Naspers Limited: Results of Annual General Meeting

Naspers Limited (Naspers) (JSE: NPN, LSE: NPSN) The 103rd annual general meeting (AGM) of Naspers Limited was held this morning in the Media24 Centre at 40 Heerengracht, Cape Town, South Africa.

Shareholders are advised that all resolutions set out in the notice of AGM were passed by the requisite majority of shareholders represented at the annual general meeting. The following information is provided in compliance with the JSE Limited’s Listings Requirements:

Issued share capital:

N ordinary shares – 438 280 262

A ordinary shares – 907 128

Total votes exercisable by A and N shares: 1 345 408 262

Number of shares present/represented at the AGM (being 78,82% of the total votable shares): 346 154 531 A and N ordinary shares.

Total votes present/represented at AGM being 1 241 610 179 (92,29%) of total votes exercisable.

Details of voting results:

* Abstentions are represented as a percentage of total exercisable votes.

In his AGM address to shareholders, Koos Bekker, chair of Naspers, noted highlights as follows:

"Welcome to the many long-term investors and shareholders I see in the audience: thank you for your generous support over many years. Which of you were shareholders when Naspers listed in 1994? And when, after the dotcom bubble bust, our share price dropped to below R12 in March 2002? The value of such long-term loyalty is that we could take risks that other companies dared not: some of those paid off. Thank you for your support through thick and thin, through hell and high water.

A few highlights of performance:

• Revenue rose 29%. So that’s how much faster the engine turned.
• In the view of our board, the single best benchmark for profit is core headline earnings, where accounting funnies are removed. Last year that grew 41% to US$1.75bn.
• Some drivers of growth stand out: firstly, our interest in listed investments Tencent, and to a lesser extent, Mail.ru, both companies that themselves publish extensive information.
• Secondly, growth in ecommerce. Our classified businesses – that some media were skeptical of – are starting to shape up nicely in several markets. And a few other internet segments like payments, food delivery and e-tailing hold promise if we can beat some tough competitors.
• Our video business felt the impact of economic volatility in South African and the oil producers in Africa. We do hope that Africa will surmount its problems and rise as a great continent.
• Our smaller Media24 business is in the process of transferring its technology from print to electronic.
• We will ask your approval to list the annual gross dividend by 12% to R5.80 per listed N ordinary share. A fifth of that per unlisted A ordinary share.

Some comments on the environment:

• Around the world, Naspers competes against the likes of Google, Facebook and Amazon – all many times our scale. However, regulators in some markets still think in terms of setting up competitors in each sector in their country. That’s not how things work anymore: we are competing against monsters from California. Please support us because we create employment locally!
• We also pay taxes locally. Last year we paid US$825 million (or R10 billion rand) to various countries where we do business – five times the amount we distributed to shareholders in dividends. I repeat: five times.
• Across 120 countries and markets, millions of people are using our services to improve their quality of life. Sometimes we entertain or inform families, sometimes we enable people to communicate or to trade with each other.

The corporate climate for public companies is also changing, and not always for the better. For example, our practices are now rated by agencies some of whom never visit us, never ran internet or media companies themselves, but compare our various ratios off the shelf with those of property companies or mines. And then several institutional investors follow their guidance blindly. That is truly not wise.

Companies very seldom go under because of a failure of governance. The latter is a hygiene factor: necessary but not sufficient. Most enterprises that fail were outperformed by tougher fighters, or lost their consumers, or fell behind technologically. To use a sports metaphor: of course Real Madrid needs governance, but washing their hands after going to the toilet doesn’t by itself make them the best football club in the world. What really differentiates them is Christiano Ronaldo and his mates, their relentless practice and invention: their flair and risk-taking on the field. And if you want Ronaldo, you’re gonna pay for him. The competition for the best engineers and entrepreneurs is fierce and expensive, but in our game without good players you’re dead.

We have always enjoyed engaging with shareholders and getting their views, some quite useful. May I briefly deal with 3 recurrent themes that are less productive.

• Firstly, for two decades we have received advice from short-term traders to buy back our own shares. Of course such action will spike our share price for a few weeks, then investors will work out that a growth company like ours consumes cash and can’t keep on buying back its own stock. Whereupon the share price will drop back. By that time, of course, the short-term operator that planted this idea would have long ago sold his Naspers shares and run off. And loyal long-term shareholders like you will be left holding the can, which can will then be empty of cash.
• A second recurrent theme is that we should sell Tencent shares. We started getting that advice from the day Tencent listed in 2004, at the equivalent of less than one HK$ (considering the later share split). Then the shares went to HK$20, then 100. We kept getting the same demand, even from people who had never visited China. For example, had we given in to that advice even 5 years ago, we would have sold at the equivalent of HK$ 45. Except today the price is HK$ 325. Fact is: each time our board evaluated Tencent, we concluded at that moment it’s still the best use for our money. And today we see no reason yet to change.
• A third and last theme is obsessing about the so-called "discount” of the Naspers share price to theoretical calculations of its sum-of-the-parts. If one broke up the company, you could instantly get more for the constituents. That would also be true of most composite companies like ours. But there is strength in being one large group rather than a series of small outfits. The best evidence: over the past years the big 5 tech companies in Silicon Valley far, far outperformed the aggregate of their small competitors. The same was true of the tech big 3 in China. This theoretical problem of a so-called discount need not bother the long-term investor. Let me give an example. If we broke up Naspers 5 years ago, and we then got a premium of 33% more for the various parts, each Naspers shareholder would have received $77 in cash. But today your Naspers share is worth three times more. Which would a sensible long-term investor prefer? And over five years hence the share will hopefully appreciate further. In short, your Naspers share that opened at $6 on listing in 1994, had grown to $220 today.

And that’s what we are aiming for on behalf of our shareholders: long term growth. We are really not interested in fads and funnies to make a quick buck.

Let me thus thank you with great sincerity for your constant support as long-term shareholders over many years.

We also thank our partners, our suppliers and associates around the world.

Most importantly, we deeply appreciate what our thousands of skilled people in many countries have contributed over the past year in enthusiasm, in energy and enterprise.”

Important Information:
The report may contain forward-looking statements as defined in the United States Private Securities Litigation Reform Act of 1995. Words such as ‘believe’, ‘anticipate’, ‘intend’, ‘seek’, ‘will’, ‘plan’, ‘could’, ‘may’, ‘endeavour’ and similar expressions are intended to identify such forward-looking statements, but are not the exclusive means of identifying such statements. While these forward-looking statements represent our judgements and future expectations, a number of risks, uncertainties and other important factors could cause actual developments and results to differ materially from our expectations. These include factors that could adversely affect our businesses and financial performance. We are not under any obligation to (and expressly disclaim any such obligation to) update or alter our forward-looking statements, as a result of new information, future events or otherwise. Investors are cautioned not to place undue reliance on any forward-looking statements in this report.

Sponsor: Investec Bank Limited

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