| Wed 3 May 2006, 16:37 | | NAIL - Disclaimed Reviewed Preliminary Results: Ye |
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NAI NAN
NAI
NAIL - Disclaimed Reviewed Preliminary Results: Year Ended 31 December 2005
NEW AFRICA INVESTMENTS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1993/002467/06)
(Share codes: NAI and NAN)
(ISIN: ZAE000033338 and ZAE000033346)
("Nail" or "the Group" or "the Company")
DISCLAIMED REVIEWED PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2005
COMMENTARY
DIRECTORS" STATEMENT
Your directors take pleasure in presenting the reviewed preliminary results of
the Group for the year ended 31 December 2005.
TRANSITION TO INTERNATIONAL FINANCIAL REPORTING STANDARDS (`IFRS") The Group"s
financial statements for the year ended 31 December 2005 are the first annual
financial statements that are required to be prepared in accordance with IFRS.
In respect of subsidiaries and the associate owned by the Group as at 1 January
2005, this report has been prepared in accordance with the Group accounting
policies which have been drafted to comply with the revised IFRS standards and
interpretations effective at 31 December 2005, except for the matter below.
The transition to IFRS should have been accounted for in accordance with IFRS 1
(First-time Adoption of International Reporting Standards). IFRS 1 requires an
opening IFRS balance sheet to be prepared as at 1 January 2004, the Group"s date
of transition to IFRS, and requires that the same accounting policies applicable
to the Group at 31 December 2005 should be applied to the opening IFRS balance
sheet and throughout all periods presented. The Group"s opening balance sheet at
1 January 2004 was not restated to reflect the necessary adjustments to comply
with IFRS statements expected to be applicable at 31 December 2005 in respect of
subsidiaries and associates sold during the 2004 financial period. This can be
attributed to the difficulties experienced in accessing financial information
for subsidiaries and associates that were disposed of during the period ended 31
December 2004, as these were no longer under the Group"s control or influence.
The directors" view is that the only material impact on the comparative
financial information, had these subsidiaries and associates complied fully with
IFRS 1, would have been between opening retained earnings, operating profit and
profit and loss on sale of subsidiaries and associates. The non-compliance with
IFRS 1 is also not considered to affect the current year results as the issue
relates to subsidiaries and associates that were sold during the financial
period ended 31 December 2004. The necessary adjustments have been accounted
for, for those subsidiaries and associates and other Group operations that
existed at the beginning of the financial period under review.
However, the auditors of Hertz are in the process of auditing the IFRS opening
balance sheet and the IFRS financial information for the current and preceding
financial year. If the audit reveals that further adjustments need to be made
there may be an impact on the opening retained income at 1 January 2004 and/or
the closing retained income at 31 December 2004 and/or the operating results for
the year ended 31 December 2004 and/or 31 December 2005.
In preparing this consolidated financial information the Group has applied the
mandatory exceptions and certain of the optional exemptions from full
retrospective application of IFRS.
Exemptions from full retrospective application elected by the Group
The Group has elected to apply the following exemptions:
a) Business combinations.
The Group has applied the business combinations exemption in IFRS 1. It
has not restated business combinations that took place before 1 January
2004 transition date.
b) Exemption from restatement of comparative for IAS32 and IAS39.
The Group elected to apply this exemption. It applies previous GAAP rules
to financial assets and financial liabilities for the 2004 comparative
information.
The adoption of IFRS statements required the Group to revise accounting policies
in the following areas that have affected the amounts reported for current year
and previous years:
In accordance with the requirements of IFRS 3 "Business combinations":
amortisation of goodwill ceased from 1 January 2004;
and goodwill is tested annually for impairment, as well as when there are
indications of impairment.
The Group has identified prior accounting policies that were not in accordance
with international interpretations and applications. Retained income has been
adjusted for prior year errors in applying accounting policies relating to
operating leases, as required by IAS 17, Leases.
DIRECTORSHIP CHANGES
Mr A Mabogoane did not seek re-election to the board at the AGM held on 28 July
2005. Mr S Macozoma resigned from the board on 31 October 2005. The Company
takes this opportunity to thank Messrs Mabogoane and Macozoma for their services
to the Company.
