This week I Is looking @ NPN
NPN
2013
Headline earnings per N ordinary share (cents) 1 722 (12mths)
2014
Headline earnings per N ordinary share (cents) 1 514 1 722
2013
Net asset value per N ordinary share (cents) 15 360 12 567 13 630
2014
Net asset value per N ordinary share (cents) 16 637 13 630
The Naspers group had a lively year with progress in several businesses. The financial results are detailed below, but
in summary we report robust consolidated revenue growth of 26%, driven by both the internet and pay-television
businesses. This growth was fuelled by development spend of R7,7bn – up 79% on last year – devoted particularly to
ecommerce and digital terrestrial television (DTT). As previously cautioned, this expansionary spend had the effect
of limiting core earnings to R8,6bn, approximately the same as last year.
Looking forward, our established businesses should continue to be in the aggregate cash flow positive, profitable
and growing. Our goal is to invest in new ventures that will deliver value over the long term. With this in mind, we
will continue to invest heavily for organic growth and may also acquire new businesses within our fields of focus. Our
belief is that, through a combination of attractive markets and appealing customer product offerings such as online
classifieds, etail and DTT, we have a realistic prospect for growth over the medium term.
Whilst aggressively investing for the long term limits short-term earnings and cash flows, we believe this strategy to
be sound. Our aim is to deliver superior value to our shareholders over time and to contribute to the communities in
which we operate.
FINANCIAL REVIEW
Consolidated revenues grew 26% to R62,7bn, boosted largely by growth in our internet businesses. Also influential
was a rand that depreciated by an average 19% over the period against a basket of our main operating currencies.
Expanding our ecommerce and DTT businesses resulted in development spend accelerating by 79% to R7,7bn
(2013: R4,3bn).
Net interest on borrowings increased to R1,261bn (2013: R636m), due both to the rand depreciation and increased
borrowings utilised to fund acquisitions and growth.
Tencent and Mail.ru reported strong growth. Our share of equity-accounted results includes once-off gains of R2,9bn
flowing from Mail.ru’s sale of shares in Facebook and Qiwi, as well as gains from Tencent’s merger of some of its
ecommerce businesses with JD.com and the sale of its interest in ChinaVision. These gains, being non-recurring, have
been excluded from core headline earnings.
An impairment charge of R1,6bn has been recognised in other gains/losses and relates mainly to the flash-sale fashion
businesses in our ecommerce segment, such as FashionDays, Brandsclub and Markafoni. These failed to achieve
targets and we impaired goodwill and other intangibles during the first half of the year. In addition, our associate
investment in Abril has been fully written down in the current year and is the main item included in impairment of
equity-accounted investments.
A rather theoretical dilution loss of R852m on our equity-accounted investments was booked, mainly stemming from
Tencent buying back its own shares.
For many years we have held our core headline earnings as the most reliable indicator of sustainable operating
performance. In the past year this measure was marginally higher at R8,6bn – R21,81 per N ordinary share. Free cash
flow for the period was an outflow of R349m – largely due to capex in DTT networks and the accelerated development
spend.
Consolidated balance sheet gearing stands at 23%, excluding transponder leases and non-interest bearing liabilities.
Any forecasts in this provisional report have not been audited, reviewed or reported on by the company’s external
auditor.
