• diary political and General News Events from Feb 2

Nigeria 1%

Sudan 68%

EQ. GUINEA 22%

GABON 9%

DEMOCRATIC REPUBLIC

OF THE CONGO 28%

ANGOLA 37%

ZIMBABWE 6%

SOUTH AFRICA 3%
Source: IMF
Note: Table made from line graph.


COPYRIGHT 2006 Circle Publishing Ltd.
Document GEOM000020061223e2c100010
Focus

China and Africa tie the knot

Ford, Neil

2,230 words

1 December 2006

African Business

AFBZ

38

Issue 326; ISSN: 01413929

English

Copyright (c) 2006 Bell & Howell Information and Learning Company. All rights reserved.
One of the biggest gatherings of African heads of state and ministers outside the continent took place in Beijing last month. The summit has confirmed the new relationship between a resurgent China and Africa. Trade is expected to hit $100bn a year by 2010 and a whole slew of new projects are in the pipeline. NeM Ford assesses what this means to Africa.
The growing economic relationship between China and sub-Saharan Africa was confirmed by November's grand meeting in Beijing. The Sino-African Summit had been heralded by the Chinese government as a breakthrough in relations between the two regions - and African leaders left the Chinese capital in no doubt that a major new source of foreign direct investment (FDI) had emerged.
Chinese interest in the continent has widely been portrayed as a campaign for hydrocarbons but there are growing signs that the relationship could yield far more than oil revenues for investment hungry African states.
Heads of state and ministers from most African governments participated in the summit. At the meeting, the Chinese government promised to double its aid to African countries by 2009. It is difficult to put such a pledge into context because Beijing does not publish details of its aid budget. Moreover, there is likely to be a blurred line between the level of Chinese investment and bilateral aid as a result of Beijing's tendency to tie infrastructural projects with oil and gas sector investment.
Chinese officials also revealed that the country's import duty regime will be made more favourable to African exporters. In particular, the number of goods that will be able to enter the country duty free will be doubled, although again Beijing has yet to flesh out the details of the new regulations. Another announcement concerned the creation of development funds intended to build new hospitals and schools and train 15,000 African workers for skilled positions.
The Chinese government predicts that total annual trade with Africa will reach $100bn by 2010, a massive increase on the 2005 figure of $42bn, which itself is 10 times bigger than bilateral trade in 1995. As recently as 1990, just 9% of African imports went to Asia; today, that proportion has tripled to 27%. According to the World Bank, the value of African goods exported to Asia is rising by 18% a year, although most of this figure is accounted for by oil exports.
The main participants seemed enthused by the opportunities afforded by the summit. Chinese Vice-Premier Wu Yi said: "We take great pride in China's strong and warm friendship with Africa," while China's President Hu Jintao commented: "Our meeting today will go down in history. China will forever be a good friend, good partner and good brother of Africa." Meles Zenawi, the prime minister of Ethiopia, said: "Our main challenge now is not to fight colonialism, but fighting poverty and backwardness and achieving economic independence. Africa needs the support of its friends to overcome this challenge."
This pledge could be seen as an effort to overcome what has been seen as one of the main drawbacks of Chinese projects in Africa. Chinese companies, whether state owned or private sector firms, have a track record of using Chinese designs, engineering, labourers and sometimes also raw materials to build projects. The host country is left with a new railway Une or power plant but the local economy misses out on many other potential benefits.
Development schemes from most other sources over the past few years have tended to include a large element of training, in order to enable African engineers and other professionals to maintain whatever facility has been built and help to develop similar ventures in the same country.
Infrastructural and mining deals
Infrastructural and mining deals worth a total of $1.9bn were announced at the summit, including $200m of investment in the Zambian copper sector, a $300m road upgrade scheme in Nigeria, plus a $300m investment in an Egyptian aluminium project. The agreements formed part of a string of such deals that have been concluded over the past two years.
The most high profile agreement to date has been the $8bn contract awarded to China Civil Engineering Construction Corporation (CCECC) by the Nigerian government. The Chinese firm will build a 1,315km railway from Lagos in the south to Kano in the north, partly with the assistance of a loan from the Chinese government. CCECC has promised to employ 50,000 Nigerians on the five-year construction project, while the company is expected to maintain the line once it is up and running. (see page 50).
The rail deal appears to form part of a wider agreement between the Chinese and Nigerian governments. This has included the $2.6bn purchase of a 45% stake in the OML130 concession offshore Nigeria from South Atlantic Petroleum Limited (SAPETRO) in April. The block includes the Akpo field, with 65Om barrels of condensâtes and 2.5 trillion cubic feet (tcf) of natural gas, and lies at the heart of Nigeria's highly prospective Gulf of Guinea deepwater acreage.
A similarly wide-ranging agreement was reached between the Chinese and Angolan government last year, which encompassed an interest free loan, upstream assets for Sinopec of China and investment in the Angolan telecoms sector by another Chinese firm, ZTE Corporation.
However, it would be wrong to characterise China's interest in Africa as something new. Chinese vessels landed along the east coast of Africa during the medieval period before one of China's periodic cultural revolutions saw the entire national fleet destroyed in order to prevent contact with the outside world.
More recently, China was a small player in the various Cold War struggles that were fought in Africa and launched a major investment programme in the continent during the 1970s. One of the lasting legacies of this period is the Tanzania Zambia Railway (Tazara), which was built with Chinese finance and tens of thousands of Chinese workers. It was constructed from Dar es Salaam south-westwards through Tanzania and into Zambia in order to reduce the region's reliance on the then apartheid regime in South Africa.
The international view
There are many different ways of looking at die Chinese influx. The international press has fought shy of the comparison but it would be easy to portray growing Chinese interest in Africa as part of the UK government's campaign for a fairer deal for Africa that focused on aid, debt and trade and which was showcased at Gleneagles in July last year. From being a virtual diplomatic backwater until fairly recentiy, the attitudes of the world's leading economic nations towards African development are now a significant strand of their foreign policies.
On the other hand, some in the international community, particularly in the West, have criticised China's attitude towards some African countries, notably, its refusal to criticise Zimbabwe's President Robert Mugabe and its reluctance to persuade the Sudanese government to accept UN peacekeepers in Darfur. Beijing's critics have claimed Chinese investment is being used to support repressive and autocratic regimes in Africa, purely so China can gain access to natural resources.
There does seem to be some validity in this argument. The activities of Western firms that invest in developing countries generally come under a great deal more scrutiny than state-owned Chinese companies. In the past, concerted campaigns have forced investors out of countries with governments that are perceived as having a poor record on human rights.
However, Western governments propped up a number of undemocratic African regimes during the Cold War in order to counter Soviet influence or to secure access to natural resources. It would therefore be wrong to see the Chinese strategy as anything new.
As many claim, the driving force behind China's interest in Africa is oil. Until 1995, China was actually a net oil exporter but now imports 3m barrels a day (b/d) and this figure is set to rise rapidly over the next decade. Like all other major importers and other countries with pretensions of global political importance, Beijing has therefore been forced to confront the issue of energy security.
When Chinese state-owned companies were able to source the lion's share of their raw materials domestically, relations with African nations were of little import. Now, however, Beijing is keen to promote strong ties with the governments of key supplier nations. It is also eager to ensure that Chinese oil and gas companies acquire a large portfolio of overseas assets, so that at least a proportion of the country's oil and gas requirements can be guaranteed.
Some have connected China's economic success in Africa with its refusal to criticise the continent's leaders. However, Liberia's President Ellen Johnson-Sirleaf commented: "When it comes to certain continental political positions, I think Africa must look at the positions we take, irrespective of what stance China takes, whether it is on Darfur, whatever else, and I think many of us African leaders have in fact taken independent positions that may or may not be consistent with China's own policy stance.
"In Liberia, we're trying to settle our huge debt problem. China wanted to provide some resources on the basis of sovereign guarantees. We said 'no, we can't take your money on that basis'."
In many sectors, African companies cannot hope to compete with firms from other parts of the world in the short term, because they either do not have the industrial capacity, the technology, the skills or the experience. Since the independence era, most African economies have therefore continued to survive on the export of raw materials, which are largely sold in an unprocessed form.
However, it had been hoped that the continent's manufacturing capacity could grow strong on the export of low cost goods, such as textiles. But new trade deals with China could give Chinese textiles producers better access to African markets, thereby helping to undermine African manufacturers.
The same process occurred during the colonial era in eastern Africa, when the local iron industry was virtually wiped out by cheaper imports from India.
However, it is generally expected that Chinese interest in Africa will have a positive economic impact on the continent. Infrastructural projects will be developed that Western firms have been reluctant to support and increased competition should drive up the price of natural resources. In addition, rising Chinese investment in Africa could prompt greater interest in the continent from investment funds. Many exclude Africa entirely from their portfolios, while others dedicate only a tiny fraction of their finances to African assets. Increasing awareness of the value of African resources should only be good for the continent.
POLITICS
The Taiwan five
Five countries that are likely to miss out on Chinese investment are Burkina Faso, Gambia, Malawi, Sao Tome & Principe and Swaziland, all of which recognise Taiwan rather than China.
The two Asian countries have fought a long diplomatic war for international recognition since the end of the Chinese civil war in 1949, when the communists held the mainland and the nationalist forces retained the island of Taiwan. Since then, the Chinese authorities have viewed Taiwan as a renegade province rather than a sovereign state and have refused to have diplomatic ties with some countries that did recognise Taiwan's Independence.
The impact of the dispute on Africa to date has largely been restricted to aid. Taiwan and China have both offered large aid packages to any African states that offered them sole recognition. The number of countries recognising Taiwan has fallen in recent years, in Africa as elsewhere, but the five nations continue to side with Taiwan. Gambia, Malawi and the others were not entitled to full participation in the Beijing summit but were offered the opportunity to send observers.
It will be interesting to see how the situation develops over the next few years. China may be able to offer large-scale investment but Taiwan is a prosperous nation in its own right and could launch its own investment counter-offensive if it chose to do so. While such heightened competition may raise tensions in East Asia, it would also boost investment and aid in Africa, so the five pro-Taiwanese African states may not yet lose out financially.
The growing economic relationship between China and sub-Saharan Africa was confirmed by November's grand meeting in Beijing. The Sino-African Summit had been heralded by the Chinese government as a breakthrough in relations between the two regions -- and African leaders left the Chinese capital in no doubt that a major new source of foreign direct investment had emerged. Chinese interest in the continent has widely been portrayed as a campaign for hydrocarbons but there are growing signs that the relationship could yield far more than oil revenues for investment hungry African states. Chinese officials revealed that the country's import duty regime will be made more favorable to African exporters. As many claim, the driving force behind China's interest in Africa is oil. However, it is generally expected that Chinese interest in Africa will have a positive economic impact on the continent. In addition, rising Chinese investment in Africa could prompt greater interest in the continent from investment fluids.
Copyright International Communications Dec 2006
Document AFBZ000020061216e2c10000o

