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Summary of the audited results of the Naspers group for the year ended 31 March 2013
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
Provisional report
Summary of the audited results
of the Naspers group for the
year ended 31 March 2013
Commentary
The group posted a solid performance over the past year. Investors are reminded that our strategy is to maximise the
potential of existing businesses, whilst investing deeper to grow new ventures for the longer term. We are mindful that
this strategy will reduce both earnings and cash flows in the short term.
Against this background, it is pleasing that we generated consolidated revenue growth of 27% now some R50bn. The
main contribution to this growth came from the internet segment, which experienced robust revenue growth across
almost all major platforms. Note that not all internet units are profitable as yet.
Despite the step-up in development spend, core headline earnings per N ordinary share grew 20% to R22,16. However,
the major part of this growth came from currency translation effects, as the rand exchange rate weakened over the
period.
These results are underpinned by a diverse portfolio, a fairly global presence and the spread of risk. A milestone was
reached this year when managed revenues from our internet units, which includes our share of associates, exceeded
that of pay television.
Looking ahead, we intend to expand ecommerce businesses across emerging markets and to build our pay-television
subscriber base across the African continent. A significant shift is visible in user activity moving from the personal
computer to mobile devices such as smartphones and tablets. This trend simultaneously disrupts existing business
models and creates new opportunities.
FINANCIAL REVIEW
Consolidated revenues grew by 27% to R50,2bn. Growth came from organic expansion of existing businesses and
acquisitions, supplemented by the depreciation of the rand (which has a positive effect when we translate foreign
revenues into rand).
Development spend accelerated to R4,3bn (2012: R2,8bn), focused mainly on growing our ecommerce businesses
and the roll-out of pay-television services across Africa. As this development spend is expensed through the income
statement, our consolidated trading profits for the year were flat at R5,7bn.
Net interest cost on borrowings amounted to R630m (2012: R517m) largely to fund acquisitions.
Our equity-accounted associates, Tencent and Mail.ru, both reported positive growth and contributed R7,3bn to
core headline earnings. We recorded a non-recurring book profit of R2,6bn, flowing from Mail.rus sale of shares in
Facebook. This profit is excluded from core headline earnings.
The impairment of equity-accounted investments amounts to R2,1bn and relates mainly to our print media investment,
Abril. Revenues in the print industry are buffeted by the dual headwinds of the macro-economic downturn in Brazil
and increased online competition. Whilst cost savings initiatives have been implemented, we believe it prudent to book
this impairment.
The net result of the above is that core headline earnings grew 20% to R22,16 per N ordinary share. Free cash flow for
the period was R3,5bn, slightly lower than last year because of the higher capital expenditure.
Consolidated balance sheet gearing stands at 12%, excluding transponder lease and non-interest bearing liabilities.
SEGMENTAL REVIEW
This segmental review includes our consolidated subsidiaries, plus a proportional consolidation of associated companies.
Internet
In the aggregate, managed internet revenues expanded 80% to R34,6bn. Trading profits from the internet segment
were 44% higher at R6,2bn.
Tencent is growing in a highly competitive environment. Internet users in China grew by some 12% to 564m at
the end of 2012. Tencents core operating platforms performed well: the QQ instant messaging platform reached
peak concurrent users of 173m, whilst the online gaming business delivered a solid performance. Weixin/WeChat,
a communication service for smartphones, established a market position in China and is expanding internationally.
Tencent continues to build its young ecommerce businesses and achieved growth both in transaction volume and
revenues.
Mail.ru had a good year with revenue growing 40% in local currency. The Russian internet market boasts 64m users.
Mail.ru integrated and upgraded key products across desktop and mobile platforms, as well as growing online games
and value-added services.
Ecommerce: We believe online shopping is a global consumer trend and anticipate that affordable tablets and
smartphones will accelerate the uptake of services in our markets.
Ecommerce revenues doubled to R11,4bn, through a combination of organic growth and a few acquisitions. We
extended the breadth of our products, with particular emphasis on etailing and online classifieds. As we are in
the building phase, this segment is presently loss-making and we do not expect profits in the aggregate for several
more years.
Pay television
This segment reports revenues 20% higher at R30,3bn. Growth came largely from an increase in the net subscriber
base of 1,1m, which now reaches 6,7m households across 48 countries in Africa. Trading profits grew 18% to R7,6bn,
despite the increased development spend on infrastructure. We are also investing more in local productions.
