Naspers Ltd
Annual Report 2011

Plain-text annual report

Integrated annual report 2011 www.naspers.com For quick access on your mobile to the Naspers website scan the barcode above. Alternatively go to www.naspers.com for more information. Contents 1 The Naspers group 2 Scope of the report and assurance 3 Statement of the board of directors on the integrated annual report 4 Highlights of the year in review 8 Our business 10 Group at a glance 12 Our global footprint 14 Chairman’s report 20 Chief executive’s report 28 Risk management 36 Balancing people, profi t and our planet 37 Value added statement 38 Strategy 41 Performance review 42 Financial review 45 Operational review 93 Corporate governance 110 Directorate 116 Remuneration report 126 Report of the audit committee 129 Summarised annual fi nancial statements 145 Shareholder and corporate information 146 Administration and corporate information 147 Analysis of shareholders 147 Shareholders’ diary 148 Notice of annual general meeting 157 GRI G3 indicators 161 Form of proxy 164 Notes to form of proxy Recommend What type of business are we building? A leading group of international media and e-commerce platforms. What service do we provide our users? Entertainment, trading opportunities, information and access to their friends wherever they are. Naspers values What is Naspers about? We aim to be useful in the communities we serve. We offer an environment for entrepreneurs to succeed. We value cultural diversity. We love to innovate. Above all, customer service. P U O R G S R E P S A N E H T The Naspers group A spread of media investments in emerging markets THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Scope of the report and assurance Naspers has reported annually to stakeholders on television businesses in South Africa and Nigeria its non-financial performance since 2008. (MultiChoice), managed internet operations in This is, however, our first integrated annual Latin America (BuscaPé) and Central and Eastern report – combining financial and non-financial Europe (Allegro). Together these account for performance for a fuller understanding of our 80% of group revenue. group. It covers the financial year from Our South African operations publish separate 1 April 2010 to 31 March 2011. integrated annual reports on www.media24.co.za The report has been prepared using the and www.multichoice.co.za. guidelines of the Global Reporting Initiative We are concentrating on developing group (GRI G3) and the recommendations of the latest reporting standards that will make our disclosure King Report on Corporate Governance in South increasingly meaningful and measurable for Africa (known as King III). stakeholders. Generally, detailed forward-looking Integrated reporting is a new discipline and information is not provided. global standards are still being developed. Until In terms of GRI reporting requirements Naspers such time, we are guided by peer practices has met the requirements and self-declared this globally. Our aim is incrementally improved report at level C. reporting and disclosure, while protecting the long-term sustainability of our group in a highly competitive sector. Feedback can be communicated directly to gri@naspers.com. This report includes the financial performance of the Naspers group and its subsidiaries, joint ventures and associates. The scope of reporting on non-financial performance covers the holding company, managed media operations in South Africa (Media24), managed pay- The financial information extracted from the audited Naspers Limited consolidated annual financial statements for the year ended 31 March 2011 has been correctly quoted in this integrated annual report. Refer to page 132 for PricewaterhouseCoopers Inc.’s report. The South African broad-based black economic empowerment information was verified by Empowerlogic (MultiChoice) and CODEX (Media24). 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, whether as a result of new information, future events or otherwise. Investors are cautioned not to place undue reliance on any forward-looking statements contained herein. 2 NASPERS INTEGRATED ANNUAL REPORT 2011 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Statement of the board of directors on the integrated annual report As required by King III, the audit committee has reviewed the integrated annual report and the board has reviewed and approved the report. The fi nancial statements are prepared in accordance with International Financial Reporting Standards (IFRS) and the South African Companies Act No 61 of 1973 (as amended), while the integrated annual report was prepared in accordance with the guidelines of the Global Reporting Initiative (GRI) level C. The integrated annual report and fi nancial statements fairly refl ect, in our opinion, the true fi nancial position of the group at 31 March 2011 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 24 June 2011 NASPERS INTEGRATED ANNUAL REPORT 2011 3 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Highlights of the year in review Financial performance R’m 50 000 40 000 30 000 20 000 10 000 0 Revenue* 2007 2008 2009 2010 2011 R’m 12 000 10 000 8 000 6 000 4 000 2 000 0 Trading profit* 2007 2008 2009 2010 2011 * including associates on a proportionate basis * including associates on a proportionate basis Cents 2 000 1 500 1 000 500 0 Core HEPS 2007 2008 2009 2010 2011 R’m 5 000 4 000 3 000 2 000 1 000 0 Free cash flow 2007 2008 2009 2010 2011 Cents 300 250 200 150 100 50 0 Dividend per share 2007 2008 2009 2010 2011 4 NASPERS INTEGRATED ANNUAL REPORT 2011 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Five-year review Income statement items including associates Revenue Trading profit Excluding associates Trading profit Free cash flow 2007 R’m 2008 R’m 2009 R’m 2010 R’m 2011 R’m 19 790 4 156 25 305 34 505 5 243 7 173 37 251 8 537 45 103 10 220 3 532 2 182 4 084 2 223 4 940 2 432 5 447 4 129 5 838 3 991 Statement of financial position Total assets Total equity Total liabilities 32 184 21 570 10 614 57 523 33 147 24 376 54 560 35 217 19 343 57 468 35 634 21 834 69 855 42 942 26 913 Other information Core headline earnings per share (cents) 965 1 130 1 179 1 426 1 612 Dividend per N ordinary share (cents) (proposed) 156 180 207 235 270 Weighted average number of N ordinary shares (’000) 295 756 353 622 371 004 372 951 374 501 NASPERS INTEGRATED ANNUAL REPORT 2011 5 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Non-fi nancial performance USERS AND SERVICE USAGE ON OUR INTERNET PLATFORMS OUR PEOPLE ENVIRONMENT SOCI0-ECONOMIC DEVELOPMENT 6 NASPERS INTEGRATED ANNUAL REPORT 2011 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION (cid:96) 4,92 million pay-television homes across Africa. (cid:96) 18 million smartcards sold by Irdeto globally. (cid:96) 8 022 827 222 average daily page views. (cid:96) 8 021 609 average daily unique visitors. (cid:96) 7 666 851 004 average daily messages. (cid:96) 817 134 740 total game unique identifi cation number (UiNs). (cid:96) Ten talented technologists participated in the international Junior Staff Exchange programme (opportunity to spend three months at a different group company). (cid:96) 11 up-and-coming technologists recognised with the MIH Distinguished Technologist Award. (cid:96) 229 bursaries to Media24 employees. (cid:96) In Poland, Allegro’s All For Planet Foundation combines ecology with design and music to revitalise public spaces. (cid:96) In South Africa our usage of electricity decreased by 9%. (cid:96) In Switzerland Ricardo runs charity auctions for Jeder Rappen zählt. (cid:96) 172 new MultiChoice Resource Centres rolled out across Africa. (cid:96) 120 000 Phuthuma Nathi shareholders, 108 000 Welkom Yizani shareholders. NASPERS INTEGRATED ANNUAL REPORT 2011 7 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Our business Naspers is a leading multinational media group based in South Africa and incorporated in 1915 as a public limited liability company. technology products and services, and book publishing. Europe – The group’s activities comprise its interests in internet activities in Central and It was listed on the Johannesburg Stock Eastern Europe and Russia. Naspers also Exchange (JSE) in September 1994 where it has generates revenue from interactive television been a constituent of the Top 40 index for some and technology products and services provided years. Naspers has an American Depository by subsidiaries in the Netherlands. The largest Receipt (ADR) listing on the London Stock e-commerce platforms are Allegro in Poland Exchange (LSE) and international investors are (Eastern Europe) and Ricardo, primarily in also able to participate via a plan maintained Switzerland (Western Europe). In Russia the by The Bank of New York Mellon (details on group has a 29% investment in Mail.ru Group, page 146). listed on the London Stock Exchange Over the past two decades the group has (www.mail.ru). evolved from a traditional print media business in one country to a broad-based media company Asia – Group activities span interests in internet in multiple markets. The group’s operating and print activities based in China, India and business segments span internet, pay television, south-east Asia. In China the group has a 34% print media and related technology in emerging investment in Tencent, listed on the Hong Kong markets. stock exchange (www.tencent.com). In India Most of our businesses are market leaders in ibibo is growing its internet business, focusing their sectors, and our most significant operations on social media, search, online gaming and are in emerging markets. These include Africa, advertising. China, Latin America, Central and Eastern Europe, Russia and India. Latin America – The group provides various products in the region through subsidiaries and Africa – The group earns revenues from television associates, with BuscaPé, OLX (e-commerce) platform services, print media, internet services, and Abril (print) as the main operations. 8 NASPERS INTEGRATED ANNUAL REPORT 2011 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION INTERNET MXIT PAY TELEVISION ENRICHING LIVES PRINT TECHNOLOGY NASPERS INTEGRATED ANNUAL REPORT 2011 9 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Group at a glance 100% Internet Eastern Europe Western Europe South-east Asia 100% 52% China Russia Africa MXIT 29% 80% 30% 97% 100% 34% 30% 51% 100% 30% 76% 50% 51% 34% 36% India Middle East 25% Latin America 95% 65% 84% 80% 10 NASPERS INTEGRATED ANNUAL REPORT 2011 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Pay television South Africa Print South Africa 80% 85% ENRICHING LIVES Sub-Saharan Africa 100% 30% Brazil China Technology 100% NASPERS INTEGRATED ANNUAL REPORT 2011 11 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Global footprint We have offi ces/provide services in 131 countries EUROPE AFRICA 12 NASPERS INTEGRATED ANNUAL REPORT 2011 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION ASIA AUSTRALIA (cid:132) Group Coverage (cid:116) Offi ces NORTH AMERICA SOUTH AMERICA NASPERS INTEGRATED ANNUAL REPORT 2011 13 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Chairman’s report OVERVIEW In line with the recommendations of the King Report on Governance for South Africa 2009 (King III) – revised guidelines on corporate governance in South Africa and aligned with global best practice – this is the fi rst Naspers integrated annual report to stakeholders. We aim to present a balanced view of our economic, social, environmental and governance activities for the year to 31 March 2011. As a board we oversee the strategic direction of the company. We are pleased to report that our results refl ect an increase in consolidated revenues by 18% and core headline earnings by 13%. Major areas of growth were the internet and pay-television businesses. Our print media business has shown some recovery, while the technology business improved margins. The internet industry continued its robust growth during the year, particularly in emerging markets, Naspers’s strategic area of expertise. The resilience of our pay-television operations underscores the importance of quality content, although the rising cost of acquiring subscribers and sports rights is placing pressure on margins. In line with global peers, revenues in our print media businesses continued to be subdued. Ton Vosloo – chairman Wireless technology 14 NASPERS INTEGRATED ANNUAL REPORT 2011 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Film Talent Incubator Operationally we have made good progress the development of entrepreneurs and increases in increasing local content and skills in key the size of the talent pool. Electrical power is key pay-television markets such as South Africa to these initiatives and in countries where supply and Nigeria (page 56). Importantly, in countries is compromised, we have secured alternative facing educational challenges, Naspers has power sources. steadily expanded the scope of its educational and literacy initiatives. We are also supporting GOVERNANCE the development of industries with potential to Governance and sustainability are essential create employment and develop skills, such as for our stakeholders. The board conducts fi lm-making and journalism. The MIH Media Lab the group’s business with integrity, applying sponsors top students in the fi eld of new media appropriate corporate governance policies and at postgraduate level. This programme fosters practices in each company in the group. NASPERS INTEGRATED ANNUAL REPORT 2011 15 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Chairman’s report (continued) Several Naspers subsidiaries are governed by independent boards of directors, all with their own governance practices and subcommittees that comply with the necessary governance and regulatory requirements. A disciplined reporting structure ensures the holding company board is apprised of subsidiary activities, risks and opportunities. Detailed strategies and business plans are kept under constant review, spanning the fi nancial and non-fi nancial elements of each company’s business, and performance against targets underpins management remuneration. Naspers continually evaluates areas where governance at corporate and subsidiary level can be strengthened. The impact of the new Companies Act in South Africa, as well as the King III Code on Corporate Governance, was a focus over the past year. The board approved an implementation plan to roll out King III across our global operations in 2009. Good progress was made and the extent of applying King III in the governance frameworks of Naspers, MIH, MultiChoice and Media24 is outlined on page 95 of this report. REGULATORY ENVIRONMENT The regulatory environment in Africa remains uncertain and the past year presented many challenging issues requiring attention. 16 NASPERS INTEGRATED ANNUAL REPORT 2011 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION requirements are under way in Angola, Kenya, Namibia, Rwanda, Tanzania, Uganda and Swaziland. In South Africa cabinet approved the adoption of DVB-T2 and set 31 December 2013 as the switch-off date for all analogue terrestrial television transmissions. A number of matters must be finalised by the Independent Communications Authority of South Africa (Icasa) and the Ministry of Communications for migration, such as gazetting a performance period and finalising the DTT set-top box subsidy scheme. Cost and access to broadband internet remain issues in South Africa. Naspers subsidiary MWEB was the first internet service provider in the country to offer an uncapped ADSL service, an important step in expanding affordable internet NASPERS INTEGRATED ANNUAL REPORT 2011 17 Ending a protracted period of uncertainty, the Southern African Development Community (SADC) adopted the latest version of the digital video broadcast terrestrial standard (DVB-T2) to migrate analogue terrestrial television broadcasting services to digital terrestrial television (DTT). Other countries in sub-Saharan Africa are following suit. However, regulatory pressure continues to increase owing to the planned digital migration and introduction of new competitors on all platforms. There is also uncertainty on the analogue-to-digital migration process as government policies and strategies are undefined or unfinished in most countries of operation. In addition new broadcasting bills, regulations, licences and licence renewal THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Chairman’s report (continued) access. The ministry has prioritised broadband access, setting November 2011 as the deadline for local loop unbundling. This is generally expected to increase competition and lower broadband prices. The regulatory environment in South Africa in respect of the press has been under considerable scrutiny in the last year. The proposed Information Bill currently before parliament limits access to information held by the state by declaring it secret. It protects information that goes beyond that which is necessary to protect national security. The bill will limit the ability of civil society to hold government accountable and will facilitate corruption. The fi nal Consumer Protection Act regulations Eight new DStv channels were published on 31 March 2011. It is uncertain STOCK EXCHANGE LISTINGS at this stage what impact these regulations will Naspers has its primary listing on the JSE Limited have on our businesses. in South Africa and a Level I American Depository DIVIDEND Receipt (ADR) programme. These shares are listed on the London Stock Exchange (LSE) and The board recommends that the annual dividend traded in the USA on an over-the-counter (OTC) be increased by 15% to 270 cents (previously basis. International investors are therefore able 235 cents) per listed N ordinary share, and to buy and sell Naspers securities either through 54 cents (previously 47 cents) per unlisted the appropriate OTC market, or on the London or A ordinary share. If approved by shareholders Johannesburg stock exchanges. at the annual general meeting on 26 August 2011, dividends will be payable to shareholders DIRECTORS recorded in the books on Friday 23 September In terms of the company’s articles of association, 2011 and paid on Monday 26 September 2011. one-third of non-executive directors retire annually Further details appear on page 44. and reappointment is not automatic. 18 NASPERS INTEGRATED ANNUAL REPORT 2011 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Adv Francine-Ann du Plessis, Prof Jakes Gerwel meeting. The abridged curricula vitae and Messrs Fred Phaswana, Ben van der Ross of all directors appear in the directorate on and Boetie van Zyl, who retire by rotation at the pages 110 to 113. annual general meeting, but are eligible, offer My thanks to my fellow board members themselves for re-election. for their guidance and support in another Shareholders will be asked to consider the challenging, but successful year. We also re-election of these directors at the annual general appreciate the commitment of our management meeting, notice of which is contained in this report. teams around the world. Members of the audit committee are Messrs Boetie van Zyl and Ben van der Ross, Prof Rachel Jafta and Adv Francine-Ann du Plessis. The board recommends shareholders reappoint them as audit committee members. In compliance with the new Companies Act, shareholders will be asked to consider their re-election at the annual general Ton Vosloo Chairman 24 June 2011 NASPERS INTEGRATED ANNUAL REPORT 2011 19 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Chief executive’s report OVERVIEW Naspers’s results for the year underscore the benefi ts of its diversifi ed portfolio and global presence. SUSTAINABLE DEVELOPMENT We link users to media, e-commerce, their friends, advertising, content and means of communication. Our products and services can Koos Bekker – chief executive improve people’s lives in very practical ways. We have already harnessed our core services to offer educational programming, increase accessibility of banking services and grow local industries through our local programming and local language strategy. Smartphone development 20 NASPERS INTEGRATED ANNUAL REPORT 2011 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION We regularly review our progress in building a balanced, sustainable organisation and identifying areas for improvement. The board is ultimately responsible for To ensure an integrated and group-wide view of ensuring that sustainable development is the sustainability aspects of our operations, we integrated into business strategy. The board are consolidating these into a single platform, delegates implementation of this policy to management, with oversight vesting in the group audit and risk committees. naspers.org. In time naspers.org will harness the group’s strengths in media and technology to build products and advocate for policies that address Operationally, sustainable development is global challenges. incorporated under our risk management processes. The board is also responsible for the integrity of integrated reporting. The audit committee has been tasked to oversee sustainability issues in the integrated annual report and will assist the board in its review by ensuring the information is reliable and that no confl icts or differences arise when compared to the fi nancial results. While this initiative is still young, our vision is that naspers.org projects will concentrate on addressing social issues and serving the public good. Where practical we will draw on synergies between group businesses to develop solutions to global challenges such as education. We will focus on activities that capitalise on Naspers’s expertise, global infrastructure and ability to innovate. NASPERS INTEGRATED ANNUAL REPORT 2011 21 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Chief executive’s report (continued) MANAGING SUSTAINABILITY returned to operational profi tability. However, print The Naspers board determines the business businesses globally, including our own, lagged due strategy and is ultimately responsible for oversight to slower growth in advertising revenues. of our group’s performance. Management teams across our businesses provide leadership and Internet implement strategies, guided by the group’s code The internet segment, comprising mainly our of ethics and business conduct. interests in Allegro in Central Europe, Tencent Our sustainable development framework in China, Mail.ru in Russia and BuscaPé in Latin fl ows from our values and a clear understanding America, increased revenue by 47% to R12bn and of the key concerns of material stakeholders. trading profi t grew to R3,5bn. This includes our These link to our risk management processes, proportionate share of associates’ results. which integrate fi nancial and non-fi nancial risk The e-commerce operations of Allegro (Eastern identifi cation, management and monitoring. Europe) and Ricardo (Western Europe) broadened their product offerings through organic growth and PERFORMANCE IN CONTEXT smaller bolt-on acquisitions. Over the past year the Naspers group continued In Russia the recently listed Mail.ru Group to expand. In comparison to developed holds assets that include 100% of the online countries, most emerging markets in which we community, email and games platform, Mail.ru, operate survived the global economic downturn instant messaging service ICQ and social network reasonably well. services, My World and Odnoklassniki. It also owns For the year under review Naspers recorded an 18% increase in consolidated revenues to R33bn. Consolidated trading profi t advanced 7% to R5,8bn, while core headline earnings grew 13% to R6bn. Our fi nancial performance is analysed in the review on pages 42 to 44. The internet businesses in emerging markets continued their strong growth by introducing accessible, reliable and convenient services to users. As a result consumer trust in transacting on these platforms is increasing. Our pay-television operations grew well, while the technology business 22 NASPERS INTEGRATED ANNUAL REPORT 2011 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Sharing information 32,5% of Vkontakte – Russia’s most popular social network. In addition Mail.ru has small In China, Tencent recorded another strong set interests in Facebook, Zynga and Groupon. of results in an increasingly competitive market. Buoyed by a rebound in online advertising, our Our share of Tencent’s revenues was R7,2bn share of Mail.ru Group’s reported revenues was and trading profi t R3,5bn. The QQ platforms now R657m and trading profi t of R157m. manage 674 million active instant messaging (IM) In Latin America OLX was added to the user accounts and 137 million concurrent users group in August 2010. Our Latin American at peak. The social networking service Qzone also unit is growing its core comparison shopping grew well. business and broadening its base with new In India, ibibo, our joint venture with Tencent, services including electronic payments, classifi ed is developing social-gaming and e-commerce advertising and affi liate advertising networks. platforms. NASPERS INTEGRATED ANNUAL REPORT 2011 23 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Chief executive’s report (continued) In South Africa, 24.com remains a leading local technology and business models are still evolving internet publisher. The kalahari.net e-commerce globally and it will take some years to see returns platform continues to grow and is rolling out a on this investment. number of new services and products. In the rest of sub-Saharan Africa, our base In aggregate the other internet businesses grew by 340 000 to 1,44 million households. The reported revenue growth of 45% and a trading lower-priced Compact and Family bouquets now profi t of R151m, before corporate costs of reach 602 000 families. Trading margins were R201m. Pay television reduced by investment in local content, increased competition, higher sport content cost and additional international content rights. Increased This unit recorded growth of 977 000 households regulation and new distribution technologies are (including Easyview) during the period. This adding to the challenge. was largely driven by the 2010 Fifa SuperSport has become by far the prime World Cup, decoder subsidies and funder of sport across Africa. Specifi cally it is the extensive marketing. As a result main supporter of several local soccer leagues on revenue increased by 19% to R21bn. the continent. Trading margins were lower due to cost pressures from growing the subscriber Technology base, higher sports content cost and Consolidated revenues in local increased competition. In South Africa the gross base expanded 637 000 to 3,5 million households. The lower-priced Compact bouquet delivered most growth (376 000 homes) to pass the one million subscriber mark. Pay television’s advertising revenue recovered, bouncing back by 32%. The roll-out of mobile television services started in South Africa. Mobile television is a long-term opportunity that will require signifi cant investment. The concept, 24 NASPERS INTEGRATED ANNUAL REPORT 2011 currency grew 10% and operating performance improved as Irdeto implemented tight controls and reorganised its products for effi ciencies. New clients were added and additional services introduced, which positioned Irdeto in a growing market for securing internet- distributed digital assets. Top technology THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Super branding Print media markets. In consideration, the group contributed Operations in South Africa showed marginal its 39,3% investment in Mail.ru and US$388m in revenue growth of 9%, with advertising improving cash. DST was renamed Mail.ru Group Limited modestly. Trading profi ts declined in part due to and its depository receipts were listed on the the fl awed implementation of a new enterprise London Stock Exchange. resource planning (ERP) system. In August 2010 the group acquired 67,8% In Brazil, Abril’s revenue and operating profi t, of OLX for US$144m cash. In December 2011 excluding the educational business sold in the the group increased its investment to 71,5%. prior year, grew 14% on the back of an improving This is a classifi eds business operating mainly in economy. emerging markets, especially Latin America. SIGNIFICANT ACQUISITIONS INVESTOR ENGAGEMENT In August 2010 the group consolidated its Naspers is committed to providing timely, internet interests in Russia, acquiring a 29% transparent and useful information on corporate shareholding in Digital Sky Technologies (DST), a strategies and fi nancial data to the investing prominent internet company in Russian-speaking public. We disseminate information through a NASPERS INTEGRATED ANNUAL REPORT 2011 25 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Chief executive’s report (continued) broad range of communication channels and do maintain our competitive advantage, especially not provide information selectively. Shareholders, in our technology-intensive businesses. We investors and analysts have access to the investor aim to attract the best talent, specifically young relations function. engineers. Training is key to our growth. Over the past year we conducted roadshows We ensure that succession plans for key locally and internationally and attended a number management are in place. of investor conferences. We receive feedback With effect from 1 April 2011 Cobus Stofberg, from the investment community through regular chief executive of the MIH group, Naspers’s independent surveys and strive to continually internet and pay-television operations, stepped improve our investor engagement. down and Antonie Roux, head of MIH’s internet Contact details for the investor relations officer division, took over the reigns as chief executive are on page 146. and director of MIH Holdings Limited. PEOPLE Cobus Stofberg will, however, remain in a full- time position as a senior executive and corporate In a global economic landscape characterised adviser to MIH. by rapid change, markets demand that we In April 2011 Francois Groepe resigned as chief adapt quickly. This requires rare skills executive and director of Media24 to pursue an to meet the challenges in each acquisition and Esmaré Weideman was appointed of the countries in which in his stead. we operate. Across the group, skills development is critical to We value the contribution made by our people in so many countries. In a challenging year, they have been innovative in achieving most of the set goals. Their commitment, and the guidance and support of the Naspers board of directors, underpins our sustainability. 26 NASPERS INTEGRATED ANNUAL REPORT 2011 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Skilled people PREPARING FOR GROWTH through the income statement. However, we Over the past year the group continued to believe this strategy is sound in view of positive expand as evidenced by growth in revenue. long-term growth prospects. Although nuances shift from time to time, the We aim to deliver value to our shareholders growth strategy continues to have three legs over the medium to longer term. We will work namely organic growth of existing businesses, closely with regulators and lawmakers to improve pursuing acquisitions that add value and the regulatory environment. We continue to developing new technologies. contribute to the communities we operate in. Recent experience is that internet valuations have become heady and value is diffi cult to fi nd. As a consequence we are focusing somewhat more on growing our businesses organically and on developing new technologies. This will dampen earnings in the year ahead as the cost of developing these businesses are expensed Koos Bekker Chief executive 24 June 2011 NASPERS INTEGRATED ANNUAL REPORT 2011 27 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Risk management Risk management is integral to the day- to-day operations of our businesses. As an international multimedia group with activities in 131 countries, the group is exposed to a wide range of risks that may have serious consequences. The diversified nature of the group, despite adding complexity, assists in spreading exposure. RISK PHILOSOPHY The group is committed to identifying and managing risk in line with international best corporate governance practice and applying the relevant rules and regulations. The board is responsible for the governance of risk and is satisfied with the effectiveness of the risk management process. The risk committee (page 105), at which risk management plans and processes are presented, discussed and approved, was established during the year. Risk registers of significant risks facing the group are discussed, as are management’s actions to control these risks within board-approved ranges of tolerance. The diversified nature of the group helps to spread risk, particularly in relation to global political and economic instability, market development and currency fluctuations. Identifying risk and developing plans to manage risks are part of each business unit’s business plan. These are assessed by the board annually. RISK POLICY The group’s risk profile is based on a structured, formal and planned approach to risk management. The identification, management and reporting of risks are embedded in business activities and processes. The group’s revised risk policy applies to all operations where Naspers has more than 50% ownership and management control. The board adopted a top-down road map for the first-year implementation of the risk plan, with areas of focus for the 2011 reporting year spanning: (cid:96) Naspers corporate (cid:96) MIH corporate (cid:96) Media24 (cid:96) MultiChoice South Africa (cid:96) MultiChoice Africa (Nigeria) (cid:96) BuscaPé, and (cid:96) Allegro We plan to roll out the policy to other entities in the next financial year. The policy applies to risks the group faces in executing its strategy, operations, reporting and compliance activities, and will be reviewed annually. Some group companies have specific risk management functions and 28 NASPERS INTEGRATED ANNUAL REPORT 2011 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION the Naspers risk committee is responsible for ERM1 framework as well as the COBIT2 framework reviewing these. for information technology. Risk management support advises on, formulates, oversees and manages the risk management system and monitors the group’s risk profile, ensuring major risks are identified and reported at the appropriate level in the group. RISK FRAMEWORK The Naspers enterprise-wide risk management (ERM) framework is designed to ensure significant risks and related incidents are identified, documented, managed, monitored and reported in a consistent and structured manner across the group. It is modelled on the COSO Material issues and how we manage these Some material risks are outside our control and other factors, besides those listed, may affect the overall performance of the business. In spite of our structured approach to risk identification, some risks may be unknown at present and other risks, currently regarded as immaterial, may become material. An internal control oversight forum monitors the system of internal control. Naspers has operations in 131 countries, each facing a unique set of risks, particularly regarding regulation. 