Wrap Text
Reviewed Interim Financial Results for the six months to 30 September 2014
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
Interim report
We are pleased to present the independently
reviewed results of the Naspers group for the
six months to 30 September 2014
Commentary
Our businesses continued to deliver strong growth for the six months to
30 September 2014, with revenues measured on an economic-interest
basis (including our proportionate share of associates and joint ventures)
expanding by 30% year on year. During the period we made solid progress
in building our ecommerce and pay-television platforms. Core headline
earnings increased by 24%.
In ecommerce we are investing in formats such as etail (online retail),
classifieds and payments. These are proven winners for customers and
gaining market share from other formats. We aim to build leading positions
in markets that we believe have the potential to grow significantly faster
than mature economies in the years ahead. Execution capacity and
operations are strengthening throughout the group and the focus is on
customer satisfaction, engagement and retention.
Our online classifieds footprint now covers about 40 countries, all showing
good user and listings growth. An agreement was concluded with Schibsted,
subject to regulatory approval, covering key classifieds assets in Latin
America and South East Asia that should enhance our consumer proposition
and improve the outlook to our classifieds platforms in these regions.
In many of our etail businesses, revenue growth is accelerating.
In our pay-television segment the digital terrestrial television (DTT) network
is now largely in place. The DTT subscriber base is increasing steadily, and we
are well placed to realise DTT growth prospects once analogue switch-offs
occur in sub-Saharan Africa. We are focused on delivering a differentiated
content offering and unique services to our DTT customers.
With our internet and ecommerce businesses growing ahead of pay
television and print, 72% of revenues, measured on an economic-interest
basis, are now earned offshore. Internet revenues make up 58% of total
group revenues.
FINANCIAL REVIEW
Revenue on an economic-interest basis was up 30% year on year.
Consolidated revenues for the period were R34,4bn, 20% higher than last
year driven by growth in the ecommerce and pay-television segments.
Tencent concluded its transaction with JD.com, resulting in a transfer of
ecommerce revenues and related development costs to JD.com. Prior year
numbers included higher ecommerce revenues and development costs,
resulting in improved year-on-year profitability. Tencent is performing well
and contributed R6,2bn to core headline earnings. This is a stronger than
expected performance. Tencent has since concluded a number of additional
strategic investments and will continue investing in developing additional
products and services with a strong mobile focus.
Impacted by geopolitical issues, Mail.ru recorded weaker advertising
revenues. Nevertheless, it contributed R528m to core headline earnings, up
30% on the prior year.
Development spend measured on an economic-interest basis increased by
42% to R4,4bn, driven by increased spend in the etail (including increased
shareholdings in Souq and Flipkart) and payment businesses to scale and
expand market share. Our online classifieds footprint is also larger compared
to the prior year, which carries higher development costs. Larger markets in
which we are investing include India, Brazil and Indonesia. The ramp up in
development spend began in the second half of last year and we expect the
year-on-year increase for the second half of this fiscal to be lower.
Our pay-television segment grew trading profit by 11% to R5bn on the back
of good subscriber growth and after taking into account development spend
of R642m incurred on DTT and online video initiatives.
Net interest expense on borrowings rose 55% to R787m, largely due to
drawdowns on the revolving credit facility to fund new acquisitions and
development spend, a weaker rand and the US$1bn bond issued in July 2013.
Consolidated net gearing remained low at 29%, while Moody's recently
reaffirmed its investment-grade rating of Baa3 for our bonds.
Our share of equity-accounted results increased to R9,9bn and includes
once-off gains on the remeasurement of Mail.ru's interest in VK.com and
the sale of Mail.ru's shares in Qiwi amounting to R3,87bn, as well as R887m
representing our share of the gain realised by Tencent on the sale of
investments.
Tax expense increased to R1,75bn due to higher profits in pay television, the
Allegro marketplace and the online price-comparison businesses.
The growth in revenue and increased earnings contribution from Tencent,
Mail.ru, pay-television and some ecommerce assets is partially offset by
expanded development spend, resulting in core headline earnings growing
24% to R6,1bn.
Free cash outflow of R428m was recorded due to higher development spend,
capex to build our DTT footprint and in-country pay-television production
facilities in East and West Africa. Also making an impact is the higher tax
charge. Working capital in the etail businesses remains well managed.
