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Naspers Limited HY 2014 financial results presentation

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Naspers Limited HY 2014 financial results presentation

Naspers Limited HY 2014 financial results presentation

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    Naspers Limited HY 2014 financial results presentation Naspers Limited HY 2014 financial results presentation Presentation Transcript

    • Financial results presentation For the six months ended 30 September 2012
    • 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 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. 2
    • Group Overview Financial Results Internet Pay-TV Outlook Appendix 3
    • Naspers key financials for 1H FY13 Revenue (ZARbn) Sep 11 Sep 12 Trading profit (ZARbn) 22% 18.5 22.6 6% 3.2 Core HEPS (ZAR) 3.4 Free Cash Flow (ZAR) 15% 9.21 10.62 22% 1.4 1.7 4
    • Sustained revenue momentum Revenue (ZARm)* 35,000 30,000 25,000 20,000 34,172 15,000 25,802 21,425 10,000 5,000 15,855 17,521 11,272 Sep 07 Sep 08 Sep 09 Sep 10 * Based on economic interest, i.e. assuming all equity accounted investments are proportionately consolidated Sep 11 Sep 12 5
    • Increased focus on organic growth Development spend vs. Other operating costs (ZARm) 36,000 2,823 1,535 27,000 1,211 1,240 1,591 18,000 1,126 31,180 25,712 9,000 20,363 21,311 15,402 18,513 Mar 09 Mar 10 Mar 11 Mar 12 Other operating costs Sep 11 Sep 12 Development costs 6
    • More investment activity Total acquisition spend (US$m) Subsequent acquisitions 800 600 377 400 754 Other 517 200 260 214 Mar 09 Mar 10 Mar 11 Mar 12 Sep 12 7
    • Solid earnings growth Core Headline Earnings (ZARm)* 4,500 4,000 3,500 3,000 2,500 4,086 2,000 3,215 1,500 1,000 3,458 2,414 1,706 1,763 500 Sep 07 Sep 08 Sep 09 Sep 10 * Based on economic interest, i.e. assuming all equity accounted investments are proportionately consolidated Sep 11 Sep 12 8
    • Group Overview Financial Results Internet Pay-TV Outlook Appendix 9
    • Revenue: internet remains major growth driver Revenue* (ZARm) 1H FY13 Revenue by Business* 19% 70% 40,000 32% 262 34,172 5,638 2,285 5,823 30,000 14,108 20,000 25,802 14,426 10,000 – Sep 11 Internet Pay-TV Print Sep 12 Internet (41%) Pay TV (42%) Print (17%) * Based on economic interest, i.e. assuming equity accounted investments are proportionately consolidated Internet Pay-TV Tencent & Mail.ru’s revenue +82% YoY E-Commerce revenue increased 61% YoY 16% increase in subscribers YoY 7% growth in advertising revenue over 12 months 10
    • Growing organically: development spend up 41% Development spend (ZARm) Development spend split 1H FY13 67 3,000 2,500 41% 2,000 1,500 482 2,823 1,042 1,000 1,211 1,240 Mar 09 Mar 10 500 1,535 1,126 1,591 0 Mar 11 Mar 12 Sept 11 Sept 12 Internet Pay-TV additional products and services more engineers and marketing Internet (66%) Pay-TV (30%) Print (4%) … to accelerate 2H ZAR345m for DTT, mobileTV and online ZAR137m for other technologies New DTT licenses expected 2H 11
    • Trading profit: trimmed by development costs Trading profit* (ZARm) 47% 8,000 994 6,000 4,000 1H FY13 Trading profit by Business* 28% 18% - 604 247 7,356 3,089 4,020 5,757 2,000 Sep 11 Internet Pay-TV Print Sep 12 Internet (42%) Pay TV (55%) Print (3%) * Based on economic interest, i.e. assuming equity accounted investments are proportionately consolidated Internet Pay-TV Margins lower due to change in business mix and cost of scaling e-commerce operations Scale resulted in stable margins, despite costs of DTT roll-out and additional investment in content 12
