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Naspers hikes development spending
Africa’s biggest company by market value financial results for the year ended 31 March 2014 have shown that Naspers growth was limited by increasing development spend by 79 percent to R7.7 billion.
The company posted revenue growth of 26 percent to R62.7 billion, which the company attributes to its internet and pay television businesses. However, the growth rate is the slowest the company has posted in six years, due mostly to the increase in spending on development.
Driven by strong growth in etail (online retail), revenues from ecommerce activities increased 64 percent to R20.3 billion. “As this is an area of expansion, development spend rose as we scaled operations, increased the number of focus markets in classifieds and strengthened our talent pool. Consequently the trading loss widened to R5,3bn,” says Basil Sgourdos, new CFO of the group.
The year saw improving profitability from the Allegro marketplace business and some classifieds and online price-comparison operations. Several classifieds markets evidenced growth ahead of competitors. “We had a lively year with progress across several businesses,” says Naspers Chair, Ton Vosloo. “Our established businesses performed very well and we stepped up our investment in new growth opportunities, particularly in ecommerce.”
This stepped-up limited core headline earnings, considered by the board to be an indication of sustainable earnings performance, to R8.6 billion, marginally higher than last year. Core headline earnings per share amounted to R21.81 and a dividend increase of 10 percent to R4.25 per share has been proposed.
The pay television business, which covers 50 countries on the African continent, reported 20 percent growth in revenues to R36.3 billion. Total subscribers increased by a record 1.3 million, taking the base to over 8 million homes. Continued expansion of digital terrestrial (DTT) services, more investment in local content, and an increase in online service offerings resulted in 13 percent growth in trading profit to R8.5 billion.
The print media remains exposed to challenging global conditions and experienced a tough year. Revenues were flat and margins declined. Naspers’s share of core earnings from associates, including Tencent in China and Mail.ru Group in Russia, increased by 46 percent to R10.2 billion.
“Our goal is to invest in growth businesses that will deliver value over the long term. With this in mind, we will continue to invest heavily for organic expansion and may also acquire new businesses within our fields of focus,” says new Naspers CEO, Bob van Dijk.
“Our belief is that, through a combination of attractive markets with development potential and appealing customer product offerings such as online classifieds, etail and DTT, we have realistic, solid prospects for growth and value creation over time,” he concludes.