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NASPERS LIMITED - PRELIMINARY REPORT
(Registration Number: 1925/001431/06)
("Naspers")
ISIN ZAE000015889
JSE Share Code: NPN
PRELIMINARY REPORT
A summary of the audited results of the Naspers Group for the year ended 31
March 2002, is as follows:
GROUP OVERVIEW
The international business climate changed dramatically over the past year.
The unprecedented bull market of the past 20 years led to excessive optimism
in share prices, unrealistic expectations about the speed at which new
technologies would impact the economy and over-capacity in
telecommunications, resulting in its subsequent collapse. The events of 11
September 2001 in the US and the effect on advertising costs triggered a
further reduction in the value of media stocks.
In the face of these shocks, the Group was compelled to make rapid and
drastic adjustments, including the introduction of cost-cutting measures,
scaling back operations with too slow a path to break-even and driving each
of its businesses relentlessly towards profitability. The results reported
below show that the Group has had some success in this regard. Whilst these
reductions were necessary, growth opportunities remain.
The Group`s print businesses withstood the upheavals in the international
media industry better than most. The internet businesses continue to grow
organically. Pay television remains exposed to the vagaries of the rand and
is a mature business. While subscriber numbers are not expected to grow
significantly, migration from analogue to digital services does increase
revenues per subscriber. Private education has yet to show a meaningful
growth in turnover, but profitability improved.
In the present volatile international environment, it would be rash to
forecast concrete prospects for the year ahead. However, given the actions
implemented over the past months and with the acceptance of a more or less
stable economic environment, the Group is confident of generating real
growth in the year ahead.
FINANCIAL REVIEW
Subsequent to the financial year-end, shareholders were advised that the
Group had concluded an agreement, subject to the fulfillment of certain
conditions precedent, to dispose of its interest in OpenTV. This transaction
is expected to close during the next quarter.
The Mindport Broadband and Lyceum College businesses were discontinued for
reasons discussed below. In accordance with Generally Accepted Accounting
Practice, the OpenTV disposal and the discontinuation of these operations
are shown separately on the income statement, and the corresponding figures
have been adjusted to allow comparison. The net loss from these discontinued
operations for the period amounted to R605 million. A further loss of R952
million, including goodwill impairment of R810 million, arose as a direct
result of providing for further costs arising on the discontinuance of these
operations.
After adjusting for the above in both the present and previous year, group
revenues grew by 19% to R9,8 billion, whilst Ebitda grew almost fourfold
from R180 million to R709 million.
Depreciation increased by 37% to R636 million, mainly due to additional
transponder capacity, expansion of the printing infrastructure and the
depreciation of the rand. As a result of the stronger operating performance,
operating profits before amortisation amounted to R73 million, compared with
a loss of R284 million last year.
The net headline loss per N ordinary share from continuing operations
consequently amounted to 162 cents, compared with 277 cents last year. On 31
March 2002 the Group had net consolidated cash resources of R3,1 billion and
interest-bearing liabilities of R1,7 billion, excluding satellite leases and
Welkom debenture liabilities.
SEGMENTAL REVIEW
Revenues and earnings before interest, tax, depreciation and amortisation
(Ebitda) of the key business segments were as follows:
REVENUE (R`m) EBITDA (R`m)
2002 2001 % 2002 2001 %
Continuing operations
Subscriber platforms
- pay television 5 591 4 558 23 515 342 51
- internet 547 411 33 (333) (641) 48
Print media 2 102 1 922 9 374 337 11
Technology 475 383 24 98 104 (6)
Book publishing 610 545 12 32 22 45
Private education 511 447 14 36 27 33
Corporate services 1 - - (13) (11) (18)
9 837 8 266 19 709 180 394
Discontinuing operations
OpenTV 840 553 (386) (240)
Mindport Broadband 85 123 (356) (224)
Lyceum College 25 73 (2) (15)
950 749 (744) (479)
SUBSCRIBER PLATFORMS
Pay television
The pay television operations reported revenue growth, although the net
subscriber base under management grew by only 40 000 during the year. The
fact that the digital base now accounts for 57% of the total subscriber
base, established a platform for the future roll-out of interactive services
and increased revenues per subscriber.
On the African continent the subscriber base grew to 1,28 million
households. M-Net and SuperSport also reported satisfactory earnings growth.
However, the pay television market in South Africa is reaching maturity, and
subscriber growth will decline in future.
In Greece, the launch of a competing platform caused turbulence in the
market. The Group`s digital service, Nova, maintained its leadership of the
market by adding 31 000 subscribers to end the year on 100 000. However,
the region ended the year with 317 000 subscribers, with analogue
subscribers down from last year. Whilst this intense level of competition
continues, short term profitability will not be achievable.