We now produce more than 6 000 hours per annum of local broadcasting in South Africa, Nigeria and Kenya. This year
saw the launch of seven local entertainment channels. Also the launch of the Africa Magic portfolio of channels, the
addition of two local community channels and the launch of the M-Net movie genre channels in South Africa. A further
six high-definition channels were added.
SuperSport is by far the largest funder of sport in Africa. We contribute more to sports bodies than any government.
More affordable digital terrestrial television services were launched under the GOtv brand, which now operates in
eight countries reaching 376 000 households.
Print media
It was a tough year for print media globally. Revenues were flat as advertisers continue to either divert their spend to
the internet or cut budgets.
In South Africa, Media24s trading profits were marginally up as costs were cut. In Brazil, Abril suffered a decline in
profitability. Cost-cutting initiatives are now being implemented there.
DIVIDEND NUMBER 84
The board recommends that the annual gross dividend be increased by 15% to 385c (previously 335c) per listed
N ordinary share, and 77c (previously 67c) per unlisted A ordinary share. If approved by shareholders at the annual
general meeting to be held on 30 August 2013, dividends will be payable to shareholders recorded in the books on
Friday 20 September 2013, and will be paid on Monday 23 September 2013. The last date to trade cum dividend
will be on Friday 13 September 2013. (The shares will therefore trade ex dividend from Monday 16 September 2013.)
Share certificates may not be dematerialised or rematerialised between Monday 16 September 2013 and Friday
20 September 2013, both dates inclusive.
The dividend will be declared from income reserves. There are no STC credits available for this declaration. The
dividend will therefore be subject to the dividend tax rate of 15% which will result in a net dividend of 327,25c per
listed N ordinary share and 65,45c per unlisted A ordinary share to those shareholders not exempt from paying
dividend tax. Dividend tax will amount to 57,75c per listed N ordinary share and 11,55c per unlisted A ordinary share.
The issued ordinary share capital as at 21 June 2013 is 415 540 259 N ordinary shares and 712 131 A ordinary shares.
The companys income tax reference number is 9550138714.
BASIS OF PRESENTATION AND ACCOUNTING POLICIES
The provisional report is prepared in accordance with the requirements of the JSE Limited Listings Requirements and
the South African Companies Act No 71 of 2008. The Listings Requirements require provisional reports to be prepared
in accordance with the framework concepts, the measurement and recognition requirements of International Financial
Reporting Standards (IFRS), the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee
and must also, as a minimum, contain the information required by IAS 34 "Interim Financial Reporting". The accounting
policies applied in the preparation of the condensed consolidated provisional financial statements are in terms of
IFRS and are, except as noted below, also consistent with those applied in the previous annual financial statements.
The annual financial statements have been audited by the companys auditor, PricewaterhouseCoopers Inc., whose
unqualified audit reports on the annual financial statements and provisional report are available for inspection at the
registered office of the company. The auditors report does not necessarily cover all of the information contained in
this provisional report. Shareholders are therefore advised that in order to obtain a full understanding of the nature
of the auditors work they should obtain a copy of that report, together with the annual financial statements from the
registered office of the company.
The group adopted the following amendments for the year ended 31 March 2013:
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". We will from now on disclose four separate reporting units, being "Tencent", "Mail.ru", "Ecommerce" and
"Other internet". The groups focus on ecommerce, and Tencent and Mail.ru being listed entities, prompted us to
disclose these units separately. The definition of trading profit has been updated to exclude equity-settled share
scheme charges and retention option expenses. This resulted in the March 2012 trading profit being restated from
R5,5bn to R5,7bn. 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 have been restated by R3,3bn to exclude assets already
capitalised.
Trading profit excludes amortisation of intangible assets (other than software), equity-settled share scheme charges,
retention option expenses 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 groups 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 25 June 2013.
