Financial results presentation For the six months ended 30 September - - PowerPoint PPT Presentation

For the six months ended 30 September 2012

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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Group Overview

Financial Results Internet Pay-TV Outlook Appendix

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Sep 11 Sep 12

Revenue (ZARbn) Trading profit (ZARbn) Core HEPS (ZAR) Free Cash Flow (ZAR)

18.5 22.6

22% 6% 15% 22%

3.2 3.4 9.21 10.62 1.4 1.7

Naspers key financials for 1H FY13

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• 5,000

10,000 15,000 20,000 25,000 30,000 35,000 Sep 07 Sep 08 Sep 09 Sep 10 Sep 11 Sep 12 11,272 15,855 17,521 21,425 25,802 34,172

Revenue (ZARm)*

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

Sustained revenue momentum

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Development spend vs. Other operating costs (ZARm)

• 9,000

18,000 27,000 36,000 Mar 09 Mar 10 Mar 11 Mar 12 Sep 11 Sep 12 20,363 21,311 25,712 31,180 15,402 18,513 1,211 1,240 1,535 2,823 1,126 1,591 Other operating costs Development costs

Increased focus on organic growth

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Total acquisition spend (US$m)

• 200

400 600 800 Mar 09 Mar 10 Mar 11 Mar 12 Sep 12 214 517 754 260 Other 377

Subsequent acquisitions

More investment activity

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Core Headline Earnings (ZARm)*

• 500

1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 Sep 07 Sep 08 Sep 09 Sep 10 Sep 11 Sep 12 1,706 1,763 2,414 3,215 3,458 4,086

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

Solid earnings growth

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Group Overview

Financial Results

Internet Pay-TV Outlook Appendix

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Revenue* (ZARm)

Revenue: internet remains major growth driver

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

1H FY13 Revenue by Business*

Tencent & Mail.ru’s revenue +82% YoY E-Commerce revenue increased 61% YoY

Internet

16% increase in subscribers YoY 7% growth in advertising revenue over 12 months

Pay-TV

– 10,000 20,000 30,000 40,000 Sep 11 Internet Pay-TV Print Sep 12 25,802 5,823 2,285 262 34,172

70% 19% 32%

14,108 14,426 5,638

Internet (41%) Pay TV (42%) Print (17%)

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500 1,000 1,500 2,000 2,500 3,000 Mar 09 Mar 10 Mar 11 Mar 12 Sept 11 Sept 12 1,211 1,240 1,535 2,823 1,126 1,591

Development spend (ZARm) Development spend split 1H FY13

additional products and services more engineers and marketing

Internet

ZAR345m for DTT, mobileTV and online ZAR137m for other technologies New DTT licenses expected 2H

Pay-TV

41%

Growing organically: development spend up 41%

… to accelerate 2H

1,042 482 67

Internet (66%) Pay-TV (30%) Print (4%)

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

• 2,000

4,000 6,000 8,000 Sep 11 Internet Pay-TV Print Sep 12 5,757 994 604

• Trading profit: trimmed by development costs

Trading profit* (ZARm) 1H FY13 Trading profit by Business*

Margins lower due to change in business mix and cost of scaling e-commerce operations

Internet

Scale resulted in stable margins, despite costs of DTT roll-out and additional investment in content

Pay-TV

3,089 4,020 247

Internet (42%) Pay TV (55%) Print (3%) 7,356

47% 18% 28%

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Select information Sep 11 ZARm Sep 12 ZARm Revenue 18,482 22,597 EBITDA 3,883 4,208 EBITDA margin 21% 19% Trading profit 3,167 3,368 Net finance costs (148) (488) Share of equity accounted results 1,618 4,064 Taxation (1,008) (1,394) Net profit 2,265 4,658 Core headline earnings 3,458 4,086 Core headline EPS (ZAR) 9.21 10.62 Higher debt levels to fund acquisitions Normalised preference dividend income

Finance costs up Income from associates

Includes R1.5bn once-off book profit on Mail.ru’s partial sale of Facebook Increased 4% YoY in constant currency

Revenue growth

+22%

Increased 6% YoY in constant currency +18%

Core headline earnings

Summarised consolidated income statement

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FCF from operations

Sep 11 ZARm Sep 12 ZARm Operating cash flow 2,921 3,259 Capex (719) (1,006) Finance leases (231) (263) Tax (886) (1,274) Investment income 285 954 Free cash flow 1,370 1,670

