Naspers Limited Class N · JSE:NPN
Naspers Limited Class N — FY2008 Earnings Presentation
49 slides from Naspers Limited Class N's earnings presentation, 2008
Slide 1: Results presentation
Results presentation For the financial year ended 31 March 2008
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: Highlights
Highlights Financial overview Operational overview Outlook Appendix
Slide 4: Group strategy
Group strategy Operating platforms that link users to media services, content and means of Business strategy communication Providing entertainment, information, trading opportunities and friends Vision for users wherever the user might be Packaging media content, building brand names around it, and
Slide 5: Business focus
Business focus Internet Pay TV Print Technology 5
Slide 6: Financial Highlights
Financial Highlights 2007 2008 Revenue(ZARbn) Revenue (Rbn) EBITDA (ZARbn) EBITDA Margin (%) Up 19% Up 15% Down 1% 20.5 25 24 17.2 4.9 4.2 HEPS (ZAR) Core HEPS (ZAR) DPS (ZAR) Up 24% Up 16% Up 15% 1.80 10.76 11.16 1.56 9.65 8.66 6
Slide 7: Operational highlights
Operational highlights Major focus on Investing in 4 key segments (communication, social networks, e-commerce internet and content). 13 companies mainly across 18 countries FY08 acquisitions totalled ZAR22bn – cash outflow ZAR17bn. Significant Includes 100% of Tradus, 97% of Gadu-Gadu, 100% of Cloak
Slide 8: Financial overview
Highlights Financial overview Operational overview Outlook Appendix
Slide 9: Revenue and operating margin
Revenue and operating margin Revenue ZARbn Mar '07 Mar '08 YoY Change • YoY increase 19%, organic growth 18% Revenue 17.2 20.5 19% • Pay TV revenue increased 22% boosted by 13% subscriber growth Operating profit* 3.7 4.2 15% • Total advertising revenue increased 16% Operating margin 21.4% 20.7% * Be
Slide 10: Portfolio Analysis
Portfolio Analysis* Segmental revenue Segmental Development Costs Pay TV (45%) Pay TV (18%) Technology (4%) Technology (26%) Internet (16%) Internet (27%) Print Media (35%) Print Media (29%) Geographic revenue Segmental Acquisitions South Africa (61%) Pay TV (19%) Rest of Africa (13%) Technology (4%
Slide 11: Development costs
Development costs • Pay-TV: Mar '07 Mar '08 YoY – Relates mainly to mobile TV trials ZARm ZARm Change – Reduced spending due to delay in DVBH licensing in SA Pay-TV 260 205 -21% • Internet: – ZAR103m (FY07 ZAR30m) attributed Internet 103 291 +183% to Indian start-up ibibo – ZAR72m attributed to 24.c
Slide 12: Equity accounted results
Equity accounted results Mar '07 Mar '08 YoY ZARm ZARm Change Tencent 343 615 +79% Abril 99 150 +52% Mail.ru - 49 - Other (1) (42) - Contribution to core headline earnings 441 772 +75% 12
Slide 13: Summary income statement
Summary income statement Mar '07 Mar '08 ZARm ZARm Revenue 17 218 20 518 Operating profit 3 416 3 878 Finance costs (338) 1 005 Share of equity accounted results 339 654 Impairment of equity investments (176) (279) Profit on sale of investments 3 16 Income before taxation 3 244 5 274 Taxation (1 185
Slide 14: Income Statement – Special Items
Income Statement – Special Items Net finance income amounted to ZAR1bn. Includes interest earned of Finance costs ZAR602m on net cash deposits, mainly on the capital raised in March 2007 and deployed only in the latter half of the year Impairments Investments in BMC and Titan Media were impaired The
