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Cape Town – The 100th annual general meeting of Naspers [JSE:NPN] took place in Cape Town on Friday.
A gross dividend of R4.25 per Naspers N-ordinary and 85c per Naspers A-ordinary share were approved.
In his address as chair Ton Vosloo reported that Naspers posted a solid performance for the year up to March 31 2014.
The group’s strategy remained organic growth of existing businesses and limited acquisitions that add value to the group.
The company has since last year become fully international when its biggest subsidiary, MIH Holdings, was folded into Naspers.
"Our board now comprises members from around the globe," said Vosloo.
"Looking back over the 99 years of our being, one can say that Naspers has really grown forward and upwards as a business. From the parochial publisher of 1915, we have now spurted forward to being among the top ten on the internet, with activities in 133 countries."
Vosloo congratulated Koos Bekker, who is poised to succeed him as non-executive chair in April next year.
"Koos is an inspiring and far-sighted leader. He can see around the next corner and he can spot a curve ball coming. Naspers' transition has been huge and it started 30 years ago when Koos Bekker came into my and Naspers' life," said Vosloo.
A lively year
According to Vosloo Naspers group had a lively year with progress in several businesses.
"We reported robust consolidated revenue growth of 26% at R62.7bn, driven by both our internet and pay-television businesses. This growth was fuelled by development spend that increased 79% on 2013 to R7.7bn – particularly for e-commerce and digital terrestrial television (DTT)," he said.
In line with its goal to invest in new ventures that will deliver value over the long term, Naspers continued to invest for organic growth and acquire new businesses in its fields of focus.
By investing in this ongoing expansion, core earnings growth was limited to
around R8.6bn, similar to last year.
"While aggressively investing for the long term limits short-term earnings and cash flows, we believe this strategy is sound. Our aim is to deliver value to our shareholders over time and to contribute to the communities in which we operate," said Vosloo.
"Our recent performance underscores the soundness of this strategy. Despite the
turbulence of the past five years, Naspers has grown revenues, including our share of associates’ results, at a compound annual rate of some 25% over this period."
Globally, economic growth was variable over the past year, and each country and
business in the portfolio has its own uncertainties.
However, a benefit of operating in multiple countries and across more than one technology is that the aggregate risk profile is diminished.
Internet services
The growth of mobile devices is an important trend for the group. In some of its businesses, over 50% of total traffic now comes from cellphones and tablets.
"E-commerce is taking market share from bricks-and-mortar commerce. Technologies such as mobile apps, location-based services, barcode/product identification and image recognitions, mobile payments and services will continue to drive e-commerce growth," said Vosloo.
"Over the next decade, e-commerce is expected to emerge as the largest section of the internet in most countries around the world."
Internet units
Naspers' internet units recorded strong growth with this segment increasing revenues by 65% to R57bn, although higher development spend restricted trading profit growth to 8% or R6.6bn.
"Our internet activities are rapidly transforming themselves into mobile-focused operations," said Vosloo.
Tencent performed well in a dynamic and highly competitive Chinese market and, in Russia, Mail.ru reported good results with growth across all major segments.
Revenues from e-commerce activities rose 64% to R20.3bn.
Given that e-commerce is an area of expansion, development spend of R5.6bn resulted in the trading loss for this segment widening to R5.3bn.
"We recorded strong organic expansion in our online retail operation, but we are still some way off the appropriate scale," said Vosloo.
In its online classifieds businesses, the company now owns and operates sites in some 40 countries in Eastern Europe, Asia, Africa, Latin America and the Middle East.
Pay-television
The pay-television business reported revenue growth of 20% to R36.3bn. Subscribers rose by 1.3 million households, its largest ever, taking the base to over 8 million homes across 50 countries in sub-Saharan Africa.
Investments in DTT and online services and local content resulted in trading profits creeping up at a slower 13% to R8.5bn. DTT coverage expanded and at March 31 now covered eight countries and 92 cities and is still growing.
"We continue to invest in our online offering, expanding our services on mobile phones, tablets and computers and we launched an improved personal video recorder, the DStv Explora," said Vosloo.
Print media
The print media segment had a tough year, with flat revenues and declining margins.
Media24 managed revenue growth of 1%, but trading profit declined by 7%.
Abril had a poor year, as revenues declined and restructuring lagged.
Different risks
"Governance and sustainability remain essential measures for our stakeholders," said Vosloo.
"As a multinational group, we are exposed to different risks in different jurisdictions. Accordingly, the board conducts the group's business with integrity in all territories, applying appropriate corporate governance policies and principles."
"In essence, the sustainability of our group is determined by our ability to inform, entertain and connect people, distribute media products, support e-commerce, sell advertising and develop related technologies."
Sustainable development
Dividends, share price appreciation and interest payments account for 12% of total earnings distributed.
"The remaining 30% has been reinvested to ensure we maintain a sustainable group that enriches people’s lives, provides jobs to over 28 000 people
- excluding associates and joint ventures and contributes to developing the countries in which we operate," said Vosloo.
The future
Looking forward, he said established businesses should in the aggregate remain cash flow positive, profitable and growing.
"As noted, 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 for organic growth and may also acquire new businesses in our selected fields," said Vosloo.
We believe that, through a combination of attractive markets and appealing customer product offerings such as online classifieds, e-tail and DTT, we have a realistic prospect for growth over the medium term."
- Fin24
* Fin24 is part of Media24, a subsidiary of Naspers.
