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NASPERS LIMITED
(REGISTRATION NUMBER: 1925/001431/06)
("NASPERS")
PRELIMINARY REPORT
THE AUDITED RESULTS OF THE NASPERS GROUP FOR THE YEAR ENDED 31 MARCH 2000 ARE
STATED BELOW:
COMMENTS
OVER THE PAST YEAR THE NASPERS GROUP CONTINUED ITS EVOLUTION INTO AN
INTEGRATED, MULTINATIONAL MEDIA BUSINESS WITH AN INVESTMENT STRATEGY FOCUSED ON
THE RAPID DEVELOPMENT OF ITS INTERNET AND TECHNOLOGY BUSINESSES.
GROUP REVENUES FOR THE YEAR AMOUNTED TO R7,15 BILLION, AN AGGREGATE INCREASE OF
26%. EARNINGS BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION AMOUNTED TO
R7 MILLION. EXCEPTIONAL PROFITS OF R4,7 BILLION WERE REALISED. NET INCOME
ATTRIBUTABLE TO NASPERS' SHAREHOLDERS AMOUNTED TO R3,5 BILLION COMPARED TO LAST
YEAR'S R591 MILLION. HEADLINE LOSSES WERE R145 MILLION DUE TO INTENSIVE
DEVELOPMENTS. THE BALANCE SHEET WAS CONSIDERABLY STRENGTHENED AND ON 31 MARCH
2000 THE GROUP HAD CONSOLIDATED CASH RESOURCES OF R2,3 BILLION.
OPERATIONAL HIGHLIGHTS FOR THE YEAR INCLUDED:
* MIH LIMITED (MIHL) ACCELERATED ITS DEVELOPMENT OF INTERNET BUSINESSES WITH
THE LAUNCH OF NEW OPERATIONS IN CHINA, THAILAND AND INDONESIA, PROVIDING
INTERNET ACCESS, LOCAL CONTENT, E-COMMERCE AND CUSTOMER CARE.
* OPENTV ESTABLISHED ITSELF AS THE WORLD LEADER IN INTERACTIVE TELEVISION
OPERATING SYSTEMS SOFTWARE. FORMING STRATEGIC ALLIANCES WITH LEADING COMPANIES
SUCH AS AMERICA ONLINE (AOL), TIME WARNER AND ECHOSTAR STRENGTHENED THIS
POSITION.
* OPENTV ANNOUNCED THAT IT WOULD MERGE ITS OPERATIONS WITH SPYGLASS INC. THIS
MERGER WILL ADD FULL INTERNET FUNCTIONALITY AND A COMPREHENSIVE SUITE OF
WIRELESS TECHNOLOGIES TO THE OPENTV PRODUCT OFFERING.
* AGREEMENT WAS REACHED TO MERGE NASPERS' MAGAZINE PRINTING BUSINESS WITH THAT
OF PAARL POST WEB (PPW). NASPERS WILL HOLD 65% OF THE MERGED ENTITY, WITH PPW
AND THE MINEWORKERS' INVESTMENT COMPANY AS PARTNERS.
* THE UPGRADING OF THE PRINTING CAPACITY AND INFRASTRUCTURE OF THE NEWSPAPER
AND MAGAZINE BUSINESSES HAS LARGELY BEEN COMPLETED.
* NASPERS INCREASED ITS INVESTMENT IN THE PRIVATE EDUCATION INDUSTRY IN SOUTH
AFRICA BY MERGING ITS EDUCATION BUSINESS, NATIONAL PRIVATE COLLEGES, WITH THAT
OF EDUCOR. NASPERS WILL HOLD 40% OF THE MERGED OPERATIONS.
