Naspers Limited (“Naspers”) (JSE:NPN) (LSE:NPSN): The 99th
annual general meeting (AGM) of Naspers Limited was held this
morning, under the chairmanship of Mr Ton Vosloo, in the Naspers
Centre at 40 Heerengracht, Cape Town, South Africa.
Shareholders approved all the ordinary and special resolutions
with the required majority. A gross dividend of 385c per Naspers N-
ordinary and 77c per Naspers A- ordinary share were approved.
PricewaterhouseCoopers was appointed as external auditors, with Mr
A Wentzel as the individual who will undertake the audit.
Messrs Lourens Jonker, Fred Phaswana, Ben van der Ross, Ton
Vosloo and Adv Fran du Plessis, who retired by rotation, were
re-elected to the board.
Messrs Boetie van Zyl, Ben van der Ross and Adv Fran du Plessis
were elected to the audit committee.
Mr Vosloo reported in his AGM address that Naspers posted a
solid performance for the year 31 March 2013. It reached a
strategic milestone when revenues from its internet businesses
exceeded those from pay television for the first time. The group’s
strategy remained organic growth of existing businesses and limited
acquisitions that add value to the group.
The chairman’s address follows:
The group posted a solid performance for the year 31 March 2013.
We also reached a strategic milestone this year when revenues from
our internet businesses exceeded those from pay television for the
first time. During a somewhat bumpy period, Naspers grew revenues,
including our share of associates' results, at a compound annual
rate of some 25% over the past five years.
Globally, economic growth remained variable over the past year,
but we played the field as we found it. The growth of mobile
devices is an important technology trend for our group. With over
1bn smartphones now accounting for 20% of all mobile devices
worldwide, internet use is shifting steadily from PC to mobile and
tablets. In some of our businesses, as much as a third of total
traffic now stems from mobile applications. While this trend
disrupts existing business models, it also creates opportunities
for our talented engineers and committed people in some 130
countries around the globe.
Throughout the year, we continued to develop our strategy of
maximising the potential of existing businesses while investing to
grow new ventures for the longer term. While we understand that
this strategy will reduce earnings and cash flows in the short
term, our shareholders have nonetheless enjoyed steady growth in
dividends over the past five years.
Against this background, I can report that we generated
consolidated revenue growth of 27% to over R50 billion. The main
contribution came from our internet segment, which recorded robust
revenue growth across most platforms. Not all internet units are
profitable yet, specifically those in development stages.
In line with strategy, we increased our development spend to
R4,3bn (up from R2,8bn in 2012). We are aiming at growing our
ecommerce businesses and rolling out digital terrestrial pay-TV
services across sub-Saharan Africa. As this development spend is
expensed through the income statement, our consolidated trading
profits for the year were flat at R5,7bn.
Despite this increased spend, core headline earnings per N
ordinary share grew 20% to R22,16. Growth came mainly from organic
expansion of existing businesses and acquisitions during the year,
supplemented by the depreciation of the rand, which has a positive
effect when we translate foreign revenues into rand, but is
tempered somewhat by the payments to studios for movies, series and
other.
These results are underpinned by a diverse portfolio, a fairly
global presence and well-spread risk.
In line with our sustainable development policy, we
continue to reduce our impact on the environment. For example, we
no longer print our full integrated annual report. The full report
to shareholders is published on our website.
Our integrated report presents a balanced view of our economic,
social, environmental and governance activities for the year to 31
March 2013. The report is supplemented by naspers.org, our
integrated sustainability platform that captures our combined
social awareness as a group and focuses on projects that address
social and environmental issues. Our intention is to extend
Naspers’s core value of being useful to the communities we serve,
while reflecting the key concerns of stakeholders. Now in its
second year, naspers.org is demonstrating the nature and quality of
our group’s impact on society and on the planet. In time, it will
also harness the group’s strengths to help address global
challenges such as education.
Looking at our results by segment, managed internet
revenues expanded 80% to almost R35bn, while trading profits were
44% up at over R6bn. Given the growth of the internet in China,
Tencent continues to record strong results. Equally, in the Russian
market, Mail.ru had another good year.
