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NPN - Naspers Limited - Provisional Report summary of the audited results of the
Naspers group for the year ended 31 March 2009
Naspers Limited
(Registration Number: 1925/001431/06)
("Naspers")
ISIN ZAE000015889
JSE Share Code: NPN
LSE Share Code: NPSN
Provisional Report
Summary of the audited results of the Naspers group for the year ended 31 March
2009
Commentary
GROUP OVERVIEW
Naspers reports revenues up 30% to R26,7 billion for the past financial year.
Operating profit before amortisation and gains/losses advanced 21% to R5,1
billion, whilst core headline earnings grew 9% to R4,4 billion.
The past twelve months evidenced a global economic downturn. Each business in
the group played the field as it found it and each adapted as fast as possible
to these new conditions. Overall, the group`s growth was satisfactory.
Emerging markets are at the centre of our strategy. In the aggregate and at
consumer level, they were under pressure, but fared better than developed
economies.
Our recent internet acquisitions - Allegro, Ricardo and Gadu-Gadu - performed
steadily. Our associates, Tencent in China and mail.ru in Russia, expanded.
Our pay-TV businesses proved resilient. When people experience economic
pressure, they spend more time at home and pay TV is an affordable form of
entertainment. We invested substantially to grow, and the gross subscriber base
improved.
Our technology business, Irdeto, was more impacted by the economy than our
consumer-facing units.
Print circulations in South Africa and China held up, but advertising revenues
were stagnant. In Brazil, however, Abril had a good year.
Looking ahead, we mostly have resilient businesses in economies that are on
average doing better than the developed world. Competition in pay TV, regulation
and consumer spending levels remain concerns.
We will continue our growth strategy. Rigorous evaluation processes are applied
when new investments are considered. We continue to strive to deliver value to
our shareholders over the medium and longer term. The group has a strong balance
sheet.
FINANCIAL REVIEW
Revenue growth of 30% in the aggregate was recorded over the period. Drivers
were both existing operations, which accounted for 19%, and new acquisitions,
which added 11%.
The internet segment was boosted by the inclusion of Allegro and Ricardo
(formerly Tradus). Pay-TV revenues increased by 29% as a result of its gross
subscriber growth of 683 000 households.
Our operating profit before amortisation and other gains/losses increased by 21%
to R5,1 billion (2008: R4,2 billion). A reduction in group margins followed
sharper competition in pay-TV markets. Various new services were launched and
total development costs were R1,2 billion (2008: R1,1 billion).
Net interest costs for the year amounted to R306 million, compared with net
income of R502 million in the prior year. This resulted from funding new
acquisitions. Other finance income includes preference dividends of R377 million
(2008: R336 million) and mark-to-market losses of R374 million, compared with
gains of R167 million in the prior year.
Naspers`s share of the equity-accounted results of our associates, mainly
Tencent, mail.ru and Abril, grew to R1,47 billion (2008: R654 million). All
three enterprises performed excellently under exceptional leadership teams.
As reported at the interim stage, the impairment of equity-accounted investments
refers mostly to our withdrawal from a German mobile TV project due to an
unfavourable regulatory environment. A R2,97 billion profit was made on the sale
of pay-TV businesses in Greece and Cyprus. The proceeds are once-off in nature
and were applied to long-term debt.
The net effect of the above is that core headline earnings for the year grew by
9% to R4,4 billion. A calculation of headline and core headline earnings is
detailed below.
INTERNET
The internet segment recorded revenue of R3,8 billion, which stepped up after
the inclusion of Allegro, Ricardo and Gadu-Gadu. Operating profit before
amortisation and other gains/losses of R128 million was recorded.
The e-commerce operations of Allegro (Eastern Europe) and Ricardo (Western
Europe) generated revenues of R1,9 billion. The aggregate e-businesses achieved
ahead of expectations. New services were launched in some countries.
Gadu-Gadu in Poland bedded down and now has 15 million registered users. A
casual gaming portal and virtual network was added and further expansion is
planned.
In China Tencent performed ahead of expectations with growth on most platforms.