Free cash flow: boosted by investment income

Pay-TV (incl. DTT) ZAR639m Internet ZAR171m Print ZAR196m

Capex +40%

includes R519m dividend from Tencent and R388m operational dividend from Mail.ru

Investment income

Free cash flow (ZARm)

• 1,000

2,000 3,000 4,000 5,000 Mar 09 Mar 10 Mar 11 Mar 12 Sep 11 Sep 12 2,432 4,123 3,991 3,619 1,370 1,670

22%

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Group net consolidated debt

Sep 12 ZARm Net debt – offshore (US$1.3bn) (11,075) Minus: Net cash – South Africa 4,341 Closing net debt (6,733) Interest cover 13x

in net debt a consequence of debt-funded acquisitions

Increase

excludes transponder leases of ZAR5.7bn, considered to be an operating cost

Net debt Gearing 14%

Balance sheet: remains strong

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Group Overview Financial Results

Internet

Pay-TV Outlook Appendix

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Payment platforms Portals Social networking Mobile value-added services

Lead-generation B2C Other Vertical e-tail Facilitation

(marketplace etc.)

Classifieds

(free, paid)

Payment platforms

(price-comparison etc.) (fashion, shoes, etc.)

Lead-generation Other Vertical e-tail Marketplace

(facilitation)

Classifieds

(free, paid)

Payments

e-Commerce

(price-comparison etc.)

General e-tail

e-Commerce: strategy and positioning

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How profitable is selling a $500 Samsung smartphone?… …it depends on your business model

Marketplace

US$

Revenue (7% take rate) 35 Trading margin 36%

Trading profit

General e-tail

US$

Revenue (includes inventory) 500 Trading margin 4%

Trading profit

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e-Commerce: different business models

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e-Commerce: group financials

Revenue by type

Expansion across the e-commerce value chain Focused on scaling e-tail, Payments and Classifieds

Strategy

Organic growth accounts for 27% of total revenue growth, rest acquisitive General e-tail the fastest growing segment

Revenue

Continued focus on scaling operations

ZARm Sep 11 Sep 12 % Change Revenue 2,478 3,991 61% Trading profit (211) (767) > -100% Marketplace (33%) General e-tail (29%) Lead generation (11%) Vertical e-tail (11%) Payments (6%) Classifieds (6%) Other (4%)

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Revenue (ZARm)

• 1,000

2,000 3,000 4,000 5,000 6,000 Mar 09 Mar 10 Mar 11 Mar 12 Sep 11 Sep 12 1,981 2,713 3,684 5,736 2,478 3,991

e-Commerce: revenue growth

61%

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• 500

1,000 1,500 2,000 Mar 09 Mar 10 Mar 11 Mar 12 Sep 11 Sep 12 272 268 575 1,725 550 1,031

e-Commerce: development spend

Development spend (ZARm) 87%

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PLNm* Sep 11 Sep 12 % Change Revenue 538 1,046 95% Trading profit 108 2 n/a

* Data reflects 100% of results; 1H FY13 ZAR/Zloty 2.48 (2.45)

e-Commerce:

Revenue by type

Marketplace (39%) General e-tail (37%) Vertical e-tail (9%) Classifieds (6%) Lead generation (3%) Payment Platforms (3%) Other (3%)

Revenue by geography

Poland (50%) Czech (16%) Turkey (14%) Other (20%) Further investment in classifieds and e-tail Operations now in 20 countries and 7 verticals Acquisitions: agito, Netretail, eMag, lazienkaplus

Operations

Expansion into B2C affecting margins

Represents 65% of group e-commerce revenue (53% in 1H FY12) 12% of total revenue growth organic, rest acquisitive Core marketplace platform in Poland profitable

Financials

more than doubled to PLN161m

Development spend

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IVAS gaming (54%) IVAS other (21%) MVAS (9%) e-Commerce (8%) Advertising and other (8%)

Internet:

RMBm* Jun 11 Jun 12 % Change Revenue 13,078 20,175 54% Operating profit 6,170 7,629 24% Operating margin 47% 38%

* Data for 1H FY13 reflects 100% of results Jan-Jun 2012 available on www.Tencent.com; 1H FY13 ZAR/Rmnb1.30 (1.083)

Revenue mix 1H FY13*

• 784m monthly active IM user accounts (+10% YoY)
• 167m peak concurrent IM user accounts (+15% YoY)
• 9.4m PCU’s for QQ Game Platform (+18% YoY)
• 74m fee-based IVAS registered subscriptions (-5% YoY)
• WeChat (Weixin) expanding internationally, registered

user accounts exceed 200m in Sept.