SEGMENTAL PERFORMANCE
THE REVENUES AND EARNINGS BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION
(EBITDA) OF THE KEY BUSINESS SEGMENTS ARE AS FOLLOWS:
REVENUE (R'M) EBITDA (R'M)
2000 1999 % 2000 1999 %
TELEVISION PLATFORMS 3,909 3,252 20 229 138 66
PRINT MEDIA 1,809 1,468 23 263 259 2
INTERNET 231 124 86 (342) (226) 51
TECHNOLOGY 546 374 46 (170) (65) 162
BOOK PUBLISHING 434 379 15 21 (13) -
PRIVATE EDUCATION 217 92 136 (5) 14 -
CORPORATE SERVICES - - - 11 6 83
7,146 5,689 26 7 113
TELEVISION PLATFORMS
REVENUES GREW BY 20% TO R3,9 BILLION, LARGELY DUE TO THE INCREASE IN THE
SUBSCRIBER BASE WHICH NOW EXCEEDS TWO MILLION HOUSEHOLDS - 1,38 MILLION ON THE
AFRICAN CONTINENT AND THE MIDDLE EAST, 350 000 IN GREECE/CYPRUS AND 330 000 IN
THAILAND. THE MIGRATION FROM ANALOGUE TO DIGITAL SERVICES CONTINUED IN ALL
MARKETS. IMPROVED OPERATING MARGINS AND THE CAPITALISATION OF SATELLITE
TRANSPONDER LEASES, RESULTED IN EBITDA GROWING BY 66% TO R229 MILLION.
M-NET/SUPERSPORT REPORTED ATTRIBUTABLE EARNINGS OF R107,5 MILLION, OF WHICH
NASPERS' EQUITY ACCOUNTED SHARE WAS R31,1 MILLION.
PRINT MEDIA
OVERALL, PRINT MEDIA REVENUES GREW BY 23% TO R1,8 BILLION. REVENUES FROM THE
SUNDAY NEWSPAPER, RAPPORT AND TOUCHLINE MEDIA MAGAZINES WERE, HOWEVER,
CONSOLIDATED FOR THE FIRST TIME. ADJUSTING FOR THIS FACTOR SHOWS THAT REAL
GROWTH WAS 11%. MARKET CONDITIONS WERE INDIFFERENT OVER THE YEAR, WITH
CIRCULATION STABLE BUT THE DEMAND FOR NEWSPAPER ADVERTISING SOFTENING OVER THE
PAST SIX MONTHS.
THE MAGAZINE DIVISION HAD A SATISFACTORY YEAR IN AN ENVIRONMENT CHARACTERISED
BY INCREASED FRAGMENTATION AND COMPETITION. NEW TITLES SUCCESSFULLY LAUNCHED
DURING THE YEAR WERE TVPLUS! AND FHM.
INTERNET
REVENUES FROM OUR INTERNET BUSINESSES GREW BY AS MUCH AS 86%. M-WEB'S SOUTH
AFRICAN OPERATIONS GREW ITS SUBSCRIBER BASE FROM 145 000 TO 235 000 HOMES. THE
EXPANSION OF THE SOUTH AFRICAN OPERATIONS, COUPLED WITH EXPANSION INTO NEW
MARKETS, NECESSITATED A SIGNIFICANT INVESTMENT IN OPERATING COSTS AND
INFRASTRUCTURE. CONSEQUENTLY, A NEGATIVE EBITDA OF R342 MILLION WAS REPORTED.
TECHNOLOGY
REVENUES FROM OUR TECHNOLOGY BUSINESSES GREW TO R546 MILLION (INCREASE OF 46%)
AND INCLUDE OPENTV FOR THE FIRST TIME. NEGATIVE EBITDA OF R170 MILLION AROSE
FROM OPENTV, ACCELERATING ITS DEVELOPMENT OF INTERACTIVE TELEVISION
APPLICATIONS AND REINFORCING ITS POSITION AS WORLD LEADER WITH 7,8 MILLION
DIGITAL DECODERS INSTALLED WITH ITS RUNTIME SYSTEM. IN ADDITION, MINDPORT
INCREASED ITS INVESTMENT IN SOFTWARE DEVELOPMENT IN LINE WITH IT STRATEGY OF
MIGRATING ITS PAY-TV ENCRYPTION AND BUSINESS SYSTEM TECHNOLOGIES INTO THE
INTERNET SPACE.
BOOK PUBLISHING
THE RESTRUCTURING AND DOWNSIZING OF THIS BUSINESS BORE FRUIT AS REVENUES
INCREASED BY 15% AND THE BUSINESS WAS RESTORED TO PROFITABILITY WITH A POSITIVE
EBITDA OF R21 MILLION. DEVELOPMENT OF THE INTERNET-BASED BOOKSTORE,
KALAHARI.NET, CONTINUED.