On behalf of the board
Ton Vosloo Koos Bekker
Chair Chief executive
Cape Town
25 June 2013
Directors
T Vosloo (chair), J P Bekker (chief executive), F-A du Plessis, 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
13th Floor, Rennie House, 19 Ameshoff Street, Braamfontein 2001
(PO Box 4844, Johannesburg 2000)
Sponsor
Investec Bank Limited
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 Mellons 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
Year ended 31 March Year ended 31 March Year ended 31 March
Segmental 2013 2012 % 2013 2012 % 2013 2012 %
review Rm Rm Change Rm Rm Change Rm Rm Change
Internet 34 587 19 192 80 7 389 5 053 46 6 163 4 293 44
Tencent 20 532 11 455 79 8 603 5 487 57 7 702 4 988 54
Mail.ru 1 669 1 094 53 895 591 51 798 517 54
Ecommerce 11 433 5 736 100 (1 979) (760) +100 (2 192) (914) +100
Other internet 953 907 5 (130) (265) (51) (145) (298) (51)
Pay television 30 257 25 259 20 8 933 7 392 21 7 559 6 379 18
Print 11 932 12 071 1 167 1 465 (20) 743 1 090 (32)
Economic interest 76 776 56 522 36 17 489 13 910 26 14 465 11 762 23
Corporate services (138) (99) (139) (100)
Less: associates (26 527) (17 035) 56 (9 730) (6 667) 46 (8 597) (5 993) 43
Consolidated 50 249 39 487 27 7 621 7 144 7 5 729 5 669
Reconciliation of Year ended Year ended
trading profit to 31 March 2013 31 March 2012
operating profit Rm Rm
Trading profit 5 729 5 669
Finance cost on transponder leases 231 132
Amortisation of intangible assets (1 001) (967)
Other gains/(losses) net (831) (1 448)
Retention option expense (138)
Equity-settled share-based charge (175) (184)
Operating profit 3 815 3 202
Note: For a reconciliation of operating profit to profit before taxation, refer to the "Consolidated income statement".
Year ended Year ended
Consolidated income 31 March 2013 31 March 2012 %
statement Rm Rm Change
Revenue 50 249 39 487 27
Cost of providing services and sale of goods (27 852) (20 863)
Selling, general and administration expenses (17 751) (13 974)
Other gains/(losses) net (831) (1 448)
Operating profit 3 815 3 202 19
Interest received 433 400
Interest paid (1 501) (1 271)
Other finance income/(costs) net (248) 174
Share of equity-accounted results 9 001 3 869
excluding net gain on disposal of investments 6 359 3 869 64
net gain on disposal of investments 2 642
Impairment of equity-accounted investments (2 057) (94)
Dilution losses on equity-accounted investments (96) (606)
Losses on acquisitions and disposals (47) (134)
Income before taxation 9 300 5 540 68
Taxation (2 552) (2 059)
Profit for the year 6 748 3 481 94
Attributable to:
Equity holders of the group 6 047 2 894
Non-controlling interest 701 587
6 748 3 481
Core headline earnings for the year (Rm) 8 533 6 951 23
Core headline earnings per N ordinary share (cents) 2 216 1 850 20
Fully diluted core headline earnings per
N ordinary share (cents) 2 164 1 789 21
Headline earnings for the year (Rm) 6 630 4 874 36
Headline earnings per N ordinary share (cents) 1 722 1 297 33
Fully diluted headline earnings per
N ordinary share (cents) 1 681 1 254 34
Earnings per N ordinary share (cents) 1 570 770 104
Fully diluted earnings per N ordinary share (cents) 1 533 745 106
Net number of shares issued (000)
At year-end 394 272 384 714
Weighted average for the year 385 064 375 653
Fully diluted weighted average 394 365 388 567
Condensed consolidated Year ended Year ended
statement of comprehensive 31 March 2013 31 March 2012
income Rm Rm
Profit for the year 6 748 3 481
Total other comprehensive income, net of tax, for the year 1 527 4 315
Translation of foreign operations 5 294 2 172
Cash flow hedges 237 162
Share of associates other comprehensive
income and reserves (3 948) 2 109
Tax on other comprehensive income (56) (128)
Total comprehensive income for the year 8 275 7 796
Attributable to:
Equity holders of the group 7 463 7 138
Non-controlling interest 812 658
8 275 7 796
Condensed consolidated Year ended Year ended
statement of changes 31 March 2013 31 March 2012
in equity Rm Rm
Balance at beginning of the year 49 576 42 942
Changes in share capital and premium
Movement in treasury shares (1 695) (1 603)
Share capital and premium issued 2 067 1 908
Changes in reserves
Total comprehensive income for the year 7 463 7 138
Movement in share-based compensation reserve 441 401
Movement in existing control business combination reserve (700) 17
Movement in valuation reserve 39