The second half of the year is traditionally the most active part of the year
for most of our businesses and we expect some pickup in development
spend as we capitalise on the holiday season. This could result in lower core
headline earnings for that period.
No forecasts in this interim report have been reviewed or reported on by the
company's external auditor.
SEGMENTAL REVIEW
This segmental review includes our consolidated subsidiaries plus a
proportionate consolidation of associated companies and joint ventures.
Internet
Our internet businesses remain the fastest-growing part of the group.
Segment revenues were up 44% to R35,8bn. Within the internet segment,
ecommerce grew at 43%, reporting revenues of R12,1bn. A strong
performance by Tencent, partially offset by higher development spend in
our own ecommerce businesses, resulted in a 67% increase in trading profit
to R6,5bn.
Tencent
Tencent revenues were RMB38,1bn, up 37% year on year. This is a solid
performance in a highly competitive market.
Increasing smartphone penetration and a growing Weixin base resulted
in strong mobile revenue growth. Tencent also recorded a good pickup
in advertising revenues, driven by video and performance-based social
advertising. Weixin, known as WeChat internationally, increased monthly
active users by 39% to 468m active accounts year on year.
Weixin enhances community and payment functionality and connects these
capabilities with strategic partners. Tencent has continued to enrich its
online-to-offline ecosystem through investments linked to tie-ups on its
Weixin and other platforms. The ever-expanding range of products and
services offered via smartphones bodes well for Tencent's future.
Mail.ru
A challenging economic environment that affected advertising revenues
in particular and a weakening rouble have slowed Mail.ru's top-line growth
to 22%. Revenues were RUB15,1bn in the first six months. The online
games business performed relatively well despite the economic climate.
The acquisition of the remaining shares in VK.com will allow Mail.ru to
consolidate its leading position in the social network market in Russia.
Ecommerce
We are pleased with progress to date in our fastest-growing segment.
Organic growth resulted in revenues for the period increasing by 43% to
R12,1bn. The segment reported a trading loss of R2,4bn after incurring
development spend of R3,6bn.
We stepped up our classifieds efforts to focus on 40 markets globally.
Average daily new listings and daily active users on our sites in the second
quarter of the financial year were 796 000 (+85%) and 16m (+73%),
respectively. Globally about 42% of our traffic comes from mobile and, in
some markets, it is as high as 81%. Continued improvement of our offering
and focus on the customer resulted in a steady increase in engagement.
Following recent brand migrations, the majority of our sites now operate
under the OLX banner. Competition remains aggressive, but we have
outgrown our competitors on the measures that matter most.
Our etail businesses are growing rapidly, with revenues on an economic-
interest basis increasing by 65% year on year. Flipkart in India recorded a
significant acceleration in its growth rates, driven by category expansion,
exclusive supply and a differentiated logistics and fulfilment proposition
on the ground. Souq in the Middle East is also scaling well. We are seeing
meaningful increases in organic traffic in most of our markets as we deliver
compelling customer propositions and scale our platforms. In South Africa
the planned merger of Kalahari and Takealot will place the business on a
better footing.
In our payment business, PayU, our new senior management team continues
to strengthen talent across the business. We are transforming five existing
regional payment businesses into one global company with a single brand
and common supporting infrastructure, similar to the way in which we scaled
our classifieds businesses. Daily payment transactions have increased 70%
year on year. We will continue to grow our payment service provider business
and are laying the groundwork for an innovative consumer electronic wallet
or ewallet business.
Allegro, our large marketplace business, is improving top-line growth rates.
Given the scale benefits of this platform, we have maintained high EBITDA
margins. We continue to build our business, augmenting and increasing our
consumer offerings and capabilities as well as our mobile products.
After consolidating our online price-comparison business under a single
legal and management structure, we now operate the world's largest price-
comparison business. The business is profitable and should continue to
expand margins as it grows and leverages its scale.
The travel business in India is growing rapidly and outpacing competition
by a significant margin. Based on the number of online transactions, it is
already the largest online travel platform in India. Other online service
businesses in Brazil are being developed, where Movile again delivered good
results. Its Brazilian online food-ordering business, iFood, is scaling well,
boosted by a merger with Just Eat's Brazilian subsidiary.
Pay television
This segment reported revenues of R20,2bn, growing 18% year on year.
