| Wed 17 Sep 2003, 16:18 | | INTERIM REPORT OF THE GROUP FOR THE SIX MONTHS EN |
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Nail - INTERIM REPORT OF THE GROUP FOR THE SIX MONTHS ENDED 30 JUNE 2003
NEW AFRICA INVESTMENTS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1993/002467/06)
(Share codes: NAI and NAN)
(ISIN: ZAE000012134 and ZAE000011946)
("Nail" or "the Group")
INTERIM REPORT OF THE GROUP FOR THE SIX MONTHS ENDED 30 JUNE 2003
* Headline earnings per share 19,2 cents
* Earnings per share 13,3 cents
* Headline earnings attributable to Radio up 104% over same period last year
CONSOLIDATED INCOME STATEMENT
Unaudited Unaudited Audited
6 months 6 months year ended
30-Jun-03 30-Jun-02 31-Dec-02
R000 R000 R000
Revenues 296 066 256 396 580 641
EBITDA pre African Bank Debtors
Book losses 13 929 22 535 55 074
African Bank Debtors Book losses (26 200) (4 450)
EBITDA (12 271) 22 535 50 624
Amortisation and depreciation (9 755) (13 875) (37 873)
Finance income 41 822 30 526 62 094
Income before exceptional items 19 796 39 186 74 845
Income from associates 9 724 8 403 23 827
Exceptional items (640) (74 035) (97 088)
Income/(loss) before taxation 28 880 (26 446) 1 584
Taxation 12 448 15 466 32 792
Income/(loss) after taxation 16 432 (41 912) (31 208)
Minority interest (212) (700) (2 537)
Income/(loss) attributable to
ordinary shareholders 16 220 (42 612) (33 745)
HEADLINE EARNINGS
Income/(loss) attributable to
ordinary shareholders 16 220 (42 612) (33 745)
Amortisation of goodwill 7 067 6 499 13 691
Loss on sale of fixed assets 18 - 11
Restructuring costs - - (2 354)
Profit on sale of business - - (348)
Minority portion and tax effect (3) - 7
23 302 (36 113) (22 738)
Headline earnings per share (cents) 19,2 (29,7) (18,7)
Earnings/(loss) per share (cents) 13,3 (35,1) (27,8)
No. of shares taken into account
in calculating EPS (000) 121 515 121 479 121 479
CONSOLIDATED CASH FLOW
Unaudited Unaudited Audited
30-Jun-03 30-Jun-02 31-Dec-02
R000 R000 R000
Cash retained from operating
activities 18 388 43 801 85 347
Cash effects of investing activities 16 117 (20 301) (75 012)
Cash effects of financing activities (9 493) 13 598 64 274
Net increase in cash and cash
equivalents 25 012 37 098 74 609
Cash and cash equivalents at
beginning of period 639 927 565 318 565 318
Cash and cash equivalents at
end of period 664 939 602 416 639 927
STATEMENT OF CHANGES IN EQUITY
Share capital
and premium Reserves Total
R000 R000 R000
Balance at 31 December 2001 841 049 678 342 1 519 391
Net loss for the year - (33 745) (33 745)
Land and building revaluation
reserve - 721 721
Foreign currency translation
reserve - (1 076) (1 076)
Balance at 31 December 2002 841 049 644 242 1 485 291
Net income for the six months - 16 220 16 220
Shares issued 111 - 111
Foreign currency transalation
reserve - 975 975
Balance at 30 June 2003 841 160 661 437 1 502 597
CONSOLIDATED BALANCE SHEET
Unaudited Unaudited Audited
30-Jun-03 30-Jun-02 31-Dec-02
R000 R000 R000
Assets
Property, plant and equipment 89 439 105 358 105 894
Intangible assets 231 192 231 259 239 722
Investments 466 025 474 194 460 868
Other non-current assets 17 059 36 736 17 016
Deferred taxation 637 23 499 28 884
Current assets 837 456 756 488 831 241
Total assets 1 641 808 1 627 534 1 683 625
Total Equity and Liabilities
Share capital and premium 841 160 841 049 841 049
Reserves 661 437 635 730 644 242
Minority interest 54 586 45 673 77 151
