Financial results presentation. For the six months ended 30 September 2013

Transcription

1 Financial results presentation For the six months ended 30 September 2013

2 Important information This presentation contains forward-looking statements as defined in the United States Private Securities Litigation Reform Act of 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

3 Group Overview Financial Results Internet Pay-TV Outlook Appendix 3

4 1H FY14: Highlights 1 Shift in business mix: majority international + internet 2 Solid revenue growth 3 Accelerated development spend 4 Thus more muted earnings growth 5 Increased traction in ecommerce 6 Pay-TV growth via DTT in Rest of Africa 4

5 Group Overview Financial Results Internet Pay-TV Outlook Appendix 5

6 1H FY14 key financials: Synopsis Sep 12 Sep 13 Revenue (ZARbn) Trading profit (ZARbn) 28% 15% Development spend (ZARbn) Core HEPS (ZAR) 87% 16%

7 Summarised consolidated income statement Sep 12 ZARm Sep 13 ZARm Revenue* 34,172 47,606 Less: Associates and joint ventures (11,767) (18,851) Consolidated revenue 22,405 28,755 Net interest on loans up 83% Higher debt levels to fund acquisitions US$1bn bond issued in July Negative effect of currency translation Trading profit 3,462 2,926 Trading margin 15% 10% Income from associates Includes ZAR1.3bn once-off book profit on Mail.ru s partial sale of Facebook and Qiwi Net finance costs (479) (915) Share of equity accounted results 3,990 5,139 Impairments (343) (1,841) Taxation (1,383) (1,447) Net profit 4,658 3,423 Core headline earnings 4,127 4,920 Core headline EPS (ZAR) Impairments R1bn relates to flash sales ecommerce businesses and R750m to Abril Core HEPS +16% Increased 2% YoY in constant currency * Based on economic interest, i.e. assuming equity accounted investments are proportionately consolidated 7

8 Revenue 1H FY14 revenue by business* Incremental revenue YoY* (ZARm) 5,642 76% 18% 0% 39% 2, ,077 24,887 10,779 47,606 34,172 Internet (52%) Pay TV (36%) Print (12%) Sep 12 Internet Pay-TV Print Sep 13 * Based on economic interest, i.e. assuming equity accounted investments are proportionately consolidated Internet Robust growth across most platforms ecommerce revenue +98% YoY Some benefit from change in business mix Tencent & Mail.ru s revenue +69% YoY Pay-TV 21% YoY increase in subscribers 6% increase in subscription rates Advertising revenue healthy Print Solid results from Media24 Negatively impacted by poor results from Abril due to weak operating environment 8

9 Development spend 1H FY14 split by business Incremental spend YoY (ZARm) % 18% 8% 87% ,286 2,970 2,328 1,591 Internet (79%) Pay-TV (19%) Print (2%) Sep 12 Internet Pay-TV Print Sep 13 Internet Significant focus on classifieds Investing in brand advertising Continue to scale etail businesses Seasonality in spending 100% 59% 60% 63% Pay-TV ZAR397m for DTT and online ZAR173m for other technologies 50% 0% 41% 40% 37% FY11 FY12 FY13 1H 2H 9

10 Trading profit 1H FY14 split by business* Incremental profit* (ZARm) % 11% 13% 16% (33) 8, ,397 Internet (45%) Pay TV (52%) Print (3%) Sep 12 Internet Pay-TV Print Sep 13 * Based on economic interest, i.e. assuming equity accounted investments are proportionately consolidated Internet R5.7bn contribution from Tencent and Mail.ru Trimmed by ecommerce loss of ZAR1.8bn Continue focus on scaling operations Pay-TV DTT roll-out continuing Accelerated investment in local content Positive contribution from Irdeto Print Declining advertising revenues SA profits up marginally Abril losses increased to R35m 10

11 Free cash flow Sep 12 ZARm Sep 13 ZARm Capex +99% Pay-TV ZAR1.7bn (mainly DTT) Internet ZAR161m Print ZAR216m Operating cash flow 3,296 3,904 Capex (994) (1,978) Finance leases (266) (382) Tax (1,265) (1,591) Investment income Free cash flow 1, Finance leases Impacted by new satellite lease for MCSA Tax Increase due to higher profits in SA Investment income Includes ZAR793m dividend from Tencent No dividends from Mail.ru or Abril 11

