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NASPERS LIMITED
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 1999
THE UNAUDITED RESULTS OF THE NASPERS GROUP FOR THE SIX MONTHS ENDED 30
SEPTEMBER 1999, ARE STATED BELOW
ABRIDGED INCOME STATEMENT
SIX MONTHS SIX MONTHS YEAR
ENDED ENDED ENDED
30 SEPT 1999 30 SEPT 1998 31 MARCH 1999
PUBLISHED AUDITED
R'M R'M R'M
REVENUE 3 311 2 793 5 689
OPERATING PROFIT BEFORE
INTEREST, TAX, DEPRECIATION
AND AMORTISATION (EBITDA) 8 46 113
DEPRECIATION AND AMORTISATION 170 106 234
OPERATING PROFIT (162) (60) (121)
FINANCE COSTS 94 36 86
INCOME FROM INVESTMENTS 21 8 14
SHARE OF EQUITY ACCOUNTED RESULTS (11) 36 (38)
EXCEPTIONAL ITEMS 1 203 140 748
INCOME BEFORE TAXATION 957 88 517
TAXATION 14 42 105
OUTSIDE SHAREHOLDERS' INTEREST (345) (37) 179
NET ATTRIBUTABLE INCOME FOR
THE PERIOD 598 9 591
DIVIDENDS - - (28)
RETAINED EARNINGS FOR THE PERIOD 598 9 563
HEADLINE EARNINGS FOR THE
PERIOD (R'M) (72) 6 (5)
EARNINGS PER N ORDINARY
SHARE (CENTS) 471 8 515
HEADLINE EARNINGS PER N ORDINARY
SHARE (CENTS) (56) 6 (12)
FULLY DILUTED EARNINGS PER
N ORDINARY SHARE (CENTS) 462 8 509
FULLY DILUTED HEADLINE EARNINGS
PER N ORDINARY SHARE (CENTS) (49) 5 (5)
WEIGHTED AVERAGE NUMBER OF N ORDINARY
SHARES IN ISSUE ('000) 126 982 112 281 114 577
ABRIDGED BALANCE SHEET
SIX MONTHS SIX MONTHS YEAR
ENDED ENDED ENDED
30 SEPT 1999 30 SEPT 1998 31 MARCH 1999
PUBLISHED AUDITED
R'M R'M R'M
ASSETS
NON-CURRENT ASSETS 4 232 2 010 3 583
FIXED ASSETS 2 072 1 090 2 064
INVESTMENTS AND LOANS 1 528 920 1 195
PROGRAMME AND FILM RIGHTS 632 - 324
CURRENT ASSETS 1 574 2 329 1 609
NET CASH 665 611 59
TOTAL ASSETS 6 471 4 950 5 251
EQUITY AND LIABILITIES
EQUITY CAPITAL AND RESERVES 1 229 1 030 721
OUTSIDE SHAREHOLDERS' EQUITY 776 534 39
LONG-TERM LIABILITIES AND
PROVISIONS 2 337 1 117 2 105
GENERAL PROVISION 100 83 101
LONG-TERM LIABILITIES
- TRANSMISSION EQUIPMENT LEASES 1 069 310 1 126
- LOANS 1 168 724 878
DEFERRED TAXATION 34 40 34
CURRENT LIABILITIES 2 095 229 2 352
TOTAL EQUITY AND LIABILITIES 6 471 4 950 5 251
NET ASSET VALUE PER N ORDINARY
SHARE (CENTS) 968 917 568
ABRIDGED CASH FLOW STATEMENT
SIX MONTHS SIX MONTHS YEAR
ENDED ENDED ENDED
30 SEPT 1999 30 SEPT 1998 31 MARCH 1999
PUBLISHED AUDITED
R'M R'M R'M
CASH AVAILABLE FROM OPERATIONS 99 (43) (217)
DIVIDENDS PAID (28) (22) (24)
CASH FLOW FROM OPERATING ACTIVITIES 71 (65) (241)