Q3 2012 statistics

Another good performance

Shift in revenue mix impacted margins Progress in advertising and open platform initiatives Continues to build stronger user engagement Investment in innovations to enhance user experience

Operations

Shift in revenue mix impacted margins Successfully issued US$600m bond in Sept 2012

Financials

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Internet:

MMO Games (22%) Community IVAS (33%) Display advertising (23%) Context advertising (11%) Other (11%) RURm* Jun 11 Jun 12 % Change Revenue 6,491 9,611 48% EBITDA 3,320 5,318 60% EBITDA margin 51% 55%

* Data reflects 100% of Mail.ru Group’s 1H FY13 aggregate segment performance as reported. For IFRS results with full disclosure and recon refer to www.corp.mail.ru; 1H FY13 ZAR/RuR 0.259 (0.243)

Revenue mix 1H FY13*

• portal: 32m (+16% YoY)
• email: 26m (+12% YoY)
• SNS: Odnoklassniki 22m (+23% YoY)
• IM: Mail.ru Agent 22m (+4% YoY)

Q3 statistics

Continued positive growth trajectory

Increased paying user engagement driving growth Ongoing diversification of revenue streams Community IVAS still growing rapidly Continued focus on mobile Robust performance by core games

Operations

Sold down on investments in Facebook, Zynga and Groupon

Other

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Group Overview Financial Results Internet

Pay-TV

Outlook Appendix

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Pay-TV: Positioning for the future

Genre Movie Channels

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Digital Terrestrial Television (DTT)

Digital Terrestrial Television (DTT) set-up

X

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Subscribers (‘000)

– 1,000 2,000 3,000 4,000 5,000 6,000 7,000 Sep 09 Sep 10 Sep 11 Sep 12 2,639 3,214 3,698 4,168 1,027 1,234 1,499 1,837 South Africa Sub-Saharan Africa

Pay-TV: growing the subscriber base

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• 200

400 600 800 1,000 Mar 09 Mar 10 Mar 11 Mar 12 Sep 11 Sep 12 195 424 607 730 368 389

Pay-TV: Operational dynamics

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

* Excludes the costs for technology (Irdeto)

• 1,500

3,000 4,500 6,000 Mar 09 Mar 10 Mar 11 Mar 12 Sep 11 Sep 12 3,709 4,304 5,497 6,037 2,790 3,364

• 500

1,000 1,500 Mar 09 Mar 10 Mar 11 Mar 12 Sep 11 Sep 12 517 656 1,159 1,187 352 621 Sep 11 Sep 12 301 308 Sep 11 Sep 12 40 38

21% 75% 6%

South Africa (ZAR) SSA(US$)

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Continue to develop business

Sep 11 Sep 12 % Change Net subscribers (‘000) 3,698 4,168 13% ZARm ZARm Revenue* 9,889 11,445 16% Trading profit 3,163 3,750 19% Trading margin 32% 33%

*Excludes intergroup adjustments

Pay-TV: South Africa

SA net additions(‘000)

• 100

200 300 400 Mar 09 Sept 09 Mar 10 Sept 10 Mar 11 Sept 11 Mar 12 Sep 12 237 238 212 363 275 209 283 187 187,000 net additions year-to-date Compact accounted for 87% of growth Impacted by Easyview clean-up (32k) PVR base increased 31% YoY to 747k

Subscribers

Migrated to IS-20 satellite Added 8 new HD channels Advertising +7% YoY

Operations

Now >400,000 movie rentals p.m. Recently launched online

BoxOffice

Awaiting DTT regulations Online competition

Regulation & Competition

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Pay-TV: Sub-Saharan Africa

On-going focus on DTT rollout

Sep 11 Sep 12 % Change Net subscribers (‘000) 1,499 1,837 23% US$m US$m Revenue* 383 439 14% Trading profit 51 59 17% Trading margin 13% 13%

* Excludes intergroup adjustments; 1H FY13 ZAR/US$8.23 (6.97)

SA net additions(‘000)*

Premium +4% YTD Compact +20% YTD

Subscribers

Incremental programming costs -3% DTT costs -5%

Margin impact

Complimentary to current DTH business Subscriber growth tracking internal targets Aiming for 8 countries by FY13

DTT

Increasing across Africa

Competition

• 50

100 150 200 250 Mar 09 Sept 09 Mar 10 Sept 10 Mar 11 Sept 11 Mar 12 Sept 12 73 113 69 139 206 63 132 206

* Includes DTT subscribers

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Group Overview Financial Results Internet Pay-TV

