Wrap Text
Interim Reviewed Results for the 6 months to 30 September 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: US 6315121003
The reviewed results of the Naspers group for the six months to
30 September 2012 are as follows:
Interim Report
Commentary
Over the past six months the group continued to expand its businesses with an increasing focus on
ecommerce. This is reflected in consolidated revenues growing 22% over the period. The internet
segment remains our area of fastest growth, whilst pay television put in a solid performance. Core
headline earnings per share grew 15%, higher than expected, as we benefitted from a weaker rand and
as much of the planned development spend will only occur in the second half of the year.
Looking ahead we will persist with the strategy to build our pay television subscriber base and to
expand ecommerce businesses across emerging markets. To date we have invested US$530m in new
ecommerce businesses such as Netretail, Flipkart and eMag.
Given the planned acceleration in development spend, as well as the increased focus on ecommerce
we anticipate that group trading margins will trend down in the second half. The aim is to increase our
absolute profits and returns over the medium and long term.
FINANCIAL REVIEW
The 22% increase in consolidated revenues to R23bn came mostly from organic growth in existing
businesses, supplemented by a few acquisitions.
As previously indicated, we are developing digital terrestrial television (DTT) services in markets across
Africa, as well as scaling our ecommerce operations in emerging markets. Development spend over the
period accelerated to R1,6bn (2011: R1,1bn). Consequently, trading profits grew at a slower pace of 6% and
trading margins narrowed to 15%.
Net interest cost increased to R488m (2011: R383m) largely a function of increased levels of debt
utilised to fund acquisitions.
Our associates, Tencent and Mail.ru, continued to grow strongly. Their contribution to core headline
earnings is R3,2bn. In addition, we recorded a non-recurring book profit of R1,5bn arising from Mail.ru's
partial sale of its stake in Facebook. This profit is excluded from core headline earnings.
Assets impaired over the period amounted to R343m (2011: R746m).
The net result of the above is that core headline earnings per share grew 15% to R10,62 per N ordinary
share. Free cash flow for the period was R1,7bn and benefited from delays in our DTT capex spend as we
await new licences. Consolidated balance sheet gearing is a healthy 14%.
SEGMENTAL REVIEW
This segmental review reflects consolidated subsidiaries, plus a proportional consolidation of associated
companies.
Pay television
After recording net growth of 393 000 subscribers during the six-month period, the pay television base
now stands at just over 6 million homes. Revenues were up 19% to R14,4bn, whilst trading profits grew
18% to R4bn. Trading margins remained stable. We continue to upgrade our broadcast infrastructure
and expand online services. GOtv, our recently-launched DTT service, is gaining traction. Competitive
pressures and regulatory scrutiny continued to intensify across the continent.
In South Africa, we added 187 000 subscribers and now reach 4,2 million households. The Compact
bouquet, benefiting from our local content offering, accounted for 87% of growth. The DStv service was
successfully migrated to the new IntelSat-20 satellite, providing capacity for new subscriber services.
Several new channels aimed at improving the viewer's experience were added to DStv bouquets. This
included 8 additional high definition channels, bringing the total to 14. We increased sales of the popular
personal video recorder (PVR) by 90 000, with the cumulative base now at 747 000 households. The
BoxOffice service, which allows PVR subscribers to view the latest blockbuster movies on-demand, reached
monthly movie rentals of 400 000. This service was recently made available online.
In the rest of sub-Saharan Africa our subscribers increased by 206 000 to reach 1,8 million homes.
Growth was spread across all bouquets and platforms. Profitability was affected by our investment in
DTT and the addition of more local content. Our DTT transmitters now reach six countries and 18 cities.
We expect to continue this rollout in coming months.
Internet
Overall managed internet revenues, which includes our share of associates, increased 70% to R14,1bn
and yielded trading profits of R3,1bn.
Tencent delivered another solid performance, despite a more challenging macro environment. The core
businesses registered healthy growth and progress was made in advertising and open platform initiatives.
Monthly active instant-messaging accounts increased to 784 million, whilst peak simultaneous online
users increased to 167 million. WeChat is starting to address international audiences. Given growth
opportunities in Chinese ecommerce, Tencent has started investing in this area.
