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Naspers’ globalisation increasing at rapid pace

Port Elizabeth -  It is well-known that Naspers [JSE:NPN] has grown from a South African newspaper group to a global media company based largely on new-technology internet channels since its change in strategic direction some 20 years ago. The interim results published today (Tuesday) shows that this growth in international businesses is still going ahead.

CEO Koos Bekker mentions that Naspers has earned the majority of its revenues during the last 6 months to end September outside SA and more from internet businesses than its large pay television interests. The establishment of M-Net, SA’s first pay television channel, was Naspers’ first foray into the high technology market. Lately the focus has been on the growth of its internet interests.

During the last few months Naspers has acquired several new businesses in the internet sphere and increased its shareholdings in existing interests. These investments amounted to more than R4.1bn during the last few months.

One of the largest investments was the acquisition of an additional 8.6% in Flipkart Private, a leading commerce site in India, for R1 376m in cash. Naspers now has an interest of 16.7% in Flipkart.

During June 2013, Naspers also acquired an effective 80% shareholding in redBus, an Indian online ticketing platform. The fair value purchase consideration was R1bn, also settled in cash.

Several other acquisitions made up the balance of the R4bn odd. Bekker notes that the acquisitions were paid in cash reserves or through the use of existing credit facilities.

He warns shareholders that Naspers also embarked on a programme to build new e-commerce platforms and expanding its digital television networks in several cities in Africa. The group plans to spend more than R7bn on new developments in the current financial year to March 2014, compared to some R4.3bn in the previous year.

“This investment is largely made through the income statement and it will dampen growth in earnings and affect cash flows in the second half of the year,” says Bekker.

Group revenue increased by 28% to R28.8bn in the 6 months to September compared to the same period last year.  Core headline earnings per share increased by 16% to 1248c.

Headline earnings excluded Naspers’ share of R1.3bn of profit made on the sale of Facebook shares by the Russian Mail.ru. Mail.ru is the largest e-mail and internet portal in Russia. Management reported that these portals and offerings now have more than 33m unique users.

The largest internet business in the group, the Chinese Tencent, contributed R4.4bn to Naspers’ headline earnings.

Worthwhile to note is the group are also expanding its pay television businesses across Africa. A total of 7.3m households in 48 African countries subscribe to the different network channels.

Ongoing development increased costs; revenue growth of 18% to R17.1bn translated to trading profit increasing only by 11% to R4.5bn.

Although Bekker indicated that earnings will grow slower in the second 6 months, it seems that the group are preparing for robust growth in earnings once the investments start to pay off.

 - Fin24

*After chasing money on the JSE for 15 years, Adriaan Kruger is now living a relaxed lifestyle in Wilderness and lectures economics part-time at Nelson Mandela Metropolitan University.

 




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