Naspers Limited Class N · JSE:NPN
Naspers Limited Class N — H1 FY2012 Earnings Presentation
47 slides from Naspers Limited Class N's earnings presentation, November 2011
Slide 1: Financial results presentation
Financial results presentation For the six months ended 30 September 2011
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: Agenda
Group Highlights Key Messages Financial Results Operational Performance Outlook Appendix 3
Slide 4: 1H FY12 Group highlights
1H FY12 Group highlights • Revenue up 17% • EBITDA down 5% due to development costs Financial • Core HEPS grew 7% to ZAR9.21 • Generated ZAR1.4bn in free cash flow • Internet: benefited from organic growth and some acquisitions • Pay-TV: sub growth +17% YoY; more competition Operational • Print: aff
Slide 5: 1H FY12 Financial highlights
1H FY12 Financial highlights Sep 10 Sep 11 Revenue (ZARbn) EBITDA (ZARbn) Up 17% Down 5% 18.5 15.8 4.0 3.8 Core HEPS (ZAR) Capex (ZARm) Up 7% Up 60% 719 8.60 9.21 450 5
Slide 6: Agenda
Group Highlights Key Messages Financial Results Operational Performance Outlook Appendix 6
Slide 7: 1H FY12 Key highlights
1H FY12 Key highlights 1 Revenue growth momentum 2 Accelerated development costs 3 Pay-TV subscriber growth lower 4 Some M&A activity 7
Slide 8: Strong revenue growth momentum
Strong revenue growth momentum Revenue (ZARm)* 50 000 Mar 45 000 Sep 45,103 40 000 35 000 37,251 34,505 30 000 25 000 25,802 25,305 20 000 21,425 19,790 17,521 15 000 15,855 10 000 11,272 5 000 - Mar 07 Sep 07 Mar 08 Sep 08 Mar 09 Sep 09 Mar 10 Sep 10 Mar 11 Sep 11 * Based on economic interest, i.e.
Slide 9: Development spend 6% of revenue
Development spend 6% of revenue Development costs as % of revenue Mar Sep 8% 7% 6% 5% 4% 6.1% 5.7% 5.5% 3% 5.1% 5.0% 4.6% 4.5% 4.4% 4.0% 2% 3.6% 1% 0% Mar 07 Sep 07 Mar 08 Sep 08 Mar 09 Sep 09 Mar 10 Sep 10 Mar 11 Sep 11 • Operating expenses categorised separately for information purposes • Relate t
Slide 10: Development cost accelerating
Development cost accelerating Development costs vs. Total operating costs (ZARm) 20,000 1,125 15,000 631 482 638 10,000 551 14,278 11,863 5,000 9,652 10,248 6,828 - Sep 07 Sep 08 Sep 09 Sep 10 Sep 11 Other operating costs Development costs 10
Slide 11: Pay-TV subscriber growth lower
Pay-TV subscriber growth lower Net Additions (‘000) 500 400 Average = 325 300 200 100 - Sept 07 Sept 08 Sept 09 Sept 10 Sept 11 • Challenging YoY comparison due to 2010 Fifa World Cup • Economic and competitive environment affecting sub-Saharan growth • Lower-priced Compact bouquet still major growt
Slide 12: Some acquisitions YTD
Some acquisitions YTD Acquisitions 1H FY12 Company Date Total cost Total cost Percentage FCm US$m acquired Markafoni Jul 11 PLN239 86 68% 7 Pixel Apr 11 EUR23 34 70% Other 40 TOTAL 160 Total acquisition spend (US$m) 1 000 750 754 500 517 250 214 160 - Mar 09 Mar 10 Mar 11 Sep 11 12
Slide 13: Agenda
Group Highlights Key Messages Financial Results Operational Performance Outlook Appendix 13
Slide 14: Summary consolidated income statement
Summary consolidated income statement Sep 10 Sep 11 ZARm ZARm Revenue 15,833 18,482 1 1 Revenue growth +17% (+18% constant currency) EBITDA 3,972 3,793 2 2 EBITDA margin 25% 21% EBITDA margin -4%; increased development spend, higher programming costs and decoder subsidies impacted margins Trading pr
Slide 15: Internet growth drives top line
Internet growth drives top line Revenue* – historic growth (ZARm) Revenue* (ZARm) Sep 10 Sep 11 % Change 50,000 45,000 Economic interest 21,425 25,802 20% 45,103 40,000 35,000 37,251 34,505 30,000 25,000 • Internet delivered 50% growth YoY 25,802 20,000 21,425 - Other internet (excl. Tencent & Mail.
