The directors present their annual report, which forms part of the audited annual financial statements of the company and the group for the year ended 31 March 2009.
NATURE OF BUSINESS
Naspers Limited was incorporated in 1915 under the laws of the Republic of South Africa. The principal
activities of Naspers and its operating subsidiaries, joint ventures and associated companies (collectively
“the group”) are the operation of pay television and the provision of related technologies, the operation of
internet and instant messaging subscriber platforms, e-commerce platforms and the publishing, distribution
and printing of magazines, newspapers and books. These activities are conducted primarily in South Africa,
sub-Saharan Africa, China, Central and Eastern Europe, Russia, India and Brazil.
OPERATING REVIEW
The internet segment recorded revenue of R3,8 billion, which leapt after the inclusion of Allegro, Ricardo and
Gadu-Gadu. This expansion came from a solid performance by established operations and the inclusion of
the new investments in the current year. The e-commerce operations of Allegro (Eastern Europe) and
Ricardo (Western Europe) generated revenues of R1,9 billion. The largest markets, Poland and Switzerland,
grew soundly. New services were launched in some smaller markets.
In China, Tencent performed ahead of expectations with growth on most platforms. The Olympics increased
traffic to almost one billion page views per day and peak concurrent users exceeded 57 million. The addition
of several new games contributed to steady growth.
In India, ibibo is growing its internet business, focusing on social media, search and advertising.
An agreement was concluded with Tencent, whereby the two companies will jointly develop the Indian business.
In Russia, mail.ru continues to grow and is developing multiple revenue streams.
Our pay-television businesses, which provide economical entertainment, proved resilient. Overall,
the pay-television segment increased revenues by 29%, thanks to solid subscriber growth during the period.
Operating margins diminished due to costs of growing the subscriber base, higher content costs and the
consequence of increased competition. In South Africa advertising revenues retreated on the back of a
general slowdown. More competition across the continent is reflected in higher prices for some content.
Mobile-TV licences were activated in Ghana, Kenya, Namibia and Nigeria. Construction of DVB-H networks
and employment of staff in these markets continue.
Our technology business was more impacted by the economy than our consumer-facing units.
Consolidation of various technology businesses into the Irdeto group has reduced development spend and
operating costs.
Print-media operations in South Africa generated only marginal revenue growth of 3%. Circulation and
readership of newspapers and magazines mostly held up, while advertising felt the pinch of the recession. In this
environment, operating costs have been reduced and capital expenditure reined in. The impact of these savings
will be felt in the year ahead. The printing sector recorded revenue growth of 4%, although margins were
affected by lower print volumes and exchange rates. The book publishing business is operating satisfactorily.
In Brazil, Abril had an excellent year, although the effect of economic turbulence on the Brazilian consumer
is not yet clear.
Looking ahead, we mostly have resilient businesses in economies that are still growing. However, financial
performance in the year ahead will be influenced by the global economic environment, development of
internet opportunities, competition in pay television, regulation and the vagaries of consumer psychology.
The group has a strong balance sheet and we will continue our growth strategy of organically expanding
existing businesses and developing new initiatives. New investments will be considered where opportunities
arise. Our aim remains to deliver value to our shareholders over the medium and longer term.
FINANCIAL REVIEW
The group reported revenue growth of 30% to R26,7 billion (2008: R20,5 billion). Drivers were both existing
operations, which grew by 19%, and new acquisitions, which added 11%. The internet segment was boosted by
the inclusion of Allegro and Ricardo (formerly Tradus). Pay-television revenues increased by 29% as a result
of strong subscriber growth during the period.
Operating profit before amortisation and other gains/losses increased by 21% to R5,1 billion (2008: R4,2 billion).
However, a reduction in group margins occurred as a consequence of increased competition in pay-television
markets, as well as growing various new services. Total development costs were R1,2 billion (2008: R1,1 billion).
Net interest costs for the year amounted to R306 million, compared with net finance income of
R503 million in the prior year. This arose from funding new acquisitions. Other finance income includes
preference dividends of R377 million (2008: R336 million) and mark-to-market losses of R375 million,
compared to gains of R166 million in the prior year.
Naspers’s share of the equity-accounted results of its associates, mainly Tencent, mail.ru and Abril, grew
to R1,47 billion (2008: R654 million). All three enterprises performed well under exceptional leadership teams.
