Financial results presentation For the year ended 31 March 2013 - - PowerPoint PPT Presentation

For the year ended 31 March 2013

Financial results presentation

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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 identify such forward-looking statements, but are not the exclusive means of identifying such statements. While these forward-looking statements represent our judgments and future expectations, a number of risks, uncertainties and other important factors could cause actual developments and results to differ materially from our expectations. These include key factors that could adversely affect our businesses and financial performance. We are not under any obligation to (and expressly disclaim any such obligation to) update or alter our forward-looking statements whether as a result of new information, future events or otherwise. Investors are cautioned not to place undue reliance on any forward-looking statements contained herein.

Important information

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Glossary of terms

ARPU: Average revenue per user B2C: Business to consumer DTH: Direct-to-home television DTT: Digital terrestrial television FCF: Free cash flow FEC: Forward exchange contract FX: Foreign exchange GEM: Global emerging markets GMV: Gross merchandise value HEPS: Headline earnings per share HD: High definition IM: Instant messaging MAU: Monthly average users MMOG: Massively multiplayer online game PCU: Peak concurrent users SNS: Social network service SSA: Sub-Saharan Africa VAS: Value-added services

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Group Overview

Financial Results Internet Pay-TV Outlook Appendix

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3.6 3.5 5.7 5.7 Mar 12 Mar 13

Revenue (ZARbn) Trading profit (ZARbn) Core HEPS (ZAR) Development spend (ZARbn)

39.5 50.2

27% 1% 20% 51%

18.50 22.16 2.8 4.3

FY13 key financials: Synopsis

Free cash flow (ZARbn) DPS (ZAR)

4% 15%

3.35 3.85

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• 10,000

20,000 30,000 40,000 50,000 60,000 70,000 80,000 Mar 09 Mar 10 Mar 11 Mar 12 Mar 13 34,505 37,251 45,103 56,522 76,776

Revenue (ZARm)*

* Based on economic interest, i.e. assuming all equity accounted investments are proportionately consolidated

Top line growth momentum

36%

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Spreading risk by diversification

Subscription (33%) VAS & games (23%) eCommerce (16%) Advertising (11%) Printing & distribution (7%) Other (7%) Technology (3%) South Africa (38%) Asia (28%) Europe (14%) Rest of Africa (11%) Latin America (8%) Other (1%) Internet (45%) Pay TV (39%) Print Media (16%)

Revenue by type* Geographic revenue split* Segmental revenue split*

* Based on economic interest, i.e. assuming all equity accounted investments are proportionately consolidated

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Development spend vs. other operating costs*(ZARm)

• 9,000

18,000 27,000 36,000 45,000 Mar 09 Mar 10 Mar 11 Mar 12 Mar 13 20,363 21,311 25,712 29,520 38,361 1,211 1,240 1,535 2,823 4,267 Other operating costs Development costs

Growing more organically

* Other operating costs = Revenue minus EBITDA minus development spend

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Core headline earnings (ZARm)*

• 1,000

2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 Mar 09 Mar 10 Mar 11 Mar 12 Mar 13 4,373 5,319 6,036 6,951 7,719

Earnings growth boosted by currency uplift (once-off)

23%

FX 814

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50 100 150 200 250 300 350 400 Mar 03 Mar 04 Mar 05 Mar 06 Mar 07 Mar 08 Mar 09 Mar 10 Mar 11 Mar 12 Mar 13 25 30 70 120 156 180 207 235 270 335 385

DPS (ZAc/share)

Consistent dividend growth

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Group Overview

Financial Results

Internet Pay-TV Outlook Appendix

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Select information Mar 12 ZARm Mar 13 ZARm Revenue* 56,522 76,776 Less: Associates (17,035) (26,527) Consolidated revenue 39,487 50,249 Trading profit 5,669 5,729 Trading margin 14% 11% Net finance costs (697) (1,316) Share of equity accounted results 3,869 9,001 Other (834) (2,200) Taxation (2,059) (2,552) Net profit 3,481 6,748 Core headline earnings 6,951 8,533 Core headline EPS (ZAR) 18.50 22.16 Higher debt levels to fund acquisitions Normalised preference dividend income

Finance costs up Income from associates

Includes ZAR2.6bn once-off book profit on Mail.ru’s partial sale of Facebook Increased 11% YoY in constant currency

+23%

Core headline earnings

Summarised consolidated income statement

ZAR2.1bn impairment mainly on Abril

Other

* Based on economic interest, i.e. assuming equity accounted investments are proportionately consolidated

