| Tue 30 Mar 2004, 18:12 | | RESULTS FOR THE YEAR ENDED 31 DECEMBER 2003 |
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New Africa Investments Limited
Release Date: 30/03/2004 17:36:01 Code(s): NAI
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")
PROVISIONAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2003
* Return of funds to shareholders R870 million
* Distribution of Metropolitan shares
Consolidated income statement
Reviewed Audited
year ended year ended
31-Dec-03 31-Dec-02
R000 R000
Revenues 617 903 580 641
Operating profit before the following items: 30 927 52 978
Amortisation and depreciation (47 263) (51 564)
Fair value gains and losses 168 843 (72 123)
Net write-downs of investments and loans (31 568) (13 628)
Impairments of goodwill (57 600) -
Operating profit/(loss) 63 339 (84 337)
Finance income 67 732 62 094
Income from associates 29 374 23 827
Profit before taxation 160 445 1 584
Taxation 49 825 32 792
Profit/(loss) after taxation 110 620 (31 208)
Minority interest (3 877) (2 537)
Profit/(loss) attributable to ordinary shareholders 106 743 (33 745)
HEADLINE EARNINGS
Profit/(loss) attributable to ordinary shareholders 106 743 (33 745)
Restructuring costs 8 478 (2 354)
(Profit)/loss on sale of fixed assets (366) 11
Profit on write-down or sale of business - (348)
Amortisation of goodwill 13 961 13 691
Impairment of goodwill 57 600 -
Minority portion and tax effect 111 7
186 527 (22 738)
Headline earnings per share (cents) 151,9 (18,7)
Earnings/(loss) per share (cents) 86,9 (27,8)
No of shares taken into account in calculating
EPS (000) 122 808 121 479
No of shares in issue at year-end (000) 126 760 121 479
Consolidated cash flow
Reviewed Audited
31-Dec-03 31-Dec-02
R000 R000
Cash retained from operating activities 33 616 85 347
Cash effects of investing activities (4 116) (75 012)
Cash effects of financing activities 37 361 64 274
Net increase in cash and cash equivalents 66 861 74 609
Cash and cash equivalents at beginning of year 639 927 565 318
Cash and cash equivalents at end of year 706 788 639 927
Segmental analysis of headline earnings
Reviewed Audited
12 months 12 months
31-Dec-03 31-Dec-02
R000 R000
Media
Publishing 2 182 2 189
Radio 26 276 18 964
Film and TV 3 736 1 544
Outdoor (4 646) 3 430
Exhibitions - (228)
Total Media 27 548 25 899
Other
Financial services 13 997 13 452
Hertz (9 777) (6 070)
African Bank Debtors Book (15 259) (3 115)
Write-down of investments 137 275 (86 099)
Head Office 32 743 33 195
Total Group 186 527 (22 738)
Consolidated balance sheet
Reviewed Audited
31-Dec-03 31-Dec-02
R000 R000
Assets
Property, plant and equipment 87 419 105 894
Intangible assets 162 044 239 722
Investments 633 653 460 868
Other non-current assets 20 567 45 900
Current assets 885 725 831 241
TOTAL ASSETS 1 789 408 1 683 625
Total equity and liabilities
Share capital and premium 874 389 841 049
Reserves 753 320 644 242
Minority interest 56 703 77 151
Non-current liabilities 15 673 11 230
Current liabilities 89 323 109 953
TOTAL EQUITY AND LIABILITIES 1 789 408 1 683 625
Net asset value per share 1 284 1 223
Statement of changes in equity
Share capital
and premium Reserves
R000 R000
Balance at 31 December 2001 841 049 678 342
Net loss for year - (33 745)
Land and building revaluation reserve - 721
Foreign currency transalation reserve - (1 076)
Balance 31 December 2002 841 049 644 242
Net income for year - 106 743
Foreign currency transalation reserve - 2 335
Shares issued 33 340 -
Balance at 31 December 2003 874 389 753 320
Fair value gains and losses
31-Dec-03 31-Dec-02
R000 R000
Provision for write up/(down) Johnnic/MTN 141 576 (3 046)
Provision for write up/(down) Metropolitan 27 267 (69 077)
168 843 (72 123)
Net write-downs of investments
And loans 31-Dec-03 31-Dec-02
R000 R000
Provision for write-down of P4 Loans (6 967) (7 000)
Provision for Hertz deferred tax asset (20 083) -
Provision for write-down African Bank Debtors Book (4 558) -
Investments written off recovered 40 344
Net profit on sale of investments - 348
Provision for write-down of Saccawu Investments - (5 000)
Provision for write-down AMB Pep - (2 320)
(31 568) (13 628)
DIRECTORS STATEMENT
Your directors take pleasure in presenting the reviewed provisional report
of the Group for the year ended 31 December 2003.
BASIS OF PREPARATION
The condensed consolidated financial statements are prepared in accordance
with South African Statements of Generally Accepted Accounting Practice, the
South African Companies Act, as amended, and the disclosure requirements of
the JSE Securities Exchange South Africa.
The condensed consolidated financial statements are prepared on a going
concern basis, using historical cost basis of accounting except for listed
investments which are stated at fair value. The principal accounting
policies are consistent with those applied in the annual financial
statements for the year ended 31 December 2002.
CORPORATE GOVERNANCE
The Group adheres to locally accepted corporate governance practices, as
embraced by the King II Report.
DIRECTORSHIP CHANGES
Mr F Titi was appointed to the board with effect from 3 March 2004.
CONTINGENT LIABILITY
Nail is a partner together with Metropolitan and BoE for the management,
collection and funding of the African Bank Debtors Book which was excluded
from the sale of the African Bank to African Bank Investment Limited.