12 Net debt Sep 13 ZARm Increase US$347m of debt-funded acquisitions Some currency impact on translation Debt: (offshore US$2.5bn) (26,706) Cash: (South Africa R6bn) 14,683 Closing net debt (12,026) Net debt Excludes transponder leases of ZAR7.2bn, considered to be an operating cost Interest cover 9x Gearing 20% 12

13 Group Overview Financial Results Internet Pay-TV Outlook Appendix 13

14 ecommerce: strategy 14

15 ecommerce: financial summary ZARm Sep 12 Sep 13 % Change Revenue by type Revenue 3,991 7,907 98% Trading profit (726) (1,779) >-100% Operational Competition increasing in many markets Mobile development remains a key priority More localisation of product offering and services Financial 16% organic revenue growth, mainly marketplace platforms 22% revenue growth from currency and rest acquisitive Development spend more than doubled to R2.3bn e-tail (84%) Classifieds (7%) Payments (6%) Other (3%) 15

16 ecommerce: development spend 1H FY14 development spend by type Revenue and development spend (ZARm) 9,000 98% 123% 681 6,000 7,907 1,424 Classifieds (61%) etail (29%) Payments (4%) Other (6%) 3,000-3,991 2,478 1, Sep 11 Sep 12 Sep 13 Revenue Development spend 2,328 16

17 ecommerce: classifieds Daily visits (m)* Daily page views (m)* % % Sep 12 Sep 13 - Sep 12 Sep 13 Strategic Market presence in ~40 countries, leading position in several Stepping up investment to extend gap over competitors India and Brazil key areas of focus Operational Focus on building brands and expanding user base Healthy growth on engagement metrics Some monetisation of vertical sites, mainly advertising Monetisation of general sites not a near-term objective Page views by region* Europe (57%) India & SE Asia (27%) Latin America (8%) Africa & Middle East (8%) * Select criteria as measured for the month of September, not adjusted for acquisitions and disposals and reflecting associates on a proportionate basis 17

18 ecommerce: e-tail Revenue (ZARm) GMV by region ** 7, % 6,000 Europe (91%) 4,500 India & SE Asia (4%) 3,000 1,500 3,241 6,651 Africa & Middle East (3%) Latam (2%) - Sep 12 Sep 13 **Includes GMV for lead-comparison operations on an imputed basis Strategic B2C retail growth accelerating, leadership in all key markets Price comparison business growing ahead of market Flash sale fashion businesses repositioned Financial 16% revenue growth organic, rest acquisitive Some impact from change in business mix Operational Continuing to scale operations and invest in driving traffic Some investment to improve fulfilment and distribution 18

19 Internet: RMBm* Jun 12 Jun 13 % Change Revenue 20,175 27,932 38% Operating profit 7,629 9,628 26% Operating margin 38% 34% * Data for 1H FY13 reflects 100% of results Jan-Jun 2013 available on 1H FY14 ZAR/RMB 1.61 (1.30) Revenue mix 1H FY14* Q statistics 272m combined monthly active WeChat and Weixin user accounts (+124% YoY) 816m monthly active IM user accounts (+4% YoY) 623m monthly active Qzone user accounts (+5% YoY) Operations Strong performance from online and smartphone games Further investment in mobile smartphone apps - Weixin expanded rapidly, supported by new features - Step-up in international marketing of WeChat Progress in online advertising and ecommerce Merger with Sogou on search VAS (77%) ecommerce transactions (15%) Advertising and other (8%) Financials Solid growth in revenues and profits ecommerce initiatives reducing margins Sales and marketing expenses increased 19

20 Internet: RURm* Jun 12 Jun 13 % Change Revenue 9,693 12,442 28% Q performance Mail.ru portal - monthly audience 33.7m users EBITDA 5,318 6,706 26% EBITDA margin 55% 54% * Data reflects 100% of Mail.ru Group s 1H FY13 aggregate segment performance as reported. For IFRS results with full disclosure refer to 1H FY14 ZAR/RUR (0.259) Revenue mix 1H FY14* Operations Contextual advertising strong IVAS healthy due to increase of paying user engagement Executing well on games strategy Warface top revenue generator Jungle Heat launched successfully Community IVAS (32%) Display advertising (20%) MMO Games (25%) Context advertising (13%) Other (10%) Other Sold remaining Facebook shares Sold 2.4m shares in Qiwi (Oct), raised US$73m Launched My.com for the US market 20