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Incremental revenue YoY* (ZARm)

Internet now largest revenue segment

* Based on economic interest, i.e. assuming equity accounted investments are proportionately consolidated

FY13 revenue by business*

Expansion across all platforms eCommerce revenue grew 100% YoY Tencent & Mail.ru’s revenue +77% YoY

Internet

20% YoY increase in subscribers 6% increase in subscription rates

Pay-TV

– 20,000 40,000 60,000 80,000 Mar 12 Internet Pay-TV Print Mar 13 56,522 15,395 4,998

• 139

76,776

80% 20% 36%

34,587 30,257 11,932 Internet (45%) Pay TV (39%) Print (16%)

1%

Negatively impacted by poor macro economy and shift in advertising online

Print

56% of total revenue growth organic

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Mar 12 Internet Pay-TV Print Mar 13 4,267 1,402 166 (124) 2,823

Incremental development spend YoY (ZARm)

Step-up in development spend to build eCommerce

FY13 split by business 75% 23% 51% 53%

3,259 897 111 Internet (76%) Pay-TV (21%) Print (3%) Focus on eCommerce More engineers Increased marketing to build brands

Internet

ZAR804m for DTT, mobileTV and online ZAR93m for other technologies

Pay-TV

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* Based on economic interest, i.e. assuming equity accounted investments are proportionately consolidated

• 3,000

6,000 9,000 12,000 15,000 Mar 12 Internet Pay-TV Print Mar 13 11,762 1,870 1,180 (347)

Development cost reducing trading profit

Trading profit* (ZARm) FY13 trading profit by business*

Boosted by Tencent and Mail.ru Trimmed by ecommerce loss of ZAR2bn Building breadth of products

Internet

DTT roll-out Added local content Stable margins

Pay-TV

6,163 7,559 743 Internet (43%) Pay TV (52%) Print (5%) 14,465

44% 18% 23% 32%

SA holding up Cut costs Abril suffered decline in profitability

Print

Increased 12% YoY in constant currency

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Free cash flow trimmed by DTT capex

Pay-TV (incl. DTT) ZAR2bn Internet ZAR434m Print ZAR305m

Capex +36%

• 2,000

4,000 6,000 Mar 11 Mar 12 Mar 13 3,991 3,619 3,473

4% Free cash flow (ZARm)

Includes ZAR510m dividend from Tencent, ZAR111m from Abril and ZAR388m ordinary dividend from Mail.ru

Investment income

FCF from operations Mar 12 ZARm Mar 13 ZARm Operating cash flow 7,505 8,440 Capex (2,034) (2,767) Finance leases (477) (586) Tax (1,923) (2,689) Investment income 547 1,075 Free cash flow 3,619 3,473

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Total acquisition spend (US$m)

• 200

400 600 800 Mar 09 Mar 10 Mar 11 Mar 12 Mar 13 214 517 754 260 Other 634

More bolt-on acquisitions

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a consequence of debt-funded acquisitions

Increase

Excludes transponder leases of ZAR6.2bn, considered to be an operating cost

Net debt Gearing 12%

Balance sheet healthy

Group net consolidated debt Mar 13 ZARm Net debt – offshore (US$1.4bn) (12,975) Minus: Net cash – South Africa 6,354 Closing net debt (6,621) Interest cover 10x

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Group Overview Financial Results

Internet

Pay-TV Outlook Appendix

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Internet: eCommerce evolution

eCommerce as % of total retail (2012)

11% 10% 6% 6% 4% 3% 3% 3% 2% 2% 2% 2% 1% 1% 1% 0% 2% 4% 6% 8% 10% 12%

UK USA Czech China Poland Brazil Turkey Hungary Argentina Chile Romania Russia Mexico Ukraine South Africa

Source: Euromonitor, Centre for Retail Research, yStats.com, Forrester Research, select GEM markets in orange

UK was 1% in 2004 USA was 4% in 2003

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eCommerce strategy

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Further scaling of operations

ZARm Mar 12 Mar 13 % Change Revenue 5,736 11,433 100% Trading profit (914) (2,192)

• 140%

eCommerce financials

More markets and product categories Some acquisitions in e-tail and classifieds Mobile development a priority Facing competition

Strategy

Revenue growth 20% organic, 11% currency and rest acquisitive Classifieds to be monetised only longer-term Development spend R3.23bn

Financial

e-Tail (84%) Classifieds (7%) Payments (6%) Other (3%)