CASH FLOW FROM INVESTMENT
ACTIVITIES (795) 438 (494)
CASH FLOW FROM FINANCING
ACTIVITIES 1 358 277 660
NET MOVEMENT ON CASH AND CASH
EQUIVALENTS 634 650 (75)
SUPPLEMENTARY INFORMATION
SIX MONTHS SIX MONTHS YEAR
ENDED ENDED ENDED
30 SEPT 1999 30 SEPT 1998 31 MARCH 1999
PUBLISHED AUDITED
R'M R'M R'M
INCLUDED IN OPERATING PROFIT
DIVIDENDS RECEIVED 21 8 14
FINANCE COSTS 94 36 86
- INTEREST RECEIVED 46 56 128
- INTEREST PAID 140 92 214
INVESTMENTS AND LOANS 1 528 920 1 195
LISTED INVESTMENTS 606 392 477
UNLISTED INVESTMENTS AND LOANS 922 528 718
MARKET VALUE OF LISTED
INVESTMENTS 1 855 1 121 1 379
DIRECTORS' VALUATION OF UNLISTED
INVESTMENTS AND LOANS 1 080 487 866
CAPITAL EXPENDITURE FOR THE PERIOD 140 154 1 198
COMMITMENTS AND CONTINGENT
LIABILITIES 593 2 410 1 464
- CAPITAL EXPENDITURE 136 417 478
- FOREIGN EXCHANGE TRANSACTIONS 57 55 517
- CONTINGENT LIABILITIES 66 2 54
- NETWORK COMMITMENTS 267 - 293
- TRANSPONDER LEASE COMMITMENTS - 1 691 -
- PROGRAMME RIGHTS AND COMMITMENTS 56 114 122
- DECODER COMMITMENTS 11 131 -
OPERATING LEASE COMMITMENTS 596 386 570
COMMENTARY
KEY DEVELOPMENTS IN THE GROUP OVER THE PERIOD INCLUDE:
- OVER THE PAST YEAR THE GROUP'S EFFECTIVE INTEREST IN MIH AND M-WEB INCREASED
FROM 29% TO 56% AND 28% TO 52% RESPECTIVELY.
- MIH LIMITED (MIHL) WAS SUCCESSFULLY LISTED ON THE NASDAQ NATIONAL MARKET IN
NEW YORK AND THE AMSTERDAM STOCK EXCHANGE. THE LISTINGS, WHICH ARE IN LINE WITH
THE GROUP'S STRATEGY TO ACCESS INTERNATIONAL CAPITAL MARKETS, RAISED $174
MILLION AND GENERATED AN EXCEPTIONAL PROFIT OF R939 MILLION.
- OPENTV'S POSITION AS LEADER IN INTERACTIVE OPERATING SYSTEMS SOFTWARE WAS
REINFORCED BY BRINGING ON BOARD STRATEGIC SHAREHOLDERS SUCH AS AMERICA ONLINE
(AOL), NEWS CORPORATION AND TIME WARNER. OPERATIONAL AGREEMENTS WERE CONCLUDED
WITH THESE INVESTORS. OPENTV WAS RECENTLY LISTED ON THE NASDAQ AND AMSTERDAM
STOCK EXCHANGES.
- THE UPGRADING OF THE NEWSPAPER DIVISION'S PRINTING CAPACITY AND
INFRASTRUCTURE CONTINUED AND SHOULD BE COMPLETED BY THE END OF THE CURRENT
FINANCIAL YEAR AT A TOTAL COST OF R325 MILLION.
- THE BOARDS OF DIRECTORS OF MIH AND M-WEB APPROVED THE DELINKING OF THE
COMPANIES' SHARES.
- THE INTERESTS OF MINORITIES IN MCGREGOR BFA WERE ACQUIRED.
THESE AND OTHER DEVELOPMENTS OVER THE PAST YEAR COMPLICATE A COMPARISON OF
PRESENT RESULTS WITH THOSE PUBLISHED FOR THE SIX MONTHS ENDED SEPTEMBER 1998.
