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Naspers: Results of Annual General Meeting

Naspers Limited (“Naspers”) (JSE:NPN) (LSE:NPSN), the 100th annual general meeting (AGM) of Naspers Limited was held this morning, under the chairmanship of Mr Ton Vosloo, in the Naspers Centre at 40 Heerengracht, Cape Town, South Africa.

Shareholders approved all the ordinary and special resolutions with the required majority. A gross dividend of 425c per Naspers N- ordinary and 85c per Naspers A- ordinary share were approved. PricewaterhouseCoopers was appointed as external auditors, with Mr B Deegan as the individual who will undertake the audit.

The appointments of Messrs Craig Enenstein, Don Eriksson, Nolo Letele, Roberto Oliveira de Lima, Yuanhe Ma, Basil Sgourdos, Cobus Stofberg and Bob van Dijk were confirmed.

Prof Rachel Jafta, Prof Debra Meyer and Mr Boetie van Zyl, who retired by rotation, were re-elected to the board.

Messrs Boetie van Zyl, Ben van der Ross and Adv Fran du Plessis were elected to the audit committee.

Mr Vosloo reported in his AGM address that Naspers posted a solid performance for the year 31 March 2014. The group’s strategy remained organic growth of existing businesses and limited acquisitions that add value to the group.

The chairman’s address follows:

Dear shareholders and guests,

This is a very special occasion for the company as it is the 100th annual general meeting since the company was formed in December 1914 at a meeting designated as a start-up meeting (stigtingsvergadering).

I do my introduction in English, wishing to point out that the first AGM was held in Dutch, the other official language of the then Union, and Afrikaans was only recognised as an official language in 1925.

We have moved on since then and today we herald another step to keep up with the fast-moving world. Up to now our AGMs were in Afrikaans till fairly recently, when we alternated between Afrikaans and English.

The company has since last year become fully international when our biggest subsidiary, MIH Holdings was folded into Naspers. Our board now comprises members from around the globe and English being the universal business language, it is now the lingua franca of the Board. We keep a copy of the minutes in Afrikaans for record purposes, and my comments today are available in Afrikaans.

I do not wish to give the impression that we are relegating Afrikaans. Our business in South Africa, especially on the print publishing side and the internet, and in books, is still the biggest purveyor of Afrikaans, and we uphold the status of the language and do not wish it to be ignored or sidelined.

Vir my as ’n Afrikaner is dit ʼn saak van die hart en ek vertrou die behoud daarvan sal so bly in die toekoms. For me as Afrikaner Afrikaans is part of my being and I trust its formal and formidable role in our society will be maintained at all levels.

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 the top ten in the internet, with activities in 133 countries. We straddle the globe and I am very proud that we have jump-started ourselves from our African origins to being a respected and leading player in our line of business worldwide. Few South African businesses have successfully made that transition and on behalf of the Board I give full credit to our teams and its leaders for the accomplishment.

In that regard I wish to congratulate our former team leader Koos Bekker, who is poised to succeed me as non-executive chair next year when I finally step down in April. 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.

I pay fullsome tribute to Koos and will be handing over the reins of this progressive, fantastic and wonderful business to him with no qualms.

The 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 ecommerce and digital terrestrial television or DTT.

In line with our goal to invest in new ventures that will deliver value over the long term, we continued to invest for organic growth and acquire new businesses in our 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.

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 our 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.

The use of internet services continued to expand with the global internet population now around 3bn – almost half the world’s total population. The growth of mobile devices is an important trend for the group. In some of our businesses, over 50% of total traffic now comes from cellphones and tablets.

Ecommerce 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 ecommerce growth. Over the next decade, ecommerce is expected to emerge as the largest section of the internet in most countries around the world.

Our integrated report presents a balanced view of our economic, social, environmental and governance activities for the year to 31 March 2014. Our intention is to extend Naspers’s core value of being useful to the communities we serve, while reflecting the key concerns of stakeholders.

Breaking down our results by segment, our 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. 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 our ecommerce activities rose 64% to R20,3bn. Given that ecommerce 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. In our online classifieds businesses, we now own and operate sites in some 40 countries in Eastern Europe, Asia, Africa, Latin America and the Middle East and on our way to becoming a global leader. Our payments activities continued to grow while we merged our businesses under a single operating unit and the PayU brand. PayU is expected to become a meaningful business in coming years. We combined our price-comparison operations across Latin America, Africa and Central and Eastern Europe into a global unit, with encouraging growth in revenues.

Our pay-television business reported revenue growth of 20% to R36,3bn. Subscribers rose by 1,3m households, our largest ever, taking the base to over 8m 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 31 March 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.

Our 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. Our online/mobile media and news efforts have delivered audience and engagement growth.

Governance and sustainability remain essential measures for our stakeholders. 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.

A disciplined reporting structure ensures the holding company board is informed of subsidiary activities. Detailed strategies and business plans, covering the financial and non-financial elements of operations, are regularly reviewed and management remuneration is linked to performance and strategic objectives.

We continually evaluate areas where governance at corporate and subsidiary level can be improved. In line with the requirements of the Companies Act, the social and ethics committee for Naspers and its South African subsidiaries reports to shareholders each year via the integrated report.

The broader regulatory environment continues to evolve. In Africa, countries are strengthening broadcasting regulation and new competition legislation is being introduced. Elsewhere in the world, internet regulation is also increasing. Naspers has the required licences to provide services, subject to conditions that may change over time. Equally, our newspaper and magazine businesses are subject to some regulatory impacts. Naspers’s two main South African units, MultiChoice and Media24, are complying with domestic black economic empowerment requirements.