Slide 16: Development costs affected profitability
Development costs affected profitability Trading Profit* – historic growth (ZARm) Trading profit (ZARm)1 Sep 10 Sep 11 % Change 12,000 Economic interest 5,380 5,536 3% 10,000 Trading margin 25% 21% 10,220 1 Before amortisation, other gains/losses and including transponder leases 8,000 8,537 6,000 7,
Slide 17: Higher development costs
Higher development costs Split per business division Sep 10 Sep 11 1 % Change ZARm ZARm ZAR471m for e-commerce ZAR42m for ibibo Internet 315 616 96% 1 ZAR103m for internet value-added services Pay-TV 241 397 65% 2 2 ZAR287m for mobile TV and DTT Other 75 112 49% ZAR110m for online pay-TV technologie
Slide 18: Solid growth in contribution from associates
Solid growth in contribution from associates Associate contribution to core headline earnings Sep 10 Sep 11 1 % Change ZARm ZARm Increased internet usage and growth across the various service platforms Tencent 1,486 1,973 33% 1 2 Mail.ru 95 178 87% 2 Robust growth in core areas such as Abril 28 18 -
Slide 19: Free cash flow affected by higher capex and costs
Free cash flow affected by higher capex and costs FCF from operations Sep 10 Sep 11 1 ZARm ZARm Internet ZAR144m Operating cash flow 3,483 2,921 Pay-TV ZAR355m Technology ZAR53m Capex (450) (719) 1 Print ZAR167m Finance leases (253) (231) 22 Tax (1,094) (886) Dividends received from associates, impa
Slide 20: Balance sheet remains strong
Balance sheet remains strong Group net consolidated debt Sep 11 ZARm Net debt – offshore (US$1.2bn) (9,516) 1 1 Consequence of debt-funded acquisitions Minus: Net cash – South Africa 2,747 Closing net debt (6,769) 2 2 Excludes transponder leases of ZAR2.6bn, considered to be an operating cost Group
Slide 21: Agenda
Group Highlights Key Messages Financial Results Operational Performance Outlook Appendix 21
Slide 22: Internet emerging market footprint
Internet emerging market footprint 22
Slide 23: Internet: Allegro Group
Internet: Allegro Group Focus on organic development PLNm* Sep 10 Sep 11 % Change • Continues to grow according to plan Revenue 387 538 39% • Operations in 15 countries and 6 verticals Trading profit 133 108 -19% • 14 territories being monetized, 5 profitable Trading margin 34% 20% • Acquired Markaf
Slide 24: Internet: Tencent
Internet: Tencent Strong operations and financials RMBm* Jun 10 Jun 11 % Change • Growth despite seasonality Revenue 8,895 13,078 47% • Focus on user experience Operating profit 4,520 6,170 37% • Open platform to 3rd parties continues to unfold • Strengthening social-networking Operating margin 51%
Slide 25: Internet: Mail.ru Group
Internet: Mail.ru Group Core products deliver solid growth US$m* Jun 10 Jun 11 % Change • Advertising and Community IVAS key drivers Revenue 137 228 66% • Continued growth in SN and IM and progress in communication products EBITDA 54 117 117% • Focused effort on games, several new launches EBITDA ma
Slide 26: Other Internet
Other Internet • Buscape - Revenue more than doubled YoY - Operating loss as discretionary growth initiatives continue - Recent comScore ratings suggest market leadership position based on unique visitors - Integrating various payment platforms to consolidate market position • ibibo - Growth, especi