    • Summarised consolidated income statement Sep 11 ZARm Sep 12 ZARm Revenue 18,482 22,597 EBITDA 3,883 4,208 21% 19% Trading profit 3,167 3,368 Net finance costs (148) (488) Share of equity accounted results 1,618 4,064 (1,008) (1,394) Net profit 2,265 4,658 Core headline earnings 3,458 4,086 9.21 10.62 Select information EBITDA margin Taxation Core headline EPS (ZAR) Revenue growth +22% Increased 4% YoY in constant currency Finance costs up Higher debt levels to fund acquisitions Normalised preference dividend income Income from associates Includes R1.5bn once-off book profit on Mail.ru’s partial sale of Facebook Core headline earnings +18% Increased 6% YoY in constant currency 13
    • Free cash flow: boosted by investment income 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) 285 954 1,370 Capex +40% 1,670 Investment income Free cash flow Pay-TV (incl. DTT) ZAR639m Internet ZAR171m Print ZAR196m Investment income includes R519m dividend from Tencent and R388m operational dividend from Mail.ru Free cash flow (ZARm) 5,000 4,000 3,000 4,123 2,000 1,000 3,991 22% 3,619 2,432 1,370 1,670 Mar 09 Mar 10 Mar 11 Mar 12 Sep 11 Sep 12 14
    • Balance sheet: remains strong Increase Group net consolidated debt Sep 12 ZARm Net debt – offshore (US$1.3bn) (11,075) Minus: Net cash – South Africa 4,341 in net debt a consequence of debt-funded acquisitions Closing net debt Interest cover (6,733) 13x Net debt excludes transponder leases of ZAR5.7bn, considered to be an operating cost Gearing 14% 15
    • Group Overview Financial Results Internet Pay-TV Outlook Appendix 16
    • e-Commerce: strategy and positioning Mobile value-added services Social networking Payment platforms Portals Vertical e-tail Facilitation (fashion, shoes, (marketplace etc.) etc.) General e-tail B2C Marketplace Vertical e-tail (facilitation) Classifieds (free, paid) Other e-Commerce Lead-generation Lead-generation (price-comparison etc.) Classifieds Payments (free, paid) (price-comparison etc.) Other Payment platforms 17
    • e-Commerce: different business models How profitable is selling a $500 Samsung smartphone?… Marketplace Revenue (7% take rate) Trading margin Trading profit US$ 35 36% 13 General e-tail US$ Revenue (includes inventory) 500 Trading margin 4% Trading profit 20 …it depends on your business model 18
    • e-Commerce: group financials Continued focus on scaling operations ZARm Revenue by type Sep 11 Sep 12 % Change Revenue 2,478 3,991 61% Trading profit (211) (767) > -100% Strategy Expansion across the e-commerce value chain Focused on scaling e-tail, Payments and Classifieds Revenue Organic growth accounts for 27% of total revenue growth, rest acquisitive General e-tail the fastest growing segment Marketplace (33%) Lead generation (11%) Payments (6%) Other (4%) General e-tail (29%) Vertical e-tail (11%) Classifieds (6%) 19
    • e-Commerce: revenue growth Revenue (ZARm) 6,000 5,000 61% 4,000 3,000 5,736 2,000 3,991 3,684 2,713 1,000 2,478 1,981 Mar 09 Mar 10 Mar 11 Mar 12 Sep 11 Sep 12 20
    • e-Commerce: development spend Development spend (ZARm) 2,000 1,500 87% 1,000 1,725 1,031 500 575 272 268 Mar 09 Mar 10 550 Mar 11 Mar 12 Sep 11 Sep 12 21
    • e-Commerce: Expansion into B2C affecting margins PLNm* Revenue by type Sep 11 Sep 12 % Change Revenue 538 1,046 95% Trading profit 108 2 Marketplace (39%) n/a General e-tail (37%) Vertical e-tail (9%) Classifieds (6%) Lead generation (3%) * Data reflects 100% of results; 1H FY13 ZAR/Zloty 2.48 (2.45) Payment Platforms (3%) Other (3%) Operations Further investment in classifieds and e-tail Operations now in 20 countries and 7 verticals Acquisitions: agito, Netretail, eMag, lazienkaplus Revenue by geography Financials Poland (50%) 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 Czech (16%) Turkey (14%) Other (20%) Development spend more than doubled to PLN161m 22