Direct retained earnings movements (98) 4
Dividends paid to Naspers shareholders (1 291) (1 012)
Changes in non-controlling interest
Total comprehensive income for the year 812 658
Dividends paid to non-controlling shareholders (1 180) (1 362)
Movement in non-controlling interest in reserves 419 485
Balance at end of the year 55 853 49 576
Comprising:
Share capital and premium 15 061 14 689
Retained earnings 27 723 23 065
Share-based compensation reserve 4 006 3 134
Existing control business combination reserve (688) 42
Hedging reserve (175) (328)
Valuation reserve 1 622 5 933
Foreign currency translation reserve 6 192 980
Non-controlling interest 2 112 2 061
Total 55 853 49 576
Condensed consolidated Year ended Year ended
statement of financial 31 March 2013 31 March 2012
position Rm Rm
Assets
Non-current assets 76 109 62 037
Property, plant and equipment 13 810 8 879
Goodwill 21 625 17 884
Other intangible assets 4 815 3 884
Investment in associates 33 150 28 095
Other investments and loans 1 891 2 564
Derivatives 72 86
Deferred taxation 746 645
Current assets 27 427 19 241
Inventory 1 941 1 238
Programme and film rights 1 868 1 522
Trade receivables 4 121 3 296
Other receivables and loans 3 189 2 639
Derivatives 449 85
Cash and cash equivalents 15 813 9 825
27 381 18 605
Assets classified as held-for-sale 46 636
Total assets 103 536 81 278
Equity and liabilities
Share capital and reserves 53 741 47 515
Share capital and premium 15 061 14 689
Other reserves 10 957 9 761
Retained earnings 27 723 23 065
Non-controlling shareholders interest 2 112 2 061
Total equity 55 853 49 576
Non-current liabilities 29 192 17 845
Capitalised finance leases 5 868 2 208
Liabilities interest-bearing 20 573 12 996
non-interest-bearing 279 348
Post-employment medical liability 164 139
Derivatives 972 839
Deferred taxation 1 336 1 315
Current liabilities 18 491 13 857
Current portion of long-term debt 2 298 1 613
Trade payables 4 179 2 865
Accrued expenses and other current liabilities 10 411 7 980
Derivatives 180 206
Bank overdrafts and call loans 1 423 1 034
18 491 13 698
Liabilities classified as held-for-sale 159
Total equity and liabilities 103 536 81 278
Net asset value per N ordinary share (cents) 13 630 12 351
Year ended Year ended
Condensed consolidated 31 March 2013 31 March 2012
statement of cash flows Rm Rm
Cash flow generated from operating activities 9 845 5 394
Cash flow utilised in investing activities (6 213) (2 360)
Cash flow generated from/(utilised in) financing activities 1 280 (1 745)
Net movement in cash and cash equivalents 4 912 1 289
Foreign exchange translation adjustments 687 139
Cash and cash equivalents at beginning of the year 8 791 7 401
Cash and cash equivalents at end of the year 14 390 8 829
Included in:
Cash and cash equivalents 14 390 8 791
Assets classified as held-for-sale 38
14 390 8 829
Calculation of Year ended Year ended
headline and core 31 March 2013 31 March 2012
headline earnings Rm Rm
Net profit attributable to shareholders 6 047 2 894
Adjusted for:
insurance proceeds (2) (2)
impairment of property, plant and equipment and other assets 97
impairment of goodwill and intangible assets 684 1 487
loss on sale of property, plant and equipment and intangible assets 17
(gains)/losses on acquisitions and disposals of investments (4) 45
dilution losses on equity-accounted investments 96 606
remeasurements included in equity-accounted earnings (2 301) 32
impairment of equity-accounted investments 2 057 94
6 691 5 156
Total tax effects of adjustments (29) (207)
Total adjustment for non-controlling interest (32) (75)
Headline earnings 6 630 4 874
Adjusted for:
equity-settled share scheme charges 850 652
recognition of deferred tax assets (195) (38)
special dividend income (423)
taxation adjustment (191)
amortisation of intangible assets 1 403 1 191
fair value adjustments and currency translation differences 273 162
retention option expense 135
business combination losses 51 110
Core headline earnings 8 533 6 951
Year ended Year ended
Supplementary 31 March 2013 31 March 2012
information Rm Rm
Depreciation of property, plant and equipment 1 509 1 222
Amortisation 1 153 1 088
intangible assets 1 001 967
software 152 121
Other gains/(losses) net (831) (1 448)
loss on sale of property, plant and equipment and intangible assets (17) (95)
impairment of goodwill and intangible assets (684) (1 487)
impairment of property, plant and equipment and other assets (97)