UBC in Thailand grew its subscriber base by 30 000 to 413 000 homes across
satellite and cable platforms and is now Ebitda positive.
Overall, the Group now manages 2,1 million pay television subscribers. In
all its markets, the migration of subscribers to digital services is
noteworthy and remains a focus for growth.
Internet
The Group regards the internet as an important media distribution platform.
Our approach is to build strong subscriber platforms with a focus on access
"anytime, anywhere". This enables subscribers to interact with their content
platforms via television, the internet or cellular technologies any time of
the day or night, anywhere in the world.
The Group internet revenues grew by 33%, whilst Ebitda losses were almost
halved to R333 million. Further improvements are expected in the year ahead.
In South Africa, M-Web maintained its leading position in the market. Ebitda
losses were reduced dramatically from R238 million to R88 million.
CommerceZone has become South Africa`s leading business-to-business e-market
and now offers an e-commerce platform and strategic sourcing services to
outside companies.
In China the Group has an interest in QQ, a Chinese instant-messaging
company. Instant-messaging has become an important communication service. QQ
processes around 500 million messages per day and has some 1,5 million
paying mobile subscribers. The sports portal, SportsCN, has grown into the
leading service of its kind in China.
In Thailand the Group has 286 000 subscribers accessing its service on a pre-
paid basis and 17 000 on a post-paid billing basis. The M-Web portals in
Thailand attract more than two million page views per day.
PRINT MEDIA
Media24 succeeded in increasing Ebitda by 11%, despite harsh market
conditions. The magazine industry`s advertising revenues came under
pressure, whilst having to absorb major increases in the cost of paper and
ink. However, the newspaper, printing and distribution divisions all
performed surprisingly well during the year.
New titles include the Sunday Sun newspaper, launched in the second half of
the year and achieving an ABC circulation of 118 000, and dit, a magazine
aimed at house-proud women, launched in September 2001 and already boasting
a circulation in excess of 75 000 a month.
Over the past five years, Media24 has benefited from the major investments
in a modern infrastructure, production resources and capacity. These
investments were made before the recent steep decline of the rand, obviating
the need for major capital expenditure for some years.
TECHNOLOGY
After a flat first half of the year, Irdeto Access was able to improve its
sales in the second half. As a result, total revenues for the year grew by
24%. The sales mix was, however, more reliant on card swops, where margins
were lower.
Following the slow-down in technology spend and its effect on the roll-out
of broadband services in the US, the Mindport Broadband business was
discontinued.
BOOK PUBLISHING
Nasboek made good progress on some fronts over the past year. Jonathan Ball,
Leserskring/Leisure Books and Lux Verbi.BM all had record years. Despite
disappointing revenues from school textbooks, total revenues increased by
12%, whilst Ebitda grew by 45%. Kalahari.net doubled its turnover and
reaffirmed its position as South Africa`s leading e-tailer.
PRIVATE EDUCATION
Educor had a satisfactory year, with revenues growing by 14% and Ebitda by
33%. A number of changes were effected to both the structure and management
to provide a base for exploiting the opportunities in the education and
training environment.
Given adverse market conditions in its sector, the Lyceum College business
was discontinued. The full cost of teaching out existing students has been
provided for and is reflected separately on the income statement as a
discontinued operation.
Early indications of enrolments for the year ahead are positive, with most
campuses reporting improved student numbers.
DIVIDEND
The board has recommended that the annual dividend be increased to 25 cents
(previously 24 cents) per N ordinary share, and five cents per unlisted A
ordinary share. The dividends are payable to shareholders registered on 13
September 2002 and will be paid on or after 16 September 2002.
ACCOUNTING POLICIES
The Group adopted new accounting standards to account for post balance sheet
events (AC 107) and employee benefits (AC 116). The Group has further
changed its accounting relating to share incentive schemes and the Welkom
debenture scheme. Shares held by the Group`s share incentive schemes are now
treated as treasury shares. The Welkom debentures have been reclassified as
debt, with the corresponding interest charge raised in full. These
accounting changes have been applied retrospectively with the comparative
information adjusted accordingly.