Outlook

Appendix

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e-Commerce

• Continue growth across e-commerce value chain
• Strengthen market positions selectively
• Changing business mix to trim margins; expect higher absolute LT profits

FY13 Financials

• Anticipate increased revenue growth, augmented by recent investments
• Organic development spend to accelerate 2H
• Expect limited earnings growth this year

Pay-TV

• Expand DTT service from 18 to 25 cities by FY13
• Push online services
• Deal with increased competition and regulation

Outlook: Ongoing investment in long-term growth

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Group Overview Financial Results Internet Pay-TV Outlook

Appendix

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Advertising (35%) Circulation (20%) Printing (26%) Distribution (6%) Books (6%) Other (6%)

Print:

ZARm Sep 11 Sep 12 % Change Revenue* 3,448 3,774 9% Trading profit 134 257 92% Trading margin 4% 7%

*Includes intergroup adjustments

Revenue mix 1H FY13 Capex trend*

Weak economic climate impacts performance Do not anticipate much change in near-term

Environment

Economic headwinds

Advertising up 3% YoY Circulation revenue increased 7% Printing revenue up 32% YoY due to additional contracts On-going investment in digital initiatives

Operations

Improved as a result of cost management and increased

• perational efficiencies

Margins

* Capex excluding insurance proceeds and inter-group transactions

• 200

400 600 Mar 09 Mar 10 Mar 11 Mar 12 Sep 11 Sep 12 433 684 348 360 167 171

2%

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Print:

Affected by sluggish economy

BRLm Jun 11 Jun 12 % Change Revenue 1,404 1,411 0% Trading profit 84 (3) >100% Trading margin 6% n/a

*Data reflects 100% of results Jan – Jun 2012; 1H FY13 ZAR/BRL 4.11 (4.31)

Brazilian economy continues to struggle 2H might also be challenging

Environment

Maintained circulation market share Subscription +5% YoY Advertising revenue -3% YOY Some benefit from investment in e-commerce distribution

Operations

to core headline earnings -ZAR95m (1HFY12 ZAR18m)

Contribution

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Net subscribers* Sep 11 Sep 12 % Change South Africa 3,697,847 4,168,193 13% Premium 1,510,656 1,553,374 3% Other 1,600,045 1,981,848 24% Easyview 513,597 575,791 12% Analogue 73,549 57,180

• 22%

Rest of Sub-Saharan Africa 1,498,503 1,837,217 23% Total 5,196,350 6,005,410 16% PVR subscribers South Africa 571,098 746,919 31% Rest of Sub-Saharan Africa 89,177 111,125 25% Total 660,275 858,044 30%

*Net subscribers reflect total subscribers net of churn. Historically we referred to these as “gross subscribers” and the change in terminology was made to avoid confusion.

Summary of Pay-TV subscribers

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Pay-TV: additional information

Digital subscriber mix - SA Digital subscriber mix - SSA South Africa 1H FY13 revenue split SSA 1H FY13 revenue split

Subscription (74%) Hardware sales (5%) Advertising (11%) Online/Broadband (6%) Other (5%) Subscription (92%) Hardware sales (7%) Other (1%) Sep 11 Sep 12 26% 26% 33% 37% 41% 37% Premium Family & Compact Other Sep 11 Sep 12 16% 23% 41% 39% 43% 38% Premium Family & Compact Other

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Sep 11 ZARm Sep 12 ZARm Headline earnings 2,597 3,194 Equity-settled share scheme charges 271 339 Deferred tax adjustments (24) (26) Amortisation of intangible assets 586 583 Business combination gains/(losses) 53 (39) Fair value adjustments & currency translations (25) 35 Core headline earnings 3,458 4,086

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 2,451

• 2,451

535 2,986 Mail.ru 1,805 (51) 1,754 (1,505) 250 Abril (74) (64) (139) 44 (95) Other 1 (4) (3) 4 1 TOTAL 4,183 (119) 4,064 (922) 3,142

* Headline and core earnings adjustments similar to Naspers methodology

Associates contribution to Core HEPS (ZARm)

Company results PPA adjustments IFRS results Other adjustments Core HEPS Contribution 3,142 (119) 4,064 (922) 4,183

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Development spend breakdown

Sep 11 ZARm Sep 12 ZARm % Change Internet 616 1,042 69% Pay-TV 397 482 21% Print 113 66