Slide 15: Free cash flow
Free cash flow Mar '07 Mar '08 ZARm ZARm Operating cash flow 4 572 5 104 Capex (875) (1 221) Finance leases (330) (340) Tax (1 228) (1 553) Investment income 50 71 Discontinued operations (8) 162 Free cash flow 2 182 2 223 15
Slide 16: Capital Expenditure
Capital Expenditure Mar '07 Mar '08 YoY Change ZARm ZARm Internet (excl. associates) 89 113 +27% Pay TV 191 573 +200% - Customer service centres 54 167 - Transmission equipment/studios 51 255 - Other 86 151 Print 550 496 -10% Technology 45 39 -13% Total 875 1 221 +40% 16
Slide 17: Details of acquisitions
Details of acquisitions Company Effective Total Total Cash Percentage Effective Accounting Method date cost cost outflow acquired holding FCm ZARm ZARm Tradus Mar 2008 £949 15,293 14,608 100% 100% Consolidated Dayport Feb 2008 $29 227 227 100% 100% Consolidated Gadu Gadu Dec 2007 € 110 1,126 904 97%
Slide 18: Net cash flow
Net cash flow Mar '07 Mar '08 ZARm ZARm Free cash flow 2 182 2 223 Net investments (5 292) (17 152) Net dividends (443) (691) Discontinued operations - 51 BEE transactions 821 - Interest 110 588 (2 622) (14 981) Net financing 7 158 9 917 Net cash inflow/(outflow) 4 536 (5 064) Net cash/(debt) balanc
Slide 19: Foreign exchange risk
Foreign exchange risk • Foreign currency cost exposure US$ Forward Exchange Cover in SA businesses US$ US$ ZARm • Mainly transponder leases and m rate content rights • 80% - 100% of foreign currency FY08 96 6.87 660 exposure covered for up to two FY09 167 7.56 1 267 years FY10 147 8.01 1 181 • Incre
Slide 20: Operational overview
Highlights Financial overview Operational overview Outlook Appendix
Slide 21: Naspers Internet Strategy – community based focus
Naspers Internet Strategy – community based focus Social Networks Commerce QQ, Mail.ru, Gadu Gadu, Allegro, Ricardo, QQ, ibibo, MXit, Kalahari.net ` Community Communication Content QQ, Gadu Gadu, QQ, Mail.ru, 24.com, MXit, Nimbuzz Sanook! 21
Slide 22: Internet Growth Drivers
Internet Growth Drivers 69 USA 50 1 60 UK 45 2 56 Czech 12 6 38 Hungary 17 2 34 Poland 14 7 22 Brazil 2 6 21 Russia 3 8 15 China 2 8 12 Ukraine 2 7 9 South Africa 1 3 5 India 2 7 0 10 20 30 40 50 60 70 80 % Real GDP growth Broadband penetration Internet penetration 22
Slide 23: Internet Assets
Internet Assets Faso li ——— Compera nTime NASPERS “@ 23
Slide 24: Internet: Transaction platforms - Tradus Group
Internet: Transaction platforms - Tradus Group • Poland • Switzerland • Czech • Denmark • Hungary • Norway • Russia • Ukraine • Slovakia • Romania • Bulgaria 24
Slide 25: Internet: Allegro & Ricardo
Internet: Allegro & Ricardo • Acquired 100% for GBP949m (Mar08) EURm* FY06 FY07 FY08 • A leading e-commerce company in Europe Revenue 44.0 67.0 107.0 • Operates in 13 countries EBIT 14.0 23.0 33.0 • # 1 auction site in 9 countries EBIT margin 31.8% 34.3% 30.8% • 12m+ registered users * Data reflects
Slide 26: Internet: Allegro & Ricardo
Internet: Allegro & Ricardo Business model (FY08) 100M 60BN page views €1.6BN GMV* €107M revenue transactions *GMV = gross merchandise volume Monetisation rate (%) Financial performance (€m) 0.4 120 100 3.4 80 60 107 40 67 2.8 20 44 33 23 14 0 Mar 06 Mar 07 Mar 08 Total rate: 6.6% Success fees Listi
Slide 27: Internet: Tencent (China)