PRIVATE EDUCATION
OUR EDUCATION BUSINESS MERGED WITH THAT OF EDUCOR OCCURRED DURING THE YEAR AND,
CONSEQUENTLY, COMPARISON WITH THE PREVIOUS YEAR'S FIGURES IS MEANINGLESS.
THE INTENTION IS TO DEVELOP THE MERGED OPERATION INTO A COMBINATION OF PRINTED
MATTER AND INTERACTIVE, INTERNET-BASED EDUCATION.
GROUP RESULTS
FINANCING COSTS INCREASED DUE TO THE FUNDING OF SUBSTANTIAL INTERNET AND
TECHNOLOGY DEVELOPMENTS AND THE COST OF SATELLITE TRANSPONDER LEASES. IN
ADDITION, AN INVESTMENT PROGRAMME TO UPGRADE THE PRINTING CAPACITY AND
INFRASTRUCTURE FOR THE PRINT MEDIA BUSINESSES WAS LARGELY CONCLUDED.
CONSEQUENTLY, HEADLINE LOSSES PER SHARE FOR THE PERIOD WERE 111 CENTS, COMPARED
TO A LOSS OF 12 CENTS LAST YEAR.
OTHER DEVELOPMENTS INCLUDED:
* MIHL AND ITS SUBSIDIARY, OPENTV, WERE BOTH SUCCESSFULLY LISTED ON THE NASDAQ
NATIONAL MARKET IN NEW YORK AND THE AMSTERDAM STOCK EXCHANGE. THIS IS IN LINE
WITH THE GROUP'S STRATEGY TO ACCESS INTERNATIONAL CAPITAL MARKETS TO FUND
GROWTH. THE LISTINGS RAISED CAPITAL OF SOME $330 MILLION, AND GENERATED
EXCEPTIONAL PROFITS OF R1,8 BILLION. SUBSEQUENT TO YEAR-END, MIHL SUCCESSFULLY
COMPLETED A SECONDARY OFFERING OF 4,5 MILLION SHARES AND RAISED A FURTHER $175
MILLION.
* THE SWOP ARRANGEMENT, ENTERED INTO WITH JOHNNIC IN JANUARY 1999, WAS
CONCLUDED AND NASPERS ACQUIRED A FURTHER 27,5 MILLION SHARES IN BOTH MIH AND
M-WEB IN EXCHANGE FOR 40,5 MILLION SHARES IN M-CELL. THIS ARRANGEMENT GENERATED
AN EXCEPTIONAL PROFIT OF R2,1 BILLION. THE RESIDUAL 17 MILLION M-CELL SHARES
HELD BY NASPERS WERE SOLD FOR A FURTHER PROFIT OF R606 MILLION AND THE PROCEEDS
UTILISED TOWARDS ACQUIRING 2 MILLION MIHL SHARES.
* M-WEB CONCLUDED A RIGHTS OFFER TO SHAREHOLDERS AND RAISED R430 MILLION TO
FUND ITS GROWTH.
* NASPERS RAISED APPROXIMATELY R1,2 BILLION BY PLACING 16,78 MILLION NASPERS N
ORDINARY SHARES WITH LOCAL AND INTERNATIONAL INSTITUTIONS. THIS CAPITAL WAS
RAISED TO FUND GROWTH OPPORTUNITIES.
DIVIDEND
THE BOARD HAS RECOMMENDED THAT THE ANNUAL DIVIDEND BE INCREASED TO 24 CENTS PER
N ORDINARY SHARE (1999: 22 CENTS). THE DIVIDEND IS PAYABLE TO SHAREHOLDERS
REGISTERED ON 4 AUGUST 2000 AND WILL, SUBJECT TO THE APPROVAL OF SHAREHOLDERS
AT THE ANNUAL GENERAL MEETING TO BE HELD ON 18 AUGUST 2000, BE PAID ON 18
AUGUST 2000.
PROSPECTS
THE GROWTH OF THE INTERNET AND E-COMMERCE CONTINUES AT A RAPID PACE. THIS
DEVELOPMENT WILL TRANSFORM NOT ONLY THE MEDIA INDUSTRY, BUT THE GLOBAL ECONOMY
OVER THE NEXT DECADE.
THE INTERNET IS A NATURAL EXTENSION OF THE NASPERS GROUP'S CORE MEDIA
COMPETENCIES. BUILDING ON THE EXPERIENCE GAINED, OPERATIONS HAVE BEEN
ESTABLISHED ON THE AFRICAN CONTINENT, GREECE, THAILAND AND CHINA.
