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NPN - Naspers Limited - Summary of the audited results of the Naspers group for
the year ended 31 March 2012
Naspers Limited
Incorporated in the Republic of South Africa
(Registration number: 1925/001431/06)
("Naspers")
JSE share code: NPN ISIN: ZAE000015889
LSE share code: NPSN
ISIN:US6315121003
Provisional report
Summary of the audited results of the Naspers group for the year ended 31 March
2012
Consolidated income statement
Year ended Year ended %
31 March 31 March Change
2012 2011
R`m R`m
Revenue 39 487 33 085 19
Cost of providing services and sale of (20 863) (17 794)
goods
Selling, general and administration (13 974) (10 354)
expenses
Other gains/(losses) - net (1 448) (881)
Operating profit 3 202 4 056 (21)
Interest received 400 401
Interest paid (1 271) (1 389)
Other finance income/(costs) - net 174 (30)
Share of equity-accounted results 3 869 3 290 18
Impairment of equity-accounted (94) (23)
investments
Dilution (losses)/gains on equity- (606) 1 461
accounted investments
(Losses)/gains on acquisitions and (134) 42
disposals
Income before taxation 5 540 7 808 (29)
Taxation (2 059) (1 861)
Profit for the year 3 481 5 947 (41)
Attributable to:
Equity holders of the group 2 894 5 260
Non-controlling interest 587 687
3 481 5 947
Core headline earnings for the period 6 951 6 036 15
(R`m)
Core headline earnings per N ordinary 1 850 1 612 15
share (cents)
Fully diluted core headline earnings per 1 789 1 550 15
N ordinary share (cents)
Headline earnings for the period (R`m) 4 874 4 213 16
Headline earnings per N ordinary share 1 297 1 125 15
(cents)
Fully diluted headline earnings per N 1 254 1 082 16
ordinary share (cents)
Earnings per N ordinary share (cents) 770 1 405 (45)
Fully diluted earnings per N ordinary 745 1 351 (45)
share (cents)
Net number of shares issued (`000)
- At period end 384 714 375 440
- Weighted average for the period 375 653 374 501
- Fully diluted weighted average 388 567 389 465
Condensed consolidated statement of
comprehensive income
Year ended Year ended
31 March 31 March
2012 2011
R`m R`m
Profit for the year 3 481 5 947
Total other comprehensive income, net of tax, 4 315 2 277
for the year
Translation of foreign operations 2 172 (461)
Cash flow hedges 162 126
Share of associates` other comprehensive income 2 109 2 622
and reserves
Tax on other comprehensive income (128) (10)
Total comprehensive income for the year 7 796 8 224
Attributable to:
Equity holders of the group 7 138 7 543
Non-controlling interest 658 681
7 796 8 224
Condensed consolidated statement of changes in
equity
Year ended Year ended
31 March 31 March
2012 2011
R`m R`m
Balance at beginning of the year 42 942 35 634
Changes in share capital and premium
Movement in treasury shares (1 603) (335)
Share capital and premium issued 1 908 253
Changes in reserves
Total comprehensive income for the year 7 138 7 543
Movement in share-based compensation reserve 401 508
Movement in existing control business 17 (63)
combination reserve
Direct retained earnings movements 4 (22)
Dividends paid to Naspers shareholders (1 012) (882)
Changes in non-controlling interest
Total comprehensive income for the year 658 681
Dividends paid to non-controlling shareholders (1 362) (665)
Movement in non-controlling interest in 485 290
reserves
Balance at end of year 49 576 42 942
Comprising:
Share capital and premium 14 689 14 384
Retained earnings 23 065 21 179
Share-based compensation reserve 3 134 2 300
Existing control business combination reserve 42 25
Hedging reserve (328) (297)
Valuation reserve 5 933 4 256
Foreign currency translation reserve 980 (1 185)
Non-controlling interest 2 061 2 280
Total 49 576 42 942
Condensed consolidated statement of financial
position
Year ended Year ended
31 March 31 March
2012 2011
R`m R`m
Assets
Non-current assets 62 037 53 610
Property, plant and equipment 8 879 7 561
Goodwill 17 884 17 278
Other intangible assets 3 884 3 886
Investment in associates 28 095 20 767
Other investments and loans 2 564 3 301
Derivatives 86 -
Deferred taxation 645 817
Current assets 19 241 16 245
Inventory 1 238 731
Programme and film rights 1 522 1 487
Trade receivables 3 296 2 929
Other receivables and loans 2 639 2 330
Derivatives 85 -
