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Naspers Limited - Interim Report
Release Date: 04/12/2002 12:30:04 Code(s): NPN
NASPERS LIMITED - INTERIM REPORT
NASPERS LIMITED
(Registration Number: 1925/001431/06)
("Naspers")
ISIN ZAE000015889
JSE Share Code: NPN
INTERIM REPORT
The results of the Naspers Group for the six months ended 30 September 2002 are
stated as follows:
HIGHLIGHTS
*Internationally the TMT sector remains turbulent.
*Revenue increased by 26%.
*An operating profit before amortisation of R78 million was realised compared to
a loss of R111 million in the prior period.
*Headline loss per N ordinary share from continuing operations reduced by 48% to
65c per share.
*Cash of R407 million generated from continuing operations.
RECENT DEVELOPMENTS
Group reorganisation
On 26 September 2002, Naspers proposed a reorganisation, pursuant to which the
minority interests in MIH Holdings Limited (MIHH) and MIH Limited (MIHL) will be
swopped for shares in Naspers. The board believes this reorganisation will
significantly simplify the corporate structure and operations of the Group.
Subsequent to this announcement, the respective shareholders approved the
reorganisation. As the effective date of the reorganisation is scheduled to be
later in December 2002, this interim report does not reflect its accounting
impact.
Disposal of OpenTV
On 27 August 2002, MIHL announced that it had closed an agreement relating to
the disposal of its interest in OpenTV for a total consideration of US$185
million, being US$46 million received in cash and the balance settled by the
receipt of 15,38 million shares of Liberty Media Corporation. This transaction
has been accounted for in this period as a discontinuing operation.
Greece pay television
On 26 July 2002, MIHL announced that it had entered into an agreement with
Fidelity Management SA, in terms of which the latter would acquire a 22%
interest in NetMed NV. The completion of this transaction was subject to the
fulfillment of certain conditions, including the unconditional approval of the
Greek Competition Committee. These conditions were not met in the appropriate
time and consequently, the agreement has ceased to have an effect.
FINANCIAL OVERVIEW
The harsh global media environment, which has been extensively reported on,
continued into the first six months of the current period and media stocks
remained under pressure, although it seems that this climate may now be
improving.
Despite these difficult conditions, the Group made satisfactory progress during
the period. Revenues grew by 26%, driven largely by currency factors and steady
growth in subscriber revenue. Cost control resulted in improved margins.
Operating profits before amortisation and impairment charges amounted to R78
million compared to a reported loss last year of R111 million.
The Group balance sheet reflects an asset of R148 million relating to
prepayments to certain Greek football teams to broadcast their matches in the
future. The board believes it is prudent to fully provide for these pre-paid
programming rights as the future economic benefits of these rights have become
uncertain, following the recent turmoil in Greek football.
Finance costs at R168 million were lower than last year, but were favourably
impacted to the extent of R74 million due to the strengthening Rand.
Exceptional items total R397 million. A charge of R298 million was accounted for
to adjust the value of the Liberty Media shares received as consideration for
the sale of OpenTV to its market value as at 30 September 2002. Subsequently,
the market value of the Liberty Media shares improved to such an extent that
this loss has been recouped. An additional amount of R95 million was accounted
for being the Group`s share of the impairment by SuperSport of its interest in
MIHL to market value.
A book profit of R746 million arose on the disposal of OpenTV.
The headline loss per N ordinary share from continuing operations amounted to 65
cents, compared to 125 cents last year.
Cash generated from continuing operations amounted to R407 million, compared to
a cash outflow of R206 million for the equivalent period last year. On 30
September 2002, the Group had net consolidated cash resources of R998 million
and interest-bearing liabilities of R1,6 billion, excluding satellite and other
transmission equipment leases.
SUBSCRIPTION PLATFORMS
Pay television
The pay television platforms recorded revenue growth of 27%, due primarily to
currency fluctuations and an increase in digital subscribers. This resulted in
improved operating profits before amortisation of R141 million.
Africa
On the African continent, the subscriber base was static at 1,28 million
households. Subscribers continue to migrate from the analogue to the digital
platform, which grew by 67 000 to 860 000 subscribers in the six-month period.
Digital subscribers now account for 66% of the total. This continued migration
to the higher revenue digital service, together with the effect of cost
reductions, resulted in improved margins.
Regulatory activity across the continent has increased significantly, with
several countries in Africa revising their regulatory frameworks for the
broadcasting industry. Regulatory processes will demand more time of senior
executives in the future.