Mail.ru continues to expand across most of its business units. Diversification of revenue streams and
an increase in paying user engagement are driving growth. The Mail.ru portal now attracts 32 million
unique Russian users and is also expanding its mobile audience.
Ecommerce
Revenues from our ecommerce segment grew robustly by 61% to R4bn in the period. This came
mainly from existing businesses, augmented by the inclusion of a few acquisitions such as Netretail. The
R1bn development spend, fully expensed through the income statement, resulted in a trading loss of
R767m. Given our drive to scale these operations and to expand across the ecommerce value chain, we
anticipate a further ramp-up in development spend in the second half of the year.
Print media
The performance of the print businesses in South Africa and Brazil were strained by the challenging
economic climate and combined delivered pedestrian revenue growth of 5%, whilst trading profits were
broadly flat.
BASIS OF PRESENTATION AND ACCOUNTING POLICIES
The financial results for the six months to 30 September 2012 have 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. Except as noted below, the accounting policies used for the interim results
are consistent with those applied in the previous annual financial statements and with 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 group adopted the following amendments for the period ended 30 September 2012:
The pay television and technology segments have been combined as these segments are interdependent
in the provision of pay television services. Our internet segment has previously been disclosed as
"Tencent" and "Other internet". "Other internet" will in future be disclosed as three separate reporting
units, being "Mail.ru", "Ecommerce" and "Other internet". The group's focus on ecommerce, and the
listing of Mail.ru, prompted us to disclose these units on their own. The definition of trading profit has
been updated to exclude equity-settled share scheme charges. This resulted in the September 2011
trading profit being restated from R3,1bn to R3,2bn. This is in line with our core headline earnings
definition, where these non-cash expenses are excluded from the sustainable earnings measurements
of the group. Comparative segmental results have been restated in accordance with IFRS 8 "Operating
segments".
Transponder lease commitments disclosed at 31 March 2012 and 30 September 2011 have been restated
by R3,3bn (March 2012) and R3,6bn (September 2011) to exclude assets already capitalised.
Trading profit excludes amortisation of intangible assets (other than software), equity-settled share
scheme charges and other gains or losses, but includes the finance cost on transponder leases.
Core headline earnings exclude once-off and non-operating items such as unrealised foreign exchange
gains or losses. We believe that it is a useful measure for our 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.
The preparation of the financial results was supervised by our financial director Steve Pacak, CA(SA).
These results were made public on 27 November 2012.
SUBSEQUENT EVENTS
During October 2012 the group invested US$120m in total, acquiring a controlling stake of
Dante International S.A. trading as eMag, a leading online retailer in Romania, and a minority stake
of Souq Group Ltd, an online retailer in the Middle East.
On behalf of the board:
Ton Vosloo Koos Bekker
Chairman Chief executive
Cape Town
27 November 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 (Pty) Limited
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 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.
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.
Revenue EBITDA Trading profit
Six months ended Year ended Six months ended Year ended Six months ended Year ended
30 September 31 March 30 September 31 March 30 September 31 March
2012 2011 2012 2012 2011 2012 2012 2011 2012
Segmental Reviewed Reviewed % Audited Reviewed Reviewed % Audited Reviewed Reviewed % Audited
review R'm R'm Change R'm R'm R'm Change R'm R'm R'm Change R'm
Pay television 14 426 12 141 19 25 259 4 617 3 880 19 7 392 4 020 3 415 18 6 379
Internet 14 108 8 285 70 19 192 3 621 2 425 49 5 051 3 089 2 095 47 4 293
