Naspers Limited Class N · JSE:NPN
Naspers Limited Class N — FY2010 Earnings Presentation
46 slides from Naspers Limited Class N's earnings presentation, June 2010
Slide 1: Financial Results Presentation
Financial Results Presentation For the year ended March 2010
Slide 2: Important information
Important information This presentation contains forward-looking 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 a
Slide 3: Group Highlights
Group p Highlights g g Key Messages Financial Results Operational performance Outlook Appendix
Slide 4: FY10 Group highlights
FY10 Group highlights • Revenue R up 5% and d EBITDA up 8% • EBITDA margin expanded marginally Financial • Core headline earnings up 22% to ZAR5.3bn • Free cash flow increased to ZAR4.1bn • Internet growing; development spend impacted margins • Pay-TV subscribers +19% YoY Operational • Print affecte
Slide 5: FY10 Financial highlights
FY10 Financial highlights Mar 09 Mar 10 Revenue (ZARbn) EBITDA (ZARbn) EBITDA Margin (%) Up 5% Up 8% Up 3% 3.2 2 24 2.8 28.0 6.5 22.6 23.2 26.7 6.0 Core Headline Earnings(ZARbn) Core HEPS(ZAR) DPS(ZAR) Up 22% Up 21% Up 14% 1.9 2.4 5.3 1.26 2.35 4.4 11.79 2.07 5
Slide 6: Key Messages
Group p Highlights g g Key Messages Financial Results Operational performance Outlook Appendix
Slide 7: FY10 Key messages
FY10 Key messages 1 Consistent growth trend over long-term 2 Further expansion of internet 3 Strong rand depressed figures 4 Growing dividend income 7
Slide 8: Good track record, consistent growth
Good track record, consistent growth Revenue* (ZARm) EBITA* (ZARm) 40,000 9,000 35,000 8,000 30,000 7,000 25,000 6,000 6 000 5,000 20,000 4,000 15,000 3,000 10,000 2,000 5,000 1,000 - - 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 (1,000) 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 * Base
Slide 9: Financial Results
Group Highlights Key Messages Financial Results Operational performance Outlook Appendix
Slide 10: Summary consolidated income statement
Summary consolidated income statement Mar 09 Mar 10 ZARm ZARm 1 Revenue growth +5% Revenue 26 690 26,690 27 998 1 27,998 +11% in constant currency 2 EBITDA 6,026 6,496 2 EBITDA +8%, margin improvement due to cost control Operating profit 3,783 4,041 3 Net finance costs (303) (421) 3 Net finance cost
Slide 11: Some effect of strong ZAR on figures
Some effect of strong ZAR on figures Contribution by offshore operations affected by rand strength upon translation Revenue growth YoY EBITA growth YoY 30,000 5,900 , +11% +18% 29,500 5,800 29,000 5,700 5,600 28,500 +5% 29,576 5,500 +10% 5,826 28,000 5,400 27,500 27,998 5,300 5,447 27,000 5,200 Repo
Slide 12: Marginal growth in revenue*
Marginal growth in revenue* Revenue* (ZARm) Revenue (ZARm) Mar 09 Mar 10 % Change 20,000 Mar 09 Mar 10 Economic interest 34,505 37,251 8% 15,000 16,659 14 858 14,858 10,000 10,722 10,204 • Pay-TV revenue grew 12%, supported by 9,181 19% subscriber growth 7,411 5,000 • Internet held up; 24% growth Yo
Slide 13: Operational profit up 19%
Operational profit up 19% Operational Profit* (ZARm) Operational profit (ZARm) Mar 09 Mar 10 % Change 6,000 Economic interest 7,173 8,537 19% 5,000 Mar 09 Mar 10 5,171 4 624 4,624 p Operational margin g 21% 23% 4,000 3,000 * Before amortisation, other gains/losses and including transponder leases 2,
Slide 14: Development spend flat; to increase
Development spend flat; to increase D Development l costs per b business i di division i i 1 Mar 09 Mar 10 % Change ZAR125m for e-commerce ZARm ZARm ZAR76m for ibibo ZAR67m for 24.com Internet 483 511 6% 1 ZAR96m for mobile Pay-TV 196 424 116% 2 2 ZAR246m for mobile TV Technology 343 239 -30% ZAR178
Slide 15: Income from associates up 50%
Income from associates up 50% Associate contribution to core headline earnings 1 Mar 09 Mar 10 Tencent again benefited from % Change ZARm ZARm strong growth in online gaming revenue Tencent 1,217 2,148 76% 1 2 Mail.ru 87 70 -20% 2 Mail.ru contribution mainly affected by currency translation Abril 41
Slide 16: Growing dividend income
Growing dividend income Dividends from associates becoming g a good g source of additional cash flow Dividends received from associates (ZARm) Dividends from associates as a % of Free Cash Flow Normal Special Associates 500 12% 400 191 300 200 296 100 98 88% 88 41 44 - 2006 2007 2008 2009 2010 16
Slide 17: Free cash flow up 70%