Robust Economy Lifts Naspers
by Nick Wilson

491 words

29 November 2006

05:09 PM

All Africa

AFNWS

English

(c) 2006 AllAfrica, All Rights Reserved
Johannesburg, Nov 29, 2006 (Business Day/All Africa Global Media via COMTEX) --
MEDIA group Naspers said yesterday that it had continued to "record satisfactory growth", with revenue rising 22% to R9,1bn for the six months to September.
The group said core headline earnings, excluding all nonrecurring, nonoperational items, increased 43% to R1,3bn, and trading conditions remained "favourable in most markets" in which the group operated.
But Naspers warned that development spending would be accelerated in the second half, affecting earnings and cash flow negatively.
The group said rising interest rates might affect consumer spending, and a weaker rand would make its foreign-dominated input costs more expensive.
"In our other markets such as China, Brazil, Greece, Nigeria and Angola, macroeconomic conditions seem generally positive in the short term."
Naspers owns newspapers and magazines as well as Africa's only pay-television channel.
The group owns SA's biggest daily newspaper, the Daily Sun, and operations in Greece, Cyprus, the Netherlands, Thailand, Angola, Nigeria, China and Brazil.
Naspers financial director Steve Pacak said the group's "very robust growth in the first six months" was largely a "function of a robust economy".
Pacak said the group was just cautioning the market that when interest rates increased, spending patterns were affected.
The group said the revenue growth of 22% was derived from an increase of 62000 in pay-television subscribers for the period.
It said the "positive trading conditions" experienced by the group were also reflected in advertising revenue, which grew by 21%.
Pacak said that a "big chunk" of the subscriber growth was from the South African market.
"A big reason for the growth is again the economy and also the growth of the emerging black middle class," he said.
Pacak said that of the group's total revenue of R9,1bn for the six months to September, R5,2bn came from its pay-television business.
He said that most of the advertising revenue was derived from the group's newspaper and magazine businesses.
Pacak said the group invested about R3,7bn over the period. Capital expenditure of R376m was incurred, mostly in its South African print media business.
Naspers said it was also "developing a number of businesses organically" and that these were focused on broadband technologies, the internet and mobile television.
The group said the development costs were R449m during the period, compared with R211m for the corresponding period last year.
"It is anticipated that this development spend will accelerate in the second half of the year, negatively affecting earnings and cash flows."
Naspers said significant acquisitions during the period included the CryptoTec conditional access business this April for R252m. The group acquired a 30% interest in Abril SA for R2,6bn in May.
Cobus Stofberg, CEO of Naspers' MIH business, will be acting chief executive from April 1 next year while Naspers CE Koos Bekker takes a year's leave.
Document AFNWS00020061129e2bt001aa
Business Day (South Africa): Robust economy lifts Naspers.
Nick Wilson

