Jul 01 2009
Naspers’ strange reporting habits
International media group Naspers announced its results for the financial year 2008/09 this week. And they were good. Or were they OK? Or perhaps not good at all?
We can’t be sure. Because, Naspers only publishes its results in rand and never mentions a word in their releases about the effect the rand exchange rate had on the results, making it impossible to judge how the business performed (with the exchange rate effect stripped out).
And that, despite the fact that the rand was on a see-saw ride in 2008 and the fact that between 30% and 40% of the core headline earnings of R4.4 billion was earned outside South Africa (34.1% or R1.5 billion came from “associates” alone, namely foreign companies in which Naspers holds minority stakes).
In the circumstances, it really is impossible to judge the result and I’m amazed that no financial journalist and/or analyst has complained about this “oversight”, which one must classify as intentional, if one looks at how other international companies report their results.
Here, for instance, is the first paragraph of eBay’s latest results report:
San Jose, Calif., January 21, 2009 — eBay Inc. (Nasdaq: EBAY) today reported financial results for its fourth quarter and year ended December 31, 2008. The ecommerce company posted fourth quarter revenue of $2.04 billion, representing a $145 million year-over-year decrease due primarily to the impact on eBay of a stronger dollar and macroeconomic conditions globally.
And here the first four paragraphs from Amazon’s latest results report:
SEATTLE–(BUSINESS WIRE)–Apr. 23, 2009– Amazon.com, Inc. (NASDAQ:AMZN) today announced financial results for its first quarter ended March 31, 2009.
Operating cash flow was $1.76 billion for the trailing twelve months, compared with $1.04 billion for the trailing twelve months ended March 31, 2008. Free cash flow increased 82% to$1.43 billion for the trailing twelve months, compared with $0.79 billion for the trailing twelve months ended March 31, 2008.
Common shares outstanding plus shares underlying stock-based awards outstanding totaled 447 million on March 31, 2009, compared with 435 million a year ago.
Net sales increased 18% to $4.89 billion in the first quarter, compared with $4.13 billion in first quarter 2008. Excluding the $268 million unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter, net sales would have grown 25% compared with first quarter 2008.
Operating income increased 23% to $244 million in the first quarter, compared with $198 million in first quarter 2008. Excluding the $32 million unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter, operating income would have grown 39% compared with first quarter 2008.
The best example comes from the Stellenbosch boys. More specifically, the office of Johann Rupert. In the form of his latest quarterly results report for Reinet Investments. You’ll find the bit of information I’ve been missing in the Naspers reporting a few paragraphs from the top of the Reinet press release.
As I’ve said before, stranger than fiction…
The next time Naspers reports, we might just see them mentioning exchange rates. Why? The rand strengthened against most currencies in the past 6 months. So, the rand-denominated performance of foreign-owned operations will look much less impressive this time around.
That’s why I make this cynical forecast: When Naspers reports 6-month results next time around, the rand will feature big time – as one of the culprits.
Christo