| Tue 29 Nov 2011, 7:05 | | NPN - Naspers Limited - Interim report - The reviewed results of the |
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NPN
NPN
NPN - Naspers Limited - Interim report - The reviewed results of the
Naspers group for the six months to 30 September 2011 are as follows:
Naspers Limited
(Registration Number: 1925/001431/06)
("Naspers")
JSE share code: NPN ISIN: ZAE000015889
LSE share code: NPSN ISIN: US 6315121003
INTERIM REPORT
The reviewed results of the Naspers group for the six months to 30
September 2011 are as follows:
Commentary
Naspers continued to expand over the past six months, with consolidated
revenues up 17%. Our internet businesses grew well, benefitting from both
organic expansion and a few smaller acquisitions. As anticipated, the pace
of subscriber growth in our pay-television operations slowed post the 2010
Fifa World Cup. Our print media business experienced strain from the
recession, but maintained market share.
Over the past six months our group focussed on growing our business
organically rather than by acquisition. Several new platforms and services
were developed. As previously reported to shareholders, the costs of
developing these businesses are expensed directly through the income
statement, which has the effect of dampening earnings. Consequently, whilst
revenues showed healthy growth, core headline earnings growth was 8%.
FINANCIAL REVIEW
The lift of 17% in consolidated revenues to R18,5bn came largely from our
internet businesses, where revenues jumped 50%. The broader pay-television
subscriber base resulted in revenue increasing 14%, whilst print revenues
were up 5%. Development costs for the period accelerated to R1,1bn (2010:
R631m), which lowered consolidated trading profit 8% to R3,1bn.
Net interest cost on cash and loans decreased from last year`s R271m to
R221m now, the result of lower costs of funding. Our core earnings from
equity-accounted associates grew 32% to R2,2bn, mainly from Tencent and
Mail.ru Group.
The above resulted in core headline earnings of R3,5bn - an increase of 8%
on the prior period. During the period, the group impaired goodwill and
intangible assets of R610m, net of tax. Positive free cash flows were
R1,4bn. Our funding structure remains sound, with total consolidated net
debt, excluding capitalised satellite leases, of R6,8bn. This represents a
net consolidated debt to equity ratio of 15%.
SEGMENTAL REVIEW
This segmental review reflects consolidated subsidiaries, plus a
proportional consolidation of associated companies.
Pay television
We experienced growth of 269 000 subscribers during the six-month period
and the total base now stands at 5,2 million homes. Revenues were up 14% to
R11,6bn, whilst trading profits grew 8% to R3,4bn. We continue to re-invest
in the business, including upgrading our technology.
In South Africa, the gross base added 209 000 to 3,7 million households.
Some 142 000 new homes came from the lower-priced Compact bouquet.
Advertising revenues grew on the back of an overall increase in the
television industry share of market. The recent roll-out of Box Office, a
service that allows our PVR subscribers to view the latest blockbuster
movies instantaneously, proved popular.
In the rest of sub-Saharan Africa our subscribers increased by 60 000 to
reach 1,5 million homes. The lower-priced Compact/Family bouquets now
account for 41% of the base. Trading margins were reduced by more
investment in local content, decoder subsidies and the development of new
products. We now cover most major football leagues and recently added the
Africa Magic Kiswahili channel for subscribers in East Africa. Economic
conditions in this region are variable and some currencies have experienced
volatility.
Digital terrestrial services, under the brand name GOtv, were launched in
Zambia, Uganda, Kenya and Nigeria. We will continue to invest in the
expansion of these digital terrestrial networks.
Competitive pressures increased and regulatory scrutiny continues to
intensify across the continent.
Internet
Overall the internet segment reported revenue growth of 50%. Due to our
increased focus on building out operations organically, and expensing that
cost, trading profits nudged up by a lower 7% to R1,9bn.
In China, Tencent achieved solid growth in an increasingly competitive
market. Our share of revenues grew by 46% to R4,9bn and trading profits
were up 27% to R2,1bn. The QQ IM platforms now manage 145 million peak
simultaneous users. QZone services and online games also grew well.
In Russia, Mail.ru Group delivered strong growth in communication, online
gaming and social networks. Mail.ru`s portal reached 27,5m unique users.
Our share of Mail.ru Group`s reported revenues was R456m and trading profit
of R141m.
In aggregate, our other internet businesses reported robust revenue growth
of 59% and a trading loss of R371m, the result of increased organic
development costs. In Eastern Europe, Allegro grew revenues by 44% as it
broadened its product offerings and diversified revenue streams. In Latin
America our e-commerce business, BuscaPe, continued to broaden its services
across the value chain and doubled its revenue.
Print media
The print media business felt economic head winds, with advertising and
circulation revenues remaining weak. Overall, total revenue grew by 5%,
whilst trading profits declined because of the cost infrastructure and
costs related to the implementation of new enterprise management systems.
We are pleased that the subscribers to our daily newspapers have increased
since the decline that was experienced in 2010 through the implementation
of a computer-based subscriber system.