MIH AMENDED ITS ACCOUNTING POLICY IN CERTAIN RESPECTS TO COMPLY WITH THE
DEMANDS OF ITS LISTING AND NOW EQUITY ACCOUNTS ITS INTEREST IN UBC, THE
THAILAND-BASED PAY-TELEVISION OPERATOR, WHEREAS IN THE COMPARABLE PERIOD IT WAS
PROPORTIONALLY CONSOLIDATED. MIH ALSO CAPITALISED CERTAIN MAJOR SATELLITE
TRANSMISSION LEASES PREVIOUSLY TREATED AS OPERATING LEASES. THE REVENUE
PREVIOUSLY PUBLISHED IN THE SEGMENTAL ANALYSIS BELOW HAS CONSEQUENTLY BEEN
RESTATED TO PROVIDE A MEANINGFUL COMPARISON.
MIH AND M-WEB'S GROWTH AND EXPANSION INTO NEW MARKETS, INTERACTIVE TECHNOLOGIES
AND INTERNET BUSINESSES ARE MAINLY ACCOUNTED FOR AS A CHARGE THROUGH THEIR
INCOME STATEMENTS. THE CORRESPONDING ASSET VALUE CREATION IS NOT, HOWEVER,
REFLECTED ON THE BALANCE SHEET. THE GROUP'S SHARE IN MIH AND M-WEB'S
DEVELOPMENT COSTS HAS INCREASED ACCORDINGLY.
OPERATING RESULTS
REVENUE FOR THE FIRST SIX MONTHS AMOUNTED TO R3,3 BILLION, REFLECTING, ON A
COMPARABLE BASIS, AN INCREASE OF 26%. THE MAIN SOURCES OF REVENUE FOR THE GROUP
WERE:
PROFIT BEFORE INTEREST,
TAX, DEPRECIATION AND
AMORTISATION
REVENUE (EBITDA)
RESTATED
SEPTEMBER SEPTEMBER SEPTEMBER SEPTEMBER
1999 1998 1999 1998
R'M R'M R'M R'M
TELEVISION PLATFORMS 2 151 1 650 19 31
MAGAZINES 455 416 90 71
NEWSPAPERS 436 363 59 59
BOOK PUBLISHING AND
EDUCATION 171 160 (30) (32)
INTERNET 98 42 (129) (83)
CORPORATE - - (1) -
3 311 2 631 8 46
TELEVISION PLATFORMS
MIH REPORTED REVENUE GROWTH OF 30%, ARISING MAINLY FROM THE STRONG GROWTH IN
DIGITAL SUBSCRIBERS. THE AGGREGATE SUBSCRIBER BASE SERVICED BY THE GROUP NOW
TOTALS TWO MILLION HOUSEHOLDS - 1,35 MILLION ON THE AFRICAN CONTINENT AND THE
MIDDLE EAST, SOME 320 000 IN GREECE AND CYPRUS, AND 310 000 IN THAILAND.
M-NET/SUPERSPORT GREW ATTRIBUTABLE EARNINGS BY 24% TO R51,2 MILLION, OF WHICH
NASPERS' EQUITY ACCOUNTED SHARE WAS R14,7 MILLION.
MAGAZINES
THE MAGAZINE DIVISION MAINTAINED ITS POSITION AS LEADING PUBLISHER IN ITS FIELD
IN AFRICA AND INCREASED CONSOLIDATED REVENUE BY 9%. IF THE NET EFFECT OF
CERTAIN DISCONTINUED ACTIVITIES IS EXCLUDED, THE REAL GROWTH IN REVENUE IS 14%.
THE SUBSTANTIAL INVESTMENT IN THE PRINTING WORKS DURING THE PREVIOUS TWO YEARS
IS BEARING FRUIT.
NEWSPAPERS
THE NEWSPAPER DIVISION REFLECTED REVENUE GROWTH OF 20%. BOTH THE SUNDAY TITLES,
RAPPORT AND CITY PRESS, AND THE DAILIES TURNED IN SOLID PERFORMANCES. THE
UPGRADING OF THE INFRASTRUCTURE AND CAPACITY OF THE PRINTING WORKS IN
JOHANNESBURG AND CAPE TOWN IS NEARING COMPLETION AND CAPITAL EXPENDITURE IN
THIS REGARD IS EXPECTED TO AMOUNT TO R175 MILLION THIS YEAR. THE PERFORMANCE OF
THE ADVERTISING MARKET IS, HOWEVER, UNSTABLE AND COULD INFLUENCE RESULTS.