Revenue by type

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• 2,000

4,000 6,000 8,000 10,000 12,000 Mar 11 Mar 12 Mar 13

3,684 5,736 11,433 575 1,725 3,235

Revenue Development spend

Revenue and development spend (ZARm)

eCommerce: financial growth

100% 88%

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eCommerce: classifieds

• 50

100 150 Mar 12 Mar 13 60 136

Market presence in 23 countries Consolidated position in Russia, now own 18.6% of Avito Acquired Tokobagus (Indonesia) and Fixeads (Portugal) Accelerated investment across all key operations

Strategic

Daily page views (m)*

Leading position in most markets we operate in Increased marketing spend to build brands Monetisation still some years off

Operational

• 5

10 15 Mar 12 Mar 13 6.2 10.2 Eastern Europe (38%) Southeast Asia (31%) Western Europe (12%) Africa & Middle East (10%) Latin America (9%)

Page views by region*

* Select criteria as measured for the month of March, adjusted for acquisitions

Daily visits (m)* 127% 65%

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eCommerce: e-tail

Includes marketplace, B2C and lead-generation Strengthened position with stakes in: − eMag (Romania), Souq.com (MENA) and Konga.com (Nigeria) Closed Multiply in Indonesia and Sabuy in Thailand

Strategic

21% revenue growth organic, rest acquisitive Gross margins stable

Financial

Scaling B2C, expanding categories and payment methods PriceCheck won global Blackberry App of the Year

Operational

• 5,000

10,000 Mar 12 Mar 13 4,183 9,615

130% Revenue (ZARm)

• 300

600 900 Mar 12 Mar 13 663 802

Items bought/sold daily (‘000)* 21%

Eastern Europe (82%) Africa & Middle East (13%) Latam (2%) Western Europe (2%) Southeast Asia (2%)

GMV by region**

**Includes GMV for lead-comparison operations on an imputed basis * Select criteria as measured for the month of March, adjusted for acquisitions

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Internet:

Another solid performance RMBm* Dec 11 Dec 12 % Change Revenue 28,496 43,894 54% Operating profit 12,254 15,479 26% Operating margin 43% 35%

* Data for FY13 reflects 100% of results Jan-Dec 2012 available on www.Tencent.com; FY13 ZAR/RMB 1.362 (1.162)

• 825m monthly active IM user accounts (+10% YoY)
• 9.2m PCU’s for QQ Game Platform (+5% YoY)
• 611m MAU on Qzone (+6% YoY)
• 194m combined MAU for Weixin and WeChat

Q1 2013 statistics

Expanding in highly competitive market Some progress in eCommerce Early evidence of success with WeChat Investment in innovation and technology

Operations

New ecommerce initiatives reducing margins

Financials

Revenue mix*

VAS (81%) eCommerce (10%) Advertising and other (9%)

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Internet:

Community VAS (32%) Display advertising (24%) MMO Games (22%) Context advertising (11%) Other (11%)

Continued positive growth trajectory RURm* Dec 11 Dec 12 % Change Revenue 15,215 21,151 39% EBITDA 8,381 11,534 38% EBITDA margin 55% 55%

* Data reflects 100% of Mail.ru Group’s FY12 aggregate segment performance as reported. For IFRS results with full disclosure refer to www.corp.mail.ru; FY13 ZAR/RUR 0.27 (0.25)

Revenue mix*

Contextual advertising growing Games lively (Warface) Further upgrades to web and mobile products Focus on driving user engagement

Operations

Sold down Facebook stake to 14.2m shares Listing of Qiwi in May realised US$51m

Other Q1 2013 statistics

• portal: 35m
• email: 27m
• SNS: Odnoklassniki 24m

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Group Overview Financial Results Internet

Pay-TV

Outlook Appendix

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PayTV: focus on local content

Viewing homes (‘000)

Mar 12 Mar 13 5,611 6,739

ZAR1,6bn in FY13 decoder subsidies Local content ZAR1bn / >6,000 hours

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PayTV: new technology to expand services

Online and mobile Various products and devices DTT 8 countries

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– 1,000 2,000 3,000 4,000 5,000 6,000 7,000 Mar 09 Mar 10 Mar 11 Mar 12 Mar 13 2,401 2,852 3,489 3,981 4,451 916 1,099 1,439 1,630 2,288 South Africa Sub-Saharan Africa

Pay-TV: solid growth in subscribers

20%

Pay-TV homes (‘000)

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Pay-TV: Operational dynamics

