New Vision profits triple

Mar 03, 2006

THE New Vision’s after tax profit nearly tripled in the six months to December 2005 compared to the same period in 2004, on the back of higher turnover and more intensive cost cutting measures, a company statement said.

By Paul Busharizi

THE New Vision’s after tax profit nearly tripled in the six months to December 2005 compared to the same period in 2004, on the back of higher turnover and more intensive cost cutting measures, a company statement said.

However, the company’s continued strong growth has not translated into improvements in its share price, making it one of the most undervalued companies on the Uganda Securities Exchange (USE), analysts say.

Profit after tax leapt to sh1.8b in the last six months of 2005 from sh649m in the previous year, driven by a 13.6% jump in turnover to sh14.7b from sh13b during the same period, unaudited results published by the company showed.

Significant cost savings were made in halving finance costs to sh65.7m from sh117.6m and in lowering the cost of sales as a percentage of turnover.
“The big increase in turnover coupled with intensive cost control contributed to this increase in profitability,” the report said. “However, the prices of imported raw materials, including news print remain a concern.”

The company expects to “maintain the momentum achieved so far,” assuming other factors remain stable.

“This year should show improved profits over last year both in total and as a percentage of turnover.”

The figures also showed an increase in net asset value to sh12.8b or sh250.24 per share which means the company is trading at per of net asset value on USE.
“The New Vision is undervalued by any measure and I think the share price is weighed down by the huge interest the Government still has in it,” one analyst said recently.

The Government sold 20% of its interest in the publishing company at the end of 2004 and retained the rest.

The nearest comparison to The New Vision, the Nation Media Group in Kenya was this week trading at almost five times its net asset value.

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