A ‘message’ from Naspers as Welkom Yizani prepare listing

Media giant Naspers produced another set of sterling financial performance during the six months ended September with a message for the listing of its BBBEE scheme Welkom Yizani on the 9th of December 2013.

So what are the messages to Welkom Yizani?

The JSE listed group, Naspers, reported 28% growth in interim revenues to R28.8 billion. This growth was largely driven by the group’s internet ventures.

With a history dominated by print media Naspers has mastered a tricky migration, integration if you like, into digital media and at that the group has globalised. Its portfolio has indirect exposure to interesting assets like Facebook. The Facebook exposure comes via a stake in Russian internet business called Mail.ru. Naspers in also invested in a China based instant messaging operation called Tencent. The operation, Tencent, boast 816 million monthly active instant messaging accounts.

Naspers also owns the expansive pay television operation. This business showed 18% growth in revenue to R17.1 billion. “The subscriber base increased by a net 560 000 and now totals 7,3m households in 48 countries in Africa.”

Note that all the later operations do not have financial impact on Welkom Yizani which is invested in an operation called Media 24. However the broader Naspers performance in a good indicator of what is possible in operations driven by this media giant. It indicates the depth of knowledge that resides in this company. Hopefully this knowledge provides synergistic benefits for Media 24 which owns South African print and digital media assets and e-commerce operations. Known brand names in this portfolio include a long list of newspapers like City Press, Daily Sun, The Witness and Volksblad. Digital media assets include online news platforms like fin24, news24, Careers 24 and McGregor BFA. The company also owns book publishing businesses like Van Schaik and printing business Paarl.

Naspers owns 85% of Media 24. This is after facilitating the transfer of 15% of Media 24 to the Welkom Yizani BBBEE scheme in 2006. The scheme which attracted more than 100 000 investors at establishment will be listed on an over the counter (OTC) platform in two weeks. This will allow initial investors to trade their shares, buy or sell. It will also allow new black investors an opportunity to join the scheme. The figures released by Naspers yesterday must be considered closely by closely by those who will be trading on the Media 24 shares.

Media 24 declared a dividend of R141.5 million on 5 September 2013. Welkom Yizani receives a proportionate share from this which joins historical dividend flow that has been enjoyed by the scheme. This does not impact people who will become new investors on the scheme when it lists in two weeks but is in an indication of what to expect from this BBBEE scheme.

Media 24 financials for the six months ended September show 6% growth in revenue to R4bn. Trading profit is up 9% from R222m to R242m. Media 24 management noted that newspaper revenue and subscription continued to be under pressure. Digital audiences show strong growth. The book publishing business produced satisfactory performance.

Welkom Yizani investors came in at R10 per share and were subsidised via Naspers loan funding to the tune of R40 per share.  The big question is at what level will the Welkom Yizani share price trade?


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