SEGMENTAL REVIEW

This segmental review includes consolidated subsidiaries plus the proportional consolidation of our economic interest in associates. Doing so allows for improved disclosure of the contribution of all our investments to the group’s results.

The group’s primary measurement of profitability is defined as operational profit, which excludes other gains/losses and amortisation of intangibles (other than software). It includes the finance cost on transponder leases, which the group treats as an operating cost.

		Revenue
	2010   R’m	2009   R’m	% Change
Pay television	16 659	14 858	12
Internet	9 181	7 411	24
– Tencent	4 874	3 281	49
– Other	4 307	4 130	4
Print media	10 204	10 722	(5)
Technology	1 207	1 514	(20)
Economic interest	37 251	34 505	8
Less: Associated companies	(9 253)	(7 815)	18
Consolidated	27 998	26 690	5
		Ebitda
	2010   R’m	2009   R’m	% Change
Pay television	5 744	5 197	11
Internet	2 804	1 973	42
– Tencent	2 542	1 588	60
– Other	262	385	(32)
Print media	1 232	1 389	(11)
Technology	98	(75)	+100
Economic interest	9 878	8 484	16
Corporate services	(230)	(210)	10
Less: Associated companies	(3 152)	(2 248)	40
Consolidated	6 496	6 026	8

	Operational profit
	2010   R’m	2009   R’m	% Change
Pay television	5 171	4 624	12
Internet	2 423	1 626	49
– Tencent	2 363	1 447	63
– Other	60	179	(66)
Print media	896	1 062	(16)
Technology	47	(139)	+100
Economic interest	8 537	7 173	19
Corporate services	(232)	(213)	9
Less: Associated companies	(2 858)	(2 020)	42
Consolidated	5 447	4 940	10

Note: Operational profit excludes amortisation of intangibles (other than software) and other gains/losses and
          includes the finance cost on transponder leases.  

 

CASH FLOWS AND STATEMENT OF FINANCIAL POSITION

Free cash flows of R4,1bn (2009: R2,4bn) were recorded. The financial position remains healthy with consolidated gearing, excluding transponder leases, of 5%. During the year the group extended an off shore revolving credit facility with a syndicate of banks to March 2013 and increased the size of the facility to US$1,72bn. The drawdown on the facility at 31 March 2010 was US$948m.

SIGNIFICANT ACQUISITIONS

In September the group acquired 94,8% of Brazilian e-commerce group BuscaPé for approximately R2,7bn. This was funded from existing credit facilities. A put option of R89m over minorities is part of the purchase consideration. The preliminary purchase price allocation is: tangible assets R180m, intangible assets R394m, liabilities R228m and the balance to goodwill.

During October the group acquired 51% of Korbitec (Proprietary) Limited (an electronic platform for attorneys, banks and other players in the property value chain) for cash of R158m with an additional R51m contingent consideration. The preliminary purchase price allocation shows: tangible assets R48m, intangible assets R135m, liabilities R21m and the balance to goodwill. Minorities’ share of the above is R79m.

During November 2009 the group made a further cash investment of R771m into Mail.ru as part of its acquisition of Astrum Online. The group’s shareholding was diluted from 42% to 39%.

Subsequent to the initial 83% interest acquired in Bankier.pl in August, the group also acquired the remaining minorities. The total consideration of R178m was allocated as follows: tangible assets R52m, intangible assets R33m and the balance to goodwill.

The group also made some other acquisitions for a combined cost of approximately R522m. Revenues and profits from all acquisitions were not significant to consolidated results.

ACCOUNTING POLICIES AND CHANGES IN ACCOUNTING TREATMENT

Our financial results for the year ended 31 March 2010 have been prepared in accordance with International Financial Reporting Standards (IFRS), the requirements of the South African Companies Act, No 61 of 1973, and in compliance with the Listings Requirements of the JSE Limited. Except as noted below, accounting policies are consistent with those applied in the previous period and IFRS.

These results have been audited 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 new standards, amendments and circulars for the year ended
31 March 2010:

The revised IAS 1 “Presentation of Financial Statements” was issued requiring certain changes to existing disclosures, as well as the introduction of the “Statement of comprehensive income”. These changes had no effect on the financial position or results of the group.

IFRS 8 “Operating Segments” replaced IAS 14 “Segment Reporting”. Segment information is now presented on the same basis as for internal management reporting purposes. The only significant change is that the results of our investments in associates are now proportionately consolidated for segmental reporting and Tencent is shown as a separate reportable segment. The amendment to IFRS 8, which allows an entity not to disclose segmental assets if not reviewed by management, has been adopted early. Comparative information was restated accordingly.

IAS 23 “Borrowing Cost (Revised)” requires entities to capitalise qualifying interest cost. The amendment had no material effect on the group.

Circular 3/2009 “Headline Earnings” was issued by the South African Institute of Chartered Accountants. The circular was changed to incorporate the latest amendments and revisions to IFRS. This circular is effective for the period under review, but had no material effect on the group.

Core headline earnings exclude once-off and non-operating items and management remains of the view that it is an appropriate measure of the group’s sustainable operating performance.

This measure is not a defined term under IFRS and may not be comparable with similarly titled measures reported by other companies.