ARPU (ZAR) Development spend (ZARm) Programming cost (ZARm) Capital expenditure (ZARm)

– 1 500 3 000 4 500 6 000 7 500 Mar 09 Mar 10 Mar 11 Mar 12 Mar 13 3,709 4,304 5,497 6,037 6,935 – 700 1 400 2 100 Mar 09 Mar 10 Mar 11 Mar 12 Mar 13 517 656 1,159 1,187 2,030 Mar 12 Mar 13 298 307

15% 71%

• 200

400 600 800 1 000 Mar 09 Mar 10 Mar 11 Mar 12 Mar 13 195 424 607 730 897

23%

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Pay-TV: services in 48 countries across Africa

1,128,000 net additions YoY Compact accounted for 38% of growth GoTV accounted for 31% of growth PVR base increased 26% YoY to 956k

Subscribers

More content, including 6 new HD channels BoxOffice SA now >400,000 movie rentals p.m. Expanded online services (BoxOffice/CatchUp) DTT now in 8 countries

Operations

Increased regulatory pressures Competition growing, including online

Regulation & Competition

Mar 12 Mar 13 % Change Net subscribers (‘000) 5,611 6,739 20% ZARm ZARm Revenue 25,259 30,257 20% Trading profit 6,379 7,559 18% Trading margin 25% 25%

• 400

800 1 200 Mar 09 Mar 10 Mar 11 Mar 12 Mar 13 683 634 977 683 1,128

Net additions (‘000)

Continue to develop business

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Group Overview Financial Results Internet Pay-TV

Outlook

Appendix

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eCommerce

• One of fastest growing eCommerce groups globally
• Focus on classifieds, B2C and e-tailing
• Strengthen market positions

FY14 Financials

• Growing organically - focus on innovation, engineering, mobile
• Thus slower earnings growth relative to topline
• Currency volatility

Pay-TV

• Accelerate subscriber growth
• Extend online services
• Intensifying competition
• More regulation may stifle innovation

Outlook: No change in strategy

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Group Overview Financial Results Internet Pay-TV Outlook

Appendix

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Print:

Advertising (34%) Printing (26%) Circulation (19%) Books (9%) Distribution (5%) Other (7%)

Reasonable results despite challenges ZARm Mar 12 Mar 13 % Change Revenue* 7,686 7,863 2% Trading profit 587 603 3% Trading margin 8% 8%

*Includes intergroup adjustments

Revenue mix FY13 Capex trend

Exposed to macro economy Long-term erosion of audiences by internet

Environment

Advertising revenue +1% YoY and circulation +3% Printing revenue -3% YoY Solid performance by book publishing Continue to extend digital initiatives

Operations

• 200

400 600 Mar 09 Mar 10 Mar 11 Mar 12 Mar 13 433 684 348 360 305

15%

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Print:

A leaner spell BRLm Dec 11 Dec 12 % Change Revenue 3,152 2,975

• 6%

Trading profit 380 101

• 73%

Trading margin 12% 3%

*Data reflects 100% of results Jan – Dec 2012; FY13 ZAR/BRL 4.24 (4.37)

Slowing economy and weak retail environment Advertising revenues under pressure

Environment

Circulation volume +3% YoY Magazine advertising income declined 8%

Operations

Contribution to core headline earnings -ZAR69m Received ZAR111m in dividends Impaired investment

Financials

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Pay-TV: additional information

Subscription (79%) Advertising (7%) Hardware sales (6%) Online/Broadband (4%) Other (4%)

FY13 revenue split Digital subscriber mix

Mar 12 Mar 13 24% 29% 37% 37% 39% 34% Other Compact Premium

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Calculation of core headline earnings Mar 12 ZARm Mar 13 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 received by Tencent

• (423)

One-off prior year tax benefit (Tencent)

• (191)

Retention option expense

• 135

Fair value adjustments & currency translations 162 273 Core headline earnings 6,951 8,533

Core headline earnings

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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) 9,001 (1,801) 7,200

* Headline and core earnings adjustments similar to Naspers methodology

Company results PPA adjustments IFRS results Other adjustments Core HEPS Contribution 7,200 (271) 9,001 (1,801) 9,272

Associates contribution to Core HEPS (ZARm)

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Development spend breakdown

Development spend per business division Mar 12 ZARm Mar 13 ZARm % Change Internet 1,857 3,259 75% Pay-TV 731 897 23% Print 235 111