Ecommerce revenues doubled to R11bn. During the year we expanded
these operations through organic growth and selective acquisitions.
We extended the breadth of our products, particularly online
retailing (known as etailing) and online classifieds. We believe
online shopping is a global consumer trend and anticipate that the
proliferation of tablets and smartphones will accelerate the uptake
of services. As we are in the building phase, this segment is
loss-making and we do not expect aggregate profits for several more
years.
Pay-TV reported 20% growth in revenues to over R30bn, while
trading profits grew 18% to well over R7bn. Growth came largely
from an increased net subscriber base, which now reaches around 7m
households across 49 countries in Africa.
In South Africa, we closed the year with some 4,5 million
subscriber homes, reflecting the benefits of a broad range of
options to meet consumer needs. In the rest of sub-Saharan Africa,
we reached 2,3 million households.
During the financial year we produced 6 000 hours of local
programming in South Africa, Nigeria and Kenya – contributing to
the local film industries’ sustainability. Seven local general
entertainment channels launched, the Africa Magic portfolio of
channels was reformatted, and two local community channels were
added.
It was a tough year for print media operations globally.
Revenues were flat as advertisers proved stingy. Circulation
revenues are also under pressure. Media24 was no exception.
However, trading profits rose marginally as costs were cut. In
Brazil, Abril suffered a decline in profitability, and cost-cutting
initiatives are implemented there.
Governance and sustainability are essential measures for
our stakeholders. Given the multinational nature of our group, we
are exposed to different risks in various jurisdictions. The board
conducts the group's business with integrity, applying appropriate
corporate governance policies and principles.
A disciplined reporting structure ensures the holding company
board is informed of subsidiary activities. Detailed strategies and
business plans, covering the financial and non-financial elements
of operations, are regularly reviewed and management remuneration
is linked to performance and strategic objectives.
We continue to evaluate areas where governance at corporate and
subsidiary level can be improved. In line with the requirements of
the new Companies Act, the social and ethics committee for Naspers
and its South African subsidiaries reports to shareholders by means
of a report included in the integrated report.
The broader regulatory environment is evolving. In
Africa, countries are increasing broadcasting regulation and new
competition legislation is toughening. Internet regulation is also
increasing. Equally, our newspaper and magazine businesses are
subject to some regulatory risks. Naspers's two main South African
units, MultiChoice and Media24, are complying with black economic
empowerment requirements unique to South Africa.
In essence, the sustainability of our group is determined by our
ability to inform, entertain and connect people, distribute media
products, support ecommerce, sell advertising, develop related
technologies and sell these to other media operators.
In line with our sustainable development policy, the group
contributes to local communities in which it operates. We also
strive to minimise our impact on the environment. Some of our more
significant initiatives focus on education, skills development,
entrepreneurial spirit, community outreach and environmental
sustainability. Most of these are implemented in partnership with
government, communities or other local organisations.
We contribute at country level too. For the review period, our
group paid R7,6 billion to governments for tax on company profits,
tax on our employees’ salaries, secondary tax on companies, skills
development levies, and more. This all helps to build economies in
emerging countries in which we operate.
Moving to dividends
The board has recommended that the annual gross dividend be
increased by 15% to 385c (last year’s was 335c) per listed N
ordinary share, and 77c (previously 67c) per unlisted A ordinary
share. If you approve this today, dividends will be payable to
shareholders recorded in the books on Friday 20 September 2013, and
paid on Wednesday 25 September 2013.
Let’s now compare taxes and dividends. If we pay governments
R7,6bn in taxes and our shareholders R1,56bn in dividends, that
means that states get 5 times more in taxes than shareholders. It’s
very clear who our biggest shareholders and beneficiaries are!
On to directors
In terms of the company’s memorandum of incorporation, Messrs
Lourens Jonker, Fred Phaswana, Ben van der Ross, myself and Adv
Fran du Plessis retire by rotation today but we are eligible to
offer ourselves for re-election.
Members of the audit committee are Adv Fran du Plessis, Messrs
Ben van der Ross and Boetie van Zyl. The board recommends that
shareholders reappoint these individuals as audit committee members
in compliance with the Companies Act.