Trading profit of R5bn increased at a lower 11% due to investments to build
DTT and online services and expand the local content offering.
The total subscriber base grew by 342 000 during the six months to over
8,4m households.
MultiChoice now operates DTT in 11 countries and has around 873 000
subscribers. We continue to scale our transmission platform and place
decoders in markets where we expect analogue switch-offs in the foreseeable
future. These switch-offs, once implemented, should provide momentum for
further subscriber growth.
We continue to invest in local content and regional production hubs
were established in Nigeria and Kenya. In South Africa we celebrated the
significant milestone of over R1bn invested in local content in the past year.
Additional transponder capacity was purchased from Eutelsat and Intelsat
to strengthen backup capacity and provide for future expansion of services.
Our customers rent some 600 000 movies per month on our BoxOffice
service and we will soon expand this service into sub-Saharan Africa.
The personal video recorder (PVR) base has also expanded to nearly
1,2m subscribers. We continue to invest in our online products and offerings.
An agreement to sell MWEB's infrastructure and business services to
Dimension Data was signed. This will allow us to focus on consumer
offerings instead of infrastructure. As part of the agreement, we will take a
minority stake in a wi-fi business housing the infrastructure assets of MWEB
and Always On.
Regulatory environments in our markets continue to evolve. A number
of reviews are under way and we continue to engage with the regulatory
authorities. With growing competition in sub-Saharan Africa, we are adding
to our already-strong content and customer offerings.
Print media
This segment continues to face tough trading conditions and large-scale
structural changes to the industry.
Revenues grew slightly but margins contracted further due to accelerated
investment in digital solutions and new growth areas to diversify the
revenue base. We will continue to adjust our structure and cost base to the
challenging business reality.
DIRECTORATE
As previously reported, Steve Pacak (financial director) retired on 30 June
2014, but remained on the board as an alternate non-executive director.
Basil Sgourdos was appointed to the board as financial director effective
1 July 2014.
PREPARATION OF THE INTERIM REPORT
The preparation of the interim report was supervised by the financial director,
Basil Sgourdos CA(SA). These results were made public on 25 November 2014.
On behalf of the board
Ton Vosloo Bob van Dijk
Chair Chief executive
Cape Town
25 November 2014
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
2014 2013 2014 2014 2013 2014 2014 2013 2014
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
Internet 35 817 24 887 44 57 018 7 619 4 748 60 8 540 6 477 3 879 67 6 638
– Tencent 22 370 15 285 46 34 256 9 126 5 839 56 12 232 8 248 5 192 59 10 792
– Mail.ru 1 306 1 100 19 2 407 714 601 19 1 286 655 546 20 1 175
– Ecommerce 12 141 8 502 43 20 355 (2 221) (1 692) (31) (4 978) (2 426) (1 859) (31) (5 329)
Pay television 20 186 17 077 18 36 271 6 000 5 375 12 10 370 4 969 4 477 11 8 520
Print media 5 979 5 642 6 11 692 269 408 34 1 073 8 214 (96) 606
Corporate services – – – – (96) (63) (52) (150) (98) (64) (53) (151)
Segment 61 982 47 606 30 104 981 13 792 10 468 32 19 833 11 356 8 506 34 15 613
Less: Equity-accounted
investments (27 619) (18 851) 47 (42 253) (9 613) (6 336) 52 (13 442) (8 558) (5 580) 53 (11 707)
Consolidated 34 363 28 755 20 62 728 4 179 4 132 1 6 391 2 798 2 926 (4) 3 906
EBITDA refers to earnings before interest, tax, depreciation and amortisation.
