Naspers Limited - Summary Of The Audited Consolidated Results Of The Naspers Group For The Year Ended 31 March 2015
Release Date: 29/06/2015 17:50:00 Code(s): NPN [Email this JSE Sens Item to a Friend] [Printer Friendly Version]
Summary of the audited consolidated results of the Naspers group for the year ended 31 March 2015
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 consolidated
results of the Naspers group
for the year ended 31 March 2015
Commentary
Naspers made progress across its video-entertainment (previously
"pay television") and internet platforms. We strengthened our position
in several markets through incremental investments in people,
technology, content and marketing – allowing growth ahead of our
competitors. Core headline earnings, a measure the board considers
a reliable indicator of sustainable operating performance, grew 30%.
Some R10,7bn was invested in development spend in growing the
business. This is a 33% increase on the prior year.
The classifieds and etail businesses saw strong growth. We continue
to invest in these formats as they are gaining market share globally.
The smartphone is becoming the primary internet device in many of our
markets, and we are dedicating considerable resources to advancing
our mobile products.
The video-entertainment business made solid progress with the total
base closing at some 10,2m households across Africa. This comprises
2,2m digital terrestrial television (DTT) subscribers and almost 8m
direct-to-home (DTH) satellite service subscribers.
FINANCIAL REVIEW
On an economic-interest basis, revenue grew 26% during the year,
driven by solid growth in the internet, ecommerce and video-
entertainment segments.
The increase in development spend is mainly attributable to the
ecommerce and video-entertainment segments, including increased
shareholdings in equity-accounted ecommerce investments Souq,
Konga and Flipkart, plus continued investment in DTT in the video-
entertainment segment. Given ongoing delays in analogue switch offs,
we decided to invest incrementally in the second half of the year to
continue to drive DTT growth, which resulted in 1,4m African homes
being added to the base, to close the year at 2,2m subscribers.
Listed internet investments Tencent and Mail.ru were the main
contributors to the group's share of equity-accounted results increasing
to R16,4bn (2014: R10,8bn). Tencent produced strong results as it
continues on its growth path. Our share of equity-accounted earnings
includes once-off gains on the remeasurement of Mail.ru's interest
in VK.com, the sale of Mail.ru's shares in Qiwi amounting to R3,9bn,
as well as R1,7bn representing our share of gains realised by Tencent
on the sale of certain investments and on the dilution of Tencent's
interest in Kakao Corporation following a merger. A net once-off
gain of R1,5bn was recognised mainly relating to dilution of our
shareholding in Flipkart. Impairment losses of R478m were
booked on underperforming equity-accounted investments
in the ecommerce segment.
Core headline earnings grew 30% to R11,2bn (2014: R8,6bn), mainly
due to increased earnings contributions from Tencent and some
of the profitable ecommerce businesses.
Impairment losses of R684m were recognised mainly relating
to broadcasting equipment and intangible assets.
Net interest incurred on borrowings amounted to R1,6bn
(2014: R1,3bn), on the back of the rand depreciating against the
USdollar and drawdowns on existing credit facilities to fund
acquisitions and development spend. Consolidated net gearing stood
at 30% at 31 March, excluding transponder leases and non-interest-
bearing liabilities.
Increased development spend, plus capital expenditure to build
our DTT footprint and TV production facilities in East and West Africa,
resulted in free cash outflow of R515m (2014: outflow of R349m).
Tax payments were up 16% year on year, as a result of profits
in the video-entertainment segment and some profitable
ecommerce businesses.
SEGMENTAL REVIEW
This segmental review includes consolidated subsidiaries, plus a
proportionate consolidation of associated companies and joint ventures.
Internet
The group's internet businesses continue to show lively growth.
Segment revenues increased 37% to R78bn (2014: R57bn). Trading
profits grew 96% to R13bn (2014: R6,6bn), mainly attributable to
the operating performance of Tencent and some of the profitable
ecommerce businesses.
