Integrated Annual Report 2012 Including Notice of Annual General Meeting Contents
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Integrated annual report 2012 including notice of annual general meeting Contents The Naspers group 1 Scope of the report and assurance 2 Statement of the board of directors on the integrated annual report 3 Highlights of the year in review 4 Our business 8 Group at a glance 10 Our global footprint 12 Chairman’s report 14 Chief executive’s report 20 Risk management 26 Balancing profit, people and our planet 34 Value added statement 36 Strategy 37 Performance review 43 Financial review 44 Operational review 46 Corporate governance 91 Directorate 106 Remuneration report 112 What type of business Report of the audit committee 122 are we building? A multinational group of media and Summarised annual e-commerce platforms. financial statements 125 What service do we Shareholder and provide for our users? corporate information 141 Entertainment, trading opportunities, information and access to their friends – Administration and corporate wherever our users may be. information 142 Analysis of shareholders 143 Shareholders’ diary 143 Notice of annual general meeting 144 Form of proxy 155 Notes to form of proxy 158 The Naspers group GROUP PERFORMANCE GOVERNANCE FINANCIAL INFORMATION THE NASPERS GROUP Scope of this report and assurance Naspers has reported annually to Nigeria (MultiChoice), internet operations in Latin America (BuscaPé) and Central and Eastern Europe stakeholders on its non-financial (Allegro). Together these account for 82% of performance since 2008. consolidated revenue. This is our second integrated annual report Our South African operations publish – combining financial and non-financial separate integrated annual reports on performance for a fuller understanding of our www.media24.com and group for the financial year from 1 April 2011 to www.multichoice.co.za. 31 March 2012. Feedback can be communicated We are concentrating on developing group directly to [email protected]. reporting standards that will make our disclosure The report has been prepared using the increasingly meaningful and measurable for guidelines of the Global Reporting Initiative stakeholders. Generally, detailed forward-looking (GRI G3) and recommendations of the latest King information is not provided. Report on Corporate Governance in South Africa The financial information extracted from (known as King III). the audited Naspers Limited consolidated This integrated annual report includes the annual financial statements for the year ended financial performance of the Naspers group and 31 March 2012 has been correctly quoted in this its subsidiaries, joint ventures and associates. integrated annual report. Refer to page 128 for The scope of reporting on non-financial PricewaterhouseCoopers Inc.’s report. The South performance covers the holding company, print African broad-based black economic empowerment media operations in South Africa (Media24), information was verified by Empowerlogic pay-television businesses in South Africa and (MultiChoice) and AQRATE (Media24). Forward-looking statements 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. 2 2012 NASPERS INTEGRATED ANNUAL REPORT GROUP PERFORMANCE GOVERNANCE FINANCIAL INFORMATION Statement of the board of directors on the integrated annual report The audit committee has reviewed the integrated annual report and the board has reviewed and approved the report. The financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) and the South African Companies Act No 71 of 2008, while the integrated annual report was prepared in accordance with the guidelines of the Global Reporting Initiative (GRI). The integrated annual report and financial statements fairly reflect, in our opinion, the true financial position of the group at 31 March 2012 as well as that of its operations during this period as described in the report. On behalf of the board Ton Vosloo Chairman Cape Town 26 June 2012 2012 NASPERS INTEGRATED ANNUAL REPORT 3 GROUP PERFORMANCE GOVERNANCE FINANCIAL INFORMATION THE NASPERS GROUP financial performance Highlights of the year in review Financial performance TRADING PROFIT* R’m REVENUE* R’m 60 000 12 000 50 000 10 000 40 000 8 000 30 000 6 000 20 000 4 000 10 000 2 000 0 0 2008 2009 2010 2011 2012 2008 2009 2010 