498 words

29 November 2006

Business Day (South Africa)

MEWBUD

21

English

The Financial Times Limited. Asia Africa Intelligence Wire. All material subject to copyright. Business Day (South Africa) © 2006 All rights reserved.
Robust economy lifts Naspers Group warns that accelerated development spending will affect second-half earnings MEDIA group Naspers said yesterday that it had continued to record satisfactory growth, with revenue rising 22% to R9,1bn for the six months to September. The group said core headline earnings, excluding all nonrecurring, nonoperational items, increased 43% to R1,3bn, and trading conditions remained favourable in most markets in which the group operated. But Naspers warned that development spending would be accelerated in the second half, affecting earnings and cash flow negatively. The group said rising interest rates might affect consumer spending, and a weaker rand would make its foreign-dominated input costs more expensive. In our other markets such as China, Brazil, Greece, Nigeria and Angola, macroeconomic conditions seem generally positive in the short term. Naspers owns newspapers and magazines as well as Africa's only pay-television channel.
The group owns SA's biggest daily newspaper, the Daily Sun, and operations in Greece, Cyprus, the Netherlands, Thailand, Angola, Nigeria, China and Brazil. Naspers financial director Steve Pacak said the group's very robust growth in the first six months was largely a function of a robust economy. Pacak said the group was just cautioning the market that when interest rates increased, spending patterns were affected. The group said the revenue growth of 22% was derived from an increase of 62000 in pay-television subscribers for the period. It said the positive trading conditions experienced by the group were also reflected in advertising revenue, which grew by 21%. Pacak said that a big chunk of the subscriber growth was from the South African market. A big reason for the growth is again the economy and also the growth of the emerging black middle class, he said. Pacak said that of the group's total revenue of R9,1bn for the six months to September, R5,2bn came from its pay-television business. He said that most of the advertising revenue was derived from the group's newspaper and magazine businesses. Pacak said the group invested about R3,7bn over the period. Capital expenditure of R376m was incurred, mostly in its South African print media business. Naspers said it was also developing a number of businesses organically and that these were focused on broadband technologies, the internet and mobile television. The group said the development costs were R449m during the period, compared with R211m for the corresponding period last year.
It is anticipated that this development spend will accelerate in the second half of the year, negatively affecting earnings and cash flows. Naspers said significant acquisitions during the period included the CryptoTec conditional access business this April for R252m. The group acquired a 30% interest in Abril SA for R2,6bn in May. Cobus Stofberg, CEO of Naspers' MIH business, will be acting chief executive from April 1 next year while Naspers CE Koos Bekker takes a year's leave.
FBUD53021757
Document MEWBUD0020061129e2bt00050
Interim 2006 NASPERS LTD Earnings Conference Call - Final
7,541 words