The Group has physical operations and joint ventures in nine countries on the
continent and operates in 40 other countries through agents. About 409 000
analogue and 640 000 digital subscribers live in South Africa, with the rest
situated as follows:
Number of Subscribers
Botswana 19 000
Ghana 6 000
Kenya 15 000
Namibia 30 000
Nigeria 59 000
Tanzania 8 000
Uganda 6 000
Zambia 13 000
Other 83 000
Mediterranean
With the customary summer churn, the total number of pay television households
in this region declined by 27 000 to 290 000 with the biggest decline in
analogue subscribers. The decline was exacerbated by the activities of a
competing platform in Greece which has recently gone into liquidation. Our
digital television service, NOVA, however maintained its leading position and
ended the period with 113 000 subscribers.
The demise of the competitor, Alpha Digital, will hopefully assist in curbing
the unrealistic escalation in the costs of sports rights, but much work is still
required to reduce the exorbitant cost structure of this market. The competitive
struggle has led to Ebitda losses of R147 million for the past six-month period
and more are expected until breakeven.
The Cyprus operation currently has 52 000 subscribers.
Thailand
UBC in Thailand ended the period with 420 000 subscribers, 65% of which are on
the digital platform. The business achieved operating profit before amortisation
of R80 million.
INTERNET
The internet remains the Group`s fastest growth segment, with revenues
increasing by 90%. Both Ebitda and operating losses were substantially lowered
from the equivalent period last year.
M-Web Africa maintained its market position, although the dial-up market is
relatively stagnant. It ended the period with 249 000 dial-up subscribers and 2
900 hosted clients. The focus remains sharply on cutting costs, reducing losses
and driving the business hard to profitability. M-Web South Africa reached
Ebitda breakeven in the current period.
In Asia, the Group reduced the cash burn across its internet businesses. Some
operations have been curtailed to match revenues to costs. In Thailand, the
group has 329 000 subscribers accessing its service, the majority on a pre-paid
basis.
The instant-messaging service in China, QQ, continues to grow its mobile
subscriber base. Payments for unique identification numbers and premium services
were introduced. The Tencent portal and SportsCN have also experienced growing
audiences.
TECHNOLOGY
Despite a global technology environment which continues to place pressure on
revenues and margins, this segment reported positive Ebitda of R3 million. It is
expected that sales will slow down in the second half of the year, negatively
impacting profitability.
Irdeto Access, a wholly-owned subsidiary of MIHL, is currently the conditional
access vendor for some 85 customers in 60 countries worldwide. Some seven
million Irdeto Access smartcards have been issued. In the People`s Republic of
China, Irdeto Access recently acquired eight new clients, bringing its total
there to 17.
PRINT MEDIA
The print media business performed solidly and grew revenues by 7%, largely from
increased advertising revenue from its newspapers. Growth in operating profits
before amortisation was limited to 4%, the consequence of start-up costs
incurred on Daily Sun and providing for the once-off effects from the
liquidation of CNA of R4 million.
The newspaper division was able to grow advertising revenues, whilst circulation
remained stable. The new newspaper, Daily Sun, was launched in July and has now
reached a circulation level exceeding 60 000.
In the magazine division, a few titles experienced circulation pressure, but the
sector survived the turmoil evident abroad better than might have been expected.
Printing operations at Paarl Media also continued to perform well.
During the period under review, a last, R60 million newspaper press was
installed, bringing to conclusion a five-year renewal programme which saw the
print media business invest some R1,5 billion upgrading its printing
infrastructure, increasing capacity and expanding the range of titles.
BOOK PUBLISHING
In general, the book publishing business experienced difficult trading
conditions, especially as a result of the liquidation of CNA for which a
provision of R5 million was made. It is also quite seasonal. Whilst revenues
grew by 7%, operating losses amounted to R26 million. The new CEO, Hein Brand,
is implementing measures to improve margins.
PRIVATE EDUCATION
Educor experienced good revenue growth of 15% from improved student enrolments.
Margins were higher and operating profits before amortisation grew by 27%.
CORPORATE GOVERNANCE
Naspers is committed to the principles of openness, equity, integrity and
accountability, as advocated in the King Report on Corporate Governance for
South Africa 2002 (King II). The directors recognise the need to conduct the
business of the enterprise with integrity and in accordance with Generally
Accepted Corporate Practices. Accordingly, the board has reviewed King II, and
requisite adjustments are in the process of being implemented.
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 2002. The interim
financial statements for the period ended 30 September 2002 have been reviewed
by the company`s auditors, PricewaterhouseCoopers, whose report is available for
inspection at Naspers` registered office.
On behalf of the board:
Ton Vosloo Koos Bekker
Chairman Managing director
Directors
T Vosloo (chairman), JF Malherbe (vice-chairman), JP Bekker (managing director),
JJM van Zyl, E Botha, LM Taunyane, LN Jonker, NP van Heerden, SJZ Pacak, BJ van
der Ross, GJ Gerwel, HSS Willemse.