Internet: Tencent (China) • Naspers owns 35% Rmb'm* FY05 FY06 FY07 • Contribution to core headline earnings Revenue 1,426 2,800 3,821 ZAR615m EBITDA margin 67.1% 70.8% 70.8% • Included in Hang Seng Index (June 2008) Operating margin 34.0% 41.5% 42.8% * Data reflects 100% of results in local currency
Slide 28: Internet: Mail.ru (Russia)
Internet: Mail.ru (Russia) • Acquired 33% at a cost of US$190m US$’m* FY05 FY06 FY07 • Contribution to core headline earnings Revenue 10.6 29.3 55.8 ZAR49m EBITDA 5.5 18.5 36.0 EBITDA margin 51.9% 63.1% 64.5% • Core offering: E-mail, IM and community • Co-operation opportunities being explored * Dat
Slide 29: Internet: Gadu-Gadu (Poland)
Internet: Gadu-Gadu (Poland) PLN’m* FY05 FY06 FY07 • Acquired 97% for €110m (Dec 07) Revenue 8.2 11.1 20.3 • Leading IM platform in Poland EBITDA 4.0 5.1 9.1 • Co-operation opportunities being explored EBITDA margin 48.8% 45.6% 44.6% with Allegro and Tencent EBIT 3.1 4.6 8.4 * Data reflects 100% of
Slide 30: Internet: Rest of operations
Internet: Rest of operations • ibibo (India) Contribution by Internet segment – Local search and community start-up YoY – New license agreement with Tencent ZARm Mar ‘07 Mar ‘08 Change – Development cost R103m (2007:R30m) Revenue 1,143 1,624 42.1% Tradus (3 weeks) - 152 - • 24.com (SA) Gadu-Gadu (3
Slide 31: Pay-TV: South Africa
Pay-TV: South Africa • Subscriber growth 13% YoY Mar '07 Mar '08 YoY Change • Net additions: Equated subscribers 1,392k 1,570K 12.8% – Equated subs*:178k – PVR: 109k ZARm ZARm – Compact: 152k Revenue** 8,554 10,359 21.1% • Now offering 4 bouquets EBITDA 2,930 3,574 22.0% – Growth strategy targeting
Slide 32: Pay-TV: South Africa – still offering growth momentum
Pay-TV: South Africa – still offering growth momentum Pay TV penetration as % of TV households SA Pay-TV Subscriber mix Romania 70 3% 46 2% 8% Czech Republic 16% Poland 39 10% Chile 36 15% Hungary 32 78% Argentina 31 77% Mexico 28 69% Angola 24 58% South Africa 20 Namibia 19 Turkey 16 Russia 13 22%
Slide 33: Pay-TV: Sub-Saharan Africa
Pay-TV: Sub-Saharan Africa • Strong subs growth (14% YoY) Mar '07 Mar ‘08 % change – despite loss of certain content rights and Equated subscribers 471k 539k 14.4% increased competition • Net additions: ZARm ZARm – Equated subs: 68k Revenue 2,466 3,056 23.9% – PVR’s: 21k EBITDA 949 1,142 20.3% – Com
Slide 34: Pay-TV: Sub-Saharan Africa
Pay-TV: Sub-Saharan Africa Sub-Saharan subscribers – March 08 Nigeria 153,581 Angola 135,004 Other 93,542 Zambia 36,426 Namibia 32,048 Kenya 30,780 Zimbabwe 23,079 Ghana 18,358 Uganda 15,888 0 40,000 80,000 120,000 160,000 Angola Pay-TV subs Nigerian Pay-TV subs 160,000 160,000 120,000 120,000 80,00
Slide 35: Technology
Technology Conditional access - Broadband technologies - % % ZARm Mar ‘07 Mar ‘08 Change ZARm Mar ‘07 Mar ‘08 Change Revenue 817 1,010 23.6% Revenue 49 71 44.9% EBITDA 73 33 -54.8% EBITDA (203) (159) 21.7% EBITA* 55 10 -81.8% EBITA* (222) (178) 19.8% * Excludes other gains & losses * Excludes other
Slide 36: Print – South Africa
Print – South Africa Print • SA consumer spending under pressure YoY • Advertising revenue up 9% YoY (ZAR2.4bn) ZARm FY07 FY08 Change Revenue 4,823 5,355 11.0% • Initiatives to combat margin pressure EBITDA* 787 776 -1.4% – Closed more than 10 titles EBITDA margin 16.3% 14.5% - – Reducing developmen
Slide 37: Print - International