Tencent 8 978 4 874 84 11 455 3 986 2 445 63 5 487 3 590 2 255 59 4 988
Mail.ru 721 456 58 1 094 386 227 70 591 342 199 72 517
Ecommerce 3 991 2 478 61 5 736 (686) (118) +100 (760) (767) (211) +100 (914)
Other internet 418 477 (12) 907 (65) (129) 50 (267) (76) (148) 49 (298)
Print 5 638 5 376 5 12 071 458 431 6 1 464 247 247 1 090
Economic interest 34 172 25 802 32 56 522 8 696 6 736 29 13 907 7 356 5 757 28 11 762
Corporate services (77) (43) (99) (77) (44) (100)
Less: Associates (11 575) (7 320) (17 035) (4 411) (2 811) (6 667) (3 911) (2 545) (5 993)
Consolidated 22 597 18 482 22 39 487 4 208 3 882 8 7 141 3 368 3 168 6 5 669
Six months ended Year ended
30 September 31 March
Reconciliation of 2012 2011 2012
trading profit to Reviewed Reviewed Audited
operating profit R'm R'm R'm
Trading profit 3 368 3 168 5 669
Finance cost on transponder leases 72 66 132
Amortisation of intangible assets (482) (470) (967)
Other gains/(losses) net (378) (722) (1 448)
Equity-settled share-based charge (88) (89) (184)
Operating profit 2 492 1 953 3 202
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
2012 2011 2012
Consolidated income Reviewed Reviewed Audited
statement R'm R'm R'm
Revenue 22 597 18 482 39 487
Cost of providing services and sale of goods (11 808) (9 623) (20 863)
Selling, general and administration expenses (7 919) (6 184) (13 974)
Other gains/(losses) net (378) (722) (1 448)
Operating profit 2 492 1 953 3 202
Interest received 218 200 400
Interest paid (706) (583) (1 271)
Other finance income/(costs) net 235 174
Share of equity-accounted results 4 064 1 618 3 869
Impairment of equity-accounted investments (94)
Dilution losses on equity-accounted investments (41) (89) (606)
Gains/(losses) on acquisitions and disposals 25 (62) (134)
Profit before taxation 6 052 3 272 5 540
Taxation (1 394) (1 008) (2 059)
Profit for the period 4 658 2 264 3 481
Attributable to:
Equity holders of the group 4 150 1 869 2 894
Non-controlling interest 508 395 587
4 658 2 264 3 481
Core headline earnings for the period (R'm) 4 086 3 458 6 951
Core headline earnings per N ordinary share (cents) 1 062 921 1 850
Fully diluted core headline earnings per
N ordinary share (cents) 1 024 884 1 789
Headline earnings for the period (R'm) 3 194 2 597 4 874
Headline earnings per N ordinary share (cents) 830 692 1 297
Fully diluted headline earnings per
N ordinary share (cents) 800 664 1 254
Earnings per N ordinary share (cents) 1 079 498 770
Fully diluted earnings per N ordinary share (cents) 1 040 478 745
Net number of shares issued ('000)
At period-end 385 414 375 865 384 714
Weighted average for the period 384 714 375 440 375 653
Fully diluted weighted average 399 131 391 206 388 567
Six months ended Year ended
30 September 31 March
Condensed consolidated 2012 2011 2012
statement of comprehensive Reviewed Reviewed Audited
income R'm R'm R'm
Profit for the period 4 658 2 264 3 481
Total other comprehensive income,
net of tax, for the period (1 817) 3 019 4 315
Translation of foreign operations 1 090 2 040 2 172
Cash flow hedges 37 394 162
Share of associates' other comprehensive
income and reserves (2 925) 763 2 109
Tax on other comprehensive income (19) (178) (128)
Total comprehensive income for the period 2 841 5 283 7 796
Attributable to:
Equity holders of the group 2 324 4 768 7 138
Non-controlling interest 517 515 658
2 841 5 283 7 796
Six months ended Year ended
30 September 31 March
Condensed consolidated 2012 2011 2012
statement of changes Reviewed Reviewed Audited
in equity R'm R'm R'm
Balance at beginning of the period 49 576 42 942 42 942
Changes in share capital and premium
Movement in treasury shares (269) (163) (1 603)
Share capital and premium issued 288 224 1 908
Changes in reserves
Total comprehensive income for the period 2 324 4 768 7 138
Movement in share-based compensation reserve 201 203 401
Movement in existing control business
combination reserve (333) 2 17
Direct retained earnings movements 4
Dividends paid to Naspers shareholders (1 292) (1 013) (1 012)
Changes in non-controlling interest
Total comprehensive income for the period 517 515 658
Dividends paid to non-controlling shareholders (1 102) (1 281) (1 362)
Movement in non-controlling interest in reserves 209 328 485
