Original Source: FD (FAIR DISCLOSURE) WIRE
OPERATOR: Good afternoon, and welcome to the Naspers Results Conference Call. [OPERATOR INSTRUCTIONS]. I would now like to turn over the conference to Beverley Branford. Please go ahead, Beverley.
BEVERLEY BRANFORD, INVESTOR RELATIONS, NASPERS: Good afternoon, ladies and gentlemen, and thank you for joining our Interim Results Conference Call today. By way of introduction, I'm Beverley Branford, Naspers Investor Relations. I'm joined today by Koos Bekker and Steve Pacak, the CEO and CFO of Naspers, Mark Sorour, Naspers Chief [Investments] Officer, calling in from Hong Kong, Cobus Stofberg and Steve Ward, the CEO and CFO of our electronic media division, MIH, calling in from the Netherlands, Salie de Swardt, the CEO of our newspaper, printing and magazine division, Media 24, Hein Brand, the CEO of our publishing and education division Via Afrika and Antonie Roux, the CEO of our Internet businesses, calling in from Thailand.
Turning to slide 2. During the call today we will be making forward-looking statements regarding the future business and financial performance of Naspers. These statements are predictions that involve both risks and uncertainties, and actual results may differ materially from the results currently expected. Factors that could cause such differences can be both external, such as general economic and industry conditions, as well as internal operating factors. These factors are more fully detailed on pages  of Naspers' 2004 20-F SEC filing.
I aim to finish this call in approximately 45 minutes. For your convenience we are simultaneously running a web cast of the conference call which can be found on our naspers.com web site. The web cast will be available on our web site for the next 2 weeks, and the playback of the conference call will be available for the next 48 hours. After the presentation today there will be an opportunity for Q&A, which the operator will cue. I now hand over to Koos Bekker to take us through the highlights for the period under review.
KOOS BEKKER, CEO, NASPERS: Thank you, Beverley. Good afternoon to the folks in Europe and in Africa. Good evening to the audience in Asia. We also say good morning to callers from the US. Thank you very much for attending.
As we previously reported to you, our shareholders, the somewhat favorable business climate we experienced has continued during this period under review. Most of our business units have performed above expectations.
Today we can report overall operating profits before amortization of some ZAR1.253m, which is about 50% increase over the corresponding period of last year. You may recall that we saw some tough times a few years ago. Now we are experiencing the results of investments done at that time, and some toughening since then.
I present you the highlights. Our aggregate revenues are up 10%, and our full headline earnings are now some ZAR519m. The pay TV businesses all over Africa, as well as our print media businesses, were both major contributors to the increased operating profits. The pay television business increase has turned the corner, and it now reports an operating profit before amortization of ZAR76m. While this business has improved a lot, we're not completely out of the woods and Cobus Stofberg will expand on that later. Tencent, the real time communications company that operates the QQ platform in China, continued to grow well.
Please now turn to slide 5. This is a snapshot of our corporate structure. You'll notice that the group consists, broadly seen, of 2 sectors, Electronic Media and Print Media.
Steve Pacak, our Chief Financial Officer, will now review the financial results. After that the CEOs of MIH, Media 24, [mobile] Afrika, will each summarize the performance of their businesses.
STEVE PACAK, CFO, NAPERS: Thank you, Koos. Now turning to slide 7, which is an analysis of our revenues. You will notice that revenue for the period increased by 10%. Our revenues were again affected by the strength of the rand, which continues to have a mixed impact on our Group. On the positive side we have substantial foreign currency input costs, which translated to lower rand expenditures. On the negative side, a stronger rand diminishes the value of our offshore revenues and earnings when these are translated and reported in rands. With the Group now generating 28% of revenue outside of South Africa, this does have an impact. We calculated if the rand had remained stable against the US dollar, revenues would have increased by some 14%.
55% of our revenues are now generated from stable monthly subscriptions, while advertising revenues constitute 14% of the total revenue base. Advertising revenues for the Group increased by 22% over the period, reflecting the very good economic conditions experienced.
Slide 8. We have a good overview, which shows the broad segmental contribution to Group revenues and operating profit. You will notice that the Electronic Media segment, which is made up of the pay television, internet and related technology businesses, contributed two-thirds of revenue and 78% to operating profit. The Print Media segment, which is made up of our newspaper, magazine, printing and distribution businesses, as well as Via Afrika, contributed 33% to revenue and 22% to operating profit.
Turning to slide 9, which is a slide reflecting our consolidated income statement. The operating profit before amortization increased by some ZAR400m from ZAR835m to ZAR1.25b. That increase is mainly generated from firstly the South African pay television business, which increased operating profit by ZAR195m. Then the turnaround in the Greek pay television business, which swung from an operating loss of ZAR62m to an operating profit of ZAR76m. And so did the Media 24 business, which increased operating profit ZAR109m, largely because of the strong advertising revenue growth.
These positive factors have been offset by an increased loss of ZAR48m in the technology businesses, brought about mainly as a result of development expenditure in Entriq and the deconsolidation of Tencent, which contributed ZAR78m. In addition AC133 had a favorable impact on operating profits and margins, a factor which I will deal with in a moment.
Finance costs of ZAR123m relate to full value adjustments of ZAR60m, which is a book charge required by AC133. Also included in Finance costs are foreign currency losses of Zar17m and imputed interest on financing leases of ZAR78m. Thus the true finance costs of the Group is a net interest received of ZAR32m, compared to interest paid of ZAR71m in the prior period.
The share of profits of associates, arising mostly from our investment in Tencent -- following Tencent's IPO in June, we now equity account for this investment. The exceptional item also relates primarily to the dilution profit arising with the listing of Tencent.
The tax charge of ZAR358m is up due to the increased profitability of the Group. The net effect of all the above is headline earnings of ZAR716m, up from ZAR156m last year.
We have previously cautioned shareholders of factors which undermine the credibility of headline earnings as a measure of true sustainable operating performance. We do so again, with particular reference to substantial impact in this period of accounting standard AC133.
On slide 10 we show you a reconciliation of headline earnings to core headline earnings. The major item in the period affecting the calculation of headline earnings relates to fair value adjustments required in terms of accounting standard AC133.
This standard requires that we translate foreign input costs at the spot rate, and not at the rate contracted in the forward exchange contracts …