchmark against which all private
sound broadcasters are measured. The success of its formula is shown by the
phenomenal weekly audience growth from 682 000 in 1997 when it was acquired
by Nail to an audience of 1 434 000 in 2001.
Kfm 94.5 was the only regional radio station to experience audience growth
during 2001. It has emerged as a market leader with its market share of
19.1% giving it a 2.9% lead over its closest competitor in the Western Cape.
Year on year operating profit increased by 35%.
Kaya FM 95.9 is forecast to break even in the first quarter of 2002.
Audience has grown by 40% over the previous year. Kaya is in a growth phase
and is projected to gain significant advertising support in 2002.
Radmark, a radio advertising sales house, represents radio stations with a
34% market share in 2001. With its mixture of mature and growth radio
stations it is projected to continue to increase its market share.
PUBLISHING
During the second half of the current financial year, the Sowetan increased
its daily circulation figure by 5.4% to 198,429 in the face of difficult
trading conditions in the newspaper industry. The Sowetan achieved an
operating profit of R20 million for the year ended 31 December 2001 against
R30 million for the 15 months to 31 December 2000. The Sowetan has undergone
a successful repositioning after the year end, which has given the paper new
depth in editorial content and a new design and features. Feedback received
from the advertising industry has been positive and this bodes well for
advertising revenue in the coming year.
The Sowetan Sunday World continues to perform above expectations.
Circulation is in excess of 135 000 copies. The Group's share of losses has
reduced from R11.6 million for the 15 months to 31 December 2000 to R7
million for the year ended 31 December 2001.
Leadership continues to make losses but circulation has improved by 49.9% in
the second half of the year under review. The operating losses for the 15
months to 31 December 2000 reduced from R3.7 million to R2.7 million for the
year to 31 December 2001.
New Africa Books is gearing up for outcomes based education curriculum
changes. The losses sustained in developing the intellectual property of
approximately R1.5 million has been expensed in the current year.
FILM AND TELEVISION
New Africa Media Films has produced its first film "Slash". The movie is
currently being showcased at international film festivals. The start up
losses have been expensed.
Rapid Phase was sold back to the original vendors on 1 January 2001.
Urban Brew showed a decline in operating income over the previous year.
Urban Brew is diversifying its income streams by developing African content
for the export market, rapidly expanding its corporate client base by
producing non-broadcast material, creating innovative live-to-air television
coverage and developing income-generating seasonal promotional pieces. Urban
Brew continues to produce the Road To Riches and The Live Draw amongst other
SABC TV shows.
EXHIBITIONS
The venture with Reed Exhibitions has been terminated because the business
model was not sustainable. The Sowetan retains its rights in the Soccer
Expo.
HERTZ
Improvement in the operating results should be seen in the new financial
year because of an increased customer base, proper fleet management, profit
sharing with Unitrans on cars sold out of the fleet and the use of a self
financed insurance scheme.
PROSPECTS
It is expected that Nail's radio assets will continue their sterling
performance in the coming financial year. Management will continue to seek
synergies in the portfolio and to position the group such that it is able to
take advantage of any changes in the regulatory environment.
The repositioning of the Sowetan and the consolidation of the Sowetan Sunday
World will continue into the second quarter of this financial year. In spite
of difficult trading conditions it is anticipated that this portfolio will
continue to improve its financial performance. Given the ICASA ruling and
the termination of the discussions between Nail and Kagiso on the purchase
of Kagiso Media, the group is developing a comprehensive strategy that will
address the utilisation of the cash resources it has, the non-core holdings
it has and strategies to create critical mass in certain areas of the media.
This comprehensive strategy is expected to be approved by the Board in
August 2002.
DIVIDEND
The directors have decided that no dividend would be declared for the
current financial year.