Six months ended Year ended
30 September 31 March
2014 2013 2014
Reconciliation of trading profit Reviewed Reviewed Audited
to operating profit R'm R'm R'm
Trading profit 2 798 2 926 3 906
Finance cost on transponder leases 182 173 356
Amortisation of intangible assets (361) (410) (711)
Other gains/(losses) – net (124) (958) (1 320)
Retention option expense (124) (74) (132)
Equity-settled share-based charges (118) (36) (81)
Operating profit 2 253 1 621 2 018
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
2014 2013 2014
Consolidated Reviewed Reviewed Audited
income statement Note R'm R'm R'm
Revenue 34 363 28 755 62 728
Cost of providing services and sale of goods (18 751) (15 856) (35 416)
Selling, general and administration expenses (13 235) (10 320) (23 974)
Other gains/(losses) – net (124) (958) (1 320)
Operating profit 2 253 1 621 2 018
Interest received 5 206 257 606
Interest paid 5 (1 332) (1 055) (2 466)
Other finance income/(costs) – net 5 (82) (117) (267)
Share of equity-accounted results 6 9 932 5 139 10 835
– excluding net gain on disposal of
investments 5 178 3 853 7 906
– net gain on disposal of investments 4 754 1 286 2 929
Impairment of equity-accounted investments – (753) (1 201)
Dilution losses on equity-accounted
investments (71) (836) (852)
Gains on acquisitions and disposals 118 614 751
Profit before taxation 7 11 024 4 870 9 424
Taxation (1 755) (1 447) (2 895)
Profit for the period 9 269 3 423 6 529
Attributable to:
Equity holders of the group 8 937 3 112 5 751
Non-controlling interest 332 311 778
9 269 3 423 6 529
Core headline earnings for the period (R'm) 4 6 077 4 920 8 616
Core headline earnings per N ordinary
share (cents) 1 528 1 248 2 181
Fully diluted core headline earnings per
N ordinary share (cents) 1 486 1 215 2 125
Headline earnings for the period (R'm) 4 4 484 3 641 5 981
Headline earnings per N ordinary
share (cents) 1 128 923 1 514
Fully diluted headline earnings per
N ordinary share (cents) 1 096 899 1 475
Earnings per N ordinary share (cents) 2 248 789 1 456
Fully diluted earnings per N ordinary
share (cents) 2 185 769 1 418
Net number of shares issued ('000)
– At period end 409 527 395 883 397 625
– Weighted average for the period 397 625 394 272 395 078
– Fully diluted weighted average 409 078 404 898 405 469
Six months ended Year ended
30 September 31 March
2014 2013 2014
Condensed consolidated Reviewed Reviewed Audited
statement of comprehensive income R'm R'm R'm
Profit for the period 9 269 3 423 6 529
Total other comprehensive income, net of tax,
for the period* 2 107 5 313 6 727
Translation of foreign operations 888 3 750 4 910
Net fair value gains/(losses) 4 – (7)
Cash flow hedges 123 (34) (204)
Share of other comprehensive income and reserves
of equity-accounted investments 1 116 1 561 1 951
Tax on other comprehensive income (24) 36 77
Total comprehensive income for the period 11 376 8 736 13 256
Attributable to:
Equity holders of the group 11 103 8 372 12 492
Non-controlling interest 273 364 764
11 376 8 736 13 256
* All components of other comprehensive income may subsequently be reclassified to profit or
loss, except for R611m (2013: R365m and 31 March 2014: R552m) included in the share of other
comprehensive income and reserves of equity-accounted investments.
Six months ended Year ended
30 September 31 March
2014 2013 2014
Condensed consolidated Reviewed Reviewed Audited
statement of changes in equity R'm R'm R'm
Balance at beginning of the period 68 205 55 853 55 853
Changes in share capital and premium
Movement in treasury shares 1 813 (245) (17)
Share capital and premium issued 234 304 1 293
Changes in reserves
Total comprehensive income for the period 11 103 8 372 12 492
Movement in share-based compensation reserve 347 214 487
Movement in existing control business combination
reserve (225) (52) (340)
Direct retained earnings movements – – 23
Dividends paid to Naspers shareholders (1 702) (1 525) (1 526)
Changes in non-controlling interest
Total comprehensive income for the period 273 364 764
Dividends paid to non-controlling shareholders (1 264) (1 034) (1 142)
Movement in non-controlling interest in reserves 378 237 318
Balance at end of the period 79 162 62 488 68 205
Comprising:
Share capital and premium 18 385 15 120 16 337
Retained earnings 39 205 29 310 31 971