• 53%

Total 2,823 4,267 51%

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Net finance costs

Reconciliation of finance costs Mar 12 Mar 13 ZARm ZARm Interest (paid) (1,271) (1,501) Loans and overdrafts (877) (1,045) Transponder leases (132) (231) Other (262) (225) Interest received 400 433 Loans and call accounts 360 415 Other 40 18 Other finance costs, net 174 (248) FX translation adjustments (135) (373) BEE preference dividends 309 125 Total finance costs (697) (1,316) US$700m 7-year bond issued Jul10:

• 6.375% coupon

5-year US$2bn RCF arranged Mar11:

• US$1.4bn drawn at Mar 2013
• US$800m fixed at 4.3% all-in for 5 years
• Floating interest of ~2.1% on rest

(1.75% + 3month LIBOR + other costs)

Debt

Increased 89% YoY

Net finance cost

• Total annual cost ~US$82m
• New SA agreement effective Sep12

Transponders

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Mar 12 ZARm Mar 13 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 profit before tax 6,602 7,845 Tax charge (2,059) (2,552) Effective rate 31% 33%

Taxation analysis

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ZAR weakness boosted offshore earnings

Average Closing rate Currency (ZAR = 1FC) Mar 12 Mar 13 % change Mar 12 Mar 13 % change US dollar 7.41 8.55

• 15

7.67 9.24

• 21

Euro 10.22 11.03

• 8

10.23 11.84

• 16

Chinese Yuan/Renminbi 1.16 1.36

• 17

1.22 1.49

• 22

Brazilian Real 4.37 4.24 3 4.20 4.57

• 9

Polish Zloty 2.44 2.65

• 9

2.46 2.83

• 15

Nigerian Naira 0.05 0.05

• 0.05

0.06

• 20

Revenue growth YoY * Trading profit growth YoY *

20,000 40,000 60,000 80,000 Reported Constant Currency 76,776 71,883 +36% +27% 4,000 8,000 12,000 16,000 Reported Constant Currency 14,465 13,149 +23% +12%

Core earnings growth YoY

• 2,000

4,000 6,000 8,000 10,000 Reported Constant Currency 8,533 7,719 +23% +11%

* Based on economic interest, i.e. assuming equity accounted investments are proportionately consolidated

Impact of currency movements

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FX – Hedging to manage risk

Pay-TV: US$367m (programming rights and leases) Print: EUR12m and US$14m (paper and ink)

Annualised net foreign input costs

• Pay-TV: long-term commitments, cover up to 100% of

rolling 12-24 month net inputs

• Print: short-term commitments, cover maximum

12 months rolling input costs

• Bond/RCF: hedge interest liability to a maximum of 24 months

Hedging strategy

Almost all FEC’s qualify for hedge accounting

FEC’s

US$ Forward Exchange Cover US$m US$ rate FY14 411 8.32 FY15 95 8.96 EUR Forward Exchange Cover EURm EUR rate FY14 12 11.70

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Capital expenditure

Spending by type Mar 12 ZARm Mar 13 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%

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Current assets and liabilities

Current assets Mar 12 ZARm Mar 13 ZARm Inventory 1,238 1,941 Programme and film rights 1,522 1,868 Trade receivables 3,296 4,121 Other receivables 2,639 3,189 Derivative financial assets 85 449 Cash and deposits 9,825 15,813 Assets held for sale 636 46 Total 19,241 27,427 Current liabilities Mar 12 ZARm Mar 13 ZARm Current portion of long-term debt 1,613 2,298 Provisions 279 295 Trade payables 2,865 4,179 Accrued expenses and other 7,436 9,875 Tax payable 265 241 Derivative financial liabilities 206 180 Bank overdraft and call loans 1,034 1,423 Liabilities held for sale 159

• Total

13,857 18,491

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Consolidated income statement – US$

Mar 12 ZARm Mar 13 ZARm Mar 12 US$m Mar 13 US$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) Dilution profits (606) (96) (82) (11) Impairment of equity accounted investments (94) (2,057) (13) (240) Profit before taxation 5,540 9,300 748 778 Taxation (2,059) (2,552) (278) (298) Net profit 3,481 6,748 470 789 Attributable to: Naspers 2,894 6,047 390 707 Minorities 587 701 79 82

FY13 ZAR/US$8.55(7.41)

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Naspers group structure

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Meloy Horn Office: +27 11 289 3320 Mobile: +27 82 7727 123 E-mail: InvestorRelations@naspers.com Website: www.naspers.com

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Investor Relations