Free cash flow up 70% Free cash flow from operations Mar 09 Mar 10 ZARm ZARm 1 Operating cash flow 5,814 7,264 Internet ZAR224m Pay-TV ZAR591m Capex (1,232) (1,403) 1 Technology ZAR199m Print ZAR389m Finance leases (450) (439) 2 Tax (1,798) (1,786) Dividends from Tencent , mail.ru and Abril Investme
Slide 18: Net consolidated debt – gearing only 5%
Net consolidated debt – gearing only 5% G Group nett consolidated lid t d d debt bt Mar 10 1 ZARm Largely to fund acquisitions Net cash – South Africa 2,968 Net debt – offshore (US$634m) (4,657) 2 1 Excluding transponder leases of ZAR2bn considered an operating cost Closing net debt (1,689) 2 Debt f
Slide 19: Operational performance
Group Highlights Key Messages Financial Results Operational performance Outlook Appendix
Slide 20: Internet strategy: focused on communities
Internet strategy: focused on communities Mobile Portals o ta s value-added services Social Instant networking messaging Community and e-mail Payment Online games platforms E-commerce 20
Slide 21: Emerging market focus
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Slide 22: Growing organically and through acquisitions
Growing organically and through acquisitions Other* internet operations growing, but development costs affecting profitability Revenue from Internet (ZARm)* Adjusted returns from Internet (ZARm)* Currency Currency Revenue as reported MWeb Africa sold 6000 1000 Development spend EBITA as reported 500
Slide 23: Internet: Allegro Group
Internet: Allegro Group Still meeting expectations PLNm* Mar 09 Mar 10 % Change • Operations growing strongly outside Poland Revenue 508 664 31% • Solid S performance f in Poland EBITA 192 216 13% • Development within vertical transaction services • Fixed price goods account for 86% of EBITA margin
Slide 24: Internet: Allegro Marketplace
Internet: Allegro Marketplace Auctions: 12 months to 31 March 2010* PLN8bn 156m PLN557m 70bn page views gross merchandise transactions revenue value (GMV) +20% +34% +28% +28% A ti Auctions: th tto 31 M 12 months h 2009* March PLN6,3bn 116m PLN 434m 58bn page views gross merchandise transactions reve
Slide 25: Internet: Tencent (China)
Internet: Tencent (China) Continued strength of diversified portfolio RMBm* Mar 09 Mar 10 % Change • Contribution to FY10 core headline earnings Revenue 7 155 12 440 74% ZAR2.1bn (FY09 ZAR1.2bn) • Revenue growth strong, margins held up Operating profit 3 246 6 020 85% • Maintained leadership in soci
Slide 26: Internet: mail.ru (Russia)
Internet: mail.ru (Russia) Sustained growth momentum RURm* Mar 09 Mar 10 % Change • Contribution to FY10 core headline earnings Revenue 1,900 2,560 35% ZAR70m (FY09 R87m) • EBITA margin affected by one-off tax EBITA 1,047 1,072 2% restructuring, acquisition charges and IFRS2 EBITA margin 55% 42% cos
Slide 27: Pay-TV: South Africa
Pay-TV: South Africa Continued growth Mar 09 Mar 10 % Change Gross subscribers (‘000) 2,401 2 ,852 19% ZARm ZARm • 19% gross subscriber growth Revenue 10,351 12,300 19% • 450,000 total gross additions – Premium +6% EBITA 3,569 4,303 21% – Compact +52% EBITA margin 34% 35% – PVR +10% • Subscription r
Slide 28: Pay-TV: Sub-Saharan Africa
Pay-TV: Sub-Saharan Africa Currency translations masking good performance Geographic subscriber split Mar 09 Mar 10 % Change Nigeria G Gross subscribers (‘ (‘000)) 916 1,099 20% Angola Kenya Zambia US$m US$m Namibia Revenue 516 567 10% Zimbabwe Ghana EBITA 161 166 3% Uganda EBITA margin 31% 29% Tanz
Slide 29: Pay-TV costs continue to trend up
Pay-TV costs continue to trend up Pay-TV: Programming costs (ZARm) • Programming costs continue to increase 6,000 – Sport escalations due to competition – More local content 5,000 – Offshore content affected by fx rates 4,000 – Variable cost driven by growth in subscribers 3,000 5,161 2,000 4,357 3,
Slide 30: Technology
Technology Returned to profitability US$m Mar 09 Mar 10 % Change Revenue* 213 212 -1% • Shipped 16m units, up 5% YoY EBITA (15) 6 >100% • Non-group sales accounted for 77% of revenue • Revenue declined as new projects and major EBITA margin -7% 3% upgrades slowed due to the recession * Before interg
Slide 31: Print – Media24 (South Africa)
Print – Media24 (South Africa) Cyclical business, advertising under pressure ZARm Mar 09 Mar 10 % Change • Advertising revenue down 1.4% 1 4% YoY • Circulation revenue up 7.5% Revenue 6,480 6,150 -5% • Maintained market share EBITA 570 460 -19% • Margins affected by EBITA margin 9% 7% – Lower advert
