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Financial Results Presentation For the six months to September 2014
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
2
Overview Financials Internet
Pay-TV Outlook Appendix
3
Pursuing simultaneous, significant growth opportunities
Becoming a major ecommerce player
1
Prioritising fast-growing segments in ecommerce
2 Mobile becoming dominant
mode of internet access
4 Focusing on growth markets
3
Optimising the structure
5
4
Becoming a major ecommerce player globally
Monthly average desktop visits in billions, Y/Y growth % (excl. payments-related properties)
Source: ComScore, Naspers
0
1
2
3
4
5
6
Alibaba Amazon Naspers eBay Mercadolibre Rocket Internet Rakuten JD.com
3Q'13 3Q'14
5
Mobile becoming dominant mode of internet access
0
500
1,000
1,500
2,000
Developed markets Naspers markets
Mobile internet users by region (m)
Saudi Arabia Indonesia
Poland South Africa
Brazil India
As a group we are very well positioned
Source: Similarweb, 5 November2014 2014E vs 2018E
~2bn
Top Shopping Apps in the Google Play Store
6
Focusing on high growth markets
India (82%) Brazil (5%)
South Africa (4%) Other (3%)
Turkey (3%) Romania (3%)
1HFY15 M&A by country (ZAR3,9bn)
India (15%) Brazil (13%)
South Africa (14%) Nigeria (11%)
Indonesia (4%) Other (43%)
1H FY15 Development spend* by country (ZAR4,4bn)
* Based on economic interest, i.e. assuming equity accounted investments are proportionately consolidated
7
Prioritising fast growing segments in ecommerce
Emerging markets: visits per segment (% change YoY)
+4.2%
+4.1%
-5.0
-2.1%
Source: IDC, Naspers
8
0%
15%
30%
45%
Etail Classifieds3Q 2012 3Q 2014
Population size (m) Our position* Brand
#1 58.com
#1 OLX
- -
#1 OLX
#1 OLX
#1 OLX
#1 OLX
#1 OLX
#1 Avito
- -
- -
#1 OLX
- -
- -
#1 Dubizzle
Strong asset base for growth in classifieds
9
82
90
94
98
122
127
143
157
174
182
200
250
316
1,252
1,357
Egypt
Vietnam
Ethiopia
Philippines
Mexico
Japan
Russia
Bangladesh
Nigeria
Pakistan
Brazil
Indonesia
US
India
China
*Including associates
Source: World Bank
Optimising the structure: rest of ecommerce
Strengthened management across operations
10
Etail
+
• Two of SA’s leading etail businesses combine to create a platform of scale
• Customers to benefit from wider selection of products and categories, as well as broader delivery services
• Deal subject to Competition Commission approval.
Merger
Other
Sold
• Strategic decision to focus on the consumer ISP business, without being an infrastructure player.
