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,
internet and instant messaging subscriber platforms, e-commerce platforms and the provision of related technologies and the
publishing, distribution and printing of magazines, newspapers and books. These activities are conducted primarily in South Africa,
sub-Saharan Africa, Greece, Cyprus, Brazil, Russia, China, India, Europe and the United States of America.
OPERATING REVIEW
Over the past year the group experienced growth, especially in the internet sector. Performance of the core operations was solid
and the development of several business opportunities progressed. Group revenues grew 19% to R20,5 billion, largely driven by the
pay-television and internet businesses.
A number of new investments were concluded during the year. The major investments were:
- the Tradus plc. e-commerce business in Europe for a consideration of R15,3 billion
- 40% interest in M-Net/SuperSport, the consideration being 21,6 million Naspers N ordinary shares and R250 million cash
- a 97% interest in Gadu-Gadu S.A., the leading instant messaging company in Poland for a cash consideration of R1,1 billion, and
- 100% of Cloakware Inc., a company providing software security solutions, for a cash consideration of R505 million.
In funding all these activities, the group incurred a net cash outflow in the year of R17,3 billion. The group raised a three-year
revolving credit facility of $1,4 billion to fund the Tradus acquisition. The balance sheet remains sound with a gearing ratio of 11%,
excluding transponder leases.
The group has also invested heavily in developing new technologies and business opportunities. These developments are
focused largely on broadband, the internet and mobile television. Total development spend of R1,1 billion was lower than
anticipated, due to the slower roll-out of mobile television services, which are dependent on the issuance of commercial licences
by regulatory authorities.
Looking ahead, our growth strategy remains focused on three legs: organically expanding existing businesses, developing new
opportunities and seeking attractive investments. Geographically, our attention remains mostly on the emerging markets, as these
still offer good opportunities for growth. The group has made some substantial investments over the past two years and these will
be further developed. Our aim remains to deliver value to our shareholders over the medium and longer term.
Financial performance in the period ahead will be influenced by the timing of regulatory approvals for ventures such as mobile
television and the development of internet opportunities. Such services, when launched, typically have an initial negative impact
on both earnings and cash flows before they start contributing. In the pay-television segment, the level of competition is also
expected to intensify.
In South Africa, we expect the slowdown in consumer spending to continue. This will have a dampening effect on advertising
and circulation revenues. However, in the past pay television has proven resilient to the economic cycle. The macro-economic
conditions in our other principal markets are expected to remain buoyant in the year ahead.
FINANCIAL REVIEW
The group reported revenue growth of 19% to R20,5 billion (2007: R17,2 billion). The star was the internet segment, which grew by
42%. The pay-television segment expanded by 22% largely driven by the growth in subscribers over the period. Operating profit
before amortisation and other gains/losses grew by 15% to R4,2 billion (2007: R3,7 billion).
Net finance income for the period amounted to R1,0 billion compared to net finance costs of R338 million in the prior year.
This includes interest income earned on net cash deposits of R602 million. As the capital raised in March 2007 was only deployed
in the latter half of the current financial year, interest income in the year ahead will be lower.
In the recent past, the group acquired substantial minority stakes in businesses in emerging markets such as China, Brazil and
Russia. Tencent, Abril and Mail.ru have all recorded pleasing growth, reflected in our share of earnings from equity-accounted
associates growing by 93% to R654 million.
The impairment of equity-accounted investments relate mostly to our investment in Beijing Media Corporation Limited and Titan
Media. Whilst positive about the future prospects of these investments, we believe it prudent to record an impairment charge.
The discontinued operations relate to the private education business, which was sold and also to the pay-television activities in
Greece and Cyprus, where sale agreements have been concluded and which we hope to close later this year.
The net effect of the above is that headline earnings grew by 49% for the period to R3,8 billion.
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 2008 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 2008 financial year. During the year the group issued 21,6 million new Naspers
N ordinary shares to partly fund the acquisition of a 40% interest in M-Net/SuperSport. The group issued 12,0 million N ordinary
shares to the Naspers Share Incentive Trust, 281 000 N ordinary shares to the MIHH Share Incentive Trust, and 2,7 million N ordinary
shares were issued to the MIH (BVI) Share Incentive Trust.
The issued share capital at 31 March 2008 was: |