Slide 32: Print – Abril (Brazil)
Print – Abril (Brazil) Adspend under pressure • Contribution to core headline earnings BRLm Mar 09 Mar 10 % Change ZAR318m Revenue 2,990 3,079 3% • Naspers received dividends of ZAR130m EBITA 348 340 -2% • Sluggish revenue growth off a high base EBITA margin 12% 11% • Advertising declined 4.4% (mark
Slide 33: Outlook
Group Highlights Key Messages Financial Results Operational performance Outlook Appendix
Slide 34: Outlook
Outlook • New pproducts constantlyy developed p and launched Internet growth • Organic and acquisitive expansion • Focus on medium to long-term returns Pay-TV investment • Changes in technology will trigger more investment P i t iimprovementt Print • Anticipate short short-term term rebound, but lon
Slide 35: Appendix
Group Highlights Key Messages Financial Results Operational performance Outlook Appendix
Slide 36: Pay-TV subscribers
Pay-TV subscribers Gross subscribers Mar 09 Mar 10 Equated subscribers Mar 09 Mar 10 South Africa 2,851,426 South Africa 1,738,810 1,924,890 2,401,456 Analogue 139,944 113,237 Analogue 128,376 104,299 Premium, Compact and Other 2,012,210 2,372,752 Premium, Compact and Other 1,604,871 1,812,437 Easyv
Slide 37: Consolidated income statement
Consolidated income statement Mar 09 Mar 10 Mar 09 Mar 10 ZARm ZARm US$m US$m Revenue 26,690 27,998 3,038 3,630 Operating profit 3,783 4,041 430 524 Finance costs (303) (421) (34) (55) Share of equity accounted results 1,473 2,058 168 267 Profit on sale of investments 36 144 4 19 Impairment of equit
Slide 38: Core headline earnings
Core headline earnings Mar 09 Mar 10 ZARm ZARm Headline earnings 3,065 3,297 1 Discontinued operations (129) - Includes R148m relating to equity-settled Treasury-settled share scheme charges 258 418 share schemes of associates Deferred tax assets (58) 253 1 2 Amortisation of intangible assets 958 92
Slide 39: Capital expenditure
Capital expenditure Mar 09 Mar 10 Capital expenditure ZARm ZARm Land, buildings & plant 349 338 Transmission equipment 323 343 Computer & office equipment 302 390 Software 182 200 Other (including vehicles, vehicles furniture) 76 132 Capital expenditure 1,232 1,403 39
Slide 40: FX - Hedging to reduce risk
FX - Hedging to reduce risk US$ Forward Exchange Cover C US$m US$ rate • Hedging strategy FY11 271 9.73 – Pay-TV: long-term commitments, cover up to 100% FY12 222 8.45 of rolling 12 month net inputs – Print: short-term commitments; cover maximum 12 months rolling input costs • Annualised net foreign
Slide 41: Current assets and liabilities
Current assets and liabilities Mar 09 Mar 10 Mar 09 Mar 10 Current Assets Current Liabilities ZARm ZARm ZARm ZARm Inventory 741 693 Current portion of long-term LT debt 1,928 1,675 Programme and film rights 1,069 1,298 Provisions 230 187 Trade receivables 2,233 2,438 Trade payable 1,662 1,721 Other
Slide 42: Taxation reconciliation
Taxation reconciliation Mar 09 Mar 10 Tax reconciliation ZARm ZARm Profit before tax 4,775 5,760 Add back: Development spend 1,211 1,240 Equity results (1,473) (2,058) Associate impairments 214 62 Other gains and losses 51 220 FX gains and losses 375 154 BEE preference dividends (377) (268) Adjusted
Slide 43: Significant acquisitions
Significant acquisitions Company Date Total cost Total cost Percentage Effective Accounting FCm ZARm acquired holding method mail.ru top-up Nov-09 US$104 771 39% Associate Korbitec Nov-09 ZAR158 158 51% 51% Subsidiary Buscape Sep-09 US$342 2,670 91% 91% Subsidiary Bankier Aug-09 US$22 178 100% 100%
Slide 44: Mail.ru results incorporating Astrum
Mail.ru results incorporating Astrum USDm Dec 08 Dec 09 % Change • Acquired Astrum to lead Russian internet gaming Revenue 75,8 126,4 67% • Results as presented include the EBITDA 45,3 55,5 23% Astrum acquisition from April 2009 EBITDA margin 60% 44% *Data reflects 100% of results as reported by Mai
Slide 45: Internet Technology Print
100% Internet Pay TV Technology Print Eastern Europe p Western Europe p South Africa Technology Newspapers & Magazines 97% 100% 100% 85% 80% 100% 44% Printing & Distribution 95% China Russia 35% 39% Sub-Sahara Africa Publishers & Agents South Africa India 100% 85% 85% 30% Brazil, Magazines & Educati
Slide 46: Investor Relations contact details
Investor Relations contact details Meloy Horn Office: +27 11 289 3320 Mobile: +27 82 7727 123 E-mail: meloy.horn@naspers.com y @ p Website: www.naspers.com