• Subject to Competition Commission approval
• Outside of focus area
• Fairly small and mature markets
Marketplaces
• Transformation to create a more customer-focused and agile business
• Specific emphasis on removing corporate layers - likely to result in headcount reduction of 300+
• Re-investing in mobile development — 80 engineers to be added
Restructured
Overview Financials Internet
Pay-TV Outlook Appendix
11
4.9 6.1
Revenue (ZARbn)
Core headline earnings (ZARbn)
28.8 34.4
12.48 15.28
Core HEPS (ZAR)
Sep 13
Sep 14
2.98
4.0
Development spend (ZARbn)
20% 35%
24% 22%
1H FY15: Synopsis of consolidated financials
12
Focus areas showing strong growth in revenue
Incremental revenue* by segment, YoY (ZARm)
Revenue by business segment*
35,817 20,186
5,979
Internet (58%) Pay TV (32%) Print (10%)
10,930 3,109 337
47,606
Sep 13 Internet Pay-TV Print Sep 14
61,982
44% 18% 30% 6%
* Based on economic interest, i.e. assuming equity accounted investments are proportionately consolidated
Revenue* (ZARm)
45,108
56,522
76,776
104,981
47,606
61,982
Mar 11 Mar 12 Mar 13 Mar 14 Sep 13 Sep 14
CAGR 30%
72% of revenues earned offshore Internet Fastest growing revenue segment
Constitutes 58% of group revenues
Revenue trends:
- Ecommerce +43% YoY
- Tencent +46% YoY
- Mail.ru +19% YoY
Pay-TV Benefited from :
- 16% increase in subscribers YoY
- 5% increase in subscription rates in SA
Print media Large scale structural changes in industry
Tough trading conditions continue:
- Media24 +1% YoY
13
More opportunities resulting in increased spending
14
Incremental development* spend by segment, YoY (ZARm)
4,374
1,154
72 71
3,077
Sep 13 Ecommerce Pay-TV Print Sep 14
48% 13% 42% 87% Further investment Major investments in high growth markets
Focus on building leading positions
Ecommerce Larger classifieds footprint resulted in
higher spend
Increased spend in etail, also impacted by
larger holdings in Souq and Flipkart
Bigger investment in payments to scale and
expand market share
Larger markets of investment include India,
Brazil and Indonesia
Pay-TV ZAR465m invested in DTT
Additional ZAR177m spent on:
- online and mobile technologies
- decoder development
• Based on economic interest, i.e. assuming equity accounted investments are proportionately consolidated
Summarised consolidated income statement
Sep 13
ZARm Sep 14 ZARm
Revenue* 47,606 61,982
Less: Associates and joint ventures (18,851) (27,619)
Consolidated revenue 28,755 34,363
Trading profit 2,926 2,798
Trading margin 10% 8%
Net finance costs (915) (1,208)
Share of equity accounted results 5,139 9,932
Impairments (1,841) (173)
Taxation (1,447) (1,755)
Net profit 3,423 9,269
Core headline earnings 4,920 6,077
Core headline EPS (ZAR) 12.48 15.28
* Based on economic interest, i.e. assuming equity accounted investments are proportionately consolidated
Currency impact Revenue* up 24% on constant currency basis
Trading margin Decline due to increase in development spend
Net finance cost 55% increase in net interest on loans due to:
- Higher debt levels to fund acquisitions
- Negative effect of currency translation
- US$1bn bond issued in July 2013
Income from associates Includes ZAR4.8bn (Sep 13 ZAR1.3bn) book profit from:
- Re-measurement of Mail.ru’s interest in VK and
its sale of shares in Qiwi (ZAR3.9bn)
- Tencent’s sale of some investments (ZAR887m)
Taxation Increase due to higher profits in pay-TV, Allegro
marketplace and OCS
15
Core headline earnings drivers
Incremental core headline earnings drivers, YoY (ZARm)
6,077
4,920
Sep 13 Developmentspend*
Pay-TV profit* Profits from listedassets
Ecommerce* Tax & Interest Other Sep 14
24%
** Excludes development spend on an economic interest basis
(1,298)
588
564
1,940
(601) (35)
* Based on economic interest, i.e. assuming equity accounted investments are proportionately consolidated
16
Investment in growth opportunities dampens FCF
Sep 13 ZARm
Sep 14 ZARm
Operating cash flow 3,904 2,490