Cash and cash equivalents 9 825 8 731
18 605 16 208
Assets classified as held-for-sale 636 37
Total assets 81 278 69 855
Equity and liabilities
Share capital and reserves 47 515 40 662
Share capital and premium 14 689 14 384
Other reserves 9 761 5 099
Retained earnings 23 065 21 179
Non-controlling shareholders` interest 2 061 2 280
Total equity 49 576 42 942
Non-current liabilities 17 845 14 951
Capitalised finance leases 2 208 1 893
Liabilities - interest-bearing 12 996 10 822
- non-interest-bearing 348 178
Post-retirement medical liability 139 179
Derivatives 839 714
Deferred taxation 1 315 1 165
Current liabilities 13 857 11 963
Current portion of long-term debt 1 613 1 510
Trade payables 2 865 1 916
Accrued expenses and other current liabilities 7 980 6 608
Derivatives 206 599
Bank overdrafts and call loans 1 034 1 330
13 698 11 962
Liabilities classified as held-for-sale 159 -
Total equity and liabilities 81 278 69 855
Net asset value per N ordinary share (cents) 12 351 10 831
Condensed consolidated statement of cash flows
Year ended Year ended
31 March 31 March
2012 2011
R`m R`m
Cash flow from operating activities 5 394 5 271
Cash flow utilised in investing activities (2 360) (5 778)
Cash flow (utilised in)/generated from (1 745) 2 513
financing activities
Net movement in cash and cash equivalents 1 289 2 006
Foreign exchange translation adjustments 139 (431)
Cash and cash equivalents at beginning of the 7 401 5 826
year
Cash and cash equivalents at end of the year 8 829 7 401
Included in:
- Cash and cash equivalents 8 791 7 401
- Assets classified as held-for-sale 38 -
8 829 7 401
Calculation of headline and core headline
earnings
Year ended Year ended
31 March 31 March
2012 2011
R`m R`m
Net profit attributable to shareholders 2 894 5 260
Adjusted for:
- insurance proceeds (2) (51)
- impairment of property, plant, equipment and - 25
other assets
- impairment of goodwill and intangible assets 1 487 1 035
- profit on sale of property, plant, equipment - (407)
and intangible assets
- losses/(gains) on acquisitions and disposals 45 (152)
of investments
- dilution losses/(gains) on equity-accounted 606 (1 461)
investments
- remeasurements included in equity-accounted 32 (28)
earnings
- impairment of equity-accounted investments 94 23
5 156 4 244
Total tax effects of adjustments (207) (27)
Total adjustment for non-controlling interest (75) (4)
Headline earnings 4 874 4 213
Adjusted for:
- treasury-settled share scheme charges 652 488
- (recognition)/reversal of deferred tax assets (38) 13
- amortisation of intangible assets 1 191 1 052
- fair value adjustments and currency 162 18
translation differences
- revolving credit facility - accelerated - 128
amortisation of costs
- business combination related costs 110 124
Core headline earnings 6 951 6 036
Segmental review
Revenue
Year ended 31 March
2012 2011 %
R`m R`m Change
Pay television 24 093 21 025 15
Internet 19 192 12 092 59
- Tencent 11 455 7 215 59
- Other 7 737 4 877 59
Print 12 071 10 758 12
Technology 1 166 1 228 (5)
Economic interest 56 522 45 103 25
Corporate services - - -
Less: Associates (17 035) (12 018) 42
Consolidated 39 487 33 085 19
EBITDA
Year ended 31 March
2012 2011 %
R`m R`m Change
Pay television 7 276 6 542 11
Internet 4 559 3 945 16
- Tencent 5 158 3 795 36
- Other (599) 150 +100
Print 1 465 1 194 23
Technology 57 188 (70)
Economic interest 13 357 11 869 13
Corporate services (198) (239) -
Less: Associates (6 199) (4 481) 38
Consolidated 6 960 7 149 (3)
Trading profit
Year ended 31 March
2012 2011 %
R`m R`m Change
Pay television 6 331 5 727 11
Internet 3 800 3 493 9
- Tencent 4 659 3 543 31
- Other (859) (50) +100
Print 1 090 872 25
Technology (11) 128 +100
Economic interest 11 210 10 220 10
Corporate services (199) (240) -
Less: Associates (5 526) (4 142) 33
Consolidated 5 485 5 838 (6)
Reconciliation of trading profit to operating
profit
Year ended Year ended
31 March 31 March
2012 2011
R`m R`m
Trading profit 5 485 5 838
Finance cost on transponder leases 132 144
Amortisation of intangible assets (967) (1 045)
Other gains/(losses) - net (1 448) (881)
Operating profit 3 202 4 056
Note: For a reconciliation of operating profit to profit before
taxation, refer to the consolidated income statement.