Slide 27: Pay-TV: Positioning for the future
Pay-TV: Positioning for the future Mali Niger Eritrea Burkina Sudan Faso Guinea Nigeria Benin Ghana Togo Ivory Central Ethiopia Coast African Rep. Cameroon Equatorial Guinea Uganda Gabon Democratic Kenya Agents Rep. of Rwanda Congo Burundi Subsidiaries Tanzania Angola ANYTIME, ANYWHERE, ANY DEVICE F
Slide 28: Pay-TV: Growth dynamics
Pay-TV: Growth dynamics Net Subscribers (‘000) Programming costs* (ZARm) 6,000 5,000 1,439 1,499 5,000 4,000 5,196 1,099 4,000 3,000 916 4,304 3,000 3,709 686 3,280 2,000 543 3,698 2,790 3,489 2,000 2,421 2,852 2,555 1,000 2,401 1,651 1,948 1,000 – - Mar 07 Mar 08 Mar 09 Mar 10 Mar 11 Sep 11 Mar 07
Slide 29: Pay-TV: South Africa
Pay-TV: South Africa Solid overall performance Sep 10 Sep 11 % Change • 209,248 net additions YTD Net subscribers (‘000) 3,214 3,698 15% - Premium +2%, Compact +13% - Select +18%, PVR +19% ZARm ZARm • BoxOffice - good start, 26% of PVR’s registered in 3 months Revenue 7,730 8,929 16% • Advertising g
Slide 30: Pay-TV: Sub-Saharan Africa
Pay-TV: Sub-Saharan Africa Continued investment in growth • 59,822 net additions YTD Sep 10 Sep 11 % Change - Premium +1%, Compact & Family +3% Net subscribers (‘000) 1,234 1,499 21% • Slower net growth due to economies/currencies • Margin pressure from: US$m US$m - higher decoder subsidies Revenue
Slide 31: Print: Media24 SA
Print: Media24 SA Recession caused strain • Advertising and circulation revenue flat ZARm Sep 10 Sep 11 % Change • Printing revenue up 21% YoY Revenue 3,212 3,448 7% • Profits affected by Trading profit 243 134 -45% ‒ ERP development expenses Trading margin 8% 4% ‒ fixed-cost base • Development of d
Slide 32: Agenda
Group Highlights Key Messages Financial Results Operational Performance Outlook Appendix 32
Slide 33: Outlook: continue to invest in future growth
Outlook: continue to invest in future growth • Investment to stimulate long-term growth Strategy unchanged • Conservative approach – expense developments where possible • Focus on scaling businesses • Commenced DTT rollout, license dependent Operational issues • Focus on organic build-out of interne
Slide 34: Agenda
Group Highlights Key Messages Financial Results Operational Performance Outlook Appendix 3434
Slide 35: Summary of Pay-TV subscribers
Summary of Pay-TV subscribers Net subscribers* Sep 10 Sep 11 South Africa 3,214,415 3,697,847 Analogue 98,677 73,549 Premium, Compact and Other 2,702,815 3,110,701 Easyview 412,923 513,597 Rest of Sub-Saharan Africa 1,234,028 1,498,503 Premium, Compact and Other 1,227,082 1,496,083 Easyview 6,946 2,
Slide 36: Consolidated income statement – US$
Consolidated income statement – US$ Sep 10 Sep 11 Sep 10 Sep 11 ZARm ZARm US$m US$m Revenue 15,833 18,482 2,145 2,650 Operating profit 2,344 1,953 318 280 Finance costs (418) (148) (57) (21) Share of equity accounted results 1,406 1,618 190 232 Acquisitions and disposals 55 (62) 7 (9) Dilution profi
Slide 37: Core headline earnings
Core headline earnings Sep 10 Sep 11 ZARm ZARm Headline earnings 2,369 2,597 Treasury-settled share scheme charges 217 271 1 1 Includes ZAR182m from Tencent and Mail.ru Deferred tax adjustments (7) (24) Amortisation of intangible assets 525 586 2 Acquisition-related costs 34 53 2 Includes ZAR20m rel