1 COSO ERM: The Committee of the Sponsoring Organisations of the Treadway Commission Framework for Enterprise-wide Risk Management. 2 COBIT: Internationally accepted framework for IT governance. NASPERS INTEGRATED ANNUAL REPORT 2011 29 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Risk management (continued) At present the following major group risks are evident among a wide range of potential exposures: Material issue Most of our businesses are subject to extensive regulations. Naspers operates in 131 countries, each with a set of regulatory and compliance obligations that affect the group’s operations. South Africa’s exchange control regulations require approval for transactions outside the common monetary area. If approvals are not received this could hinder our ability to make foreign investments. The Naspers group has a decentralised operational control environment, while operating in entrepreneurial, international businesses. The geographical spread of operations exposes us to a variety of economic, social and political risks. Certain countries in which we operate have faced diffi culties due to political instability, currency fl uctuations, interest rates, bankruptcies, stock market declines, terrorist attacks, corruption, threats and ransom, epidemics and other factors that may materially harm our businesses. We do not exercise control over our minority investments and the value of our stake in such investments could decrease if these businesses adopt strategies or take actions contrary to our preferred strategies and actions. e c n a i l p m o c d n a l y r o t a u g e R s e u s s i s e u s s i l a n o i t a r e p o d n a i c g e t a r t S 30 NASPERS INTEGRATED ANNUAL REPORT 2011 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION How we manage the issue A regulatory and legal compliance programme has been implemented in the group. Regular reviews of applicable legislation by in-country legal resources. Communication of regulatory issues to decisionmakers. Working with government agencies and regulators. Participating in public processes on new regulations. Naspers complies with the South African Reserve Bank’s regulations. It complies with conditions under which approval for transactions outside the common monetary area are granted. A top-down approach to governance ensures policies are aligned between businesses and subsidiaries where we have management control. Governance documents and processes reviewed by respective boards, company secretaries and Naspers’s internal control oversight forum (ICOF). Group risk and internal audit functions monitor compliance and alignment. In exercising the business strategy we perform regular country and business reviews. We diversify markets we invest in, monitor economic, social and political issues and take appropriate actions. The group seeks to be represented on the boards and audit committees of these entities and, where possible, to have a voice in material decisions. It also regularly monitors the performance and operations of these businesses. e c n a i l p m o c d n a l y r o t a u g e R s e u s s i s e u s s i l a n o i t a r e p o d n a i c g e t a r t S NASPERS INTEGRATED ANNUAL REPORT 2011 31 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Risk management (continued) Risk management (continued) Material issue Material issue Signifi cant investments might not be monetised effectively according to shareholder expectations, which could lead to a decline in their valuation of Naspers. ) d e u n i t n o c ( s e u s s i l a n o i t a r e p o d n a i c g e t a r t S Technology is an integral part of our operations. We may be caught off-guard by the pace of new technologies or start-ups, or deploy new technologies too slowly or ineffectively. We may not detect social, technical or economic shifts before our competitors do. Competitors in our markets may threaten the position of our companies and associates. Competition includes new or traditional players as well as new products and services. Loss of market share and scale may place pressure on margins. The group’s pay-television services are mostly delivered to subscribers via satellite. Satellites are subject to damage or destruction, which may disrupt the transmission of services. Protracted power failures will affect revenues negatively. Unauthorised access to our pay-television programming signals. 32 NASPERS INTEGRATED ANNUAL REPORT 2011 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION How we manage the issue How we manage the issue Naspers communicates with its investors, aiming to provide insight into our operations while protecting our competitive advantage and complying with stock exchange listing requirements. Segmental results enable the investment community to form an opinion of the valuation of individual businesses in the group. Regular impairment tests are performed and reported on in terms of investments. Continued focus on emerging technologies in own products and services. Acquiring companies that have developed new technologies and demonstrated relevance in our segments and markets. Focus on engineering resources and implementing recruitment programmes for the best engineers. Regular strategy reviews on how to respond to changing competitive landscape. First to market with products and services we believe hold promise. Establish complementary businesses, reducing dependency on single elements of the value chain. Regular market reviews including reviews of operational statistics. Acquiring new players or new technologies that may enhance or increase longevity of our platforms. Procedures to augment the availability of services range from back-up capacity to built-in redundancy. The cost of these measures is considered against the impact and likelihood of the risk occurring and consequently, in some cases, satellites or other key components remain unprotected or only partially protected. Installation of back-up power supplies where feasible. Regularly upgrading conditional access technology. ) d e u n i t n o c ( s e u s s i l a n o i t a r e p o d n a i c g e t a r t S NASPERS INTEGRATED ANNUAL REPORT 2011 33 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Risk management (continued) Material issue s k s i r g n i t r o p e r d e t a e r l d n a l i a c n a n F i Our level of debt could affect our business. Our ability to make payments on our debt depends on our operating performance, which is in turn subject to risks that may be outside our control. If fi nancial institutions where the group invests its surplus cash experience signifi cant fi nancial diffi culty, the group could suffer losses. Dislocations in credit and capital markets may make it more diffi cult for us to borrow money or raise capital to fi nance expansion of our existing businesses or make acquisitions. The group reports in South African rand and this exchange rate may vary against other currencies. In addition, in several markets, the group has substantial input costs in foreign currencies. The movements of these currencies could have a negative or positive impact on our income or expenses. Unrealised and realised currency translation gains or losses may distort the group’s financial accounts. n a m u H l a t i p a c y t e f a s d n a h t l a e H We rely on the skills of a few key individuals with detailed knowledge of our business and the markets in which we operate. Unanticipated loss of these individuals may disrupt the business. Implementing a healthy, safe workplace at both administrative and production facilities in line with local legislation and regulations. Incidents at any of our facilities resulting in death or serious injury while on duty may also result in criminal liability, fi nes and penalties for the company, its directors and/ or offi cers. 34 NASPERS INTEGRATED ANNUAL REPORT 2011 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION How we manage the issue The group has a conservative approach to its debt profi le, based on considering the adequacy of internal free cash fl ow resources in servicing debt and the level of investments it makes. Debt-bearing capacity is reviewed and approved by the board. Naspers has a treasury policy approved by the risk committee that governs distribution of cash resources (and thus the impact of a loss) and the grade of fi nancial institutions. Cash resources are frequently monitored by management. A treasury report is presented to the risk committees of major subsidiaries. Constantly monitor credit markets to determine optimal time to arrange funding. Ensure the group has spare debt capacity to tide it over in times of diffi culty. Spread maturity of debt facilities. Maintain a balanced portfolio of cash-generating and early stage businesses. Comply with IFRS. Management explains the impact of changes in exchange rates on results in its analysis to stakeholders. The group has a policy to hedge some of its operational foreign currency exposures, where possible. s k s i r g n i t r o p e r d e t a e r l d n a l i a c n a n F i n a m u H l a t i p a c y t e f a s d n a h t l a e H Succession plans and talent pipelines are developed by our key businesses and reviewed annually by the relevant human resources and remuneration committees. Perform health and safety audits. Consequences of non-compliance with relevant local regulations are communicated to management and remedial action taken where appropriate. Relevant risk committee monitors exceptions and progress. Comprehensive risk audits are performed annually at these facilities to ensure compliance with policies, procedures and legislation. Naspers has a comprehensive group-wide directors and offi cers (D&O) liability insurance policy as well as relevant short-term insurance. NASPERS INTEGRATED ANNUAL REPORT 2011 35 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Balancing people, profi t and our planet Naspers recognises that sustainable development Naspers connects people by playing a signifi cant developmental role in the markets where it operates. Education has been one of our group’s most important contributions to the African continent. In this fi eld we contribute to improving literacy levels through various forms of print media (from newspapers and economic, social and to school books), electronically through television, which opens up environmental protection are global the world to many people, and through social networking. imperatives that result in both Through SuperSport, Naspers has become by far the prime opportunities and risks for business. funder of sport across the continent, while promoting associated Naspers as a leading media company social and economic goals (page 78). This applies especially to aims to position itself to meet such soccer. challenges. M-Net’s initiatives have stimulated the South African industry by As Naspers expands its business, it partnering with local fi lm-makers and content producers to assist aims to contribute to the communities emerging talent to make programming with universal appeal for its in which it operates; develop its Africa Magic and Mzansi Magic channels. own people; contribute to general Naspers’s internet platforms focus on e-commerce, communities, economic prosperity; and minimise its content, communication and games. These have brought products impact on the environment. and services previously inaccessible in some markets to our users. In formulating this policy, areas Environmentally our most direct impact is from print media. in which the group can make a Our internet businesses inherently have a lower impact on meaningful contribution to sustainable the environment. Through some of their trading activities they development in the markets in which stimulate buying and selling used or recycled goods in a paperless it operates, were analysed, facilitating the integration of these aspects environment, and strive to make a difference, for example Allegro’s allforplanet initiative (page 90). into day-to-day operations and the As we expand our international presence in emerging markets, formulation of strategy. the focus will remain on sustainable development. We want to Extract from Group Sustainable contribute to the communities in which we operate, develop our own Development Policy 2010 people, contribute to economic prosperity at national and individual Sustainable development level, and minimise our impact on the environment. 36 NASPERS INTEGRATED ANNUAL REPORT 2011 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Value added statement for the year ended 31 March 2011 Revenue Cost of generating revenue Value added Income from investments Wealth created Wealth distribution: Employees Salaries, wages and benefits Providers of capital Finance cost Dividends paid Governments Total tax paid Reinvested in the group Depreciation, amortisation and capital items Retained earnings 31 March 2011 R’m 33 085 18 501 14 584 4 085 18 669 5 972 2 271 1 389 882 4 033 6 393 2 037 4 356 18 669 31 March 2010 R’m 27 998 15 399 12 599 3 096 15 695 4 953 1 656 883 773 3 675 5 411 2 949 2 462 15 695 Distribution of wealth 34% 22% 34% 23% 2011 12% 2010 11% 32% 32% (cid:116) Paid to governments (cid:116) Paid to providers of capital (cid:116) Paid to employees (cid:116) Reinvested in the group NASPERS INTEGRATED ANNUAL REPORT 2011 37 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Strategy STRATEGIC FOCUS We are building a leading group of international media and e-commerce platforms to give users entertainment, trading opportunities, information and access to friends wherever they are. In the process we create value for shareholders, attract innovative and motivated employees and contribute to the communities we operate in, to ensure a sustainable business for the future. HOW WE DO THIS (cid:96) Sustain organic growth of the business combined with some investments. (cid:96) Focus on markets with higher growth EXAMPLES OF OUR STRATEGY IN ACTION (cid:96) E-commerce platforms were initially simple. We have since expanded into a number of verticals and service a number of e-commerce opportunities. (cid:96) Pioneering e-commerce in Africa with kalahari.net. (cid:96) Attained leadership in India in local social potential, where we can achieve sustainable network services and games, with Tencent as a positions. partner. (cid:96) Increase the number of users accessing our (cid:96) Mail.ru’s listing on the London Stock Exchange internet products and services, and deepen and increase in value. their engagement with us. (cid:96) In Latin America and Eastern Europe we (cid:96) Expand the pay-television subscriber base – are growing our core internet business and maintain a local approach and innovative broadening our base by rolling out new services. technology. (cid:96) Continue working with regulators. (cid:96) Attract the best talent – train and develop employees. (cid:96) MultiChoice’s South African DStv subscriber base now delivers entertainment to 3,5 million households. The Compact bouquet, which targets the emerging market, has grown steadily. (cid:96) Use our expertise and resources to benefit (cid:96) Innovation at Irdeto with the development of its local communities where we operate. internet media business. 38 NASPERS INTEGRATED ANNUAL REPORT 2011 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION NASPERS ACROSS THE GLOBE For a fuller understanding of the Naspers group in context, we summarise some key indicators of our major operating regions. Population millions Internet population millions Mobile population millions GDP US$bn PPP* GDP per capita US$ Latin America (Brazil, Argentina and Mexico) 359 120,7 309 4 350 12 121 India China Russia 1 189 81,0 670 4 046 3 403 1 337 421,0 747 9 872 7 384 139 41,0 231 2 147 15 446 Africa and Middle East 1 201 117,4 546 3 227 2 687 Source: CIA Factbook and ITU * Purchase power parity LOOKING AHEAD Focusing on the internet we plan to expand the group through a combination of organic growth countries, but is less regulated than television or print in most countries. Competition in pay television has increased sharply in South Africa and acquisitions and to deliver value to our after new licences were issued. Many other shareholders over the medium to longer term. countries on the continent are following the Stringent processes apply when evaluating same trajectory. investment opportunities. CHALLENGES Each business unit in the Naspers group Key challenges include: (cid:96) Attracting and retaining the right people. (cid:96) Infl ated internet asset valuations, which faces its own set of competitors. This adds make acquisitions diffi cult. complexity but reduces group risk, since we are (cid:96) Ability to innovate in a changing unlikely to be wiped out by a single competitor technological environment to sustain growth. or technological shift. The group approach to (cid:96) Achieving the right balance when rolling risk management is detailed on page 28. out governance initiatives across a group Globally the regulatory environment for media operating in 131 countries, while and broadcasting is changing. The internet encouraging those businesses to be is subject to at least some legislation in all innovative and entrepreneurial. NASPERS INTEGRATED ANNUAL REPORT 2011 39 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Strategy (continued) STAKEHOLDER ENGAGEMENT Naspers has a broad range of stakeholder groups and these differ by region. Broadly, the group deals with stakeholders through: (cid:96) employee newsletters, surveys, management briefings and intranet sites (cid:96) one-on-one meetings with suppliers, business partners and opinion formers (cid:96) feedback from readers through channels such as letters to editors and social media (cid:96) interaction with readers/users/subscribers and the community as well as the cultural community through hosted or sponsored cultural events (cid:96) participation in industry groups to develop shared practices (cid:96) frequent engagement with our shareholders (cid:96) policy engagement with regulators, and (cid:96) engaging with local communities through corporate citizenship activities. 40 NASPERS INTEGRATED ANNUAL REPORT 2011 Performance review W E I V E R E C N A M R O F R E P Reaching out through the internet, broadcast and print media THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Financial review This review sets out highlights of the group’s financial performance for the past year. Full details appear in the annual financial statements. OVERVIEW OF GROUP RESULTS During March the group refinanced its RCFs. The group achieved a solid performance over These were increased to US$2bn and the tenure the past year, increasing consolidated revenues extended to 2016. The facilities bear interest at by 18% and core headline earnings were up USD LIBOR plus 1,75% before commitment and 13%. These results were underpinned by utilisation fees. a diversified portfolio and a strong financial position. Major areas of growth were the internet and pay-television businesses. Worldwide the internet industry continued its expansion from which most of our internet businesses benefited. The resilience of our pay-television operations in an REVENUES Consolidated revenues expanded by 18% to R33bn. Consolidated internet revenues (excluding associates) were up 36%, while growth of the subscriber base saw pay-television revenues increase by 19%. increasingly competitive environment underscores TRADING PROFIT the benefit of quality content, although rising costs will place margins under pressure. Our print media business experienced a limited recovery in advertising revenues, whilst the technology business was able to improve margins. CORPORATE ACTIVITIES Consolidated trading profit, which includes finance cost on transponder leases, but excludes intangible amortisation, other than software and other gains/losses lifted 7% to R5,8bn. The reduction in margins was largely the result of higher costs in the pay-television business. The group issued a seven-year US$700m bond, NET INTEREST COST with a coupon rate of 6,375%. The proceeds Net interest cost on cash and loans increased were used to partly pay down an offshore from R286m last year to R575m, the result of revolving credit facility (RCF). funding investments with debt. 42 NASPERS INTEGRATED ANNUAL REPORT 2011 THE NASPERS THE NASPERS GROUP GROUP PERFORMANCE PERFORMANCE REVIEW REVIEW CORPORATE CORPORATE GOVERNANCE GOVERNANCE SUMMARISED SUMMARISED ANNUAL FINANCIAL ANNUAL FINANCIAL STATEMENTS STATEMENTS SHAREHOLDER SHAREHOLDER AND CORPORATE AND CORPORATE INFORMATION INFORMATION EQUITY-ACCOUNTED RESULTS financial statements on page 141. As regularly Our core earnings from equity-accounted reported to shareholders the board maintains associates grew to R3,6bn, mostly from strong the view that core headline earnings is an performances at Tencent and Mail.ru Group. appropriate measure of the group’s sustainable DILUTION GAIN The reported dilution gains of R1,5bn are solely operating performance, as it excludes once-off and non-operating items. theoretical, arising mainly from the contribution of the group’s stake in Mail.ru into the newly listed entity. CASH FLOWS AND STATEMENT OF FINANCIAL POSITION CORE HEADLINE EARNINGS This earnings performance delivered positive free cash flows of R4bn. Our funding structure Core headline earnings for the year grew 13% to remains sound with total consolidated net R6bn. A calculation of headline and core headline debt, excluding satellite leases of R3,9bn. This earnings is detailed in the summarised annual represents a net debt:equity ratio of 10%. Core headline earnings Core headline earnings growth Compounded annual growth rate: 41% R’m 7 000 6 000 5 000 4 000 3 000 2 000 1 000 0 2004 2005 2006 2007 2008 2009 2010 2011 NASPERS INTEGRATED ANNUAL REPORT 2011 43 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Financial review (continued) SIGNIFICANT ACQUISITIONS Details of signifi cant acquisitions appear in the summarised annual fi nancial statements on page 144. SUMMARISED AND ANNUAL FINANCIAL STATEMENTS The summarised annual fi nancial statements appear on page 130 of this integrated annual report. The full annual fi nancial statements for the year ended 31 March 2011 are enclosed with this report and are also available on our website at www.naspers.com. +27% compound growth per annum (Compounded growth over 10 years: 27% per annum) Proposed dividend per N share: 270 cents per share 270 235 207 180 156 120 70 25 30 38 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 44 NASPERS INTEGRATED ANNUAL REPORT 2011 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Operational review Naspers is a leading media group in emerging markets with assets diversifi ed across internet, pay television and print media in markets with strong growth potential. Internet – internet platforms in Eastern and Central Europe, China, Russia, Latin America, Africa, India and south-east Asia. Services include e-commerce, communities, communication, social networks, entertainment and mobile value-added services. Pay television – pay-television subscriber platforms in South Africa and sub-Saharan Africa outside South Africa. Naspers also develops underlying content protection and access management technologies for internet, pay-television and mobile platforms. Print media – magazines, newspapers, printing, distribution and book-publishing businesses in South Africa and sub-Saharan Africa outside South Africa and print media investments in Brazil and China. Smart platforms NASPERS INTEGRATED ANNUAL REPORT 2011 45 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Operational review Internet Internet Revenue* EBITDA* Trading profit* R’m 15 000 12 000 9 000 6 000 3 000 0 R’m 4 000 3 500 3 000 2 500 2 000 1 500 1 000 500 0 R’m 3 500 3 000 2 500 2 000 1500 1 000 500 0 2010 * including associates on a proportionate basis 2011 2010 * including associates on a proportionate basis 2011 2010 * including associates on a proportionate basis 2011 46 NASPERS INTEGRATED ANNUAL REPORT 2011 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION EUROPE Sector focus Mobile value-added services Portal Social network services Community Payment platforms E-commerce IM Email Games The principal revenue sources are Geographically, the European portfolio spans e-commerce, classifi eds, payment services, 23 countries through three main businesses: comparison shopping, advertising, fee- Mail.ru Group in Russia, the Allegro Group in based value-added services and gaming. Poland and Ricardo group in Switzerland. NASPERS INTEGRATED ANNUAL REPORT 2011 47 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Operational review Internet (continued) The Allegro Group provides mainly fi xed-price e-commerce transaction platforms (over 85% of all transactions) as well as auctions, classifi ed advertisements (general auto, jobs and real estate), price comparison services and payment systems in 17 territories. Allegro continues to deliver strong growth with transactions increasing by 25%, gross merchandise value by 16% and revenue by 20% to PLN667m (R1,6bn). While Poland is still the core market for this group, international operations are now starting to contribute. In the recent past the Mail.ru Group was transformed by the merger with Digital Sky Technologies (DST) and its listing on the London Stock Exchange. After listing, Naspers holds 29% of Mail.ru Group. Full details on Mail.ru Group’s performance are available on www.corp.mail.ru. 48 NASPERS INTEGRATED ANNUAL REPORT 2011 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Mail.ru Group manages leading social networking The Ricardo group performed well and social entertainment platforms. It also during the year, delivering revenue growth houses leading kiosk payment and jobs of 30% and expanding both its range classifi eds operations, with small stakes in of services and geographic footprint. In non-Russian assets such as Facebook, Zynga November 2010 Ricardo acquired 70% and Groupon. Mail.ru Group recorded strong of the leading Danish fashion classifi eds growth, with revenue rising 86% to US$275m. business, Trendsales.dk. Subsequent to Gadu-Gadu is the largest instant year-end, Ricardo acquired 70% of leading messaging (IM) community in Poland, where Italian shopping comparison company, the group impaired R492m of goodwill and 7Pixel, strengthening the group’s position in intangible assets since growth has lagged. this e-commerce segment. NASPERS INTEGRATED ANNUAL REPORT 2011 49 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Operational review Internet (continued) SOUTH-EAST ASIA Sector focus IM Email Mobile value-added services (MVAS) Social network services Portal Community E-commerce Games Payment platforms MIH’s interests in India and the rest of south- Sanook! remains the leading local portal east Asia continue to grow organically and through acquisitions. In India the ibibo partnership with Tencent has enabled this business to strengthen its knowledge of social platforms and social gaming. ibibo is the fi rst company in India to create a business model focused on virtual in Thailand, despite diffi cult conditions in that country. As in India MIH has established a joint venture with Tencent to develop the social games and communications platform. In the Philippines Sulit maintained its status as a top local website and launched classifi eds cars. Lelong is a market leader in online auctions and has expanded with an online mall, SuperBuy. goods and commerce, spanning shopping, MIH expanded its interest in south-east Asia travel, an ad network and a payment platform. by acquiring 76% of Multiply, a company moving from social media to e-commerce. 50 NASPERS INTEGRATED ANNUAL REPORT 2011 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION CHINA Sector focus Mobile value-added services (MVAS) Portal Community Social network services Payment platforms IM Email Games Search E-commerce T encent’s excellent performance refl ects the Total internet users in China grew 19% to the outstanding management team and employees end of 2010, while internet penetration increased of Tencent, led by Ma Huateng. to 34%, exceeding the global average for the Tencent (34% interest through MIH) recorded fi rst time. Although the growth of China’s internet good fi nancial and operating results for the year user base has slowed as its scale increases, the in an increasingly competitive market. The rapid internet has become part of people’s everyday growth of the internet industry in China enabled life. Competition for users continues to increase, Tencent, through its persistent focus on user however, as internet companies are extending experience, to extend the growth of its core and diversifying their offerings. platforms. Core operating platforms again recorded good growth as Tencent launched new online NASPERS INTEGRATED ANNUAL REPORT 2011 51 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Operational review Internet (continued) 137 million peak concurrent users games to diversify its portfolio and broaden its user base. The QQ instant messaging platform recorded peak concurrent users of 137 million in March 2011, a new milestone. The online gaming industry in China. Tencent also continues to invest business achieved above-industry growth in heavily in network and platform security. This was 2010, entrenching it as a leading games business intensifi ed after a security scare in the fourth quarter globally. Massively multiplayer online games and of 2010, which caused disruption to users. advanced casual games were key drivers. During the year Tencent made strategic QQ Games registered healthy growth and provided investments in a few international markets including a platform for other Tencent online games. Russia, India, south-east Asia and the USA. Community internet value-added services also These include a 7,6% interest in Mail.ru Group registered solid growth. and a majority stake in Riot Games, a US-based Tencent continues to increase its investments developer and publisher of online games. in research and development capability, technical Total revenue for the year to 31 December infrastructure and personnel development. In 2010 was RMB19,6bn (US$2,9bn), up 58% on addition, to enrich the content offered to users, the prior year. Profi t attributable to equity holders Tencent has adopted an open-platform strategy, was RMB8bn (US$1,2bn), 56% higher year-on- allowing third parties to develop applications for year. As Tencent is listed on the Hong Kong Stock its platform. Tencent platforms are already playing Exchange, extensive further details are available an essential role in building a collaborative internet on its website www.tencent.com. 52 NASPERS INTEGRATED ANNUAL REPORT 2011 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION MIDDLE EAST AND AFRICA Sector focus MXIT Mobile value-added services (MVAS) Portal Social network services Community IM Email Payment platforms Games E-commerce kalahari.net is the leader in South African brands and genres), digital content (e-books and e-commerce with an estimated 20% share of e-music), and reducing non-performing lines. business-to-consumer e-commerce (excluding kalahari.net pioneered a fi rst in Africa by travel). This electronics and general merchandise launching MarketPlace during the year. This business is geared to selling books, CDs, DVDs, platform allows third-party sellers to offer their games and consumer electronics. kalahari.net products, new and pre-owned, alongside has maintained its focus on growing revenue kalahari.net in a secure and trusted through range expansion (increased electronic environment. This year also saw the launch of kalahariAds.net, an online classifi eds site. NASPERS INTEGRATED ANNUAL REPORT 2011 53 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Operational review Internet (continued) During the year MIH acquired 25% of Dubizzle Limited, the leading online classifi eds provider in the United Arab Emirates (UAE). MIH Internet Africa owns 51% of Korbitec, which provides services to legal, property and banking stakeholders, as well as other players in the property value chain. During the past year Property24.com, South Africa’s leading property portal, was integrated with Korbitec to build a consumer-focused property e-commerce hub. 54 NASPERS INTEGRATED ANNUAL REPORT 2011 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION LATIN AMERICA Sector focus Mobile value-added services (MVAS) IM Email Social network services Community Games Payment platforms E-commerce BuscaPé, our e-commerce business in Latin In August 2010 MIH acquired a majority stake America, continued to grow. BuscaPé offers in OLX, a leading classifi eds platform. This comparison shopping (BuscaPé and BondFaro), market segment is dynamic and very competitive. a platform for classifi ed advertisements In December 2010 MIH acquired Level Up! (QueBarato), payment platforms (Pagamento Holdings, the leading massive multiplayer online