28 November 2006

Voxant FD (FAIR DISCLOSURE) WIRE

FNDW

English

© Voxant Inc. All rights reserved.
OPERATOR: Good afternoon and welcome to the Naspers interim results for the six months ended September 30, 2006 conference call. [OPERATOR INSTRUCTIONS]. At this time, I would like to turn the conference over to Beverley Branford, Head of Investor Relations. Please go ahead.
BEVERLEY BRANFORD, HEAD OF IR, NASPERS LTD: Good afternoon, everyone, and thank you for joining our conference call. I'm Beverley Branford from Naspers Investor Relations. The other Naspers executives on the call today is the Group CEO and CFO, Koos Bekker and Steve Pacak. And then calling in from the Netherlands is the MHI CEO and CFO, Cobus Stofberg and Steve Ward. Other executives here in Cape Town with me is the Media 24 CEO and CFO, Hein Brand and Francois Groepe, as well as the Internet CEO, Antonie Roux, and the Group Finance Manager, [Karl Snyman].
For your convenience, this conference call will be available for replay for the next 48 hours and the reply of the webcast will be available for the next two weeks. All the details are available on the Naspers.com website.
I would just like to draw your attention to the important forward-looking information on slide two. I will now hand over to Naspers' CEO, Koos Bekker.
KOOS BEKKER, CEO, NASPERS LTD: Thanks, Beverley, and hello, folks. The first slide I'd like to deal with is slide three, and that summarizes what we're going to present to you today. On the operational side, the trading conditions remained favorable in almost all our markets. There's some indication that the environment in South Africa might be tightening slightly. There might be interest rate rises and less consumer spending. The indications are not yet firm. In other markets - China, Brazil, Greece, Nigeria, Angola - the trends are generally positive.
We grew mainly, over the past six months, from organic expansion of our existing businesses. You'll note that Pay TV subscribers increased by some 60,000, that the technology business pushed sales and that we launched several new magazine titles. So that's the operational side.
Turning to the financial quadrant, revenues increased by 22%, core headline earnings up by 43%. And Steve Pacak will outline shortly how we calculate that. Free cash flow was about ZAR1b.
Now, on the investment side, we've had an active period. We've focused on the so-called BRICSA countries - Brazil, Russia, India, China and Sub-Saharan Africa.
We -- in addition to that, we also developed our organic businesses, our own Broadband technologies, our own Internet and mobile ventures. You'll see development costs are up quite a bit. ZAR367m in fact, compared to last year's ZAR185m. And we expect that to increase further in the next six months ahead. So we now serve warning that we are busy developing some exciting items and that that will cost more in the six months to come.
On the merger and acquisition front, a few points. Irdeto, our encryption conditional access company, acquired one of its competitors. We also bought a 30% stake in Abril, the leading magazine company in Latin America and one of the most important book publishers. We acquired a minority interest in Titan, which is a sports publisher in China. We increased our stake in Greece and we launched two Black Economic Empowerment initiatives, in fact in all our South African businesses, and Steve will shortly outline that a bit more.
If I could deal with BEE on the next slide, slide four. The two schemes [crystallize] in MultiChoice and in Media24 respectively. They were surprisingly over-subscribed. In fact, we had about -- we received about three times the applications we could service. Each of these companies will end up with 100,000 shareholders. According to our research, that would make them some of the most widely held companies in the whole economy.
And, as a result of the success and wishing to accommodate more people, we -- the Board decided to allocate another 7.5% in MultiChoice for the next round Empowerment scheme. Now, that should push up the MultiChoice BEE component to about 22%. Then, if M-Net comes in as part of the [tonic] agreement that you might know about, that will go down to about 20%. But that's a firm base because we'll get some credits for Empowerment shareholding in Naspers itself.
Okay. Then, if I may turn to our strategy on slide five. We have a strategy to focus on emerging markets and I'll give you a brief thumbnail sketch of those markets and where we stand. In Brazil, we have a firm foothold in magazines and books in a good solid company. In Russia, we are negotiating [restoring] and have done so for three years. We now understand the market and I think we'll make some headway in the future. In India, we found the market exciting and fast growing but regrettably much too expensive to buy anything new. So we're setting up organically our own Internet business. We're up to about 50 people on the ground. In China, we have several substantial stakes with partners and we're very happy with our partners. Then, all over Sub-Saharan Africa we have Pay TV ventures that are all now profitable and some magazine ventures that we started [in 2000 and so on].
So first, that's a very superficial bird's eye view of the business. And Steve Pacak, our Financial Chief, will now take you through the numbers.
STEVE PACAK, CFO, NASPERS LTD: Thank you very much, Koos. If I could refer you to slide seven, which is an analysis of our revenue, we show here total revenue for the six month period of ZAR9.1b, which is growth of some 22% to the comparable period last year. This 22% is in fact the highest rate of growth we've experienced for a few years now. The growth came mainly over the electronic media segment which grew at 26% and print media which grew at 12%. The key driver of growth, the Pay TV subscriber base, this grew 62% net over the six-month period to September '06.
Advertising revenues continued to surprise us. We experienced growth of 21% over the period. And it's a constant indication of how robust the economies are in which we operate, particularly here in South Africa. The conditional access revenue business grew its revenue by 87%, which came roughly half from acquisition growth and half from organic growth within the business.
On slide eight we show you our operating margins. Our operating profit before accounting charges, such as amortization and other gains and losses, totaled ZAR1.9b for the period, which is growth of some 33% compared to revenue growth of 22%. So we've seen margin improvement, operating margins growing to 21.4% from 19.6% in the previous period. Once again, this has come about largely from the increase in the subscriber base, the Pay TV base, and the scale -- the positive scale effect of the Pay TV business.
The margin improvement also came despite substantial increases in our development costs. We had ZAR449m worth of development costs in the period compared to an equivalent figure of ZAR211m last year. But despite that, margins continued to improve. And, as Koos indicated, we do expect increased development cost in the second half of this year, with the concomminent effect that they will have on cash flows and earnings.
On slide nine we give you a summary of our income statement. I've already discussed the revenue and operating profit line. The finance costs line reflects a net charge of ZAR466m, which I think requires some analysis. It comprises really of three items.
Firstly, there is a true interest income item of ZAR49m. This is income that we've earned on cash deposits around the Group. Then there is an inclusive interest charge of ZAR78m. We have satellite transponder leases throughout the Pay TV business which we lease. In terms of IFRS, we have to capitalize these leases and there's an inclusive interest charge there, as I said, of ZAR78m. And then finally, there is an accounting charge in the aggregate of ZAR457m. This relates to foreign currency translation adjustments. What IFRS requires us to do is to mark-to-market our foreign assets and liabilities. As a consequence, we have an accounting charge of that amount. Most of this is actually stripped out when we get to determining our headline earnings and our core headline earnings.