Tencent
The transition of internet usage from desktop to mobile continues
at a rapid rate. In China, mobile internet users now account for 85%
of total internet users. Tencent has seen strong growth in its Weixin
mobile-communication, social and commerce platform, mobile games,
and mobile video. Tencent continued to expand its partnerships with
a series of investments in leading vertical players such as Dianping
(local restaurant and services search), 58.com (online classifieds),
as well as BitAuto and Leju (auto and real estate verticals) and JD.com
(first-party ecommerce).
Revenues for the year grew 31% to RMB78,9bn, with non-GAAP
profit attributable to shareholders (Tencent's measure of normalised
performance) up 43% to RMB24,2bn. Online advertising delivered strong
growth of 65%. More information on Tencent's results is available at
www.tencent.com/en-us/ir. Tencent's excellent performance contributed
R14,6bn (2014: R9,7bn) to core headline earnings.
Mail.ru
Mail.ru fared well in a rather turbulent geopolitical environment.
It integrated VK.com following the acquisition of the remaining 48%
it did not own. Mail.ru has since launched a mobile advertising
platform to capitalise on increased mobile activity among its users.
Revenues for the year to December 2014 increased 15% year on year
to RUB35,8bn, with aggregate net profit up 11% to RUB12,5bn. Profit was
boosted by non-recurring gains on the acquisition of minorities
in VK.com.
With significant weakening of the rouble against most currencies,
Mail.ru's contribution to segment revenues and trading profit is rather flat
compared to last year, although up in rouble terms.
Ecommerce
Our ecommerce segment is growing rapidly. Revenues are up 36% to
R27,8bn (2014: R20,4bn). Given the different stages of maturity and
nature of the various ecommerce models, retail and marketplaces
currently generate the bulk of revenues. We wish to deliver superior
customer experiences in order to grow ahead of our competitors and
expand the market. This has implications for development spend,
which totalled R8bn, leading to a 14% increase in trading loss to R6,1bn
(2014: R5,3bn).
The businesses are now organised by functional lines. This makes us
more agile to move faster and build scale rapidly. In addition, businesses
are better able to share knowledge, technology and expertise. Execution
is strengthening throughout the group and the focus is on customer
satisfaction, engagement and retention.
We stepped up focus on 40 classifieds markets globally, all showing
good user and listings growth. A number of agreements were concluded
with Schibsted ASA Media Group, Telenor Holdings ASA and Singapore
Press Holdings Limited, covering classifieds assets in Latin America,
Southeast Asia and Eastern Europe. This should improve both our
service to consumers and the outlook of our classifieds platforms in
these regions.
The group has leading positions in some 20 markets. In March 2015 our
main brand, OLX, served 240m active users worldwide and garnered
34m visits per day on average, a growth of 33% year on year. Globally
about 54% of traffic comes from mobile and, in some markets, it is more
than 80%.
The etail businesses are expanding at a rapid pace, with revenues – on
an economic-interest basis – increasing 54% year on year. Meaningful
increases in organic traffic have been experienced in most of our
markets. To improve the customer experience, and to scale faster,
we merged Agito (etail business in Poland) and eMAG (regional etail
platform in Central and Eastern Europe). In South Africa, Kalahari and
Takealot merged to create a viable consumer destination in a smaller
market and bring a greater selection of products and higher quality
customer service to a previously underserved market. Our equity-
accounted etail investments Flipkart in India, Souq in the Middle East
and North Africa, and Konga in Nigeria all experienced rapid growth.
However, these markets are highly competitive and have absorbed
significant investments by competitors during the year. We are focused
on creating scale, expanding geographically, building delivery capabilities
and bringing etail experiences to markets where these services
previously did not exist.
Our payment solutions are differentiated by offering a broad range of
local payment options to customers and good conversion on sales for
merchants. We strengthened talent across the business. Five existing
regional payment businesses are being transformed into one global
company with a single brand and common supporting infrastructure –
PayU. This is similar to the way in which the classifieds businesses were
scaled. We believe it should help consumer conversion and uptake from
merchants.
Allegro, the group's largest marketplace business, is improving topline
growth. Scale advantages of this platform benefit EBITDA margins.
Allegro is building a business-to-consumer destination that delights
its customers and has growth potential. Investments are being made
in mobile.