Capex (1,978) (1,435)
Finance leases (382) (445)
Tax (1,591) (2,086)
Investment income 834 1,047
Free cash flow (FCF) 787 (429)
Operating cashflow Down due to higher development spend
Working capital Almost all etail operations now generating negative working capital
Capex Pay-TV ZAR1bn (mainly DTT and facilities) Ecommerce ZAR278m
Finance leases Impacted by new satellite lease for MCSA
Investment income Includes ZAR1bn dividend from Tencent
17
Balance sheet solid
Sep 14 ZARm
Debt: (offshore US$2.9bn) (33,203)
Cash: (South Africa R4.2bn) 10,755
Closing net debt (22,448)
Interest cover 9x
Net debt/ Adjusted EBITDA 1.36x
Value of marketable listed securities/Debt 24.5x
Increase US$369m of debt-funded acquisitions Some currency impact on translation
Net debt Excludes transponder leases of ZAR7.6bn, considered to be an operating cost
Gearing 29%
18
Overview Financials Internet
Pay-TV Outlook Appendix
19
Ecommerce growing strongly: YoY performance metrics
Etail
Monthly active users
226m
New mobile listings
+345%
New listings
+83%
Average daily GMV
+59%
Items sold
+36%
Daily visitors
+39% Daily payment transactions
+70%
Payments TPV
+36%
Classifieds Other
Items sold on marketplaces
753k /day
20
3,085 4,218
6,643
12,386
20,355
8,502
12,141
(107) (207) (1,238)
(2,337)
(5,329)
(1,859) (2,426)
(6,000)
–
6,000
12,000
18,000
24,000
Mar 10 Mar 11 Mar 12 Mar 13 Mar 14 Sep 13 Sep 14
Revenue Trading profit/(losses)
Ecommerce: strong organic revenue growth
Strategic Fastest growing segment
Focus on building leading positions in growth markets
Investing in etail, classifieds and payments – all gaining market share from other formats
Operational Execution capacity and operations are strengthening throughout the group
Focus on customer satisfaction, engagement and retention metrics
Mobile remains central to our plan
Financial Trading loss ZAR2.4bn after incurring development spend on an economic interest basis of R3.6bn
Ecommerce revenue and trading profit/(losses) (ZARm)
43%
21
* Based on economic interest, i.e. assuming equity accounted investments are proportionately consolidated
Etail: focusing on attractive markets
+59%average
daily GMV
11 companies
19 markets
22
India & SE Asia (48%)
Europe (41%)
Africa & Middle East (11%)
Etail*: revenue growth accelerating
GMV by region
*Excludes marketplaces, OCS and online services
4,064
6,690
-
3,500
7,000
Sep 13 Sep 14
65%
Revenue (ZARm) Strategic Scaling operations in attractive markets
Delivering compelling customer propositions
Expanding through M&A
Operational Substantial increase in organic traffic
Major acceleration in Flipkart’s growth rates (category expansion, exclusive supply, differentiated logistics and fulfilment, price leadership)
Souq and eMag scaling well
Proposed merger of Kalahari and Takealot places business on better footing
Fashion businesses restructured and losses reduced
Financial Revenue growth mainly organic
Margins low, but steady and consistent with category
Negative working capital cycles across most operations
23
* Based on economic interest, i.e. assuming equity accounted investments are proportionately consolidated
Payments: focus on becoming leader in new world growth markets
24
Latin America*
Chile, Panama, Peru, Brazil, Argentina, Mexico, Colombia
Europe
Poland, Czech Republic, Turkey, Ukraine, Hungary, Romania, Russia
India
South Africa, Kenya, Nigeria
Africa
1 brand
18 markets
$$$$$ Buy Rate
Multiple Acquiring Banks
Online Merchant
$$$$$ Sell Rate
Classifieds: joining forces to develop markets
Strategic benefits of agreement
A single large platform Combine know-how
Share costs
Salient features of transaction
• Agreement with Schibsted (also Telenor and SPH)
• JV’s in Brazil, Indonesia, Thailand and Bangladesh
• Transaction based on relative metrics
• A single, sustainable platform in each market
• Cash neutral, some adjustments to working capital
• Subject to EU approval
