Naspers ponders selling pay-TV business in Africa
JSE-LISTED Stefanutti Stocks, the multi-disciplinary construction company operating in South Africa, sub-Saharan Africa and the United Arab Emirates, said problem projects and write-offs are behind them as it wants to return the business to profitability.
The group encountered a value charge of R139 million relating to the voluntary settlement agreement concluded with the South African government and six other JSElisted construction groups to transform the industry and goodwill of R155m relating to the acquisition of Cycad Pipelines.
Chief executive Willie Meyburgh said one of the issues the construction companies had to deal with over the years was the fact that the industry had remained flat.
Meyburgh said the group’s performance for the year-end in February reflected the challenging trading environment which saw companies scaling down on operations and restructuring in accordance with the availability of work.
“We are starting a slight improvement in the current year and, with us clearing those problem projects, we expect to report better results in the next reporting period,” said Meyburgh.
The results were also negatively impacted by a foreign exchange loss of R81m due to the strengthening of the rand during the year and the weakening of currencies in the African regions in which Stefanutti Stocks operates.
Meyburgh said that the group continued to experience delayed payments from clients on contracts.
In the results, the group reported a headline loss of 79.3 cents a share.
It said that had the one-off charge relating to the settlement agreement not been taken into account, the headline earnings per share would have been 89.86c, which is similar to that reported in the previous year of 89.2c.
The group’s orderbook currently stands at R14 billion of which R4.4bn arises from work beyond South Africa’s borders. Capital expenditure for the year amounted to R272m, up from R157m, of which R156m relates to the mining services operation. The group reported an operating loss of R106m for the year.
Meyburgh said the group continued to experience delayed payments on contracts.
“However, the increase in excess billings over work done to R1.2bn resulted in cash generated from operations increasing to R616m, up from R30m reported in 2016. This includes an inflow from working capital of R274m,” he said.
As a consequence, the group’s overall cash position has increased to R1.16bn, up from R851m a year before.
The group added that from clients owing to a reduction in infrastructure projects and delays in the awarding of contracts, revenue of the Roads, Pipelines & Mining Services business unit declined to R2.2bn, down from R2.6bn with a reduction in operating profit to R162m.
Meyburgh said although the market continues to be competitive there remain potential growth areas in mining surface infrastructure, marine, petrochemical tank farms, water and sanitation treatment plants, and residential and mixed-use building projects will provide opportunities for all business units.
“The group continues to seek opportunities in southern Africa and, on a more selective basis, further afield in sub-Saharan Africa, to diversify the business,” said Meyburgh.
The board did not declare a dividend for the year.
Stefanutti shares rose 1.8 percent on the JSE yesterday to close at R3.40. MEDIA group Naspers is considering the sale of its pay-TV business in Africa as sluggish economic expansion in markets stifles growth and viewers switch to cheaper online alternatives, say two people familiar with the matter.
A disposal of MultiChoice would not include the South African division, which was still highly profitable, said the people, who asked not to be identified as the plans had not been made public. A sale is one of a number of options being considered by Africa’s biggest company by market value, and a final decision had not been reached, oneadded.
Talks ongoing
Naspers and MTN Africa’s largest wireless operator, MTN, had briefly discussed a deal for MultiChoice Africa, but no agreement had been reached, according to one of the people.
Both companies confirmed yesterday that they were still in talks that were disclosed earlier about sharing TV content.
MyBroadband, a South African internet news site, reported earlier that MTN was in talks to buy MultiChoice Africa, citing unidentified people.
A sale of MultiChoice Africa would represent a further shift by Naspers away from its traditional media business, which includes newspapers and MultiChoice’s main product, the DSTV satellite-TV service.
Since winning big with a 2001 investment in Chinese technology company Tencent Holdings, a stake that’s now worth about $107 billion (R1.4 trillion), Naspers has become a serial investor in internet companies around the world, ranging from an online travel agency in India to education software providers in Silicon Valley.
The value of the Tencent stake is worth more than Naspers’s market value of R1.2 trillion, which partly reflects the weak performance of the TV division. While the company arrested a decline in subscriber numbers over the six months through September, earnings before interest, taxes, depreciation and amortisation at the unit declined 33 percent to $331 million.
Growth sluggish, viewers on the continent changing to cheaper online alternatives
As Naspers charges customers in local currencies, “the continued weakness of currencies… in many African countries resulted in lower US dollar revenues”, it said in its November results.
Nigeria’s economy contracted for the first time in 25 years in 2016 and its currency has depreciated by 37 percent against the dollar over the past 12 months. Sub-Saharan African economies grew by an average of 1.4 percent last year, compared with 3.4 percent in 2015, the International Monetary Fund has said. – Bloomberg