Technology
Revenue declined as growth in conditional access revenues were offset by
lower revenues in other product lines. Investment in new market segments,
together with the integration of acquisitions recently concluded, resulted
in reduced trading profit.
Outlook
Indications are that overall revenue growth should remain fairly robust
over the next six months. By contrast, and as previously warned, growth of
the profit line will be affected by an acceleration of organic development
spend in several of our businesses. We continue to believe that this
strategy is sound and will stimulate long-term growth.
This statement has not been reviewed or reported on by the company`s
auditors.
BASIS OF PRESENTATION AND ACCOUNTING POLICIES
The financial results for the six months to 30 September 2011 have been
prepared in accordance with IAS 34 "Interim Financial Reporting" and
International Financial Reporting Standards (IFRS), the requirements of the
South African Companies Act, No 71 of 2008, and in compliance with the
Listings Requirements of the JSE Limited. Accounting policies used are
consistent with those applied in the previous annual financial statements
and IFRS. These results have been reviewed by the company`s auditor,
PricewaterhouseCoopers Inc., whose unqualified report is available for
inspection at the registered office of the company.
The preparation of the financial results was supervised by the financial
director Steve Pacak, CA(SA). These results were made public on 29 November
2011.
Core headline earnings exclude once-off and non-operating items. We believe
that it is a useful measure for shareholders of the group`s sustainable
operating performance. However, this is not a defined term under IFRS and
may not be comparable with similarly titled measures reported by other
companies.
SIGNIFICANT ACQUISITIONS
In July 2011 the group bought 68% of Markafoni, an online group shopping
platform based in Turkey, for R575m (US$86m) in cash.
On behalf of the board
Ton Vosloo Koos Bekker
Chairman Chief executive
Cape Town
29 November 2011
Revenue
Six months ended Year ended
30 September 31 March
2011 2010 2011
Segmental Reviewed Reviewed % Audited
Review R`m R`m Change R`m
Pay television 11 601 10 186 14 21 025
Internet 8 285 5 514 50 12 092
- Tencent 4 874 3 342 46 7 215
- Other 3 411 2 172 57 4 877
Print 5 376 5 126 5 10 758
Technology 540 599 (10) 1 228
Economic interest 25 802 21 425 20 45 103
Corporate services - - - -
Less: Associates (7 320) (5 592) 31 (12 018)
Consolidated 18 482 15 833 17 33 085
Ebitda
Six months ended Year ended
30 September 31 March
2011 2010 2011
Segmental Reviewed Reviewed % Audited
Review R`m R`m Change R`m
Pay television 3 850 3 553 8 6 542
Internet 2 232 1 981 13 3 945
- Tencent 2 321 1 795 29 3 795
- Other (89) 186 - 150
Print 431 522 (17) 1 194
Technology 3 118 (97) 188
Economic interest 6 516 6 174 6 11 869
Corporate services (94) (115) - (239)
Less: Associates (2 629) (2 087) 26 (4 481)
Consolidated 3 793 3 972 (5) 7 149
Trading profit
Six months ended Year ended
30 September 31 March
2011 2010 2011
Segmental Reviewed Reviewed % Audited
Review R`m R`m Change R`m
Pay television 3 414 3 163 8 5 727
Internet 1 901 1 781 7 3 493
- Tencent 2 131 1 681 27 3 543
- Other (230) 100 - (50)
Print 247 357 (31) 872
Technology (26) 79 - 128
Economic interest 5 536 5 380 3 10 220
Corporate services (94) (115) - (240)
Less: Associates (2 363) (1 925) 23 (4 142)
Consolidated 3 079 3 340 (8) 5 838
Note: Trading profit excludes amortisation of intangible assets (other than
software) and other gains/losses, but includes the finance cost on
transponder leases.
Six months ended Year ended
30 September 31 March
2011 2010 2011
Reconciliation of Trading Profit Reviewed Reviewed Audited
to Operating Profit R`m R`m R`m
Trading profit 3 079 3 340 5 838
Finance cost on transponder leases 66 74 144
Amortisation of intangible assets (470) (541) (1 045)
Other gains/(losses) - net (722) (529) (881)
Operating profit 1 953 2 344 4 056
Note: For a reconciliation of operating profit to profit before taxation,
refer to the "Consolidated income statement".