25
Classifieds: OLX the leader across emerging markets
+20 Offices
+40 Countries
+1,200 Employees
Reach
+200M MONTHLY
ACTIVE USERS
+35M MOBILE APP DOWNLOADS
Activity
25M Monthly listing
8,5M Monthly transactions
11B Monthly page views
26
Note: numbers include OLX brand only
Country
YoY growth
Brazil 1,241%
Nigeria 548%
Global 345%
Poland 267%
India 219%
Classifieds: mobile transforming our business
27
0
2
4
6
8
10
12
14
Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14
Mobile listings [indexed on Sep 2013]
OLX India continues to strengthen its leading position
OLX Mobile listers
Brand awareness
Source : Google trends
28
Net new listings (for sale + vehicles), indexed
Source: Mobile website and app data
-
300,000
600,000
900,000
Aug-13 Oct-13 Dec-13 Feb-14 Apr-14 Jun-14 Aug-14Source: Website data
-
2
4
6
Apr-14 May-14 Jun-14 Jul-14 Aug-14
Quikr
OLX
Android app downloads in India since launch (m)
Source: Google play store, AppAnnie
Quikr
OLX
5-10
15.6
2x
+220% YoY
Classifieds: rolling out aggressively, following playbook
Strategic Aggressive expansion strategy
Professional operations
Roll-out following best in class play-book
Operational Outgrowing competition on most important metrics (focusing on mobile)
Strong user and listing growth
Increased engagement through improved offering and customer focus
Mobile traffic rising rapidly
Financial ZAR2.1bn investment in organic growth, up 46% YoY
Monetisation in Russia, UAE, Portugal, Poland, Bosnia and Bulgaria
29
16
2
12
1
5 5
23
6
Entering Fighting Leading Leading andmonetizing
2013 2014
Naspers positions (number of countries)
Population size (m) Our position* Brand
#1 58.com
#1 OLX
- -
#1 OLX
#1 OLX
#1 OLX
#1 OLX
#1 OLX
#1 Avito
- -
- -
#1 OLX
- -
- -
#1 Dubizzle
As a result, we have a fantastic asset base for growth
30
82
90
94
98
122
127
143
157
174
182
200
250
316
1,252
1,357
Egypt
Vietnam
Ethiopia
Philippines
Mexico
Japan
Russia
Bangladesh
Nigeria
Pakistan
Brazil
Indonesia
US
India
China
*Including associates
Source: World Bank, 2013
Listed internet:
9,838
12,254
15,479
19,194
9,628
15,633*
Dec 10 Dec 11 Dec 12 Dec 13 Jun 13 Jun 14
62% CAGR +25%
Tencent operating profit (RMBm)
Value-added services (79%)
Ecommerce transactions (10%)
Advertising (8%)
Other (3%)
Revenue mix 1H FY14*
Q3 2014 statistics • 468m combined monthly active WeChat and Weixin user accounts
(+39% YoY) • 542m monthly active smartphone QQ IM user accounts (+36% YoY)
Operations Business performing well across all segments
Establishing foothold in O2O space
Profitability boosted due to reduced operating expenses relating to the divested ecommerce operations
Financials Contribution to core earnings up 41% YoY to ZAR6.2bn
ZAR1.4bn profit on JD.com transaction already included in our FY14 financials
*Reflects 100% of Jan-Jun 2014 results available on www.tencent.com Effective from Mar 11 2014, Tencent has divested its B2C and C2C eCommerce marketplaces and deconsolidated such revenues 1H FY15 ZAR/RMB1.732 (1.607)
31
Listed internet:
3,628
8,381
11,535
15,087
6,706
8,047*
Dec 10 Dec 11 Dec 12 Dec 13 Jun 13 Jun 14
20%
CAGR +61%
Mail.ru EBITDA (RURm)
Community IVAS (33%)
Display advertising (31%)
MMO Games (25%)
Other (11%)
Revenue mix 1H FY14*
Q3 2014 statistics Monthly audience of Mail.ru portal now 57.8m
Operations Results affected by geopolitical issues
Advertising revenues weaker
MMO games and community IVAS broadly on target
Acquired remaining 48% of VK for US$1.47bn
Operations Contribution to core earnings up 30% YoY to ZAR528m
*Reflects 100% of 1H FY14 aggregate segment performance as reported For IFRS results with full disclosure refer to www.corp.mail.ru 1H FY15 ZAR/RUR 0.297 (0.304)
32
Overview Financials Internet
Pay-TV Outlook Appendix
33
Pay-TV strategy: continuing to build the platform
More investment in local content
3
34
• HD channels opened to non-premium tiers
• BoxOffice averaging 600k VOD purchases p.m.