CONTINGENT LIABILITY
NAIL is a partner together with Metropolitan Life Limited and Nedbank Limited,
whereby they have assumed all responsibility 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 Investments Limited.
NAIL"s contingent liability at 31 December 2005 for its portion of the
additional funding required in the event that the total book was uncollectible
amounts to R56.0 million (31 December 2004: R61.9 million).
However, the parties are in the process of realising the total loan book, which
will reduce NAIL"s total exposure from R56.0 million to R15.7 million. NAIL has
provided for the R15.7 million in full in these financial statements.
CONTINGENT ASSET
At the date of the sale of KFM to Primedia, KFM was in the process of
challenging the South African Revenue Services ("SARS") disallowance of a
trademark write-off to the value of R15 million plus R3 million in interest and
penalties.
In the event that KFM is successful against SARS the purchase price that
Primedia paid to acquire KFM will be increased by 97% of the sums recovered and
the present value of future trademark deductions. NAIL bears all costs in this
regard.
ASSET SETTLEMENT AND DISPOSAL PROCESS
The various claims and preference shares in Motsamai Media (Pty) Limited and
Makana SPV (Pty) Limited which hold 24.9% of Kaya FM and the loans to P4 Radio
Cape Town (Pty) Limited and P4 Radio Durban (Pty) Limited were settled by Makana
Investments (Pty) Limited for an amount of R26 million during the review period.
The interest held in Hertz was disposed of to Unitrans for a consideration of
R42.5 million.
PRIMEDIA LIMITED (`Primedia") OFFER
NAIL announced on 17 December 2004 that it had received a firm intention to make
an offer from Primedia to acquire all the issued ordinary and `N" ordinary
shares (`NAIL share") in NAIL as one indivisible transaction. Shareholders are
referred to the announcement for the full terms of the offer.
The salient terms of the offer are:
The offer price of R0.356 per NAIL share in cash. NAIL will have no
assets except 24.9% of Kaya FM (Pty) Limited, the various loans to P4
Radio Cape Town (Pty) Limited and P4 Radio Durban (Pty) Limited (`P4
Loans") and various claims and preference shares in Motsamai Media (Pty)
Limited and Makana SPV (Pty) Limited ("the SPV interests") which hold
24.9% of Kaya FM.
The offer price is reduced by R0.146 per NAIL share if the SPV interests
have been sold or recovered and R0.059 per NAIL share if the P4 Loans
have been sold or repaid.
Interest in the event NAIL has not disposed the SPV interests and the P4
Loans will amount to 0.228 cents per month from 1 April 2005.
Conditions precedent:
NAIL"s disposal of Hertz.
Regulatory approvals, to the extent required, including but not limited
to the JSE Limited, the Securities Regulation Panel and the Competition
Authority.
Hertz was sold during the current year and Primedia has obtained Competition
Commission approval. However, the implication of the offer is that NAIL will
have no assets or liabilities and until there is finality of the African Bank
Debtors Book the offer can not be operative.
The settlement of the SPV interests and P4 Loans (as reported under Asset
Settlement and Disposal Process) has the effect of reducing the Primedia offer
to R0.151 per NAIL share in cash.
AME OFFER
African Media Entertainment Limited ("AME") made an offer on or about 13 July
2005 to acquire NAIL"s 24.9% shareholding in Kaya FM (Pty) Limited ("Kaya") for
R21 million. The sale by NAIL of Kaya would require shareholder approval. NAIL
received written confirmation from shareholders controlling more than 50% of
NAIL voting interests that they would not support a sale of Kaya out of NAIL.
This fact was communicated to AME. On 12 January 2006 AME increased their offer
for Kaya to R25 million. The board resolved that an independent sub-committee
would interrogate the AME offer for Kaya and is in the process of engaging AME.
REVIEW OF RESULTS
The results are not comparable with the previous year as most of the operating
businesses were settled or disposed of last year. The performance this period
reflects the results of 24.9% of Kaya, 60% of Hertz until settlement and the
African Bank Debtors Book.
REVIEW OF RESULTS BY INDEPENDENT AUDITORS
The results have been reviewed by the joint independent auditors,
PricewaterhouseCoopers Inc and SizweNtsaluba VSP.