Balance at end of the period 50 119 46 525 49 576
Comprising:
Share capital and premium 14 708 14 445 14 689
Retained earnings 25 919 22 035 23 065
Share-based compensation reserve 3 563 2 631 3 134
Existing control business combination reserve (291) 26 42
Hedging reserve (319) (175) (328)
Valuation reserve 2 778 4 893 5 933
Foreign currency translation reserve 2 076 828 980
Non-controlling interest 1 685 1 842 2 061
Total 50 119 46 525 49 576
As at As at
30 September 31 March
Consolidated 2012 2011 2012
statement of financial Reviewed Reviewed Audited
position R'm R'm R'm
Assets
Non-current assets 68 172 59 842 62 037
Property, plant and equipment 12 574 8 460 8 879
Goodwill 19 708 18 606 17 884
Other intangible assets 4 319 4 108 3 884
Investment in associates 29 070 25 155 28 095
Other investments and loans 1 768 2 587 2 564
Derivatives 70 298 86
Deferred taxation 663 628 645
Current assets 22 546 18 638 19 241
Inventory 1 592 1 194 1 238
Programme and film rights 2 830 2 362 1 522
Trade receivables 4 373 3 655 3 296
Other receivables and loans 2 872 2 692 2 639
Derivatives 284 111 85
Cash and cash equivalents 10 565 7 902 9 825
22 516 17 916 18 605
Assets classified as held-for-sale 30 722 636
Total assets 90 718 78 480 81 278
Equity and liabilities
Share capital and reserves 48 434 44 683 47 515
Share capital and premium 14 708 14 445 14 689
Other reserves 7 807 8 203 9 761
Retained earnings 25 919 22 035 23 065
Non-controlling shareholders' interest 1 685 1 842 2 061
Total equity 50 119 46 525 49 576
Non-current liabilities 23 312 17 467 17 845
Capitalised finance leases 5 355 2 398 2 208
Liabilities interest bearing 15 466 12 503 12 996
non-interest bearing 248 224 348
Post-retirement medical liability 148 133 139
Derivatives 937 956 839
Deferred taxation 1 158 1 253 1 315
Current liabilities 17 287 14 488 13 857
Current portion of long-term debt 1 786 1 465 1 613
Trade payables 4 117 2 964 2 865
Accrued expenses and other current liabilities 9 659 7 979 7 980
Derivatives 149 118 206
Bank overdrafts and call loans 1 576 1 835 1 034
17 287 14 361 13 698
Liabilities classified as held-for-sale 127 159
Total equity and liabilities 90 718 78 480 81 278
Net asset value per N ordinary share (cents) 12 567 11 888 12 351
Six months ended Year ended
30 September 31 March
2012 2011 2012
Condensed consolidated Reviewed Reviewed Audited
statement of cash flows R'm R'm R'm
Cash flow from operating activities 4 092 1 912 5 394
Cash flow utilised in investing activities (2 590) (501) (2 360)
Cash flow utilised in financing activities (1 488) (2 886) (1 745)
Net movement in cash and cash equivalents 14 (1 475) 1 289
Foreign exchange translation adjustments 184 222 139
Cash and cash equivalents
at beginning of the period 8 791 7 401 7 401
Cash and cash equivalents
at end of the period 8 989 6 148 8 829
Included in:
Cash and cash equivalents 8 989 6 067 8 791
Assets classified as held-for-sale 81 38
8 989 6 148 8 829
Six months ended Year ended
30 September 31 March
Calculation of 2012 2011 2012
headline and core Reviewed Reviewed Audited
headline earnings R'm R'm R'm
Net profit attributable to shareholders 4 150 1 869 2 894
Adjusted for:
insurance proceeds (1) (2)
impairment of property, plant and
equipment and other assets 41 4
impairment of goodwill and intangible assets 289 749 1 487
profit on sale of property, plant and
equipment and intangible assets (3) (26)
losses/(gains) on acquisitions and
disposals of investments 2 (7) 45
step-up acquisition loss 21 35
dilution losses on equity-accounted investments 41 89 606
remeasurements included in equity-
accounted earnings (1 331) 32
impairment of equity-accounted investments 12 94
3 210 2 724 5 156
Total tax effects of adjustments (6) (131) (207)
Total adjustment for non-controlling interest (10) 4 (75)
Headline earnings 3 194 2 597 4 874
Adjusted for:
equity-settled share scheme charges 339 271 652
recognition of deferred tax assets (26) (24) (38)
amortisation of intangible assets 583 586 1 191
fair value adjustments and currency
translation differences 35 (25) 162
business combination (gains)/losses (39) 53 110
Core headline earnings 4 086 3 458 6 951
Six months ended Year ended
30 September 31 March
2012 2011 2012
