Wrap Text
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
liabilities
Derivatives 118 864 599
Bank overdrafts and call loans 1 835 1 288 1 330
14 361 12 019 11 962
Liabilities classified as held-for- 127 - -
sale
Total equity and liabilities 78 480 64 134 69 855
Net asset value per N ordinary share 11 888 9 541 10 831
(cents)
Six months ended Year ended
30 September 31 March
Condensed Consolidated 2011 2010 2011
Statement of Reviewed Reviewed Audited
Cash Flows R`m R`m R`m
Cash flow from operating activities 1 912 2 503 5 271
Cash flow utilised in investing (501) (4 172) (5 778)
activities
Cash flow (utilised in)/generated (2 886) 2 232 2 513
from financing activities
Net movement in cash and cash (1 475) 563 2 006
equivalents
Foreign exchange translation 222 (316) (431)
adjustments
Cash and cash equivalents at 7 401 5 826 5 826
beginning of the period
Cash and cash equivalents at end of 6 148 6 073 7 401
the period
Included in:
- Cash and cash equivalents 6 067 6 073 7 401
- Assets classified as held-for-sale 81 - -
6 148 6 073 7 401
Six months ended Year ended
30 September 31 March
2011 2010 2011
Calculation of Headline Reviewed Reviewed Audited
and Core Headline Earnings R`m R`m R`m
Net profit attributable to 1 869 3 450 5 260
shareholders
Adjusted for:
- insurance proceeds (1) (6) (51)
- impairment of property, plant and 4 2 25
equipment and other assets
- impairment of goodwill and 749 531 1 035
intangible assets
- profit on sale of property, plant (26) (57) (407)
and equipment and intangible assets
- profit on sale of investments (7) (76) (152)
- step-up acquisition loss/(gain) 35 (14) -
- dilution losses/(gains) on equity- 89 (1 532) (1 461)
accounted investments
- remeasurements included in equity- - (25) (28)
accounted earnings
- impairment of equity-accounted 12 120 23
investments
2 724 2 393 4 244
Total tax effects of adjustments (131) (25) (27)
Total adjustment for non-controlling 4 1 (4)
interest
Headline earnings 2 597 2 369 4 213
Adjusted for:
- treasury-settled share scheme 271 217 488
charges
- (recognition)/reversal of deferred (24) (7) 13
tax assets
- amortisation of intangible assets 586 525 1 052
- fair value adjustments and currency (25) 77 18
translation differences
- revolving credit facility - - - 128
accelerated amortisation of costs
- acquisition-related costs 53 34 124
Core headline earnings 3 458 3 215 6 036
Six months ended Year ended
30 September 31 March
2011 2010 2011
Reviewed Reviewed Audited
Supplementary Information R`m R`m R`m
Depreciation of property, plant and 558 497 1 040
equipment
Amortisation 560 602 1 172
- intangible assets 470 541 1 045
- software 90 61 127
Other gains/(losses) - net (722) (529) (881)
- profit/(loss) on sale of property, 21 7 42
plant and equipment and intangible
assets
- impairment of goodwill and (742) (531) (1 035)
intangible assets
- impairment of tangible assets (4) (2) (33)
- insurance proceeds 1 6 51
- profit on lease settlement 3 46 88
- fair value adjustment on (1) (55) 6
shareholders` liability
Interest received 200 211 401
- loans and bank accounts 169 165 308
- other 31 46 93
Interest paid (583) (587) (1 389)
- loans and overdrafts (390) (436) (883)
- transponder leases (66) (74) (144)
- revolving credit facility costs - - - (128)
accelerated amortisation
- other (127) (77) (234)
Other finance income/(cost) - net 235 (42) (30)
- net foreign exchange differences 5 (155) (247)
and fair value adjustments on
derivatives
- preference dividends received 230 113 217
(Losses)/gains on acquisitions and (62) 55 42
disposals
- profit on sale of investments 7 4 34
- profit on partial disposal of - 72 72
investments
- acquisition-related costs (33) (35) (109)
- other (36) 14 45
Goodwill
- cost 18 371 17 051 17 051
- accumulated impairment (1 093) (431) (431)
Opening balance 17 278 16 620 16 620
- foreign currency translation 1 101 (510) (510)
effects
- acquisitions 966 1 428 1 885
- contingent consideration adjustment - - (49)
- disposals (8) - -
- transferred to assets held-for-sale (360) - -
- impairment (371) (316) (668)
Closing balance 18 606 17 222 17 278
- cost 20 077 17 966 18 371
- accumulated impairment (1 471) (744) (1 093)
Investments and loans 27 742 19 850 24 068
