Naspers Limited Class N · JSE:NPN
Naspers Limited Class N — FY2013 Earnings Presentation
51 slides from Naspers Limited Class N's earnings presentation, 2013
Slide 1: Financial results presentation
Financial results presentation For the year ended 31 March 2013
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: Glossary of terms
Glossary of terms ARPU: Average revenue per user HEPS: Headline earnings per share B2C: Business to consumer HD: High definition DTH: Direct-to-home television IM: Instant messaging DTT: Digital terrestrial television MAU: Monthly average users FCF: Free cash flow MMOG: Massively multiplayer online
Slide 4: Group Overview
Group Overview Financial Results Internet Pay-TV Outlook Appendix 4
Slide 5: FY13 key financials: Synopsis
FY13 key financials: Synopsis Mar 12 Mar 13 Revenue (ZARbn) Trading profit (ZARbn) Development spend (ZARbn) 27% 1% 51% 50.2 5.7 5.7 4.3 39.5 2.8 Free cash flow (ZARbn) Core HEPS (ZAR) DPS (ZAR) 4% 20% 15% 22.16 3.6 3.5 3.85 18.50 3.35 5
Slide 6: Top line growth momentum
Top line growth momentum Revenue (ZARm)* 36% 80,000 70,000 60,000 50,000 40,000 76,776 30,000 56,522 45,103 20,000 34,505 37,251 10,000 - Mar 09 Mar 10 Mar 11 Mar 12 Mar 13 * Based on economic interest, i.e. assuming all equity accounted investments are proportionately consolidated 6
Slide 7: Spreading risk by diversification
Spreading risk by diversification Segmental revenue split* Geographic revenue split* Revenue by type* South Africa (38%) Subscription (33%) Internet (45%) Asia (28%) VAS & games (23%) Pay TV (39%) Europe (14%) eCommerce (16%) Print Media (16%) Advertising (11%) Rest of Africa (11%) Printing & distri
Slide 8: Growing more organically
Growing more organically Development spend vs. other operating costs*(ZARm) 45,000 4,267 36,000 2,823 1,535 27,000 1,240 1,211 38,361 18,000 29,520 25,712 20,363 21,311 9,000 - Mar 09 Mar 10 Mar 11 Mar 12 Mar 13 Other operating costs Development costs * Other operating costs = Revenue minus EBITDA m
Slide 9: Earnings growth boosted by currency uplift (once-off)
Earnings growth boosted by currency uplift (once-off) Core headline earnings (ZARm)* 23% 9,000 FX 814 8,000 7,000 6,000 5,000 7,719 4,000 6,951 6,036 3,000 5,319 4,373 2,000 1,000 - Mar 09 Mar 10 Mar 11 Mar 12 Mar 13 9
Slide 10: Consistent dividend growth
Consistent dividend growth DPS (ZAc/share) 400 350 300 250 200 385 335 150 270 235 207 100 180 156 120 50 70 25 30 0 Mar 03 Mar 04 Mar 05 Mar 06 Mar 07 Mar 08 Mar 09 Mar 10 Mar 11 Mar 12 Mar 13 10
Slide 11: Financial Results
Group Overview Financial Results Internet Pay-TV Outlook Appendix 11
Slide 12: Summarised consolidated income statement
Summarised consolidated income statement Mar 12 Mar 13 Select information ZARm ZARm Revenue* Less: Associates 56,522 (17,035) 76,776 (26,527) Finance costs up Higher debt levels to fund acquisitions Consolidated revenue 39,487 50,249 Normalised preference dividend income Trading profit 5,669 5,729 T
Slide 13: Internet now largest revenue segment
Internet now largest revenue segment Incremental revenue YoY* (ZARm) FY13 revenue by business* 80% 20% 1% 36% 80,000 11,932 4,998 -139 76,776 15,395 60,000 34,587 40,000 56,522 56% of total revenue growth organic 30,257 20,000 – Mar 12 Internet Pay-TV Print Mar 13 Internet (45%) Pay TV (39%) Print (
Slide 14: Step-up in development spend to build eCommerce
Step-up in development spend to build eCommerce Incremental development spend YoY (ZARm) FY13 split by business 75% 23% 53% 51% 111 166 (124) 897 1,402 4,267 2,823 3,259 Mar 12 Internet Pay-TV Print Mar 13 Internet (76%) Pay-TV (21%) Print (3%) Internet Pay-TV Focus on eCommerce ZAR804m for DTT, mob
Slide 15: Development cost reducing trading profit
Development cost reducing trading profit Trading profit* (ZARm) FY13 trading profit by business* 44% 18% 32% 23% 743 15,000 1,180 (347) 1,870 12,000 14,465 6,163 9,000 7,559 6,000 11,762 Increased 12% YoY in constant currency 3,000 - Mar 12 Internet Pay-TV Print Mar 13 Internet (43%) Pay TV (52%) Pr
Slide 16: Free cash flow trimmed by DTT capex
Free cash flow trimmed by DTT capex Mar 12 Mar 13 FCF from operations ZARm ZARm Capex +36% Operating cash flow 7,505 8,440 Pay-TV (incl. DTT) ZAR2bn Internet ZAR434m Capex (2,034) (2,767) Print ZAR305m Finance leases (477) (586) Tax (1,923) (2,689) Investment income Includes ZAR510m dividend from Te
Slide 17: More bolt-on acquisitions
More bolt-on acquisitions Total acquisition spend (US$m) 800 634 600 Other 400 754 517 200 260 214 - Mar 09 Mar 10 Mar 11 Mar 12 Mar 13 17
Slide 18: Balance sheet healthy
Balance sheet healthy Increase Mar 13 Group net consolidated debt ZARm a consequence of debt-funded acquisitions Net debt – offshore (US$1.4bn) (12,975) Minus: Net cash – South Africa 6,354 Net debt Excludes transponder leases of ZAR6.2bn, considered to be an operating cost Closing net debt (6,621)
Slide 19: Internet
Group Overview Financial Results Internet Pay-TV Outlook Appendix 19
Slide 20: Internet: eCommerce evolution
Internet: eCommerce evolution eCommerce as % of total retail (2012) 12% 11% 10% 10% UK was 1% in 2004 USA was 4% in 2003 8% 6% 6% 6% 4% 4% 3% 3% 3% 2% 2% 2% 2% 2% 1% 1% 1% 0% Poland Czech Chile Mexico UK China Romania South Africa USA Hungary Argentina Ukraine Brazil Russia Turkey Source: Euromonito
Slide 21: eCommerce strategy
eCommerce strategy NadheRs (OLX 6) (“allegro emas \ (— > AVITOn® buscapé Retstat : company holding dubfzzle. com ricardo matafont tablica, pl fieeGED sou | ibibo ' property24 Cem, bie Guay Pedy | ricardolino.ch ™ Gratis inserieren. Einfach verkaufen. a lapel ER. tokobagus/® pone bes EE» sulitcompn d
Slide 22: eCommerce financials
eCommerce financials Revenue by type Further scaling of operations e-Tail (84%) ZARm Mar 12 Mar 13 % Change Classifieds (7%) Payments (6%) Revenue 5,736 11,433 100% Other (3%) Trading profit (914) (2,192) -140% Strategy Financial More markets and product categories Revenue growth 20% organic, 11% cu
Slide 23: eCommerce: financial growth
eCommerce: financial growth Revenue and development spend (ZARm) 12,000 100% 10,000 88% 8,000 11,433 6,000 4,000 5,736 3,235 3,684 2,000 1,725 575 - Mar 11 Mar 12 Mar 13 Revenue Development spend 23
Slide 24: eCommerce: classifieds
eCommerce: classifieds Daily visits (m)* Strategic Market presence in 23 countries 15 Consolidated position in Russia, now own 18.6% of Avito 65% Acquired Tokobagus (Indonesia) and Fixeads (Portugal) Accelerated investment across all key operations 10 5 6.2 10.2 Operational Leading position in most
Slide 25: eCommerce: e-tail
eCommerce: e-tail Revenue (ZARm) Items bought/sold daily (‘000)* 10,000 130% 21% 900 9,615 600 5,000 802 663 4,183 300 - - Mar 12 Mar 13 Mar 12 Mar 13 * Select criteria as measured for the month of March, adjusted for acquisitions Strategic Includes marketplace, B2C and lead-generation GMV by region
Slide 26: Internet: Another solid performance (Tencent)
Internet: Another solid performance Q1 2013 statistics RMBm* Dec 11 Dec 12 % Change • 825m monthly active IM user accounts (+10% YoY) • 9.2m PCU’s for QQ Game Platform (+5% YoY) Revenue 28,496 43,894 54% • 611m MAU on Qzone (+6% YoY) • 194m combined MAU for Weixin and WeChat Operating profit 12,254
Slide 27: Internet: Continued positive growth trajectory (Mail.ru)
Internet: Continued positive growth trajectory Q1 2013 statistics RURm* Dec 11 Dec 12 % Change • portal: 35m • email: 27m Revenue 15,215 21,151 39% • SNS: Odnoklassniki 24m EBITDA 8,381 11,534 38% EBITDA margin 55% 55% * Data reflects 100% of Mail.ru Group’s FY12 aggregate segment performance as rep
Slide 28: Pay-TV
Group Overview Financial Results Internet Pay-TV Outlook Appendix 28
Slide 29: PayTV: focus on local content
PayTV: focus on local content Viewing homes (‘000) Local content 6,739 5,611 Mar 12 Mar 13 ZAR1,6bn in FY13 decoder subsidies ZAR1bn / >6,000 hours 29
Slide 30: PayTV: new technology to expand services
PayTV: new technology to expand services DTT Online and mobile 8 countries Various products and devices 30
Slide 31: Pay-TV: solid growth in subscribers
Pay-TV: solid growth in subscribers Pay-TV homes (‘000) 20% 7,000 6,000 2,288 5,000 1,630 1,439 4,000 1,099 3,000 916 4,451 3,981 2,000 3,489 2,852 2,401 1,000 – Mar 09 Mar 10 Mar 11 Mar 12 Mar 13 South Africa Sub-Saharan Africa 31
Slide 32: Pay-TV: Operational dynamics
Pay-TV: Operational dynamics ARPU (ZAR) Programming cost (ZARm) 15% 7 500 6 000 4 500 298 307 6,935 3 000 5,497 6,037 3,709 4,304 1 500 – Mar 12 Mar 13 Mar 09 Mar 10 Mar 11 Mar 12 Mar 13 Development spend (ZARm) Capital expenditure (ZARm) 71% 23% 2 100 1 000 800 897 1 400 600 2,030 400 730 607 700 1
Slide 33: Pay-TV: services in countries across Africa
Pay-TV: services in 48 countries across Africa Continue to develop business Mar 12 Mar 13 % Change Net subscribers (‘000) 5,611 6,739 20% Subscribers 1,128,000 net additions YoY Compact accounted for 38% of growth ZARm ZARm GoTV accounted for 31% of growth PVR base increased 26% YoY to 956k Revenue
Slide 34: Outlook
Group Overview Financial Results Internet Pay-TV Outlook Appendix 34
Slide 35: Outlook: No change in strategy
Outlook: No change in strategy • One of fastest growing eCommerce groups globally eCommerce • Focus on classifieds, B2C and e-tailing • Strengthen market positions • Accelerate subscriber growth • Extend online services Pay-TV • Intensifying competition • More regulation may stifle innovation • Grow
Slide 36: Appendix
Group Overview Financial Results Internet Pay-TV Outlook Appendix 36
Slide 37: Print
Print: Reasonable results despite challenges Revenue mix FY13 ZARm Mar 12 Mar 13 % Change Advertising (34%) Revenue* 7,686 7,863 2% Printing (26%) Circulation (19%) Trading profit 587 603 3% Books (9%) Trading margin 8% 8% Distribution (5%) *Includes intergroup adjustments Other (7%) Environment Exp
Slide 38: Print: A leaner spell
Print: Environment Slowing economy and weak retail environment A leaner spell Advertising revenues under pressure BRLm Dec 11 Dec 12 % Change Financials Revenue 3,152 2,975 -6% Contribution to core headline earnings -ZAR69m Received ZAR111m in dividends Impaired investment Trading profit 380 101 -73
Slide 39: Pay-TV: additional information
Pay-TV: additional information Digital subscriber mix FY13 revenue split 34% 39% 37% 37% 29% 24% Subscription (79%) Advertising (7%) Mar 12 Mar 13 Hardware sales (6%) Online/Broadband (4%) Other Compact Premium Other (4%) 39
Slide 40: Core headline earnings
Core headline earnings Mar 12 Mar 13 Calculation of core headline earnings ZARm ZARm Headline earnings 4,874 6,630 Equity-settled share scheme charges 652 850 Deferred tax adjustments (38) (195) Amortisation of intangible assets 1,191 1,403 Business combination losses 110 51 Mail.ru special dividend
Slide 41: Contribution by associates
Contribution by associates Associates contribution 1H FY13 Company PPA IFRS Other Core HEPS ZARm results adjustments results adjustments* contribution Tencent 6,114 - 6,114 538 6,652 Mail.ru 3,099 (107) 2,992 (2,340) 652 Abril 94 (133) (38) (31) (69) Other (35) (32) (67) 32 (35) TOTAL 9,272 (271) 9,
Slide 42: Development spend breakdown
Development spend breakdown Mar 12 Mar 13 Development spend per business division % Change ZARm ZARm Internet 1,857 3,259 75% Pay-TV 731 897 23% Print 235 111 -53% Total 2,823 4,267 51% 42
Slide 43: Net finance costs
Net finance costs Reconciliation of finance costs Mar 12 Mar 13 Debt ZARm ZARm US$700m 7-year bond issued Jul10: Interest (paid) (1,271) (1,501) • 6.375% coupon Loans and overdrafts (877) (1,045) 5-year US$2bn RCF arranged Mar11: Transponder leases (132) (231) • US$1.4bn drawn at Mar 2013 Other (262
Slide 44: Taxation analysis
Taxation analysis Mar 12 Mar 13 ZARm ZARm Profit before tax 5,540 9,300 Add back: Development spend 2,823 4,267 Equity results (including impairments) (3,775) (6,944) Other gains and losses 1,448 831 Acquisition gains 740 143 FX gains and losses 135 373 BEE preference dividends (309) (125) Adjusted
Slide 45: Impact of currency movements
Impact of currency movements ZAR weakness boosted offshore earnings Revenue growth YoY * Trading profit growth YoY * Core earnings growth YoY +36% +23% +23% +27% 16,000 +12% 10,000 +11% 80,000 8,000 60,000 12,000 6,000 76,776 71,883 14,465 8,533 7,719 13,149 4,000 40,000 8,000 2,000 20,000 4,000 - R
Slide 46: FX – Hedging to manage risk
FX – Hedging to manage risk Annualised net foreign input costs Pay-TV: US$367m (programming rights and leases) US$ Forward Exchange Cover US$m US$ rate Print: EUR12m and US$14m (paper and ink) FY14 411 8.32 Hedging strategy FY15 95 8.96 • Pay-TV: long-term commitments, cover up to 100% of rolling 12
Slide 47: Capital expenditure
Capital expenditure Mar 12 Mar 13 Spending by type ZARm ZARm Land, buildings & plant 412 338 Transmission equipment 626 1,468 Computer, software & network equipment 901 926 Other (including vehicles, furniture) 95 35 Capital expenditure 2,034 2,767 Capex/Revenue 5% 6% 47
Slide 48: Current assets and liabilities
Current assets and liabilities Mar 12 Mar 13 Mar 12 Mar 13 Current assets Current liabilities ZARm ZARm ZARm ZARm Inventory 1,238 1,941 Current portion of long-term debt 1,613 2,298 Programme and film rights 1,522 1,868 Provisions 279 295 Trade receivables 3,296 4,121 Trade payables 2,865 4,179 Othe
Slide 49: Consolidated income statement – US$
Consolidated income statement – US$ Mar 12 Mar 13 Mar 12 Mar 13 ZARm ZARm US$m US$m Revenue 39,487 50,249 5,329 5,875 Operating profit 3,202 3,815 432 446 Finance costs (697) (1,316) (94) (154) Share of equity accounted results 3,869 9,001 522 743 Acquisitions and disposals (134) (47) (18) (5) Dilut
Slide 50: Naspers group structure
ae Naspers group structure NASPERS e tia> rales) http://www.naspers.com/ J NASPERS Tencenr sii] | Mediay24 Fabri property24 “Gubfzzle.com tokobagus[) ads] PayuU Format a i) 7) g = (0) jos 7) 9? al U i) < 3 @ 3 =) o t f rin Internet Global platform operator 50
Slide 51: Investor Relations
Investor Relations Meloy Horn Office: +27 11 289 3320 Mobile: +27 82 7727 123 E-mail: InvestorRelations@naspers.com Website: www.naspers.com 51 51