Digital and PagosOnline) and related services. (MMO) operator in Brazil, with a lesser stake Movile, our mobile value-added services in Level Up! Philippines. This business does provider, entrenched itself as one of the leading not develop games but distributes, markets such players in Latin America. It now also and operates games from several different facilitates mobile payments for digital goods. developers. NASPERS INTEGRATED ANNUAL REPORT 2011 55 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Operational review (continued) Pay television Revenue EBITDA Trading profit R’m 25 000 20 000 15 000 10 000 5 000 0 2010 2011 R’m 7 000 6 000 5 000 4 000 3 000 2 000 1 000 0 R’m 6 000 5 000 4 000 3 000 2 000 1000 0 2010 2011 2010 2011 SOUTH AFRICA The MultiChoice DStv subscriber base grew by 637 000, bringing the number of subscribers for the year to 3,5 million. This includes the entry level bouquet, Easyview, which has minimal subscription. The Compact bouquet, targeted at the emerging market, recorded solid growth of 376 000 subscribers in the year, and now reaches more than 1 million households. Overall growth was boosted by excellent sales during the 2010 Fifa World Cup and decoder price specials. The launch of a new operator stimulated interest in pay television. An entry- level bouquet, DStv Lite, was well received, while the DStv Premium and Select bouquets continued Add to friends! to grow. 56 NASPERS INTEGRATED ANNUAL REPORT 2011 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION The popular personal video recorder (PVR) decoder recorded sales growth of 117 000 to end on 480 000, aided by the introduction of a lower- priced two-tuner high-defi nition PVR. Several new channels are improving the viewer’s experience, ranging from entertainment and movies to documentaries and sport. These include Food Network, SONY MAX, KidsCo and Afro Music. The launch of Mzansi Magic was fun (page 60). The channel showcases locally produced South African entertainment and features fi lms, comedy, music specials, talk shows, documentaries, Sevens or Super rugby? series and dramas. NASPERS INTEGRATED ANNUAL REPORT 2011 57 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Operational review Pay television (continued) The high-defi nition (HD) offering also continued service is available to to grow. With the latest additions (M-Net Movies 1 HD, Discovery HD, SuperSport HD and a 24-hour DStv Premium subscribers HD English Premier League channel), there are with PVRs, providing 20 hours now six HD channels on DStv. of the most popular television series and sports SuperSport’s production of the 2010 Fifa World magazine shows for up to seven days after Cup in South Africa was extensive. In addition broadcast. The online service can be accessed to a dedicated 24-hour channel in HD, all using a personal computer through the DStv matches were offered in four languages (English, website and provides premium content, including Portuguese, Zulu and Sotho) and preceded by movies, series, sporting action, children’s shows an hour of intensive build-up. Match analyses by and documentaries. international and local guests, as well as exclusive For a deeper understanding of viewing content from Fifa’s behind-the-scenes cameras, behaviour on the DStv platform, an audience added to the experience. There were also four measurement tool, DStv-i, was launched. The daily live magazine shows, a dedicated website, reporting panel currently comprises some roving cameras at match venues, reporters in 4 000 DStv households, and is being used Lagos and Nairobi, all broadcast from a multi- by both the advertising industry and internal stage, purpose-built HD studio. stakeholders. A catch-up service, DStv On Demand, was The DStv Mobile service, using digital video launched on the set-top box and online. The DStv’s 15th birthday 58 NASPERS INTEGRATED ANNUAL REPORT 2011 broadcasting – handheld (DVB-H) technology, was launched in December 2010. The service can be accessed on a DVB-H-enabled cellphone or via MultiChoice’s new mobile television decoder, the Drifta. This is a separate device that receives the DStv mobile broadcast signal and relays it to enabled devices such as laptops, PCs, tablets and smartphones. DStv Mobile is a long-term opportunity that will require THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Recommend this signifi cant investment. The technology and business models are still evolving globally and it will take some years to generate returns on this investment. However, it is important for the development of South Africa’s engineering capability in information and communication technologies to constantly experiment on the cutting edge of new technologies. MWEB introduced an uncapped internet service, a fi rst for the South African market. This has led to more affordable internet rates in South Africa. NASPERS INTEGRATED ANNUAL REPORT 2011 59 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Operational review Pay television (continued) CASE STUDY – MZANSI MAGIC Given rapid changes to the DStv viewer base in South Africa, M-Net has remodelled popular shows. Launched in July 2010, Mzansi Magic now showcases entertainment, comedy and local programmes. Mzansi is meeting the needs of Compact and Premium viewers, including the rapidly expanding black middle class. Mzansi Magic was shaped through dialogue with actors, musicians and comedians in the industry. The channel aims to play a role in stimulating the development of the South African film-making industry, particularly for emerging talent. REST OF AFRICA In the rest of Africa MultiChoice recorded SuperSport continued its football good growth despite the launch of additional coverage in Angola, Ghana, Nigeria, competitors in most markets. The DStv Kenya and Zambia. It expanded its coverage to subscriber base increased by 340 000 to end include basketball in Nigeria and Angola. the year on 1,44 million households. The HD offering was increased to include The launch of a new satellite, and the M-Net Movies and SuperSport HD. subsequent successful migration of subscribers, For the DStv English market, new channels allows us to broadcast more channels. include eTV Africa, Food Network, Kingdom Africa A new bouquet, DStv Compact PLUS, was and SONY MAX. Our Portuguese markets on launched for subscribers wanting additional DStv Bué Facil can now enjoy AXN HD Biography, sports channels in the mid-level tier. A low-cost Fine Living, Historia, Jim Jam, TV Brazil and Zone Portuguese bouquet, DStv Bué Facil, aired in Reality. Premium subscribers received additional Angola and Mozambique. value with the launch of DStv On Demand. Our focus on localising programming in Africa Competition is growing rapidly, from both included launching a Nigerian news channel, new entrants and existing participants. This NN24, and expanding the Kenyan has significantly increased the cost of content, news channel K24 to more countries. especially sports rights. 60 NASPERS INTEGRATED ANNUAL REPORT 2011 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Technology Revenue EBITDA Trading profit R’m 1 500 1 200 900 600 300 0 R’m 200 150 100 50 0 R’m 150 120 90 60 30 0 2010 2011 2010 2011 2010 2011 Irdeto is developing solutions combining various Highlights of the year include: products and services to address pay-media (cid:96) 18 million conditional access (CA) secure operator requirements. These solutions gained units delivered, 17% up. From 2011 CA as operators capitalised on the combination of units shipped will increasingly include broadcasting and broadband delivery to extend Cloaked CA units, Irdeto’s software product their offerings. These services are designed to using advanced Cloakware technology appeal to online viewing (fixed or mobile) and (cid:96) further expansion of facilities and teams in with new connected devices such as iPads. Asia Consolidating products and services has also (cid:96) 71 new engineers added worldwide, and delivered savings, such as a single interface to (cid:96) 24 patents granted. clients using multiple Irdeto products, resulting in better margins. Irdeto applied Cloakware technology to the products and services of major global brands for online ecosystems, such as Logitech, Sony Internet TV, D-Link and Softbank Mobile. A new security service, ActiveCloak™, was launched to dynamically manage digital assets across their lifecycles. These include video, games and e-publications distributed online to multiple devices. NASPERS INTEGRATED ANNUAL REPORT 2011 61 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Operational review (continued) Print media Revenue* EBITDA* Trading profit* R’m 12 000 10 000 8 000 6 000 4 000 2 000 0 R’m 1 500 1 200 900 600 300 0 R’m 1 000 800 600 400 200 0 2010 * including associates on a proportionate basis 2011 2010 * including associates on a proportionate basis 2011 2010 * including associates on a proportionate basis 2011 SOUTH AFRICA The South African print media interests are held in Media24. Revenue growth was recorded, with advertising revenue improving modestly. However, trading profi t and EBITDA declined in part due to the implementation of a new enterprise resource planning (ERP) system. Newspapers Media24 Newspapers continued to optimise the structure of its businesses. Cost savings were achieved through improved effi ciency, and there was a strong focus on the quality of content. The division’s central investigative reporting team was expanded and secured several scoops during the year. However, newspaper subscriptions were affected by severe implementation problems with the abovementioned ERP system. Subscribe to Rapport 62 NASPERS INTEGRATED ANNUAL REPORT 2011 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION The Sunday newspaper, City Press, was redesigned and its editor-in-chief won the National Press Club’s editor of the year award. Sake24, our Afrikaans broadsheet business section, increased readership after being refocused. Our medium-term goal is to rebuild the profi tability of this division through cost management and market development, while sharpening our focus on editorial excellence. 24.com, the largest internet publisher in South Africa, has been repositioned in the Media24 newspaper division to ensure these brands can capitalise on opportunities provided by the rapidly growing mobile and tablet markets. 24.com grew monthly visitors by some 40% across its network of sites. Magazines Muted conditions for the global magazine industry continued. We started developing digital businesses based on our magazine content. Our editorial teams continued to boost their standing in the local industry. In addition to individual editors and journalists winning several national awards, Media24 Magazines led the prestigious annual Pica Awards (page 91). NASPERS INTEGRATED ANNUAL REPORT 2011 63 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Operational review Print media (continued) Paarl Media The Paarl Media group has streamlined its operations while increasing its footprint to include one more factory in KwaZulu-Natal. Technical and machinery upgrades were undertaken in all nine facilities. As a result, Paarl Coldset became the first African member of the prestigious Wan- IFRA Quality Club. A distribution network, Shoppers Friend, has been established in Gauteng, offering retailers direct access to consumers. Paarl Media has significantly increased its footprint in Africa. Book publishing Jonathan Ball Publishers is the leading NB Publishers group increased its market share among South African trade publishers and remains the leading domestic trade publisher. Other highlights included 35 literary awards won by NB Publishers and its authors during the year. The educational publishers were less successful, except for Via Afrika Smile, which benefited from higher demand for supplementary educational material. Subsequent to year-end Media24 entered into an agreement to sell its stake in certain educational businesses supplier of general books to the South African in the Via Afrika group. The agreement is market. subject to conditions. 64 NASPERS INTEGRATED ANNUAL REPORT 2011 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Look and learn BRAZIL The group has a 30% interest in Abril, the leading magazine publisher in Brazil. Abril has a 45% share of Brazilian magazine circulation and 64% of the magazine advertising market. During the year four new titles were launched. The printing and distribution businesses were stable. Late in 2010 Abril acquired a majority stake in the leading Brazilian indoor screen display business, Elimidia. CHINA The group has minority stakes in Xin’an Media Corporation, a newspaper publisher in the fast- growing second-tier city Anhui in Hebei province, as well as in BMC, which operates a leading Beijing newspaper, the Beijing Youth Daily. NASPERS INTEGRATED ANNUAL REPORT 2011 65 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Non-fi nancial review Social review Naspers takes its responsibility to the communities in which it operates seriously. We promote the well-being of society, our customers and our employees, by contributing to initiatives that improve quality of life in these communities. HOW WE DO THIS Community (cid:96)(cid:3)We encourage employees to report areas where the group might be failing in its (cid:96) We operate in various countries and business conduct and values through endeavour, where feasible, to employ local secure channels. citizens. (cid:96)(cid:3)We endeavour to comply with local (cid:96)(cid:3)We contribute to the communities in which employment laws. we live and work. In some we contribute to educational programmes. (cid:96)(cid:3)We conduct business fairly, ethically and with integrity. Our code of ethics defi nes our culture. (cid:96)(cid:3)In South Africa we support previously disadvantaged businesses by actively seeking such suppliers. Our people (cid:96)(cid:3)We invest in the continuous development of our people. (cid:96)(cid:3)We encourage our employees to contribute to sustainability and innovation initiatives. (cid:96)(cid:3)We respect the rights of our employees and their diversity. 66 NASPERS INTEGRATED ANNUAL REPORT 2011 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Transformation Transformation is a strategic imperative for Department of Trade and Industry’s code of Naspers to ensure we comply with local good practice for broad-based black economic legislation and that our workforces reflect local empowerment (BBBEE). Media24 retained its level 4 demographics. Across the group, there are status on its BEE scorecard with a recognition various initiatives to develop appropriate skills level of 125% by virtue of it being rated as a and responsible procurement practices. value-added supplier. Eight years ago Media24 established a MultiChoice maintained its status as a transformation forum to monitor elements level 4 contributor, further investing in employment of the South African black economic equity, skills development and preferential empowerment scorecard. The forum procurement. After its successful empowerment includes senior management from each transaction in 2006, when 120 000 new business unit. shareholders were introduced, the group has In recent years Media24 has made maximum points in shareholding on the scorecard. progress with its transformation aims. These MultiChoice also scores well on employment are monitored against a scorecard for the equity (75%) and preferential procurement (87%). NASPERS INTEGRATED ANNUAL REPORT 2011 67 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Non-financial review (continued) Direct empowerment Broad-based black economic empowerment Yizani and the scheme was extended by two years (BBBEE) PHUTHUMA NATHI to December 2013. This proactive step has given Welkom Yizani shareholders a better opportunity to profit from their original investment. Through a combination of shareholding in Naspers and the Phuthuma Nathi share schemes, black Black economic empowerment partners South African individuals and groups own 30% of Media24, MultiChoice and other group companies MultiChoice South Africa. The Phuthuma have combined their buying power in South Nathi 1 and 2 share schemes were launched in Africa in a centralised bargaining company, 2006 and 2007 respectively. Since inception, CommerceZone. Suppliers’ BEE performance is the share schemes have received over R1bn in evaluated against specific criteria and they are dividends and were used to reduce debt. As the expected to boost their annual BEE rating. debt is reduced, the value of Phuthuma Nathi grows. The MultiChoice preferential procurement In terms of the scheme rules, Phuthuma Nathi programme supports the development of small, shares can be traded after a five-year lock-up medium and micro enterprises (SMMEs). In period. The lock-up period for Phuthuma Nathi 1 addition, these SMMEs are given opportunities to ends in December 2011 and for Phuthuma Nathi 2 tackle larger-scale projects, enabling entrepreneurs in March 2012. to develop their skills and capabilities. The last At launch, MultiChoice announced it would use three years have seen a lifting of MultiChoice’s its best endeavours to provide a trading platform for preferential procurement spend – from 47% in 2009 Phuthuma Nathi shares once the five-year lock-up to 87% in 2011 on BEE-compliant companies. This period ends. We are developing such a platform. equates to over R4bn spent with BEE-compliant companies. WELKOM YIZANI In addition to its own empowerment initiatives, In 2006 Media24 launched the biggest BBBEE share MultiChoice buys large numbers of decoders from offer in the print media industry, Welkom Yizani, a local manufacturer. This has created employment resulting in eligible black people and groups owning opportunities in the areas of manufacture, logistics some 25% (directly and indirectly) in Media24 and sales. MultiChoice has 113 agencies, all Holdings. In December 2009 to mitigate the impact owner-managed businesses. About 28 of these are of the recession on the value of these shares, owned by black individuals. R24m was invested in Naspers wrote off R330m of its funding in Welkom this project in the past year. 68 NASPERS INTEGRATED ANNUAL REPORT 2011 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Furthermore, enterprise development initiatives have created more than 1 500 jobs across the Paarl Media group. Employees MultiChoice plays an important role in economic growth in Africa, contributing directly and indirectly to job creation. Some 5 000 jobs were created by us in the past 18 months in South Africa alone, with indirect employment representing 44% of the growth. Learnerships comprise 16% of direct employment, ensuring skills development in the informal sector. The major area of employment creation in the indirect market stems from additional staff in agencies, larger installer teams, content creation and facilities maintenance and upgrades. Employment equity Naspers values diversity in its workforce. The breakdown of the group’s annual employment equity reports, reflecting classifications to the South African Department of Labour, is shown below. Number of employees 20 000 15 000 10 000 5 000 0 15 932 12 958 2010 2011 Distribution of employees 17% 25% 3% 11% 44% (cid:116) MultiChoice SA (cid:116) Media24 (cid:116) Allegro (cid:116) BuscaPé (cid:116) Other operations Media24’s workforce MultiChoice’s workforce 2% 54% 2011 44% 21% 2011 79% (cid:116) Disabled (cid:116) White (cid:116) Black (cid:116) White (cid:116) Black NASPERS INTEGRATED ANNUAL REPORT 2011 69 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Non-financial review Employees (continued) EMPLOYEE BENEFITS Retirement benefits EMPLOYEE RELATIONS The group complies with labour legislation in its Some countries in which we operate have areas of operation. In South Africa, MultiChoice statutory retirement benefit funding. In others, and and Media24 submit statutory reports. where appropriate, the group provides retirement The risk of child labour and forced or benefits for full-time employees, primarily as compulsory labour is low in the group. Where monthly contributions to defined-contribution children are used in local productions, strict pension and provident funds. The assets of these compliance to their regulated conditions of funds are generally held in separate trustee- employment is enforced. administered funds. TRAINING AND SKILLS DEVELOPMENT Investing in skills development is a priority for the group, given the strategic importance of technology and intellectual property to our sustainability in a competitive market. In the review period, MultiChoice spent over R17m on skills development initiatives. Medical aid benefits These include the New Managers Programme, Medical aid membership is compulsory in most Management Advancement Programme group operations, with the employer contributing and Media Management Programme, which a portion of the monthly premium. cover training from supervisory to executive Some group companies provide post- management levels. retirement healthcare benefits. This entitlement is As technology is at the core of MultiChoice’s based on an employee remaining in service until business, skills development is multifaceted. The retirement age and completing a minimum service company’s learnership programmes combine period. vocational education and training modules towards qualifications registered on the National Equity ownership Qualifications Framework (NQF). To retain the skills on which our sustainability During the year MultiChoice filled 249 depends, most group companies grant share learnership and internship positions, covering options/share appreciation rights to employees customer care, DStv Online, finance, human under a number of equity compensation plans. resources, broadcast technology and IT. These 70 NASPERS INTEGRATED ANNUAL REPORT 2011 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION programmes give prospective and new graduates the administrative skills base in sports bodies in experience in the real world. Some of the Africa. Since its inception in 2006, 120 sports programmes implemented in our businesses were administrators have graduated. as follows: Already entrenched as a world-class initiative, (cid:96)(cid:3)38 engineering and technical positions at SuperSport expanded the programme to Nigeria in M-Net 2010, working with WBS and the Nigerian National (cid:96)(cid:3)10 positions at SuperSport for practical Sports Commission to focus on major event involvement in production areas, and management, leadership, corporate governance (cid:96)(cid:3)46 positions for leadership and technical areas and strategy. To date 20 graduates have benefited. at MWEB. Over the past year SuperSport has boosted MultiChoice awarded 51 bursaries in 2011, its training in Nigeria and Kenya, particularly bringing total bursaries awarded since 2008 transferring television production skills to increase to 161. the talent pool of qualified crew. The Gain Insight SuperSport’s partnership with Wits Business From Training (GIFT) programme helps students School (WBS) has contributed to expanding develop skills in television production. At present NASPERS INTEGRATED ANNUAL REPORT 2011 71 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Non-fi nancial review Employees (continued) 69 students are enrolled. In addition, 15 trainee crew members from Kenya and Nigeria joined their South African counterparts for hands-on training from SuperSport’s highly skilled production crew, including during the 2010 Fifa World Cup. Media24 invested some R23m in the current fi nancial year to develop employees at various levels. This included R9m to train current and future journalists at its Journalism Academy, producing 24 graduates in the past year. Benefi ciaries of the academy programme, some of whom are still enrolled, included: (cid:96)(cid:3)13 bursary holders (three black, three coloured and seven white) following extensive research and development. (cid:96)(cid:3)16 Academy interns (seven black, one coloured In addition to the technical programmes, the and eight white), and academy offers Paarl Media employees skills and (cid:96)(cid:3)eight post-bursary interns (two white, two leadership courses. To enhance management black, three coloured and one Indian). Media24 also awarded 229 bursaries to employees for part-time studies in 2011. Following a study of overseas training programmes, Paarl Media has taken the lead in developing a world-class training facility, the Paarl Media Academy of Print. The outdated trade training curriculum has been replaced by new apprenticeship programmes, 72 NASPERS INTEGRATED ANNUAL REPORT 2011 skills in the industry, Paarl Media’s leadership development programme (through business schools of Stellenbosch, Wits and other institutions) concentrates on developing people at all management levels (supervisory to executive). The leadership pipeline programme ensures potential leaders are identifi ed for further advancement and future management positions. The academy, an Institute of THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Sectoral and Occupational Excellence (ISOE), the Junior Staff Exchange programme. This is an accredited training provider with MAPPP/ programme gave 10 talented technologists the FPM Seta. It has been awarded international opportunity to spend three months at other accreditation by City & Guilds, Britian’s leading Naspers companies.  vocational awarding body. MIH also recognises the importance of In our international businesses, mainly internet retaining its experienced technologists and operations, we aim to attract young engineers. engineers. By recognising a select group Training and development is thus key to our as MIH Distinguished Technologists, we strategy of operating leading internet platforms encourage senior engineers. The award includes in emerging markets. involvement in group-wide projects and was We create opportunities for young given to 11 technologists in 2011. entrepreneurs by sponsoring a technology Naspers also sponsors 30 students at incubator where 10 recent graduates are postgraduate level in new media studies at implementing their ideas for new businesses, Stellenbosch University. Graduates of the guided by experienced engineers and project Media Lab programme have been successfully managers. employed in group companies. Internationally, young engineers and Irdeto stepped up its collaboration with some technologists are incentivised to further their 20 universities worldwide through internships, careers in the MIH Internet group through joint research and summer schools. CASE STUDY – SUPERSPORT IN KENYA SuperSport held a three-month training exercise in Kenya where South African crew participated in covering local football to give Kenyans practical experience in all fi elds of television production. We trained over 40 operators. After securing the use of the main stadium in Kenya and with assistance from the Kenyan Premier League, 11 fi rst-division practice matches provided practical training for trainee crew members. Productions were recorded and reviewed in the classroom to show trainees what they did well and where they needed to improve. NASPERS INTEGRATED ANNUAL REPORT 2011 73 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Non-fi nancial review (continued) Corporate citizenship COMMUNITIES The group is active in its communities, focusing on literacy and educational programmes in Africa. Given the nature of its business, MultiChoice plays a key role in its communities. Aiming to achieve a sustainable impact on the country’s socio-economic challenges, MultiChoice companies have implemented various initiatives. Project Benefi ciaries Community development initiatives Invested over R50m in donations and airtime. Apex Awards Industry skills development l i s e a S a d e M v t S D d n a t e N - M 74 NASPERS INTEGRATED ANNUAL REPORT 2011 Recognising excellent results by advertisers and agencies. In addition, over 30 charities and NGOs received free airtime to create awareness of various social causes. (cid:96) Vuka Awards encourage pro bono public service announcements for charities and social causes. Over 170 entries were received and 25 fi nalists’ work broadcast on M-Net channels. (cid:96) New Directions is targeted at directors and scriptwriters – 75 entries were received in 2010. Two fi lms and one documentary produced will premiere on Mzansi Magic. (cid:96) EDit gives emerging fi lm and television students real-life production opportunities. Three reality pilots will be explored for development and broadcasting on Mzansi Magic. THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Project Project Benefi ciaries Benefi ciaries Naledi Gogo Magic ) d e u n i t n o c ( Breast cancer awareness i l s e a S a d e M v t S D d n a t e N - M Teaching grade 3 children to read and write. (cid:96) 300 children in six schools in Gauteng and Western Cape benefi ted in 2010. Creates employment for disadvantaged individuals by knitting beanies which are distributed to orphans and vulnerable children. (cid:96) 593 jobs from six communities in Gauteng and Limpopo were created and 28 000 beanies distributed to children around the country. Financial support for trucks providing education and testing for breast cancer in rural areas: (cid:96) 1 365 women received mammography tests (cid:96) 7 435 clinical breast examinations performed (cid:96) 11 205 individuals received breast cancer education, and (cid:96) 27 000 pieces of educational material distributed. NASPERS INTEGRATED ANNUAL REPORT 2011 75 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Non-fi nancial review Corporate citizenship (continued) Project Benefi ciaries t r o p S r e p u S B E W M i e c o h C i t l u M My 2010 Schools Adventure Reducing crime in schools through sports skills development Internet cafés and computer training centres in townships Film Talent Incubator Introduced three additional orphanages Partnered with 2010 Fifa World Cup and Department of Basic Education in a programme with 7 500 schools. Partnered with Unicef and Department of Basic Education on a programme to reduce crime and increase school attendance through sport. (cid:96) 450 schools were reached. Donated R700 000 to Silulo Ulothu Technologies to assist opening more internet cafés and computer training centres in townships. (cid:96) Centres in Athlone, Blue Downs and Gugulethu. Skills and mentorship opportunities to up-and-coming fi lm-makers through an intensive hands-on course. (cid:96) To date the fi lm industry has gained 64 skilled professionals who are gainfully employed. (cid:96) About R20m invested in this programme. MultiChoice assisted three orphanages in three provinces (North West, Northern Cape and Mpumalanga) as part of its programme to support orphaned children. (cid:96) To date 10 residential facilities nationally and over 1 000 children assisted. 76 NASPERS INTEGRATED ANNUAL REPORT 2011 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Project Benefi ciaries Expanding computer labs in schools ) d e u n i t n o c ( i e c o h C i t l u M MultiChoice Make a Difference (MMAD) Reach Out Media development a c i r f A i e c o h C i t l u M Multimedia laboratories were installed in eight schools in Eastern Cape, Free State and Northern Cape. The laboratories included computers, internet connectivity, televisions and free DStv education content. To ensure impact, teachers have been trained in managing the resource and integrating technology into teaching. (cid:96) Through this programme over 28 000 learners have access to computers. Employee involvement and volunteering in community development. (cid:96) Over 1 100 employees touched the lives of some 2 000 community members. DStv subscribers can get involved through the Reach Out programme by nominating their favourite social causes for a fi nancial contribution from MultiChoice. (cid:96) In 2010 the following homes received support: Ikhaya Le Themba, SAVF Belfast Kinderhuis, Knysna Education Trust and Mother of Peace orphanage. MultiChoice partners with CNN to produce the CNN MultiChoice African Journalist of the Year awards. The 2010 event was held in Uganda in May and attended by President Museveni. NASPERS INTEGRATED ANNUAL REPORT 2011 77 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Non-fi nancial review Corporate citizenship (continued) MultiChoice has developed a social investment strategy aligned to its aims. This will contribute to broader South African transformation. The strategy focuses on generating skills critical for MultiChoice’s industry and consolidates its social programmes into a single vehicle, DStv Be More. Launched in 2005 SuperSport’s Let’s Play received the best Social Responsibility in Sport partnerships with, among others, Unicef, and the prize at the Virgin Active Sport Industry Awards departments of Basic Education and of Sport for 2010. Let’s Play encourages primary school and Recreation. During the 2010 Fifa World Cup, children to participate in sport and has forged Let’s Play partnered with the Local Organising CASE STUDY – SUPERSPORT’S INVOLVEMENT IN AFRICAN FOOTBALL LEAGUES SuperSport is involved with the soccer federations in Nigeria, Kenya, Zambia, Angola, Ghana and Uganda. In some cases, the fees SuperSport pays for rights to broadcast the local soccer games constitutes as much as 75% of their revenue. Our football consultant, Stanley Matthews, conducts regular workshops which improve corporate governance, administration and management of the leagues. SuperSport assists with managing their websites and employs and upskills locals and invests heavily in infrastructure such as studios, outside broadcasting vans and the like. We help the leagues to secure sponsorships and allow them to participate in an exchange programme with the German Bundesliga, where administrators, players and journalists attend workshops in Germany. Spectator attendances have increased rapidly since SuperSport became involved in the federations, with Kenya as an example increasing on average from 2 000 to 20 000 spectators per match. 