21 Group Overview Financial Results Internet Pay-TV Outlook Appendix 21

22 PayTV: strategy More investment in local content Better products Investment in DTT 22

23 Pay-TV: subscriber growth Subscribers Pay-TV homes ( 000) 8,000 21% 7,000 6,000 2,560 5,000 1,499 1,837 4,000 1,234 3,000 2,000 1,030 2,639 3,214 3,698 4,168 4,699 1,000 Sep 09 Sep 10 Sep 11 Sep 12 Sep 13 South Africa Sub-Saharan Africa 23

24 Pay-TV: overview Sep 12 Sep 13 % Change Net subscribers ( 000) 6,005 7,260 21% ZARm ZARm Revenue 14,426 17,077 18% Trading profit 4,020 4,477 11% Trading margin 28% 26% Net additions ( 000) 800 Subscribers 1,3m net additions YoY - Compact accounted for 35% of growth - Premium stable - 541,180 DTT subscribers at 30 Sep PVR base increased 19% YoY to 1m Operations More local content, weaker ZAR and additional satellite costs triggered margin pressure 10 new channels, including 2 local content channels Launched the Explora with improved hard drive Expanded video on demand capability GoTV (DTT) continue in-country rollout Mar 11 Sep 11 Mar 12 Sep 12 Mar 13 Sep 13 Regulation & Competition Increased regulatory pressures Competition increasing sharply 24

25 18,810 5,279 5,855 22,253 6,319 7,559 25,259 30,257 14,426 4,020 17,077 4,477 Pay-TV: operational dynamics Digital subscriber mix Programming cost (ZARm) 37% 31% % 38% 38% 25% 31% ,304 5,497 6,037 6,935 3,364 3,943 Sep 12 Sep 13 Premium Compact Lower-end Mar 10 Mar 11 Mar 12 Mar 13 Sep 12 Sep 13 Pay-TV financials (ZARm) 28% 28% Capital expenditure (ZARm) % 26% 25% 25% 26% Mar 10 Mar 11 Mar 12 Mar 13 Sep 12 Sep 13 Revenue Trading profit Margin 800 2,016 1,687 1,204 1, Mar 10 Mar 11 Mar 12 Mar 13 Sep 12 Sep 13 25

26 Pay-TV: revenues 1H FY14 revenue split 1H FY14 subscription revenue split Subscription (80%) Advertising (8%) Hardware sales (5%) Online/Broadband (4%) Other (3%) Premium (57%) Compact (26%) Other (10%) Family & Select (4%) Access (2%) DTT (1%) * Blended ARPU currently ZAR314 26

27 Pay-TV: DTT investment to ramp up 2H Analogue switch-off (ASOs) starting to gain pace Dec 12 Sep 13 Mar 13 Dec 14 Jun 15 Tanzania Development spend (ZARm) % Mar 10 Mar 11 Mar 12 Mar 13 Sep 12 Sep 13 27

28 Group Overview Financial Results Internet Pay-TV Outlook Appendix 28

29 Outlook: Accelerating investment spend ecommerce Step-up spending on classifieds, focus on Brazil and India Strengthen market positions Focus on mobile Pay-TV Prepare for analog switch-off in some countries Extend online services and launch new products Position for intensifying competition FY14 Financials Top-line growth momentum to be maintained Development spend around ZAR7bn Thus lower profit growth and FCF 29

30 Group Overview Financial Results Internet Pay-TV Outlook Appendix 30

31 Print: ZARm* Sep12 Sep 13 % Change Revenue mix 1H FY14 Revenue 3,721 3,951 6% Trading profit % Trading margin 6% 6% *Data for 1H FY14 reflect Media24 s stand-alone results available on Advertising (32%) Printing (29%) Circulation (16%) Books (9%) Other (9%) Distribution (5%) Environment Economic environment remains challenging Print losing adspend market share to television and online Capex trend* 800 Operations Advertising revenue -3% and circulation -4% YoY Printing revenue +8% YoY, solid performance by book publishers Expansion into ecommerce (i.e. Spree) Capex higher due to acquisition of some printing assets % Mar 10 Mar 11 Mar 12 Mar 13 Sep 12 Sep 13 31