• Customer service levels improved to 95%
• Bouquets optimised
Focus on better products
2
Scale DTT operations 1
Pay-TV: solid performance
Pay-TV subscriber homes (‘000)
Subscribers 1.14m net additions YoY (+342k YTD)
- Non-premium accounted for 96% of growth - Premium stable - 872,515 DTT subscribers at 30 Sep
PVR base increased 15% YoY to 1.2m
Operations Regulatory pressures intensifying
Increased competition
Clean-up of base resulted in disconnection of 159k non-revenue generating subscribers (Easy Access)
Continue to invest in online products, new launches soon
Mweb consumer ISP retained (Mweb Business sold)
Financials Margin pressure due to:
- weaker ZAR resulting in higher content costs - continued investment in local content - ongoing DTT costs
3,214 3,698 4,168 4,699 5,174*
1,234 1,499
1,837 2,560
3,227
–
2,000
4,000
6,000
8,000
10,000
Sep 10 Sep 11 Sep 12 Sep 13 Sep 14
South Africa Sub-Saharan Africa
16% CAGR
17%
22
,25
9
25
,25
9
30
,25
7
36
,27
1
17
,07
7
20
,18
6
5,9
27
6,3
79
7,5
59
8,5
20
4,4
77
4,9
69
Mar 11 Mar 12 Mar 13 Mar 14 Sep 13 Sep 14
Revenue Trading profit
27%
25% 25%
23%
26%
25%
Margin
Pay-TV financials (ZARm)
35
*Excludes disconnected Easy Access subscribers
Digital Terrestrial Television (DTT)
23 151
377
541
817 873
-
300
600
900
Mar 12 Sep 12 Mar 13 Sep 13 Mar 14 Sep 14
DTT Subscribers (‘000)
Jun 15
11 Countries
142 Sites
Operations - DTT network now largely in place - Subscriber growth momentum affected by:
• Regulatory delays/challenges • Delayed analogue switch-off dates
- Focusing on differentiated content offering
36
Expected Analogue Switch Offs
Initial Revised Expected
Kenya Dec 2013 Sept 2014 Dec 2014
Nigeria Jun 2014 Dec 2014 Apr 2015
Overview Financials Internet
Pay-TV Outlook Appendix
37
Outlook: further growth and scaling of operations
38
Ecommerce
• Scale up in focus segments (etail, payments) in geographies with high mobile growth
• Solidify strong classifieds position
• Deliver profitability from marketplaces and OCS
• Seed online services further (India and Latam)
• Revenue growth momentum to be maintained
• Seasonal business cycle likely to result in sequential development spend increasing somewhat.
• Accelerated investment in online services
• Build-out of DTT subscriber base
• Deliver efficiency gains in mature businesses
Financials
Pay-TV
Overview Financials Internet
Pay-TV Outlook Appendix
39
Consolidated income statement – US$
1H FY15 ZAR/US$10.73 (9.86)
Sep 13 ZARm
Sep 14 ZARm
Sep 13 US$m
Sep 14 US$m
Revenue 28,755 34,363 2,917 3,201
Operating profit 1,621 2,253 164 210
Finance costs (915) (1,208) (93) (113)
Share of equity accounted results 5,139 9,932 522 926
Acquisitions and disposals 614 118 62 11
Dilution profits (836) (71) (85) (7)
Impairment of equity accounted investments (753) - (76) -
Profit before taxation 4,870 11,024 494 944
Taxation (1,447) (1,755) (147) (163)
Net profit 3,423 9,269 347 864
Attributable to:
Naspers 3,112 8,937 316 833
Minorities 311 332 31 31
40
Core headline earnings
Sep 13 ZARm
Sep 14 ZARm
Headline earnings 3,641 4,484
Equity-settled share scheme charges 429 587
Deferred tax adjustments (49) -
Amortisation of intangible assets 690 741
Business combination gains/(losses) 12 21