78 NASPERS INTEGRATED ANNUAL REPORT 2011 Committee and the Department of Basic Education in the My 2010 Schools Adventure programme involving 7 500 schools. Through the Let’s Play a Million project, 220 000 soccer balls were distributed to schools and communities throughout the country. MultiChoice, in partnership with ministries of education in African countries, established MultiChoice Resource Centres as a learning tool for learners in under-resourced schools. Nine hundred of these centres are now operational in 28 countries – 172 new centres were rolled out in the past fi nancial year. MultiChoice provides THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION and installs decoders, televisions and DVD community projects throughout South Africa recorders. The DStv Educational bouquet is focused on welfare, health and education. In provided free to MultiChoice Resource Centres. addition, its newspapers and magazines provided The bouquet comprises eight educational free editorial and advertising space to create channels: History, National Geographic, National awareness and harness support for a number of Geographic Wild, BBC World, BBC Knowledge, socio-economic issues in the country. Discovery, Mindset Learn and Animal Planet. In addition, educators in these schools are trained to integrate this educational programming into curricula. Media24 wants all South Africans to read. Accordingly, the company has invested in numerous projects that educate, uplift and develop, especially as regards literacy. In the past year Media24 invested some R13m in Project Literacy Volunteers24 Rachel’s Angels Empowerment Trust Benefi ciaries Move! Best Parent collaborated with Project Literacy to roll out a series of adult literacy and training programmes. Media24’s employee volunteers supported a number of initiatives, including renovating preprimary and primary school classrooms in the Western Cape and Gauteng. Awareness campaigns and fundraising drives supported the National Cancer Association, Heart and Stroke Foundation, Epilepsy Society and Red Cross Society. Media24’s mentorship programme, Rachel’s Angels, is now in its fi fth year, with 20 participating schools and 140 mentors from Stellenbosch University providing mentorship and career advice to senior learners from these schools. NASPERS INTEGRATED ANNUAL REPORT 2011 79 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Non-fi nancial review Corporate citizenship (continued) (cid:96) Supports the International Federation of the Red Cross and Red Crescent societies for food security programmes. (cid:96) Implemented a food tent at The House orphanage in Berea that provides nutritional food and skills development. (cid:96) Provided fi nancial support and blankets to The Haven Care Centre. (cid:96) Sponsored a vehicle for Amado, an organisation that empowers disabled children through animal-assisted therapy. (cid:96) Donated school clothes, stationery and food to Prissked Charities. (cid:96) Provided support to the Carel du Toit Centre, which cares for children with hearing disabilities. (cid:96) Contributes annually to the Paarl Post Christmas fundraising project in aid of the Western Cape Community Chest. (cid:96) Subsidised printing for the Society of the Blind and Tsiba College. (cid:96) Assisted Monte Christo Ministries with feeding schemes at schools, soup kitchens and hospitals. (cid:96) Continuously donates to the National Sea Rescue Institute and SOS Children’s Village. Paarl Media is active in its communities at both social and environmental levels. Some of its current projects include: (cid:96) Established a R10m bursary trust for previously disadvantaged students from the Paarl community. (cid:96) Assisted the Miqlat learning centre in Paarl East with learning and computer resources. (cid:96) Sponsors printing of The Big Issue, whose vendors are mainly unemployed people from informal settlements on the outskirts of Cape Town. 80 NASPERS INTEGRATED ANNUAL REPORT 2011 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION COMMUNITY BENEFIT MultiChoice reaches out to the local communities in which it operates, supporting initiatives such as disaster relief donations in Uganda for the victims of mudslides in the eastern part of that country and Farmer’s Day celebrations in Ghana. In Nigeria, MultiChoice supports the Sickle (cid:96) Partnered with the Paarl Mountain Project to Cell Foundation. We provide vehicles and create employment opportunities in clearing the advocacy support for the foundation by using mountain of alien vegetation. our platform to create awareness about the (cid:96) Provided fi nancial assistance to Helping Hand disease and provide information on treatment. SA, a missionary organisation that distributes In some businesses where we have minority food, clothing and other goods to the poor. investments, valuable work is also being done. National Sickle Cell Centre, Lagos NASPERS INTEGRATED ANNUAL REPORT 2011 81 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Non-fi nancial review Corporate citizenship (continued) employees founded the Tencent Volunteers’ Association, which has more than 1 000 members. Among these are middle- and high-ranking management headed by the chief executive offi cer and the core backbone of various departments. They use their spare time to implement projects funded by the Tencent Charity Foundation. These include educational development and university talent development projects. Other activities include help to the (cid:96) The Tencent Charity Foundation donated elders, safe internet surfi ng training for young almost RMB10m (R10,4m) to construct school people and donating clothing to disaster buildings, dormitories and other infrastructure regions. to improve local educational quality and (cid:96) In the Philippines, Sulit joined the Bayan-Anihan school conditions in poor regions. Tencent (“community harvest”) movement, a partnership 82 NASPERS INTEGRATED ANNUAL REPORT 2011 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION between the Department of Agriculture and year) by running charity auctions on Gawad Kalinga anti-poverty organisation. This www.ricardo.ch, supported by promotional movement aims to address the pressing issue marketing and employee volunteers. Ricardo of hunger in the Philippines. To mark its fourth also supported fundraising for the international anniversary, Sulit organised the SULITulungan Red Cross. Artworks incorporating a red cross project – 23 employees and some 40 members created by prominent people were auctioned of the Sulit community built a farm and on www.ricardo.ch. This project received the provided sustainable living for families from a prestigious Swiss Dialogue Marketing village in Laguna region. Prize 2011. Health and safety (cid:96) Each year Level Up! uses viral marketing and celebrity endorsements to encourage gamers to donate blood in its Life Quest project, working with the Apro Sangue Institute. To mark Tree Day, Level Up! hosts a quiz on its website, with player participation supporting the company’s donation of some 200 trees to Tropical Flora. (cid:96) OLX Argentina runs a computer donation (cid:96) We aim to have an injury-free workplace. programme to help schools, charities and not- (cid:96) We perform health and safety risk for-profi t organisations (NPOs) in their focus on assessments at our facilities, supported by education. Twelve organisations benefi ted from training. donations of computers and laptops in good (cid:96) We monitor management’s actions through condition. In addition, OLX supports numerous operational, internal and external auditing and NPOs focused on education, literacy, reporting processes. vulnerable children and people with disabilities. (cid:96) A healthy workforce contributes to business (cid:96) Ricardo participates in the largest fundraising activity in Switzerland, success. Several of our businesses provide medical aid and wellness programmes for Jeder Rappen zählt, (before Christmas each their staff. NASPERS INTEGRATED ANNUAL REPORT 2011 83 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Non-financial review Health and safety (continued) backgrounds and receive training from Media24 on executing their jobs safely and effectively. The nature of the print business, which owns and manages distribution networks and printing facilities, makes it the area in the Naspers group with the greatest inherent risk for injuries on duty. MONITORING The Media24 safety, health and environment committee, a subcommittee of the board, monitors related issues in the Media24 group. THE WORKPLACE Implementing a healthy, safe workplace at both administrative and production facilities is a priority. Our aim is the lowest Media24 and MultiChoice conduct annual health, possible harm rate on duty. Where required, safety and environmental compliance audits health and safety committees – comprising as well as building scans. Injuries on duty are responsible, trained individuals – ensure stringently monitored. regulatory compliance. Appropriate medical Tragically, a fire at Paarl Print in April 2009 emergency and disaster-recovery plans have caused 13 deaths and serious injuries to four been devised for operating businesses. people, the worst in the group’s history. We Annual occupational health and safety deeply regret this loss of life and injury and our risk-control audits or reviews are conducted thoughts are still with those families. Group by operational entities across the group and companies assisted the families financially, improvements implemented as required. paying out almost R7m. A formal inquiry into Significant matters are reported to and the Paarl Print fire, in terms of Section 32 of monitored by the Naspers risk committee. the Occupational Health and Safety Act, was Media24’s distribution and printing operations make extensive use of contractors and organisers. Most of completed in June 2010. A report has been prepared in terms of this act, and based on information received from the these are from previously disadvantaged Department of Labour it is anticipated 84 NASPERS INTEGRATED ANNUAL REPORT 2011 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION that this report will be made available in the MultiChoice offers a range of wellness and foreseeable future. Further information indicates balanced lifestyle services to all employees on that the report has been referred to the National site, plus a Montessori nursery school for its Prosecuting Authority for further action. Once the Randburg employees. report has been made available, it is possible that Media24 has a wellness centre at its Cape third parties may pursue civil claims against the Town offi ces and certain printing facilities. Health company. Paarl Print’s exposure in this regard, services include hypertension and diabetes after insurance reimbursement, is not expected testing, free HIV/Aids counselling and testing, to be material. We also assisted the families to and a number of risk-control programmes. submit claims under the Compensation for Occupational Injuries and Diseases Act, 1993. WELLNESS Several wellness programmes are operated by group subsidiaries in a preventative approach to employee health. These range from programmes to stop smoking to HIV/Aids tests. Regular medical, eye and hearing tests are performed on drivers and staff exposed to noise. Professional and independent psychosocial support is provided for staff in businesses. Ongoing wellness support is provided by mobile clinics throughout the company. HIV/AIDS We are acutely aware of the HIV/Aids pandemic in Africa, and its social and economic implications. Comprehensive programmes in Media24, MultiChoice South Africa and MultiChoice sub- Saharan Africa outside South Africa comprise: (cid:96) information and awareness campaigns (cid:96) voluntary free testing (cid:96) free counselling, and (cid:96) comprehensive medical treatment programmes. NASPERS INTEGRATED ANNUAL REPORT 2011 85 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Non-fi nancial review (continued) Environment Through improvement and sustainable technological innovation, Naspers strives to create solutions that minimise its impact on the environment. HOW WE DO THIS (cid:96) We use environmentally sustainable resources (cid:96) We perform risk assessments identifying to meet our operational needs, and conserve operations where our direct impact on the non-renewable natural resources. environment is most signifi cant. (cid:96) Where possible, we use environmentally (cid:96) We try using advanced technologies to reduce responsible energy sources, invest in improving the impact on the environment. energy effi ciency and design energy-effi cient (cid:96) Our printing operations apply leading facilities. emission-reduction technology to minimise (cid:96) We aim to infl uence our suppliers to adopt a and responsibly dispose of waste. similar approach in supplying materials and (cid:96) We monitor environmental compliance services. standards at our facilities and participate in third-party reviews. Naspers’s South African operations measured (cid:96) We measure and report on our carbon footprint. their gross carbon footprint with respect to (cid:96) We respond to situations where operations scope 1 and 2 emissions for the second year have had an adverse effect on the in accordance with the Greenhouse Gas (GHG) environment. protocol. THE GREENHOUSE GAS (GHG) PROTOCOL is an accounting tool used by business and governments. It was created in 2001 when the World Resources Institute and the World Business Council for Sustainable Development identifi ed a need for consistency in how organisations accounted and reported emissions and together introduced the new standard. 86 NASPERS INTEGRATED ANNUAL REPORT 2011 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION The largest contributor to direct emissions remains electricity. Given that the primary source of electricity in South Africa is coal, South African operations which has a higher emission rate, electricity 131 522 859 accounts for 100% of scope 2 emissions (95% kWh of total emissions). Continuous supply of good quality electricity is vital to the continuity of our operations. The group installed generators at some facilities to ensure continuous supply of electricity, hence mitigating the risk of disruptions. The gross carbon footprint (scope 1 and 2) is 141 081 (2010: 129 760) tonnes of CO2e. The group measured direct emissions at some 12 locations across South Africa and will focus on refi ning the process of collecting complete 123 105 6 655 2010 119 833 655 133 692 7 389 2011 Scope 1 CO2 tonnes Scope 2 CO2 tonnes Electricity usage sets of data in the coming year. The printing During the past year our usage of electricity operations contribute 59% to the total carbon decreased by 9%, whilst the GHG emission factor emissions of the group. for electricity increased by 10%. NASPERS INTEGRATED ANNUAL REPORT 2011 87 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Non-financial review Environment (continued) Greenhouse gases Community outreach initiatives were also 3% 38% implemented: (cid:96) installing solar-powered traffic lights around the MultiChoice campus in Randburg (cid:96) installing e-waste bins for customers and employees to safely dispose of obsolete electronic devices such as decoders, remote 59% controls, PCs etcetera, and (cid:116) Logistics (cid:116) Printing plants (cid:116) Office buildings (cid:96) Allegro in Poland has several initiatives under its All For Planet Foundation (www.allforplanet.pl) designed to assist the local community in awareness in striving for a greener country, as well as making certain investments in the GREENHOUSE GASES environment. The operations of Naspers are diverse, ranging from printing plants to transactional internet platforms offering entertainment or products. Each type of business has a unique effect on the environment, requiring different responses to limit these impacts. In MultiChoice and Media24, a number of Think Green initiatives have been implemented to reduce our carbon footprint and support the sustainability campaign. Energy-efficiency initiatives introduced in the past year include: (cid:96) installing movement-activated lights (cid:96) refurbishing air conditioners to reduce electricity consumption (cid:96) consolidating data centres, and (cid:96) automatic hibernation of PCs. Waste management initiatives included: (cid:96) setting double-sided printing as a default to reduce paper consumed, and (cid:96) recycling office waste in a more appropriate manner. 88 NASPERS INTEGRATED ANNUAL REPORT 2011 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Printing facilities Informative programming ensures viewers Paarl Media’s paper suppliers are based in South are encouraged to protect their immediate Africa and Europe. They continuously investigate environment. options to limit their environmental impact while ensuring quality paper products are used in our Internet publications. Internet platforms such as Allegro do more Paarl Media was the first African printing with less. Their core business includes online organisation to receive the Forest Stewardship shopping of pre-owned goods. Council (FSC) chain-of-custody certification. Contributions are also made in companies This is an independent international verification where we have minority stakes. Tencent’s that printed products can be traced back from Volunteers’ Association, with over 1 000 their point of origin to responsible, well-managed employees, has held numerous tree-planting forestry, controlled and recycled sources. activities to build Tencent Green Forests in the Paarl Media offers clients a range of past five years. Tencent volunteers have planted environmentally sustainable paper, leading over 1 000 trees. the South African print industry in recognising the impact of print-production processes on The environmental impact of our international businesses is limited mainly to the use of natural resources and implementing practices electricity. to eliminate emissions. The Paarl Media group focuses on reduction and recycles all paper not sold as part of the printed product to Mondi. Equipment in the upgraded Paarl Media Cape plant ensures that dust particles from the printing process are collected and recycled. Media24 produces mainly books, magazines and newspapers. It recycles all unsold magazines and newspapers. It uses its magazines and newspapers as platforms to educate readers about lowering their impact on the environment. Pay television Decoders are sourced from reputable suppliers with a commitment to protect the environment. NASPERS INTEGRATED ANNUAL REPORT 2011 89 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Non-financial review Environment (continued) CASE STUDY – ALL FOR PLANET FOUNDATION Allegro established its All For Planet Foundation in November 2008 to encourage communities to think green every day. It combines ecology with design and music to revitalise public spaces through sustainable design and city transport: (cid:96) Bicycle racks supporting the sustainable concept by: (cid:116) promoting bikes as environmentally friendly transport (cid:116) combining design and usability (cid:116) encouraging public opinion to discuss city transport (cid:116) supporting talented young Polish designers, and (cid:116) presenting a unique approach to ecology projects in Poland. (cid:96) Green backyards initiative encourages local communities to take the ecology initiative, starting small by changing their own backyards. Each year Allegro selects five backyards from hundreds of applications sent in from all over the country. (cid:96) Recycling music creates musical instruments from used advertising materials and barrels. Recently, the initiative was recognised by Guinness World Records for the largest orchestra playing on recycled instruments at the XVI Woodstock Festival. 90 NASPERS INTEGRATED ANNUAL REPORT 2011 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Regulatory environment and fi nes The group received no signifi cant fi nes for non- some fi nes from the self-regulatory body, the compliance in the past year. Broadcasting Complaints Commission of South Because MultiChoice operates in a highly Africa. These relate to incorrect scheduling of regulated environment in South Africa, content due to human error and steps were compliance is important. The company taken to correct this. participates in the regulatory process affecting In the past year there were no environmental the communications industry through various accidents nor were any environment-related public forums and debates, giving inputs on fi nes imposed by any government. The group formulating standards and strategies for this will continue to refi ne its processes for managing industry. MultiChoice and M-Net received its impact on the environment. Awards Some of the prominent awards received by our group companies: (cid:96) ibibo Star Youth Icon award at the third Global Youth Marketing Awards 2011 for contributing to youth. (cid:96) Media24 Newspapers National Press Club Editor of the year 2010: City Press editor-in-chief, Ferial Haffajee. (cid:96) Media24 Magazines Excellent performance at annual Pica Awards: (cid:3) (cid:116) SARIE – Michélle van Breda, editor of the year (cid:3) (cid:116) SARIE – consumer magazine of the year (cid:3) (cid:116) Woolworths TASTE – published by New Media Publishing and commissioned by Woolworths – client magazine of the year. NASPERS INTEGRATED ANNUAL REPORT 2011 91 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Non-fi nancial review Awards (continued) (cid:96) Paarl Media (cid:116) First Africa member admitted to international WAN/IFRA Quality Club (cid:3) (cid:116) Acknowledged by Mondi and Sappi for printing work. (cid:96) NB Publishers (cid:3) (cid:116) Hertzog prize for fi ction – 30 Nagte in Amsterdam by Etienne van Heerden (Tafelberg) (cid:116) University of Johannesburg début prize for creative writing – Plaasmoord by Karin Brynard (Human & Rousseau) (cid:3) (cid:116) University of Johannesburg prize for creative writing – Reisiger by Elsa Joubert (Tafelberg) (cid:3) (cid:116) Alba Bouwer prize for children’s literature – In die nimmer-immer-bos by Linda Rode, illustrated by Fiona Moodie (Tafelberg) (cid:3) (cid:116) Commonwealth Writers’ Prize best book Africa region – The Double Crown by Marié Heese. (cid:96) SuperSport (cid:3) (cid:116) Let’s Play judged South Africa’s best social responsibility in sport initiative at inaugural Virgin Active sport industry awards. (cid:96) MultiChoice (cid:3) (cid:116) Orange Index Awards – fi rst in telecommunication sector and fourth overall (evaluation of all companies providing customer services) (cid:3) (cid:116) Four Loerie Awards (evaluation of all creative media advertising adjudicated by an expert panel) (cid:3) (cid:116) First in FinWeek radio campaign of the year (evaluation of radio advertising by an expert panel) (cid:3) (cid:116) 21 Generation X Top Teas (research on all South African brands) (cid:3) (cid:116) 12 Africa Promax Awards (Africa on-air creative marketing) (cid:3) (cid:116) Four international Promax awards (international on-air creative marketing) (cid:3) (cid:116) First and joint second in Millward Brown (research company) ten most-loved South African television ads. 92 NASPERS INTEGRATED ANNUAL REPORT 2011 Corporate governance E C N A N R E V O G E T A R O P R O C Conducting our business with integrity THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Corporate governance INTRODUCTION APPLICATION OF AND APPROACH TO KING III The board of directors conducts The board, its subcommittees, and the boards and the group’s business with integrity by applying appropriate corporate governance policies and practices. Naspers is a multinational media group with operations in 131 countries including Africa, South America, Europe, China, India, south-east Asia and the USA. Its primary listing is on the JSE Limited (JSE). The company is therefore subject to the Listings Requirements of the JSE, the guidelines in the King Code and Report on Corporate Governance for South Africa 2009 (King III), as well as legislation applying to publicly listed companies in South Africa. Naspers also has a secondary listing of its American Depository Shares (ADSs) on the London Stock Exchange (LSE). Compliance with both the JSE and applicable LSE listings requirements is monitored by the audit and risk committees of the board. The board’s audit, risk, human resources and remuneration and nomination committees fulfil key roles in ensuring good corporate governance. The group uses independent subcommittees of subsidiaries MIH, MultiChoice and Media24 made good progress in embedding the appropriate principles and practices contained in King III. The Naspers board approved revised board and subcommittee charters. The responsibilities of the audit and risk committees were separated and new risk committees formed. Similar changes were approved by the boards of MIH, MultiChoice and Media24. A plan to address aspects of King III was approved and implemented for the in-scope entities for 2011. A disciplined reporting structure ensures the Naspers board is fully apprised of subsidiary activities, risks and opportunities. All controlled entities in the group are required to subscribe to the relevant principles of King III. Business and governance structures have clear approval frameworks. The process to address the principles of King III has been a top-down and bottom-up approach. Naspers has an internal control oversight forum comprising the CFOs and risk and internal audit managers of Naspers, MIH, MultiChoice, Media24 and the group company secretary and group general counsel. The forum was tasked to ensure external advisers to monitor regulatory the Naspers group’s governance structures and developments, locally and internationally, to framework and King III implementation plan were enable management to make recommendations rolled out to in-scope entities in the group during the to the Naspers board on matters of corporate financial year. Progress was monitored by the audit governance. and risk committees and reported to the board. 94 NASPERS INTEGRATED ANNUAL REPORT 2011 THE NASPERS THE NASPERS GROUP GROUP PERFORMANCE PERFORMANCE REVIEW REVIEW CORPORATE CORPORATE GOVERNANCE GOVERNANCE SUMMARISED SUMMARISED ANNUAL FINANCIAL ANNUAL FINANCIAL STATEMENTS STATEMENTS SHAREHOLDER SHAREHOLDER AND CORPORATE AND CORPORATE INFORMATION INFORMATION Set out below is a synopsis of changes to our governance framework during the past year: New governance policies introduced (cid:96) Alternative dispute resolution policy (cid:96) Directors’ right to take independent professional advice policy (cid:96) Human resources and remuneration committee’s orientation policy (cid:96) Investor relations policy (cid:96) IT governance policy (cid:96) Legal compliance policy (cid:96) Nomination committee’s orientation policy (cid:96) Risk committee’s orientation policy (cid:96) Risk management policy (cid:96) Sustainable development policy Governance policies revised (cid:96) Appointment of new directors policy (cid:96) Audit committee’s orientation policy (cid:96) Code of ethics and business conduct (cid:96) Communication policy (cid:96) Directors’ right to access information/documents policy (cid:96) Group levels of authority (cid:96) Orientation policy for new directors (cid:96) Provision of services by independent auditor (cid:96) Remuneration policy (cid:96) Trading in securities policy (cid:96) Whistle-blower policy (cid:96) Risk committee charter (cid:96) Board charter (cid:96) Human resources and remuneration committee charter (cid:96) Nomination committee charter (cid:96) Audit committee charter New charters introduced Charters revised NASPERS INTEGRATED ANNUAL REPORT 2011 95 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Corporate governance (continued) The composition of subcommittees of the competence for group compliance with the board and subcommittees of the boards of MIH, relevant laws. The board further manages MultiChoice and Media24 was reviewed and, corporate governance via its audit and risk where required, amended. committees, which monitor the proper operation The formalisation of our risk management of such structures and systems and report to the processes was a major focus. Details of the board. enterprise-wide risk management framework Due to risk factors most notably the safety appear on page 28. of our executives in the emerging markets in In terms of JSE Listings Requirements which we operate and possible contraventions reporting against King III applies for financial of local privacy laws, the board has decided year-ends from 1 March 2010. In line with to report on the remuneration of executive the overriding principle in King III of apply or management of the company, not the group. explain, the board, to the best of its knowledge, As such, remuneration of the two executive believes the group has applied or is embedding directors is set out in the remuneration report on processes in support of the relevant principles of page 119. Other company employees perform King III. administrative functions. King III provides that directors should have a The board believes the current non-executive working understanding of the effect of applicable directors’ fee structure of a single annual laws, rules, codes and standards on the fee is more appropriate for the board and company and its business. The company does its committees and better reflects member not interpret these provisions to mean the board contribution. should have legal expertise in all spheres in which the company operates or be familiar with all STATUS: NEW COMPANIES ACT laws applicable to the company and its various The impact of the new South African Companies businesses, nor is it practical to do so, since Act No 71 of 2008 (signed into law on 8 April Naspers operates in 131 countries and in several 2008 and effective 1 May 2011) was a focus subsectors of these economies. over the past year. To comply with this act, However, the Naspers board does ensure shareholders will be asked to appoint the adequate structures and systems are in members of the audit committee and consider place and populated with people of sufficient special resolutions on directors’ fees and the 96 NASPERS INTEGRATED ANNUAL REPORT 2011 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION provision of loans and other financial assistance. members is reported to this committee, along A new memorandum of incorporation is being with the manner in which the company’s drafted and will be brought to shareholders for disciplinary code was applied. consideration and approval at the appropriate Naspers is committed to conducting its time. The new act provides transitional business on the basis of complying with the law, arrangements in terms of which Naspers has until with integrity and with proper regard for ethical 1 May 2013 to adopt a new memorandum of business practices. It expects all directors and incorporation. employees to comply with these principles and, in particular, to avoid conflicts of interest and to BUSINESS ETHICS STATEMENT desist from insider trading, illegal anti-competitive Naspers is formalising its compliance and ethics activities and bribery and corruption. management process. The group code of Whistle-blowing facilities at most major business ethics was revised during the year, and subsidiaries enable employees to anonymously is available on www.naspers.com. report unethical business conduct. This code applies to all directors and employees in the group. Ensuring that group COMPLIANCE FRAMEWORK companies adopt appropriate processes and Naspers has established a legal compliance establish supporting policies and procedures is programme formalising practices followed for an ongoing process. Management focuses on some time. The programme involves preparing policies and procedures that address key ethical and maintaining inventories of material laws and risks, such as conflicts of interest, accepting regulations for each business unit, implementing inappropriate gifts and acceptable business policies and procedures based on these conduct. laws and regulations, establishing processes The human resources and remuneration to supervise compliance and mitigate risks, committee is the overall custodian of business monitoring compliance, implementing effective ethics. The disciplinary codes and procedures training and awareness programmes and of the various companies are used to ensure reporting to the various boards and management compliance with policies and practices that on the effectiveness of these efforts. underpin the overall code of business ethics. The compliance programme is managed by Unethical business behaviour by senior staff the general counsel, André Coetzee, acting as NASPERS INTEGRATED ANNUAL REPORT 2011 97 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Corporate governance (continued) the chief compliance officer, while implementation At 31 March 2011 the board comprised 11 at each business unit is undertaken by a local independent non-executive directors, one non- compliance officer and compliance committee. executive director and two executive directors, Each local compliance committee reports to the as defined under the Listings Requirements of chief compliance officer who, in turn, reports to the JSE. Five directors (36%) are from previously the relevant risk committees. disadvantaged groups and three directors (21%) Litigation in the business units is reported are female. These figures are above the average monthly by the respective heads of legal affairs for JSE-listed companies. to the general counsel, but material litigation is notified to the general counsel as soon as THE CHAIR possible after it arises. The general counsel, in The chair is an independent non-executive turn, reports regularly on material litigation to the director. He guides the board and ensures it is applicable boards and risk and audit committees. efficient, focused and operates as a unit. The THE BOARD COMPOSITION responsibilities of the chair include: (cid:96) Provide overall leadership to the board without limiting the principle of collective responsibility Details of directors at 31 March 2011 are set out for board decisions, while being aware of on pages 110 to 113. individual duties of board members. Naspers has a unitary board, which (cid:96) In conjunction with the chief executive, fulfils oversight and controlling functions. represent the board in communicating The board charter sets out the division of with shareholders, other stakeholders and, responsibilities. The majority of board members indirectly, the general public. are non-executive directors and independent of (cid:96) Assisted by the board, its subcommittees management, to ensure that no one individual and the boards and subcommittees of has unfettered powers of decision-making and subsidiary companies, ensure the integrity and authority. The roles of chair and chief executive effectiveness of the governance process. are separate. (cid:96) Maintain regular dialogue with the group’s chief Mr Boetie van Zyl acts as lead director in all executive on operational matters and consult matters not dealt with by the independent non- with other board members on any matter of executive chair. concern. 