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FOR THE SIX MONTHS ENDING 30 SEPTEMBER 1998
INCOME STATEMENT
SIX MONTHS SIX MONTHS YEAR YEAR
ENDED ENDED ENDED ENDED
30/09/98 30/09/97 31/03/98 31/03/98
RESTATED RESTATED REPORTED
R'M R'M R'M R'M
REVENUES 2 793 1 980 4 508 1 931
NET OPERATING INCOME (60,5) 43,7 16,9 182,9
EXCEPTIONAL ITEMS 140,0 - 3,6 3,6
FINANCING COSTS 35,8 12,5 27,5 26,8
43,7 31,2 (7,0) 159,7
INVESTMENT INCOME 7,7 22,9 51,7 29,4
INCOME BEFORE TAXATION 51,4 54,1 44,7 189,1
TAXATION 28,7 47,0 99,6 72,1
NET INCOME FOR THE PERIOD 22,7 7,1 (54,9) 117,0
OUTSIDE SHAREHOLDERS'
INTEREST (37,3) 35,8 117,8 1,3
SHARE OF ASSOCIATED
COMPANIES' RESULTS 23,2 11,7 33,3 (22,1)
NET INCOME ATTRIBUTABLE
TO NASPERS 8,6 54,6 96,2 96,2
HEADLINE EARNINGS FOR
THE PERIOD 6,4 54,6 92,6 92,6
EARNINGS PER "N"
SHARE (CENT) 8 49 86 86
HEADLINE EARNINGS PER "N"
SHARE (CENT) 6 49 83 83
WEIGHTED "N" SHARES
ISSUED ('000) 112 281 111 814 111 814 111 814
ABRIDGED GROUP BALANCE SHEET
SIX MONTHS SIX MONTHS YEAR YEAR
ENDED ENDED ENDED ENDED
30/09/98 30/09/97 31/03/98 31/03/98
RESTATED RESTATED REPORTED
R'M R'M R'M R'M
SOURCE OF CAPITAL
TOTAL SHAREHOLDERS'
EQUITY 1 564 1 855 1 719 1 015
GENERAL PROVISION 83 83 83 83
DEFERRED TAX 40 33 51 35
NET INTEREST-BEARING DEBT 42 373 (730) 237
PROGRAMMING LIABILITIES 310 111 157 -
2 039 2 455 1 280 1 370
EMPLOYMENT OF CAPITAL
FIXED ASSETS 1 090 721 858 438
INVESTMENTS AND LOANS 920 1 876 916 581
NET CURRENT ASSETS 29 (142) (494) 351
CURRENT ASSETS 2 329 1 265 1 447 683
CURRENT LIABILITIES 2 300 1 407 1 941 332
2 039 2 455 1 280 1 370
SUPPLEMENTARY INFORMATION
SIX MONTHS SIX MONTHS YEAR
ENDED ENDED ENDED
30/09/98 30/09/97 31/03/98
RESTATED REPORTED
R'M R'M R'M
INCLUDED IN OPERATING LOSS
DIVIDEND RECEIVED 5 23 27
DEPRECIATION 106 81 71
FINANCE COSTS: 36 12 27
- INTEREST RECEIVED 56 40 45
- INTEREST PAID 92 52 72
INVESTMENTS AND LOANS 920 1 876 581
- LISTED INVESTMENTS 392 1 566 376
- UNLISTED INVESTMENTS 309 145 205
- LOANS TO EMPLOYEE SHARE
INCENTIVE SCHEMES 219 165 -
MARKET VALUE OF LISTED INVESTMENTS 1 121 2 034 1 619
DIRECTORS' VALUATION OF
UNLISTED INVESTMENTS 487 590 1 871
CAPITAL EXPENDITURE FOR THE PERIOD 154 102 101
COMMITMENTS AND CAPITAL EXPENDITURE 2 410 1 791 217
CAPITAL EXPENDITURE 417 205 196
FOREIGN EXCHANGE TRANSACTIONS 55 46 14
CONTINGENT LIABILITIES 2 - 7
TRANSPONDER LEASE COMMITMENTS 1 691 1 337 -
PROGRAMME RIGHTS AND COMMITMENTS 114 96 -
DECODER COMMITMENTS 131 107 -
OPERATING LEASE COMMITMENTS 386 213 58
NET ASSET VALUE PER "N" SHARE (CENTS) 917 985 905
COMMENTS
DUE TO EXTENSIVE CHANGES IN ITS BUSINESS ACTIVITIES, NASPERS HAS REPACKAGED ITS
FINANCIAL STATEMENTS, WHICH NOW PROVIDE MORE INFORMATION ON THE DIFFERENT
SECTORS. THE STRATEGY EMPHASISES INVESTMENTS IN ELECTRONIC INFORMATION
DISSEMINATION, WHICH IS SUPPORTED BY THE MORE TRADITIONAL PRINT MEDIA AND NEW
INFORMATION RESOURCES.