Share-based compensation reserve 5 817 4 576 5 082
Existing control business combination reserve (1 068) (733) (1 065)
Hedging reserve (176) (155) (262)
Valuation reserve 3 513 2 817 3 005
Foreign currency translation reserve 12 047 9 874 11 085
Non-controlling interest 1 439 1 679 2 052
Total 79 162 62 488 68 205
30 September 31 March
2014 2013 2014
Condensed consolidated statement Reviewed Reviewed Audited
of financial position Note R'm R'm R'm
Assets
Non-current assets 116 650 90 304 100 212
Property, plant and equipment 17 280 15 644 17 053
Goodwill 8 25 935 24 609 25 811
Other intangible assets 5 767 5 738 5 702
Investments in associates 9 64 063 41 364 47 755
Investments in joint ventures 9 1 719 838 1 727
Investments and loans 9 742 1 119 1 193
Derivative financial instruments 13 30 16 2
Deferred taxation 1 114 976 969
Current assets 36 524 30 965 28 390
Inventory 4 204 2 486 2 882
Programme and film rights 3 955 3 147 1 979
Trade receivables 4 983 5 007 4 849
Other receivables and loans 10 518 3 530 4 807
Derivative financial instruments 13 219 501 209
Cash and cash equivalents 12 061 16 262 13 664
35 940 30 933 28 390
Assets classified as held-for-sale 11 584 32 –
Total assets 153 174 121 269 128 602
Equity and liabilities
Share capital and reserves 77 723 60 809 66 153
Share capital and premium 18 385 15 120 16 337
Other reserves 20 133 16 379 17 845
Retained earnings 39 205 29 310 31 971
Non-controlling shareholders' interest 1 439 1 679 2 052
Total equity 79 162 62 488 68 205
Non-current liabilities 42 052 36 223 36 549
Capitalised finance leases 7 026 6 730 6 768
Liabilities – interest bearing 32 842 27 225 27 395
– non-interest bearing 452 463 452
Post-employment medical liability 182 173 176
Derivative financial instruments 13 317 336 364
Deferred taxation 1 233 1 296 1 394
Current liabilities 31 960 22 558 23 848
Current portion of long-term debt 2 826 2 192 2 628
Trade payables 6 448 5 669 5 318
Accrued expenses and other current liabilities 20 529 12 245 13 981
Derivative financial instruments 13 842 875 840
Bank overdrafts and call loans 1 306 1 577 1 081
31 951 22 558 23 848
Liabilities classified as held-for-sale 11 9 – –
Total equity and liabilities 153 174 121 269 128 602
Net asset value per N ordinary share (cents) 18 979 15 360 16 637
Six months ended Year ended
30 September 31 March
2014 2013 2014
Condensed consolidated Reviewed Reviewed Audited
statement of cash flows R'm R'm R'm
Cash flows from operating activities
Cash generated from operating activities 2 490 3 904 7 383
Interest income received 208 261 734
Dividends received from equity-accounted companies 1 048 833 841
Interest costs paid (1 139) (810) (2 365)
Taxation paid (2 086) (1 590) (3 319)
Net cash generated from operating activities 521 2 598 3 274
Cash flows from investing activities
Acquisitions and disposals of tangible
and intangible assets (1 435) (1 978) (4 442)
Acquisitions and disposals of subsidiaries,
associates and joint ventures (3 332) (3 127) (4 434)
Cash movement in other investments and loans 323 895 840
Net cash utilised in investing activities (4 444) (4 210) (8 036)
Net cash generated from financing activities 1 729 1 552 2 114
Net movement in cash and cash equivalents (2 194) (60) (2 648)
Foreign exchange translation adjustments 366 515 1 001
Cash and cash equivalents at beginning of the period 12 583 14 230 14 230
Cash and cash equivalents at end of the period 10 755 14 685 12 583
Notes to the interim financial results
1. General information
Principal activities of Naspers and its operating subsidiaries, joint ventures and associated companies
(collectively "the group") are the operation of internet and media platforms. Our principal operations
are in ecommerce and other internet services, pay-television services and print media.
2. Basis of presentation and accounting policies
The interim report is prepared in accordance with International Financial Reporting Standard
(IAS) 34 Interim Financial Reporting, the SAICA Financial Reporting Guides as issued by the
Accounting Practices Committee and Financial Pronouncements as issued by the Financial
Reporting Standards Council and the requirements of the Companies Act of South Africa.
The accounting policies used in preparing the interim results are consistent with those applied in the
previous annual financial statements.