The ibibo Group increased market share significantly in the Indian
online travel agents' market and is delivering significant growth on
mobile. redBus, the leading Indian bus vertical site, deployed new
mobile products and continues to innovate. ibibo's hotels offering is
being rolled out. Movile, in Brazil, again delivered firm results, growing
its core revenues and profits while continuing to invest in its Brazilian
online food-ordering business, iFood. We estimate iFood to have an 80%
market share.
Video entertainment
The video-entertainment segment produced another consistent
performance, generating revenues of R42,4bn – up 17% year on year.
Development spend increased 31% to R2,4bn as MultiChoice builds out
its DTT services, resulting in trading profit contracting by 6% to R8bn
(2014: R8,5bn).
Subscriber growth across the African continent remained robust. Some
727 000 DTH customers were added, bringing the DTH subscriber base
to almost 8m. The DTT network is now substantially in place, with
MultiChoice operating in 11 countries and 114 cities. The DTT base more
than doubled, closing at 2,2m customers. Kenya is one of the first African
countries to make the transition to digital as the analogue switchoff
rollout began in January 2015.
Competition from international online players with global reach,
such as Netflix, Amazon and Google, is increasing. MultiChoice is
investing in its online offering, expanding its delivery platforms and
improving products and services. The DStv Explora (personal video
recorder) is a significant differentiator and became internet-connected
in November 2014. Our "TV everywhere" strategy gained traction with
the launch of DStv Now. Connected services allow customers access
to a greater selection of entertainment on their tablet or smartphone
– anywhere, anytime. Home movie rentals were made available to all
DStv customers through BoxOffice, the video-on-demand service, which
is now available in 11 African countries. Average monthly rentals tally
around 600 000.
The focus on producing home-grown content tailored to specific
audience preferences was given a boost in Nigeria and Kenya, with
our new local studios stimulating local productions. In South Africa over
R2bn was spent on local sport and content. SuperSport remains the
largest funder by far of sport on the African continent.
Additional transponder capacity was purchased from Eutelsat and
Intelsat to strengthen in-orbit backup capacity. The group also invested
in a second broadcast site to ensure uninterrupted viewing for our
customer base.
The backend infrastructure of MWEB was disposed of. MWEB is now a
consumer-focused internet service provider. The deal created a
Wi-Fi joint venture in which MWEB holds a 49% interest.
Video entertainment attracts regulatory scrutiny in several territories.
Regulators are key stakeholders to the business and MultiChoice plays
an active role in supporting the broadcasting landscape.
Print media
The print-media segment saw the listing of printing business, Novus
Holdings Limited, in March 2015. The group received proceeds of R1,1bn
from the listing. The segment managed marginal revenue growth.
However, trading profit declined to R314m (2014: R606m) as the print
industry continues to face sectoral headwinds globally, and Media24 is
also investing in internet and ecommerce opportunities.
DIVIDEND NUMBER 86
The board recommends that the annual gross dividend be increased
by 11% to 470c (previously 425c) per listed N ordinary share, and 94c
(previously 85c) per unlisted A ordinary share. If confirmed by shareholders
at the annual general meeting on 28 August 2015, dividends will be
payable to shareholders recorded in the books on Friday 18 September
2015. It will be released on Monday 21 September 2015. The last date
to trade cum dividend will be on Friday 11 September 2015 (the shares
therefore to trade ex dividend from Monday 14 September 2015).
Share certificates may not be dematerialised or rematerialised
between Monday 14 September 2015 and Friday 18 September 2015, both
dates inclusive.
The dividend will be declared from income reserves. It will be subject
to the dividend tax rate of 15%, yielding a net dividend of 399,5c per
listed N ordinary share and 79,9c per unlisted A ordinary share to those
shareholders not exempt from paying dividend tax. Such dividend tax
will amount to 70,5c per listed N ordinary share and 14,1c per unlisted
A ordinary share. The issued ordinary share capital as at 26 June 2015
was 419 203 470 N ordinary shares and 712 131 A ordinary shares.
The company's income tax reference number is 9550138714.