Retention option expense 72 109
Fair value adjustments & currency translations 125 135
Core headline earnings 4,920 6,077
41
Impact of currency movements
ZAR weakness positively impacted translation of offshore earnings
Revenue growth YoY * Trading profit growth YoY * Core earnings growth YoY
Average Closing rate
Currency (ZAR = 1FC) Sep 13 Sep 14 % change Mar 15E Sep 13 Sep 14 % change
US dollar 9.86 10.73 -9 10.87 10.11 11.31 -12
Euro 13.00 14.36 -10 14.82 13.66 14.27 -5
Chinese Yuan/Renminbi 1.61 1.73 -8 1.73 1.65 1.84 -12
Brazilian Real 4.45 4.72 -6 4.57 4.49 4.61 -3
Polish Zloty 3.06 3.44 -12 3.49 3.23 3.41 -6
Russian Ruble 0.304 0.297 2 0.30 0.31 0.29 6
61,982 58,984
-
35,000
70,000
Reported Constant Currency
+30% +24%
11,356 10,785
-
4,000
8,000
12,000
Reported Constant Currency
+34% +27%
6,077 5,916
-
3,000
6,000
Reported Constant Currency
+24% +20%
42
FX exposure: hedging to manage risk
Annualised net foreign input costs Pay-TV: US$342m and EUR4m (programming rights and leases)
Print: EUR31m and US$3m (paper and ink)
Hedging strategy Pay-TV: long-term commitments, cover up to 100% of rolling 12 -24 month net inputs
Print: short-term commitments, cover maximum 12 months rolling input costs
Bond/RCF: hedge interest expense to a maximum of 24 months
FEC’s Almost all FEC’s qualify for hedge accounting
US$ FX Cover US$m US$ rate
FY15 212 10.99
FY16 285 11.34
EUR FX Cover EURm EUR rate
FY15 35 14.82
FY16 1 14.84
43
Components of revenue growth
2,998 11,185
193
47,606
Sep 13 Exchange rate impact Organic growth Acquisitive growth Sep 14
61,982
Incremental revenue YoY* (ZARm)
* Based on economic interest, i.e. assuming equity accounted investments are proportionately consolidated
24% growth from existing operations - Tencent (+38%) and Mail.ru (+21%) in local
currency - Ecommerce +27% YoY - Pay-TV revenues +15% YoY
Organic growth 6% revenue uplift from weaker ZAR Devalued 8% vs. Rmb and 9% vs. US$
Exchange rate Driven mainly by increased stake in Flipkart
Acquisitive growth
30%
44
21,425 25,802
34,172
47,606
61,982
631 1,126 1,591 3,077 4,374
Sep 10 Sep 11 Sep 12 Sep 13 Sep 14
Revenue Development spend
Development spend* breakdown
Revenue* and Development spend (ZARm)
1H FY15 split by business segment As % of revenue*
Sep 13 ZARm
Sep 14 ZARm
% Change
Ecommerce 2,425 3,579 48%
Pay-TV 570 642 13%
Print 82 153 87%
Total 3,077 4,374 42%
3,579
642 153
Ecommerce (82%)
Pay-TV (15%)
Print (3%) 2.9%
4.4% 4.7%
6.5% 7.1%
0%
2%
4%
6%
8%
Sep 10 Sep 11 Sep 12 Sep 13 Sep 14
30%
42%
* Based on economic interest, i.e. assuming equity accounted investments are proportionately consolidated
45
Ecommerce: development spend*
1H FY15 development spend by type
2,079 950
242
308 Classifieds (58%)
Etail (26%)
Payments (7%)
Other (9%)
2,955 4,409
8,502
12,141
616 1,042 2,425
3,579
Sep 11 Sep 12 Sep 13 Sep 14
Revenue Development spend
Revenue* and development spend (ZARm)
655
334 150 16
2,425
Sep 13 Classifieds Etail Payments Other Sep 14
Incremental development spend YoY (ZARm)
3,579
43%
48%
* Based on economic interest, i.e. assuming equity accounted investments are proportionately consolidated
46
Trading profit trimmed by organic expansion
* Based on economic interest, i.e. assuming equity accounted investments are proportionately consolidated