The group has adopted all new and amended accounting pronouncements issued by the
International Accounting Standards Board (IASB) that are effective for financial years commencing
1 April 2014. None of the new or amended accounting pronouncements that are effective for the
financial year commencing 1 April 2014 are expected to have a material impact on the group.
Trading profit excludes amortisation of intangible assets (other than software), equity-settled share-
based 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 it is a useful measure
of the group's sustainable operating performance. However, this is not a defined term under
International Financial Reporting Standards (IFRS) and may not be comparable with similarly titled
measures reported by other companies.
3. Review by the independent auditor
This interim report has been reviewed by the company's auditor, PricewaterhouseCoopers Inc.,
whose unqualified report appears at the end of this interim report. The auditor's report does not
necessarily cover all information contained in this interim report.
4. Headline and core headline earnings
Six months ended Year ended
30 September 31 March
2014 2013 2014
Calculation of headline Reviewed Reviewed Audited
and core headline earnings R'm R'm R'm
Net profit attributable to shareholders 8 937 3 112 5 751
Adjusted for:
– impairment of property, plant and equipment
and other assets 148 24 112
– impairment of goodwill and intangible assets 24 1 063 1 461
– profit on sale of property, plant and equipment
and intangible assets (3) (99) (58)
– gains on acquisitions and disposals of
investments (107) (111) (45)
– remeasurement of previously held interest (36) (516) (700)
– dilution losses on equity-accounted investments 71 836 852
– remeasurements included in equity-accounted
earnings (4 534) (1 286) (2 447)
– impairment of equity-accounted investments – 753 1 201
4 500 3 776 6 127
Total tax effects of adjustments (4) (103) (81)
Total adjustment for non-controlling interest (12) (32) (65)
Headline earnings 4 484 3 641 5 981
Six months ended Year ended
30 September 31 March
2014 2013 2014
Calculation of headline Reviewed Reviewed Audited
and core headline earnings R'm R'm R'm
Headline earnings 4 484 3 641 5 981
Adjusted for:
– equity-settled share-based charges 587 429 1 120
– (recognition)/reversal of deferred tax assets – (49) 58
– amortisation of intangible assets 741 690 1 385
– fair value adjustments and currency translation
differences 135 125 (47)
– retention option expense 109 72 128
– business combination losses/(gains) 21 12 (9)
Core headline earnings 6 077 4 920 8 616
5. Interest received/(paid)
Six months ended Year ended
30 September 31 March
2014 2013 2014
Reviewed Reviewed Audited
R'm R'm R'm
Interest received 206 257 606
– loans and bank accounts 176 242 456
– other 30 15 150
Interest paid (1 332) (1 055) (2 466)
– loans and overdrafts (963) (656) (1 717)
– transponder leases (182) (173) (356)
– other (187) (226) (393)
Other finance income/(cost) – net (82) (117) (267)
– net foreign exchange differences and fair value
adjustments on derivatives (111) (165) (344)
– preference dividends received 29 48 77
6. Equity-accounted results
The group's equity-accounted associated companies and joint ventures contributed to the interim
financial results as follows:
Six months ended Year ended
30 September 31 March
2014 2013 2014
Reviewed Reviewed Audited
R'm R'm R'm
Share of equity-accounted results 9 932 5 139 10 835
– sale of assets – – (19)
– sale of investments (4 754) (1 286) (2 929)
– impairment of assets 239 – 532
Contribution to headline earnings 5 417 3 853 8 419
– amortisation of intangible assets 474 376 897
– equity-settled share-based charges 469 393 987
– fair value adjustments and currency translation
differences 77 (72) (181)
– (recognition)/reversal of deferred tax assets – (49) 35
Contribution to core headline earnings 6 437 4 501 10 157
Tencent 6 197 4 380 9 724
Mail.ru 528 405 911
Abril – (153) (110)
Other (288) (131) (368)
7. Profit before taxation
In addition to the items detailed above, profit before taxation has been determined after taking into
account, inter alia, the following:
Six months ended Year ended
30 September 31 March
2014 2013 2014
Reviewed Reviewed Audited
R'm R'm R'm
Depreciation of property, plant and equipment 1 089 940 1 942
Amortisation 472 503 898
– intangible assets 361 410 711
– software 111 93 187
Other gains/(losses) – net (124) (958) (1 320)
– profit on sale of property, plant and equipment
and intangible assets 3 99 58
– impairment of goodwill and intangible assets (24) (1 063) (1 461)