The Olympics increased traffic to around one billion page views per day and peak
concurrent users exceeded 57 million. The addition of several new games produced
steady growth. Tencent`s contribution to core headline earnings increased to
R1,2 billion (2008: R615 million).
In India ibibo is growing its small internet business and focuses on social
media, search and advertising. In terms of an agreement with Tencent, the two
companies will jointly develop the Indian business.
In Russia mail.ru expanded its base to 58 million active email users. This
business contributed R87 million (2008: R49 million) to our core headline
earnings. It is maturing by developing multiple revenue streams.
PAY TELEVISION
Overall, the pay-TV segment expanded revenues by 29%, owing to subscriber
growth. Operating margins diminished due to costs of building the subscriber
base, as well as higher content costs resulting from increased competition.
In South Africa the base grew by 453 000 gross subscribers to 2 401 000
households. The mid-priced Compact bouquet proved the most popular. Advertising
revenues retreated on the back of an economic slowdown.
In the rest of sub-Saharan Africa, a focus on local content and SuperSport`s
coverage of the Olympics reached 230 000 additional gross subscribers, taking
the base to 916 000 homes. The Compact bouquet stands at 313 000. More
competition across the continent is reflected in higher prices for sports
content.
Mobile-TV licences were activated in Ghana, Kenya, Namibia and Nigeria.
Construction of DVB-H networks and employment of staff in these markets
continues.
Irdeto delivered some 15 million conditional access units in the period. Serving
operators rather than consumers, its business model was more impacted by the
recession. Consolidation of various businesses into the Irdeto group has reduced
development spend and operating costs.
PRINT MEDIA
Our printing business, Paarl Media, suffered two fires of which the latter
caused the most serious loss of life and injury in the company`s history. Our
thoughts are with the bereaved families.
Print media operations in South Africa generated marginal revenue growth of 3%.
Circulation and readership of newspapers and magazines mostly held up, whilst
advertising felt the pinch of the economic slowdown. In this environment,
operating costs have been reduced and capital expenditure reined in. The impact
of these savings should materialise in the future.
The printing sector had revenue growth of 4%, although margins were affected by
lower print volumes and exchange rates. The book publishing business is
operating satisfactorily.
In Brazil Abril had an excellent year and its contribution to our core headline
earnings increased to R414 million (2008: R150 million).
DIVIDEND
The board has recommended that the annual dividend be increased by 15% to 207
cents (previously 180 cents) per N ordinary share, and 41 cents (previously 36
cents) per unlisted A ordinary share. If approved by shareholders, dividends
will be payable to shareholders recorded in the books on 11 September 2009. It
will be paid on 14 September 2009. The last date to trade cum dividend will be
on 4 September 2009.
BASIS OF PRESENTATION AND ACCOUNTING POLICIES
Our financial results for the year ended 31 March 2009 have been prepared
according to IAS 34 "Interim Financial Reporting" in accordance with
International Financial Reporting Standards ("IFRS"), the requirements of the
South African Companies Act, No 61 of 1973 and in compliance with the Listings
Requirements of the JSE Limited. Accounting policies are consistent with those
applied in the previous period and IFRS. These results have been audited by the
company`s auditor, PricewaterhouseCoopers Inc., whose unqualified report is
available for inspection at the registered office of the company.
Some aspects: Preference dividend income was previously included in "interest
received", but has been reclassified to "other finance income" to better reflect
its nature. During the year the purchase price allocation for the acquisition of
Tradus plc was finalised as follows: goodwill decreased by R3,2 billion,
intangible assets increased by R3,9 billion and deferred tax liabilities
increased by R731 million. The group restated its balance sheet at 31 March 2008
accordingly.
SIGNIFICANT ACQUISITIONS
In September 2008 the group acquired 100% of Vatera.hu, an online auction
company in Hungary, for cash of approximately R183 million (US$23 million). We
are currently finalising the purchase price allocation and have recorded it,
based upon a preliminary appraisal, as follows: net tangible assets R2 million,
intangible assets R54 million and the balance to goodwill.