Non-current liabilities 10 898 8 677 10 322
Deferred taxation 610 775 908
Current liabilities 73 117 95 630 109 953
Total equity and liabilities 1 641 808 1 627 534 1 683 625
Listed investments at market
value and unlisted investments
at directors valuation (R000) 1 539 518 1 451 880 1 510 921
Diluted valuation (R000) after
the exercise of the in the
money options 1 569 382 1 452 245 1 511 286
Net asset value (cents) 1 266,9 1 195,2 1 243,8
Diluted net asset value (cents) 1 242,4 1 194,3 1 242,8
No. of shares in issue at the end
of period (000) 121 515 121 479 121 479
Diluted no. of shares in issue at the
end of period (000) after the
exercise of the in the money options 126 321 121 603 121 603
Directors valuation for 30 June 2003 is based on the valuation performed at 31
December 2002 less distributions or provisions made in the period until review.
No material fact has arisen to change this view. These values exclude wind up
costs or STC which may become payable on distributions. The diluted net asset
value is based on the exercise of all the in the money options of the NAIL share
incentive scheme.
CONTRIBUTION TO HEADLINE EARNINGS
Unaudited Unaudited Audited
6 months 6 months year ended
30-Jun-03 30-Jun-02 31-Dec-02
R000 R000 R000
Media
Radio 13 304 6 537 19 534
Publishing 841 3 124 2 314
Film and TV 630 1 658 1 544
Outdoor (426) 3 642 3 432
Exhibitions - (228) (228)
Total Media 14 349 14 733 26 596
Other
Financial services 7 453 7 089 13 426
Hertz (8 565) (4 115) (6 070)
African Bank Debtors Book (18 340) - (3 115)
Write back/(down) of investments 6 387 (67 686) (86 443)
Other 22 018 13 866 32 868
Total Group 23 302 (36 113) (22 738)
EXCEPTIONAL ITEMS
Unaudited Unaudited Audited
6 months 6 months year ended
30-Jun-03 30-Jun-02 31-Dec-02
R000 R000 R000
Provision for write down
New Africa Capital (5 453) (61 803) (69 077)
Provision for write back/(down)
Johnnic/MTN 37 767 (5 883) (3 046)
Amortisation of goodwill (7 067) (6 499) (13 691)
Investments written off recovered 40 150 344
Provision for write down of P4 Loans (6 967) - (7 000)
Provision against Hertz deferred tax asset (18 960) - -
Net profit on sale of investments - - 348
Provision for write down of
Saccawu Investments - - (5 000)
Provision for write down AMB Pep - - (2 320)
Restructuring fees - - 2 354
(640) (74 035) (97 088)
Your directors take pleasure in presenting the unaudited interim results of
the Group for the six months ended 30 June 2003.
BASIS OF PREPARATION
These results comply in all material respects with the requirements of the
South African Statements of Generally Accepted Accounting Practice, as well as
the South African Companies Act of 1973, as amended.
The principal accounting policies are consistent with those applied in the
Audited Annual Financial Statements at 31 December 2002.
The headline earnings for the comparative period to 30 June 2002 has been
restated to conform with The South African Institute of Chartered Accountants
circular 07/02, which requires available for sale assets to be marked to market
and such adjustments to be included in headline earnings.
INVITATION TO EXPRESS AN INTEREST
On the 28 May 2003 NAIL released a statement inviting proposals from
interested parties to express an interest for all or part of the business or
exploring merger alternatives. A formal process was implemented to receive and
evaluate all such proposals received.