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
NASPERS LIMITED
ABRIDGED INCOME STATEMENT
Year Year
ended ended
31 March 31 March
2002 2001
R`m R`m
Revenue 9 837 8 266
Earnings before interest, tax,
depreciation and amortisation (Ebitda) 709 180
Depreciation (636) (464)
Operating profit/(loss) 73 (284)
Amortisation (374) (44)
Finance costs (412) (301)
Share of equity-accounted results 158 (60)
Income from investments 4 1
Exceptional items 5 815
(Loss)/profit before taxation (546) 127
Taxation (148) (159)
Minority interest 328 184
Net (loss)/income from continuing operations (366) 152
(Loss)/income from discontinuing operations (605) 848
Loss arising on discontinuance of operations (952) -
Net (loss)/income attributable to
Shareholders (1 923) 1 000
Headline loss for the period (R`m) (457) (484)
Headline loss from continuing
operations (R`m) (236) (387)
Earnings per N ordinary share (cents) (1 320) 715
Headline loss per N ordinary share (cents) (313) (346)
Headline loss per N ordinary share from
continuing operations (cents) (162) (277)
Fully diluted earnings per N ordinary
share (cents) (1 320) 679
Dividend paid per N ordinary share (cents) 24 24
Proposed dividend per N ordinary share (cents) 25 -
Proposed dividend per A ordinary share (cents) 5 -
Number of shares issued (`000)
at year-end 148 084 139 927
weighted average for the period 145 692 139 896
fully diluted weighted average 159 503 153 837
NASPERS LIMITED
ABRIDGED BALANCE SHEET
31 March 31 March
2002 2001
R`m R`m
ASSETS
Non-current assets 10 108 11 668
Property, plant and equipment 4 502 3 351
Goodwill and other intangibles 3 630 6 764
Investments and loans 1 408 1 088
Programme and film rights 509 361
Deferred taxation 59 104
Current assets 6 538 5 816
TOTAL ASSETS 16 646 17 484
EQUITY AND LIABILITIES
Share capital and reserves 1 386 2 553
Minority interest 4 364 7 543
Non-current liabilities 5 118 3 253
Transmission equipment leases 2 861 1 631
Welkom debenture scheme 271 234
Loans - interest-bearing 1 459 865
- non-interest-bearing 334 337
Post-retirement medical liabilities 126 122
Deferred taxation 67 64
Current liabilities 5 778 4 135
TOTAL EQUITY AND LIABILITIES 16 646 17 484
Net asset value per N ordinary share (cents) 936 1 824
ABRIDGED STATEMENT OF CHANGES IN EQUITY
Year ended Year ended
31 March 31 March
2002 2001
R`m R`m
Balance at beginning of year
As previously stated 3 144 1 804
Effect of changes in accounting policies (591) (623)
As restated 2 553 1 181
Movement in treasury shares 3 1
Share capital and premium issued 227 -
Foreign currency translation 556 341
Capital contributions by minorities - 9
Adjustments to prior year goodwill 8 55
Net (loss)/income attributable to
Shareholders (1 923) 1 000
Dividends (38) (34)
Balance at end of year 1 386 2 553
ABRIDGED CASH FLOW STATEMENT
Year ended Year ended
31 March 31 March
2002 2001
R`m R`m
Cash generated by/(utilised in)
continuing operations 228 (332)
Cash utilised in discontinuing operations (574) (432)
Dividends paid (38) (34)
Cash flow from operating activities (384) (798)
Cash flow from investment activities (1088) (662)
Cash flow from financing activities 819 1 395
Net movement in cash and cash equivalents (653) (65)
ANALYSIS OF EXCEPTIONAL ITEMS
Year ended Year ended
31 March 2002 31 March 2001
R`m R`m
(Loss)/profit on sale of investments (25) 5
Profit on dilution of interests in
Investments 53 882
Asset impairments and write-offs (23) (47)
Warranties in respect of debtors and
business disposals - (25)
5 815
CALCULATION OF HEADLINE LOSS
Year ended Year ended
31 March 2002 31 March 2001
R`m R`m
Net (loss)/income attributable to
Shareholders (1 923) 1 000
Adjusted for
- loss arising on discontinuance
of operations 952 -
- exceptional items after tax
and minorities 91 (1 671)
- amortisation of goodwill
after minorities 423 187
Headline loss (457) (484)
Loss from discontinuing operations 221 97
Headline loss from continued operations (236) (387)
SUPPLEMENTARY INFORMATION
31 March 31 March
2002 2001
R`m R`m
Dividends received 4 1
Finance costs 412 301
- interest received (86) (169)
- interest paid 523 387
- net foreign exchange differences (25) 83
Investments and loans 1 408 1 088
- listed investments 329 291
- unlisted investments 299 440
- marketable securities 780 357
Market value of listed investments 1 573 1 000
Directors` valuation of unlisted
investments 299 440
Commitments 1 202 1 452
- capital expenditure 89 75
- programme and film rights 881 834
- network commitments 202 187
- decoder commitments 30 356
Operating lease commitments 1 339 1 223
Date: 26/06/2002 02:00:00 PM Produced by the SENS Department
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