AS A RESULT OF THIS NEW APPROACH THE STATEMENTS CANNOT BE ASSESSED AS USUAL.
DURING THE PAST SIX MONTHS A NUMBER OF SIGNIFICANT DEVELOPMENTS OCCURRED AT
NASPERS:
* AT JOHNNIC'S REQUEST, AN AGREEMENT WAS CONCLUDED IN TERMS OF WHICH JOHNNIC
WOULD ASSUME A LEADING ROLE IN THE DEVELOPMENT OF M-CELL, WITH NASPERS TAKING
THE LEAD IN DEVELOPMENTS AT MIH AND M-WEB. NASPERS WILL ACCORDINGLY FULLY
CONSOLIDATE THE RESULTS OF MIH AND M-WEB, AND CONSEQUENTLY THE RESULTS FOR THE
SIX MONTHS ENDED SEPTEMBER 1998 ARE NOT COMPARABLE WITH THOSE PREVIOUSLY
REPORTED. TO ASSIST IN A PROPER UNDERSTANDING OF THE GROUP'S ACTIVITIES,
PREVIOUSLY REPORTED RESULTS HAVE BEEN RESTATED TO REFLECT SIMILAR ACCOUNTING
TREATMENT.
* A FURTHER R195 MILLION WAS INVESTED IN M-CELL.
* A MAJORITY INTEREST WAS ACQUIRED IN THE BUSINESS ANALYST COMPANY BFA-NET,
MCGREGOR'S ONLINE FINANCIAL SERVICES WAS PURCHASED AND THE TWO BUSINESSES
MERGED INTO A NEW ELECTRONIC INFORMATION PROVIDER TO THE BUSINESS SECTOR.
* PERSKOR'S INTEREST IN M-NET/SUPERSPORT WAS ACQUIRED FOR R105 MILLION.
* SEVERAL OF NASPERS' OWN INTERNET INITIATIVES WERE LAUNCHED, INCLUDING 24.COM,
KALAHARI.NET AND AGRI24.COM.
* MIH INCREASED ITS STAKE IN UBC, THE THAILAND-BASED PAY TELEVISION OPERATION,
TO 26%. MIH HAS PROPORTIONATELY CONSOLIDATED THIS INVESTMENT FOR THE FIRST TIME
* BUILDING OPERATIONS FOR A NEW PRINTING PLANT AND OFFICE BUILDING FOR THE
NORTHERN NEWSPAPERS IN JOHANNESBURG IS IN PROGRESS. NEW PRINTING PRESSES HAVE
ALSO BEEN ORDERED FOR DIE BURGER AND DIE BURGER (EASTERN CAPE). THE TOTAL COST
OF THE PROJECT AMOUNTS TO R325 MILLION.
* ONE OF THE LARGEST EMPOWERMENT INITIATIVES TO DATE IN SOUTH AFRICA, THE
WELKOM TRUST SHARE SCHEME, WAS CONCLUDED. SOME 18 000 HISTORICALLY
DISADVANTAGED CUSTOMERS SUBSCRIBED TO THE SCHEME AND WILL BECOME NASPERS
SHAREHOLDERS, TREBLING THE COMPANY'S NUMBER OF SHAREHOLDERS.