32 Print: BRLm Jun 12 Jun 13 % Change Revenue 1,411 1,284-9% Trading loss (3) (26) > -100% *Data reflects 100% of results Jan Jun 2013; 1H FY14 ZAR/BRL 4.45 (4.11) Environment Impacted by weak economy Advertising revenues under pressure Print being complemented by digital initiatives Financials ZAR153m loss included in core headline earnings Impaired investment Operations Advertising revenue -10% YoY, maintained market share Subscription revenues remain strong Single copy circulation declining in line with market Cost-cutting initiatives implemented, more required Some rationalisation of magazine titles 32

33 Revenue Incremental revenue YoY* (ZARm) 39% 5,117 5,738 2,579 47,606 34,172 Sep 12 Exchange rate impact Organic growth Acquisitive growth Sep 13 * Based on economic interest, i.e. assuming equity accounted investments are proportionately consolidated Organic growth 17% growth from existing operations - Tencent (+38%), Mail.ru (+28%) in local currency - ecommerce +16% YoY - Pay-TV revenues +12% YoY Exchange rate 15% revenue uplift from weaker ZAR Devalued -24% vs. Rmb and -20% vs. US$ Acquisitive growth Mainly driven by new etail platforms such as emag and Netretail 33

34 Development spend Sep 12 ZARm Sep 13 ZARm % Change Revenue and Development spend (ZARm)* 28% 87% Internet 1,043 2, % Pay-TV % Print % Total 1,591 2,970 87% 30,000 20,000 10,000-28,755 22,405 18,482 15,833 13,455 2,970,482 1,240 1,591 1,126 Sep 09 Sep 10 Sep 11 Sep 12 Sep 13 Revenue Development spend Development spend as % of revenue Incremental ecommerce development spend YoY (ZARm) 12% 8% 7.1% 7.1% 8.6% 10.3% ,328 4% 4.6% 6.1% ,043 0% Mar 11 Sep 11 Mar 12 Sep 12 Mar 13 Sep 13 - Sep 12 Classifieds e-tail Payments Sep 13 34

35 Contribution by associates and joint ventures Company PPA IFRS Other Core HEPS ZARm results adjustments results adjustments* contribution Tencent 3,960-3, ,380 Mail.ru 1,607 (59) 1,548 (1,143) 405 Abril (128) (70) (198) 45 (153) Other (136) (35) (171) 40 (131) TOTAL 5,303 (164) 5,139 (638) 4,501 * Headline and core earnings adjustments similar to Naspers methodology Associates and joint ventures contribution to Core HEPS (ZARm) (164) (638) 5,303 5,139 4,501 Company results PPA adjustments IFRS results Other adjustments Core HEPS Contribution 35

36 Net finance costs Sep 12 ZARm Sep 13 ZARm Interest (paid) (703) (1,055) Loans and overdrafts (480) (749) Transponder leases (72) (173) Other (151) (133) Interest received Loans and call accounts Other Other finance costs, net - (117) FX translation adjustments (76) (165) BEE preference dividends Total finance costs (479) (915) Debt US$700m 7-year bond issued Jul10: 6.375% coupon US$1bn 7-year bond issued Jul 13: 6% coupon 5-year US$2.25bn RCF extended to Oct 2018: US$800m drawn at Sep 2013 US$800m fixed at 4.3% all-in until March 2016 Floating interest of 1.75% + 3 month LIBOR Net interest paid on loans Increased 83% YoY from ZAR277m to ZAR504m Transponders SSA: new 15-yr lease effective Dec09 Total cost ~US$40m p.a. SA: new agreement effective Sep12 Cost increased to US$42m p.a. 36