On the 24 July 2003 NAIL announced that it had received an unsolicited bid
outside of the formal bid process, from a consortium comprising Investec Bank
Limited, Safika Holdings (Pty) Limited, Tiso Private Equity Fund and
Mineworkers Investment Company (Pty) Limited ("the consortium"). The consortium
offered a price of R9.00 per share subject to certain conditions precedent. On
16 September 2003 NAIL received a letter from the consortium, advising that the
due diligence investigation of NAIL, referred to in the original firm intention,
has been completed to the satisfaction of the consortium and based on the
successful completion of the due diligence, the consortium will increase its
offer contained in its original firm intention from R9.00 to R10.50 per NAIL
share, subject to the fulfilment of the remaining conditions precedent.
The NAIL Board is finalising deliberations on the bids received by it as part
of its bidding process and will consider the consortium"s amended firm intention
together with such other bids.
POST-BALANCE SHEET EVENTS
* NAIL has acquired a further 3,3% of New Africa Books bringing the NAIL
shareholding to 93,3%.
* Nail Outdoor has acquired the 30% minority stake in Nail Outdoor Africa.
SEASONALITY
The media investments results are subject to seasonal factors where the
second six months of the year traditionally attract higher advertising revenues.
CONTINGENT LIABILITIES
Nail is a partner together with New Africa Capital and BoE for the
management, collection and funding of the African Bank Debtors Book which was
excluded from the sale of The African Bank Limited to African Bank Investments
Limited. BoE has made a conditional offer to dissolve the partnership that would
involve Nail making a payment of R30,65 million to fund realisation losses. This
has been provided for in full in the financial statements.
REVIEW OF OPERATIONS
Media
* Radio
The radio assets continue to be the star performers of NAIL"s media assets.
Jacaranda 94.2 FM remains the largest regional radio station and Kfm 94.5
remains the largest radio station in the Western Cape. Kaya has experienced
strong advertising sales growth over the previous year. Radmark, the radio sales
house, continues to perform exceptionally in a buoyant radio advertising market.
* Print
The Sowetan remains profitable in spite of a circulation decline. An
investment has been made to improve the quality of the newspaper to attract
higher LSM readership.
Sowetan Sunday World has shown impressive circulation growth. Efforts are
being made to grow advertising to meet this circulation growth.
The publication of the Leadership magazine has been outsourced to a third
party and this should result in a breakeven position for the second half of the
year.
New Africa Books has produced educational books for the new curriculum. The
costs of marketing these new curriculum titles to the majority of schools have
been expensed. The orders for the new curriculum should be finalised by the end
of September 2003.
* Film and television
Urban Brew continues to perform well. The company continues to produce the
Live Lotto Draw and an expanded YoTv youth show.
The Film production company was closed during the period. NAIL retains its
investment in the movie SLASH which has been distributed and released
internationally. An acceptable return on investment is expected.
* Outdoor
The results have been impacted by the poor performance from the signage
division, mainly as a result of foreign exchange losses from a large export
order. A concerted effort has been made to lower the unsold inventory in the
outdoor media division.
OTHER INVESTMENTS
* Hertz
Hertz turned in a poor performance for the period. However the outlook appears
better with economic factors such as lower interest rates, which will reduce
funding costs of the fleet, and the stronger Rand, which has lowered the
inflationary pressures on the cost of the fleet, should result in an improved
performance.
DIVIDEND
The directors have decided that no interim dividend will be declared.
A S Mabogoane S Macozoma
Non-executive Chief Executive
Chairman Officer
16 September 2003
Directors: A S Mabogoane (Non-executive Chairman),
S Macozoma (Chief executive Officer), T Curtis, Prof M M Katz,
J T Mdlalose, G T Serobe, G Snelgar, Prof G Williams, R Kevan,
K Setzin, G Chadwick, L Mojela, M Ngoasheng
Company Secretary: D Qwelane
Date: 17/09/2003 04:15:09 PM Produced by the JSE SENS Department
