| Wed 28 Nov 2001, 0:00 | | Naspers Limited - Interim Report |
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Release Date: 28/11/2001 13:29:18Code(s): NPN © 2001 SharenetClick CODE for more details on the company(Registration Number: 1925/001431/06)
("Naspers")
ISIN: ZAE000015889
Story reference: 1424
Share Code: NPN
INTERIM REPORT
The unaudited results of the Naspers Group for the six months
ended 30 September 2001 are stated below:
GROUP OVERVIEW
The period under review has been marked by tough economic
conditions and the dramatic aftermath of the events of
September 11. The impact of these events on media companies
internationally, has been severe, particularly with regard to
advertising revenues. Several major international media
companies have recently issued profit warnings or reported
diminished prospects.
Despite these market conditions, we made steady progress on
most fronts as reflected by group revenues, which grew by 16%,
and Ebitda, from continuing operations, which improved from a
loss of R22 million last year to a positive R77 million in the
current period.
As a broad-based international media group, Naspers was also
challenged by these macro economic forces. In particular, the
recent downturn in the technology sector of the USA economy has
had an impact.
To some extent our group has been more sheltered than most
media businesses from the impact of events over the past six
months as a significant portion of our revenue is generated
from regular subscription income. Subscription revenues tend
to be more stable during recessions than revenues from
advertising or the sale of products and technology.
Looking ahead, prospects for the remainder of this financial
year are more difficult than usual to forecast. However, we are
moderately confident of reflecting real growth in revenues and
in Ebitda for the year as a whole.
FINANCIAL REVIEW
Group revenues for the period grew by 16% to R4,7 billion.
Positive Ebitda of R77 million was recorded compared to an
Ebitda loss of R22 million for the same period last year.
Depreciation increased by 48% to R332 million, largely due to
transponder capacity and the investment by Media24 in printing
infrastructure. A charge for the amortisation of goodwill and
intangibles of R983 million is also reflected, and is
substantially higher than last year, largely due to the
accounting treatment of goodwill arising from the merger of
OpenTV and SpyGlass concluded in September last year.
The net headline loss per N ordinary share from continued
operations consequently amounted to 141 cents, compared to 131
cents last year.
On 30 September 2001, the group had net consolidated cash
resources of R846 million and interest-bearing liabilities of
R900 million (excluding satellite leases).
Business in two sub-units, Mindport Broadband and Lyceum
College, was discontinued for reasons discussed below. In
accordance with Generally Accepted Accounting Practice, the
impact of these discontinued operations has been shown
separately on the income statement, and the comparative figures
adjusted to provide for an accurate comparison. The loss from
these discontinued operations for the period amounted to R73
million. A further loss of R144 million, including goodwill
impairment of R75 million, arose as a direct result of
providing for further costs arising from discontinuing these
operations.
SUBSCRIPTION PLATFORMS
Pay television
The pay television businesses were able to improve Ebitda by
51%, after adjusting for the effect of satellite leases and
foreign exchange transactions. Growth was largely driven by the
continued migration from the analogue to the digital service.
The pay television subscriber base is some two million, of
which 55% subscribe to the digital service.
Internet
In general, the group's cash utilisation on internet activities
during the period was substantially reduced as some businesses
drew closer to breakeven and others were scaled down. As a
result, Ebitda losses were reduced by 24% to R220 million, a
trend which is expected to continue for the remainder of the
year.
In South Africa the M-Web subscriber base has stabilised just
above 240 000 whilst Ebitda losses were more than halved to R61
million (2000: R136 million). This was achieved through
rationalisation, integration and renegotiation of input costs.
M-Web's financial performance is expected to improve even
further in the second half of the year.
In China the group has a 46,5% stake in QQ, an instant
messaging business, and will drive its development. Instant
messaging has become an important communication service and
community building tool world-wide. QQ is currently the leading
instant messaging service in China with some half a billion
messages sent daily.
M-Web Thailand is a content and access service provider with
more than 220 000 prepaid active subscribers and 3,5 million
page views per day.
In Indonesia M-Web has grown its content business, attracting
approximately 60% of the market. Cash utilisation is low and
the focus is on operational efficiencies.
PRINT MEDIA
Our print media businesses were impacted by the softer economic
conditions in South Africa, aggravated by the depreciation of
the rand, which has increased the cost of paper, including
locally produced supplies. In general, circulation levels for
the various newspaper and magazine titles were reasonably
stable, whilst advertising revenues are under pressure.
Despite these difficult circumstances, revenue growth of 8% was
recorded, whilst Ebitda grew by 6%.
New titles launched in the period include Sunday Sun, a tabloid-
format Sunday newspaper, and dit, a monthly women's magazine.
Both have exceeded growth expectations.
TECHNOLOGY
OpenTV deployed a further four million set-top boxes with its
software during the period, boosting the total deployment world-
wide to over 20 million set-top boxes and generating revenue
growth of 60% to $48 million (R398 million). In July, OpenTV
acquired Static, the company that created PlayJam, the
successful iTV entertainment and games channel. PlayJam
currently reaches more than nine million homes on digital
television networks and will in time provide OpenTV with
recurring revenue streams.
