To view the PDF file, sign up for a MySharenet subscription.

NPN - Naspers Limited - Interim report - The reviewed results of the

Release Date: 29/11/2011 07:05
Code(s): NPN
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 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.

Share This Story