Naspers Limited Class N · JSE:NPN
Naspers Limited Class N — H1 FY2013 Earnings Presentation
49 slides from Naspers Limited Class N's earnings presentation, November 2012
Slide 1: Financial results presentation
Financial results presentation For the six months ended 30 September 2012
Slide 2: Important information
Important information This presentation contains 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 i
Slide 3: Group Overview
Group Overview Financial Results Internet Pay-TV Outlook Appendix 3
Slide 4: Naspers key financials for 1H FY13
Naspers key financials for 1H FY13 Sep 11 Revenue (ZARbn) Trading profit (ZARbn) Sep 12 22% 6% 22.6 3.2 3.4 18.5 Core HEPS (ZAR) Free Cash Flow (ZAR) 15% 22% 10.62 1.7 9.21 1.4 4
Slide 5: Sustained revenue momentum
Sustained revenue momentum Revenue (ZARm)* 35,000 30,000 25,000 20,000 34,172 15,000 25,802 21,425 10,000 17,521 15,855 11,272 5,000 - Sep 07 Sep 08 Sep 09 Sep 10 Sep 11 Sep 12 * Based on economic interest, i.e. assuming all equity accounted investments are proportionately consolidated 5
Slide 6: Increased focus on organic growth
Increased focus on organic growth Development spend vs. Other operating costs (ZARm) 36,000 2,823 1,535 27,000 1,240 1,211 1,591 18,000 1,126 31,180 25,712 20,363 21,311 18,513 9,000 15,402 - Mar 09 Mar 10 Mar 11 Mar 12 Sep 11 Sep 12 Other operating costs Development costs 6
Slide 7: More investment activity
More investment activity Total acquisition spend (US$m) Subsequent acquisitions 800 600 377 400 754 Other 517 200 260 214 - Mar 09 Mar 10 Mar 11 Mar 12 Sep 12 7
Slide 8: Solid earnings growth
Solid earnings growth Core Headline Earnings (ZARm)* 4,500 4,000 3,500 3,000 2,500 4,086 2,000 3,458 3,215 1,500 2,414 1,000 1,706 1,763 500 - Sep 07 Sep 08 Sep 09 Sep 10 Sep 11 Sep 12 * Based on economic interest, i.e. assuming all equity accounted investments are proportionately consolidated 8
Slide 9: Financial Results
Group Overview Financial Results Internet Pay-TV Outlook Appendix 9
Slide 10: Revenue: internet remains major growth driver
Revenue: internet remains major growth driver Revenue* (ZARm) 1H FY13 Revenue by Business* 32% 40,000 70% 19% 34,172 262 5,638 2,285 30,000 5,823 14,108 20,000 25,802 14,426 10,000 – Sep 11 Internet Pay-TV Print Sep 12 Internet (41%) Pay TV (42%) Print (17%) * Based on economic interest, i.e. assumi
Slide 11: Growing organically: development spend up 41%
Growing organically: development spend up 41% Development spend (ZARm) Development spend split 1H FY13 67 3,000 2,500 482 41% 2,000 1,500 2,823 1,042 1,000 1,535 1,591 1,211 1,240 1,126 500 0 Mar 09 Mar 10 Mar 11 Mar 12 Sept 11 Sept 12 Internet (66%) Pay-TV (30%) Print (4%) Internet Pay-TV … to acce
Slide 12: Trading profit: trimmed by development costs
Trading profit: trimmed by development costs Trading profit* (ZARm) 1H FY13 Trading profit by Business* 28% 247 18% 7,356 8,000 47% - 604 994 3,089 6,000 4,000 4,020 5,757 2,000 - Sep 11 Internet Pay-TV Print Sep 12 Internet (42%) Pay TV (55%) Print (3%) * Based on economic interest, i.e. assuming e
Slide 13: Summarised consolidated income statement
Summarised consolidated income statement Sep 11 Sep 12 Select information ZARm ZARm Revenue growth +22% Revenue 18,482 22,597 Increased 4% YoY in constant currency EBITDA 3,883 4,208 EBITDA margin 21% 19% Finance costs up Higher debt levels to fund acquisitions Normalised preference dividend income