Six months ended Year ended
30 September 31 March
2011 2010 2011
Consolidated Income Reviewed Reviewed Audited
Statement R`m R`m R`m
Revenue 18 482 15 833 33 085
Cost of providing services and sale (9 623) (8 156) (17 794)
of goods
Selling, general and administration (6 184) (4 804) (10 354)
expenses
Other gains/(losses) - net (722) (529) (881)
Operating profit 1 953 2 344 4 056
Interest received 200 211 401
Interest paid (583) (587) (1 389)
Other finance income/(costs) - net 235 (42) (30)
Share of equity-accounted results 1 618 1 406 3 290
Impairment of equity-accounted - (120) (23)
investments
Dilution (losses)/gains on equity- (89) 1 532 1 461
accounted investments
(Losses)/gains on acquisitions and (62) 55 42
disposals
Profit before taxation 3 272 4 799 7 808
Taxation (1 008) (973) (1 861)
Profit for the period 2 264 3 826 5 947
Attributable to:
Equity holders of the group 1 869 3 450 5 260
Non-controlling interest 395 376 687
2 264 3 826 5 947
Core headline earnings for the period 3 458 3 215 6 036
(R`m)
Core headline earnings per N ordinary 921 860 1 612
share (cents)
Fully diluted core headline earnings 884 830 1 550
per N ordinary share (cents)
Headline earnings for the period 2 597 2 369 4 213
(R`m)
Headline earnings per N ordinary 692 633 1 125
share (cents)
Fully diluted headline earnings per N 664 612 1 082
ordinary share (cents)
Earnings per N ordinary share (cents) 498 921 1 405
Fully diluted earnings per N ordinary 478 889 1 351
share (cents)
Net number of shares issued (`000)
- At period-end 375 865 374 694 375 440
- Weighted average for the period 375 440 374 308 374 501
- Fully diluted weighted average 391 206 387 662 389 465
Six months ended Year ended
30 September 31 March
Condensed Consolidated 2011 2010 2011
Statement of Comprehensive Reviewed Reviewed Audited
Income R`m R`m R`m
Profit for the period 2 264 3 826 5 947
Total other comprehensive income, net 3 019 (760) 2 277
of tax, for the period
Translation of foreign operations 2 040 (932) (461)
Hedging reserve movements 394 35 126
Share of associates` other 763 138 2 622
comprehensive income and reserves
Tax on other comprehensive income (178) (1) (10)
Total comprehensive income for the 5 283 3 066 8 224
period
Attributable to:
Equity holders of the group 4 768 2 720 7 543
Non-controlling interest 515 346 681
5 283 3 066 8 224
Six months ended Year ended
30 September 31 March
Condensed Consolidated 2011 2010 2011
Statement of Changes Reviewed Reviewed Audited
in Equity R`m R`m R`m
Balance at beginning of the period 42 942 35 634 35 634
Changes in share capital and premium
Movement in treasury shares (163) (49) (335)
Share capital and premium issued 224 61 253
Changes in reserves
Total comprehensive income for the 4 768 2 720 7 543
period
Movement in share-based compensation 203 259 508
reserve
Movement in existing control business 2 5 (63)
combination reserve
Direct retained earnings movements - (23) (22)
Dividends paid to Naspers (1 013) (885) (882)
shareholders
Changes in non-controlling interest
Total comprehensive income for the 515 346 681
period
Dividends paid to non-controlling (1 281) (600) (665)
shareholders
Movement in non-controlling interest 328 154 290
in reserves
Balance at end of period 46 525 37 622 42 942
Comprising:
Share capital and premium 14 445 14 479 14 384
Retained earnings 22 035 19 366 21 179
Share-based compensation reserve 2 631 1 922 2 300
Existing control business combination 26 151 25
reserve
Hedging reserve (175) (373) (297)
Valuation reserve 4 893 1 844 4 256
Foreign currency translation reserve 828 (1 641) (1 185)
Non-controlling interest 1 842 1 874 2 280
Total 46 525 37 622 42 942
As at As at
30 September 31 March
Condensed Consolidated 2011 2010 2011
Statement of Reviewed Reviewed Audited
Financial Position R`m R`m R`m
ASSETS
Non-current assets 59 842 48 989 53 610
Property, plant and equipment 8 460 7 011 7 561
Goodwill 18 606 17 222 17 278
Other intangible assets 4 108 4 134 3 886
Investment in associates 25 155 16 581 20 767
Other investments and loans 2 587 3 269 3 301
Derivatives 298 - -
Deferred taxation 628 772 817
Current assets 18 638 15 145 16 245
Inventory 1 194 829 731
Programme and film rights 2 362 2 226 1 487
Trade receivables 3 655 2 826 2 929
Other receivables and loans 2 692 1 891 2 330
Derivatives 111 - -
Cash and cash equivalents 7 902 7 361 8 731
17 916 15 133 16 208
Assets classified as held-for-sale 722 12 37
Total assets 78 480 64 134 69 855
EQUITY AND LIABILITIES
Share capital and reserves 44 683 35 748 40 662
Non-controlling shareholders` 1 842 1 874 2 280
interest
Total equity 46 525 37 622 42 942
Non-current liabilities 17 467 14 493 14 951
Capitalised finance leases 2 398 1 995 1 893
Liabilities - interest-bearing 12 503 10 292 10 822
Liabilities - non-interest-bearing 224 152 178
Post-retirement medical liability 133 182 179
Derivatives 956 789 714
Deferred taxation 1 253 1 083 1 165
Current liabilities 14 488 12 019 11 962
Current portion of long-term debt 1 465 1 724 1 510
Trade payables 2 964 2 278 1 915
Accrued expenses and other current 7 979 5 865 6 608