BOOK PUBLISHING AND EDUCATION
THESE DIVISIONS REMAIN ADVERSELY AFFECTED BY THE EDUCATION CRISIS IN SOUTH
AFRICA. NET REVENUE IS MARGINALLY AHEAD OF LAST YEAR, WITH COSTS BEING TIGHTLY
CONTROLLED AS THE UNITS POSITION THEMSELVES FOR A RECOVERY IN THE INDUSTRY.
INTERNET
M-WEB REPORTED REVENUE GROWTH OF 130% AND ITS SUBSCRIBER BASE GREW TO 177 000
HOMES. THE NUMBER OF PAGE VIEWS FOR THE M-WEB WEBSITE INCREASED FROM 10 MILLION
IN SEPTEMBER 1998 TO 18 MILLION IN SEPTEMBER 1999. THIS GROWTH HAS RESULTED IN
M-WEB INVESTING STRONGLY IN ADDITIONAL INFRASTRUCTURE, WHICH WILL CONTINUE
UNTIL CRITICAL MASS IS ACHIEVED. DEVELOPMENT LOSSES FOR THE PERIOD AMOUNTED TO
R132 MILLION.
FINANCIAL RESULTS
DEVELOPMENT COSTS IN MIH AND M-WEB RESULTED IN A HEADLINE DEFICIT OF R72
MILLION, OF WHICH R59 MILLION IS ATTRIBUTABLE TO THE GROUP'S INCREASED INTEREST
IN MIH AND M-WEB. GROUP FINANCE COSTS INCREASED TO A NET R94 MILLION, LARGELY
AS A RESULT OF THE CAPITALISATION OF SATELLITE TRANSMISSION EQUIPMENT.
NET EXCEPTIONAL PROFITS OF R1,2 BILLION WERE RECORDED. THESE AROSE MAINLY FROM
THE LISTING OF MIHL AND THE DISPOSAL OF ORBICOM (R203 MILLION).
NET INCOME ATTRIBUTABLE TO NASPERS' SHAREHOLDERS AMOUNTED TO R598 MILLION.
PROSPECTS
NASPERS IS COMMITTED TO A STRATEGY OF RAPIDLY DEVELOPING ITS ELECTRONIC MEDIA
OPERATIONS, TECHNOLOGY AND INTERNET BUSINESSES, WHILE THE PROCESS OF UPGRADING
CONTINUES IN THE NEWSPAPER AND MAGAZINE BUSINESSES. WHILE THIS STRATEGY WILL
IMPACT NEGATIVELY ON GROUP EARNINGS IN THE SHORT TERM, THE VALUE CREATED SHOULD
PROVE BENEFICIAL TO SHAREHOLDERS OVER THE LONG TERM.
THE ELECTRONIC MEDIA BUSINESS CONTINUES TO FOCUS ON THREE CORE AREAS -
TELEVISION PLATFORMS, TECHNOLOGY AND THE INTERNET:
- TELEVISION PLATFORMS: THE GROUP HAS A LEADING POSITION IN SUB-SAHARAN AFRICA,
THE MEDITERRANEAN REGION AND THAILAND. DEVELOPMENT IN ASIA CONTINUES, WITH
CONTINUED GROWTH IN TELEVISION PLATFORMS AND INTERACTIVE OPPORTUNITIES.
- TECHNOLOGY: MINDPORT PROVIDES TECHNOLOGY SOFTWARE SOLUTIONS TO MEDIA AND
INTERNET COMPANIES WORLDWIDE. OPENTV, IN WHICH MIHL PRESENTLY HAS A MAJORITY
INTEREST, IS A WORLD LEADER IN DIGITAL TELEVISION OPERATING SYSTEMS AND
DEVELOPS INTERACTIVE SOFTWARE APPLICATIONS.
- INTERNET: TWO INTERNET INVESTMENTS WERE MADE DURING THE PERIOD. IN SOUTH
AFRICA MIH ACQUIRED A 13,6% INTEREST IN M-WEB AND IN THAILAND A 95% INTEREST IN
THE LEADING THAI CONTENT PORTAL, SANOOK!.COM.