    • Internet: Another good performance Q3 2012 statistics RMBm* Jun 11 Jun 12 Revenue 13,078 20,175 54% 6,170 7,629 24% 47% 38% Operating profit Operating margin % Change * Data for 1H FY13 reflects 100% of results Jan-Jun 2012 available on www.Tencent.com; 1H FY13 ZAR/Rmnb1.30 (1.083) • • • • • 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. Operations 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 Revenue mix 1H FY13* IVAS gaming (54%) IVAS other (21%) MVAS (9%) e-Commerce (8%) Advertising and other (8%) Financials Shift in revenue mix impacted margins Successfully issued US$600m bond in Sept 2012 23
    • Internet: Continued positive growth trajectory RURm* Q3 statistics Jun 11 Jun 12 Revenue 6,491 9,611 48% EBITDA 3,320 5,318 60% 51% 55% EBITDA margin % Change * Data reflects 100% of Mail.ru Group’s 1H FY13 aggregate segment performance as reported. For IFRS results with full disclosure and recon refer to www.corp.mail.ru; 1H FY13 ZAR/RuR 0.259 (0.243) Revenue mix 1H FY13* • • • • portal: 32m (+16% YoY) email: 26m (+12% YoY) SNS: Odnoklassniki 22m (+23% YoY) IM: Mail.ru Agent 22m (+4% YoY) Operations Increased paying user engagement driving growth Ongoing diversification of revenue streams Community IVAS still growing rapidly Continued focus on mobile Robust performance by core games MMO Games (22%) Community IVAS (33%) Display advertising (23%) Other Context advertising (11%) Sold down on investments in Facebook, Zynga and Groupon Other (11%) 24
    • Group Overview Financial Results Internet Pay-TV Outlook Appendix 25
    • Pay-TV: Positioning for the future Genre Movie Channels 26
    • Digital Terrestrial Television (DTT) Digital Terrestrial Television (DTT) set-up X 27
    • Pay-TV: growing the subscriber base Subscribers (‘000) 7,000 6,000 1,837 5,000 1,499 1,234 4,000 1,027 3,000 2,000 2,639 3,214 3,698 4,168 1,000 – Sep 09 Sep 10 South Africa Sep 11 Sep 12 Sub-Saharan Africa 28
    • Pay-TV: Operational dynamics ARPU South Africa (ZAR) Programming cost (ZARm) SSA(US$) 6,000 21% 4,500 301 308 40 38 3,000 1,500 Sep 11 Sep 12 Sep 11 3,709 4,304 5,497 6,037 2,790 3,364 - Sep 12 Mar 09 Mar 10 Mar 11 Mar 12 Development spend* (ZARm) Sep 11 Sep 12 Capital expenditure* (ZARm) 1,000 1,500 800 600 6% 400 200 607 195 730 424 368 389 Mar 09 Mar 10 Mar 11 Mar 12 * Excludes the costs for technology (Irdeto) Sep 11 Sep 12 1,000 75% 1,159 500 517 1,187 656 352 621 Mar 09 Mar 10 Mar 11 Mar 12 Sep 11 Sep 12 29
    • Pay-TV: South Africa Subscribers Continue to develop business Sep 11 Sep 12 % Change 3,698 4,168 13% ZARm ZARm Revenue* 9,889 11,445 16% Trading profit 3,163 3,750 19% 32% 33% 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 Net subscribers (‘000) Trading margin Migrated to IS-20 satellite Added 8 new HD channels Advertising +7% YoY *Excludes intergroup adjustments SA net additions(‘000) BoxOffice 400 Now >400,000 movie rentals p.m. Recently launched online 300 200 100 Operations 237 238 212 363 275 209 283 187 Mar 09 Sept 09 Mar 10 Sept 10 Mar 11 Sept 11 Mar 12 Sep 12 Regulation & Competition Awaiting DTT regulations Online competition 30
    • Pay-TV: Sub-Saharan Africa Subscribers On-going focus on DTT rollout Sep 11 439 14% 59 17% 13% 13% Premium +4% YTD Compact +20% YTD US$m 51 Trading margin 23% 383 Trading profit 1,837 US$m Revenue* % Change 1,499 Net subscribers (‘000) Sep 12 Margin impact Incremental programming costs -3% DTT costs -5% * Excludes intergroup adjustments; 1H FY13 ZAR/US$8.23 (6.97) DTT SA net additions(‘000)* 250 200 150 100 50 - Complimentary to current DTH business Subscriber growth tracking internal targets Aiming for 8 countries by FY13 73 113 69 139 206 63 132 206 Mar 09 Sept 09 Mar 10 Sept 10 Mar 11 Sept 11 Mar 12 Sept 12 * Includes DTT subscribers Competition Increasing across Africa 31
    • Group Overview Financial Results Internet Pay-TV Outlook Appendix 32