Then there's an impairment charge of ZAR150m. We have an investment in Beijing Media Corporation of 9.9%. BMC is, in fact, a listed company. And the share price of BMC is below the level at that which we acquired the interest. So we believe it's prudent to actually write down the investment by ZAR150m.
That's all I wish to highlight on the income statement.
On slide 10 we give you some analysis of our headline earnings. The headline earnings, as calculated in accordance with the JSE requirements, totaled ZAR1.27b in the period. That grew 25% compared to last year.
More importantly for us is the core headline earning figure at the bottom of that slide. We have constantly reminded our shareholders over the past few years that core headline earnings, as we define it, we regard as a more appropriate measure of our operating performance, simply because we adjust or strip out non-recurring and non-operational items. In essence, what we do is we take out the accounting IFRS clutter from the figures. So core headline earnings in the period grew by 43% to ZAR1.3b.
You will notice that the difference, though, between headline and core headline earnings in this period is pretty small, so I won't dwell on the reconciliation but the items are there for your information.
Then, on to our cash flow performance. On slide 11 we show you our free cash flows. They totaled ZAR1b for the period, which is up 39% from last year. So for us it's quite pleasing that the free cash flow growth is tracking that which we are achieving on the core headline earnings side.
Capital expenditure remains at a very high level of ZAR376m, the bulk of that actually going into our print media businesses here in South Africa. And we continue to have higher levels of tax payment because of the higher levels of profitability in the Group.
On the next slide we show you the net cash flow position. After free cash of ZAR1b, we invested ZAR3.7b in the period on the acquisitions that Koos referred to earlier on. We had dividend payments of ZAR378m and had some net interest income of about ZAR44m. So the net cash outflow in the period was just over ZAR3b, leaving net cash balance of about ZAR2.6b on our aggregated balance sheet. That is before capitalized finance lease liabilities, relating mostly to the satellite transponders, of about ZAR2b. So the net cash balance is less our capitalized finance lease liabilities that total just above ZAR600m.
Those are all the financial highlights. I would now like to hand you over to Cobus Stofberg, CEO of MIH.
COBUS STOFBERG, CEO ELECTRONIC MEDIA MIH, NASPERS LTD: Thank you, Steve. Let's start on slide 14, on Pay Television in South Africa. The South African Pay Television operation remains a core business and we continue to be really pleasantly surprised with the growth in the subscriber numbers in South Africa. The subscriber base grew by 60,000 in the six months and it now totals 1.3m subscribers, of which 85% are digital. The drivers here really is the lower-price Compact bouquet, as well as the PVR subscribers. We have 67,000 Compact subscribers and 65,500 PVR subscribers.
Currently, we're testing mobile television. And while this is a fairly new development, we believe it's a growth opportunity.
And you're probably all aware of the broadcast license process. We applied for the license at the end of July. There are 17 other applicants. And we believe ICASA will issue licenses in the second quarter of next year.
Let's go on to the M-Net/SuperSport transaction on slide 15. Koos referred to this. We purchased the Johncom 38% stake in M-Net and SuperSport for 21m Naspers shares plus ZAR250m in cash. There are conditions precedent to this transaction. And, once we have completed this transaction, we will fully inject the M-Net/SuperSport business into MultiChoice South Africa to ensure M-Net/SuperSport maintains its BEE status.
Going on to Sub-Saharan Africa Pay Television on slide 16. We've seen great growth in Sub-Saharan Africa with the base growing by 35,000 in the six months. We now have 422,000 subscribers in Africa, all of them digital. Most of the growth came from the Portuguese service here in Angola, which increased by 20,000. The Nigerian subscriber base also grew by 9,000.
Going forward, we expect to see more inclusive regulatory regimes across the African continent and we're preparing for that. We also intend to launch several mobile TV pilots in Africa in the coming months.
Going to Greece on slide 15, Greece and Cyprus, slide 17. MIH acquired 12% in NetMed from minority partners and we now hold 27% of NetMed and Teletypos holds the balance.
The Greek subscriber base increased by 10,000 in the six months. Now, as you may recall from previous years, this is the summer season. This first half reflects the summer churn. It's not indicative of the growth.
In Cyprus, the subscriber management services contract to administer the analogue base on behalf of the third party was terminated and this resulted in a transfer of some 42,000 analogue subscribers to the third party LTV. Going forward in Cyprus, we intend to focus on a digital platform, which is linked to the Greek -- the Greece platform. And we already have 21,000 digital subscribers in Cyprus.
If you look in -- on the slide, you'll notice the prior-year financial results reflect a one-off EUR6.5m recoupment of legal costs relating to the successful conclusion of the Alpha arbitration in 2005.
Moving on to conditional access, Irdeto on slide 18. Irdeto has made great progress. We're shipping 4.5m units in the various segments (those segments are digital television, mobile television and IPTV) during the period. And that compares to 2.7m in the corresponding period. The revenues grew by 87% and operating profit increased to ZAR76m. This increase is due to a combination of organic growth from existing and new customers and the CryptoWorks acquisition, by coincidence about 50/50.
The Philips CryptoWorks business was acquired in April 2006 and has been successfully integrated in the six months into Irdeto. Irdeto have pioneered the mobile TV segment and intends to capitalize on its lead by further developing technology for safeguarding content in the Broadband, Internet and mobile environments. You will recall that they were a Korean satellite mobile TV provider. They were really the first in the world.
Then, on slide 19, the Broadband technologies, Entriq. Entriq is the company in California that develops content protection and subscriber management services for Broadband markets. The rollout of Broadband market and the distribution of video content online continues to grow worldwide and has taken off in the last two years specifically. Entriq has gained traction over the period in terms of the number of licenses issued, as well as the number of new clients, and this is then evidenced in revenue growth. So, although it's from a very low base, revenues grew by 78%, giving an indication of the potential.
Entriq incurred significant R&D in the period under review and we expect that to continue in the foreseeable future.
Going on to the Internet, slide 20. The Internet segment, which on this slide excludes Tencent, grew revenues by 14% and operating profit of ZAR24m. Now, M-Web South Africa has 277,000 dial-up and 62,000 Broadband customers. And, as you can see, it remains very profitable. Historically, Telkom has had a monopoly on the market in South Africa and it has been slow to roll out Broadband services. Now, while we're happy that there is some movement in the growth of Broadband connections in South Africa and that it's improving, it's still very slow and disappointing. And it leaves our country way behind other developed and developing countries.
Looking at M-Web Thailand, they further extended their leadership role with the Sanook portal and this was helped by the rollout of new services.
In China, we made investment in Tixa. Tixa is a low-cost advertising business. And we established an Internet business in India, which is targeted at the youth market in India.
Then, a last slide from my side is the slide 21 on Tencent. Tencent remains the leading instant-messaging platform in China and the Tencent portal, QQ.com, is now ranked fifth globally; quite an achievement.
Tencent has shown strong growth, peak simultaneous online users reaching 22m users. It's one of the numbers we look at. The new enhanced lifestyle products like QQ Pets and Q-Zone and Q-Home continue to grow and they continue to diversify the business models and revenue streams.