– impairment of property, plant and equipment
and other assets (148) (24) (112)
– fair value adjustments on financial instruments 45 30 195
Gains on acquisitions and disposals 118 614 751
– gain on sale of investments 107 111 44
– remeasurement of earn-out obligations – – 48
– acquisition-related costs (25) (13) (41)
– remeasurement of previously held interest 36 516 700
8. Goodwill
Goodwill arises on the acquisition of interests in subsidiaries and is subject to an annual impairment
assessment. Movements in the group's goodwill for the period are detailed below:
Six months ended Year ended
30 September 31 March
2014 2013 2014
Reviewed Reviewed Audited
R'm R'm R'm
Goodwill
– cost 29 405 24 077 24 077
– accumulated impairment (3 594) (2 484) (2 484)
Opening balance 25 811 21 593 21 593
– foreign currency translation effects (115) 1 988 3 226
– acquisitions 428 1 701 2 003
– disposals (179) (9) (18)
– impairment (10) (664) (993)
Closing balance 25 935 24 609 25 811
– cost 29 537 27 873 29 405
– accumulated impairment (3 602) (3 264) (3 594)
9. Investments and loans
The following relates to the group's investments and loans as at the end of the reporting period:
Six months ended Year ended
30 September 31 March
2014 2013 2014
Reviewed Reviewed Audited
R'm R'm R'm
Investments and loans 66 524 43 321 50 675
– listed investments 57 016 37 417 44 194
– unlisted investments and loans 9 508 5 904 6 481
10. Commitments and contingent liabilities
Commitments relate to amounts for which the group has contracted, but that have not yet been
recognised as obligations in the statement of financial position.
Six months ended Year ended
30 September 31 March
2014 2013 2014
Reviewed Reviewed Audited
R'm R'm R'm
Commitments 27 424 18 088 22 417
– capital expenditure 425 837 740
– programme and film rights 16 532 13 491 17 701
– network and other service commitments 1 475 1 244 1 530
– transponder leases 6 916 422 424
– operating lease commitments 1 453 1 577 1 413
– set-top box commitments 623 517 609
The group operates a number of businesses in jurisdictions where withholding taxes are payable
on certain transactions or payments. In some circumstances transactions could potentially lead to
withholding taxes being payable. Our current assessment of possible withholding tax exposures,
including interest and potential penalties, amounts to approximately R2bn (31 March 2014: R1,6bn).
The group signed an agreement with Intelsat Satellite LLC for additional transponder capacity
effective 2017, to cater for future growth in satellite services and to provide for in-orbit backup of
existing capacity.
11. Assets classified as held-for-sale
At 30 September 2014 the group classified the net assets of its MWEB Business, Optinet Services,
Networks and Wi-fi divisions, amounting to R575m as held-for-sale. The wi-fi assets will form part
of the purchase price for the group's interest in a joint venture to be established with Dimension
Data. The composite transaction is expected to be completed by 31 March 2015, pending regulatory
approval.
An impairment loss of R106m was recognised in the income statement as part of "Other gains/
(losses) – net" with respect to this transaction.
12. Business combinations and other acquisitions
Various acquisitions were made within the Movile group during the reporting period. These
acquisitions resulted in the recognition of intangible assets amounting to R139m and goodwill of
R326m. The remainder of the increase in goodwill during the reporting period relates to various
smaller acquisitions.
With respect to investments in associated companies, the group participated in two funding rounds
of Flipkart Private Limited (Flipkart), a leading ecommerce platform in India. These funding rounds,
during May and August 2014, resulted in additional investments of R555m and R2,67bn respectively
in cash. The group now has a 16,63% interest in Flipkart on a fully diluted basis.
The investments were primarily funded through the utilisation of existing credit facilities.
13. Financial instruments
The group's activities expose it to a variety of financial risks such as market risk (including currency
risk, fair value interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity
risk.
The interim report does not include all financial risk management information and disclosures
required in the annual financial statements and should be read in conjunction with the group's
annual financial statements as at 31 March 2014. There have been no material changes in the
group's credit, liquidity, market risks or key inputs used in measuring fair value since 31 March 2014.