In December 2008 the group closed an agreement to acquire a 37% interest in Xin
An Media, a leading newspaper publisher in China, for a cash consideration of
R315 million (US$31 million). The purchase price allocation is being finalised.
A preliminary appraisal shows: net tangible assets R133 million, intangible
assets R162 million and the balance to goodwill.
In December 2008 the group bought 10% more of mail.ru (together with an
investment that increased our interest in Molotok) for cash of R1,03 billion
(US$101 million), bringing our total shareholding in mail.ru to 42,9%. We
recorded the purchase consideration, based upon a preliminary appraisal, as
follows: net tangible assets R270 million and the balance to goodwill.
The group also made some smaller acquisitions for a combined cost of
approximately R598 million (US$68 million). Revenues and profits from these
acquisitions were not material to consolidated results.
DISCONTINUED OPERATIONS
In April 2008 the group announced a process to sell NetMed, the pay-TV business
in Greece and Cyprus, to ForthNet SA. The transaction was concluded in August
2008 and accounting profit on disposal of R2,97 billion recorded. The
transaction was accounted for as a discontinued operation in accordance with
IFRS 5 "Non-current Assets Held for Sale and Discontinued Operations".
SUBSEQUENT EVENTS
On 10 November 2008 the group announced an agreement for the sale of MWEB`s sub-
Saharan Africa business, excluding South Africa. The purchase price for our
share was some R500 million and the transaction closed after year-end in April
2009.
On 9 June 2009 the group announced that it had made a public tender offer to
acquire up to 100% of Warsaw-listed financial portal Bankier.pl. Bankier
provides financial news, analysis and comparison-shopping information on
consumer financial products. If successful, Allegro, a subsidiary of the group,
intends to integrate Bankier.pl`s products and services into its e-commerce
platform in Poland. Assuming 100% acceptance of the offer, the total investment
will be approximately R156 million (PLN62,8 million).
On behalf of the board
Ton Vosloo Koos Bekker
Chairman Managing director
Cape Town
30 June 2009
Segmental Review
Revenue Ebitda
2009 2008 % 2009 2008 %
R`m R`m Change R`m R`m Change
Pay 14 858 11 542 29 5 197 4 272 22
television
Internet * 3 833 1 624 +100 292 (64) +100
Technology 1 514 1 081 40 (75) (126) 41
Print ** 6 480 6 271 3 822 858 (4)
Corporate 5 - - (210) (40) -
services
26 690 20 518 30 6 026 4 900 23
Operating profit before Operating profit
amortisation and other
gains/(losses)
2009 2008 % 2009 2008 %
R`m R`m Change R`m R`m Change
Pay 4 737 3 940 20 4 269 3 845 11
television
Internet * 128 (142) +100 (507) (234) +100
Technology (132) (168) 21 (308) (250) 23
Print ** 596 650 (8) 541 560 (3)
Corporate (213) (42) - (212) (43) -
services
5 116 4 238 21 3 783 3 878 (2)
* Excluding our share of Tencent and mail.ru.