Slide 14: Free cash flow: boosted by investment income
Free cash flow: boosted by investment income FCF from operations Sep 11 Sep 12 Capex +40% ZARm ZARm Pay-TV (incl. DTT) ZAR639m Operating cash flow 2,921 3,259 Internet ZAR171m Print ZAR196m Capex (719) (1,006) Finance leases (231) (263) Investment income Tax (886) (1,274) includes R519m dividend fro
Slide 15: Balance sheet: remains strong
Balance sheet: remains strong Increase in net debt a consequence of debt-funded Sep 12 Group net consolidated debt acquisitions ZARm Net debt – offshore (US$1.3bn) (11,075) Minus: Net cash – South Africa 4,341 Net debt excludes transponder leases of ZAR5.7bn, considered to be an operating cost Closi
Slide 16: Internet
Group Overview Financial Results Internet Pay-TV Outlook Appendix 16
Slide 17: e-Commerce: strategy and positioning
e-Commerce: strategy and positioning Mobile value-added Portals services Vertical e-tail Facilitation General e-tail (fashion, shoes, (marketplace etc.) etc.) B2C Social networking Payment platforms Marketplace Classifieds Vertical e-tail (facilitation) Other (free, paid) e-Commerce Lead-generation
Slide 18: e-Commerce: different business models
e-Commerce: different business models How profitable is selling a $500 Samsung smartphone?… Marketplace US$ General e-tail US$ Revenue (7% take rate) 35 Revenue (includes inventory) 500 Trading margin 36% Trading margin 4% Trading profit Trading profit 13 20 …it depends on your business model 18
Slide 19: e-Commerce: group financials
e-Commerce: group financials Continued focus on scaling operations Revenue by type ZARm Sep 11 Sep 12 % Change Revenue 2,478 3,991 61% Trading profit (211) (767) > -100% Strategy Expansion across the e-commerce value chain Focused on scaling e-tail, Payments and Classifieds Revenue Marketplace (33%)
Slide 20: e-Commerce: revenue growth
e-Commerce: revenue growth Revenue (ZARm) 6,000 5,000 61% 4,000 3,000 5,736 2,000 3,991 3,684 2,713 2,478 1,000 1,981 - Mar 09 Mar 10 Mar 11 Mar 12 Sep 11 Sep 12 20
Slide 21: e-Commerce: development spend
e-Commerce: development spend Development spend (ZARm) 2,000 1,500 87% 1,000 1,725 1,031 500 575 550 272 268 - Mar 09 Mar 10 Mar 11 Mar 12 Sep 11 Sep 12 21
Slide 22: e-Commerce: Poland and Central Europe
e-Commerce: Expansion into B2C affecting margins Revenue by type Marketplace (39%) PLNm* Sep 11 Sep 12 % Change General e-tail (37%) Revenue 538 1,046 95% Vertical e-tail (9%) Trading profit 108 2 n/a Classifieds (6%) Lead generation (3%) * Data reflects 100% of results; 1H FY13 ZAR/Zloty 2.48 (2.45
Slide 23: Internet: Tencent
Internet: Another good performance Q3 2012 statistics RMBm* Jun 11 Jun 12 % Change • 784m monthly active IM user accounts (+10% YoY) • 167m peak concurrent IM user accounts (+15% YoY) Revenue 13,078 20,175 54% • 9.4m PCU’s for QQ Game Platform (+18% YoY) • 74m fee-based IVAS registered subscriptions
Slide 24: Internet: Mail.ru
Internet: Continued positive growth trajectory Q3 statistics RURm* Jun 11 Jun 12 % Change • portal: 32m (+16% YoY) • email: 26m (+12% YoY) Revenue 6,491 9,611 48% • SNS: Odnoklassniki 22m (+23% YoY) EBITDA 3,320 5,318 60% • IM: Mail.ru Agent 22m (+4% YoY) EBITDA margin 51% 55% * Data reflects 100% o
Slide 25: Pay-TV
Group Overview Financial Results Internet Pay-TV Outlook Appendix 25