Supplementary information
Year ended Year ended
31 March 31 March
2012 2011
R`m R`m
Depreciation of property, plant and equipment 1 222 1 040
Amortisation 1 088 1 172
- intangible assets 967 1 045
- software 121 127
Other gains/(losses) - net (1 448) (881)
- (loss)/profit on sale of property, plant, (95) 42
equipment and intangible assets
- impairment of goodwill and intangible assets (1 487) (1 035)
- impairment of tangible assets - (33)
- insurance proceeds 2 51
- profit on transponder lease settlement 100 88
- fair value adjustment on shareholders` 32 6
liability
Interest received 400 401
- loans and bank accounts 360 308
- other 40 93
Interest paid (1 271) (1 389)
- loans and overdrafts (877) (883)
- transponder leases (132) (144)
- revolving credit facility costs - accelerated - (128)
amortisation
- other (262) (234)
Other finance income/(cost) - net 174 (30)
- net foreign exchange differences and fair (135) (247)
value adjustments on derivatives
- preference dividends received 309 217
(Losses)/gains on acquisitions and disposals (134) 42
- (loss)/profit on sale of investments (7) 34
- profit on partial disposal of investments - 72
- acquisition-related costs (72) (109)
- other (55) 45
Goodwill
- cost 18 371 17 051
- accumulated impairment (1 093) (431)
Opening balance 17 278 16 620
- foreign currency translation effects 583 (510)
- acquisitions 1 184 1 885
- disposals (99) -
- contingent consideration adjustment - (49)
- transferred to non-current assets held-for- (226) -
sale
- impairment (836) (668)
Closing balance 17 884 17 278
- cost 19 801 18 371
- accumulated impairment (1 917) (1 093)
Investments and loans 30 659 24 068
- listed investments 24 331 16 874
- unlisted investments 6 328 7 194
Commitments 22 502 16 997
- capital expenditure 299 401
- programme and film rights 12 143 7 744
- network and other service commitments 953 700
- transponder leases 7 796 6 787
- operating lease commitments 1 083 896
- set-top box commitments 228 469
Share of equity-accounted results 3 869 3 290
- dilution losses/(gains) 16 (39)
- foreign currency translation reserve release - (29)
- impairment of investments 122 24
- gains on acquisitions and disposals (112) (262)
Contribution to headline earnings 3 895 2 984
- amortisation of intangible assets 538 355
- treasury-settled share scheme charges 468 227
- business combination costs 22 15
- fair value adjustments 67 -
- (recognition)/reversal of deferred tax assets (38) 13
Contribution to core headline earnings 4 952 3 594
Tencent 4 376 3 164
Mail.ru 364 152
Abril 205 250
Other 7 28
Business combinations (IFRS 3)
In April 2011 the group acquired an 85% interest in 7Pixel, an e-commerce group
operating in Western Europe. The fair value of the total purchase consideration
was R228m (US$35m) in cash. The purchase price allocation: PP&E R22m;
intangible assets R136m; cash R12m; trade and other receivables R25m; trade and
other payables R17m; deferred tax liability R43m and the balance to goodwill. A
non-controlling interest of R20m was recognised at the acquisition date.
In July 2011 the group acquired an 80% interest in Vipindirim Electronic
Services plc (Markafoni), a Turkish e-commerce group. The fair value of the
total purchase consideration was R672m (US$95m) in cash. The purchase price
allocation: PP&E R18m; intangible assets R373m; cash R48m; inventory R42m; trade
and other receivables R11m; trade and other payables R116m; deferred tax
liability R69m and the balance to goodwill. A non-controlling interest of R104m
was recognised at the acquisition date.
