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Hosken Consolidated Investments Limited - Group annual
results for the year ended 31 March 2002.
(Incorporated in the Republic of South Africa)
(Registration number 1973/007111/06)
("HCI" or "the company")
(ISIN Number: ZAE000003257) (Share code: HCI)
Group annual results for the year ended 31 March 2002.
The following are the audited results of the group for the
year ended 31 March 2002 together with comparative figures:
ABRIDGED CONSOLIDATED INCOME STATEMENTS
Year ended
31 March
2002 2001
R`000 R`000
Revenue
390,266 258,318
Operating loss
(341,221) (312,727)
Net investment income
34,061 16,503
Share of associated companies
profits 34,410 20,609
Investment surplus
18,813 10,946
Impairment of goodwill and
investments (296,324) -
Loss before taxation
(550,261) (264,669)
Taxation
5,469 11,153
Loss before preference dividends
(555,730) (275,822)
Preference dividends
(45,561) (75,647)
Attributable to minorities
166,398 148,041
Loss attributable to ordinary
shareholders (434,893) (203,428)
Reconciliation of headline loss
Loss attributable to ordinary
shareholders (434,893) (203,428)
Adjusted for:
Investment surplus
(18,813) (10,946)
Amortisation of goodwill
14,615 4,975
Profit on sale of assets
(21)
Impairment of goodwill and
investments 296,324 -
Headline loss
(142,788) (209,399)
Loss per share (cents)
Basic
(115.9) (53.3)
Headline
(38.0) (54.9)
Weighted average number of shares
in issue (`000) 375,294 381,724
Actual number of shares in issue at end of
year (`000)
-adjusted for treasury shares
367,530 389,588
ABRIDGED CONSOLIDATED BALANCE SHEET
31 March
2002 2001
R`000 R`000
ASSETS
Non current assets 2,618,524 3,113,070
Property, plant and equipment
84,484 67,931
Goodwill - 116,692
Deferred tax 49 -
Investments 2,533,991 2,928,447
Current assets 663,145 411,503
Total assets 3,281,669 3,524,573
EQUITY AND LIABILITIES
Ordinary shareholders` equity 2,051,852 2,865,181
Minority shareholder interest 15,844 117,459
Non current liabilities and 743,903 114,455
preference shares
Current liabilities 470,070 427,478
Total equity and liabilities 3,281,669 3,524,573
Net asset value per share 5.58 7.35
ABRIDGED CONSOLIDATED CASHFLOW STATEMENTS
Year ended
31 March
2002 2001
R`000 R`000
Cash flows from operating activities (396,623) (28,948)
Cash flows from investing activities (20,876) (82,945)
Cash flows from financing activities. 541,779 114,013
Increase in cash and cash equivalents 124,280 2,120
Cash and cash equivalents
At beginning of year (24,988) (27,108)
At end of year 99,292 (24,988)
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Share Accumulated
Capital Premium NDR Loss Total
R`000 R`000 R`000 R`000 R`000
Balances
1 April
2000 92,760 1,015,356 2,344,249 (52,976) 3,399,389
Share
capital
and
premium
Shares
issued 4,637 94,131 98,768
Issue costs (324) (324)
Current
Operations
Loss
attributable
to ordinary
share
holders (203,428) (203,428)
Transfer on
realisation
of
investments 10,946 (10,946) -
Revaluation
Current
revaluation
deficit (429,224) (429,224)
Balances
31 March
2001 97,397 1,109,163 1,925,971 (267,350) 2,865,181
Share
capital
and
premium
Shares
issued 200 2,040 2,240
Shares
repurchased
and
cancelled (3,205) (41,665) (44,870)
Share
issue &
cancellation
costs (2,178) (2,178)
Treasury
shares
acquired by
subsidiary (2,510) (30,934) (33,444)
Current
Operations
Loss
attributable
to ordinary
shareholders (434,893) (434,893)
Transfer on
realisation
of
investments 18,813 (18,813)
Revaluation
Current
revaluation
deficit (300,184) (300,184)
Balances
31 March
2002 91,882 1,036,426 1,644,600 (721,056) 2,051,852
COMMENTARY
ACCOUNTING POLICIES
The preliminary report to shareholders is prepared on the
historical cost basis modified by the revaluation of
investments and conforms with Statements of South African
Generally Accepted Accounting Practice. The accounting
policies of the group have been consistently applied.