In essence, the sustainability of our group is determined by our ability to inform, entertain and connect people, distribute media products, support ecommerce, sell advertising and develop related technologies.

In line with our sustainable development policy, the group contributes to local communities in which it operates. We also strive to minimise our impact on the environment. Some of our more significant initiatives focus on education, skills development, entrepreneurial spirit, community outreach and environmental sustainability. Most of these are implemented in partnership with government, communities or other local organisations.

In the past year, the group paid 31% of the wealth we created to employees, and 27% to local governments where we have operations. To fund our expansion and growth strategy, we rely on investors and debt providers, who in turn are compensated by dividends, share price appreciation and interest payments. This accounts 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.

Moving to dividends
The board recommends that the annual gross dividend be increased 10% to 425c (previously 385c) per listed N ordinary share, and 85c (previously 77c) per unlisted A ordinary share. If you confirm this today, dividends will be payable to shareholders recorded in the books on Friday, 19 September 2014 and paid on Monday, 22 September 2014.

On to directors
During the year, we announced several changes to the board. Our subsidiary MIH Holdings Proprietary Limited had grown to comprise the vast majority of our market capitalisation and large overlaps developed between the MIH and Naspers boards. As such, we decided to reconfigure the Naspers board.

As part of this process, after many years of excellent service, Lourens Jonker, Neil van Heerden and Lambert Retief and Prof Hein Willemse stepped down. Craig Enenstein, Don Eriksson, Roberto Oliveira de Lima, Cobus Stofberg, Yuanhe Ma and Nolo Letele were appointed to the board.

Bob van Dijk, who headed our ecommerce operations, was appointed chief executive of Naspers in April 2014. With an MSc in econometrics from Erasmus University Rotterdam, and an MBA from Insead in France, Bob’s extensive international ecommerce experience in our key growth field is expected to help us become one of the leading global players in this segment.

In June this year, Steve Pacak, executive director and chief financial officer, retired, but remains an alternate non-executive director. Basil Sgourdos, formerly CFO of Naspers’s subsidiary MIH, succeeded him. Steve, fondly known in the group as “Mr Pay Check”, had a distinguished career and we thank him for his outstanding contribution to the group. Mark Sorour, head of mergers and acquisitions, was appointed as an alternate director.

Balancing capable, experienced management with fresh talent has long been a hallmark of our group and we look forward to a seamless transition to our new management team.

Members of the audit committee are Adv Fran du Plessis, Don Eriksson, Ben van der Ross and Boetie van Zyl. We recommend that you reappoint these individuals as audit committee members in compliance with the Companies Act.

You will also be asked to elect Prof Rachel Jafta, Prof Debra Meyer and Boetie van Zyl, who retire by rotation.

Now a few achievements, career moves, retirements and more
Apart from the changes at board level already noted, there were several other notable changes during the year.

As we expand our ecommerce group we have made several new key appointments. Larry Illg, head of ecommerce operations, marketplaces and fashion, Peter de Caluwe, CEO payments, Aileen O’Toole, Naspers head of human resources, Tim Hilpert Classifieds CEO for Europe, Miguel Mascarenhas, the founder and CEO of Fixeads in Portugal, was promoted to Classifieds global CTO. Eben Greyling decided to take some time out and we welcome Jim Volkwyn back into our fold as head of payTV operations.

Nico Marais was promoted general manager finance for the Naspers group.

Retirements included André Coetzee, group legal counsel. Craig Opperman was appointed in his stead.

Media24 had a number of retirements, many of whom served the company for more than 30 years:
John Relihan, CEO of Media24 Magazines, who served 37 years. Charlene Beukes, currently GM of Weekly Magazines takes over from John and CEO of Media24 Magazines

Other retirees are:
Alida Potgieter, Publisher Human & Rousseau Fiction
Aldré Lategan, Publisher Children's books at NB Publishers
Tim du Plessis retired after 38 years at Media24 and joined kykNET.

Fred Mouton retired in February 2013 but still comes to the office every day, now working on a contract basis. In this regard Die Burger has a remarkable record: only 3 cartoonists in the 99 years since the establishment of Naspers and Die Burger in 1915.
Martiens van Bart retired earlier this year, after some 35 years’ service at Die Burger, as a fearless champion for the preservation of the Cape cultural treasures – buildings, artefacts and documents alike.

Anthony Stidolph: The Witness’s political cartoonist – and the first person to hold such a position in the paper’s nearly 170-year history, is nearing retirement next month after a career spanning nearly 30 years at the paper.

We are saddened by the passing of one of our most illustrious former directors, Jeff Malherbe and Prof Russel Botman, Media24 Director and Rector and Vice Chancellor of Stellenbosch University; Lappies Labuschagne erstwhile CEO of Tafelberg-Uitgewers died of cancer earlier this year and also Ronnie van Wyk, one of the founders of M-Net.

The future for Naspers
Looking forward, our 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.

We believe that, through a combination of attractive markets and appealing customer product offerings such as online classifieds, etail and DTT, we have a realistic prospect for growth over the medium term.

Shareholders, I have been the custodian of Naspers in my role as chair for 22 years. It has been quite an innings, rollicking at times, even hair-raising, never dull, and I trust you as shareholders appreciate the value that has been unlocked.

Thank you for your sterling support, especially in the sometimes trying times when things did not run according to expectations.

I specially wish to thank our very able, diligent and strict disciplinarian of a Group Secretary, Gillian Kisbey-Green for guiding me at all levels to bring matters to a satisfactory conclusion.

It has been a great privilege, and I have been enriched by the lifetime experience of being involved with Naspers For that I thank you as shareholders and my fellow and succeeding board members through the years for the opportunity.

I thank you.

Important Information:

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.

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