OPERATING PERFORMANCE
THE UNAUDITED RESULTS OF THE NASPERS GROUP FOR THE SIX MONTHS ENDED 30
SEPTEMBER 1998 ARE STATED BELOW:
REVENUES FOR THE FIRST SIX MONTHS AMOUNT TO R2,79 BILLION, REFLECTING, ON A
COMPARABLE BASIS, AN INCREASE OF 41%. THE MAIN SOURCES OF REVENUE FOR NASPERS
ARE:
SEPT. 1998 SEPT. 1997
R'M R'M GROWTH
PAY TELEVISION 1 812 1 049 73%
MAGAZINES 416 371 12%
NEWSPAPERS 363 325 12%
BOOK PUBLISHING 160 230 -30%
INTERNET 42 5 +100%
2 793 1 980 41%
MIH
MIH REPORTED REVENUE GROWTH OF 73%, ARISING LARGELY FROM THE INCREASE OF
SUBSCRIBERS WHICH NOW TOTAL 1,9 MILLION HOUSEHOLDS - 1,3 MILLION ON THE AFRICAN
CONTINENT AND THE MIDDLE EAST, SOME 300 000 IN GREECE/CYPRUS AND ABOUT 300 000
IN THAILAND.
MIH REPORTED AN OPERATING LOSS OF R25 MILLION, WHICH INCLUDED OPERATING LOSSES
OF R43 MILLION FROM UBC IN THAILAND. M-NET/SUPERSPORT REFLECTED ATTRIBUTABLE
EARNINGS OF R41 MILLION, OF WHICH NASPERS' EQUITY ACCOUNTED SHARE WAS R11
MILLION.
M-CELL
M-CELL, THE LARGEST SHAREHOLDER IN THE CELLPHONE COMPANY MTN, REPORTED SUPERB
REVENUE GROWTH OF 68% AS THE MTN ACTIVE SUBSCRIBER BASE INCREASED BEYOND 850
000. ATTRIBUTABLE EARNINGS JUMPED BY 59% TO R38 MILLION. THE NASPERS EQUITY
ACCOUNTED SHARE WAS R10 MILLION.
MAGAZINES
THE MAGAZINE DIVISION MAINTAINED ITS POSITION AS LEADING PUBLISHER IN ITS FIELD
IN AFRICA AND INCREASED REVENUES BY 12%. THE MAJOR NEW PRINTING PLANT
ESTABLISHED LAST YEAR IS NOW REACHING MAXIMUM EFFICIENCY.
NEWSPAPERS
THE NEWSPAPER DIVISION REFLECTED REVENUE GROWTH OF 12%. THE DAILY TITLES TURNED
IN A SOLID PERFORMANCE, GIVEN THE WEAKENING ECONOMY, BUT THE SUNDAY TITLES
SUFFERED. RENEWAL OF PRINTING INFRASTRUCTURE AND CAPACITY IN JOHANNESBURG, CAPE
TOWN AND PORT ELIZABETH GAINED MOMENTUM AND CAPITAL EXPENDITURE IN THIS REGARD
IS EXPECTED TO AMOUNT TO R325 MILLION OVER THE NEXT TWO YEARS.
BOOK PUBLISHING
THE BOOK PUBLISHING DIVISION REMAINS SEVERELY HIT BY THE EDUCATION CRISIS IN
SOUTH AFRICA. THE YEAR-ON-YEAR COMPARISON WAS AGGRAVATED BY THE CIRCUMSTANCE
THAT, WHILST THE PREVIOUS FINANCIAL YEAR AS A WHOLE WAS ALSO NEGATIVELY
AFFECTED, THE FIRST SIX MONTHS OF THE PREVIOUS YEAR HAD REFLECTED SOME INCOME
AND THE COLLAPSE OF BOOK ORDERING BY EDUCATION DEPARTMENTS OCCURRED LARGELY IN
THE SECOND HALF. AS A CONSEQUENCE, THE NET REVENUE IN BOOK PUBLISHING DECLINED
BY 30% COMPARED TO THE FIRST HALF OF LAST YEAR, AND LOSSES OF R27 MILLION WERE
INCURRED.