98 NASPERS INTEGRATED ANNUAL REPORT 2011 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION (cid:96) In consultation with the company’s chief The functions and responsibilities of the chief executive and secretary, ensure appropriate executive include: content and order of the agendas of board (cid:96) Developing the company’s strategy for meetings and that members of the board consideration and approval by the board. receive documentation promptly. (cid:96) Developing and recommending to the board (cid:96) Ensure board members are properly informed the annual business plan and budget that on issues arising from board meetings and support the company’s long-term strategy. that relevant information is submitted. (cid:96) Monitoring and reporting to the board on the (cid:96) Act as facilitator at board meetings to ensure performance of the company. a sound flow of opinions. The chair ensures (cid:96) Establishing an appropriate organisational adequate time is scheduled for discussions, structure for the company to execute its and that these lead to conclusions. strategic planning. (cid:96) Monitor how the board works together and (cid:96) Recommending/appointing the executive how individual directors interact at meetings. team and ensuring proper succession The chair meets with directors annually to planning and performance appraisals. evaluate their performance. (cid:96) Ensuring the company complies with relevant (cid:96) Preapprove all dealings in Naspers shares laws, corporate governance principles, by directors of the company and its major business ethics and appropriate best subsidiaries (as defined in the JSE Listings practice. Requirements). THE CHIEF EXECUTIVE ORIENTATION AND DEVELOPMENT An induction programme is held for new The chief executive reports to the board and members of the board and key committees, is responsible for the day-to-day business tailored to the needs of individual appointees. of the group and implementation of policies This involves industry and company-specific and strategies approved by the board. Chief orientation, such as meetings with senior executives of the various businesses assist management to facilitate an understanding of him in this task. Board authority conferred on operations. Board members are also exposed to management is delegated through the chief the main markets in which the group operates. executive, against approved authority levels. The company secretary assists the chair with NASPERS INTEGRATED ANNUAL REPORT 2011 99 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Corporate governance (continued) the induction and orientation of directors, and (cid:96) Determine the group’s values and arranges specific training if required. incorporate these into the code of The company will continue director business ethics and conduct; ensure development to build on expertise and develop compliance with these codes is integrated an understanding of the businesses and main in the operations of the group. markets in which the group operates. During the (cid:96) Provide strategic direction to the company, past year Prof Debra Meyer attended a media take responsibility for the adoption of course at Harvard. CONFLICTS OF INTEREST Potential conflicts are appropriately managed to ensure candidate and existing directors have no conflicting interests between their obligations to the company and their personal interests. Any interest in contracts with the company must be formally disclosed and documented. Directors must also adhere to a policy on trading securities of the company. INDEPENDENT ADVICE Individual directors may, after consulting with the chair or chief executive, seek independent professional advice, at the expense of the company, on any matter connected with discharging their responsibilities as directors. strategic plans. (cid:96) Monitor the company’s social, environmental and financial performance. (cid:96) Monitor compliance with key laws, codes and standards. (cid:96) Identify material stakeholders and monitor management’s process of engaging. (cid:96) Approve the annual business plan and budget compiled by management, take cognisance of sustainability aspects. (cid:96) Retain effective control of the company and monitor management’s implementation of the approved annual budget and business plan. (cid:96) Oversee preparation of and approve the annual financial statements (for adoption by shareholders), interim, provisional and integrated annual reports (as reviewed ROLE AND FUNCTION OF THE BOARD by the audit committee) and ensure their The board has adopted a charter setting out its integrity and fair presentation. responsibilities as follows: (cid:96) Consider and, if appropriate, declare the (cid:96) Determine the company’s purpose and key payment of dividends to shareholders. objectives. 100 NASPERS INTEGRATED ANNUAL REPORT 2011 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION (cid:96) Evaluate the viability of the company and (cid:96) Communicate with shareholders and the group as a going concern, and properly relevant stakeholders appropriately. record this evaluation. (cid:96) Determine the selection and orientation of directors. (cid:96) Appoint the chief executive and financial director, and ensure succession is planned. (cid:96) Establish appropriate subcommittees with clear terms of reference and responsibilities. (cid:96) Appoint the chair of the board and its subcommittees. (cid:96) Annually evaluate performance and effectiveness of directors, the board as a (cid:96) Ensure processes are in place to resolve disputes. Alternative dispute resolution will be considered where appropriate. (cid:96) Annually review the charters of the group’s significant subsidiary companies’ boards, and their self-assessment of compliance with these to establish if the Naspers board can rely on the work of the subsidiary companies’ boards. (cid:96) Review annually the charters of subcommittees of the board. whole and its subcommittees. BOARD MEETINGS AND ATTENDANCE (cid:96) Ensure the company governs risk The board meets at least four times a year, or adequately through risk management systems and processes, which allow the board to set tolerance levels. (cid:96) Ensure there is effective risk-based internal audit, which allows it to report on the effectiveness of the company’s system of internal controls in its integrated annual report. (cid:96) Define levels of delegation for specific matters, with appropriate authority delegated to subcommittees and management. as required. The executive committee attends to matters that cannot wait for the next scheduled meeting. The board held five meetings in the past financial year. Independent, non-executive directors meet at least once annually without the chief executive, financial director and chair present, to discuss the performance of these individuals. The company secretary acts as secretary to the board and its subcommittees and attends all (cid:96) Determine the company’s communication meetings. Details of attendance at meetings are policy. provided on page 114. NASPERS INTEGRATED ANNUAL REPORT 2011 101 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Corporate governance (continued) EVALUATION determined that although some directors had The nomination committee carries out the annual served as members for nine years or longer, they evaluation process. The performance of the board all demonstrated that they were independent and its subcommittees, as well as the chair of in character and judgement and there were no the board, against their respective mandates in relationships or circumstances that were likely to terms of the board charter and the charters of its affect or could appear to affect their independence. subcommittees, is appraised. The subcommittees perform self-evaluations against their charters for BOARD COMMITTEES consideration by the board. While the whole board remains accountable for In addition, the performance of each director the performance and affairs of the company, it is evaluated by the other board members, using delegates certain functions to subcommittees an evaluation questionnaire. The chair of the and management to assist in discharging nomination committee discusses the results with its duties. Appropriate structures for those each director and agrees on any training needs delegations are in place, accompanied by or areas requiring attention by that director. monitoring and reporting systems. Where a director’s performance is not considered Each subcommittee acts within agreed, satisfactory, the board will not recommend his/her written terms of reference. The chair of each re-election. subcommittee reports at each scheduled board A consolidated summary of the evaluation is meeting. reported to and discussed by the board, including The chair of each subcommittee is a non- any actions required. The lead independent executive director and is required to attend director leads the discussion on the performance annual general meetings to answer questions. of the chair, with reference to the results of the Two Naspers directors serve on the Media24 evaluation questionnaire, and provides feedback safety, health and environmental committee. to the chair. The established board subcommittees are The annual evaluation process showed that the detailed below. board and its subcommittees had functioned well and discharged their duties as per the mandates Executive committee in their charters. Furthermore, the independence This committee comprises a majority of non- of each director was evaluated. The board executive directors, one being the chair of the 102 NASPERS INTEGRATED ANNUAL REPORT 2011 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION board, who also serves as the chair of the This committee’s main responsibilities, in executive committee, plus two executive addition to its responsibilities in terms of the directors. The executive committee acts for Companies Act, are as follows: the board in managing urgent issues when the (cid:96) Review and approve the company’s board is not in session, subject to statutory integrated annual report, annual financial limits and the board’s limitations on delegation. statements, interim and provisional reports, This committee met three times during the and any other press releases with material financial year. Details of attendance at meetings financial or internal control impacts. Final are provided on page 115. approval rests with the board. Audit committee (cid:96) Review the viability of the company and the group on a going-concern basis, making This committee, chaired by Mr Boetie van Zyl, relevant recommendations. comprises only non-executive independent (cid:96) Receive all audit reports directly from the directors. All members are financially literate external auditor. and have business and financial acumen. (cid:96) Annually review and report on the quality The committee held four meetings during the and effectiveness of the audit process, past financial year. Details of attendance are including assessing the external auditor’s provided on page 115. The chief executive and independence. financial director attend committee meetings by (cid:96) Evaluate the lead partner of the external invitation. auditor, who will be subject to rotation as Both internal and external auditors have required by regulations. unrestricted access to the committee through (cid:96) Present the committee’s conclusions on the the chair. The internal and external auditors external auditor to the board, preceding the also report their findings to the committee with annual request to shareholders to approve members of executive management not in the appointment of the external auditor. attendance. (cid:96) Approve the external auditor’s terms of The chair of the board is not a member of engagement and remuneration. Evaluate and the audit committee, but may attend meetings provide commentary on the external auditor’s by invitation. audit plans, scope of findings, identified issues and reports. NASPERS INTEGRATED ANNUAL REPORT 2011 103 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Corporate governance (continued) (cid:96) Develop a policy for the board to approve (cid:96) Confirm the appointment or dismissal of the non-audit services performed by the external head of the group’s internal audit function auditor. Approve non-audit services provided and periodically review his/her performance. by the external auditor in accordance with this Ensure the internal audit function is subject to policy. a periodic independent quality review. (cid:96) Receive notice of reportable irregularities (as (cid:96) Review internal audit and the risk committee’s defined in the Auditing Profession Act) that reports to the audit committee. have been reported by the external auditor to (cid:96) Review compliance with the requirements of the Independent Regulatory Board for Auditors. the JSE Limited, the United Kingdom Listing (cid:96) Evaluate the effectiveness of internal audit, Authority (UKLA) and the London Stock including its purpose, activities, scope, Exchange. adequacy and costs, and approve the annual (cid:96) Review procedures in light of the King Code internal audit plan and any material changes. on Corporate Governance. (cid:96) Satisfy itself it has appropriately addressed: (cid:96) Monitor compliance with board-approved (cid:1) (cid:116)(cid:1)(cid:253)(cid:79)(cid:66)(cid:79)(cid:68)(cid:74)(cid:66)(cid:77)(cid:1)(cid:83)(cid:70)(cid:81)(cid:80)(cid:83)(cid:85)(cid:74)(cid:79)(cid:72)(cid:1)(cid:83)(cid:74)(cid:84)(cid:76)(cid:84) (cid:1) (cid:116)(cid:1)(cid:74)(cid:79)(cid:85)(cid:70)(cid:83)(cid:79)(cid:66)(cid:77)(cid:1)(cid:253)(cid:79)(cid:66)(cid:79)(cid:68)(cid:74)(cid:66)(cid:77)(cid:1)(cid:68)(cid:80)(cid:79)(cid:85)(cid:83)(cid:80)(cid:77)(cid:84) group levels of authority. (cid:96) Evaluate: (cid:1) (cid:116)(cid:1)(cid:71)(cid:83)(cid:66)(cid:86)(cid:69)(cid:1)(cid:83)(cid:74)(cid:84)(cid:76)(cid:1)(cid:66)(cid:84)(cid:1)(cid:74)(cid:85)(cid:1)(cid:83)(cid:70)(cid:77)(cid:66)(cid:85)(cid:70)(cid:84)(cid:1)(cid:85)(cid:80)(cid:1)(cid:253)(cid:79)(cid:66)(cid:79)(cid:68)(cid:74)(cid:66)(cid:77)(cid:1)(cid:83)(cid:70)(cid:81)(cid:80)(cid:83)(cid:85)(cid:74)(cid:79)(cid:72)(cid:13)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1) (cid:1) (cid:116)(cid:1)(cid:77)(cid:70)(cid:72)(cid:66)(cid:77)(cid:1)(cid:78)(cid:66)(cid:85)(cid:85)(cid:70)(cid:83)(cid:84)(cid:1)(cid:85)(cid:73)(cid:66)(cid:85)(cid:1)(cid:78)(cid:66)(cid:90)(cid:1)(cid:66)(cid:71)(cid:71)(cid:70)(cid:68)(cid:85)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1)(cid:253)(cid:79)(cid:66)(cid:79)(cid:68)(cid:74)(cid:66)(cid:77)(cid:1) (cid:1) (cid:116)(cid:1)(cid:42)(cid:53)(cid:1)(cid:83)(cid:74)(cid:84)(cid:76)(cid:84)(cid:1)(cid:66)(cid:84)(cid:1)(cid:85)(cid:73)(cid:70)(cid:84)(cid:70)(cid:1)(cid:83)(cid:70)(cid:77)(cid:66)(cid:85)(cid:70)(cid:1)(cid:85)(cid:80)(cid:1)(cid:253)(cid:79)(cid:66)(cid:79)(cid:68)(cid:74)(cid:66)(cid:77)(cid:1)(cid:83)(cid:70)(cid:81)(cid:80)(cid:83)(cid:85)(cid:74)(cid:79)(cid:72)(cid:15) statements (cid:96) Evaluate the nature and extent of the formal (cid:1) (cid:116)(cid:1)(cid:78)(cid:66)(cid:85)(cid:85)(cid:70)(cid:83)(cid:84)(cid:1)(cid:80)(cid:71)(cid:1)(cid:84)(cid:74)(cid:72)(cid:79)(cid:74)(cid:253)(cid:68)(cid:66)(cid:79)(cid:68)(cid:70)(cid:1)(cid:83)(cid:70)(cid:81)(cid:80)(cid:83)(cid:85)(cid:70)(cid:69)(cid:1)(cid:67)(cid:90)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1) documented review of internal financial controls to internal and external auditors, and any other be performed annually by internal audit on behalf parties, including implied potential risks of the board. Weaknesses in internal financial to the group and recommendations on controls that are considered material (individually appropriate improvements or in combination with other weaknesses) and (cid:1) (cid:116)(cid:1)(cid:78)(cid:66)(cid:75)(cid:80)(cid:83)(cid:1)(cid:86)(cid:79)(cid:83)(cid:70)(cid:84)(cid:80)(cid:77)(cid:87)(cid:70)(cid:69)(cid:1)(cid:66)(cid:68)(cid:68)(cid:80)(cid:86)(cid:79)(cid:85)(cid:74)(cid:79)(cid:72)(cid:1)(cid:80)(cid:83)(cid:1)(cid:66)(cid:86)(cid:69)(cid:74)(cid:85)(cid:74)(cid:79)(cid:72)(cid:1) that resulted in actual material financial loss, fraud issues, and or material errors, to be reported to the board and (cid:1) (cid:116)(cid:1)(cid:81)(cid:83)(cid:80)(cid:72)(cid:83)(cid:70)(cid:84)(cid:84)(cid:1)(cid:80)(cid:79)(cid:1)(cid:68)(cid:80)(cid:78)(cid:81)(cid:77)(cid:70)(cid:85)(cid:74)(cid:80)(cid:79)(cid:1)(cid:80)(cid:71)(cid:1)(cid:78)(cid:66)(cid:85)(cid:85)(cid:70)(cid:83)(cid:84)(cid:1)(cid:83)(cid:70)(cid:81)(cid:80)(cid:83)(cid:85)(cid:70)(cid:69) in the integrated annual report. by the internal and external auditors. (cid:96) Approve for recommendation to the board the (cid:96) Establish procedures for the receipt, retention internal audit charter, which must be reviewed and treatment of complaints received on annually. accounting, internal control, auditing matters, 104 NASPERS INTEGRATED ANNUAL REPORT 2011 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION risk management and management of other (cid:96) Perform an annual self-assessment of its fraudulent activities, including procedures effectiveness, reporting these findings to the for confidential, anonymous reporting by board. employees. (cid:96) Annually evaluate the performance and Human resources and remuneration appropriateness of the expertise and committee experience of the financial director and the The main objective of this committee is to fulfil finance function, and disclose the results in the board’s responsibility for the strategic human the integrated annual report. resources issues of the group, particularly the (cid:96) Ensure a combined assurance model is appointment, remuneration and succession of the applied to provide a coordinated approach most senior executives. The committee comprises to all assurance activities, monitoring the a minimum of three independent non-executive relationship between external providers and directors. Its responsibilities are outlined in the the company. Coordination between internal remuneration report on page 116. and external auditors must be evaluated. (cid:96) Report to shareholders at the annual Risk committee general meeting on fulfulling its duties in The committee comprises a minimum of three terms of the Companies Act during the independent non-executive directors, as well as financial year. the chief executive and financial director. The (cid:96) Execute assignments commissioned by the chair of the board may not serve as chair of this board. committee. (cid:96) Annually assess its charter and recommend Members of the committee are individuals with any required amendments for approval by risk management skills and experience. the board. The committee’s responsibilities include: (cid:96) Annually review the charters of significant (cid:96) Review and approve for recommendation to subsidiaries’ audit committees, and review the board a risk management policy and plan their annual assessment of compliance with developed by management. The risk policy these charters to establish if the Naspers and plan are reviewed annually. committee can rely on the work of the (cid:96) Monitor implementation of the risk policy and subsidiary companies’ committees. plan, ensuring an appropriate enterprise- NASPERS INTEGRATED ANNUAL REPORT 2011 105 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Corporate governance (continued) wide risk management system is in place INTERNAL CONTROL SYSTEMS with adequate and effective processes The company has a system of internal controls, that include strategy, ethics, operations, based on the group’s policies and guidelines, reporting, compliance, IT and sustainability. in all material subsidiaries and joint ventures (cid:96) Make recommendations to the board on under its control. For those entities in which risk indicators, levels of risk tolerance and Naspers does not have a controlling interest, appetite. the directors representing Naspers on these (cid:96) Monitor that risks are reviewed by boards seek assurance that significant risks management, and that management’s are managed and systems of internal control responses to identified risks are within are effective. Internal auditors monitor the board-approved levels of risk tolerance. functioning of internal control systems and (cid:96) Ensure risk management assessments are make recommendations to management and performed regularly by management. the audit and risk committees. The external (cid:96) Issue a formal opinion to the board on the auditor considers elements of the internal control effectiveness of the system and process of systems as part of its audit and communicates risk management. deficiencies when identified. (cid:96) Review reporting on risk management that All internal control systems have is to be included in the integrated annual shortcomings, including the possibility of report. human error or flouting of control measures. (cid:96) Review annually the charters of the group’s Even the best system may provide only partial significant subsidiary companies’ risk assurance. The group’s internal controls and committees, and their annual assessment of systems are designed to provide reasonable, compliance with these charters to establish and not absolute, assurance on the integrity if the Naspers committee can rely on the and reliability of the financial statements; to work of these risk committees. safeguard, verify and maintain accountability of (cid:96) Perform an annual self-assessment of the its assets; and to detect fraud, potential liability, effectiveness of the committee, reporting loss and material misstatement, while complying these findings to the board. with regulations. The board reviewed the effectiveness of controls for the year ending 31 March 2011, 106 NASPERS INTEGRATED ANNUAL REPORT 2011 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION principally through a process of management committee, with administrative reporting to the self-assessment, including formal confirmation financial director. A large part of the internal per representation letters by executive audit fieldwork is outsourced. management. Consideration was given to input, including reports from internal audit NON-AUDIT SERVICES and the external auditor, compliance and the The group’s revised policy on non-audit services risk management process. Where necessary, provides guidelines on dealing with audit, audit- programmes for corrective actions have been related, tax and other non-audit services that may initiated. be provided by Naspers’s independent auditor to Nothing has come to the attention of the group entities. It also sets out services that may board, external or internal auditors to indicate not be performed by the independent auditor. any material breakdown in the functioning of The audit committee preapproves audit and internal controls and systems during the year non-audit services to ensure these do not impair under review except for: the auditor’s independence and comply with (cid:96) weaknesses reported at Media24 with legislation. Under our guiding principles, the respect to the IT implementation of the auditor’s independence will be deemed impaired ERP system during the year and the if the auditor provides a service where he/she: consequential inadequate and ineffective (cid:96) functions in the role of management of the internal controls over the circulation company, or process. (cid:96) audits his/her own work, or (cid:96) serves in an advocacy role for the company. INTERNAL AUDIT An internal audit function is in place throughout IT GOVERNANCE the group. This is an independent appraisal Information technology (IT) governance is mechanism that examines and evaluates the integrated in the operations of the Naspers group’s procedures and systems, including businesses and, for many, specifically the internal controls, disclosure procedures and internet businesses, at the core of their information systems, ensuring these are operations. Management of each subsidiary or functioning effectively. The head of internal business unit is responsible for ensuring proper audit reports to the chair of the Naspers audit processes are rolled out on IT governance. NASPERS INTEGRATED ANNUAL REPORT 2011 107 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Corporate governance (continued) Internal audit will provide assurance to committed to providing timely and transparent management and the audit committee on the information on corporate strategies and financial effectiveness of IT governance. data to the investing public. In addition, we consider the growing demand for transparency COMPANY SECRETARY and accountability on our non-financial (or The company secretary and group legal sustainability) performance. In line with King III, counsel are responsible for guiding the board in Naspers recognises that this performance is discharging its regulatory responsibilities. based on its risk profile and strategy, which Directors have unlimited access to the includes non-financial risks and opportunities. advice and services of the company secretary. The company manages communications with The company secretary plays a role in the its key financial audiences, including institutional company’s corporate governance and ensures shareholders and financial (debt and equity) that, in accordance with the pertinent laws, analysts, through a dedicated investor relations the proceedings and affairs of the board, unit. Presentations and conference calls take the company itself and, where appropriate, place after publishing interim and final results. shareholders are properly administered. She A broad range of public communication is also the company’s compliance officer as channels (including stock exchange news defined in the Companies Act and delegated services, corporate website, press agencies, information officer. The company secretary newswires and news distribution service monitors directors’ dealings in securities and providers) are used to disseminate news ensures adherence to closed periods. releases. These channels are supplemented The company secretary attends all board and by direct communication via email, conference committee meetings. calls, group presentations and one-on-one meetings. INVESTOR RELATIONS Our policy is not to provide forward-looking Naspers’s investor relations policy can be information. However, to enable the investment found on www.naspers.com. It describes the community to better assess the group and its principles and practices applied in interacting performance, prospects, strategy and plans for with shareholders and investors. Naspers is operations may be discussed. While disclosing 108 NASPERS INTEGRATED ANNUAL REPORT 2011 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION such information constitutes forward-looking The board encourages shareholders to attend statements, Naspers cautions investors and the annual general meeting, notice of which shareholders that these statements, although is contained in this integrated annual report, made on a fair and creditable basis, involve where shareholders have the opportunity to put many assumptions and sources of risk and, questions to the board, management and the therefore, actual results may differ materially chairs of the various subcommittees. from the projected scenario. Naspers also The company’s website www.naspers.com complies with legislation and stock exchange provides the latest and historical financial and rules on forward-looking statements. other information, including financial reports. CLOSED PERIODS Naspers would typically be in a closed period on the day after the end of a reporting period (30 September or 31 March) until the release of results. General investor interaction during this time is limited to discussions on strategy and/or historical, publicly available information. ANALYST REPORTS To enhance the quantity and quality of research, Naspers maintains working relationships with stock brokers, investment banks and credit- rating agencies – irrespective of their views or recommendations on the group. Naspers may review an analyst’s report or earnings model for factual accuracy of information in the public domain, but in line with regulations and group policy. We do not provide guidance or forecasts. NASPERS INTEGRATED ANNUAL REPORT 2011 109 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Directorate TON VOSLOO (73) became managing director of Naspers in 1984, serving as executive chairman from 1992 to 1997. Mr Vosloo worked as a journalist from 1956 to 1983 and as editor of Beeld from 1977 to 1983. He is a director of Media24 and MultiChoice South Africa Holdings, chairman of MIH BV, MIH Holdings and MIH (Mauritius) and independent non-executive chairman of the board of Naspers, a position he has held since 1997. He is a former chairman of Sanlam, M-Net, WWF South Africa and the Cape Philharmonic Orchestra. He was awarded the Nieman Fellowship from Harvard University in 1970. Mr Vosloo has been awarded three honorary doctorates. RACHEL JAFTA (50), MEcon and PhD, is a professor in economics at Stellenbosch University. She joined Naspers as a director in 2003 and was appointed a director of Media24 in 2007. She is a member of the South African Economic Society, director of Econex, chairperson of the Cape Town Carnival Trust and board member of the South African Institute of Race Relations. She is a member of the audit and risk committees of Naspers and Media24. She was appointed chair of the Media24 audit and risk committees in April 2008. KOOS BEKKER (58) led the founding team of M-Net in 1985. He was also a founding director of MTN. He led the MIH group until 1997, when he became chief executive offi cer of Naspers. He serves on the boards of other companies in the wider group. He also served on the Local Organising Committee for the 2010 Fifa World Cup, the Council of Stellenbosch University and various bodies. He holds several qualifi cations, including BAHons (Stellenbosch), LLB (Wits), MBA (Columbia) and an honorary doctorate. 110 NASPERS INTEGRATED ANNUAL REPORT 2011 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION JAKES GERWEL (65) joined Naspers as a director in 1999. He is a former director- general in the offi ce of then president Nelson Mandela, and a previous director of the University of the Western Cape. He is chancellor of Rhodes University, distinguished professor in humanities at the University of the Western Cape and honorary professor in humanities at the University of Pretoria. He is non-executive chairman of Aurecon, Brimstone Investment Corporation, Life Healthcare and Media24. He chairs the boards of trustees of the Nelson Mandela Foundation, Mandela Rhodes Foundation, Allan Gray Orbis Foundation and is vice chairman of the Peace Parks Foundation. He is a member of the executive, human resources and remuneration and nomination committees of Media24 and Naspers. DEBRA MEYER (43) was appointed a director in 2009. Currently professor of biochemistry at the University of Pretoria, she holds a PhD in biochemistry and molecular biology from UC Davis (University of California). She writes for scientifi c journals and contributes to several newspapers and magazines. She is a published poet, has won several awards in her fi eld of expertise and was recognised by Rapport and City Press in 2007 as one of ten nominated for their Prestigious Women Awards. She is involved in social issues, particularly HIV/Aids, and serves as trustee or board member of various organisations. STEVE PACAK (56), a qualifi ed CA(SA), began his career with Naspers as group fi nancial manager of M-Net in 1988 and held various executive positions in the MIH group. He is a director of Media24, MIH BV, MIH (Mauritius), MIH Holdings, MultiChoice South Africa Holdings and other companies in the wider Naspers group. He was appointed an executive director of Naspers in 1998. NASPERS INTEGRATED ANNUAL REPORT 2011 111 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Directorate (continued) BOETIE VAN ZYL (72) holds the qualifi cations PrEng and BScEng(Mechanical) (UCT). He joined Naspers as a director in 1988. He is a member of the boards of MIH Holdings and Media24, a director of the Peace Parks Foundation, and a trustee of WWF South Africa. He is chairman of the audit and risk committees of Naspers, a member of the audit and risk committees of Media24 and MIH, and a member of the human resources and remuneration and nomination committees of Media24 and Naspers. FRANCINE-ANN DU PLESSIS (56) has been a director of Naspers since 2003 and holds the qualifi cations BComHons(Taxation), LLB and CA(SA). Although she is admitted as an advocate of the Cape High Court, she practises as a chartered accountant and is a director of Loubser du Plessis Inc. She is a member of the audit and risk committees of Naspers. She also serves on the boards of Sanlam, ArcelorMittal and Life Healthcare. FRED PHASWANA (66) holds the qualifi cations MA and BComHons, and obtained a BA(Philosophy, Politics and Economics) from the University of South Africa in 2010. He joined Naspers as a director in 2003. He is chairman of The Standard Bank Group and of Standard Bank of South Africa Limited. He is also chairperson of the SA Institute of International Affairs. LAMBERT RETIEF (58) obtained the qualifi cations BCom and BComHons at Stellenbosch University. He then qualifi ed as a CA(SA) and completed the Owner President Management (OPM) programme at Harvard Business School. He is a director of Media24, chair and former chief executive of Paarl Media group and a director of other group subsidiaries. He is also a director of the listed Zeder Investments Limited. 