Mindport's objective was to exploit the anticipated growth in
the broadband market in the USA. The slowdown in technology
spend, dramatically exacerbated by the September 11 disaster,
has severely delayed the expansion of broadband services in the
USA. Although it is clear that broadband services will develop,
the time frame has moved out. As a consequence, Mindport took
immediate and drastic action to reduce its efforts in this
area.
The scaling down of the broadband operations has been shown
separately on the income statement as a discontinued operation
and the comparative figures adjusted to provide for an accurate
comparison. Looking ahead, Mindport will concentrate on
supporting its existing customer base and new technologies will
continue to be developed.
The global slowdown in technology sales also had an impact,
although a lesser one, on our conditional access businesses.
Irdeto Access' revenues declined by some 10% and an Ebitda loss
of $6 million was recorded, compared to a profit of $6 million
in the comparable period last year. Prospects are positive for
this business to return to profitability in future.
BOOK PUBLISHING
Our book publishing interests continued on their recovery path,
recording a healthy growth in revenues of 25%. The market for
public school textbooks remains unpredictable and it is
difficult to plan ahead. Our e-tailer, Kalahari.net, is growing
well and is now one of the leaders in the country. The new
distribution unit, On the Dot, has become the most efficient in
its industry.
PRIVATE EDUCATION
The merger between National Private Colleges and Educor last
year makes comparison with the previous year's figures
meaningless. Revenue for the period amounted to R246 million
and Ebitda to R25 million.
The industry has experienced turbulent conditions, in
particular from the regulatory process. Government's decision
to refuse deductions on Persal, the state payroll system, had a
particular impact on Lyceum College. This led to a decision to
discontinue this operation. The full cost of teaching out
existing students over the next few years, has been provided
for and reflected separately on the income statement as a
discontinued operation.
Looking ahead, we expect both revenues and Ebitda to reflect
positive growth in the second half of the year.
STRATE
Naspers shares are being converted to Share Transactions
Totally Electronic (STRATE), an electronic settlement platform
for share transactions on the JSE, from 12 November 2001 (the
dematerialisation date). Trading for electronic settlement
begins on 3 December 2001. Five business days later, on 10
December 2001, electronic settlement of Naspers trades will
take place for the first time.
ACCOUNTING POLICIES
These abridged consolidated interim financial statements were
prepared in accordance with AC127 Interim Financial Reporting.
The same accounting policies and methods of computation have
been followed in this interim report as in the annual financial
statements for the year ended 31 March 2001, except for the
adoption of AC107 (revised) on post balance sheet events, AC116
(revised) on employee benefits and the implementation of AC133
on financial instruments.
The group has further changed its policy regarding share
incentive schemes. Shares issued to incentive schemes are now
only included in equity to the extent that the economic
benefits have been received. This change in policy will bring
the group more in line with international standards.
Comparative figures have been restated to conform with changes
in accounting policies and presentation in the current period.
On behalf of the board:
Ton Vosloo Koos Bekker
Chairman Managing director
Directors
T Vosloo (chairman), JF Malherbe (vice-chairman), JP Bekker
(managing director), MJ de Vries, JJM van Zyl, E Botha, LM
Taunyane, LN Jonker, NP van Heerden, SJZ Pacak, BJ van der
Ross, GJ Gerwel.
Company secretary: GM Coetzee
SEGMENTAL REVIEW
Revenue Ebitda
Six months ended 30 Six months ended 30
Sept Sept
2001 2000 % 2001 2000 %
R'm R'm Change R'm R'm Change
Continued
Operations
Subscriber
platforms
- pay television 2 469 2 147 15 264 156 69
- internet 222 188 18 (220) (290) 24
Print media 1 053 973 8 181 170 6
Technology 519 353 47 (155) (66) (135)
Book publishing 217 174 25 (13) (14) 7
Private education 246 230 7 25 28 *
Corporate services - - - (5) (6) 17
4 726 4 065 16 77 (22)
Discontinued
Operations
Mindport Broadband 36 52 (161) (91)
Lyceum 35 45 (6) (2)
71 97 (167) (93)
* not comparable
ABRIDGED INCOME STATEMENT
Six Six Year
Months Months ended
ended ended 31
30 Sept 30 Sept March
2001 2000 2001
Unaudited Unaudited Audited
R'm R'm R'm
Revenue 4 726 4 065 8 798
Earnings before interest,
tax, depreciation and
amortisation (Ebitda) 77 (22) (80)
Depreciation (332) (225) (497)
Amortisation (983) (223) (948)
