Nov 28 2008

Was it good, or was it not?

Published by at 11:50 am under Companies,Top Stories

I’ve been looking at the financial results of Naspers for the six months to end September to report something, but one aspect bothered me so much, that I couldn’t get going. So, I decided to write about what bothered me and not the results.    

Am I really so “dof” with financial stuff, or can a SA-based company doing business all over the world (and earning a huge and growing part of its total income abroad) publish financial results in SA without a single mention of the word exchange rates?

I know SA shareholders are only interested in what they pocket in rand. But, anyone interested in anything more long-term and who wants to understand whether the numbers reported in the past six months were good, average or bad, must know what the exchange rates did (against the rand) of the countries Naspers operated in.

Surely, there should be something like an “exchange rate-adjusted” set of headline figures. Or am I completely “dom”? I ask, because I got hold of an assessment by the Merrill Lynch analysts of the same financial results this morning and, again, not a single mention of the exchange rate factor. And this in a six-month period where exchange rates really fluctuated. Most went down – also the Russian rouble and EU’s euro – but few took as big a dip as the rand in this period.

Without going into the whole calculation for the different rates, I think I can safely say that at least “some” of the growth in revenue earned abroad (in rand) had to do with the fact that the rand weakened against the currencies of the countries where Naspers operated.

Without this adjustment for exchange rate movements, one really compares apples with pears from period to period and cannot get a true handle on how the foreign businesses are really performing.

But, I might be wrong. I’ll be the last one to think I know better than the Merrill Lynch analysts, or Steve Pacak, or the SA business writers (who didn’t see any problem with this).

* For the record, Merrill Lynch said: With (Naspers’) proven track record in the internet and pay-TV segments, healthy balance sheet and good liquidity position, we believe Naspers is well positioned to weather the recession and take market share across many of its business. 

The analysts rated Naspers a buy – as they did in the previous six months period.

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