Slide 38: Net finance costs
Net finance costs Sep 10 Mar 11 Sep 11 1 ZARm ZARm ZARm Debt include: Interest (paid) (587) (1,388) (583) • US$700m 7-year bond issued Jul10: Loans and overdrafts (436) (883) (390) 1 - 6.375% coupon Transponder leases (74) (144) (66) 2 • 5-year US$2bn RCF arranged Mar11: RCF costs write-off - (128)
Slide 39: Taxation analysis
Taxation analysis Sep 10 Sep 11 ZARm ZARm Profit before tax 4,799 3,273 Add back: Development spend 631 1,125 Equity results (1,286) (1,618) Other gains and losses 529 722 Acquisition gains (1,587) 151 FX gains and losses 155 (5) BEE preference dividends (113) (230) Adjusted profit before tax 2,973
Slide 40: Capital expenditure
Capital expenditure Sep 10 Sep 11 ZARm ZARm Land, buildings & plant 75 233 Transmission equipment 116 127 Computer, software & network equipment 194 302 Other (including vehicles, furniture) 65 57 Capital expenditure 450 719 Capex/Revenue 2.8% 3.9% 40
Slide 41: Minimal impact of currency movements
Minimal impact of currency movements ZAR fluctuation impacts translation of offshore earnings Revenue growth YoY Trading Profit growth YoY 20,000 +17% +18% 3,500 -8% -9% 15,000 2,500 10,000 18,482 18,596 3,079 3,105 1,500 5,000 - ,500 Reported Constant Currency Reported Constant Currency Average Clo
Slide 42: FX - Hedging to manage risk
FX - Hedging to manage risk US$ Forward Exchange Cover • Hedging strategy: US$m US$ rate - Pay-TV: long-term commitments, cover up to 100% of rolling 12 -24 month net inputs FY12 203 8.12 - Print: short-term commitments, cover maximum FY13 381 7.80 12 months rolling input costs - Bond/RCF: hedge int
Slide 43: Technology: Irdeto
Technology: Irdeto Affected by investments and FX US$m Sep 10 Sep 11 % Change • Shipped 9.3m CA units, up 2% YoY Revenue 111 112 - • Non-group sales accounted for 69% of revenue Trading profit 11 (4) >100% • Added new clients in all product categories Trading margin 10% n/a • Margin contraction rela
Slide 44: Print: Abril
Print: Abril Impacted by non-recurring 2010 WC benefits • Magazine advertising +4% YoY and circulation BRLm Jun 10 Jun 11 % Change revenue +3% Revenue 1,404 1,404 - • Distribution revenue down 10%, lower volumes post 2010 Fifa WC Operating profit 101 96 -4% • Contribution to core headline earnings Z
Slide 45: Internet Strategy
Internet Strategy Central and Eastern Europe Africa / Middle East / SE Asia IM MVAS MVAS Portal Email SNS Portal IM SNS Community Email Community Games Payment Games platforms Payment E-commerce platforms E-commerce China Latam MVAS Portal MVAS Portal IM SNS Email IM SNS Community Email Community Pa
Slide 46: Internet Pay-TV Print
100% Internet Pay-TV Print China Russia Latam South Africa South Africa 80% 34% 29% 95% 85% India Eastern Europe 84% 80% 97% 100% 52% 71% 65% Sub-Sahara Africa Brazil Southeast Asia Western Europe 100% 30% 76% 100% China 50% Africa 100% Technology 49% 51% 34% 100% Middle East 36% 25% 46
Slide 47: Investor Relations
Investor Relations Meloy Horn Office: +27 11 289 3320 Mobile: +27 82 7727 123 E-mail: [email protected] Website: www.naspers.com 4747