Slide 26: Pay-TV: Positioning for the future
Pay-TV: Positioning for the future Genre Movie Channels 26
Slide 27: Digital Terrestrial Television (DTT)
Digital Terrestrial Television (DTT) Digital Terrestrial Television (DTT) set-up X 27
Slide 28: Pay-TV: growing the subscriber base
Pay-TV: growing the subscriber base Subscribers (‘000) 7,000 6,000 1,837 5,000 1,499 4,000 1,234 1,027 3,000 4,168 2,000 3,698 3,214 2,639 1,000 – Sep 09 Sep 10 Sep 11 Sep 12 South Africa Sub-Saharan Africa 28
Slide 29: Pay-TV: Operational dynamics
Pay-TV: Operational dynamics ARPU Programming cost (ZARm) South Africa (ZAR) SSA(US$) 6,000 4,500 21% 301 308 40 38 6,037 3,000 5,497 4,304 3,709 3,364 1,500 2,790 - Sep 11 Sep 12 Sep 11 Sep 12 Mar 09 Mar 10 Mar 11 Mar 12 Sep 11 Sep 12 Development spend* (ZARm) Capital expenditure* (ZARm) 1,000 1,50
Slide 30: Pay-TV: South Africa
Pay-TV: South Africa Continue to develop business Subscribers Sep 11 Sep 12 % Change 187,000 net additions year-to-date Compact accounted for 87% of growth Net subscribers (‘000) 3,698 4,168 13% Impacted by Easyview clean-up (32k) ZARm ZARm PVR base increased 31% YoY to 747k Revenue* 9,889 11,445 16
Slide 31: Pay-TV: Sub-Saharan Africa
Pay-TV: Sub-Saharan Africa On-going focus on DTT rollout Subscribers Sep 11 Sep 12 % Change Premium +4% YTD Compact +20% YTD Net subscribers (‘000) 1,499 1,837 23% US$m US$m Revenue* 383 439 14% Margin impact Trading profit 51 59 17% Incremental programming costs -3% Trading margin 13% 13% DTT costs
Slide 32: Outlook
Group Overview Financial Results Internet Pay-TV Outlook Appendix 32
Slide 33: Outlook: Ongoing investment in long-term growth
Outlook: Ongoing investment in long-term growth • Continue growth across e-commerce value chain e-Commerce • Strengthen market positions selectively • Changing business mix to trim margins; expect higher absolute LT profits • Expand DTT service from 18 to 25 cities by FY13 Pay-TV • Push online servi
Slide 34: Appendix
Group Overview Financial Results Internet Pay-TV Outlook Appendix 34
Slide 35: Print: Economic headwinds
Print: Economic headwinds Revenue mix 1H FY13 ZARm Sep 11 Sep 12 % Change Advertising (35%) Revenue* 3,448 3,774 9% Circulation (20%) Trading profit 134 257 92% Printing (26%) Trading margin 4% 7% Distribution (6%) Books (6%) *Includes intergroup adjustments Other (6%) Environment Weak economic clim
Slide 36: Print: Brazil
Print: Environment Brazilian economy continues to struggle 2H might also be challenging Affected by sluggish economy BRLm Jun 11 Jun 12 % Change Contribution to core headline earnings -ZAR95m Revenue 1,404 1,411 0% (1HFY12 ZAR18m) Trading profit 84 (3) >100% Operations Trading margin 6% n/a Maintain
Slide 37: Summary of Pay-TV subscribers
Summary of Pay-TV subscribers Net subscribers* Sep 11 Sep 12 % Change South Africa 3,697,847 4,168,193 13% Premium 1,510,656 1,553,374 3% Other 1,600,045 1,981,848 24% Easyview 513,597 575,791 12% Analogue 73,549 57,180 -22% Rest of Sub-Saharan Africa 1,498,503 1,837,217 23% Total 5,196,350 6,005,41
Slide 38: Pay-TV: additional information
Pay-TV: additional information Digital subscriber mix - SA South Africa 1H FY13 revenue split Premium Subscription (74%) 41% 37% Family & Compact Hardware sales (5%) 33% 37% Other Advertising (11%) Online/Broadband (6%) 26% 26% Other (5%) Sep 11 Sep 12 Digital subscriber mix - SSA SSA 1H FY13 revenu