    • Outlook: Ongoing investment in long-term growth e-Commerce Pay-TV FY13 Financials • Continue growth across e-commerce value chain • Strengthen market positions selectively • Changing business mix to trim margins; expect higher absolute LT profits • Expand DTT service from 18 to 25 cities by FY13 • Push online services • Deal with increased competition and regulation • Anticipate increased revenue growth, augmented by recent investments • Organic development spend to accelerate 2H • Expect limited earnings growth this year 33
    • Group Overview Financial Results Internet Pay-TV Outlook Appendix 34
    • Print: Economic headwinds ZARm Revenue mix 1H FY13 Sep 11 Sep 12 % Change Advertising (35%) 3,448 3,774 9% Circulation (20%) Trading profit 134 257 92% Trading margin 4% 7% Revenue* Printing (26%) Distribution (6%) Books (6%) *Includes intergroup adjustments Other (6%) Environment Weak economic climate impacts performance Do not anticipate much change in near-term Operations Advertising up 3% YoY Circulation revenue increased 7% Printing revenue up 32% YoY due to additional contracts On-going investment in digital initiatives Margins Improved as a result of cost management and increased operational efficiencies Capex trend* 600 400 200 684 433 2% 348 360 167 Mar 09 Mar 10 Mar 11 Mar 12 171 Sep 11 Sep 12 * Capex excluding insurance proceeds and inter-group transactions 35
    • Print: Environment Brazilian economy continues to struggle 2H might also be challenging Affected by sluggish economy BRLm Jun 11 Jun 12 % Change 1,404 1,411 0% Trading profit 84 (3) >100% Trading margin 6% n/a Revenue *Data reflects 100% of results Jan – Jun 2012; 1H FY13 ZAR/BRL 4.11 (4.31) Contribution to core headline earnings -ZAR95m (1HFY12 ZAR18m) Operations Maintained circulation market share Subscription +5% YoY Advertising revenue -3% YOY Some benefit from investment in e-commerce distribution 36
    • Summary of Pay-TV subscribers Net subscribers* Sep 11 Sep 12 % Change 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% 571,098 746,919 31% 89,177 111,125 25% 660,275 858,044 30% South Africa PVR subscribers South Africa Rest of Sub-Saharan Africa Total *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. 37
    • Pay-TV: additional information Digital subscriber mix - SA 41% 37% 33% 37% 26% Premium Subscription (74%) Family & Compact Hardware sales (5%) Other Advertising (11%) 26% Sep 11 South Africa 1H FY13 revenue split Sep 12 Online/Broadband (6%) Other (5%) Digital subscriber mix - SSA 43% 41% 38% 39% 16% 23% Sep 11 SSA 1H FY13 revenue split Premium Family & Compact Other Subscription (92%) Hardware sales (7%) Other (1%) Sep 12 38
    • Core headline earnings Sep 11 ZARm Sep 12 ZARm 2,597 3,194 Equity-settled share scheme charges 271 339 Deferred tax adjustments (24) (26) Amortisation of intangible assets 586 583 53 (39) (25) 35 3,458 4,086 Headline earnings Business combination gains/(losses) Fair value adjustments & currency translations Core headline earnings 39
    • Contribution by associates Associates contribution 1H FY13 Company PPA IFRS Other Core HEPS results adjustments results adjustments* contribution Tencent 2,451 - 2,451 535 2,986 Mail.ru 1,805 (51) 1,754 (1,505) 250 (74) (64) (139) 44 (95) 1 (4) (3) 4 1 4,183 (119) 4,064 (922) 3,142 ZARm Abril Other TOTAL * Headline and core earnings adjustments similar to Naspers methodology Associates contribution to Core HEPS (ZARm) (119) 4,183 Company results (922) 4,064 PPA adjustments IFRS results 3,142 Other adjustments Core HEPS Contribution 40
    • Development spend breakdown Development spend per business division 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% 41