1H FY15 split by business segment*
6,477
4,969
Internet (57%) Pay TV (43%) Print (0%)
11,356
2,598 (34) 492 (206)
8,506
Sep 13 Internet Pay-TV Print Corp Sep 14
Incremental trading profit by segment* (ZARm)
67% 11% 34% -96% -53%
Trading profit* (ZARm)
10,546
11,762
14,326
15,613
8,506
11,356
Mar 11Mar 12Mar 13Mar 14 Sep 13 Sep 14
Internet R9bn contribution by Tencent and Mail.ru Reduced by Ecommerce loss of ZAR2.4bn Increased profitability from:
- Allegro marketplace - OCS businesses
Pay-TV DTT roll-out continuing Accelerated investment in local content Positive contribution from Irdeto
Print Affected by declining advertising revenues and investment in new revenue streams
47
Contribution by associates and joint ventures
6,437
(66) 9,932 (3,495) 9,998
Company results PPA adjustments IFRS results Other adjustments Core HEPS Contribution
Company PPA IFRS Other Core HEPS
ZARm results adjustments results adjustments* contribution
Tencent 5,923 - 5,923 274 6,197
Mail.ru 4,401 (41) 4,360 (3,832) 528
Other (326) (25) (351) 63 (288)
TOTAL 9,998 (66) 9,932 (3,495) 6,437
* Headline and core earnings adjustments similar to Naspers methodology
Associates and joint ventures contribution to Core HEPS (ZARm)
48
Net finance costs
US$700m 7-year bond issued July 2010: - 6.375% coupon US$1bn 7-year bond issued July 2013: - 6% coupon
5-year US$2.25bn RCF extended to Oct 2018: - US$1,142m drawn at Sep 2014 - US$800m fixed at 4.3% all-in until March 2016 - Floating interest of 1.75% + 1 month LIBOR
Debt
Increased 55% YoY from ZAR507m to ZAR787m
Net interest paid on loans
SSA: 15-yr lease effective Dec 2009 - Cost ~US$40m p.a.
SA: 15-yr agreement effective Sep 2012 - Cost ~US$42m p.a.
New Transponder: 15-yr agreement effective Jan 2017 - Cost ~US$55m p.a
Transponders
Sep 13 ZARm
Sep 14 ZARm
Interest (paid) (1,055) (1,332)
Loans and overdrafts (749) (963)
Transponder leases (173) (182)
Other (133) (187)
Interest received 257 206
Loans and call accounts 242 176
Other 15 30
Other finance costs, net (117) (82)
FX translation adjustments (165) (111)
BEE preference dividends 48 29
Total finance costs (915) (1,208)
49
Taxation analysis
Sep 13 ZARm
Sep 14 ZARm
Profit before tax 4,870 11,024
Add back:
Development spend* 2,898 4,025
Equity results (including impairments) (4,386) (9,932)
Other gains and losses 958 124
Acquisition gains 222 (47)
FX gains and losses 165 111
BEE preference dividends (48) (29)
Adjusted profit before tax 4,679 5,276
Tax charge (1,447) (1,755)
Effective rate 31% 33%
50
* No deferred tax assets currently being raised on assessed losses
Capital expenditure
1H FY15 split by business Sep 13 ZARm
Sep 14 ZARm
Land, buildings & plant 264 257
Transmission equipment 1,217 548
Computer, software & network equipment 429 445
Other (including vehicles, furniture) 68 206
Capital expenditure 1,978 1,456
Capex/Revenue 7% 4%
278
1,008
170
Ecommerce (19%) Pay TV (69%) Print (12%)
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Current assets and liabilities
Current assets Sep 13 ZARm
Sep 14 ZARm
Inventory 2,486 4,204
Programme and film rights 3,147 3,955
Trade receivables 5,007 4,983
Other receivables 3,530 10,518
Derivative financial assets 501 219