I'd now like to hand over to Hein Brand to take you through the print media division.
HEIN BRAND, CEO MEDIA24, NASPERS LTD: Thank you, Cobus. If we can move to slide 23 and actually start with South African newspapers, magazines and printing, you will see that we still have the benefit of robust economic conditions with the resultant good advertising support and quite strong organic growth, which enabled us to increase revenue by 18% to some ZAR2.3b. We also had the benefit this year of the commissioning of the Paarl Gravure printing plant late in last year and this year we'll have the full benefit of it contributing to the growth in turnover.
You will also note that in the next few slides that we are accelerating our investments in physical infrastructure and titles in all the territories in which we are active.
If we can move on to slide 24, more specifically on newspapers, we're having -- we're experiencing [snowballed] circulation with continued growth of especially the tabloid products - Daily Sun, Son, Soccer Laduuma and Sunday Sun. And, in particular, the Daily Sun achieved circulation in September of some 493,000.
I referred to the acceleration of investment. In this period we launched a number of new titles including the Cape Son, My Week and the People's Post. And we also commissioned additional printing infrastructure in Cape Town and Johannesburg.
Moving on to magazines, we launched a number of new titles including Maxpower, True Love Babe, Go! and TopMotor. And we also acquired and relaunched Topcar, Topbike and Topdeal. We do experience this as a very competitive segment.
If we move on to slide 25, dealing with book publishing and private education. In terms of the book publishing, in this period under review there was an accelerated implementation of a number of grades in the new curriculum, which increased our marketing spend in the period. The September period end is also somewhat arbitrary for school books in that the cut-off point for the first and second semesters, orders aren't quite crisp, so there's not much to be drawn from the conclusion of the period result.
In general book publishing, the trading satisfactory but it's a tough and competitive market.
In terms of private education, we're happy with the progress we're making with the repositioning of the business.
If we could go to slide 26, I'll quickly highlight international print development. Koos has referred to our Abril transaction, where we acquired 30%. It is the biggest magazine publisher in Brazil and one of the largest media companies in Latin America. Its flagship, the Veja, is the fourth highest selling weekly internationally. It has also got a leading educational book publishing business.
We acquired a minority stake in Titan, a large sports publisher in China. And we've finished the first phase of the transaction, which encompassed us acquiring 20%. In the rest of Africa we're satisfied with the progress made on especially the magazine businesses.
I'll now hand you back to Koos.
KOOS BEKKER: Thank you, Hein. First, just a conclusion and a word on the outlook. I think we've experienced good socioeconomic conditions and macroeconomic conditions in our key markets and we expect some of that might continue. The core businesses performed well. They're generally profitable and they product healthy cash flows. But we give some warning that those favorable conditions may not last; it's not all within our control.
Then, going forward, a few points of focus. Firstly, we'll be increasing our R&D spending. You've seen it up in the past six months; it'll increase further. We're developing especially Broadband and mobile technologies, some of which we regard, at least, as exciting. And we'll continue to explore those BRICSA countries, further investment opportunities in the industries that we understand well.
Then, perhaps just a last note which is not in your slides. The Board has kindly granted me a year of sabbatical. The background is just briefly as follows. I think often leaders are not particularly good in their last terms. They lose their daring and they start believing their own pearls of wisdom. So it's a danger. And the danger in my case is perhaps bigger than most because I had a break early in life and I was barely 33 when M-NET started. So, for 21 years now I've been heading up a major media company and for 16 that company was listed with thousands of shareholders. And you have to bring the bacon home at the end of the year.
So what I've asked the Board, and they've agreed to on an unpaid basis, is just to take a year off and to go investigate the world. I'd like to in particular look at places like Korea, Japan and the west coast of the U.S., where the new media industry is being born, where new things are invented by young people and try to understand what's happening. I also want to just read and relax and take a break.
And then I think what influenced the Board was that we have a very good CEO available in Cobus Stofberg. He's been with the Group for 21 years. He went through the creation of M-NET and all the other businesses, lived in many countries and is especially balanced and sound. And then around him we've got a strong management team, many of whom are seasoned and you've heard some of them on the call today. There are more outside. So they should be able to do a good job.
So, folks, that's a broad outline of what we did in the last six months and some comments on prospects. We'll now take questions and try to respond.
OPERATOR: Thank you very much. [OPERATOR INSTRUCTIONS]. Our first question comes from Kevin Mattison of Avior Research. Please go ahead.
KEVIN MATTISON, ANALYST, AVIOR RESEARCH: Hi. Congratulations on what looks like quite an exciting period. A few questions for you, first of all just on M-Net/SuperSport, your decision to issue shares to acquire Johncom's stake. If you can just maybe take us through that? In particular, if we look at the Phuthuma Nathi scheme, we've seen that you can gear those assets quite nicely. And just a bit surprised that you are using shares instead of some of your cash or debt resources that are available.
Also, just on the Greece op -- the Greek operations. Hearing obviously what you said about the contribution from the legal outcome, it stills looks, just given the exchange rate and your -- and also your growth in subscribers, that it seems to have gone backwards a bit. If you could maybe just talk about the outlook there and also specifically about the programming environment?
And then my final question is about Brazil. If we look at your associate line and we look at QQ, that's done quite well but there seems to be a bit of a gap. And if you could maybe just talk about that and say what impact Abril has had on your associate line in the first six months? Thank you.
KOOS BEKKER: Okay, Kevin. May I suggest that Steve Pacak here will take the M-NET/SuperSport shares question. Cobus Stofberg can take Greece and Hein Brand can comment on Abril. Steve?
STEVE PACAK: Yes, Kevin. Hi, it's Steve here. On the M-Net/SuperSport issue, that's really just what came out of the deal. You saw from the announcement what Johncom wanted to do was to essentially unbundle whatever came out of the deal with us. And what they wanted was they didn't want cash, they wanted the Naspers shares, which will then go to their shareholders once they've approved the transaction. So they wanted to unbundle not cash, they wanted to unbundle Naspers shares.
KEVIN MATTISON: So did you have a discussion with them and then you then determined that it would be best to offer shares to Johncom?
STEVE PACAK: It came out of the negotiation with the Johncom management, yes.
KOOS BEKKER: Cobus?
COBUS STOFBERG: Kevin, on Greece, you're right. There are more -- the margins deteriorated because of the sports programming rights. And sports programming rights worldwide seem to be picking up and getting more expensive. I think in Africa and South Africa we'll suffer a lot more from that going forward.
So in Greece it was specifically the soccer, it was the increase in the soccer. We have quite a nice package this year of soccer rights in Greece and we hope to see that translate into subscriber growth. But those rights made the programming more expensive and as a result you'll see less of a profit than what you would expect.