M-WEB HAS GROWN INTO A MARKET LEADER IN THE INTERNET FIELD IN SOUTH AFRICA AND
CONTINUES TO EXPAND. M-WEB WILL INVEST IN GROWING ITS SUBSCRIBER BASE, AS WELL
AS BUILDING CONTENT OFFERINGS AND E-COMMERCE CAPABILITIES. IN SO DOING,
SUBSTANTIAL LOSSES OF AT LEAST THE PRESENT LEVEL WILL CONTINUE OVER THE NEXT
FINANCIAL YEAR.
TO RAISE FUNDS, M-WEB IS PLANNING A RIGHTS OFFER TO EXISTING SHAREHOLDERS
DURING THE FIRST QUARTER OF NEXT YEAR. THE GROUP INTENDS TO FULLY SUPPORT SUCH
AN OFFER. WE BELIEVE THAT GROWTH AT M-WEB MAY CREATE SUBSTANTIAL SHAREHOLDER
VALUE AND IS WORTH THE CONSIDERABLE RISK INVOLVED.
THE NEWSPAPER AND MAGAZINE DIVISIONS SHOULD CONTINUE TO MAINTAIN THEIR MARKET
POSITIONS AND PERFORM SATISFACTORILY.
THE BOOK PUBLISHING DIVISION REMAINS EXPOSED TO THE EDUCATION CRISIS AND IT IS
STILL TOO EARLY TO DETERMINE WHEN A RECOVERY WILL OCCUR. GIVEN THESE
CIRCUMSTANCES ACTION WILL BE TAKEN TO ENSURE THAT COSTS ARE REDUCED TO THE
MINIMUM.
YEAR 2000
THE GROUP HAS CONDUCTED A COMPREHENSIVE REVIEW OF ITS OPERATIONS TO DETERMINE
IF ITS BUSINESS CRITICAL SYSTEMS ARE YEAR 2000 COMPLIANT. IT HAS COMPILED AN
INVENTORY OF ITS HARDWARE AND SOFTWARE SYSTEMS, PREPARED AN IMPACT ASSESSMENT
AND IMPLEMENTED CORRECTIONS AND UPGRADES BASED ON DIAGNOSTIC TESTING. THE GROUP
HAS ALSO PREPARED CONTINGENCY PLANS. IN PREPARATION FOR THE YEAR 2000, THE
GROUP HAS INCURRED, AND WILL INCUR, GENERAL STAFF COSTS, CONSULTANCY FEES AND
OTHER EXPENSES, WHICH WILL BE ABSORBED BY ITS NORMAL OPERATING BUDGET.
IN THE PROVISION OF ITS SERVICES, THE GROUP RELIES ON SYSTEMS, SUPPLIERS AND
THIRD PARTIES WHICH FREQUENTLY ARE NOT CONTROLLED BY IT AND MAY NOT ALL BE YEAR
2000 COMPLIANT. YEAR 2000 ISSUES AFFECTING THE GROUP'S BUSINESS, IF NOT
ADEQUATELY ADDRESSED WHETHER BY THE GROUP, THIRD PARTY VENDORS OR SUPPLIERS,
COULD HAVE A NUMBER OF NEGATIVE CONSEQUENCES, INCLUDING INTERRUPTIONS OF THE
SERVICES OF NETWORK OPERATORS USING THE GROUP'S PRODUCTS, DAMAGE TO THE GROUP'S
REPUTATION, AND CLAIMS ASSERTING LIABILITY, ANY OF WHICH COULD MATERIALLY
ADVERSELY AFFECT THE GROUP'S BUSINESS AND RESULTS OF OPERATIONS.
ON BEHALF OF THE BOARD:
T VOSLOO JP BEKKER
CHAIRMAN MANAGING DIRECTOR
6 DECEMBER 1999
DIRECTORS
T VOSLOO (CHAIRMAN), JP BEKKER (MANAGING DIRECTOR), JF MALHERBE
(VICE-CHAIRMAN), MJ DE VRIES, JP DE LANGE, JJM VAN ZYL, E BOTHA, LM TAUNYANE,
LN JONKER, NP VAN HEERDEN, SJZ PACAK, BJ VAN DER ROSS, GJ GERWEL, JDUT STOFBERG
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