They have disclaimed to express a review conclusion. Their review report on the
consolidated financial statements contained in this preliminary report is
available for inspection at the Company"s registered office.
The reasons for disclaiming as set out in the auditors report are:
"As indicated in the directors" statement, under "Transition to International
Financial Reporting Standards", in the accompanying preliminary financial
information, the Group did not fully comply with IFRS 1: First time adoption of
International Financial Reporting Standards ("IFRS"). The Group"s opening IFRS
balance sheet was not prepared to restate balances and transactions in respect
of subsidiaries and associates disposed of during the year ended 31 December
2004. IFRS 1 requires an opening IFRS balance sheet to be prepared as at 1
January 2004, the Group"s date of transition to IFRS, and requires the same
accounting policies applicable to the Group at 31 December 2005 to be applied to
the opening IFRS balance sheet and throughout all periods presented (with
certain exemptions and exceptions to retrospective application). It was
impracticable for us to determine the effects of the non-compliance with IFRS 1
on the preliminary financial information.
Furthermore, management did not provide us with the audited opening IFRS balance
sheet and the audited IFRS financial information of the current and preceding
financial year for Alisa Holdings (Pty) Ltd ("Hertz"), a subsidiary representing
a material portion of the current year"s consolidated results.
Consequently, we did not obtain all the information and explanations regarding
the subsidiary that we considered necessary for purposes of our review."
DIVIDEND ANNOUNCEMENT
Notice is hereby given that a special dividend of 60 cents per share was
declared on the 3 May 2006 payable to shareholders recorded in the register of
the Company at the close of business on the record date below. The salient dates
pertaining to the special dividend are:
2006
Last date to trade cum final dividend Friday, 26 May
First date to trade ex-dividend Monday, 29 May
Record date Friday, 2 June
Payment date Monday, 5 June
Shares may not be dematerialised or rematerialised between Monday, 29 May 2006
and Friday, 2 June 2006, both days inclusive.
F TITI G SNELGAR
3 May 2006
Consolidated income statement
Reviewed Restated
year ended year ended
31-Dec-05 31-Dec-04
R000 R000
Revenues 115 181 357 082
Operating (loss)/profit before
the following items (14 861) 10 503
Amortisation and depreciation (1 208) (15 202)
Net profit on sale of subsidiaries
and investments 2 704 205 603
Fair value gains and losses - 8 213
Net write-downs of investments and loans (15 620) 7 500
Impairments of goodwill - (30 924)
Provision against Hertz
and Wild Coast Films assets (3 765) (58 641)
Operating (loss)/profit (32 750) 127 052
Finance income 7 008 32 240
Income from associates 1 862 8 468
(Loss)/profit before taxation (23 880) 167 760
Taxation (19) 67 458
(Loss)/profit after taxation (23 861) 100 302
Attributable to:
Minority interest (3 971) (3 202)
Group equity holders (19 890) 103 504
(23 861) 100 302
Headline (loss)/earnings
(Loss)/profit attributable to
ordinary shareholders (19 890) 103 504
Profit on sale of subsidiaries and associates (2 736) (166 359)
Provision (reversed)/raised against Hertz
and Wild Coast Films assets 3 765 58 641
Impairment of goodwill - 30 924
(Profit)/loss on sale of fixed assets (25) 239
Minority portion and tax effect (3 765) 20
(22 651) 26 969
Headline (loss)/earnings per share (cents) (17.9) 21.3
Earnings per share (cents) (15.7) 81.7
Number of shares taken into account
in calculating EPS (000) 126 760 126 760
Consolidated cash flow
Cash (utilised)/retained from operating
activities (20 757) (410 981)
Cash effects of investing activities 49 019 706 594
Cash effects of financing activities - (871 960)
Foreign currency translation - 2 134
Net increase/(decrease) in cash and cash
equivalents 28 262 (574 213)