Finance costs (160) (55) (148)
Income from investments - - 1
Share of equity-accounted
results 39 (20) (44)
Exceptional items (57) 3 424 3 316
(Loss)/profit before
taxation (1 416) 2 879 1 600
Taxation (61) (32) (109)
Minority interest 1 030 (1 364) (305)
Net (loss)/income from
continuing operations (447) 1 483 1 186
Loss from discontinued
operations (73) (38) (186)
Loss arising on discontinued
operations (144) - -
Net (loss)/income
attributable to shareholders (664) 1 445 1 000
Headline loss for the period
(R'm) (267) (221) (522)
Headline loss from
continuing operations (R'm) (202) (183) (336)
Earnings per N ordinary
share (cents) (463) 1 033 714
Headline loss per N
ordinary share (cents) (186) (158) (373)
Headline loss per N ordinary
share from continuing
operations (cents) (141) (131) (240)
Fully diluted earnings per
N ordinary share (cents) (419) 943 657
Dividend per N ordinary
share (cents) 24 24 24
Number of shares issued ('000)
issued 147 979 139 911 139 927
weighted average for the
period 143 429 139 882 139 896
fully diluted weighted
average 157 345 153 838 153 838
ABRIDGED BALANCE SHEET
30 Sept 30 Sept 31 March
2001 2000 2001
Unaudited Unaudited Audited
R'm R'm R'm
ASSETS
Non-current assets 13 561 10 235 11 715
Property, plant and equipment 4 134 3 001 3 351
Goodwill and other intangibles 7 488 5 909 6 764
Investments and loans 1 444 838 1 135
Programme and film rights 388 411 361
Deferred taxation 107 76 104
Current assets 5 645 6 348 5 823
TOTAL ASSETS 19 206 16 583 17 538
EQUITY AND LIABILITIES
Share capital and reserves 2 575 3 017 2 815
Minority interest 7 578 7 151 7 564
Non-current liabilities 3 907 2 592 3 019
Transmission equipment leases 2 420 1 532 1 631
Loans - interest-bearing 900 500 865
- non-interest-bearing 389 350 337
350 865 337
Post-retirement medical
liability 128 114 122
Deferred taxation 70 96 64
Current liabilities 5 146 3 823 4 140
TOTAL EQUITY AND LIABILITIES 19 206 16 583 17 538
Net asset value per N ordinary
share (cents) 1 740 2 156 2 012
ABRIDGED STATEMENT OF CHANGES IN EQUITY
Six Six Year
Months Months ended
ended ended 31
30 Sept 30 Sept March
2001 2000 2001
Unaudited Unaudited Audited
R'm R'm R'm
Balance at beginning of
period
As previously stated 3 144 1 804 1 804
Effect of changes in
accounting policies (329) (371) (371)
As restated 2 815 1 433 1 433
Adjustment in respect of
adopting AC133 33 - -
Share capital and premium
issued 228 - 1
Foreign currency translation 186 118 351
Cash flow hedges 13 - -
Capital contributions by
minorities - - 9
Adjustments to prior year
goodwill - 55 55
Net income attributable
to shareholders (664) 1 445 1 000
Dividends (36) (34) (34)
Balance at end of period 2 575 3 017 2 815
ABRIDGED CASH FLOW STATEMENT
Six Six Year
Months Months ended
ended ended 31
30 Sept 30 Sept March
2001 2000 2001
Unaudited Unaudited Audited
R'm R'm R'm
Cash utilised in operations (492) (372) (765)
Dividends paid (36) (35) (35)
Cash flow from operating
activities (528) (407) (800)
Cash flow from investment
activities (926) (355) (660)
Cash flow from financing
activities 151 1 028 1 395
Net movement in cash and
cash equivalents (1 303) 266 (65)
ANALYSIS OF EXCEPTIONAL ITEMS
Six Six Year
Months Months ended
ended ended 31
30 Sept 30 Sept March
2001 2000 2001
Unaudited Unaudited Audited
R'm R'm R'm
(Loss)/profit on sale of
investments (37) 125 (210)
(Loss)/profit on dilution
of subsidiaries (17) 3 302 3 670
Asset impairments and
write-offs (3) (3) (119)
Warranties in respect of
debtors and business
disposals - - (25)
(57) 3 424 3 316
CALCULATION OF HEADLINE LOSS
Six Six Year
Months Months ended
ended ended 31
30 Sept 30 Sept March
2001 2000 2001
Unaudited Unaudited Audited
R'm R'm R'm
Net (loss)/ income
attributable to shareholders (664) 1 445 1 000
Adjusted for
- loss arising on 144
discontinued operations 22 - -
- exceptional items after
tax and minorities 231 (1 719) (1 719)
- amortisation of goodwill
after minorities
Headline loss (267) (221) (522)
Loss from discontinued
operations 65 38 186
Headline loss from continued
operations (202) (183) (336)
SUPPLEMENTARY INFORMATION
Six Six Year
Months Months ended
ended ended 31
30 Sept 30 Sept March
2001 2000 2001
Unaudited Unaudited Audited
R'm R'm R'm
Dividends received - - 1
Finance costs 160 55 148
- interest received (184) (125) (270)
- interest paid 303 158 336
- net foreign exchange
differences 41 22 82
Investments and loans 1 444 838 1 135
- listed investments 341 366 338
- unlisted investments 436 209 440
- marketable securities 667 263 357
Market value of listed
investments 1 013 1 426 1 000
Directors' valuation of
unlisted investments 436 209 440
Commitments 1 298 1 337 1 452
- capital expenditure 133 247 75
- programme and film rights 904 801 834
- network commitments 184 239 187
- decoder commitments 77 50 356
Operating lease commitments 756 1 143 767