Company secretary: GM Coetzee
SEGMENTAL REVIEW
Earnings before
interest, tax,
Revenue depreciation and
Six months ended 30 amortisation (Ebitda)
Sept Six months ended 30
Sept
2002 2001 % 2002 2001 %
R`m R`m Change R`m R`m Change
Continuing operations
Subscriber platforms
- pay television 3 2 471 27 333 250 33
149
- internet 421 222 90 (68) (220) 69
Print media 1 1 053 7 186 181 3
124
Technology 235 126 87 3 (26) -
Book publishing 233 217 7 (19) (13) (46)
Private education 283 246 15 28 25 12
Corporate services - - - (8) (5) (60)
5 4 335 26 455 192 137
445
Operating profit
before amortisation
and impairment Operating loss
Six months ended 30 Six months ended 30
Sept Sept
2002 2001 % 2002 2001 %
R`m R`m Chang R`m R`m Chan
e ge
Continuing operations
Subscriber platforms
- pay television 141 91 55 (24)* 82 -
- internet (178) (291) 39 (304) (474) 36
Print media 135 130 4 132 129 2
Technology (6) (33) 82 (23) (34) 32
Book publishing (25) (18) (39) (26) (18) (44)
Private education 19 15 27 7 7 -
Corporate services (8) (5) (60) (8) (5) (60)
78 (111) (246) (313) 21
* Includes a once-off charge of R148 million for the impairment of
programming rights.
NASPERS LIMITED
ABRIDGED INCOME STATEMENT
Six months Six months Year ended
ended ended 31 Mar`02
30 Sept `02 30 Sept `01 Audited
Reviewed Unaudited
R`m R`m R`m
Revenue 5 445 4 335 9 837
Earnings before interest,
tax, depreciation and 455 192 709
amortisation (Ebitda)
Depreciation (377) (303) (636)
Operating profit before
amortisation and impairment 78 (111) 73
Amortisation (176) (202) (374)
Impairment of programming (148) - -
rights
Operating loss (246) (313) (301)
Finance costs (168) (203) (412)
Income from investments - - 4
Share of equity-accounted 83 39 158
results
Exceptional items (397) (56) 5
Loss before taxation (728) (533) (546)
Taxation (92) (53) (148)
Minority interest 370 291 328
Net loss from continuing (450) (295) (366)
operations
Loss from discontinuing (154) (244) (605)
operations
Profit/(loss) arising on 746 (144) (952)
discontinuance of operations
Net income/(loss) 142 (683) (1 923)
attributable to shareholders
Headline loss for the period (143) (286) (457)
(R`m)
Headline loss from (96) (180) (236)
continuing operations (R`m)
Earnings per N ordinary 96 (476) (1 320)
share (cents)
Headline loss per N ordinary (96) (199) (313)
share (cents)
Headline loss per N ordinary
share from continuing (65) (125) (162)
operations (cents)
Fully diluted earnings per N 96 (476) (1 320)
ordinary share (cents)
Dividend per N ordinary 25 24 24
share (cents) - paid Sept
`02
Dividend per A ordinary 5 - -
share (cents) - paid Sept
`02
Net number of shares issued
(`000) 148 084 147 979 148 084
at period-end 148 084 143 429 145 692
weighted average for the 161 895 157 345 159 503
period
fully diluted weighted
average
NASPERS LIMITED
ABRIDGED BALANCE SHEET
30 Sept 30 Sept 31 March
2002 2001 2002
Reviewed Unaudited Audited
R`m R`m R`m
ASSETS
Non-current assets 5 583 13 514 10 108
Property, plant and 3 911 4 133 4 502
equipment
Goodwill and other 785 7 488 3 630
intangibles*
Investments and loans 442 1 398 1 408
Programme and film rights 380 388 509
Deferred taxation 65 107 59
Current assets 6 060 5 491 6 538
TOTAL ASSETS 11 643 19 005 16 646
EQUITY AND LIABILITIES
Share capital and reserves 763 2 264 1 386
Minority interest 706 7 478 4 364
Non-current liabilities 4 895 4 431 5 118
Transmission equipment 2 754 2 420 2 861
leases
Welkom debenture scheme 293 252 271
Loans - interest- 1 283 1 172 1 459
bearing 369 389 334
- non-interest-
bearing
Post-retirement medical 126 128 126
liability
Deferred taxation 70 70 67
Current liabilities 5 279 4 832 5 778
TOTAL EQUITY AND 11 643 19 005 16 646
LIABILITIES
515
Net asset value per N 1 530 936
ordinary share (cents)
* Goodwill decreased with the
sale of OpenTV.