112 NASPERS INTEGRATED ANNUAL REPORT 2011 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION BEN VAN DER ROSS (64), who holds the qualifi cation of DipLaw (UCT) and is an admitted attorney, is chairman of Strategic Real Estate Management (Proprietary) Limited, the managers of the Emira Property Fund. He also serves inter alia on the boards of FirstRand Limited, MMI Holdings Limited and Pick n Pay Stores Limited. LOURENS JONKER (71) obtained the qualifi cation BScAgric with further studies at UC Davis (University of California). He has completed programmes for director development at IMD, Lausanne, Switzerland and GIBS (University of Pretoria). He is the owner of Weltevrede Wine Estate. He joined the board of KWV Co-operative in 1981 and became chairperson of KWV Group Limited in 1994. He led the successful transformation of KWV from a cooperative to a fully commercialised company, and resigned from the KWV board in December 2003. HEIN WILLEMSE (53) holds an MA (cum laude), MBL and DLitt degrees. He is currently a literature professor at the University of Pretoria. He is a board member or trustee of various national and international technical associations or community organisations. NEIL VAN HEERDEN (71), who holds a BA qualifi cation, is a trustee of the University of the Western Cape, former director-general of foreign affairs, ambassador to the Federal Republic of Germany, ambassador to the European Union and former executive director of the South Africa Foundation (now South Africa Business Leadership). He is also a director of other companies. NASPERS INTEGRATED ANNUAL REPORT 2011 113 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Directorate (continued) DIRECTORS AND ATTENDANCE AT MEETINGS Date first appointed in current position 6 October 1997 6 October 1997 23 October 2003 12 July 1999 23 October 2003 7 June 1996 Date last appointed 27 August 2010 1 April 2008 28 August 2009 22 August 2008 28 August 2009 27 August 2010 25 November 2009 25 November 2009 1 April 2009 23 October 2003 1 April 2009 28 August 2009 T Vosloo J P Bekker F-A du Plessis G J Gerwel R C C Jafta L N Jonker D Meyer S J Z Pacak T M F Phaswana L P Retief 1 September 2008 1 September 2008 B J van der Ross N P van Heerden J J M van Zyl H S S Willemse 12 February 1999 7 June 1996 1 January 1988 30 August 2002 22 August 2008 27 August 2010 22 August 2008 27 August 2010 Five board meetings were held during the year. Attendance: 5 5 5 5 5 5 5 5 5 5 5 5 5 5 Category Independent non-executive Executive Independent non-executive Independent non-executive Independent non-executive Independent non-executive Independent non-executive Executive Independent non-executive Non-executive Independent non-executive Independent non-executive Independent non-executive Independent non-executive 114 NASPERS INTEGRATED ANNUAL REPORT 2011 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION COMMITTEES AND ATTENDANCE AT MEETINGS Executive committee Audit committee1 Risk committee Human resources and remuneration committee1 Nomination committee1 Three meetings held during the year. Attendance: Four meetings held during the year. Attendance: Four meetings held during the year. Attendance: Five meetings held during the year. Attendance: Five meetings held during the year. Attendance: ✓ 5 ✓ 5 ✓ 5 ✓ 5 ✓ 5 ✓ 5 T Vosloo ✓ 3 F-A du Plessis ✓ 4 G J Gerwel ✓ 3 R C C Jafta J J M van Zyl ✓ 3 B J van der Ross J P Bekker S J Z Pacak ✓ ✓ 3 3 ✓ ✓ ✓ 4 4 3 Note 1Executive directors attend meetings by invitation. ✓ ✓ ✓ ✓ ✓ ✓ ✓ 4 4 4 4 3 4 4 Category Independent non-executive Independent non-executive Independent non-executive Independent non-executive Independent non-executive Independent non-executive Executive Executive NASPERS INTEGRATED ANNUAL REPORT 2011 115 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Remuneration report Human resources and remuneration committee final approval by shareholders in the annual and its role general meeting. Remuneration is approved The human resources and remuneration by shareholders in advance. committee comprises only independent (cid:96) Fulfil delegated responsibilities on Naspers’s non-executive directors. Executive directors share-based incentive plans, eg appointing and certain members of management attend trustees and compliance officers. meetings by invitation. This committee met five times during the financial year. Details of attendance at meetings are provided on page 115.  The main responsibilities of the committee are as follows: (cid:96) Determine and approve the group’s general remuneration policy, which must be tabled at each annual general meeting for a non-binding advisory vote by shareholders. (cid:96) Prepare an annual remuneration report for inclusion in the company’s integrated annual report. (cid:96) Review and approve annually the remuneration packages of the most senior executives, including incentive schemes and increases, ensuring they are appropriate and in line with the remuneration policy. (cid:96) Annually appraise the performance of the chief executive. (cid:96) Review the remuneration of non-executive directors of the board and its subcommittees annually. Make proposals to the board for (cid:96) Approve the most senior appointments and promotions. (cid:96) Review incidents of unethical behaviour by senior managers and the chief executive. (cid:96) Review annually the company’s code of ethics and business conduct. (cid:96) Review annually the committee’s charter and recommend required amendments. (cid:96) Approve amendments to the Naspers share-based incentive plans. (cid:96) Perform an annual self-assessment of the effectiveness of the committee, reporting these findings to the board. (cid:96) Review annually the charters of the group’s significant subsidiaries’ remuneration committees, and their annual assessment of compliance with these charters to establish if the Naspers committee can rely on the work of the subsidiary companies’ committees. The committee fulfilled its remit during the year. Remuneration strategy and policy Naspers’s remuneration strategy aims to attract, motivate and retain competent leaders 116 NASPERS INTEGRATED ANNUAL REPORT 2011 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION in its drive to create sustainable shareholder of the board and boards of subsidiaries. value. We aim to attract entrepreneurs and the A premium is payable to the chair of the board, best creative engineers to grow the value of as well as to the chairs of the subcommittees. the group and to recognise top performance. Remuneration is reviewed annually, with Our policies and practices align the reference to competitors and companies that remuneration and incentives of executives and have a dual listing on the JSE and an overseas employees to the group’s long-term business securities exchange. Independent advice is strategy. Group companies are responsible for acquired to review directors’ remuneration. developing their own policies and benefits This remuneration is not linked to the within the confines of the group remuneration company’s share price or performance. policy and in accordance with their local laws Non-executive directors do not qualify for and each company’s needs. shares in terms of the group’s incentive Primary objectives include the need to schemes. The board annually recommends promote superior performance; direct remuneration of non-executive directors for employees’ energies towards key business approval by shareholders in advance. goals; achieve the most effective returns for In remunerating executives, the group aims employee spend; address needs across to attract, motivate and retain competent and differing cultures; and have credible committed leaders in its drive to create remuneration policies. sustainable shareholder value. We aim to Naspers has an integrated approach to its recognise top performance and attract reward strategy, encompassing a balanced entrepreneurs and the best creative engineers design in which reward components are to grow the value of the group. The aligned to the strategic direction and remuneration policies strive to meet this business-specific value drivers of Naspers. objective. Accordingly, the focus is not primarily Overview of remuneration Non-executive directors receive annual remuneration as opposed to a fee per meeting. This recognises the ongoing responsibility of directors for the efficient control of the company. This remuneration is augmented by compensation for services on subcommittees on guaranteed annual remuneration, but on individual incentive plans linked to creating shareholder value. Naspers usually structures packages on a total cost-to-company basis which incorporates base pay, car allowance, pension, medical aid and other optional benefits. In NASPERS INTEGRATED ANNUAL REPORT 2011 117 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Remuneration report (continued) addition, most executives qualify for individual companies or subsidiaries. These awards and/or team performance incentives. At senior normally vest over a period of four or five years level, we avoid standardised packages and aim and must be exercised within five to ten years to tailor compensation structure to the needs from the date of grant. The shares/appreciation of the specific business. rights are not free. The employee is offered the Remuneration packages are reviewed shares/appreciation rights at market value on annually and are monitored and compared with the day of the award. Employees benefit only if reported figures for similar positions to ensure they, together with colleagues in that unit, can they are fair and sensible. In some cases create additional value above the value on the independent consultants provide benchmarks. date of issue. The various remuneration We have no specific group policies to, for committees in the group annually review the example, pay the median, as the requirements share awards. In addition, if a particular group of a group serving a multitude of countries company employs people during the year, that differ widely. Annual bonus Most executives have an annual bonus scheme that may comprise a variable component based on surpassing financial and operational objectives, as well as fixed amounts for achieving specific discrete objectives. The incentive for each executive is agreed annually in advance. Incentives are based on targets that are verifiable and aligned to the group’s business plan, risk management policy and strategy. If targets are not met, no bonus is paid. Long-term incentives Long-term incentives are generally share-based incentive schemes for Naspers N shares and/ or shares or appreciation rights in respective remuneration committee may decide to make awards to those individuals. No awards of shares/appreciation rights are made during a closed period for trading, backdating awards is prohibited, there is no repricing and automatic regranting of underwater shares/appreciation rights. There is no automatic entitlement to bonuses or early vesting of share-based incentives should an executive leave the employ of the company. The group operates numerous share-based incentive schemes, detailed in the notes to the annual financial statements enclosed with this report under equity compensation benefits. Service contracts Executives’ contracts generally are subject to terms and conditions of employment in the 118 NASPERS INTEGRATED ANNUAL REPORT 2011 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION local jurisdiction. Top executive and non-executive directors’ contracts do not contain ‘golden parachute’ clauses. Non-executive directors are subject to regulations on appointment and rotation in terms of the company’s articles of association/memorandum of incorporation and the South African Companies Act No 61 of 1973. SHARE-BASED INCENTIVE PLANS The group operates a number of share-based incentive schemes. Some offer employees Naspers shares, others relate directly to individual operating companies. Details are contained in the annual financial statements enclosed with this report, which can also be found on www.naspers.com. At 31 March 2011 the group held 26 433 083 (2010: 26 868 506) Naspers N ordinary shares as treasury shares to settle outstanding options under certain of the group’s share incentive schemes. The dilution effect of these treasury shares amounted to 54 cents per N ordinary share (2010: 25 cents). EXECUTIVE DIRECTORS 2011 S J Z Pacak J P Bekker 2010 S J Z Pacak J P Bekker Bonuses and performance- related fees R’000 Pension contributions R’000 2 900 — 2 900 3 135 — 3 135 200 — 200 280 — 280 Salary R’000 3 054 — 3 054 2 820 — 2 820 Total R’000 6 154 — 6 154 6 235 — 6 235 Mr Pacak’s bonus is based on financial, operational and discrete objectives, which were approved by the human resources and remuneration committee in advance. The bonus is capped at 100% of total cost to company. Remuneration received by executive directors for other services paid by subsidiary companies totalled R6,154m (2010: R6,235m). NASPERS INTEGRATED ANNUAL REPORT 2011 119 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Remuneration report (continued) Executive directors’ contracts No executive director has a notice period of more than one year. No executive director’s service contract includes predetermined compensation as a result of termination exceeding one year’s salary and benefits. The chief executive, Mr Bekker, does not earn any remuneration from the group. In particular no salary, bonus, car scheme, medical or pension contributions of any nature are payable. His contract is for a five-year period, which started on 1 April 2008. No compensation will apply to termination. The chief executive has share allocations, as indicated below, under the Naspers share incentive scheme, in terms of which Naspers N ordinary shares can be acquired at certain prices, with various tranches vesting over periods of five years. The purchase prices for the allocations were set at the middle market price of the shares on the purchase date, but increased by anticipated inflation over the vesting periods of three, four and five years respectively, for each tranche. Inflation expectations were calculated by the Bureau for Economic Research, University of Stellenbosch. The chief financial officer, Mr Pacak, has an indefinite employee contract. Directors’ interests in scheme shares of the Naspers share incentive scheme The executive directors of Naspers are allowed to participate in the Naspers share incentive scheme. Details as at 31 March 2011 in respect of the executive directors’ participation in scheme shares not yet released, are as follows: Name J P Bekker Purchase date 31/03/2008 31/03/2008 Number of N shares 3 895 936 3 895 936 Purchase price R176,11 R185,56 Release period 31/03/2012 31/03/2013 S J Z Pacak1 08/07/2006 50 000 R114,52 08/07/2011 1 On 15 December 2010 a total of 15 000 released Naspers N ordinary shares were sold by Mr S J Z Pacak’s family trust upon payment of an average price of R23,50 per share (the original average offer price based on the listed market price of Naspers Limited N ordinary shares on the date of the offer) due to the Naspers share incentive trust, at an average selling price of R392,01 per Naspers N ordinary share. On 21 December 2010 a total of 10 000 released Naspers N ordinary shares were sold by Mr S J Z Pacak’s family trust upon payment of an average price of R23,50 per share (the original average offer price based on the listed market price of Naspers Limited N ordinary shares on the date of the offer) due to the Naspers share incentive trust, at an average selling price of R390,00 per Naspers N ordinary share. At 31 March 2011 a total of 428 000 (2010: 556 000) unreleased Naspers N ordinary shares had been allocated to Mr S J Z Pacak by the MIH (Mauritius) Limited share incentive scheme with vesting periods until 27 February 2014. 120 NASPERS INTEGRATED ANNUAL REPORT 2011 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION NON-EXECUTIVE DIRECTORS’ TERMS OF non-executive directors submitted for election APPOINTMENT Appointments to the board The board has a policy on procedures for the appointment and orientation of directors. The nomination committee periodically or re-election are accompanied by brief biographical details to enable shareholders to make an informed decision on their election. The reappointment of non-executive directors is not automatic. assesses the skills represented on the board Directors’ emoluments by non-executive directors and determines whether these meet the company’s needs. Annual self-evaluations conducted by the board and its subcommittees assist. Directors are invited to give their input in identifying potential candidates. The members of the nomination committee, who are all independent, propose suitable candidates for consideration by the board. A fit and proper evaluation is performed for each candidate. Non-execuitve directors: Fees for services as directors Fees for services as directors of subsidiary companies 31 March 2011 R’000 2010 R’000 7 649 6 409 5 241 5 247 12 890 11 656 Retirement and re-election of directors All non-executive directors are subject to retirement and re-election by shareholders every three years. In addition, all non-executive directors are subject to election by No director has a notice period of more than one year. No director’s service contract includes predetermined compensation as a result of termination that would exceed one year’s shareholders at the first suitable opportunity salary benefits. for interim appointments. The names of NASPERS INTEGRATED ANNUAL REPORT 2011 121 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Remuneration report (continued) Fees for the current year and proposed for 31 March 2012 and 31 March 2013 are as follows: Board 1.1 Chair*** 1.2 Member Commitees 1.3 ● Audit committee: Chair 1.4 1.5 ● Risk committee: Chair 1.6 1.7 ● Human resources and Member Member remuneration committee: Chair 1.8 1.9 ● Nomination committee: Chair 1.10 Member Member Other 1.11 Naspers representatives on Media24 safety, health and environmental committee: Member 1.12 Trustee of group share schemes/other personnel funds 1.13 Media24 pension fund: Chair 1.14 Trustee 31 March 2011 31 March 2012 31 March 2013** R2 011 400* R378 800* R2 390 000 R430 000 R2 390 000 R430 000 R270 000* R135 000* R120 000* R60 000* R140 000* R70 000* R50 000* R25 000* R280 000 R140 000 R140 000 R70 000 R160 000 R80 000 R60 000 R30 000 R280 000 R140 000 R140 000 R70 000 R160 000 R80 000 R60 000 R30 000 R45 000 R48 000 R48 000 R32 000 R80 400 R53 600 R34 000 R85 500 R57 000 R34 000 R85 500 R57 000 * These fees were approved by shareholders on 27 August 2010 and paid before the effective date of the Act and are reflected for comparative purposes. ** The proposed 31 March 2013 remuneration is subject to such annual increase as may be retrospectively approved by the shareholders at the 2013 Naspers annual general meeting. *** The chair of the board does not receive additional remuneration if he/she is a member of or chairs any committee of the board. 122 NASPERS INTEGRATED ANNUAL REPORT 2011 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Individual non-executive directors received the following remuneration and emoluments during the current financial year: Directors’ fees Committee1 and trustee2 fees Directors’ fees Committee1 and trustee2 fees Non-executive directors Paid by company R’000 Paid by sub- sidiaries R’000 Paid by company R’000 Paid by sub- sidiaries R’000 Total 2011 R’000 Paid by company R’000 Paid by sub- sidiaries R’000 Paid by company R’000 Paid by sub- sidiaries R’000 T Vosloo3 J J M van Zyl3,4 L N Jonker4 2 011 1 407 379 379 791 — — 517 45 109 211 — 3 527 1 898 424 1 887 1 233 354 354 578 — 379 85 — 379 379 379 379 379 379 379 379 — 590 — — — 1 350 197 — 163 165 45 339 — — 195 — — — 70 — — — 133 298 — 464 354 80 542 1 204 424 718 379 1 862 1 069 379 354 354 354 354 354 354 354 148 — 557 — — 124 1 687 186 — N P van Heerden3 B J van der Ross G J Gerwel3 H S S Willemse4 F-A du Plessis4 T M F Phaswana L P R Retief3 R C C Jafta3 D Meyer Notes 6 180 4 420 1 469 821 12 890 5 575 4 445 834 802 11 656 1 Committee fees include fees for the attendance of the audit committee, the risk committee (2011 only), the human resources and remuneration committee, and the nomination committee meetings of the board. 2 Trustee fees include fees for the attendance of the various retirement fund trustee meetings of the group’s retirement funds. 3 Directors’ fees include fees for services as directors, where appropriate, of Media24 Limited, Paarl Media Holdings (Proprietary) Limited, Via Afrika Limited, MIH Holdings Limited, MIH (Mauritius) Limited, Myriad International Holdings B.V. and MultiChoice South Africa (Proprietary) Limited. 4 Committee and trustees fees include, where appropriate, fees to be considered by shareholders at the annual general meeting on 26 August 2011 for services as trustees or members, as appropriate, of the group’s share schemes/retirement funds/ Media24’s safety, health and environmental committee. NASPERS INTEGRATED ANNUAL REPORT 2011 123 Total 2010 R’000 3 215 1 498 396 434 354 1 068 396 626 478 2 171 872 148 — 390 42 — — 90 42 95 176 — — — 67 — 135 137 — — 135 — — 130 197 — THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Remuneration report (continued) Shareholding Directors’ interest in Naspers shares The directors of Naspers have the following interests in Naspers A ordinary shares on 31 March 2011: 31 March 2011 31 March 2010 Naspers A ordinary shares Naspers A ordinary shares Beneficial Beneficial Name Direct Indirect Total Direct Indirect J J M van Zyl 745 — 745 745 — Total 745 Mr J P Bekker has an indirect 25% interest in Wheatfields 221 (Proprietary) Limited, which controls 168 605 Naspers Beleggings Beperk ordinary shares, 16 860 500 Keeromstraat 30 Beleggings Beperk ordinary shares and 133 350 Naspers A shares. No other director of Naspers had any direct interest in Naspers A ordinary shares at 31 March 2011 or 31 March 2010. 124 NASPERS INTEGRATED ANNUAL REPORT 2011 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION The directors of Naspers (and their associates) had the following interests in Naspers N ordinary shares as at 31 March: 31 March 2011 31 March 2010 Naspers N ordinary shares Naspers N ordinary shares Beneficial Beneficial Name Direct Indirect Total Direct Indirect Total T Vosloo J P Bekker5 J J M van Zyl L N Jonker N P van Heerden B J van der Ross1 G J Gerwel H S S Willemse2 F-A du Plessis T M F Phaswana3 L P Retief4 R C C Jafta S J Z Pacak6 D Meyer Notes — 3 895 936 50 361 1 000 — — — 85 — — — — 300 510 — 213 000 4 688 691 190 796 52 000 2 600 400 — 3 205 — 3 530 — — 282 548 — 213 000 8 584 627 241 157 53 000 2 600 400 — 3 290 — 3 530 — — 583 058 — — 213 000 — 4 688 691 190 796 52 000 2 600 400 — 3 205 — 3 530 — — 307 548 — 50 361 1 000 — — — 85 — — — — 122 510 — 213 000 4 688 691 241 157 53 000 2 600 400 — 3 290 — 3 530 — — 430 058 — 4 247 892 5 436 770 9 684 662 173 956 5 461 770 5 635 726 1 It has been ascertained that the Van der Ross Family Trust acquired 400 Naspers N ordinary shares on 18 August 2008. The comparatives have been adjusted accordingly. Furthermore, on 21 April 2011 this trust acquired 100 Naspers N ordinary shares. The trade was implemented by the investment manager without specific approval from Mr B J van der Ross. The investment manager accepted full responsibility for the breach in the JSE Listings Requirements. 2 In April 2004, in terms of a scheme of arrangement, Naspers acquired all the ordinary shares of M-Net and SuperSport for a cash distribution and 4,2365 Naspers shares for every 100 linked units in M-Net/SuperSport. It has been ascertained that Mr H S S Willemse and one of his associates were entitled to receive 85 Naspers N ordinary shares each in terms of this transaction. The comparatives have been adjusted accordingly. 3 Mr T M F Phaswana’s shares were reclassified from direct to indirect. The comparatives have been adjusted accordingly. 4 The Media24 group entered into a contract with the Retief family trust in October 2008, which contains a put option whereby the Retief family trust can enforce a buy-out by Media24 group of their remaining interest in Paarl Media Holdings (Proprietary) Limited (currently 5%) and Paarl Coldset (Proprietary) Limited (currently 12,6%). Mr L P Retief, a director of Naspers Limited, is a related party to the Retief family trust. 5 At 31 March 2011, 3 895 936 Naspers N ordinary shares at an offer price of R167,23 per share were released and reserved for Mr J P Bekker in the Naspers share incentive scheme. 6 During the financial year Naspers N ordinary shares were released and reserved for Mr S J Z Pacak in the Naspers group’s share incentive schemes. Except as set out in note 1 above there have been no changes to the directors’ interests in the table above between the end of the financial year and 24 June 2011. Prof G J Gerwel Chairman: Human resources and remuneration committee 24 June 2011 NASPERS INTEGRATED ANNUAL REPORT 2011 125 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Report of the audit committee for the year ended 31 March 2011 The audit committee has pleasure in submitting (cid:116)(cid:1) (cid:1)(cid:83)(cid:70)(cid:87)(cid:74)(cid:70)(cid:88)(cid:70)(cid:69)(cid:1)(cid:77)(cid:70)(cid:72)(cid:66)(cid:77)(cid:1)(cid:78)(cid:66)(cid:85)(cid:85)(cid:70)(cid:83)(cid:84)(cid:1)(cid:85)(cid:73)(cid:66)(cid:85)(cid:1)(cid:68)(cid:80)(cid:86)(cid:77)(cid:69)(cid:1)(cid:73)(cid:66)(cid:87)(cid:70)(cid:1)(cid:66)(cid:1) this report, as required by sections 269A and significant impact on the organisation’s 270A of the South African Companies Act financial statements. No 61 of 1973 (“the Act”). (cid:96) Reviewed external audit reports on the FUNCTIONS OF THE AUDIT COMMITTEE The audit committee has adopted formal terms of reference, delegated by the board of directors, as its audit committee charter. annual financial statements. (cid:96) Reviewed the board-approved internal audit charter. No amendments were recommended to the board by the committee. The audit committee has discharged the (cid:96) Reviewed and approved the internal audit functions in terms of its charter and ascribed to plan. it in terms of the Act as follows: (cid:96) Reviewed internal audit and risk (cid:96) Reviewed the interim, provisional and management reports and, where relevant, year-end financial statements and integrated made recommendations to the board. annual report, culminating in a (cid:96) Evaluated the effectiveness of risk recommendation to the board to adopt them. management, controls and governance In the course of its review the committee: processes. (cid:116)(cid:1) (cid:1)(cid:85)(cid:80)(cid:80)(cid:76)(cid:1)(cid:66)(cid:81)(cid:81)(cid:83)(cid:80)(cid:81)(cid:83)(cid:74)(cid:66)(cid:85)(cid:70)(cid:1)(cid:84)(cid:85)(cid:70)(cid:81)(cid:84)(cid:1)(cid:85)(cid:80)(cid:1)(cid:70)(cid:79)(cid:84)(cid:86)(cid:83)(cid:70)(cid:1)(cid:85)(cid:73)(cid:70)(cid:1) (cid:96) Verified the independence of the financial statements were prepared in external auditor, nominated accordance with International Financial PricewaterhouseCoopers Inc. as auditor for Reporting Standards (IFRS) and in the 2011 and noted the appointment of manner required by the Act Mr Anton Wentzel as the designated (cid:116)(cid:1) (cid:1)(cid:68)(cid:80)(cid:79)(cid:84)(cid:74)(cid:69)(cid:70)(cid:83)(cid:70)(cid:69)(cid:1)(cid:66)(cid:79)(cid:69)(cid:13)(cid:1)(cid:88)(cid:73)(cid:70)(cid:79)(cid:1)(cid:66)(cid:81)(cid:81)(cid:83)(cid:80)(cid:81)(cid:83)(cid:74)(cid:66)(cid:85)(cid:70)(cid:13)(cid:1)(cid:78)(cid:66)(cid:69)(cid:70)(cid:1) auditor. recommendations on internal financial (cid:96) Approved audit fees and engagement controls terms of the external auditor. (cid:116)(cid:1) (cid:1)(cid:69)(cid:70)(cid:66)(cid:77)(cid:85)(cid:1)(cid:88)(cid:74)(cid:85)(cid:73)(cid:1)(cid:68)(cid:80)(cid:79)(cid:68)(cid:70)(cid:83)(cid:79)(cid:84)(cid:1)(cid:80)(cid:83)(cid:1)(cid:68)(cid:80)(cid:78)(cid:81)(cid:77)(cid:66)(cid:74)(cid:79)(cid:85)(cid:84)(cid:1)(cid:80)(cid:79)(cid:1) (cid:96) Determined the nature and extent of accounting policies, internal audit, the auditing or content of annual financial allowable non-audit services and approved contract terms for non-audit services by the statements, and internal financial controls, external auditor. and 126 NASPERS INTEGRATED ANNUAL REPORT 2011 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION MEMBERS OF THE AUDIT COMMITTEE AND independent and has the necessary resources, ATTENDANCE AT MEETINGS standing and authority in the organisation to The audit committee consists of the discharge its duties. The committee oversees non-executive directors listed below and cooperation between internal and external meets at least three times per annum in auditors, and serves as a link between the accordance with its charter. All members board of directors and these functions. The act independently as described in section head of internal audit reports functionally to the 269A of the Act. During the year under chair of the committee and administratively to review, four meetings were held. Details of attendance are on page 115 of the integrated annual report. Name of committee member Qualifications J J M van Zyl PrEng and BScEng(Mechanical) (UCT) R C C Jafta MEcon and PhD the financial director. ATTENDANCE The internal and external auditors, in their capacity as auditors to the group, attended and reported at all meetings of the audit committee. The group risk management function was also represented. Executive directors and relevant senior managers F-A du Plessis BComHons (Taxation), LLB and CA(SA) attended meetings by invitation. B J van der Ross DipLaw (UCT) CONFIDENTIAL MEETINGS All committee members, with the exception of Mr Van der Ross who was appointed with effect from 17 June 2010, served on the committee for the full financial year. INTERNAL AUDIT The audit committee has oversight of the group’s financial statements and reporting process, including the system of internal financial control. It is responsible for ensuring the group’s internal audit function is Audit committee agendas provide for confidential meetings between committee members and the internal and external auditors. INDEPENDENCE OF THE EXTERNAL AUDITOR During the year the audit committee reviewed a representation by the external auditor and, after conducting its own review, confirmed the independence of the auditor. NASPERS INTEGRATED ANNUAL REPORT 2011 127 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Report of the audit committee (continued) for the year ended 31 March 2011 EXPERTISE AND EXPERIENCE OF FINANCIAL legal and other responsibilities as outlined in DIRECTOR AND THE FINANCE FUNCTION terms of its remit, details of which are included As required by the JSE Listings Requirement on page 103 of this report. The board 3.84(h), the audit committee has satisfied itself concurred with this assessment. that the financial director has appropriate expertise and experience. In addition, the committee satisfied itself that the composition, experience and skills set of the finance function met the group’s requirements. DISCHARGE OF RESPONSIBILITIES J J M van Zyl The committee determined that during the Chairman: Audit committee financial year under review it had discharged its 24 June 2011 128 NASPERS INTEGRATED ANNUAL REPORT 2011 Summarised annual fi nancial statements Strategically focused on long-term business success L A U N N A D E S R A M M U S I S T N E M E T A T S I L A C N A N F I THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Summarised annual fi nancial statements Index Statement of responsibility by the board of directors Report of the independent auditor Basis of presentation and accounting policies Segmental review Reconciliation of trading profi t to operating profi t Consolidated income statement Condensed consolidated statement of comprehensive income Condensed consolidated statement of changes in equity Condensed consolidated statement of fi nancial position Condensed consolidated statement of cash fl ows Calculation of headline and core headline earnings Supplementary information Business combinations and signifi cant acquisitions 131 132 133 134 135 136 137 138 139 140 141 142 144 130 NASPERS INTEGRATED ANNUAL REPORT 2011 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Statement of responsibility by the board of directors for the year ended 31 March 2011 The summarised financial statements of the The independent auditing firm group are the responsibility of the directors of PricewaterhouseCoopers Inc., which was given Naspers Limited. In discharging this unrestricted access to all financial records and responsibility, they rely on the management of related data, including minutes of all meetings the group to prepare the annual financial of shareholders, the board of directors and statements on pages 133 to 144 in committees of the board, has audited the accordance with International Financial group annual financial statements from which Reporting Standards (IFRS) and the South the summarised financial statements were African Companies Act No 61 of 1973. As derived. The directors believe that all such, the summarised financial statements representations made to the independent include amounts based on judgements and auditor during his audit were valid and estimates made by management. The appropriate. PricewaterhouseCoopers Inc.’s information given is comprehensive and audit report is presented on page 132. presented in a responsible manner. The summarised financial statements were The directors accept responsibility for the approved by the board of directors on preparation, integrity and fair presentation of 24 June 2011 and are signed on its behalf by: the summarised financial statements and are satisfied that the systems and internal financial controls implemented by management are effective. The directors believe that the company and group have adequate resources to continue operations as a going concern in the foreseeable future, based on forecasts and available cash resources. The annual financial statements support the viability of the company and the group. T Vosloo Chairman J P Bekker Chief executive 24 June 2011 NASPERS INTEGRATED ANNUAL REPORT 2011 131 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Report of the independent auditor on the summarised group annual financial statements to the members of Naspers Limited The summarised group annual financial statements, which comprise the condensed AUDITOR’S RESPONSIBILITY Our responsibility is to express an opinion on consolidated statement of financial position as the summarised group annual financial at 31 March 2011, and the condensed statements based on our procedures, which consolidated income statement and were conducted in accordance with condensed consolidated statements of International Standard on Auditing (ISA) 810, comprehensive income, changes in equity and “Engagements to Report on Summary cash flows for the year then ended, and Financial Statements”. related notes, as set out on pages 133 to 144, are derived from the audited group annual financial statements of Naspers Limited for the year ended 31 March 2011. We expressed an unmodified audit opinion on those group annual financial statements in our report dated 24 June 2011. The summarised group annual financial statements do not contain all the disclosures required by International Financial Reporting Standards and in the manner required by the South African Companies Act No 61 of 1973. Reading the summarised group annual financial statements, therefore, is not a substitute for reading the audited group annual financial statements of Naspers Limited. DIRECTORS’ RESPONSIBILITY FOR THE SUMMARISED GROUP ANNUAL FINANCIAL STATEMENTS The company’s directors are responsible OPINION In our opinion, the summarised group annual financial statements derived from the audited group annual financial statements of Naspers Limited for the year ended 31 March 2011 are consistent, in all material respects, with those group annual financial statements, in accordance with the requirements of section 8.57 of the JSE Limited Listings Requirements. PricewaterhouseCoopers Inc. Director: Anton Wentzel Registered auditor for the preparation of the summarised group Cape Town, South Africa annual financial statements in accordance 24 June 2011 with the requirements of section 8.57 of the JSE Limited Listings Requirements. 