Cash and cash equivalents
at beginning of the year 132 575 706 788
Cash and cash equivalents
at end of the year 160 837 132 575
Segmental analysis of headline earnings
Publishing - 3 399
Radio 1 862 17 880
Film and TV - 709
Outdoor - (1 103)
Hertz (278) (2 204)
African Bank Debtors Book (15 700) -
Head Office (8 535) 8 288
Total Group (22 651) 26 969
Net profit/(loss) on sale of subsidiaries and
investments
Alisa Holdings 2 736 -
New Africa Media - 42 391
New Africa Publications - 4 183
Philo Films - 989
Jacaranda - 125 174
Radmark - 10 705
Kaya SPV"s (32) 6 391
Metropolitan - 22 950
Johnnic/MTN - 17 937
Nail Outdoor - (18 764)
New Africa Books - (5 041)
Urban Brew - (1 312)
2 704 205 603
Fair value gains and losses
Kaya SPV"s - 8 213
Net write-downs of investments and loans
Provision for losses incurred
in African Bank Debtors Book 15 700 -
Union Alliance (80) -
Provision for write-down of P4 Loans - 7 500
15 620 7 500
Consolidated balance sheet
Reviewed Restated
31-Dec-05 31-Dec-04
R000 R000
Assets
Property, plant and equipment - 6 783
Investments 13 052 31 119
Current assets 24 718 59 501
Cash and cash equivalents 160 839 132 895
Total assets 198 609 230 298
Total Equity and Liabilities
Share capital and premium 4 814 4 814
Reserves 164 711 184 601
Minority interest (9 363) (5 778)
Total equity 160 162 183 637
Non-current liabilities 9 172 9 172
Current liabilities 29 365 37 169
Bank overdraft 2 320
Total equity and liabilities 198 609 230 298
Net asset value per share (cents) 134 149
Number of shares in issue at end of year 126 760 126 760
Statement of changes in equity
for the year ended 31 December 2005
Share
capital and Minority
premium Reserves interest Total
R000 R000 R000 R000
Balance at
31 December 2003 874 389 753 320 40 662 1 668 371
Adjustment for
operating
leases - (1 433) (955) (2 388)
Restated opening
balance
at 1 January 2004 874 389 751 887 39 707 1 665 983
Net income for the
period - 103 504 (3 202) 100 302
Foreign currency
translation reserve - (1 259) - (1 259)
Land and building
revaluation reserve - (685) - (685)
Dividends paid - (668 846) (23 153) (691 999)
Capital reduction (869 575) - - (869 575)
Sale of subsidiaries - - (19 130) (19 130)
Balance at
31 December 2004 4 814 184 601 (5 778) 183 637
Net loss for the year - (19 890) (3 971) (23 861)
Sale of subsidiaries - - 386 386
Balance at
31 December 2005 4 814 164 711 (9 363) 160 162
Reconciliation of equity holders interest at 1 January 2004
R000
Balance as per SA GAAP 1 627 709
Prior period error - effect of straight lining operating
leases IAS 17 (2 388)
Minority interest portion of above 955
Balance per IFRS 1 626 276
Reconciliation of minority interest at 1 January 2004
R000
Balance as per SA GAAP 40 662
Minority interest portion of above (955)
Balance per IFRS 39 707
Reconciliation of profit attributable to equity holders for the
year ended 31 December 2004
R000
Profit as per SA GAAP 104 366
Prior period error - effect of straight lining operating
leases IAS 17 (2 288)
Minority interest portion of above 915
Goodwill no longer amortised as per IAS 3 6 794
Impairment of goodwill as per IAS 3 (2 266)
Reduction in profit on sale of subsidiaries and associates
due to no goodwill amortisation (4 017)
103 504
Reconciliation of equity holders interest at 31 December 2004
R000
Balance as per SA GAAP 191 710
Prior period error - effect of straight lining operating
leases IAS 17 (4 676)
Minority interest portion of above 1 870
Goodwill no longer amortised as per IAS 3 6 794
Impairment of goodwill as per IAS 3 (2 266)
Reduction in profit on sale of subsidiaries and associates
due to no goodwill amortisation (4 017)
Balance per IFRS 189 415
Reconciliation of minority interest at 31 December 2004
R000
Balance as per SA GAAP (3 908)
Minority interest portion of above (1 870)
Balance per IFRS (5 778)
Directors: G Chadwick, R Kevan, K Setzin, G Snelgar, F Titi
Company Secretary: R Kevan
Date: 03/05/2006 04:37:38 PM Produced by the JSE SENS Department