THIS SETBACK HAS SEVERE NEGATIVE IMPLICATIONS FOR WRITERS AND WORKERS
PERSONALLY AND GREATLY DAMAGES THE CAUSE OF EDUCATION IN SOUTH AFRICA.
M-WEB
OVER THE PAST SIX MONTHS, THE M-WEB SUBSCRIBER BASE GREW TO 58 000 HOMES. THE
NUMBER OF PAGE VIEWS TO THE M-WEB WEB SITE INCREASED FROM 4,8 MILLION IN MARCH
1998 TO 10 MILLION IN SEPTEMBER 1998. TO ACCOMMODATE THIS GROWTH, M-WEB HAS
INVESTED SIGNIFICANTLY IN ADDITIONAL INFRASTRUCTURE, WHICH WILL CONTINUE UNTIL
CRITICAL MASS IS ACHIEVED.
DEVELOPMENT LOSSES FOR THE PERIOD AMOUNTED TO R93 MILLION AND, SINCE THIS IS
THE FIRST FULL YEAR OF OPERATION, ARE NOT COMPARABLE WITH THE SAME PERIOD LAST
YEAR.
SINCE THE END OF THE REPORTING PERIOD, AN AGREEMENT WITH DATATEC, COMBINED WITH
ORGANIC GROWTH, HAS LIFTED THE SUBSCRIBER BASE TO 120 000 HOMES AND SMALLER
BUSINESSES IN SOUTH AFRICA.
FINANCIAL RESULTS
DEVELOPMENT COSTS IN MIH AND M-WEB, COUPLED TO THE LOCAL EDUCATION CRISIS,
RESULTED IN A NET OPERATING DEFICIT OF R60 MILLION. NET EXCEPTIONAL PROFITS OF
R140 MILLION WERE REPORTED. THESE AROSE MAINLY IN MIH FROM WARRANTY PROVISIONS
NO LONGER REQUIRED, PROVISIONS FOR RATIONALISATION OF MANUFACTURING OPERATIONS
OF A UNIT RECENTLY PURCHASED BY MIH, AND A GAIN ARISING ON THE SALE OF
M-NET/SUPERSPORT SHARES AS PART OF THE PHUTHUMA FUTHI SCHEME. IN ADDITION, AN
AMOUNT OF R40 MILLION WAS PROVIDED IN NASPERS ITSELF FOR THE DISPOSAL,
RATIONALISATION AND CLOSURE COSTS OF SOME OF THE GROUP'S NON-CORE ASSETS. NET
INCOME ATTRIBUTABLE TO NASPERS SHAREHOLDERS AMOUNTED TO R8,6 MILLION.
STRATEGY AND PROSPECTS
NASPERS HAS TRADITIONALLY BEEN VIEWED AS A PRINT MEDIA AND BOOK PUBLISHING
CONCERN WITH SOME ELECTRONIC INTERESTS. THE COMPANY HAS NOW, HOWEVER, BECOME AN
INTEGRATED, MULTINATIONAL MEDIA CONCERN WITH A STRONG DEVELOPMENT FOCUS ON
ELECTRONIC MEDIA, SOFTWARE SYSTEMS, TECHNOLOGY AND THE INTERNET, WHILE
CONTINUING ITS INTERESTS IN THE MORE ESTABLISHED BUSINESSES OF NEWSPAPER,
MAGAZINE AND BOOK PUBLISHING.
MIH IS COMMITTED TO A STRATEGY OF DEVELOPING EXISTING MARKETS BY GROWING ITS
DIGITAL AND ANALOGUE BUSINESSES, EXPLORING PAY TELEVISION AS WELL AS INTERNET
OPPORTUNITIES IN ASIA AND EXPANDING ITS TECHNOLOGICAL INTERESTS. SINCE
ESTABLISHING A PRESENCE IN HONG KONG, BANGKOK AND BEIJING, MIH HAS BEEN
PURSUING VARIOUS TECHNOLOGICAL, PAY TELEVISION AND INTERNET INVESTMENT
OPPORTUNITIES IN ASIA AND IS CONSIDERING LISTING AN OFFSHORE SUBSIDIARY TO
ENSURE THAT LIQUID CAPITAL RESOURCES ARE AVAILABLE TO FUND SUCH OPPORTUNITIES.