37 Taxation analysis Sep 12 ZARm Sep 13 ZARm Profit before tax 6,041 4,870 Add back: Development spend 1,525 2,898 Equity results (including impairments) (4,063) (4,386) Other gains and losses Acquisition gains FX gains and losses BEE preference dividends (76) (48) Adjusted profit before tax 3,895 4,679 Tax charge (1,242) (1,447) Effective rate 32% 31% 37

38 Core headline earnings Sep 12 ZARm Sep 13 ZARm Headline earnings 3,194 3,641 Equity-settled share scheme charges Deferred tax adjustments (26) (49) Amortisation of intangible assets Business combination gains/(losses) (39) 12 Retention option expense Fair value adjustments & currency translations Core headline earnings 4,127 4,920 38

39 Impact of currency movements ZAR weakness positively impacted translation of offshore earnings Revenue growth YoY * Trading profit growth YoY * Core earnings growth YoY 52,000 43,000 34, % 47, % 42,131 9,000 6, % +16% 8,570 8,544 6,000 4,000 2, % 4,920 +5% 4,314 25,000 Reported Constant Currency 3,000 Reported Constant Currency - Reported Constant Currency * Based on economic interest, i.e. assuming equity accounted investments are proportionately consolidated Average Closing rate Currency (ZAR = 1FC) Sep 12 Sep 13 % change Sep 12 Sep 13 % change US dollar Euro Chinese Yuan/Renminbi Brazilian Real Polish Zloty Russian Ruble

40 FX - Hedging to manage risk US$ FX Cover US$m US$ rate FY FY EUR FX Cover EURm EUR rate FY Annualised net foreign input costs Pay-TV: US$368m and EUR6m (programming rights and leases) Print: EUR20m and US$16m (paper and ink) Hedging strategy Pay-TV: long-term commitments, cover up to 100% of rolling 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 FY FEC s Almost all FEC s qualify for hedge accounting 40

41 Capital expenditure Sep 12 ZARm Sep 13 ZARm Land, buildings & plant Transmission equipment 492 1,217 Computer, software & network equipment Other (including vehicles, furniture) Capital expenditure 994 1,978 Capex/Revenue 4% 7% 41

42 Ongoing M&A activity Total acquisition spend (US$m) Other Other - Mar 10 Mar 11 Mar 12 Mar 13 Sep 13 42

43 Current assets and liabilities Current assets Sep 12 ZARm Sep 13 ZARm Current liabilities Sep 12 ZARm Sep 13 ZARm Inventory 1,588 2,486 Current portion of long-term debt 1,786 2,192 Programme and film rights 2,830 3,147 Provisions Trade receivables 4,294 5,007 Trade payable 4,056 5,669 Other receivables 2,842 3,531 Accrued expenses and other 8,674 11,318 Derivative financial assets Tax payable Cash and deposits 10,363 16,262 Derivative financial liabilities Assets held for sale Bank overdraft and call loans 1,577 1,578 Liabilities held for sale - - Total 22,231 30,966 Total 17,052 22,599 43

44 Consolidated income statement US$ Sep 12 ZARm Sep 13 ZARm Sep 12 US$m Sep 13 US$m Revenue 22,405 28,755 2,721 2,917 Operating profit 2,548 1, Finance costs (479) (915) (58) (93) Share of equity accounted results 3,990 5, Acquisitions and disposals Dilution profits (41) (836) (5) (85) Impairment of equity accounted investments - (753) - (76) Profit before taxation 6,041 4, Taxation (1,383) (1,447) (168) (147) Net profit 4,658 3, Attributable to: Naspers 4,150 3, Minorities H FY14 ZAR/US$ 9.86 (8.23) 44

45 Naspers group structure 45

46 Glossary of terms ARPU: B2C: DPS: DTH: DTT: EPS: FCF: FEC: GEM: Average Revenue per User Business To Consumer Dividend per Share Direct-to-Home Television Digital Terrestrial Television Earnings per Share Free Cash Flow Forward Exchange Contract Global Emerging Markets GMV: Gross Merchandise Value HEPS: Headline Earnings per Share HD: High definition IM: Instant Messaging MMOG: Massively Multiplayer Online Game PCU: Peak Concurrent Users SNS: Social Network Service SSA: Sub-Saharan Africa VAS: Value-Added Services 46 46

47 Investor Relations Meloy Horn Office: Mobile: Website: