Naspers Limited Class N · JSE:NPN
Naspers Limited Class N — H1 FY2010 Earnings Presentation
42 slides from Naspers Limited Class N's earnings presentation, November 2009
Slide 1: Financial Results Presentation
Financial Results Presentation F the For th 6 months th ended d d 30 S September t b 2009
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” “will” plan , “could” could , “may” may , “endeavour” endeavour and sim
Slide 3: Group Highlights
Group p Highlights g g Key Messages Financial Results Performance by business Outlook Appendix 3
Slide 4: Group highlights
Group highlights • Revenue up 6% and EBITA 19% Financial • EBITDA margin expanded to 24% • Core headline earnings up 37% to ZAR2 ZAR2.4bn 4bn • Pay-TV P TV subscribers b ib +11% YTD (352 (352,000 000 gross additions) dditi ) Operational • Print margins hit by recession • Technology operations reache
Slide 5: Financial Highlights
Financial Highlights Sept 08 Sept 09 Revenue (ZARbn) EBITDA (ZARbn) EBITDA Margin (%) Up 6% Up 15% Up 13.5 12.7 24 32 3.2 22 2.8 Operating Profit (ZARbn) Core Headline Earnings (ZARbn) Core HEPS (ZAR) Up 16% Up 37% Up 36% 19 1.9 24 2.4 6 48 6.48 1.7 1.8 4.76 4.76 5
Slide 6: Key Messages
Group p Highlights g g Key Messages Financial Results Performance by business Outlook Appendix 6
Slide 7: Key messages
Key messages 1 Continued growth in internet 2 Subdued revenue growth partly due to currency fluctuations 3 Scale, restructuring and cost-management drove margin expansion 7
Slide 8: Financial Results
Group p Highlights g g Key Messages Financial Results Performance by business Outlook Appendix 8
Slide 9: Summary consolidated income statement
Summary consolidated income statement 1 Sept 08 Sept 09 Revenue growth +6%, but +10% at constant ZARm ZARm fx rates 1 Revenue 12,652 13,455 2 EBITDA 2,795 3,224 2 EBITDA growth accelerated (+15% YoY) due to cost control; EBITDA margin expanded to 24% Operating profit 1,663 1,926 Net interest paid 13
Slide 10: Subdued revenue growth
Subdued revenue* growth Revenue* (ZARm) Revenue R Revenue (ZAR (ZARm)) S t 08 Sept S t 09 Sept % Ch Change Sept 08 8,000 Sept 09 7,000 Economic interest 15,855 17,521 11% 6,000 5,000 4,000 8,019 6,985 3,000 5,001 4,836 2 000 2,000 4 061 4,061 3,144 1,000 • Pay-TV revenue up 15%, driven by subscriber
Slide 11: Diversified revenue streams reduce risks
Diversified revenue streams reduce risks 1H FY10 Revenue by Type* 1H FY10 Revenue by Business* Subscription (42%) Pay-TV (46%) IM & Games (12%) Internet (23%) e-Commerce (7%) Technology (3%) Printing & distribution (11%) Print (28%) Book publishing (3%) Advertising (15%) Technology (3%) Other (7%) *
Slide 12: Operating profit up
Operating profit* up Operating Profit** (ZARm) O Operating ti Profit P fit (ZARm) (ZAR ) S t 08 Sept S t 09 Sept % Ch Change 3,000 2,694 Economic interest 3,269 4,108 26% Sep 08 2,500 Sep 09 Operating margin 20.6% 23.5% 2,099 , 2,000 * Before amortisation, other gains/losses 1,500 1,098 1,000 735 48
Slide 13: Development costs scaled back
Development costs scaled back 1 ZAR54m for Allegro/Ricardo Sept 08 Sept 09 ZAR33m for ibibo % Change ZAR26m for 24.com ZARm ZARm ZAR29m for instant messaging Internet 184 203 10% 1 2 y Pay-TV 197 113 -43% 2 ZAR98m for mobile TV Technology 158 134 -15% 3 Media24 reduced to ZAR32m Print 99 32 -68% 68%
Slide 14: Equity accounted income growing strongly
Equity accounted income growing strongly 1 Sept 08 Sept 09 % Tencent benefited from strong growth ZARm ZARm Change in online g gaming g revenue Tencent 413 901 118% 1 2 Mail.ru 24 44 83% 2 Mail.ru Mail ru starting to benefit from Abril -13 -62 - 3 recovery in online advertising Other -19 -11 - 3 Equ
Slide 15: Free cash flow more than doubled
Free cash flow more than doubled Sept 08 Sept 09 ZARm ZARm 1 O Operating cash flow f 2,380 2,940 Pay-TV ZAR186m Internet ZAR83m Capex -630 -495 1 Technology ZAR61m Print ZAR165m Finance leases -195 -212 2 Tax -896 -859 Dividends from Tencent and mail.ru Investment income 100 284 2 Free cash flow (co
Slide 16: Net consolidated debt – low gearing
Net consolidated debt – low gearing Sept 09 1 ZARm Largely to fund acquisitions Net cash – South Africa 2,408 2 Net debt – offshore (US$659m) 4,972 1 Excluding c ud g ttransponder a spo de leases eases o of ZAR835m (considered an operating cost ) Closing net debt 2,564 2 Group gearing 8% Debt facili
Slide 17: Performance by business
Group p Highlights g g Key Messages Financial Results Performance by business Outlook Appendix 17
Slide 18: Internet: Naspers strategy
Internet: Naspers strategy Social Network Commerce Fixed Communication Community Games Mobile Content M-VAS Six-pillar strategy built around developing “sticky” communities, which help create dominant positions and sustainable advantage against competitive and technological threats 18
Slide 19: Emerging Market focus
eco eI CriacedL © Rip:/rww.naspers.com/ 7 -/-Tencent iit vimbuzz! ricardo $f Gaduw-cadu <p FE abr digital - y ———_ Compera nTime ' 1 i ' l @ hess Me 19
Slide 20: Internet: Allegro Group - Poland
Internet: Allegro Group - Poland Tracking ahead of expectations PLNm Sep 08 Sep 09 % Change • Poland ggrowingg strongly gy Revenue 203 268 32% • Development continues within vertical related transaction services EBITA 85 104 23% • Core transaction margins remain largely in tact EBITA margin - total
Slide 21: Internet: Allegro Poland Marketplace
Internet: Allegro Poland Marketplace Auctions: 6 months to Sep 2009** 31.1bn page 43.2m PLN254m PLN3.7bn GMV* views transactions revenue Auctions: 6 months to Sep 2008** 26.3bn page 33.1m PLN198m PLN2.7bn GMV* views transactions revenue *GMV = gross merchandise value ** Information for Allegro aucti
Slide 22: Internet: Tencent (China)
Internet: Tencent (China) No signs of slowing down RMBm* Sept 08 Sept 09 % Change •• Contribution Contribution to to 1H 1H FY10 FY10 core core headline headline earnings ZAR936m earnings R936m (1H FY09 ZAR504m) (1HFY09R504m) Revenue 3,033 5,383 77% •• Revenue Revenue growth growth strong; strong; so
Slide 23: Internet: mail.ru (Russia)
Internet: mail.ru (Russia) Sustained growth momentum RURm* RURm Sep 08 Sep 09 % Change Revenue 786 1,028 31% • Contribution to 1H FY10 core headline earnings ZAR54m (1H FY09 R38m) EBITA 435 518 19% • Margins affected by: EBITA margin 55% 50% - hard currency costs, agreements being renegotiated * Dat
Slide 24: Internet: BuscaPé (Brazil)
Internet: BuscaPé (Brazil) A leading e-commerce platform • #1 comparison shopping network • Leading e-classifieds network • Leading affiliate network • Rapidly growing e-payments platform • Only lead-generation business • Only provider of e-commerce market insights 24
Slide 25: Internet: BuscaPé (Brazil)
Internet: BuscaPé (Brazil) Addressing entire e-commerce value chain Purchase Awareness Interest Decision Action Post Sale Resale Cycle Convenient Liquid Product Product Price & Secure Sharing the Consumer Resale Awareness Information Comparison Payment Experience Needs Market Option Broad Access at
Slide 26: Pay-TV: South Africa
Pay-TV: South Africa Holding up well despite recession Sep 08 Sep 09 % Change Gross subscribers (‘000) 2,106 2 ,639 25% ZARm ZARm • 25% gross subscriber growth YoY Revenue 5,006 5,875 17% • 238,000 238 000 gross additions over 6 months EBITA 1,828 2,304 26% – Premium and PVR +2% EBITA margin 37% 39%
Slide 27: Pay-TV: Sub-Saharan Africa
Pay-TV: Sub-Saharan Africa Affected by weak Naira Sep 08 Sep 09 % Change Gross subscribers (‘000) ( 000) 829 1 030 1,030 24% • Gross subscriber growth 24% YoY ZARm ZARm • 114,000 gross additions over 6 months Revenue 1,941 2,119 9% – Premium & PVR +5% EBITA 594 594 0% – Compact & Family +25% EBITA m
Slide 28: Pay-TV costs trending up
Pay-TV costs trending up Pay-TV: Programming costs (ZARm) • Programming costs continue to increase 6,000 – Sport content price escalations due to 5,018 competition p 5 000 5,000 4,000 3,694 – Price of offshore content affected by 3,169 2,903 fx rates 3,000 2,807 2,366 – Variable programming cost dri
Slide 29: Technology
Technology • Orders from existing clients held up; growth Restructuring paying off from India • New client acquisition slowed and fewer new ZARm Sept 08 Sept 09 % Change pay-tv launches • Contracts with Adobe and RIM Revenue 725 605 -17% 17% • Irdeto shipped 7.6m units in 1H FY10 (8.3m EBITA -49 -11
Slide 30: Print – Media24 (South Africa)
Print – Media24 (South Africa) Gaining market share Print (ZARm) Sep 08 Sep 09 % Change Revenue 2,721 2,785 2% EBITA 349 252 -22% EBITA margin 13% 9% • Advertising revenue under pressure (-5% YoY) • Circulation revenue held upp ((+7% YoY)) Books (ZARm) Sep 08 Sep 09 % Change • Cost containment ongoi
Slide 31: Print – Abril (Brazil)
Print – Abril (Brazil) Adspend under pressure • Sluggish revenue growth off a high base BRLm Sep 08 Sep 09 % Change • Costs (+9% YoY) affected by: Revenue 1,298 1,327 2% – Higher cost of imported paper EBITA 132 76 -42% 42% – Mandatory M d t 6% salary l iincreases – Investment in digital products an
Slide 32: Outlook
Group p Highlights g g Key Messages Financial Results Performance by business Outlook Appendix 32
Slide 33: Outlook
Outlook Internet growth • Increased contribution; organic growth and some acquisitions Pay-TV resilience • Counter-cyclical; continued growth expected Some pressure • Print and technology feel economy; further cost-management More R&D • Likely acceleration of development spend in 2H 33
Slide 34: Appendix
Group p Highlights g g Key Messages Financial Results Performance by business Outlook Appendix 34
Slide 35: Pay-TV subscribers
Pay-TV subscribers G Gross subscribers b ib S 08 Sep S 09 Sep E Equated t d subscribers b ib S 08 Sep S 09 Sep SA - analogue 156,302 123,686 SA - analogue 142,638 114,323 SA - digital 1 949 469 1,949,469 2 515 655 2,515,655 SA - digital 1 506 081 1,506,081 1 707 393 1,707,393 Total S.A. 2,105,771 2,
Slide 36: Consolidated income statement
Consolidated income statement Sep 08 Sep 09 Sep 08 Sep 09 ZARm ZARm US$m US$m Revenue 12,652 13,455 1,639 1,705 Operating profit 1,663 1,926 215 244 Finance Costs (95) 29 (12) 4 Share of equity accounted results 405 872 52 111 Profit on sale of investments 34 107 4 14 Impairment of equity accounted
Slide 37: Core headline earnings
Core headline earnings Sep 08 Sep 09 ZARm ZARm Headline earnings 1,078 1,466 1 Treasury-settled Treasury settled share scheme charges 124 134 Lower amortisation charges due to stronger ZAR Amortisation of intangible assets 557 436 1 Fair value adjustments j & currency y 2 125 (84) translations Relat
Slide 38: Capital expenditure
Capital expenditure Sep 08 Sep 09 Capital expenditure ZARm ZARm Land, buildings & plant 238 208 Transmission equipment 151 106 Computer & office equipment 104 90 Software 88 64 Other (including vehicles, furniture) 49 27 Capital expenditure 630 495 38
Slide 39: FX - Hedging to reduce risk
FX - Hedging to reduce risk US$ $ Forward Exchange Cover US$m US$ rate • Hedging strategy FY10 105 8 78 8.78 – Pay-TV: long-term commitments, cover 100% of rolling 12 month net inputs FY11 209 10.24 – Print: short-term commitments; cover 12 months rolling input costs FY12 36 9.37 • Annualised net fo
Slide 40: Current assets and liabilities
Current assets and liabilities Sep 08 Sep 09 Sep 08 Sep 09 Current Assets Current Liabilities ZARm ZARm ZARm ZARm Inventory 779 755 Current portion of long-term LT debt 1,395 1,578 Programme and film rights 1,147 1,690 Provisions 207 205 Trade receivables 2,431 2,343 Trade payable 1,725 1,836 Other
Slide 41: Internet Pay TV Technology Print
Internet Pay TV Technology Print Eastern Europe Western Europe South Africa Technology Newspapers & Magazines 97% 100% 80% 100% 85% China Russia Printing & Distribution 35% 43% 95% India Poland Sub-Sahara Africa Publishers & Agents 94% 100% 100% 100% South Africa South Africa Brazil, Magazines & g E
Slide 42: Investor Relations contact details
Investor Relations contact details Meloy Horn Office: +27 11 289 3320 Mobile: +27 82 7727 123 y @ p E-mail: meloy.horn@naspers.com Website: www.naspers.com 42