Print - International Abril – Advertising revenue and Market share • China (Titan and BMC) 800 65% – Largest soccer newspaper in China 600 60% – Portfolio of 7 sports magazines 400 761 636 683 – Looking to capitalise on soccer and Beijing 55% 200 Olympics 0 50% – Tough year for newspapers in China 2
Slide 38: Outlook
Highlights Financial overview Operational overview Outlook Appendix
Slide 39: Outlook
Outlook Mixed trading Macro economic environment varied. conditions South Africa tough; BRIC and rest of Africa all growing 5-11% Solid core Profitable and generating strong cash flows business Increased Adjust to meet new competitive challenges and protect margins competition 39
Slide 40: Growth Strategy – focusing on emerging markets
Growth Strategy – focusing on emerging markets Organic growth Build out of existing businesses Product Continue to develop new technologies and services development Acquisitive Acquire new growth opportunities growth 40
Slide 41: Appendix
Highlights Financial overview Operational overview Outlook Appendix
Slide 42: Consolidated income statement
Consolidated income statement ZAR millions US$ millions Mar '08 Mar '07 Mar '08 Mar '07 Revenue 20,518 17,219 2,867 2,429 Operating profit 3,878 3,416 542 482 Finance costs 1,005 (338) 140 (48) Share of equity accounted results 654 339 91 48 Profit on sale of investments 16 3 2 1 Impairment of equit
Slide 43: Pay-TV subscriber numbers
Pay-TV subscriber numbers Mar '07 Mar '08 SA - analogue 185,341 156,488 SA - digital 1,206,473 1,413,052 Total SA 1,391,814 1,569,540 Sub-Saharan Africa - analogue - - Sub-Saharan Africa - digital 470,814 538,706 Total Sub-Saharan Africa 470,814 538,706 Africa - analogue 185,341 156,488 Africa - dig
Slide 44: Foreign exchange risk
Foreign exchange risk Total outstanding FEC's at 31 March 2008: Maturing within one year: AUD CHF EUR GBP HKD SGD USD '000 '000 '000 '000 '000 '000 '000 Pay television - - 1 214 - - - 159 402 Internet - - - 66 - - 175 Newspapers and magazines - - 2 378 - - - 150 Printing - 82 29 859 - - - 6 600 Book
Slide 45: Foreign exchange rates
Foreign exchange rates 31 March 2008 31 March 2007 Currency (1FC = ZAR) Average rate Closing rate Average rate Closing rate US Dollar 7.1558 8.1363 7.0889 7.2749 Euro 10.2618 12.8584 9.1703 9.7154 Thai baht 0.2284 0.2584 0.1949 0.2242 Chinese yuan renminbi 0.9660 1.1603 0.8991 0.9406 Brazilian reais
Slide 46: Core headline earnings
Core headline earnings Mar '07 Mar '08 ZARm ZARm Headline earnings 2 560 3 806 Deferred tax assets (30) (244) Treasury-settled share scheme charges 42 47 Amortisation of intangible assets 173 410 Fair value adjustments & currency translations 109 (71) Core headline earnings 2 854 3 948 Discontinued
Slide 47: Pay-TV: Greece and Cyprus (NetMed)
Pay-TV: Greece and Cyprus (NetMed) Mar '07 Mar '08 • Concluded sale agreements with ForthNet SA for €490m Subscribers 346k 362k - Greece analogue 63k 50k - Greece digital 267k 299k • Greece: - Cyprus digital 15k 14k – 5% subscriber growth to 349k ZARm ZARm – 86% digital, Revenue 1 787 2 057 • Enhanc
Slide 48: Naspers Group Structure
Naspers Group Structure Naspers Ltd Welkom Yizani 100% Phuthuma Nathi 20% 15% Via Africa Ltd Book publishing 100% 85% 80% 95% Media24 Holdings Ltd MCSA Holdings Paarl Media Holdings Printing 100% 100% Major associated companies M-Net/Super Sport M-Web Holdings MIH Holdings Ltd 30.0% Abril Printing/P
Slide 49: 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 Website: www.naspers.com 49