    • Net finance costs Sep 11 Mar 12 Sep 12 ZARm (583) (390) (66) (127) ZARm (1,271) (877) (132) (262) ZARm (706) (481) (72) (153) Interest received 200 400 218 Loans and call accounts 169 360 205 31 40 12 Interest (paid) Loans and overdrafts Transponder leases Other Other Debt 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) Net interest cost increased 27% YoY from ZAR383m to ZAR488m Other finance costs, net FX translation adjustments BEE preference dividends Total finance costs 235 174 0 5 (135) (76) 230 309 76 (148) (697) (488) Transponders 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$42m p.a. 42
    • Taxation analysis Sep 11 ZARm Sep 12 ZARm 3,273 6,053 1,125 1,525 (1,618) (4,063) Other gains and losses 722 379 Acquisition gains 150 16 (5) 76 BEE preference dividends (230) (76) Adjusted profit before tax 3,417 3,908 (1,008) (1,253) 29% 32% Profit before tax Add back: Development spend Equity results (including impairments) FX gains and losses Adjusted tax charge Effective rate 43
    • Impact of currency movements ZAR fluctuation impacts translation of offshore earnings Revenue growth YoY * 40,000 +32% Core Earnings growth YoY Trading Profit growth YoY * +24% 8,000 +28% +17% +6% 3,000 30,000 34,172 32,072 Reported 20,000 +18% 4,500 5,000 Constant Currency 10,000 7,356 6,745 4,086 3,679 Reported Constant Currency 1,500 - 2,000 Reported Constant Currency * Based on economic interest, i.e. assuming equity accounted investments are proportionately consolidated Average Currency (ZAR = 1FC) US dollar Euro Chinese Yuan/Renminbi Brazilian Real Polish Zloty Nigerian Naira Sep 11 6.97 9.97 1.08 4.31 2.45 0.045 Sep 12 8.23 10.43 1.30 4.11 2.48 0.052 % change -18 -5 -20 5 -1 -16 Closing rate Mar 13E 8.21 11.16 1.28 4.56 2.49 0.05 Sep 11 8.02 10.78 1.26 4.33 2.44 0.051 Sep 12 8.32 10.69 1.32 4.10 2.60 0.053 % change -4 -5 5 -7 -4 44
    • FX - Hedging to manage risk Annualised net foreign input costs US$ Forward Exchange Cover US$m US$ rate FY13 220 7.62 FY14 397 8.28 FY15 73 8.82 EURm EUR rate 23 10.52 Pay-TV: US$309m (programming rights and leases) Print: EUR23m and US$13m (paper and ink) EUR Forward Exchange Cover FY13 Hedging strategy Pay-TV: long-term commitments, cover up to 100% of rolling 12 -24 month net inputs Print: short-term commitments, cover maximum 12 months rolling input costs Bond/RCF: hedge interest liability to a maximum of 24 months FEC’s Almost all FEC’s qualify for hedge accounting 45
    • Capital expenditure Sep 11 ZARm Sep 12 ZARm Land, buildings & plant 133 85 Transmission equipment 254 492 Computer, software & network equipment 310 376 21 53 719 1,006 3.9% 4.5% Other (including vehicles, furniture) Capital expenditure Capex/Revenue 46
    • Current assets and liabilities Sep 11 ZARm Sep 12 ZARm Inventory 1,194 1,592 Current portion of long-term debt Programme and film rights 2,362 2,830 Provisions Trade receivables 3,655 4,373 Other receivables 2,692 2,872 111 284 7,902 10,565 722 30 Current Assets Derivative financial assets Cash and deposits Assets held for sale Sep 11 ZARm Sep 12 ZARm 1,465 1,786 215 285 Trade payable 2,964 4,117 Accrued expenses and other 7,430 8,844 Tax payable 334 531 Derivative financial liabilities 118 149 1,835 1,577 127 - 14,488 17,287 Current Liabilities Bank overdraft and call loans Liabilities held for sale Total 18,638 22,547 Total 47
    • Consolidated income statement – US$ Sep 11 ZARm Revenue Sep 12 ZARm Sep 11 US$m Sep 12 US$m 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) 3,273 6,054 469 735 (1,008) (1,394) (144) (169) 2,265 4,660 325 566 1,870 4,152 268 504 395 508 57 62 Profit before taxation Taxation Net profit Attributable to: Naspers Minorities 1H FY13 ZAR/US$8.23 (6.97) 48
    • Investor Relations Meloy Horn Office: +27 11 289 3320 Mobile: +27 82 7727 123 E-mail: InvestorRelations@naspers.com Website: www.naspers.com 49 49