- listed investments 21 245 5 710 16 874
- unlisted investments 6 497 14 140 7 194
Commitments 20 024 16 989 16 997
- capital expenditure 644 468 401
- programme and film rights 8 839 8 041 7 744
- network and other service 1 269 516 700
commitments
- transponder leases 8 216 7 045 6 787
- operating lease commitments 755 679 896
- set-top box commitments 301 240 469
Share of equity-accounted results 1 618 1 406 3 290
- dilution gains - - (39)
- FCTR release - - (29)
- sale of assets (4) (25) -
- impairment of investments and other 18 - 24
assets
- gains on acquisitions and disposals - - (262)
Contribution to headline earnings 1 632 1 381 2 984
- amortisation of intangible assets 261 169 355
- treasury-settled share scheme 183 91 227
charges
- business combination costs 20 - 15
- fair value adjustments 36 - -
- reversal/(recognition) of deferred 19 (10) 13
taxation
Contribution to core headline 2 151 1 631 3 594
earnings
Tencent 1 973 1 486 3 164
Mail.ru 178 95 152
Abril 18 28 250
Other (18) 22 28
Business combinations
In July 2011 the group acquired a 68,2% interest in Vipindirim Electronic
Services plc (Markafoni), a Turkish e-commerce group. The fair value of the
total purchase consideration was R575m (US$86m) in cash. The provisional
purchase price allocation (PPA): PP&E R18m; intangible assets R378m; cash
R48m; trade and other receivables R23m; trade and other payables R116m;
deferred tax liability R69m and the balance to goodwill. The goodwill
recognised reflects the company`s leading market presence in Turkey, and is
not expected to be deductible for income tax purposes. A non-controlling
interest of R99m was recognised at the acquisition date. This was measured
using the proportionate share of the identifiable net assets.
In April 2011 the group acquired a 70% interest in 7 Pixel srl (7 Pixel),
in Italy, an online shopping and price comparison company. The fair value
of the total purchase consideration was R223m (US$34m) in cash. The
provisional purchase price allocation (PPA): PP&E R22m; intangible assets
R32m; cash R12m; trade and other receivables R24m; trade and other payables
R17m; deferred tax liability R8m and the balance to goodwill. The main
factor contributing to the goodwill recognised is the company`s leading
market presence, and is not expected to be deductible for income tax
purposes. A non-controlling interest of R13m was recognised at the
acquisition date. This was measured using the proportionate share of the
identifiable net assets.
In July 2011 the group acquired a 100% interest in Slando Limited, an
online classifieds company in the Ukraine. The fair value of the total
purchase consideration was R195m (US$29m) in cash. The provisional purchase
price allocation (PPA): intangible assets R21m; cash R2m; trade and other
receivables R3m; trade and other payables R2m; deferred tax liability R5m
and the balance to goodwill. The main factor contributing to the goodwill
recognised is the company`s leading market presence in the Ukraine, and is
not expected to be deductible for income tax purposes.
The group made smaller acquisitions for a combined cost of R108m. Total
acquisition-related costs of R33m were recorded in "(Losses)/gains on
acquisitions and disposals" in the income statement. Had the revenues and
net results of all business combinations that occurred in the period been
included from 1 April 2011, it would not have had a significant effect on
the group`s consolidated revenue and net results.
Directors
T Vosloo (chairman)
J P Bekker (chief executive)
F-A du Plessis
G J Gerwel
R C C Jafta
L N Jonker
D Meyer
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
(PO Box 2271, Cape Town 8000) 13th floor, Rennie House
19 Ameshoff Street
Braamfontein 2001
(PO 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`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.
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.
For more details about Naspers and investor enquiries regarding the
results, visit the Naspers website at www.naspers.com
Sponsor: Investec Bank Limited
29 November 2011
Date: 29/11/2011 07:05:28 Supplied by www.sharenet.co.za
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