THE DEVELOPMENT OF INTERACTIVE CONTENT PORTALS, ONLINE SERVICE PROVIDERS AND
E-COMMERCE OPPORTUNITIES IN SOUTHEAST ASIA AND CHINA IS A KEY FOCUS. IN
ADDITION, THE GROUP WILL CAPITALISE ON ITS OPERATIONAL PRESENCE IN ITS MARKETS
TO DEVELOP INTERACTIVE TELEVISION AND INTERNET OPPORTUNITIES.
A DYNAMIC OF OUR GROUP IS THAT ORGANIC GROWTH, EXPANSION INTO NEW MARKETS,
INTERACTIVE TECHNOLOGIES AND INTERNET BUSINESSES IN THE MAIN ARE ACCOUNTED FOR
AS A CHARGE THROUGH THE INCOME STATEMENT, WHILE THE CORRESPONDING VALUE
CREATION IN THE FORM OF PAY-TV AND INTERNET SUBSCRIBER BASES, AND INTELLECTUAL
PROPERTY, IS NOT REFLECTED AS AN ASSET ON THE BALANCE SHEET.
RECENT AMENDMENTS TO SOUTH AFRICAN STATEMENTS OF GENERALLY ACCEPTED ACCOUNTING
PRACTICE IN TERMS OF WHICH GOODWILL ARISING FROM ACQUISITIONS WILL NOW BE
CAPITALISED AND AMORTISED THROUGH THE INCOME STATEMENT, WILL INCREASE REPORTED
LOSSES IN THE YEARS AHEAD. THESE CHANGES IN ACCOUNTING PRACTICE WILL INCREASE
THE FOCUS ON EBITDA TO PROPERLY ASSESS THE OPERATIONAL PERFORMANCE OF THE GROUP
THE STRATEGY OF RAPID DEVELOPMENT IN THE ABOVE-MENTIONED ACTIVITIES WILL RESULT
IN SUBSTANTIAL HEADLINE LOSSES OVER THE NEXT FEW YEARS. THE BOARD IS OF THE
VIEW THAT THE LONG-TERM POTENTIAL FOR VALUE CREATION OUTWEIGHS THE NEGATIVE
SHORT-TERM IMPACT ON EARNINGS, AND INTENDS TO INVEST SUBSTANTIALLY IN GROWTH
OVER THE NEXT FEW YEARS.
ON BEHALF OF THE BOARD:
TON VOSLOO KOOS BEKKER
CHAIRMAN MANAGING DIRECTOR
DIRECTORS
T VOSLOO (CHAIRMAN), JF MALHERBE (VICE-CHAIRMAN), JP BEKKER (MANAGING
DIRECTOR), E BOTHA, JP DE LANGE, MJ DE VRIES, GJ GERWEL, LN JONKER, SJZ PACAK,
JDT STOFBERG, LM TAUNYANE, BJ VAN DER ROSS, NP VAN HEERDEN, JJM VAN ZYL.