2011 2012 cents CORE HEPS R’m FREE CASH FLOW 2 000 4 500 1 800 4 000 3 500 1 600 3 000 1 400 2 500 1 200 2 000 1 000 1 500 800 1 000 2008 2009 2010 2011 2012 2008 2009 2010 2011 2012 cents DIVIDEND PER SHARE 400 350 300 250 200 150 100 50 0 2008 2009 2010 2011 2012 * including associates on a proportionate basis 4 2012 NASPERS INTEGRATED ANNUAL REPORT GROUP PERFORMANCE GOVERNANCE FINANCIAL INFORMATION Five-year review R’m 2008 2009 2010 2011 2012 Income statement items including associates on a proportional basis Revenue 25 305 34 505 37 251 45 103 56 522 Trading profit 5 243 7 173 8 537 10 220 11 210 Excluding associates Trading profit 4 084 4 940 5 447 5 838 5 485 Free cash flow 2 223 2 432 4 129 3 991 3 619 Statement of financial position Total assets 57 523 54 560 57 468 69 855 81 278 Total equity 33 147 35 217 35 634 42 942 49 576 Total liabilities 24 376 19 343 21 834 26 913 31 702 Other information Core headline earnings per share (cents) 1 130 1 179 1 426 1 612 1 850 Dividend per N ordinary share (cents) (proposed) 180 207 235 270 335 Weighted average number of N ordinary shares (‘000) 353 622 371 004 372 951 374 501 375 653 2012 NASPERS INTEGRATED ANNUAL REPORT 5 GROUP PERFORMANCE GOVERNANCE FINANCIAL INFORMATION THE NASPERS GROUP Non-financial performance Users and service Our people Environment Socio-economic development 6 2012 NASPERS INTEGRATED ANNUAL REPORT GROUP PERFORMANCE GOVERNANCE FINANCIAL INFORMATION Approximately 5,6 million households in 48 countries across the African continent enjoy our pay-television channels packed with premium sport and entertainment. SuperSport broadcasts 24 sports channels throughout Africa, featuring around 12 000 live events a year. More than one billion internet users worldwide can now trade, be entertained and connect with friends and family through our internet platforms, and those of our associates. Around 500 companies worldwide use our technologies to manage their pay-television subscribers and content in a digital world. Media24 publishes around 60 magazines and 50 newspaper titles in South Africa, including Africa’s most widely read daily newspaper, Daily Sun. More than 12 million people read our magazines monthly and our newspapers on a weekly basis. 222 bursaries awarded to Media24 employees. 313 868 hours of training conducted across the Media24 group. MultiChoice filled 956 learnership and internship positions. MultiChoice’s green initiatives are progressively covering energy efficiency, waste management, products and community outreach. “Treefree” paper labels introduced at Paarl Media. Allegro’s energy saving initiative at Woodstock Music Festival used human power to charge mobile phones and electricity for the concert’s lighting. BuscaPé investing in entrepreneurial companies. 120 000 shareholders now able to trade their Phuthuma Nathi shares. 2012 NASPERS INTEGRATED ANNUAL REPORT 7 GROUP PERFORMANCE GOVERNANCE FINANCIAL INFORMATION THE NASPERS GROUP Our business Naspers is a leading multinational media group. It was listed on the Johannesburg Stock Exchange (JSE Limited) in September 1994, where it has been a constituent of the Top 40 index for some years. Naspers has an American Depository Receipt and Eastern Europe and Russia. The largest (ADR) listing on the London Stock Exchange e-commerce platforms are Allegro in Poland (LSE) and international investors are also able (Eastern Europe) and Ricardo, primarily in to participate via a plan maintained by The Switzerland (Western Europe). In Russia the Bank of New York Mellon (details on page 142). group has a 29% investment in Mail.ru Group, Over time the group has evolved into a listed on the London Stock Exchange broad-based media company in multiple (www.mail.ru). Naspers also generates markets. The group’s operating business revenue from interactive television and segments span internet, pay television, print technology products and services provided media and related technology in emerging by subsidiaries. markets. Most of our businesses are market leaders Asia – Group activities span internet interests in their sectors, and our most significant in China, India and south-east Asia. In China operations are in emerging markets. These the group has a 34% investment in Tencent, include Africa, China, Latin America, Central listed on the Hong Kong stock exchange and Eastern