Supplementary Reviewed Reviewed Audited
information R'm R'm R'm
Depreciation of property, plant
and equipment 698 558 1 222
Amortisation 552 560 1 088
intangible assets 482 470 967
software 70 90 121
Other gains/(losses) net (378) (722) (1 448)
profit/(loss) on sale of property, plant and
equipment and intangible assets 3 21 (95)
impairment of goodwill and intangible assets (289) (742) (1 487)
impairment of tangible and other assets (54) (4)
insurance proceeds 1 2
profit on transponder lease settlement 3 100
fair value adjustment on shareholders' liability (38) (1) 32
Interest received 218 200 400
loans and bank accounts 205 169 360
other 13 31 40
Interest paid (706) (583) (1 271)
loans and overdrafts (481) (390) (877)
transponder leases (72) (66) (132)
other (153) (127) (262)
Other finance income/(cost) net 235 174
net foreign exchange differences and fair value
adjustments on derivatives (76) 5 (135)
preference dividends received 76 230 309
Gains/(losses) on acquisitions and disposals 25 (62) (134)
profit/(loss) on sale of investments 42 7 (7)
loss on partial disposal of investments (44)
remeasurement of contingent consideration 75 (17)
acquisition-related costs (37) (33) (72)
other (11) (36) (38)
Goodwill
cost 19 801 18 371 18 371
accumulated impairment (1 917) (1 093) (1 093)
Opening balance 17 884 17 278 17 278
foreign currency translation effects 563 1 101 583
acquisitions 1 533 966 1 184
disposals (31) (8) (99)
transferred to non-current assets held-for-sale (360) (226)
impairment (241) (371) (836)
Closing balance 19 708 18 606 17 884
cost 21 811 20 077 19 801
accumulated impairment (2 103) (1 471) (1 917)
Investments and loans 30 838 27 742 30 659
listed investments 24 481 21 245 24 331
unlisted investments 6 357 6 497 6 328
Commitments 16 988 16 415 19 202
capital expenditure 416 644 299
programme and film rights 13 500 8 839 12 143
network and other service commitments 1 287 1 269 953
transponder leases 372 4 607 4 496
operating lease commitments 1 015 755 1 083
set-top box commitments 398 301 228
Share of equity-accounted results 4 064 1 618 3 869
dilution gains 16
sale of assets (1 544) (4)
impairment of investments and other assets 213 18 122
gains on acquisitions and disposals (112)
Contribution to headline earnings 2 733 1 632 3 895
amortisation of intangible assets 259 261 538
equity-settled share scheme charges 251 183 468
business combination costs 20 22
fair value adjustments and currency
translation differences (75) 36 67
(recognition)/reversal of deferred tax assets (26) 19 (38)
Contribution to core headline earnings 3 142 2 151 4 952
Tencent 2 986 1 973 4 376
Mail.ru 250 178 364
Abril (95) 18 205
Other 1 (18) 7
Business combinations
In June 2012 the group acquired a 79% interest in Netretail, an online retailer with operations in Czech Republic, Poland, Hungary,
Slovakia and Slovenia. The fair value of the total purchase consideration was R1,7bn in cash. The purchase price allocation: PP&E
R36m; intangible assets R626m; cash R79m; trade and other receivables R213m; inventory R116m; trade and other payables R507m;
deferred tax liability R114m and the balance to goodwill. A non-controlling interest of R55m was recognised at the acquisition date.
The main factor contributing to the goodwill recognised is Netretail's market presence. This goodwill is not expected to be deductible
for income tax purposes. The non-controlling interest was measured using the proportionate share of the identifiable net assets.
The group made various smaller acquisitions with a combined cost of R65m. Total acquisition-related costs of R37m were recorded
in "Gains/(losses) on acquisitions and disposals" in the income statement. Had the revenues and net results of Netretail been
included from 1 April 2012, the group's consolidated revenue would have been R362m higher and the net results would have
decreased by R16m. The smaller acquisitions made during the period would not have had a significant effect on the group's
consolidated revenue and net results.
For more details about Naspers and investor enquiries regarding the results, visit the Naspers website at www.naspers.com
Date: 27/11/2012 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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