SIGNED BY:
Ashley Mabogoane
Chairman
Sakumzi Macozoma
Chief Executive Officer
27 March 2002
Consolidated income statement
Continuing Operations Unbundled operations Enterprise as a whole
Audited Audited Audited Audited Audited Audited
12 months 15 months 12 months 15 months 12 months 15 months
31-Dec 31-Dec 31-Dec- 31-Dec 31-Dec 31-Dec
2001 2000 2001 2000 2001 2000
R000 R000 R000 R000 R000 R000,
Income before
exceptional
items 66,562 81,631 486,800 1,388,328 553,362 1,469,959
Income from
associates 16,282 15,685 21,941 16,282 37,626
Exceptional
items -241,658 31,369 -143,425 -237,523 -385,083 -206,154
Income before
taxation -158,814 128,685 343,375 1,172,746 184,561 1,301,431
Taxation 28,354 33,798 145,000 471,897 173,354 505,695
(Loss)/Income
after taxation -187,168 94,887 198,375 700,849 11,207 795,736
Minority
interest 3,409 2,043 -165,786 -452,073 -162,377 -450,030
(Loss)/Income
attributable
to ordinary
shareholders -183,759 96,930 32,589 248,776 -151,170 345,706
HEADLINE EARNINGS
(Loss)/Income
attributable to
ordinary
shareholders -183,759 96,930 32,589 248,776 -151,170 345,706
Exceptional
items net of
minority
portion 241,658 -31,369 143,425 237,523 385,083 206,154
Insurance
transitional
tax 0 0 95,000 95,000
Minority
portion and
tax effect of
exceptional
items -650 -366 -15,808 -72,034 -16,458 -72,400
57,249 65,195 160,206 509,265 217,455 574,460
Headline
earnings
per share
(cents) 47.1 53.7 131.9 419.2 179 472.9
(Loss)/
Earnings per
share (cents) -151.3 79.8 26.8 204.8 -124.4 284.6
No of shares
taken into
account in
calculating
EPS (000) 121,479 121,479 121,479 121,479 121,479 121,479
Contribution to headline earnings
Financial
services 5,635 13,997
Media
Publishing 2,882 4,853
Radio 14,197 11,895
Film and
television 751 3,026
Exhibitions -1,027 0
Total Media 16,803 19,774
Other
Hertz -11,113 -10,016
Head Office 51,559 41,440
Total Group 57,249 65,195
Consolidated balance sheet
Continuing Operations Unbundled operations Enterprise as a whole
Audited Audited Audited Audited Audited Audited
31-Dec 31-Dec 31-Dec 31-Dec 31-Dec 31-Dec
2001 2000 2001 2000 2001 2000
Assets R000 R000 R000 R000 R000 R000
Property,
plant and
equipment 103,260 134,696 0 131,000 103,260 265,696
Intangible
assets 233,120 254,945 0 2,871,580 233,120 3,126,525
Investments 536,901 511,543 0 27,310,929 536,901 27,822,472
Current
assets 799,758 1,176,195 0 1,241,000 799,758 2,417,195
TOTAL ASSETS 1,673,039 2,077,379 0 31,554,509 1,673,039 33,631,888
Total Equity
and
Liabilities
Share
capital and
premium 841,049 841,049 0 2,717,554 841,049 3,558,663
Reserves 678,342 812,570 0 512,807 678,342 1,325,377
Minority
interest 42,077 40,458 0 1,229,149 42,077 1,269,607
Long Term
Insurance
Fund 0 0 0 25,763,000 25,763,000
Long-Term
Liabilities 1221 38,198 0 0 1221 38,198
Current
Liabilities 110,350 345,104 0 1,331,999 110,350 1,667,103
TOTAL EQUITY
AND
LIABILITIES 1,673,039 2,077,379 0 31,554,509 1,673,039 33,631,888
Listed
investments at
market value
and unlisted
investments
at directors
valuation
(R000) 1,494,046 1,896,000
Net asset
value (cents) 1,229.90 1,560.80
No of shares
in issue at
the end of
period (000) 121,479 121,479
Consolidated cash flow
Cash (absorbed by) retained from operating activities
-107,557 3,361,700
Cash effects of investing
activities -310,688 -3,062,916
Cash effects of
financing activities -56,191 99,783
Net (decrease)
increase in cash
and cash equivalents -474,436 398,567
Cash held by
unbundled companies -197,000 -471,863
Cash and cash
equivalents at
beginning of period 1,236,754 1,310,050
Cash and cash
equivalents
at end of period 565,318 1,236,754
Statement of changes in equity for the year ended 31 December 2001
Share capital
and Premium Reserves Total
R000 R000 R000
Balance at 30 September 1999 10,239,447 2,252,693 12,492,140
Change in accounting policy -467,993 -467,993
Restated balance at 30 September
1999 10,239,447 1,784,700 12,024,147
Unbundling AMB and ABIL -6,680,844 -562,071 -7,242,915
Net profit for fifteen months 345,706 345,706
Dividend declared -242,958 -242,958
Restated 31 December 2000 3,558,603 1,325,377 4,883,980
Unbundle New Africa Capital -2,717,554 -495,865 -3,213,419
Net loss for year -151,170 -151,170
Balance at 31 December 2001 841,049 678,342 1,519,391
Exceptional items
Continuing Operations
12 months 15 months
31-Dec-2001 31-Dec-2000
R000 R000
Loss on Johnnic put option -91,283 -40,000
Write down of New Africa Capital -60,221
Write down of UAH -24,592 -11,500
Net profit on sale of other investments 1,234 123,490
Restraint of trade payments -1,000 -500
Restructuring fees -53,957 -25,323
Amortisation of goodwill -11,839 -14,798
-241,658 31,369