Nail"s contingent liability in respect of additional funding required in the
event that the total debtors book, was uncollectable amounts to R71.9 million
(2002: R109,8 million). Operating losses of R21 million have been expensed
in the current year. A transaction has been concluded between Nail,
Metropolitan and BoE for the partnership to be unwound and the book to be
ceded to a company Unique Finance. Nail invested R5 million to recapitalise
Unique Finance, which has been provided against. Put and call arrangements
exist between the parties to ensure that NAIL exits its position after
regulatory approvals have been granted.
INVITATION TO EXPRESS AN INTEREST AND SUBSEQUENT OFFER
On 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 24 July 2003, NAIL announced that it had received an unsolicited bid
outside the formal bid process, from a consortium comprising Tiso Private
Equity Fund, Investec Bank Limited, Safika Holdings (Pty) Limited and
Mineworkers Investment Company (Pty) Ltd ("the consortium"). The consortium
offered a price of R9 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, had been completed to the satisfaction of the consortium and
based on the successful completion of the due diligence, the consortium
increased its offer price to R10,50 per NAIL share. On 2 October 2003, the
consortium announced that it had made a conditional offer to acquire all or
any of the issued shares by NAIL, other than the shares held by Investec or
Safika. The Tiso Consortium was extended to include Capricorn Capital Partners,
which is related to Hollard, a significant shareholder of NAIL. The
consortium announced on 3 October that the condition of obtaining at least
50% of the "N" ordinary shares had been fulfilled, making the offer
unconditional.
On 17 October 2003, NAIL issued a circular supporting the consortium
offer as the offer was not conditional on regulatory approvals and was
supported by NAIL"s controlling shareholder Phaphama.
Subsequent to the offer process the consortium now controls approximately
95% of the economic value of the company.
OPERATING PERFORMANCE
* Radio
The radio assets continue to be the star performers. Jacaranda 94.2 FM
continues to be the largest regional radio station by audience and Kfm 94.5
remains the market leader in the Western Cape. Kaya FM is profitable and
advertising revenues continue to show strong growth.
Radio advertising revenues remain strong across all radio stations and
this has resulted in a 38% increase in headline earnings.
Radmark, the radio sales house, has produced an impressive set of results
as a result of the increased advertising revenues generated for the radio
stations.
* Publishing
The Sowetan increased its net income by 102% compared to last year,
in spite of increased competition in its target market and consequent
circulation decline. The paper has been repositioned to attract a higher LSM
readership
Sowetan Sunday World: Circulation continues to increase which should result
in increased advertising revenues.
New Africa Books is positioning itself as a major educational publisher.
New titles have been produced for the new outcomes based education
curriculum.
* Film and TV
Urban Brew continues to produce the highly successful Road to Riches TV
show and the Live Lotto Draw and has expanded the YOTV youth show. New shows
and improved margin control has resulted in improved performance over last
year.
New Africa Media Films has ceased production of films. The film Slash has
been distributed internationally and the proceeds are starting to flow.
* Outdoor
Outdoor performed poorly as a result of a marked decrease in the signage
Business and low sell out rates in the outdoor media division. The
strengthening of the Rand resulted in large foreign exchange losses
resulting from the Africa business.
* Hertz
The losses attributable to NAIL in the second six months reduced to R1
million against R8.5 million in the first six months. The reduction in
interest rates and lower car inflation has reduced the carrying costs of the
fleet.
* Other
The value of the listed shares, Metropolitan, Johnnic and MTN increased
substantially over the value carried at the previous year end, resulting in
write ups to the investments of R169 million compared to last year"s write
down of R72 million. Goodwill to the value of R52 million has been impaired
in the current financial year.
POST BALANCE SHEET EVENTS
Post balance sheet date the company has approved:
* a capital reduction of R6.86 per share.
* a dividend in specie being the distribution of 28.68105 Metropolitan
Holdings shares for every 100 Nail shares held.
The payment and posting of the Metropolitan distribution shares will be made
on or after 29 March 2004.
The Group has sold:
* the shares held in MTN and Johnnic Holdings, realising R271 million;
* New Africa Publications, Jacaranda and Radmark subject to regulatory
approvals.
Negotiations are in progress to dispose of the remaining assets.
UNCERTAINTY AROUND FINAL DISPOSAL PRICES OF UNDERLYING ASSETS
The Board has announced its intention to dispose of the underlying assets
and return cash to shareholders. This has the effect of classifying all
assets as discontinuing operations.
The written down carrying value for Urban Brew Studios, Hertz, NAIL Outdoor
and New Africa Books amounts to R132 million. Offers have been received that
were significantly less than the carrying value. These offers have not been
accepted by the board. There is uncertainty as to the final realisation
values attributable to these assets, which may have a material impact on the
carrying values, as included in the condensed financial statements.
New Africa Publications, Jacaranda and Radmark have been sold subject to
conditions precedent related to regulatory approvals. The final purchase
prices are linked to the operating performances of the assets and can only
be finally determined once the conditions precedent have been fulfilled.
Other assets are subject to sale discussions and there is uncertainty around
the final disposal prices.
The uncertainty around the final disposal prices of the assets is
problematic in determining the appropriate carrying values for the
discontinuing operations at the financial year-end.
MODIFIED REVIEW OPINION
PricewaterhouseCoopers Inc and SizweNtsaluba vsp"s modified review report on
the condensed consolidated financial statements contained in this
provisional report is available for inspection at the company"s registered
office.
Without qualifying their review opinion, the auditors emphasised the
uncertainty regarding the final disposal prices of the assets as discussed
above. This uncertainty is likely to result in an emphasis of matter in the
audit report on the Annual Financial Statements for the year under review.
AS Mabogoane S Macozoma
Non-executive Chairman Chief Executive Officer
30 March 2004
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, F Titi
Company Secretary: R Kevan
