Naspers’s decision, 12 years ago, to buy a stake in Chinese instant-messaging, entertainment and online advertising company Tencent continues to pay big dividends for the South African-headquartered media and technology group.
Financial results published on Tuesday show strong performance from Tencent, in which Naspers holds a 34% stake, contributed significantly to the group’s growth in the year ended 31 March 2013. Pay television, through MultiChoice, also performed strongly.
Group revenue climbed by 27% compared to 2012, reaching more than R50bn for the first time. The growth was driven mainly by a 79% increase in revenue at Tencent, a 53% revenue improvement at Russia’s Mail.ru and a doubling in sales in the loss-making e-commerce segment.
Tencent’s instant-messaging platform, QQ, reached peak concurrent users of 173m during the 2013 financial year. Revenue at Mail.ru grew by 40% in roubles.
Tencent and Mail.ru contributed R7,3bn to core headline earnings. Naspers also recorded a nonrecurring book profit of R2,6bn from the sale of Mail.ru’s stake in US-based social network Facebook. This profit is excluded from core headline earnings, which rose by 20% to R22,16/share, helped to a large extent by the slump in the value of the rand against major currencies.
E-commerce revenues, meanwhile, doubled to R11,4bn. The e-commerce segment reported a trading loss of R2,2bn, and Naspers says it is does “not expect profits in the aggregate for several more years”.
Pay TV performed well, growing revenue by 20% to R30,3bn, with plans to step up expansion in Africa. However, Naspers says it reached a “milestone” in 2013 when “managed revenues from our Internet units, which includes our share of associates, exceeded that of pay television”.
Growth came mainly from a 1,1m increase in the number of subscribers, which has reached 6,7m homes in 48 countries. The GOtv digital terrestrial television brand, has been launched in more markets and had 376 000 subscribers at the end of March.
Trading profits from pay TV rose by 18% to R7,6bn.
Naspers increased development spend in 2013 to R4,3bn, up from R2,8bn in 2012, with most of this investment going into growing its e-commerce businesses and expanding pay-TV services in Africa. The increased spend meant group consolidated trading profits remained flat at R5,7bn.
Free cash flow for the period was R3,5bn, down slightly on 2012 because of higher capital expenditure.
Naspers has declared a dividend of R3,85/share before tax.
Its share price was trading 1,6% higher shortly after the market opened in Johannesburg on Tuesday. In the past year, the counter has added 50%, giving Naspers a market capitalisation of R281bn. — (c) 2013 NewsCentral Media