Cash and deposits 16,262 12,061
Assets held for sale 32 584
Total 30,965 36,524
Current liabilities Sep 13 ZARm
Sep 14 ZARm
Current portion of long-term debt 2,192 2,826
Provisions 228 283
Trade payable 5,669 6,448
Accrued expenses and other 11,318 19,587
Tax payable 699 659
Derivative financial liabilities 875 842
Bank overdraft and call loans 1,577 1,306
Liabilities held for cash - 9
Total 22,558 31,960
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M&A activity
Total acquisition spend (US$m)
754
260
634
465
-
200
400
600
800
Mar 11 Mar 12 Mar 13 Mar 14 Sep 14
Other
369
53
Pay-TV operational metrics
Capital expenditure (ZARm)
Programming cost (ZARm) Free cash flow (ZARm)
Net additions (‘000)
Digital subscriber mix
1H FY15 revenue split
684
394
734
521
800
342
Mar 12 Sep 12 Mar 13 Sep 13 Mar 14 Sep 14
1,1
59
1,1
87
2,0
30
3,7
20
1,6
87
1,0
08
Mar 11 Mar 12 Mar 13 Mar 14 Sep 13 Sep 14
40%
CAGR 48%
36% 41%
33% 32%
31% 27%
Sep 13 Sep 14
Premium Compact Lower-end
5,4
97
6,0
37
6,9
35
8,2
13
3,9
43
4,6
82
Mar 11 Mar 12 Mar 13 Mar 14 Sep 13 Sep 14
19%
3,2
39
4,1
23
4,4
86
3,0
10
2,0
22
1,7
71
Mar 11 Mar 12 Mar 13 Mar 14 Sep 13 Sep 14
12%
CAGR 14%
54
Subscription (81%)
Advertising (7%)
Hardware sales (5%)
Online/Broadband (4%)
Other (3%)
Print media:
Capex trend
ZARm* Sep 13 Sep 14 % Change
Revenue 3,951 3,965 -
Trading profit 242 92 -62%
Trading margin 6% 2%
*Data for 1H FY15 reflect Media24’s stand-alone results available on www.media24.com
Advertising (30%) Printing (31%)
Circulation (20%) Books (6%)
Other (9%) Distribution (4%)
Revenue mix 1H FY15
348 360
302
428
223
155
Mar 11 Mar 12 Mar 13 Mar 14 Sep 13 Sep 14
Operations Tough trading conditions persist
Retained market leadership in newspapers and magazines – continued focus on efficiencies
Paarl Media built out capacity and expanded into new market segments
24.com strengthened its position as leading digital publisher in Africa
Spree enjoys leading position in online fashion and launched new categories
Financials Margins contracted due to: - lower print media revenues - accelerated investment in digital initiatives - expansion into new areas to diversify revenues Printing revenue +10%, driven by new acquisitions
Book publishing -30% YoY, due to lower schoolbook orders than budgeted
Advertising revenue -8% YoY
55
*Organogram depicts major brands
56
Glossary of terms
B2C: Business to Consumer
C2C: Consumer to Consumer
DTH: Direct-to-Home Television
DTT: Digital Terrestrial Television
EPS: Earnings per Share
FCF: Free Cash Flow
FEC: Forward Exchange Contract
GMV: Gross Merchandise Value
HEPS: Headline Earnings per Share
HD: High Definition
IM: Instant Messaging
ISP: Internet Service Provider
IVAS: Internet Value-Added Services
JV: Joint Venture
M&A: Mergers and Acquisitions
MMO: Massively Multiplayer Online
NNL: Net New Listings
O2O: Online to Offline
OCS: Online Comparison Shopping
PV: Page Views
PVR: Personal Video Recorder
ROI: Return on Investment
SSA: Sub-Saharan Africa
VOD: Video-On-Demand
57
Investor Relations
Meloy Horn
Office: +27 11 289 3320
Mobile: +27 82 7727 123
E-mail: InvestorRelations@naspers.com
Website: www.naspers.com
58 58
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