FINANCIAL REVIEW
This review reflects highlights of the group’s financial performance for the past year. Full details can be found in the annual financial statements
OVERVIEW OF GROUP RESULTS
The past financial year was characterised by challenging economic conditions as well as a strong rand, which had a negative impact on reported results when translating other currencies.
Revenue
Revenue growth of 5% to R28bn (2009: R26,7bn) was recorded over the period. This muted growth was partly the result of pressure on print media, but mainly a stronger rand. Based on a stable currency, we estimate revenue growth would have been 11%.
In aggregate, the internet segment recorded revenue up by 24% to R9,2bn. Overall, the paytelevision segment expanded revenues by 12%, due to subscriber growth of 634 000 net households. Both the print and technology segments suffered revenue declines due to economic conditions and the effects of a strong rand.
Operational profit
Our operational profit increased by 10% to R5,4bn (2009: R4,9bn). Using a stable currency, operational profit growth is estimated to have been 17%. Group margins improved largely due to cost management and delayed development spend.
During the year MultiChoice launched the W7 satellite resulting in an increase in our transponder leases and commitments.
Core headline earnings
Core headline earnings for the year grew 22% to R5,3bn. A calculation of headline and core headline earnings is detailed in the table on page 17. As regularly reported to shareholders, the board remains of the view that core headline earnings is an appropriate measure of the group’s sustainable operating performance, as it excludes once-off and non-operating items.
Finance costs
Net interest costs for the year increased to R535m (2009: R306m), the result of funding new acquisitions with debt and available cash balances.
Equity-accounted results
Naspers’s share of equity-accounted results of our associates, mainly Tencent, Mail.ru and Abril, increased to R2,1bn (2009: R1,5bn).
Profit on sale of investments
The profit on sale of investments relates mainly to the sale of MWEB’s business in the rest of Africa. These proceeds are once-off in nature.
Calculation of headline and core headline earnings
| Year ended 31 March 2010 R’m |
Year ended 31 March 2009 R’m |
||
| Net profit attributable to shareholders | 3 257 | 5 761 | |
| Adjusted for: | |||
| – insurance proceeds | (369) | (113) | |
| – impairment of property, plant and equipment and other assets | 225 | 117 | |
| – impairment of goodwill and intangibles | 384 | 22 | |
| – (profit)/loss on sale of property, plant and equipment | (156) | 27 | |
| – profit on sale of intangibles | (73) | — | |
| – discontinued operations | — | (2 965) | |
| – profit on sale of investments | (120) | (10) | |
| – remeasurements included in equity-accounted earnings | 30 | — | |
| – impairment of equity-accounted investments | 62 | 214 | |
| 3 240 | 3 053 | ||
| Total tax effects of adjustments | 7 | 5 | |
| Total minority interest of adjustments | 50 | 7 | |
| Headline earnings | 3 297 | 3 065 | |
| Discontinued operations | — | (129) | |
| Headline earnings from continuing operations | 3 297 | 2 936 | |
| Adjusted for: | |||
| – treasury-settled share scheme charges | 418 | 258 | |
| – prior-year withholding taxes | 121 | — | |
| – reversal/(creation) of deferred tax assets | 253 | (58) | |
| – amortisation of intangibles | 922 | 958 | |
| – Welkom Yizani refinancing | 330 | — | |
| – fair value adjustments and currency translation differences | (22) | 279 | |
| Core headline earnings | 5 319 | 4 373 |