ABRIDGED INCOME STATEMENT
31 MARCH 31 MARCH
2000 1999
R'M R'M
REVENUE 7,146 5,689
EARNINGS BEFORE INTEREST, TAX, DEPRECIATION
AND AMORTISATION (EBITDA) 7 113
DEPRECIATION AND AMORTISATION 362 234
OPERATING LOSS (355) (121)
FINANCE COSTS (154) (74)
INCOME FROM INVESTMENTS 3 2
SHARE OF EQUITY-ACCOUNTED RESULTS (6) (38)
EXCEPTIONAL ITEMS 4,743 748
INCOME BEFORE TAXATION 4,231 517
TAXATION 60 105
OUTSIDE SHAREHOLDERS' INTEREST (665) 179
NET INCOME ATTRIBUTABLE TO SHAREHOLDERS 3,506 591
DIVIDENDS (35) (28)
RETAINED EARNINGS FOR THE YEAR 3,471 563
HEADLINE EARNINGS FOR THE YEAR (R'M) (145) (14)
EARNINGS PER N ORDINARY SHARE (CENTS) 2,700 515
HEADLINE LOSS PER N ORDINARY SHARE (CENTS) (111) (12)
FULLY DILUTED EARNINGS PER N ORDINARY
SHARE (CENTS) 2,596 509
DIVIDEND PER N ORDINARY SHARE (CENTS) 24 22
NUMBER OF SHARES ISSUED:
- AT YEAR-END 148,262 126,982
- WEIGHTED AVERAGE FOR THE YEAR 129,851 114,577
- FULLY DILUTED 135,457 117,710
ABRIDGED BALANCE SHEET
31 MARCH 31 MARCH
2000 1999
R'M R'M
ASSETS
NON-CURRENT ASSETS 5,071 3,583
PROPERTY, PLANT AND EQUIPMENT 2,448 2,064
INVESTMENTS AND LOANS 1,783 1,195
PROGRAMME AND FILM RIGHTS 833 324
DEFERRED TAXATION 7 -
CURRENT ASSETS 2,043 1,609
NET CASH 2,338 59
TOTAL ASSETS 9,452 5,251
EQUITY AND LIABILITIES
SHARE CAPITAL AND RESERVES 1,804 721
OUTSIDE SHAREHOLDERS' EQUITY 1,503 39
LONG-TERM LIABILITIES 2,874 2,004
TRANSMISSION EQUIPMENT LEASES 1,082 1,126
LOANS:- INTEREST-BEARING 843 553
- NON-INTEREST-BEARING 949 325
GENERAL PROVISION 116 103
DEFERRED TAXATION - 34
CURRENT LIABILITIES 3,155 2,350
TOTAL EQUITY AND LIABILITIES 9,452 5,251
NET ASSET VALUE PER N ORDINARY SHARE (CENTS) 1,217 568
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
SHARE NON- DISTRIBU-
CAPITAL AND DISTRIBUTABLE TABLE
PREMIUM RESERVES RESERVES TOTAL
R'M R'M R'M R'M
BALANCE AS AT 1
APRIL 1999 519 44 158 721
SHARE CAPITAL AND
PREMIUM ISSUED 1,452 1,452
FOREIGN CURRENCY
TRANSLATION DIFFERENCES 10 10
CURRENT YEAR WRITE-OFFS:
- GOODWILL (3,836) (3,836)
- DEFERRED TAXATION ON
ITEMS CHARGED AGAINST
RESERVES 9 9
- PATENTS, TRADEMARKS
AND TITLES (23) (23)
RETAINED EARNINGS
FOR THE YEAR 3,471 3,471
BALANCE AS AT
31 MARCH 2000 1,971 54 (221) 1,804
ABRIDGED CASH FLOW STATEMENT
31 MARCH 31 MARCH
2000 1999
R'M R'M
CASH AVAILABLE FROM OPERATIONS 476 (217)
DIVIDENDS PAID (28) (24)
CASH FLOW FROM OPERATING ACTIVITIES 448 (241)
CASH FLOW FROM INVESTMENT ACTIVITIES (1,738) (494)
CASH FLOW FROM FINANCING ACTIVITIES 3,574 660
NET MOVEMENT ON CASH AND CASH
EQUIVALENTS 2,284 (75)
SUPPLEMENTARY INFORMATION
31 MARCH 31 MARCH
2000 1999
R'M R'M
INCLUDED IN OPERATING LOSS:
DIVIDENDS RECEIVED 3 2
DEPRECIATION AND AMORTISATION 362 234
FINANCE COSTS: 154 74
- INTEREST RECEIVED 125 128
- INTEREST PAID 255 196
- FOREIGN EXCHANGE LOSSES 24 6
INVESTMENTS AND LOANS: 1,783 1,195
- LISTED INVESTMENTS 265 451
- UNLISTED INVESTMENTS 702 380
- LOANS TO SHARE INCENTIVE SCHEMES 816 364
MARKET VALUE OF LISTED INVESTMENTS 1,695 1,379
DIRECTORS' VALUATION OF UNLISTED
INVESTMENTS AND LOANS 1,932 865
CAPITAL EXPENDITURE FOR THE YEAR 840 1,198
COMMITMENTS 1,074 1,204
- CAPITAL EXPENDITURE AUTHORISED 461 558
- PROGRAMME AND FILM RIGHTS 259 190
- NETWORK COMMITMENTS 272 332
- DECODER COMMITMENTS 82 124
OPERATING LEASE COMMITMENTS 1,193 584
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