NASPERS LIMITED
ABRIDGED STATEMENT OF CHANGES IN EQUITY
Six months Six months Year
ended ended Ended
30 Sept 30 Sept 31 March
2002 2001 2002
Reviewed Unaudited Audited
R`m R`m R`m
Balance at beginning of period 1 386 2 553 2 553
Movement in treasury shares - 1 3
Share capital and premium - 227 227
issued
Foreign currency translation (728) 202 556
Adjustments to prior year - - 8
goodwill
Net income/(loss) attributable 142 (683) (1 923)
to shareholders
Dividends (37) (36) (38)
Balance at end of period 763 2 264 1 386
NASPERS LIMITED
ABRIDGED CASH FLOW STATEMENT
Six months Six months
ended ended Year
30 Sept 30 Sept ended
2002 2001 31 March
Reviewed Unaudited 2002
R`m R`m Audited
R`m
Cash generated from/(utilized in)
continuing operations 407 (206) 228
Cash utilised in discontinuing (277) (286) (574)
operations
Dividends paid (37) (36) (38)
Cash flow from operating 93 (528) (384)
activities
Cash flow from investment (496) (926) (1 088)
activities
Cash flow from financing (348) 422 819
activities
Net movement in cash and cash (751) (1 032) (653)
equivalents
NASPERS LIMITED
ANALYSIS OF EXCEPTIONAL ITEMS
Six months Six months Year ended
ended ended 31 March
30 Sept 30 Sept 2002
2002 2001 Audited
Reviewed Unaudited R`m
R`m R`m
Loss on sale and impairment (25)
of investments (393) (37)
(Loss)/profit on dilution - (17) 53
of interest in subsidiaries
Asset impairments and write- (4) (2) (23)
offs
(397) (56) 5
RECONCILIATION OF HEADLINE LOSS
Six months Six months Year ended
ended ended 31 March
30 Sept 30 Sept 2002
2002 2001 Audited
Reviewed Unaudited R`m
R`m R`m
Net income/(loss) attributable to 142 (683) (1 923)
shareholders
Adjusted for:
- impairment of programming
rights after 57 - -
minorities
- (profit)/loss arising on (746) 144 952
discontinuance of operations 232 23 91
- exceptional items after tax 172 230 423
and minorities
- amortisation of goodwill
after minorities
Headline loss (143) (286) (457)
Loss from discontinuing 47 106 221
operations
Headline loss from continuing (96) (180) (236)
operations
NASPERS LIMITED
SUPPLEMENTARY INFORMATION
Six Six months Year ended
months ended
ended
30 Sept 30 Sept 31 March
2002 2001 2002
Reviewed Unaudited Audited
R`m R`m R`m
Dividends received - - 4
Finance costs 168 203 412
- interest received (123) (184) (86)
- interest paid 365 321 523
- net foreign exchange (74) 66 (25)
differences
Investments and loans 442 1 398 1 408
- listed investments 289 295 329
- unlisted investments 153 436 299
- marketable securities - 667 780
Market value of listed 1 396 1 013 1 573
investments
Directors` valuation of 299
unlisted investments 153 436
Commitments 1 320 1 300 1 202
- capital expenditure 115 135 89
- programme and film 952 904 881
rights
- network commitments 253 184 202
- decoder commitments - 77 30
Operating lease commitments 685 1 238 1 339
IMPORTANT INFORMATION
This interim report contains forward-looking statements. While these forward-
looking statements represent our judgements and future expectations, a number of
risks, uncertainties and other important factors could cause actual developments
and results to differ materially from our expectations. These factors include,
but are not limited to, the key factors that we have indicated that could
adversely affect our businesses and financial performance contained in our past
and future filings and reports, including those filed with or furnished to the
U.S. Securities and Exchange Commission (the "SEC"). We are not under any
obligation to (and expressly disclaim any such obligation to) update or alter
our forward-looking statements whether as a result of new information, future
events or otherwise. Investors are cautioned not to place undue reliance on any
forward-looking statements contained herein.
Investors will be able to obtain any documents filed with the SEC from the SEC`s
Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549.
Telephone: (202) 942-8090, Fax: (202) 628-9001. E-mail: publicinfo@sec.gov.
Documents filed with or furnished to the SEC by Naspers (other than certain
exhibits) are also available free of charge from The Company Secretary, Naspers
Limited, 40 Heerengracht, Cape Town, 8001, South Africa, Telephone No: +27 21
406 2121.
Date: 04/12/2002 12:30:00 PM Produced by the JSE SENS Department