The fair values of the group's financial instruments that are measured at fair value at each reporting
period are categorised as follows:
Fair value measurements at
30 September 2014 using:
Quoted prices
in active
markets for Significant
identical other Significant
assets observable unobservable
or liabilities inputs inputs
(Level 1) (Level 2) (Level 3)
Recurring fair value measurements R'm R'm R'm
Assets
Available-for-sale investments 135 – –
Foreign exchange contracts – 249 –
Liabilities
Foreign exchange contracts – 30 –
Shareholders' liabilities – – 823
Earn-out obligations – – 372
Interest rate swaps – 306 –
Fair value measurements at
31 March 2014 using:
Quoted prices
in active
markets for Significant
identical other Significant
assets observable unobservable
or liabilities inputs inputs
(Level 1) (Level 2) (Level 3)
Recurring fair value measurements R'm R'm R'm
Assets
Available-for-sale investments 120 – –
Foreign exchange contracts – 210 –
Interest rate swaps – 1 –
Liabilities
Foreign exchange contracts – 66 –
Shareholders' liabilities – – 806
Earn-out obligations – – 263
Interest rate swaps – 332 –
The fair values of level 2 and 3 instruments are measured as follows:
- Foreign exchange contracts – market observable quotes of forward foreign exchange rates on
instruments that have a similar maturity profile.
- Interest rate swaps – discounted cash flow techniques using only market observable
information.
- Shareholders' liabilities – option pricing models and discounted cash flow techniques.
Significant inputs include: fair values of underlying shares, strike prices, risk-free interest rates,
calculated volatilities and the period to exercise.
- Earn-out obligations – discounted cash flow techniques. Key inputs include: forecasts of the
extent to which performance criteria are expected to be met, discount rates and contractually
specified earn-out payments.
A reconciliation of the movement in the carrying value of level 3 fair value measurements is
provided below:
30 September 2014
Share-
holders' Earn-out
liabilities obligations
R'm R'm
Opening balance at 1 April 2014 806 263
Total (gains)/losses in the income statement (21) 3
Issues – 90
Foreign currency translation effects 38 16
Closing balance at 30 September 2014 823 372
31 March 2104
Share-
holders' Earn-out
liabilities obligations
R'm R'm
Opening balance at 1 April 2013 704 185
Total gains in the income statement (145) (13)
Issues 284 155
Settlements (82) (91)
Foreign currency translation effects 45 27
Closing balance at 31 March 2014 806 263
The group discloses the fair values of the following financial instruments as their carrying values are
not a reasonable approximation of their fair values:
30 September 2014
Carrying Fair
value value
Financial liabilities R'm R'm
Loans from non-controlling shareholders 485 592
Capitalised finance leases 7 600 7 636
Publicity traded bonds 19 222 20 963
31 March 2014
Carrying Fair
value value
Financial liabilities R'm R'm
Loans from non-controlling shareholders 480 478
Capitalised finance leases 7 277 7 074
Publicity traded bonds 17 784 19 706
14. Events after the reporting period
Subsequent to the end of the reporting period, the group entered into an agreement with Takealot
Online (RF) Proprietary Limited (Takealot) for the merger of the group's Kalahari business with
Takealot. The transaction is subject to regulatory approval.
The group also invested a further US$27m in its joint venture Konga Online Shopping Limited
(Konga), a leading etail platform in Nigeria, during October 2014 in cash. The group now has a
40,22% interest in Konga on a fully diluted basis.
During November 2014, Naspers, Schibsted Media Group, Telenor Holdings and Singapore Press
Holdings entered into an agreement to establish joint ventures for the development of their online
classifieds platforms in Brazil, Indonesia, Thailand and Bangladesh. The transactions are subject to
European Union approvals.
Directors
T Vosloo (chair), B van Dijk (chief executive), C L Enenstein, D G Eriksson, F-A du Plessis, R C C Jafta, F L N Letele, Y Ma, D Meyer,
R Oliveira de Lima, T M F Phaswana, V Sgourdos, J D T Stofberg, B J van der Ross, J J M van Zyl
Alternate directors
S J Z Pacak, M R Sorour
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
Bank of New York Mellon maintains a GlobalBuyDIRECTTM plan for Naspers Limited. For additional information, please visit 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: 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.
www.naspers.com
Date: 25/11/2014 07:05:00 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.