In July 2011 the group acquired 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 purchase price allocation:
intangible assets R21m; cash R2m; trade and other receivables R3m; trade and
other payables R2m; deferred tax liability R5m and the balance to goodwill.
In December 2011 the group acquired a 90% interest in Fashion Days, an e-
commerce group operating in several eastern European countries. The fair value
of the total purchase consideration was R435m (US$54m) in cash. The preliminary
purchase price allocation: PP&E R4m; intangible assets R342m; cash R7m;
inventory R35m; trade and other receivables R123m; trade and other payables
R76m; deferred tax liability R64m and the balance to goodwill. A non-controlling
interest of R37m was recognised at the acquisition date.
The main factor contributing to the goodwill recognised in these acquisitions is
their market presence. This goodwill is not expected to be deductible for income
tax purposes. The non-controlling interest in these acquisitions was measured
using the proportionate share of the identifiable net assets.
The group made various smaller acquisitions with a combined cost of R323m. Total
acquisition-related costs of R72m 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.
COMMENTARY
Naspers experienced growth across most of its businesses. Full year consolidated
revenues grew 19%. Core headline earnings were up 15%, achieved while
accelerating organic development. This solid growth was achieved against the
background of continued worldwide economic turmoil.
The internet segment remains the fastest-growing area, with several new services
under development. The pay-television segment recorded satisfactory progress in
subscribers and is currently focused on expanding into online services and the
delivery of digital terrestrial television services.
The print media segment had a more favourable year, with improved revenue and
earnings growth.
FINANCIAL REVIEW
The lift of 19% in consolidated revenues to R39,5bn was buoyed by our internet
businesses, where revenues jumped 59%. Growth in the subscriber base resulted in
pay-television revenues increasing 15%, while print revenues were up 12%.
Consolidated development costs however, also accelerated to R2,8bn (2011:
R1,5bn) resulting in a 6% decline in consolidated trading profit.
The interest cost on net borrowings decreased to R517m, a result of lower costs
of funding. Core earnings from equity-accounted associates grew 38% to R5bn,
mainly from Tencent, Mail.ru and Abril.
Total core headline earnings were R6,9bn - an increase of 15% on the prior year.
The group impaired goodwill and intangible assets of R1,2bn, net of tax, in
respect of investments where progress lagged our expectations. Positive free
cash flows were R3,6bn. Our balance sheet remains sound, with total consolidated
net debt, excluding capitalised satellite leases, of R4,6bn.
SEGMENTAL REVIEW
This segmental review includes our consolidated subsidiaries, plus the
proportional consolidation of associated companies.
Pay television
The pay-television businesses recorded growth of 684 000 subscribers in the year
and the total base now stands at 5,6 million homes. Revenues were up 15% to
R24,1bn, while trading profits grew 11% to R6,3bn. We continue to reinvest in
the business, including upgrading our technology and broadcast infrastructure.
In South Africa the gross base added 492 000 to some four million households, of
which 293 000 new clients came from the lower-priced Compact bouquet. The roll-
out of BoxOffice, where PVR subscribers view the latest blockbuster movies,
proved popular with an average monthly rental of more than 300 000 movies.
In the rest of Africa our subscribers increased by 192 000 to reach 1,6 million
homes. The lower-priced Compact/Family bouquets now account for 42% of the base.
Trading margins were reduced by investment in local content, decoder subsidies
and the development of new products.
Digital terrestrial services, under the brand name GOtv, were launched in
Zambia, Uganda, Kenya and Nigeria. We plan to continue investing in the
expansion of digital terrestrial networks.
Competitive pressures and regulatory scrutiny continue to intensify across the
continent.
Internet
Overall the internet segment reported revenue growth of 59%. Increased focus on
organic expansion and expensing that cost, meant that trading profits increased
at a slower rate of 9% to R3,8bn.
In China, Tencent had a lively year in which it enhanced its core user
experience and achieved growth in both revenue and earnings. Our share of its
revenues grew by 59% to R11,5bn and core headline earnings were up 38% to
R4,4bn. Peak simultaneous online instant messaging users increased by 22% to 167
million, while total user accounts grew to 752 million.