Slide 39: Core headline earnings
Core headline earnings Sep 11 Sep 12 ZARm ZARm Headline earnings 2,597 3,194 Equity-settled share scheme charges 271 339 Deferred tax adjustments (24) (26) Amortisation of intangible assets 586 583 Business combination gains/(losses) 53 (39) Fair value adjustments & currency translations (25) 35 Cor
Slide 40: Contribution by associates
Contribution by associates Associates contribution 1H FY13 Company PPA IFRS Other Core HEPS ZARm results adjustments results adjustments* contribution Tencent 2,451 - 2,451 535 2,986 Mail.ru 1,805 (51) 1,754 (1,505) 250 Abril (74) (64) (139) 44 (95) Other 1 (4) (3) 4 1 TOTAL 4,183 (119) 4,064 (922)
Slide 41: Development spend breakdown
Development spend breakdown Development spend per business division Sep 11 Sep 12 % Change ZARm ZARm Internet 616 1,042 69% Pay-TV 397 482 21% Print 113 66 -42% Total 1,126 1,591 41% 41
Slide 42: Net finance costs
Net finance costs Sep 11 Mar 12 Sep 12 ZARm ZARm ZARm Debt US$700m 7-year bond issued Jul10: Interest (paid) (583) (1,271) (706) • 6.375% coupon Loans and overdrafts (390) (877) (481) 5-year US$2bn RCF arranged Mar11: Transponder leases (66) (132) (72) • US$1.1bn drawn at Sep 2012 Other (127) (262)
Slide 43: Taxation analysis
Taxation analysis Sep 11 Sep 12 ZARm ZARm Profit before tax 3,273 6,053 Add back: Development spend 1,125 1,525 Equity results (including impairments) (1,618) (4,063) Other gains and losses 722 379 Acquisition gains 150 16 FX gains and losses (5) 76 BEE preference dividends (230) (76) Adjusted profi
Slide 44: Impact of currency movements
Impact of currency movements ZAR fluctuation impacts translation of offshore earnings Revenue growth YoY * Trading Profit growth YoY * Core Earnings growth YoY +28% +18% 40,000 +32% 8,000 +17% 4,500 +6% +24% 30,000 3,000 5,000 7,356 4,086 3,679 34,172 32,072 6,745 20,000 1,500 10,000 2,000 - Reporte
Slide 45: FX - Hedging to manage risk
FX - Hedging to manage risk Annualised net foreign input costs US$ Forward Exchange Cover Pay-TV: US$309m (programming rights and leases) Print: EUR23m and US$13m (paper and ink) US$m US$ rate FY13 220 7.62 FY14 397 8.28 Hedging strategy Pay-TV: long-term commitments, cover up to 100% FY15 73 8.82 o
Slide 46: Capital expenditure
Capital expenditure Sep 11 Sep 12 ZARm ZARm Land, buildings & plant 133 85 Transmission equipment 254 492 Computer, software & network equipment 310 376 Other (including vehicles, furniture) 21 53 Capital expenditure 719 1,006 Capex/Revenue 3.9% 4.5% 46
Slide 47: Current assets and liabilities
Current assets and liabilities Sep 11 Sep 12 Sep 11 Sep 12 Current Assets Current Liabilities ZARm ZARm ZARm ZARm Inventory 1,194 1,592 Current portion of long-term debt 1,465 1,786 Programme and film rights 2,362 2,830 Provisions 215 285 Trade receivables 3,655 4,373 Trade payable 2,964 4,117 Other
Slide 48: Consolidated income statement – US$
Consolidated income statement – US$ Sep 11 Sep 12 Sep 11 Sep 12 ZARm ZARm US$m US$m Revenue 18,482 22,597 2,650 2,744 Operating profit 1,954 2,493 280 303 Finance costs (148) (488) (21) (59) Share of equity accounted results 1,618 4,063 232 493 Acquisitions and disposals (62) 26 (9) 3 Dilution profi
Slide 49: Investor Relations
Investor Relations Meloy Horn Office: +27 11 289 3320 Mobile: +27 82 7727 123 E-mail: [email protected] Website: www.naspers.com 49 49