** Excluding Abril.
Consolidated Income Statement
Year ended Year ended
31 March 31 March %
2009 2008 Change
R`m R`m
Revenue 26 690 20 518 +30
Cost of providing services (13 531) (10 778)
and sale of goods
Selling, general and (9 289) (5 877)
administration expenses
Other (losses)/gains - net (87) 15
Operating profit 3 783 3 878
Interest received 572 826
Interest paid (878) (324)
Other finance income - net 3 503
Share of equity-accounted 1 473 654
results
Impairment of equity- (214) (279)
accounted investments
Profit on sale of investments 36 16
Profit before taxation 4 775 5 274
Taxation (1 436) (1 378)
Profit after taxation 3 339 3 896
Profit from discontinued 127 243
operations
Profit/(loss) arising on 2 965 (82)
discontinuance of operations
Profit for the year 6 431 4 057
Attributable to:
Naspers shareholders 5 761 3 418
Minority shareholders 670 639
6 431 4 057 +58
Core headline earnings for 4 373 3 996 +9
the period (R`m)
Core headline earnings per N 1 179 1 130 +4
ordinary share (cents)
Fully diluted core headline 1 169 1 104 +6
earnings per N ordinary share
(cents)
Headline earnings for the 3 065 3 806 (19)
period (R`m)
Headline earnings per N 826 1 076 (23)
ordinary share (cents)
Fully diluted headline 819 1 051 (22)
earnings per N ordinary share
(cents)
Earnings per N ordinary share 1 553 967 +61
(cents)
Fully diluted earnings per N 1 540 944 +63
ordinary share (cents)
Net number of shares issued
(`000)
- At period-end 372 451 370 558
- Weighted average for the 371 004 353 622
period
- Fully diluted weighted 374 108 362 106
average
Abridged Consolidated Balance Sheet
31 March 31 March
2009 2008
R`m R`m
ASSETS
Non-current assets 40 873 42 553
Property, plant and equipment 4 754 4 541
Goodwill and other intangible assets 20 916 24 914
Investments and loans 14 276 12 507
Deferred taxation 871 466
Other non-current assets 56 125
Current assets 13 001 12 940
Assets classified as held for sale 686 2 030
TOTAL ASSETS 54 560 57 523
EQUITY AND LIABILITIES
Share capital and reserves 33 591 31 909
Minority shareholders` interest 1 626 1 238
Total equity 35 217 33 147
Non-current liabilities 8 991 13 784
Capitalised finance leases 865 1 112
Liabilities - interest-bearing 5 934 10 629
- non-interest-bearing 118 181
Post-retirement medical liability 155 142
Derivatives 543 8
Deferred taxation 1 376 1 712
Current liabilities 10 088 8 935
Liabilities classified as held for 264 1 657
sale
TOTAL EQUITY AND LIABILITIES 54 560 57 523
Net asset value per N ordinary share 9 019 8 611
(cents)
Abridged Consolidated Statement of Changes in Equity
Year ended Year ended
31 March 31 March
2009 2008
R`m R`m
Balance at beginning of year 33 147 21 570
Movement in treasury shares (405) (2 180)
Share capital and premium issued 123 4 752
Foreign currency translations (3 544) 3 529
Movement in valuation reserve (6) 1 849
Movement in cash flow hedging reserve (321) 218
Movement in share-based compensation 432 155
Transactions with minority 336 24
shareholders
Net profit for the year 6 431 4 057
Dividends (976) (827)
Balance at end of year 35 217 33 147
Abridged Consolidated Cash Flow Statement
Year ended Year ended
31 March 31 March
2009 2008
R`m R`m
Cash flow from operating activities 3 913 4 411
Cash flow generated from/(utilised 1 217 (18 331)
in) investment activities
Cash flow (utilised in)/from (6 839) 8 856
financing activities
Net movement in cash and cash (1 709) (5 064)
equivalents
Foreign exchange translation 187 908
adjustments
Cash and cash equivalents at 7 325 11 481
beginning of year
Cash and cash equivalents at end of 5 803 7 325
year
Included in:
- Cash and cash equivalents 5 724 6 690
- Assets classified as held for sale 79 635
5 803 7 325
Calculation of Headline and Core Headline Earnings
Year ended Year ended
31 March 31 March
2009 2008
R`m R`m
Net profit attributable to 5 761 3 418
shareholders
Adjusted for:
- impairment of goodwill and other 26 48
assets
- loss/(profit) on sale of assets, 27 (15)
plant and equipment
- discontinuance of operations (2 965) 82
- gain on loan settlement - (87)
- (profit)/loss on sale of (10) 512
investments
- impairment of equity-accounted 214 348
investments
3 053 4 306
Total tax effect of adjustments 5 (486)
Total minority interest of 7 (14)
adjustments
Headline earnings 3 065 3 806