The impairment of equity-accounted investments refers mostly to the withdrawal from a German mobile-TV
project due to an unappealing regulatory environment.
A R2,97 billion profit, arising from the discontinuance of operations, relates to the sale of pay television
businesses in Greece and Cyprus. The proceeds are once-off in nature and were applied to long-term debt.
A segmental analysis, reflecting the revenues and results per individual business segment, appears in
note 36 to the consolidated annual financial statements.
SHARE CAPITAL
The authorised share capital at 31 March 2009 was:
- 1 250 000 A ordinary shares of R20 each;
- and
500 000 000 N ordinary shares of 2 cents each.
Naspers issued no new A ordinary shares during the 2009 financial year. During the current financial year,
the group issued 30 000 N ordinary shares to the Naspers Share Incentive Trust and 966 000 N ordinary
shares to the MIH (BVI) Share Incentive Trust.
The issued share capital at 31 March 2009 was: |
PROPERTY, PLANT AND EQUIPMENT
At 31 March 2009 the group’s investment in property, plant and equipment amounted to R4,8 billion, compared
with R4,5 billion last year. Details are reflected in note 4 of the consolidated annual financial statements.
Capital commitments at 31 March 2009 amounted to R359 million (2008: R642 million). Further capital
expenditure to the amount of R1,5 billion has been approved by the boards of directors of the various group
companies, but has not been contracted for as of 31 March 2009.
DIVIDENDS
The board recommends that a dividend of 207 cents per N ordinary share be declared (2008: 180 cents) and
41 cents per A ordinary share (2008: 36 cents).
GROUP
Naspers Limited is not a subsidiary of any other company. The name, country of incorporation and effective
financial percentage interest of the holding company in each of the Naspers group’s principal subsidiaries are disclosed in note 7 to the consolidated annual financial statements. All subsidiaries, significant associated
companies and joint ventures share the same financial year-end as the holding company, except for
Tencent Holdings Limited, Abril S.A. and Port.ru Inc., which have a 31 December year-end. The holding
company’s interest in the aggregate amount of profit after tax but before minorities earned by subsidiaries
totalled R3,2 billion (2008: R3,0 billion) and its interest in the aggregate losses after tax but before minorities
amounted to Rnil (2008: Rnil).
Details relating to significant acquisitions and divestitures in the group are highlighted in note 3 to the
consolidated annual financial statements.
DIRECTORS, SECRETARY AND AUDITOR
The directors’ names and details are presented here, and the secretary’s name and business and
postal address are presented here. Directors’ shareholdings in the issued share
capital of the company are disclosed in note 13 to the consolidated annual financial statements.
PricewaterhouseCoopers Inc. will continue in office as auditor in accordance with section 270(2) of the
South African Companies Act, 1973.
BORROWINGS
The company has unlimited borrowing powers in terms of its articles of association.
SUBSEQUENT EVENTS
On 10 November 2008 the group announced an agreement for the sale of MWEB’s sub-Saharan Africa
business, excluding South Africa. The purchase price for our group’s share was approximately R500,0 million.
The transaction closed in April 2009.
Subsequent to 31 March 2009, Media24 decided to sell its land and buildings situated at 40 Heerengracht,
Cape Town, to Naspers Properties (Proprietary) Limited, a wholly owned subsidiary of Naspers. The selling
price of R280,0 million was based on independent external valuations.
On 17 April 2009 a devastating fire destroyed the Paarl Print plant, resulting in the death of 13 people.
While forensic fire investigations are ongoing to determine the cause of the fire, Paarl Print is in the process
of implementing its business continuity plan. This was a tragic incident in the history of the group. The net
book value of the assets damaged by this fire was R157,0 million and has been written off. The group is fully
insured and is in the process of recovering the insurance proceeds.
On 9 June 2009 the group announced that it had made a public tender offer to acquire up to 100% of
Warsaw-listed Polish financial portal Bankier.pl. It provides financial news, analysis and comparison-shopping
information on consumer financial products. If successful, Allegro, a subsidiary of the group, intends to
integrate Bankier.pl’s products and services into its e-commerce platform in Poland. As part of this public
offer, one of Bankier’s current shareholders has irrevocably committed to tender its 18,4% holding. Assuming
100% acceptance of the offer, the total investment will be approximately R156,0 million (PLN62,8 million).
Signed on behalf of the board:
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