RESTATEMENT OF COMPARATIVE FIGURES
Certain subsidiaries that were previously considered to be
held for sale or subject to potential dilution have been
reclassified, resulting in the full consolidation of their
assets, liabilities and results of operations with those of
the rest of the group. To aid comparability, the prior year
figures have been restated. This has no effect on earnings
per share for the prior year as the group`s share of losses
had previously been accounted for.
REVIEW OF INVESTMENTS
Telecommunications
Vodacom Group (Pty) Ltd
The group`s 5% interest in unlisted Vodacom Group (Pty) Ltd
("Vodacom") remained unchanged during the year. Vodacom
continued its exceptional performance showing strong growth
in headline earnings of 37% to R 2,438m. Despite the entry
of Cell-C into the local cellular market the company`s
subscriber base continues to grow making Vodacom the leading
cellular network operator on the African continent
Media and Broadcasting
Midi TV (Pty) Ltd ("e-TV")
5p.m. - 11p.m. audience share of the channel has grown by an
average of 45% for the year.
Revenues over the same period increased some 58% bringing the
ratio of revenue to audience more in line with expectations.
The growth in general television adspend over the year was
disappointing particularly after the September 11th events.
The rapid decline of the rand against the US Dollar also
adversely affected the station`s performance.
Financial year 2003 ought to see audience share climb to an
average of close to 20% and the accompanying growth in
revenue should substantially reduce the operating losses of
the station in the coming year. The station is expected to
be cash positive from May 2003.
e-TV has successfully negotiated the exit of Warner Bros.
from the station subject to ICASA approval and has also
suitably adjusted its program licencing arrangements for the
period until October 2004. 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 business in the route
business was delayed by litigation. This litigation has
been settled / determined and the business is again advancing
slowly. We anticipate the roll out will only effectively
commence towards the end of this financial year.
The group has converted about half of it debts with On-line
Gaming Systems Ltd ("OGAM") to ordinary equity. This
conversion has given the group 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
reasonable prospects of concluding contracts which over time
will make OGAM profitable.
Financial services
Mettle Limited
Despite the adverse market conditions in which Mettle Ltd
("Mettle") operated during the year the company has performed
well with growth in headline earnings of 37%. The company`s
return on equity remains in excess of 30% and we believe this
ratio can be sustained going forward. Your directors are
confident of Mettle`s ability to respond to changes in the
small cap sector and to deliver long-term growth to
investors. This view was supported by the actions of
institutional investors who rejected the proposed delisting
of Mettle.
OPERATIONS AND RESULTS FOR THE YEAR
The business operations of HCI include 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. Your directors are confident
that the group will deliver satisfactory growth in the
future.
The group reported a headline loss per share of 38 cents
compared with the headline loss per share of 54.9 cents for
the prior year which represents an improvement of 31%. The
largest contributor to the headline loss per share is the
group`s share of the losses of e-TV after adjusting for
minorities. Income from the group`s investment in associate
companies contributed R34,4m.
The investment surplus arose from the sale of certain non-
core investments. The impairment of goodwill and investments
relates principally to goodwill arising on e-TV and the
provision for the diminution in the value of the group`s
offshore gaming interests.
In terms of a specific buyback, the company repurchased and
cancelled 12 820 000 shares during the year under review.
Details of this transaction were included in a circular to
shareholders dated 7 August 2001.
DISTRIBUTIONS TO SHAREHOLDERS
The directors have decided not to declare a dividend for the
year ended 31 March 2002. The company requires its cash for
further investments.
APPOINTMENT OF NON-EXECUTIVE DIRECTORS
Messrs Arnold Jack Shapiro and Amon Malencane Ntuli have been
appointed as non-executive directors of the company with
effect from 19 June 2002.
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
potential. Your directors are confident that the group will
deliver satisfactory returns in the near future.
For and behalf on the board of directors
MA Golding Chairman
JA Copelyn Chief Executive Officer
24 June 2002
Durban
Registered office: 3rd Floor, MB House, 641 Ridge Road,
Durban, 4001 (PO Box 18881, Dalbridge, 4014)
Transfer secretaries: Computershare Investor Services
Limited, 8th Floor, 11 Diagonal Street, Johannesburg, 2001
Directors: M A Golding (Chairman), J A Copelyn (Chief
Executive Officer), M F Magugu*, V E Mphande*, A J Shapiro*,
A M Ntuli*
* Non-executive
Company secretary: T G Govender
ENDS.
Date: 24/06/2002 05:50:00 PM Produced by the SENS Department
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