M-WEB AND 24.COM HAVE SECURED LEADING POSITIONS ON THE INTERNET IN SOUTH AFRICA
AND INTEND GROWING RAPIDLY. WORLDWIDE THE INTERNET CONTINUES TO EXPAND AT A
BRISK PACE. APART FROM GENERAL SERVICES, IT HAS EVOLVED TO ADDRESS THE NEEDS OF
SPECIFIC INTEREST COMMUNITIES, AND TO IMPROVE THE ECONOMIC EFFICIENCY OF
WORKERS AND THE QUALITY OF LIFE OF CONSUMERS. GROWTH IN SOUTH AFRICA IS
EXPECTED TO FOLLOW SIMILAR TRENDS AND THE GROUP INTENDS TO INVEST HEAVILY IN
THIS FIELD. NASPERS WILL SUPPLEMENT ITS OWN INTERNET CONTENT SERVICES,
NEWS24.COM, KALAHARI.NET AND AGRI24.COM WITH FURTHER INITIATIVES.
THE NEWSPAPER AND MAGAZINE DIVISIONS HAVE MAINTAINED THEIR MARKET POSITIONS,
ALTHOUGH THE WEAKENING SOUTH AFRICAN ECONOMY MAY MODERATE GROWTH IN THE
INDUSTRY DURING THE YEAR AHEAD.
THE BOOK PUBLISHING DIVISION HAS BORNE THE BRUNT OF THE EDUCATION CRISIS, WITH
LITTLE CHANCE OF RECOVERY IN SIGHT. STEPS WILL BE TAKEN TO ENSURE THAT COSTS
ARE LIMITED TO THE MINIMUM.
M-CELL IS PURSUING FURTHER INVESTMENT OPPORTUNITIES BOTH IN SOUTH AFRICA AND
ELSEWHERE ON THE AFRICAN CONTINENT. THE RECENTLY LAUNCHED TELECOMMUNICATION
SERVICES IN UGANDA, RWANDA AND SWAZILAND ARE PROGRESSING ON SCHEDULE. ORGANIC
GROWTH IN SOUTH AFRICA SHOULD REMAIN PARTICULARLY ROBUST.
YEAR 2000
THE NASPERS GROUP IS CONDUCTING A COMPREHENSIVE REVIEW OF ITS OPERATIONS TO
ENSURE THAT ITS PRODUCTS, SERVICES AND BUSINESS CRITICAL SYSTEMS WILL ACHIEVE
ACCEPTABLE LEVELS OF YEAR 2000 COMPLIANCE BY 30 JUNE 1999. BASED ON ITS
ASSESSMENT TO DATE AND ITS PLANNED MODIFICATIONS, NASPERS DOES NOT EXPECT TO
ENCOUNTER MATERIAL OPERATIONAL DIFFICULTIES ARISING FROM THE ADVENT OF THE YEAR
2000. TO ENSURE THIS, NASPERS WILL CONTINUE TO INCUR GENERAL STAFF COSTS,
CONSULTANCY FEES AND OTHER EXPENSES, WHICH WILL BE ABSORBED IN THE NORMAL
OPERATING BUDGET.
ON BEHALF OF THE BOARD:
T VOSLOO JP BEKKER
CHAIRMAN MANAGING DIRECTOR
7 DECEMBER 1998 CAPE TOWN
DIRECTORS
T VOSLOO (CHAIRMAN), JP BEKKER (MANAGING DIRECTOR), JF MALHERBE
(VICE-CHAIRMAN), MJ DE VRIES, JP DE LANGE, SW VAN DER MERWE, JJM VAN ZYL, E
BOTHA, LJ BOTHA, LM TAUNYANE, LN JONKER, NP VAN HEERDEN, SJZ PACAK.
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