insurance proceeds 2 2
profit on transponder lease settlement 100
fair value adjustment on shareholders liability (35) 32
Interest received 433 400
loans and bank accounts 415 360
other 18 40
Interest paid (1 501) (1 271)
loans and overdrafts (1 045) (877)
transponder leases (231) (132)
other (225) (262)
Other finance income/(cost) net (248) 174
net foreign exchange differences and fair value
adjustments on derivatives (373) (135)
preference dividends received 125 309
Losses on acquisitions and disposals (47) (134)
profit/(loss) on sale of investments 61 (7)
losses recognised on loss of control transactions (44)
acquisition-related costs (73) (72)
other 9 (55)
Goodwill
cost 19 801 18 371
accumulated impairment (1 917) (1 093)
Opening balance 17 884 17 278
foreign currency translation effects 2 123 583
acquisitions 2 423 1 184
disposals (203) (99)
transferred to non-current assets held-for-sale (226)
impairment (602) (836)
Closing balance 21 625 17 884
cost 24 253 19 801
accumulated impairment (2 628) (1 917)
Investments and loans 35 041 30 659
listed investments 29 157 24 331
unlisted investments 5 884 6 328
Commitments 18 099 19 202
capital expenditure 1 064 299
programme and film rights 13 559 12 143
network and other service commitments 1 158 953
transponder leases 399 4 496
operating lease commitments 1 359 1 083
set-top box commitments 560 228
Share of equity-accounted results 9 001 3 869
dilution losses 16
sale of investments (2 642)
impairment of investments 348 122
gains on acquisitions and disposals (8) (112)
Contribution to headline earnings 6 699 3 895
amortisation of intangible assets 690 538
equity-settled share scheme charges 675 468
business combination costs 22
special dividend income (423)
taxation adjustment (191)
fair value adjustments (55) 67
recognition of deferred tax assets (195) (38)
Contribution to core headline earnings 7 200 4 952
Tencent 6 652 4 376
Mail.ru 652 364
Abril (69) 205
Other (35) 7
Business combinations and other acquisitions
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 R1,8bn in cash. The purchase price
allocation: property, plant and equipment 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 R116m was recognised at the acquisition date.
During October 2012 the group acquired a controlling stake in Dante International S.A. trading as eMag, a leading online retailer
in Romania. The fair value of the total purchase consideration was R728m in cash. The purchase price allocation: property, plant
and equipment R40m; intangible assets R358m; investments R106m; cash R12m; trade and other receivables R81m; inventory
R182m; trade and other payables R293m; deferred tax liability R55m and the balance to goodwill. A non-controlling interest of
R116m 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 was measured using the proportionate share
of the identifiable net assets.
The group made various smaller acquisitions with a combined cost of R450m. Total acquisition-related costs of R73m were
recorded in "Losses on acquisitions and disposals" in the income statement. Had the revenues and net results of Netretail and
eMag been included from 1 April 2012, the groups consolidated revenue would have been R1,8bn higher and the net results
would have decreased by R55m. The smaller acquisitions made during the period would not have had a significant effect on the
groups consolidated revenue and net results.
The following investments in associated and joint-venture companies were made:
In August 2012 the group acquired a 10% interest in Flipkart Private Limited, a leading ecommerce platform in India, for R858m
in cash.
In October 2012 the group acquired a 29,6% interest in Souq Group Limited, an online retailer, marketplace and payment
platform business, with operations in the UAE, Saudi Arabia, Egypt and Kuwait, for R319m in cash.
In March 2013 the group contributed its Slando.ru and OLX.ru assets as well as R462m in cash in exchange for a fully diluted
interest of 18,6% in Avito Holdings AB. Avito.ru is the leading general classifieds platform in Russia.
The above acquisitions were primarily funded through the utilisation of existing credit facilities.
For more details about Naspers and investor enquiries regarding the results, visit the Naspers website at www.naspers.com
Date: 25/06/2013 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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