• 42%

Total 1,126 1,591 41%

Development spend per business division

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Net finance costs

Sep 11 Mar 12 Sep 12 ZARm ZARm ZARm Interest (paid) (583) (1,271) (706) Loans and overdrafts (390) (877) (481) Transponder leases (66) (132) (72) Other (127) (262) (153) Interest received 200 400 218 Loans and call accounts 169 360 205 Other 31 40 12 Other finance costs, net 235 174 FX translation adjustments 5 (135) (76) BEE preference dividends 230 309 76 Total finance costs (148) (697) (488) US$700m 7-year bond issued Jul10:

• 6.375% coupon

5-year US$2bn RCF arranged Mar11:

• US$1.1bn drawn at Sep 2012
• 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 27% YoY from ZAR383m to ZAR488m

Net interest cost

SSA: new 15-yr lease effective Dec09

• Total cost ~US$40m p.a.

SA: new agreement effective Sep12

• Current cost ~ US$24m p.a.
• To increase to US$42m p.a.

Transponders

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Sep 11 ZARm Sep 12 ZARm Profit before tax 3,273 6,053 Add back: Development spend 1,125 1,525 Equity results (including impairments) (1,618) (4,063) Other gains and losses 722 379 Acquisition gains 150 16 FX gains and losses (5) 76 BEE preference dividends (230) (76) Adjusted profit before tax 3,417 3,908 Adjusted tax charge (1,008) (1,253) Effective rate 29% 32%

Taxation analysis

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ZAR fluctuation impacts translation of offshore earnings

Average Closing rate Currency (ZAR = 1FC) Sep 11 Sep 12 % change Mar 13E Sep 11 Sep 12 % change US dollar 6.97 8.23

• 18

8.21 8.02 8.32

• 4

Euro 9.97 10.43

• 5

11.16 10.78 10.69

• Chinese Yuan/Renminbi

1.08 1.30

• 20

1.28 1.26 1.32

• 5

Brazilian Real 4.31 4.11 5 4.56 4.33 4.10 5 Polish Zloty 2.45 2.48

• 1

2.49 2.44 2.60

• 7

Nigerian Naira 0.045 0.052

• 16

0.05 0.051 0.053

• 4

Revenue growth YoY * Trading Profit growth YoY *

10,000 20,000 30,000 40,000 Reported Constant Currency 34,172 32,072 +32% +24% 2,000 5,000 8,000 Reported Constant Currency 7,356 6,745 +28% +17%

Core Earnings growth YoY

• 1,500

3,000 4,500 Reported Constant Currency 4,086 3,679 +18% +6%

* 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$309m (programming rights and leases) Print: EUR23m and US$13m (paper and ink)

Annualised net foreign input costs

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

• f 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 FY13 220 7.62 FY14 397 8.28 FY15 73 8.82 EURm EUR rate FY13 23 10.52 EUR Forward Exchange Cover

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Capital expenditure

Sep 11 ZARm Sep 12 ZARm Land, buildings & plant 133 85 Transmission equipment 254 492 Computer, software & network equipment 310 376 Other (including vehicles, furniture) 21 53 Capital expenditure 719 1,006 Capex/Revenue 3.9% 4.5%

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Current assets and liabilities

Current Assets Sep 11 ZARm Sep 12 ZARm Inventory 1,194 1,592 Programme and film rights 2,362 2,830 Trade receivables 3,655 4,373 Other receivables 2,692 2,872 Derivative financial assets 111 284 Cash and deposits 7,902 10,565 Assets held for sale 722 30 Total 18,638 22,547 Current Liabilities Sep 11 ZARm Sep 12 ZARm Current portion of long-term debt 1,465 1,786 Provisions 215 285 Trade payable 2,964 4,117 Accrued expenses and other 7,430 8,844 Tax payable 334 531 Derivative financial liabilities 118 149 Bank overdraft and call loans 1,835 1,577 Liabilities held for sale 127

• Total

14,488 17,287

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Consolidated income statement – US$

Sep 11 ZARm Sep 12 ZARm Sep 11 US$m Sep 12 US$m Revenue 18,482 22,597 2,650 2,744 Operating profit 1,954 2,493 280 303 Finance costs (148) (488) (21) (59) Share of equity accounted results 1,618 4,063 232 493 Acquisitions and disposals (62) 26 (9) 3 Dilution profits (89) (40) (13) (5) Profit before taxation 3,273 6,054 469 735 Taxation (1,008) (1,394) (144) (169) Net profit 2,265 4,660 325 566 Attributable to: Naspers 1,870 4,152 268 504 Minorities 395 508 57 62

1H FY13 ZAR/US$8.23 (6.97)

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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