132 NASPERS INTEGRATED ANNUAL REPORT 2011 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Basis of presentation and accounting policies The summarised annual financial statements The total amount reallocated to investing for the year ended 31 March 2011 have been activities was R404m for the year ended prepared in accordance with IAS 34 and 31 March 2010. International Financial Reporting Standards (IFRS), the requirements of the South African (cid:96) IFRS 3 Revised “Business Combinations” and IAS 27 Revised “Consolidated and Companies Act No 61 of 1973, and in Separate Financial Statements” were compliance with the Listings Requirements of adopted. The effect of these standards is the JSE Limited. Except as noted below, recorded in the line item “Gains on accounting policies used are consistent with acquisitions and disposals” on the income those applied in the previous annual financial statement. These items are adjusted for in statements and IFRS. These results have been the calculation of headline and core headline audited by the company’s auditor, earnings. PricewaterhouseCoopers Inc., whose The MWEB business is now reported in the unqualified report is available for inspection at pay-television rather than the internet segment. the registered office of the company. It is working on technologies to deliver video The group adopted the following new content. Comparative segmental results have standards and amendments for the year been restated in accordance with IFRS 8 ended 31 March 2011: (cid:96) IAS 7 “Statement of Cash Flows” has been amended and now requires changes in “Operating Segments”. Our share of associates’ other comprehensive income and reserves relates interests in a subsidiary that do not result in mainly to the revaluation of the associates’ a loss of control to be recorded in financing available-for-sale investments. activities as opposed to investing activities. Core headline earnings exclude once-off and This amendment is effective retrospectively, non-operating items. We believe that it is a resulting in the restatement of the statement useful measure for shareholders of the group’s of cash flows. Preference dividends received sustainable operating performance. However, are now recorded in investing activities as this is not a defined term under IFRS and may opposed to financing activities. not be comparable with similarly titled measures reported by other companies. NASPERS INTEGRATED ANNUAL REPORT 2011 133 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Segmental review for the year ended 31 March 2011 Revenue Year ended 31 March 2010 R’m 17 603 8 237 4 874 3 363 10 204 1 207 37 251 (9 253) 27 998 EBITDA Year ended 31 March 2010 R’m 5 851 2 697 2 542 155 1 232 98 9 878 (230) (3 152) 6 496 2011 R’m 21 025 12 092 7 215 4 877 10 758 1 228 45 103 (12 018) 33 085 2011 R’m 6 542 3 945 3 795 150 1 194 188 11 869 (239) (4 481) 7 149 % change 19 47 48 45 5 2 21 30 18 % change 12 46 49 (3) (3) 92 20 4 42 10 Pay television Internet – Tencent – Other Print Technology Economic interest Less: Associates Consolidated Pay television Internet – Tencent – Other Print Technology Economic interest Corporate services Less: Associates Consolidated 134 NASPERS INTEGRATED ANNUAL REPORT 2011 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Segmental review (continued) for the year ended 31 March 2011 Trading profit Year ended 31 March 2011 R’m 5 727 3 493 3 543 (50) 872 128 10 220 (240) (4 142) 5 838 2010 R’m 5 232 2 362 2 363 (1) 896 47 8 537 (232) (2 858) 5 447 % change 9 48 50 +100 (3) +100 20 3 45 7 Pay television Internet – Tencent – Other Print Technology Economic interest Corporate services Less: Associates Consolidated Note Trading profit excludes amortisation of intangible assets (other than software) and other gains/losses, but includes the finance cost on transponder leases. Reconciliation of trading profit to operating profit for the year ended 31 March 2011 Trading profit Finance cost on transponder leases Amortisation of intangible assets Other gains/(losses) – net Operating profit Note Year ended 31 March 2011 R’m 5 838 144 (1 045) (881) 4 056 2010 R’m 5 447 93 (1 135) (364) 4 041 For a reconciliation of operating profit to profit before taxation, refer to the consolidated income statement. NASPERS INTEGRATED ANNUAL REPORT 2011 135 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Consolidated income statement for the year ended 31 March 2011 31 March 2011 R’m 33 085 (17 794) (10 354) (881) 31 March 2010 R’m 27 998 (14 438) (9 155) (364) % change 18 4 056 401 (1 389) (30) 3 290 (23) 1 461 42 7 808 (1 861) 5 947 5 260 687 5 947 6 036 1 612 1 550 4 213 1 125 1 082 1 405 1 351 4 041 348 (883) 114 2 058 (62) — 144 5 760 (1 808) 3 952 3 257 695 3 952 5 319 1 426 1 386 3 297 884 859 873 848 375 440 374 501 389 465 374 308 372 951 383 820 60 36 50 13 13 12 28 27 26 61 59 Revenue Cost of providing services and sale of goods Selling, general and administration expenses Other gains/(losses) – net Operating profit Interest received Interest paid Other finance income/(costs) – net Share of equity-accounted results Impairment of equity-accounted investments Dilution gains on equity-accounted investments Gains on acquisitions and disposals Income before taxation Taxation Profit for the year Attributable to: Equity holders of the group Non-controlling interest Core headline earnings for the period Core headline earnings per N ordinary share (cents) Fully diluted core headline earnings per N ordinary share (cents) Headline earnings for the period Headline earnings per N ordinary share (cents) Fully diluted headline earnings per N ordinary share (cents) Earnings per N ordinary share (cents) Fully diluted earnings per N ordinary share (cents) Net number of shares issued (’000) – At period-end – Weighted average for the period – Fully diluted weighted average 136 NASPERS INTEGRATED ANNUAL REPORT 2011 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Condensed consolidated statement of comprehensive income for the year ended 31 March 2011 Profit for the year Total other comprehensive income, net of tax, for the year Translation of foreign operations Cash flow hedges Share of associates’ other comprehensive income and reserves Tax on other comprehensive income Total comprehensive income for the year Attributable to: Equity holders of the group Non-controlling interest 31 March 2011 R’m 5 947 2 277 (461) 126 2 622 (10) 8 224 7 543 681 8 224 31 March 2010 R’m 3 952 (2 047) (1 918) (560) 250 181 1 905 1 308 597 1 905 NASPERS INTEGRATED ANNUAL REPORT 2011 137 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Condensed consolidated statement of changes in equity for the year ended 31 March 2011 Balance at beginning of the year Changes in share capital and premium Movement in treasury shares Share capital and premium issued Changes in reserves Total comprehensive income for the year Movement in share-based compensation reserve Movement in existing control business combination reserve Direct retained earnings movements Dividends paid to Naspers shareholders Changes in non-controlling interest Total comprehensive income for the year Dividends paid to non-controlling shareholders Movement in non-controlling interest in reserves Balance at end of year Comprising: Share capital and premium Retained earnings Share-based compensation reserve Existing control business combination reserve Hedging reserve Valuation reserve Foreign currency translation reserve Non-controlling interest Total 31 March 2011 R’m 31 March 2010 R’m 35 634 35 217 (335) 253 (1 041) 433 7 543 1 308 508 (63) (22) (882) 681 (665) 290 498 (334) (22) (773) 597 (311) 62 42 942 35 634 14 384 21 179 2 300 25 (297) 4 256 (1 185) 2 280 42 942 14 466 16 823 1 573 98 (408) 1 844 (736) 1 974 35 634 138 NASPERS INTEGRATED ANNUAL REPORT 2011 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Condensed consolidated statement of financial position at 31 March 2011 31 March 2011 R’m 31 March 2010 R’m ASSETS Non-current assets Property, plant and equipment Goodwill Other intangible assets Investment in associates Other investments and loans Deferred taxation Current assets Inventory Programme and film rights Trade receivables Other receivables and loans Cash and cash equivalents Assets classified as held-for-sale Total assets EQUITY AND LIABILITIES Share capital and reserves Non-controlling shareholders’ interest Total equity Non-current liabilities Capitalised finance leases Liabilities – interest-bearing – non-interest-bearing Post-retirement medical liability Derivatives Deferred taxation Current liabilities Current portion of long-term debt Trade payables Accrued expenses and other current liabilities Derivatives Bank overdrafts and call loans Total equity and liabilities Net asset value per N ordinary share (cents) 53 610 7 561 17 278 3 886 20 767 3 301 817 16 245 731 1 487 2 929 2 330 8 731 37 69 855 40 662 2 280 42 942 14 951 1 893 10 822 178 179 714 1 165 11 962 1 510 1 915 6 608 599 1 330 69 855 10 831 44 342 6 490 16 620 4 976 11 942 3 500 814 13 126 693 1 298 2 438 1 900 6 785 12 57 468 33 660 1 974 35 634 10 892 1 736 6 983 51 178 684 1 260 10 942 1 675 1 721 5 740 847 959 57 468 8 993 NASPERS INTEGRATED ANNUAL REPORT 2011 139 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Condensed consolidated statement of cash flows for the year ended 31 March 2011 Cash flow from operating activities Cash flow utilised in investing activities Cash flow generated from/(utilised in) financing activities Net movement in cash and cash equivalents Foreign exchange translation adjustments Cash and cash equivalents at beginning of the year Cash and cash equivalents at end of the year 31 March 2011 R’m 31 March 2010 R’m 5 271 (5 778) 2 513 2 006 (431) 5 826 7 401 5 622 (4 752) (169) 701 (678) 5 803 5 826 140 NASPERS INTEGRATED ANNUAL REPORT 2011 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Calculation of headline and core headline earnings for the year ended 31 March 2011 Net profit attributable to shareholders Adjusted for: – insurance proceeds – impairment of property, plant, equipment and other assets – impairment and derecognition of goodwill and intangible assets – profit on sale of property, plant and equipment and intangible assets – profit on sale of investments – dilution gains on equity-accounted investments – remeasurements included in equity-accounted earnings – impairment of equity-accounted investments Total tax effects of adjustments Total adjustment for non-controlling interest Headline earnings Adjusted for: – treasury-settled share scheme charges – prior year withholding taxes – reversal of deferred tax assets – amortisation of intangible assets – Welkom Yizani refinancing – fair value adjustments and currency translation differences – RCF – accelerated amortisation of costs – acquisition-related costs Core headline earnings 31 March 2011 R’m 5 260 (51) 25 1 035 (407) (152) (1 461) (28) 23 4 244 (27) (4) 4 213 488 — 13 1 052 — 18 128 124 6 036 31 March 2010 R’m 3 257 (369) 225 384 (229) (120) — 30 62 3 240 7 50 3 297 418 121 253 922 330 (22) — — 5 319 NASPERS INTEGRATED ANNUAL REPORT 2011 141 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Supplementary information for the year ended 31 March 2011 Depreciation of property, plant and equipment Amortisation – intangible assets – software Other gains/(losses) – net – profit/(loss) on sale of property, plant and equipment and intangible assets – impairment and derecognition of goodwill and intangible assets – impairment of tangible assets – Welkom Yizani refinancing – insurance proceeds – profit on transponder lease settlement – fair value adjustment on shareholders’ liability Interest received – loans and bank accounts – other Interest paid – loans and overdrafts – transponder leases – RCF costs – accelerated amortisation – other Other finance income/(cost) – net – net foreign exchange differences and fair value adjustments on derivatives – preference dividends received Gains on acquisitions and disposals – profit on sale of investments – profit on partial disposal of investments – acquisition-related costs – other 142 NASPERS INTEGRATED ANNUAL REPORT 2011 31 March 2011 R’m 1 040 1 172 1 045 127 (881) 42 (1 035) (33) — 51 88 6 401 308 93 (1 389) (883) (144) (128) (234) (30) (247) 217 42 34 72 (109) 45 31 March 2010 R’m 878 1 213 1 135 78 (364) (47) (384) (225) (330) 369 253 — 348 314 34 (883) (600) (93) — (190) 114 (154) 268 144 144 — — — THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Supplementary information (continued) for the year ended 31 March 2011 31 March 2011 R’m 31 March 2010 R’m Goodwill – cost – accumulated impairment Opening balance – foreign currency translation effects – acquisitions – contingent consideration adjustment – impairment and derecognition Closing balance – cost – accumulated impairment Investments and loans – listed investments – unlisted investments Market value of listed investments Directors’ valuation of unlisted investments Commitments – capital expenditure – programme and film rights – network and other service commitments – transponder leases – operating lease commitments – set-top box commitments Share of equity-accounted results – dilution gains – FCTR release – impairment of investments – (gains)/losses on acquisitions and disposals Contribution to headline earnings – amortisation of intangible assets – treasury-settled share scheme charges – business combination costs – reversal of deferred taxation Contribution to core headline earnings Tencent Mail.ru Abril Other 17 051 (431) 16 620 (510) 1 885 (49) (668) 17 278 18 371 (1 093) 24 068 16 874 7 194 137 735 7 194 16 997 401 7 744 700 6 787 896 469 3 290 (39) (29) 24 (262) 2 984 355 227 15 13 3 594 3 164 152 250 28 15 407 (49) 15 358 (1 163) 2 807 — (382) 16 620 17 051 (431) 15 442 4 646 10 796 92 843 10 796 18 626 527 8 698 656 7 689 697 359 2 058 (64) — — 100 2 094 180 148 — 101 2 523 2 148 70 318 (13) NASPERS INTEGRATED ANNUAL REPORT 2011 143 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Business combinations and significant acquisitions In August 2010 the group consolidated its internet interests in Russia, acquiring a 28,7% in Digital Sky Technologies (DST), a prominent internet company in Russian-speaking markets. In consideration, the group contributed its 39,3% investment in Mail.ru and US$388m in cash. In August 2010 the group acquired a 67,8% fully diluted interest in OLX Inc., an online classifieds business. The fair value of the total purchase consideration was R1 044m (US$144m) cash. The purchase price allocation (PPA): PP&E R3m; intangible assets R260m; cash R237m; other current assets R59m; trade and other payables R35m; deferred tax liability R103m and the balance to goodwill. The main factor contributing to the goodwill recognised is the company’s presence in the classifieds sector in the emerging markets. The recognised goodwill is not expected to be deductible for income tax purposes. A non-controlling interest of R51m was recognised at the acquisition date. This was measured using the proportionate share of the identifiable net assets. In December 2010 the group increased it’s total economic interest to 71,5% on a fully diluted basis. This was accounted for as a transaction with non-controlling interests. The revenue and results from OLX since the acquisition date were not significant to the group’s consolidated results. In September 2010 the group acquired a 73,9% fully diluted interest in Multiply Inc. which combines social networking with an online marketplace. The fair value of the total purchase consideration was R311m (US$44m) in cash. The group increased its holding in Multiply to 74,5% during November. The preliminary PPA: PP&E R7m; intangible assets R80m; cash R3m; trade and other receivables R2m; trade and other payables R1m; deferred tax liability R24m and the balance to goodwill. The main factor contributing to the goodwill recognised is the company’s significant user base in emerging markets. The recognised goodwill is not expected to be deductible for income tax purposes. A non-controlling interest of R17m was recognised at the acquisition date, and was measured using the proportionate share of the identifiable net assets. The revenue and results from Multiply since the acquisition date were not significant to the group’s consolidated results. In December 2010 the group acquired 100% of Level Up! International Holdings for a cash purchase consideration of R365m (US$51m). A PPA has not yet been performed and the difference between the net asset value and purchase consideration of R279m was allocated to goodwill. In February 2011 the group acquired 77,7% of DineroMail, Latam’s leading internet payment solution, for a cash purchase consideration of R206m (US$28m). A PPA has not yet been performed and the difference between the net asset value and purchase consideration of R181m was allocated to goodwill. Total acquisition-related costs of R109m were recorded in “Gains on acquisitions and disposals” in the income statement. Had the revenues and net results of all business combinations that occurred in the period been included from 1 April 2010 it would not have had a significant effect on the group’s consolidated revenue and net results. 144 NASPERS INTEGRATED ANNUAL REPORT 2011 Shareholder and corporate information Applying appropriate corporate governance and policies D N A R E D L O H E R A H S I N O T A M R O F N I E T A R O P R O C THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Administration and corporate information GROUP SECRETARY G Kisbey-Green 251 Oak Avenue Randburg 2194 South Africa REGISTERED OFFICE 40 Heerengracht Cape Town 8001 South Africa PO Box 2271 Cape Town 8000 South Africa Tel: +27 (0)21 406 2121 Fax: +27 (0)21 406 3753 REGISTRATION NUMBER 1925/001431/06 Incorporated in South Africa AUDITOR PricewaterhouseCoopers Inc. TRANSFER SECRETARIES Link Market Services South Africa (Proprietary) Limited (Registration number: 2000/007239/07) PO Box 4844, Johannesburg 2000 South Africa Tel: +27 (0)11 630 0800 Fax: +27 (0)11 834 4398 ADR PROGRAMME The Bank of New York Mellon maintains a Global BuyDIRECT™ plan for Naspers Limited. For additional information, please visit The Bank of New York Mellon’s website at www.globalbuydirect.com or call Shareholder Relations at 1-888-BNY-ADRS or 1-800-345-1612 or write to: The Bank of New York Mellon Shareholder Relations Department – Global BuyDIRECT™ Church Street Station PO Box 11258, New York, NY 10286-1258, USA SPONSOR Investec Bank Limited (Registration number: 1969/004763/06) PO Box 785700, Sandton 2146 South Africa Tel: +27 (0)11 286 7326 Fax: +27 (0)11 286 9986 ATTORNEYS Werksmans incorporating Jan S de Villiers PO Box 1474, Cape Town 8000 South Africa INVESTOR RELATIONS M Horn meloy.horn@naspers.com Tel: +27 (0)11 289 3320 Fax: +27 (0)11 289 3026 www.naspers.com 146 NASPERS INTEGRATED ANNUAL REPORT 2011 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Analysis of shareholders and shareholders’ diary ANALYSIS OF SHAREHOLDERS Size of holdings 1 – 100 shares 101 – 1 000 shares 1 001 – 5 000 shares 5 001 – 10 000 shares More than 10 000 shares Number of Number of shareholders shares owned 19 460 19 035 3 630 547 1 156 732 907 6 882 891 7 795 757 4 006 261 387 164 095 The following shareholders hold 5% and more of the issued share capital of the company: Name Public Investment Corporation Dodge & Cox Incorporated Capital World Investors Coronation Fund Managers (Proprietary) Limited Number of shares owned 41 404 675 29 795 695 27 761 600 21 126 278 Public shareholder spread To the best knowledge of the directors, the spread of public shareholders in terms of section 4.25 of the JSE Limited’s Listings Requirements at 31 March 2011 was 92,19%, represented by 43 809 shareholders holding 374 810 522 ordinary shares in the company. The non-public shareholders of the company comprising 19 shareholders representing 31 771 389 ordinary shares are analysed as follows: Category Naspers Share Trust Directors Group companies SHAREHOLDERS’ DIARY Annual general meeting Reports Interim for half-year to September Announcement of annual results Annual financial statements Dividend Declaration Payment Financial year-end Number of % of issued shares share capital 17 377 456 9 684 662 4 709 271 4,3 2,4 1,2 August November June July August September March NASPERS INTEGRATED ANNUAL REPORT 2011 147 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Notice of annual general meeting Notice is hereby given in terms of the Companies Act No 71 of 2008, as amended (“the Act”) that the ninety-seventh annual general meeting of Naspers Limited (”the company” or “Naspers”) will be held on the 18th floor of Naspers Centre, 40 Heerengracht in Cape Town, South Africa, on Friday, 26 August 2011 at 11:15. RECORD DATE, ATTENDANCE AND VOTING The record date for the meeting (determined in accordance with section 59(3)(a) of the Act) is 28 July 2011, being the date on which a person must be registered as a shareholder of the company for purposes of being entitled to receive notice of the annual general meeting. Votes at the annual general meeting will be taken by way of a poll and not on a show of hands. A shareholder entitled to attend and vote at the meeting is entitled to appoint a proxy to attend, participate in and vote at the meeting in the place of the shareholder. A proxy need not be a shareholder of the company. Before any person may attend or participate in a shareholders’ meeting that person must present reasonably satisfactory identification and the person presiding at the meeting must be reasonably satisfied that the right of that person to participate and vote, either as a shareholder, or as a proxy for a shareholder, has been reasonably verified. Forms of identification include valid identity documents, driver’s licences and passports. A form of proxy, which includes the relevant instructions for its completion, is attached for the use of holders of certificated shares and “own name” dematerialised shareholders who wish to be represented at the annual general meeting. Completion of a form of proxy will not preclude such a shareholder from attending and voting (in preference to that shareholder’s proxy) at the annual general meeting. Holders of dematerialised shares, other than “own name” dematerialised shareholders, who wish to vote at the annual general meeting must instruct their central securities depositary participant (CSDP) or broker accordingly in the manner and cut-off time stipulated by their CSDP or broker. Holders of dematerialised shares, other than “own name” dematerialised shareholders, who wish to attend the annual general meeting in person need to arrange the necessary authorisation as soon as possible through their CSDP or broker. The form appointing a proxy and the authority (if any) under which it is signed must reach the transfer secretaries of the company (Link Market Services South Africa (Proprietary) Limited, 13th floor – Rennie House, 19 Ameshoff Street, Braamfontein 2001 or PO Box 4844, Johannesburg 2000) by no later than 11:15 on Thursday, 25 August 2011. A form of proxy is enclosed with this notice. The form of proxy may also be obtained from the registered office of the company. PURPOSE OF MEETING The purpose of the meeting is (i) to present the directors’ report and the audited annual financial statements of the company for the immediately preceding financial year and an audit committee report and (ii) to consider and, if approved, to adopt with or without amendment, the resolutions set out below and 148 NASPERS INTEGRATED ANNUAL REPORT 2011 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Notice of annual general meeting (continued) (iii) to consider any matters raised by the shareholders of the company, with or without advance notice to the company. number of votes which may be exercised by the shareholders present or represented by proxy at this meeting. ELECTRONIC PARTICIPATION Shareholders entitled to attend and vote at the meeting or proxies of such shareholders shall be entitled to participate in the meeting (but not vote) by electronic communication. Should a shareholder wish to participate in the meeting by electronic communication, the shareholder concerned should advise the company thereof by no later than 09:00 on Friday, 19 August 2011 by submitting via registered mail addressed to the company (for the attention of Mrs Gillian Kisbey-Green) relevant contact details as well as full details of the shareholder’s title to securities issued by the company and proof of identity, in the form of certified copies of identity documents and share certificates (in the case of materialised shares) and (in the case of dematerialised shares) written confirmation from the shareholder’s CSDP confirming the shareholder’s title to the dematerialised shares. Upon receipt of the required information, the shareholder concerned will be provided with a secure code and instructions to access the electronic communication during the annual general meeting. Shareholders must note that access to the electronic communication will be at the expense of the shareholders who wish to utilise the facility. ORDINARY RESOLUTIONS In order for the ordinary resolutions below to be adopted, the support of a majority of votes exercised by shareholders present or represented by proxy at this meeting is required. Ordinary resolutions numbers 8 and 9 require the support of at least 75% of the total 1. The financial statements of the company and the group for the twelve (12) months ended 31 March 2011 and the reports of the directors, the auditor and the audit committee to be considered and accepted. (The summarised form of the financial statements is included on pages 130 to 144 of the annual integrated report). A copy of the complete annual financial statements of the company for the preceding financial year is enclosed with this notice and can also be obtained at www.naspers.com. The confirmation and approval of payment of dividends in relation to the N ordinary and A ordinary shares of the company as recommended by the board after having applied the solvency and liquidity tests contemplated in the Act. To reappoint, on the recommendation of the company’s audit committee, the firm PricewaterhouseCoopers Inc. as independent registered auditor of the company (noting that Mr A Wentzel is the individual registered auditor of that firm who will undertake the audit) for the period until the next annual general meeting of the company. To elect Adv F-A du Plessis, Prof G J Gerwel and Messrs T M F Phaswana, B J van der Ross and J J M van Zyl, who retire by rotation and, being eligible, offer themselves for re-election as directors of the company. Their abridged curricula vitae appear on pages 111 to 113 of the integrated annual report. 2. 3. 4. NASPERS INTEGRATED ANNUAL REPORT 2011 149 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Notice of annual general meeting (continued) The board unanimously recommends that The appointment of the members of the audit the re-election of directors in terms of resolution 4 be approved by the shareholders of the company. The re-election is to be conducted as a series of votes, each of which is on the candidacy of a single individual to fill a single vacancy, and in each vote to fill a vacancy, each voting right entitled to be exercised may be exercised once. 5. To appoint the audit committee members as required in terms of the Act and as recommended by the King Code of Governance for South Africa 2009 (“King III”) (chapter 3). The board and the nomination committee are satisfied that the company’s audit committee members are suitably skilled and experienced independent non-executive directors. Collectively they have sufficient qualifications and experience to fulfil their duties, as contemplated in regulation 42 of the Companies Regulations 2011. They have a comprehensive understanding of financial reporting, internal financial controls, risk management and governance processes within the company, as well as International Financial Reporting Standards, South African Statements of Generally Accepted Accounting Practice and other regulations and guidelines applicable to the company. They keep up-to-date with developments affecting their required skills-set. The board and the nomination committee therefore unanimously recommend Messrs J J M van Zyl and B J van der Ross, Prof R C C Jafta and Adv F-A du Plessis for election to the audit committee. Their abridged curricula vitae appear on pages 110 to 113 of the integrated annual report. committee will be conducted by way of a separate vote in respect of each individual. 6. 7. 8. To endorse the company’s remuneration policy, as set out in the remuneration report on pages 116 and 117 of the integrated annual report, by way of a non-binding advisory vote. To place the authorised but unissued share capital of the company under the control of the directors and to grant, until the conclusion of the next annual general meeting of the company, an unconditional authority to the directors to allot and issue at their discretion (but subject to the provisions of the Act, and the requirements of the JSE Limited (“the JSE”) and any other exchange on which the shares of the company may be quoted or listed from time to time) the unissued shares of the company on such terms and conditions and to such persons, whether they be shareholders or not, as the directors at their discretion deem fit. Subject to a minimum of 75% of the votes of shareholders of the company present in person or by proxy at the annual general meeting and entitled to vote, voting in favour thereof, the directors be authorised and are hereby authorised to issue unissued shares of a class of shares already in issue in the capital of the company for cash as and when the opportunity arises, subject to the requirements of the JSE, including the following: 150 NASPERS INTEGRATED ANNUAL REPORT 2011 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Notice of annual general meeting (continued) (cid:96) this authority shall not endure beyond the earlier of the next annual general meeting of the company or beyond fifteen (15) months from the date of the meeting (cid:96) that a paid press announcement giving full details, including the impact on the net asset value and earnings per share, will be published at the time of any issue representing, on a cumulative basis within one year, 5% or more of the number of shares of that class in issue prior to the issue (cid:96) the aggregate issue of any particular class of shares in any financial year will not exceed 5% of the issued number of that class of shares (including securities which are compulsorily convertible into shares of that class) (cid:96) that in determining the price at which an issue of shares will be made in terms of this authority, the discount at which the shares may be issued may not exceed 10% of the weighted average traded price of the shares in question, as determined over the thirty (30) business days prior to the date that the price of the issue is determined, and (cid:96) that the shares will only be issued to “public shareholders” as defined in the Listings Requirements of the JSE, and not to related parties. 