In Russia, Mail.ru delivered strong growth in communication, online gaming and
social networks. Mail.ru`s portal reached 33 million unique users. Our share of
Mail.ru`s reported revenues grew by 66% to R1,1bn and core headline earnings
were up 139% to R364m.
In aggregate our other internet businesses together also reported robust revenue
growth of 57% and a trading loss of R1,2bn, the direct result of increased
organic development costs. In Eastern Europe Allegro grew revenues by 58% as it
broadened its product offerings and diversified its revenue streams. In Latin
America our e-commerce business BuscaPe continued to make headway as it more
than doubled its revenue.
Print media
Our South African operations showed slightly improved revenue growth of 15%,
largely the result of commercial print contracts. Trading profits recovered as
the business continued to manage costs. Abril`s operations in Brazil grew
revenue by 10% and trading profit by 18%.
Technology
Growth in conditional access revenues were offset by lower revenues in other
product lines. Investment in new products, which position Irdeto to secure
internet distributed digital assets and content, resulted in a marginal trading
loss.
Outlook
In general the broader markets and specific business sectors in which we operate
remain vibrant. While significant competitive, regulatory and technology
challenges present themselves, so do opportunities. We will continue to explore
these opportunities with the objective of growing our businesses for the long
term.
DIVIDEND NUMBER 83
The board has taken cognisance of recent amendments to the taxation of
dividends, and recommends that the annual gross dividend be increased by 24% to
335 cents (previously 270 cents) per listed N ordinary share, and 67 cents
(previously 54 cents) per unlisted A ordinary share. If approved by shareholders
at the annual general meeting to be held on 31 August 2012, dividends will be
payable to shareholders recorded in the books on Friday 21 September 2012, and
will be paid on Tuesday 25 September 2012. The last date to trade cum dividend
will be on Friday 14 September 2012. (The shares will therefore trade ex
dividend from Monday 17 September 2012.) Share certificates may not be
dematerialised or rematerialised between Monday 17 September 2012 and Friday 21
September 2012, both dates inclusive.
The dividend has been declared from income reserves. There are R502 122 976
STC credits available for utilisation. Accordingly the STC credit available is
121,91778 cents per listed N ordinary share and 24,37512 cents per unlisted A
ordinary share. The amount per share subject to the 15% dividend tax (DT) is
therefore 213,08222 cents per listed N ordinary share and 42,62488 cents per
unlisted A ordinary share. DT will amount to 31,96233 cents per listed N
ordinary share and 6,39373 cents per unlisted A ordinary share. As a result N
ordinary shareholders will receive a net dividend amount of 303,03767 cents per
share and A ordinary shareholders will receive a net dividend amount of 60,60627
cents per share. The issued ordinary share capital as at 26 June 2012 is 411 711
353 N ordinary shares and 712 131 A ordinary shares. The company`s income
tax reference number is 9550138714.
BASIS OF PRESENTATION AND ACCOUNTING POLICIES
This provisional report for the year ended 31 March 2012 has been prepared in
terms of the recognition and measurement requirements of International Financial
Reporting Standards (IFRS), the AC 500 series pronouncements as issued by the
Accounting Practices Board, the JSE Listings Requirements, the requirements of
the South African Companies Act No 71 of 2008 and the presentation and
disclosure requirements of IAS 34. Accounting policies used are consistent with
those applied in the previous annual financial statements and IFRS.
The preparation of the financial results was supervised by the financial
director, Steve Pacak CA(SA).
Trading profit excludes amortisation of intangible assets (other than software)
and other gains/losses, but includes the finance cost on transponder leases.
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.
On behalf of the board
Ton Vosloo Koos Bekker
Chairman Chief executive
Cape Town
26 June 2012
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
40 Heerengracht
Cape Town 8001
(PO Box 2271, Cape Town 8000)
Transfer secretaries
Link Market Services South Africa Proprietary Limited
11 Diagonal Street, Johannesburg 2001
(PO Box 4844, Johannesburg 2000)
ADR programme
The Bank of New York Mellon maintains a GlobalBuyDIRECT'Trade Mark 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 - GlobalBuyDIRECT'Trade Mark, 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 a more detailed exposition, visit the Naspers website at www.naspers.com
Date: 27/06/2012 07:30:01 Supplied by www.sharenet.co.za
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