Discontinued operations (129) (258)
Headline earnings from continuing 2 936 3 548
operations
Headline earnings 3 065 3 806
Adjusted for:
- (profit)/loss from discontinued (129) 48
operations
- treasury settled share scheme 258 47
charges
- creation of deferred tax assets (58) (244)
- amortisation of intangible assets 958 410
- fair-value adjustments and 279 (71)
currency translation differences
Core headline earnings 4 373 3 996
Supplementary Information
Year ended Year ended
31 March 31 March
2009 2008
R`m R`m
Depreciation of property, plant and 910 662
equipment
Amortisation of intangible assets 1 246 375
Other (losses)/gains - net (87) 15
- (loss)/profit on sale of (25) 8
property, plant and equipment and
intangible assets
- impairments of goodwill and (18) (20)
intangible assets
- impairments of tangible assets (30) (28)
- dividends received - 1
- gain on loan settlement - 87
- fair-value adjustment on (14) (33)
financial instruments
Net finance costs/(income) 303 (1 005)
- interest received (572) (826)
- interest paid 769 224
- interest on finance leases 109 100
- net foreign exchange translation 374 (167)
differences and fair-value
adjustments on derivative instruments
- preference dividends received (377) (336)
Investments and loans 14 276 12 507
- listed investments 3 591 2 282
- unlisted investments 10 685 10 225
Market value of listed investments 44 491 29 306
Directors` valuation of unlisted 10 685 10 225
investments
Commitments 14 205 8 682
- capital expenditure 359 642
- programme and film rights 8 063 4 804
- network and other services 4 770 2 138
commitments
- operating lease commitments 701 802
- set-top box commitments 312 296
Analysis of equity-accounted results
Tencent 1 217 615
Abril 414 150
mail.ru 87 49
Other (41) (42)
Contribution to core headline 1 677 772
earnings
Amortisation - intangible assets (179) (214)
Deferred tax assets created - 244
Discontinued operations - (62)
Contribution to headline earnings 1 498 740
Impairment of assets - (18)
Sale of assets (17) -
Sale of investments (8) (68)
Share of equity-accounted results 1 473 654
Important information
The report contains forward-looking statements as defined in the United States
Private Securities Litigation Reform Act of 1995. Words such as "believe",
"anticipate", "intend", "seek", "will", "plan", "could", "may", "endeavour" and
similar expressions are intended to identify such forward-looking statements,
but are not the exclusive means of identifying such statements. While these
forward-looking statements represent our judgements and future expectations, a
number of risks, uncertainties and other important factors could cause actual
developments and results to differ materially from our expectations. These
include factors that could adversely affect our businesses and financial
performance. We are not under any obligation to (and expressly disclaim any such
obligation to) update or alter our forward-looking statements, whether as a
result of new information, future events or otherwise. Investors are cautioned
not to place undue reliance on any forward-looking statements contained herein
as we are human and the future unknowable.
Directors
T Vosloo (chairman), J P Bekker (managing director), F-A du Plessis, G J
Gerwel, R C C Jafta,
L N Jonker, S J Z Pacak, T M F Phaswana, L P Retief, B J van der Ross, N P
van Heerden,
J J M van Zyl, H S S Willemse
Company secretary
G Kisbey-Green
Registered office Transfer secretaries
40 Heerengracht, Cape Town 8001 Link Market Services
South Africa
(Proprietary) Limited
(P O Box 2271, Cape Town 8000) 11 Diagonal Street,
Johannesburg 2001
(P O Box 4844,
Johannesburg 2000)
ADR programme
The Bank of New York Mellon maintains a GlobalBuyDIRECTTM plan for Naspers
Limited. For additional information, please visit the Bank of New York Mellon`s
website at www.globalbuydirect.com or call Shareholder Relations at 1-888-BNY-
ADRS or 1-800-345-1612 or write to: The Bank of New York Mellon, Shareholder
Relations Department - GlobalBuyDIRECTTM, Church Street Station, PO Box 11258,
New York, NY 10286-1258, USA.
(For a more detailed exposition, visit the Naspers website at www.naspers.com)
Sponsor: Investec Bank Limited
Date: 30/06/2009 07:30:02 Produced by the JSE SENS Department.
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