KEVIN MATTISON: And have you entered into multi-year contracts now, so it's a little bit more predictable in terms of what your costs should be?
STEVE PACAK: No. As -- well, put it this way. As far as the studios are concerned we have multi-year contracts and a number of the sport events we have multi-year contracts or the -- a number of the sports rights we have multi-year contracts. But there still are some soccer contracts that's only done for the next season. So I expect that may result in an increase when they come up for renewal.
KEVIN MATTISON: Fine.
HEIN BRAND: Kevin, the Abril transaction was concluded on May 4, so we've only equity accounted in fact for a two-month period. So the impacts on the results are quite limited. The number that we put in on the attributable line was a loss of ZAR30m.
KEVIN MATTISON: Right, thank you.
OPERATOR: Our next question comes from Shamir Khan of JP Morgan. Please go ahead.
SHAMIR KHAN, ANALYST, JP MORGAN: Hi, good afternoon. Just to recap on some of the numbers that were given to us at the year-end conference call. CapEx, we were looking at about ZAR50m for the full year '07. Are we still on track for that or are we going to overshoot that? Development costs were around US$70m. What sort of number are we looking for this year, maybe going forward?
And in terms of the Internet businesses, I see Thailand as well as [inaudible] are still loss making. Do you still see a pathway to profitability there and, if so, over what sort of time period?
And then the final question is on the printing assets. You've put in a lot of new presses. What is your capacity utilization and specifically looking at the Gauteng region? Thank you.
KOOS BEKKER: Shamir, [better] Steve Pacak takes the CapEx, the development cost questions. You're lucky that Antonie Roux's fresh here from Thailand, just to answer your question on Thailand.
SHAMIR KHAN: Thank you.
KOOS BEKKER: And Hein Brand will take it.
SHAMIR KHAN: Okay.
STEVE PACAK: Shamir, on the development costs, just to understand this, we don't give out full costs. So the $70m that we spoke about last time around, well, that's more or less what we spent last year. We indicated that we would increase the spending; we have. We spent substantially more this period than we did in the equivalent period last year. I'm talking about the ZAR449m.
What we will spend in the next six months, we don't actually give out a projection on it. But we have said, and I'll say it again, that we do anticipate it being higher in the second half of the year than it was in the first half of the year.
CapEx, likewise. We spent -- you've seen what we spent in the first half of this year, just below ZAR400m. I'm not going to give you a projection but at the same time I would expect that for the full year to be pretty close to double that. So that's how we see development costs and CapEx. Both are at a high level because of the developments that we have.
ANTONIE ROUX, CEO INTERNET, NASPERS LTD: Shamir, as far as Sanook in Thailand is concerned, during the period the portal business performed remarkably well from a usage point of view. We have experienced a political situation in the market, where we've seen a dramatic decline in advertising spend which has had a marginal impact on the business. [Focus] of the business is really small and we're continuing to actually roll out some of the Tencent QQ products into the market. So we expect that the business will perform well in the future.
KOOS BEKKER: Hein?
HEIN BRAND: Shamir, in the period under review we commissioned the [Uniset] in Cape Town, four towers and some folding equipment and some dispatch equipment. And in Gauteng we actually commissioned also a Uniset, quite a big one, nine towers and two folders mailroom equipment.
We're quite fine with the current product portfolio in terms of capacity. Of course, the problem is peak capacity. We, for instance, still have a bottleneck on a Saturday evening, because we've got three very big Sunday products - City Press, Sunday Sun and the Report. But unless we launch new titles we are more or less on capacity and we should be okay for the foreseeable future, unless big growth or big new titles.
SHAMIR KHAN: Okay, thank you.
OPERATOR: Our next question comes from [Malloy Horne] of Merrill Lynch. Please go ahead.
MALLOY HORNE, ANALYST, MERRILL LYNCH: Thank you very much. Good afternoon. Two of my questions have been answered, so I'll just focus on the free cash flow utilization. I was just wondering if you could perhaps just maybe give us some kind of guidance or thoughts about your free cash flow utilization, your anticipated change in potentially the dividend policy, given the significant growth in your headline or core EPS line, and how we should actually extrapolate that relative to the dividend growth going forward, taking into account your potential investment opportunities.
KOOS BEKKER: Malloy, that sounds like a difficult question. I'll give it to Steve, especially concerning dividend payment.
STEVE PACAK: Malloy, on the dividend, I think our policy is to pay an annual dividend. And so I think, come June next year, we will take the audited results to the Board and they will opine on what kind of dividend to pay, depending on the growth that's then. So we'll judge that when we next talk to you in June.
The free cash flow utilization, we have a [really straight] fund. The strategy that Koos outlined, specifically as it relates to the so-called BRICSA strategy and specifically as it relates to developing exciting opportunities in the Broadband space and, of course, mobile television. So that's what we'll utilize our free cash flow for.
MALLOY HORNE: Okay. If I could maybe just follow up on that, there is a bit of concern about reinvestment risk. So I guess what the market's looking for is, if you look at your -- increasing your dividend last year relative to your earnings growth, and so far this year it's really tracking significant growth on the bottom line, whether one could actually anticipate a similar kind of trend or whether you think at -- where you are at this stage of your business development that you should favor investment ahead of potentially growing your dividend aggressively?
STEVE PACAK: Malloy, I'm hoping we can do a bit of both. I'm hoping that the -- we did the last time -- last year's dividend we -- in fact, the increase was slightly higher than the earnings growth. I'm hoping we can do a bit of both. I think, in other words, we can invest in -- make investments that we want to with the cash that we have to do that. And also to reward shareholders with an increased dividend that matches something along the line which earnings grow at.
MALLOY HORNE: Thank you.
STEVE PACAK: I really just think it's something that we need to deal with when we have the actual results for the full year to March '07.
KOOS BEKKER: You see he's trying to duck, Malloy.
MALLOY HORNE: Fine.
OPERATOR: Our next question comes from Craig Hackney of BJM. Please go ahead.
CRAIG HACKNEY, ANALYST, BJM: Hi, good afternoon. Three questions, firstly Sub-Sahara Pay TV. You had some really nice margin expansion there, I think close to 35% in this period. Was that purely a function of the revenue growth, i.e. positive operating leverage? Or are there any abnormal [inaudible] in that operating profit?
Then, secondly, you've spoken about that you would expect increased programming costs in South Africa and the rest of Africa. If you could just give us a sense as to whether you think those increased costs will be offset by economies of scale, i.e. are margins sustainable at these sorts of levels?
And then, thirdly, if you can just speak a little bit more about Abril in terms of how it's trading, the outlook and whether it's meeting your original expectations? Thank you.
KOOS BEKKER: Okay, Craig. I think Cobus can take the first two questions on the Pay TV margins and the programming costs. And I think the answer to the third question is yes but Hein can respond.
COBUS STOFBERG: Yes, I -- Steve Ward, please, if you can add to this. The -- there is nothing unusual in the figures, so one would expect that's the kind of margins that we'll be able to maintain. The only question, as I referred to earlier on, there will -- there seemed to be a jump in sports rights. And as competition heats up in Africa, and it's all over Africa but specifically in Nigeria and South Africa, one will see pressure, increased pressure on programming rights which is just one of the effects that you have to deal with.