9. To approve the following amendments to the trust deed of the Naspers share incentive scheme, Masters reference IT4713/97 (“the scheme”): Changing the heading of clause 2 of the trust deed to DEFINITIONS AND INTERPRETATION and adding the following to clause 2: “closed period” any period during which dealing in shares by a participant is prohibited, whether by virtue of the requirements of the JSE or any other exchange on which the shares may from time to time be listed, the internal rules of Naspers or applicable legislation; “dealing” dealing in the shares which shall include buying and selling the shares, or accepting or exercising an offer to acquire the shares or to dispose of the shares, or paying the purchase price or receiving the selling price in respect of the shares, or taking any other action in relation to the shares; 2.4 Whenever the last day of any period stipulated in this trust deed falls within a closed period, the stipulated period shall be extended to a date ninety (90) days after the expiry of the closed period or a date ninety (90) days after the expiry of any subsequent closed period(s), should another/further closed period(s) occur during the ninety (90) day extension period. The trust deed of the scheme in its amended form will be available for inspection by shareholders during normal business hours at Naspers’s registered address, 40 Heerengracht, Cape Town, 8000 (contact person Lurica Klink) and in Johannesburg at 251 Oak Avenue, Randburg, 2194 (contact person Gillian Kisbey-Green) for a period of 14 days prior to the date of this annual general meeting. The amendment of the terms of the scheme must be approved by ordinary resolution requiring a 75% majority of the votes exercised NASPERS INTEGRATED ANNUAL REPORT 2011 151 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Notice of annual general meeting (continued) in favour of such resolution by all shareholders present or represented by proxy at the annual general meeting. Votes attaching to equity securities owned or controlled by persons who are existing participants in the scheme and which have been acquired in terms of the scheme and may be impacted by the changes will be excluded from the vote. SPECIAL RESOLUTIONS The special resolutions set out below, require the support of at least 75% of votes exercised by shareholders present or represented by proxy at this meeting in order to be adopted. SPECIAL RESOLUTIONS NUMBERS 1.1 – 1.14 The approval of the remuneration of the non-executive directors for the years ending 31 March 2011 (that have not yet been approved and paid), 31 March 2012 and 31 March 2013, as follows: Board 1.1 Chair*** 1.2 Member Commitees 1.3 ● Audit committee: Chair 1.4 1.5 ● Risk committee: Chair 1.6 1.7 ● Human resources and Member Member remuneration committee: Chair 1.8 1.9 ● Nomination committee: Chair 1.10 Member Member Other 1.11 Naspers representatives on Media24 safety, health and environmental committee: Member 1.12 Trustee of group share schemes/other personnel funds 1.13 Media24 pension fund: Chair 1.14 Trustee 31 March 2011 31 March 2012 31 March 2013** R2 011 400* R378 800* R2 390 000 R430 000 R2 390 000 R430 000 R270 000* R135 000* R120 000* R60 000* R140 000* R70 000* R50 000* R25 000* R280 000 R140 000 R140 000 R70 000 R160 000 R80 000 R60 000 R30 000 R280 000 R140 000 R140 000 R70 000 R160 000 R80 000 R60 000 R30 000 R45 000 R48 000 R48 000 R32 000 R80 400 R53 600 R34 000 R85 500 R57 000 R34 000 R85 500 R57 000 * These fees were approved by shareholders on 27 August 2010 and paid before the effective date of the Act and are reflected for comparative purposes only. ** The proposed 31 March 2013 remuneration is subject to such annual increase as may be retrospectively approved by the shareholders at the 2013 Naspers annual general meeting. *** The chair of the board does not receive additional remuneration if he/she is a member of or chairs any subcommittee of the board. 152 NASPERS INTEGRATED ANNUAL REPORT 2011 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Notice of annual general meeting (continued) The reason and effect of special resolutions numbers 1.1 – 1.14 is to grant the company the authority to pay remuneration to its directors for their services as directors. Each of the special resolutions 1.1 – 1.14 in respect of each of the proposed 31 March 2011, 31 March 2012 and the proposed 31 March 2013 remuneration will be considered by way of a separate vote. SPECIAL RESOLUTION NUMBER 2 That the board may authorise the company to generally provide any direct or indirect financial assistance in the manner contemplated in and subject to the provisions of sections 44 and 45 of the Act to a related or inter-related company or corporation, or to a member of a related or inter-related corporation, pursuant to the authority hereby conferred upon the board for these purposes. The reason for and effect of special resolution number two is to approve generally the provision of financial assistance to the potential recipients as set out in the resolution. SPECIAL RESOLUTION NUMBER 3 That the company or any of its subsidiaries be and are hereby authorised to acquire N ordinary shares issued by the company from any person whatsoever (including any director or prescribed officer of the company or any person related to any director or prescribed officer of the company), in terms of and subject to the Act and in terms of the rules and requirements of the JSE being that: (cid:96) any such acquisition of N ordinary shares shall be effected through the order book operated by the JSE trading system and done without any prior understanding or arrangement (cid:96) this general authority shall be valid until the company’s next annual general meeting, provided that it shall not extend beyond fifteen (15) months from the date of passing of this special resolution (cid:96) an announcement will be published as soon as the company or any of its subsidiaries have acquired N ordinary shares constituting, on a cumulative basis, 3% of the number of N ordinary shares in issue prior to the acquisition pursuant to which the aforesaid 3% threshold is reached, and for each 3% in aggregate acquired thereafter, containing full details of such acquisitions (cid:96) acquisitions of N ordinary shares in aggregate in any one financial year may not exceed 20% of the company’s N ordinary issued share capital as at the date of passing of this special resolution (cid:96) in determining the price at which N ordinary shares issued by the company are acquired by it or any of its subsidiaries in terms of this general authority, the maximum premium at which such N ordinary shares may be acquired will not exceed 10% of the weighted average of the market value at which such N ordinary shares are traded on the JSE as determined over the five (5) business days immediately preceding the date of repurchase of such N ordinary shares by the company or any of its subsidiaries (cid:96) the company has been given authority by its articles of association (cid:96) at any point, the company may only appoint one agent to effect any repurchase on the company’s behalf NASPERS INTEGRATED ANNUAL REPORT 2011 153 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Notice of annual general meeting (continued) (cid:96) the company’s sponsor must confirm the adequacy of the company’s working capital for purposes of undertaking the repurchase of N ordinary shares in writing to the JSE before entering the market for the repurchase (cid:96) the company remaining in compliance with the minimum shareholder spread requirements of the JSE Listings Requirements, and (cid:96) the company and/or its subsidiaries not repurchasing any N ordinary shares during a prohibited period as defined by the JSE Listings Requirements, unless a repurchase programme is in place where dates and quantities of shares to be traded during the prohibited period are fixed and full details of the programme have been disclosed in an announcement over the Securities Exchange News Service (SENS) prior to the commencement of the prohibited period. Before the general repurchase is effected, the directors, having considered the effects of the repurchase of the maximum number of N ordinary shares in terms of the foregoing general authority, will ensure that for a period of twelve (12) months after the date of the notice of the annual general meeting: (cid:96) the company and the group will be able, in the ordinary course of business, to pay their debts (cid:96) the assets of the company and the group, fairly valued in accordance with International Financial Reporting Standards, will exceed the liabilities of the company and the group, and (cid:96) the company and the group’s ordinary share capital, reserves and working capital will be adequate for ordinary business purposes. The following additional information, some of which appears elsewhere in the integrated annual report of which this notice forms part and in the annual financial statements enclosed with this notice, is provided in terms of the JSE Listings Requirements for purposes of the general authority: (cid:96) directors – pages 110 to 113 of the integrated annual report (cid:96) major shareholders – page 147 of the integrated annual report (cid:96) directors’ interests in ordinary shares – page 125 of the integrated annual report (cid:96) share capital of the company, and litigation – pages 66 to 68 and pages 79 to 80, respectively, of the annual financial statements. Directors’ responsibility statement The directors, whose names appear in the list of directors set out on pages 110 to 113 of the integrated annual report collectively and individually accept full responsibility for the accuracy of the information pertaining to this special resolution number three and certify that, to the best of their knowledge and belief, there are no facts that have been omitted which would make any statement false or misleading, and that all reasonable enquiries to ascertain such facts have been made and that special resolution number three contains all relevant information. Material changes Other than the facts and developments reported on in the integrated annual report and enclosed annual financial statements, there have been no material changes in the affairs or financial position of the company and its subsidiaries since the date of signature of the audit report and up to the date of this notice. 154 NASPERS INTEGRATED ANNUAL REPORT 2011 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Notice of annual general meeting (continued) The directors have no specific intention, at present, for the company to repurchase any of its N ordinary shares, but consider that such a general authority should be put in place should an opportunity present itself to do so during the year which is in the best interests of the company and its shareholders. The reason for and effect of special resolution number three is to grant the company the authority in terms of the Act and the JSE Listings Requirements for the acquisition by the company, or a subsidiary of the company, of the company’s N ordinary shares. SPECIAL RESOLUTION NUMBER 4 That the company or any of its subsidiaries be and are hereby authorised to acquire A ordinary shares issued by the company from any person whatsoever (including any director or prescribed officer of the company or any person related to any director or prescribed officer of the company), in terms of and subject to the Act. The reason for and effect of special resolution number four is to grant the company the authority in terms of the Act for the acquisition by the company, or a subsidiary of the company, of the company’s A ordinary shares. SPECIAL RESOLUTION NUMBER 5 The resolution set out below was passed (in part) as an ordinary resolution with the requisite majority vote at the annual general meeting of the company on 27 August 2010. In terms of the transitional arrangements under the Act, certain matters which had previously been approved by the company’s shareholders prior to the effective date of the Act are subject to the Act, which contains additional requirements that must be complied with in respect of the matters contemplated in this resolution. Shareholders are accordingly requested to consider and vote on this resolution as a special resolution. Details of the Naspers group share-based incentive schemes currently in existence can be found in the annual financial statements of the company enclosed with this notice, which are also available on www.naspers.com. (The Naspers share incentive scheme conducted in terms of the trust deed of the Naspers share incentive trust, Masters reference IT 4713-97, the other existing group share-based incentive schemes and such group share-based schemes that are established in future are hereafter collectively referred to as ‘Naspers group share-based incentive schemes ’.) Resolved, subject to the Act and Schedule 14 of the Listings Requirements of the JSE, that the board of directors of Naspers shall be authorised for purposes of sections 41, 42, 44 and 45 of the Act: 5.1 to allot and issue, to grant and issue options for the allotment or subscription and to grant any other rights exercisable in respect of up to 40 588 541 Naspers N ordinary shares (which comprised 10% of Naspers’s issued N ordinary share capital as at March 2010) (“the shares”) to the Naspers group share-based incentive schemes and participants thereunder (which may include directors, future directors, prescribed officers and future prescribed officers of the company or of a related or inter-related company) (“the participants) NASPERS INTEGRATED ANNUAL REPORT 2011 155 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Notice of annual general meeting (continued) 5.2 to make application to the JSE for the listing of the shares 5.3 to authorise the company to grant financial assistance by way of a loan, guarantee, the provision of security or otherwise to the Naspers group share-based incentive schemes and participants thereunder for the purpose of, or in connection with, the subscription of any option, or any securities, issued or to be issued by the company or a related or inter-related company, or for the purchase of any securities of the company or a related or inter-related company, pursuant to the administration and implementation of the Naspers group share-based incentive schemes, in each instance on the terms applicable to the Naspers group share-based incentive scheme in question. The reason and effect of special resolution number 5 is to grant the Naspers board the necessary authority to allot and issue up to 40 588 541 Naspers N ordinary shares and to grant options, rights exercisable and financial assistance in respect thereof to the Naspers group share-based incentive schemes and participants thereunder, to allow for the proper administration and implementation of the Naspers group share-based incentive schemes. ORDINARY RESOLUTION 10. Each of the directors of the company is hereby authorised to do all things, perform all acts and sign all documentation necessary to effect the implementation of the ordinary and special resolutions adopted at this annual general meeting. OTHER BUSINESS To transact such other business as may be transacted at an annual general meeting. By order of the board G Kisbey-Green Company secretary 28 July 2011 Cape Town Note The proxy form can be found on pages 161 to 164 of this integrated annual report. 156 NASPERS INTEGRATED ANNUAL REPORT 2011 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION GRI G3 indicators INDICATORS GRI Topic Strategy and analysis 1.1 Statement from CEO Organisational profile 2.1 – 9 Name, primary brands, operational structure, location, number of countries, legal form, markets served, scale, significant changes 2.10 Awards Report parameters 3.1 – 8 Reporting period 3.9 Data measurement techniques and assumptions 3.10 – 1 Explanation of restatements 3.12 3.13 GRI index Policy and practice on external assurance Governance, commitments and engagement 4.1 – 4 Governance structure 4.5 4.6 4.7 4.8 4.9 Link between compensation and performance Process for avoiding conflict of interest Expertise of board Policies on economic, environmental and social performance Procedures for board oversight of economic, environmental and social performance 4.10 Board performance 4.14 – 15 Stakeholder groups 4.16 Approach to stakeholder engagement Economic Economic performance Page 20 5 – 13; 146 – 147 91 – 92 2 – 3 86; 133 133 2 – 3 2; 132 flap; 94 – 128 116 100 110 – 113 95 100 – 106 102 66 – 73; 147 40 EC1 Economic value generated and distributed (revenues, operating costs, employee compensation, donations and other community investments, retained earnings and payments to capital providers and governments).(Core) EC3 Coverage of defined benefit plan obligations. (Core) 4 – 5; 37; 74 – 83; 130 – 144 Refer to Naspers’s annual financial statements, page 70 on www.naspers.com EC4 Significant financial assistance received from government. (Core) None NASPERS INTEGRATED ANNUAL REPORT 2011 157 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION GRI G3 indicators (continued) GRI Topic Market presence EC6 Policy, practices and proportion of spending on locally-based suppliers at significant operations. (Core) Page Most of our procurement is from local sources except for some international programming and sporting rights, satellite leases and printing equipment Indirect economic impacts EC8 Development and impact of infrastructure investments and services provided primarily for public benefit through commercial, in-kind or pro bono engagement. (Core) Educational development, Let’s Play initiative Environmental Materials Management approach EN2 Energy Percentage of materials used that are recycled input materials. (Core) Management approach EN4 EN5 EN6 EN7 Indirect energy consumption by primary source. (Core) Energy saved due to conservation and efficiency improvements. (Additional) Initiatives to provide energy-efficient or renewable energy-based products and services, and reductions in energy requirements as a result of these initiatives. (Additional) Initiatives to reduce indirect energy consumption and reductions achieved. (Additional) Biodiversity EN11 Location and size of land owned, leased, managed in or adjacent to protected areas and areas of high biodiversity value outside protected areas. (Core) EN12 Description of significant impacts of activities, products, and services on biodiversity in protected areas and areas of high biodiversity value outside protected areas. (Core) Emissions, effluents and waste EN16 EN17 EN18 Total direct and indirect greenhouse gas emissions by weight. (Core) Other relevant indirect greenhouse gas emissions by weight. (Core) Initiatives to reduce greenhouse gas emissions and reductions achieved. (Additional) 158 NASPERS INTEGRATED ANNUAL REPORT 2011 89 87 87 88 – 89 88 None None 87 87 88 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION GRI G3 indicators (continued) GRI Topic Emissions, effluents and waste (continued) EN23 EN24 EN25 Total number and volume of significant spills. (Core) Weight of transported, imported, exported or treated waste deemed hazardous under terms of Basel I, II, III, and VIII and percentage of transported waste shipped internationally. (Additional) Identity, size, protected status and biodiversity value of water bodies and related habitats significantly affected by discharges of water and runoff. (Additional) Products and services EN26 Initiatives to mitigate environmental impacts of products and services, and extent of impact mitigation. Compliance EN28 Transport EN29 Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with environmental laws and regulations. (Core) Significant environmental impacts of transporting products and other goods and materials used for operations and transporting members of the workforce. (Additional) Social performance: Labour practices and decent work Employment LA1 LA3 Total workforce by employment type, contract and region. (Core) Benefits for full-time employees not provided to temporary/ part-time employees, by major operations. Occupational health and safety LA7 LA8 Rates of injury, occupational diseases, lost days and absenteeism, and number of work-related fatalities by region. (Core) Education, training, counselling, prevention and risk-control programmes to assist workforce members, their families or community members with serious diseases. (Core) Child labour HR6 Operations identified as having significant risk for incidents of child labour, and measures taken to contribute to elimination of child labour. (Core) Forced and compulsory labour HR7 Operations identified as having significant risk for incidents of forced or compulsory labour, and measures to contribute to the elimination of forced or compulsory labour. (Core) Page None None None 89 None None 69 70 84 83 – 85 70 None NASPERS INTEGRATED ANNUAL REPORT 2011 159 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION GRI G3 indicators (continued) GRI Topic Indigenous rights HR9 Total number of incidents of violations involving rights of indigenous people and actions taken. (Additional) Social performance: Society Page None Corruption SO2 Percentage and number of business units analysed for risks related to corruption. (Core) 2; 80% of revenue SO4 Actions taken in response to incidents of corruption. (Core) No significant incidents Compliance SO8 Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with laws and regulations. (Core) 91 Social performance: Product responsibility Customer health and safety PR1 PR2 Lifecycle stages where health and safety impacts are assessed for improvement, and percentage of significant products and services categories subject to such procedures. (Core) No significant impact through products Total number of incidents of non-compliance with regulations and voluntary codes on health and safety impacts of products and services during their lifecycle, by type of outcomes. (Additional) None Products and service labelling Type of product and service information required by procedures, and percentage of significant products and services subject to such information requirements. (Core) Some requirements on programming on DStv channels PR3 PR4 Total number of incidents of non-compliance with regulations and voluntary codes concerning product and service information and labelling, by type of outcomes. (Additional) Marketing communications Customer privacy PR8 Total number of substantiated complaints regarding breaches of customer privacy and losses of customer data. (Additional) Compliance PR9 Monetary value of significant fines for non-compliance with laws and regulations on the provision and use of products and services. (Core). 160 NASPERS INTEGRATED ANNUAL REPORT 2011 91 91 91 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Form of proxy Incorporated in the Republic of South Africa JSE code: NPN ISIN: ZAE000015889 LSE code: NPSN Registration number: 1925/001431/06 NINETY-SEVENTH ANNUAL GENERAL MEETING OF SHAREHOLDERS For use by holders of certificated shares or “own name” dematerialised shareholders at the ninety-seventh annual general meeting of shareholders of the company to be held on the 18th floor of the Naspers Centre, 40 Heerengracht in Cape Town, South Africa on Friday, 26 August 2011 at 11:15. I/We ____________________________________________________________________________ (please print) of _________________________________________________________________________________________ being a holder of ___________________________________________________________ certificated shares of “own name” dematerialised shares of Naspers and entitled to _____________________votes hereby appoint, (see note 1) 1. ___________________________________________________________________________or, failing him/her, 2. ___________________________________________________________________________or, failing him/her, 3. the chairman of the annual general meeting as my/our proxy to act for me/us at the annual general meeting, which will be held in the boardroom on the 18th floor, Naspers Centre, 40 Heerengracht in Cape Town on Friday, 26 August 2011 at 11:15 for the purpose of considering and, if deemed fit, passing, with or without modification, the resolutions to be proposed thereat and at each adjournment or postponement thereof, and to vote for or against the resolutions and/or abstain from voting in respect of the shares in the issued share capital of the company registered in my/our name/names (see note 2) as follows: In favour of Against Abstain Ordinary resolutions 1. Approval of annual financial statements 2. Confirmation and approval of payment of dividends 3. Reappointment of PricewaterhouseCoopers Inc. as auditor 4. To elect the following directors: 4.1 Adv F-A du Plessis 4.2 Prof G J Gerwel 4.3 Mr T M F Phaswana 4.4 Mr B J van der Ross 4.5 Mr J J M van Zyl 5. Appointment of the following audit committee members: 5.1 Adv F-A du Plessis 5.2 Prof R C C Jafta 5.3 Mr B J van der Ross 5.4 Mr J J M van Zyl 6. To endorse the company’s remuneration policy NASPERS INTEGRATED ANNUAL REPORT 2011 161 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION In favour of Against Abstain Form of proxy (continued) 7. 8. 9. Approval of general authority placing unissued shares under the control of the directors Approval of issue of shares for cash Approval of amendments to the trust deed of the Naspers Share Incentive Scheme 10. Authorisation to implement all resolutions adopted at annual general meeting Special resolution number one Approval of the remuneration of the non-executive directors: Proposed 31 March 2011 1.11 Naspers representatives on Media24 safety, health and environmental committee 1.12 Trustees of group share schemes/other personnel funds 1.13 Chair of Media24 pension fund 1.14 Trustees of Media24 pension fund Proposed 31 March 2012 1.1 Board – chair 1.2 Board – member 1.3 Audit committee – chair 1.4 Audit committee – member 1.5 Risk committee – chair 1.6 Risk committee – member 1.7 Human resources committee – chair 1.8 Human resources committee – member 1.9 Nomination committee – chair 1.10 Nomination committee – member 1.11 Naspers representatives on the Media24 safety, health and environmental committee 1.12 Trustees of group share schemes/other personnel funds 1.13 Chair of Media24 pension fund 1.14 Trustees of Media24 pension fund Proposed 31 March 2013 1.1 Board – chair NASPERS INTEGRATED ANNUAL REPORT 2011 162 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION In favour of Against Abstain Form of proxy (continued) 1.2 Board – member 1.3 Audit committee – chair 1.4 Audit committee – member 1.5 Risk committee – chair 1.6 Risk committee – member 1.7 Human resources committee – chair 1.8 Human resources committee – member 1.9 Nomination committee – chair 1.10 Nomination committee – member 1.11 Naspers representatives on the Media24 safety, health and environmental committee 1.12 Trustees of group share schemes/other personnel funds 1.13 Chair of Media24 pension fund 1.14 Trustees of Media24 pension fund Special resolution number two Approve generally the provision of financial assistance Special resolution number three General authority for the company or its subsidiaries to acquire N ordinary shares in the company Special resolution number four General authority for the company or its subsidiaries to acquire A ordinary shares in the company Special resolution number five Approval of issue of shares, options and rights to Naspers share-based incentive schemes and participants and generally to act as my/our proxy at the said annual general meeting (tick whichever is applicable. If no indication is given, the proxy holder will be entitled to vote or to abstain from voting as the proxy holder deems fit). Signed at Signature on this day of 2011. Assisted (where applicable) Each shareholder is entitled to appoint one or more proxies (who need not be a shareholder(s) of the company) to attend, speak and vote in place of that shareholder at the annual general meeting. NASPERS INTEGRATED ANNUAL REPORT 2011 163 THE NASPERS GROUP PERFORMANCE REVIEW CORPORATE GOVERNANCE SUMMARISED ANNUAL FINANCIAL STATEMENTS SHAREHOLDER AND CORPORATE INFORMATION Notes to form of proxy 1. The following provisions shall apply in relation to proxies: 4. 1.1 1.2 1.3 1.4 1.5 1.6 1.7 2. 3. a shareholder of the company may appoint any individual (including an individual who is not a shareholder of the company) as a proxy to participate in, and speak and vote at, the annual general meeting of the company a shareholder may appoint two or more persons concurrently as proxies and may appoint more than one proxy to exercise voting rights attached to different securities held by the shareholder a proxy instrument must be in writing, dated and signed by the shareholder a proxy may delegate the proxy’s authority to act on behalf of the shareholder to another person subject to any restrictions set out in the instrument appointing the proxy a copy of the instrument appointing a proxy must be delivered to the company, or to any other person on behalf of the company, before the proxy exercises any rights of the shareholder at the annual general meeting irrespective of the form of instrument used to appoint the proxy (i) the appointment is suspended at any time and to the extent that the shareholder chooses to act directly and in person in the exercise of any rights as a shareholder (ii) the appointment is revocable unless the proxy appointment expressly states otherwise and (iii) if the appointment is revocable, a shareholder may revoke the proxy appointment by cancelling it in writing or making a later inconsistent appointment of a proxy and delivering a copy of the revocation instrument to the proxy and the company, and the proxy is entitled to exercise, or abstain from exercising, any voting right of the shareholder without direction except to the extent that the Memorandum of Incorporation of the company, or the instrument appointing the proxy provides otherwise. A certificated or “own name” dematerialised shareholder may insert the names of two alternative proxies of the shareholder’s choice in the space provided, with or without deleting “the chairman of the annual general meeting”. The person whose name appears first on the form of proxy and whose name has not been deleted and who attends the meeting will be entitled and authorised to act as proxy to the exclusion of those whose names follow. A shareholder’s instructions to the proxy must be indicated by the insertion of the relevant number of votes exercisable by that shareholder in the appropriate space provided. Failure to comply herewith will be deemed to authorise the proxy to vote at the annual general meeting as he/she deems fit in respect of the shareholder’s votes exercisable at that meeting, but where the proxy is the chairman, failure to so comply will be deemed to authorise the chairman to vote in favour of the resolutions. A shareholder or his/her proxy is not obliged to use all the votes exercisable by the shareholder or by the proxy. 5. 6. Forms of proxy must be lodged at or posted to the transfer secretaries of the company, Link Market Services South Africa (Proprietary) Limited, 13th floor – Rennie House, 19 Ameshoff Street, Braamfontein, 2001 or PO Box 4844, Johannesburg, 2000 to be received by not later than 11:15 on Thursday, 25 August 2011, or such later date if the annual general meeting is postponed. The completion and lodging of this form of proxy will not preclude the certificated shareholder or “own name” dematerialised shareholder from attending the annual general meeting and speaking and voting in person at the meeting to the exclusion of any proxy appointed in terms hereof. An instrument of proxy shall be valid for any adjournment or postponement of the annual general meeting as well as for the meeting to which it relates, unless the contrary is stated therein but shall not be used at the resumption of an adjourned annual general meeting if it could not have been used at the annual general meeting from which it was adjourned for any reason other than that it was not lodged timeously for the meeting from which the adjournment took place. 7. A vote cast or act done in accordance with the terms of a form of proxy shall be deemed to be valid despite: (cid:96) the death, insanity, or any other legal disability of the person appointing the proxy, or (cid:96) the revocation of the proxy, or (cid:96) the transfer of a share in respect of which the proxy was given, unless notice as to any of the abovementioned matters shall have been received by the company at its registered office or by the chairman of the annual general meeting at the place of the annual general meeting if not held at the registered office, before the commencement or resumption (if adjourned) of the annual general meeting at which the vote was cast or the act was done or before the poll on which the vote was cast. 8. The authority of a person signing the form of proxy: 8.1 under a power of attorney, or 8.2 on behalf of a company or close corporation or trust, must be attached to the form of proxy unless the full power of attorney has already been received by the company or the transfer secretaries. 9. Where shares are held jointly, all joint holders must sign. 10. Dematerialised shareholders, other than by “own name” registration, must NOT complete this form of proxy and must provide their central securities depository participant (CSDP) or broker of their voting instructions in terms of the custody agreement entered into between such shareholders and their CSDP and/or broker. NASPERS INTEGRATED ANNUAL REPORT 2011 164 All sports pictures courtesy of ©Gallo Images Dora the Explorer courtesy of ©Nickelodeon In The Night Garden courtesy of ©Ragdoll Limited This report is printed on Triple Green, a paper made from sustainable forests and manufactured from chlorine-free pulp. 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