Now a few achievements and career moves, retirements, top
achievers etc
Career moves and new appointments:
Bob van Dijk, recently appointed CEO of Allegro Group. We thank
Hein Pretorius for his major role in building Allegro and we look
forward to continuing to work with him in the future.
Peet Kruger is stepping down as editor of Beeld (but is
remaining with the company). He has been with Media24 since 1981.
Adriaan Basson, currently assistant editor at City Press, succeeds
Peet.
Oliver Rippel, who is now head of our business-to-consumer (B2C)
etail businesses
Tim Jacobs, newly appointed MultiChoice group CFO
Martin Scheepbouwer, was appointed head of all our online
classifieds businesses
Retirements:
Cobus Stofberg, chief executive and founding member of the MIH
group, retired after serving the group for 28 years. We hope to
continue our association with Cobus going forward. An announcement
will be made in due course.
In May 2013, Bokkie Gerber retired as editor of Rapport, having
been with Media24 for 34 years. One of the greats in the field of
journalism and a real gentleman.
Nic de Bruine, viewed by many as the rock of Landbouweekblad,
retires on 1 April 2014 as head of sales, after a 50-year career
with Media24.
Some of our people that served the group many years are
seriously ill:
Past director Cronk Conradie and senior sports journalist Herman
le Roux; and Ronnie van Wijk, one of the founding members of the
M-Net team. They are all in our prayers.
Several of our colleagues passed away:
Prof Jakes Gerwel, who was chairman of Media24 and Welkom Yizani
- he also served on the Naspers board for many years and he is
sorely missed;
Roberto Civita, who was chairman of our associate Abril in
Brazil.
Jaya Naidoo, who started with M-Net in the finance department in
1986 – he always referred to the “caravan days” – M-Net’s decoders
were sold out of a caravan in the early days!
Mandy Rossouw, respected political journalist at City Press, who
passed away at the young age of 33. Her death was mourned by
colleagues, the industry and political parties across the
spectrum.
Albert de Jager, senior typographer during his career with
Magazines, passed away last month.
Top Achievers:
Several of our newspapers, magazines and book publishers brought
home many prizes and some of our editors have won top prizes:
Adriaan Basson from City Press won a prestige CNN award as news
journalist of the year and Kate Wilson, editor of Women’s Health,
was crowned editor of the year.
Our CEO, Koos Bekker, has been honoured with the Frans du Toit
medal for leadership in industry, awarded by the South African
Academy for Science and Art.
Allegro’s green initiative, Allforplanet, was recognised for its
interesting climate projects in Poland.
Nolo Letele, executive chair of MultiChoice received a lifetime
achievement award for media development in Africa from the
Millennium Excellence Foundation – well deserved!
As to the future
Over the past year, revenue growth reflected the expansion of
our group. While our strategy is continually refined, three legs
are unchanged: organic growth of existing businesses, a few
acquisitions that add value and developing new technologies.
In the year ahead, we will focus especially on growing our
businesses organically. This will mute earnings in the short term
as the cost of developing these businesses is expensed through the
income statement. However, we believe this strategy is sound.
Our aim is to deliver value to our shareholders over the medium
to longer term and to contribute to the communities in which we
operate.
I thank you.
Important Information:
The report may contain forward-looking statements as defined in
the United States Private Securities Litigation Reform Act of 1995.
Words such as ‘believe’, ‘anticipate’, ‘intend’, ‘seek’, ‘will’,
‘plan’, ‘could’, ‘may’, ‘endeavour’ and similar expressions are
intended to identify such forward-looking statements, but are not
the exclusive means of identifying such statements. While these
forward-looking statements represent our judgements and future
expectations, a number of risks, uncertainties and other important
factors could cause actual developments and results to differ
materially from our expectations. These include factors that could
adversely affect our businesses and financial performance. We are
not under any obligation to (and expressly disclaim any such
obligation to) update or alter our forward-looking statements, as a
result of new information, future events or otherwise. Investors
are cautioned not to place undue reliance on any forward-looking
statements in this report.
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