And so I would imagine in the short term you will see margins under pressure. Long term, hopefully, one can manage that and crawl our way back to those margins. Steve, I don't know if you --?
STEVE WARD, CFO ELECTRONIC MEDIA MIH, NASPERS LTD: I don't think I'd add to that, thank you. Hit the nail on the head there.
KOOS BEKKER: Okay. Hein, if you will.
HEIN BRAND: Craig, these two quarter -- two months doesn't probably make a lot of sense to anybody. What I can tell you a little bit about is the six-month period up to June. To give you an indication size-wise, the turnover for that period is about ZAR3.5b, which makes them slightly bigger than Media 24's -- all of Media 24's operations. We're quite happy they're tracking what we were expecting, a nice positive EBITDA level.
As you know, when we did the transaction one of the reasons why we could do the transaction was the high level of gearing. So on a net attributable basis they are still making a loss but they're performing to our expectations.
CRAIG HACKNEY: Okay, thank you very much.
OPERATOR: Our next question comes from [John Sletterfold] of UBS. Please go ahead.
JOHN SLETTERFOLD, ANALYST, UBS: Thanks. Just I've got three questions. The first one really relates to the reconciliation between the headline earnings and recorded line earnings. The ZAR308m which is shown as a loss on investment, I was just wondering what the specific asset was that that relates to.
The second question really dealt with the advertising trends through October/November, if they still remain quite strong relative to expectations and if they're still in line with the first six months' performance.
And, just lastly, on M-Net. I see the EBITDA margin has gone up to 35%, whether or not that's sustainable and what really was driving that performance?
KOOS BEKKER: Okay. We have the financial manager of Naspers, Karl Snyman, here and we'll give him the headline earnings question. And then, on ad trends, do you have in mind more print or electronic or all of it, John?
JOHN SLETTERFOLD: The print side.
KOOS BEKKER: Okay. Hein, you can respond to that and Steve Ward can maybe comment on the EBITDA of M-Net. Karl?
KARL SNYMAN, GROUP FINANCE MANAGER, NASPERS LTD: John, the ZAR308m is made up of two items. The one is ZAR260m loss that we -- a ForEx loss that we incurred on the settlement, or a partial settlement, of an investment in a foreign operation. And because it's of a capital nature, we add it back for headline earnings. And then the remaining portion, which is about ZAR50m, is related to Tencent buying back their shares in the open market, which then has an effect on our investment in them.
KOOS BEKKER: Then ad trends, Hein?
HEIN BRAND: John, I'm quite wary of answering this one. We didn't really have a good six months. We had an excellent four months and then a particularly bad two months in August/September. But October and November looked a little bit better again. So it looked like there's quite a marked shift, a period shift, to the traditional Christmas advertising. And it is difficult at this stage for us to draw any hard conclusions but we see it softening at the moment. Whether it will sustain at that levels or drop back, it's difficult to call and we avoid making those assumptions. But it's quite turbulent for us at the moment.
JOHN SLETTERFOLD: Thanks.
KOOS BEKKER: Steve Ward, do you want to comment on the EBITDA at M-Net?
STEVE WARD: Yes. John, there's probably two main effects that improved the EBITDA performance at M-Net. The first is the advertising, which has been very strong the first quarter and for the time being, at least, continues to be strong. And the second is that revenue from Sub-Saharan Africa is denominated in U.S. dollars. So there is a benefit from that dollar inflow for M-Net, against the weakening rand, I should say.
JOHN SLETTERFOLD: So 35%. Just, assuming advertising doesn't drop very sharply, it could well be maintained going forward?
STEVE WARD: Yes, I think that's a fair assumption.
JOHN SLETTERFOLD: Okay, thanks.
OPERATOR: [OPERATOR INSTRUCTIONS]. Our next question comes from [Stephen Charest] of Credit Suisse. Please go ahead.
STEPHEN CHAREST, ANALYST, CREDIT SUISSE: Good afternoon, thank you. Just looking at the -- what exactly happened in the Cyprus operation, I didn't quite get that. If you could just say exactly what happened and when? And then also, what are you doing now to make up for this? It looks you're focusing on the digital platform. If you could expand on that a little bit?
And then if you could just also expand on the impact of losing that subscriber management operation on the financials? The -- what amounts of revenue and EBITDA from that discontinued business is included in your September '06 numbers? Thank you.
KOOS BEKKER: Cobus, before you respond, Karl, you just want to say something about your previous answer.
KARL SNYMAN: Yes. John, just to come back to those adjustments we made for headline earnings, those are pure accounting adjustments and are not realized losses and doesn't have a cash flow effect.
KOOS BEKKER: Cobus, do you want to respond on Cyprus?
COBUS STOFBERG: Yes. Not sure I can go into the fine detail but just in general, this happened at the end of June. It has been in discussion since December and the contract that we were running the analog base on behalf of LTV. And we provided the subscriber management services to LTV, very similar to, say, MultiChoice provides to M-Net. And LTV decided they'd like to do it themselves, so at the end of June they took over those analogue subscribers.
We -- over the last year we've had a launch of -- approximately a year ago we launched a digital satellite delivered package to Cyprus and that's now sitting at 22,000. And that links in to our platform in Greece. So when we go and we negotiate channels or programs and so on, we negotiate satellite rights for Greece and for Cyprus. So, in a way, the platform hangs together and so we're using that to service Cyprus.
So our focus very much on digital subscribers and, as you can imagine, those are the subscribers at a higher margin and that's where we intend to build the business. So what we lost was the 42,000 analogue subscribers that we were running on behalf of LTV.
STEPHEN CHAREST: Okay. Is it that your ZAR160m of EBITDA, do you know how much of that was related to this contract that you've lost for the full year? What is it for the four months that it was consolidated?
KOOS BEKKER: Steve?
STEVE WARD: Stephen, I'd have to look into detail on that. We've picked up our interest in Cyprus to Greece, where it's consolidated. I mean the overall indirect percentage we have is around about the 50% mark, now that we've increased our interest in Greece. But those analogue subscribers are worth about $12m per annum, so it's really quite small numbers, very immaterial to the overall figure.
STEPHEN CHAREST: Super. Thank you.
OPERATOR: Ladies and gentlemen, we have no further questions. Would you like to make some closing comments?
KOOS BEKKER: We just want to thank people for their patience and for the questions posed, the participation and wish them a good year.
OPERATOR: Thank you very much. On behalf of Naspers, that concludes this afternoon's conference. Thank you.
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Document FNDW000020061212e2bs000p3
Naspers - Reviewed interim results for the six months ended 30 September 2006
4,158 words

28 November 2006

04:01 AM

Johannesburg Stock Exchange

JSEXCH

English

(c) 2006 Johannesburg Stock Exchange. All rights reserved.
NPN

Naspers - Reviewed interim results for the six months ended 30 September 2006

Naspers Limited

(Registration number: 1925/001431/06)

ISIN: ZAE000015889

JSE share code: NPN

("Naspers")

Interim Report

The reviewed results of the Naspers group for the six months ended 30

September 2006 are as follows:

Commentary

GROUP OVERVIEW

The group continues to record satisfactory growth. Trading conditions remain

favourable in most markets in which we operate, but will probably not remain

so indefinitely. Growth in the period under review came mostly from organic

expansion of existing businesses. Revenue grew by 22% to R9,1 billion and core

headline earnings expanded by 43% to R1,3 billion.