financial results presentation - naspers financial results presentation ... classifieds: substantial...

Financial results presentationFor the six months ended 30 September 2016

Important information

2

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.

STRATEGIC OVERVIEW

1H FY17 Overview: continue building platforms to optimise returns

4

LEAD IN ECOMMERCE

TARGET HIGH-GROWTH

BUSINESS MODELSPURSUE SCALE

TRANSFORM FURTHER INTO

MOBILE

OPTIMISE RETURNS

Mar 16 Sep 16

Mobile classifieds

Monthly unique listers - USA

139%

Target high-growth business models

5

Food delivery

178%

1H FY16 1H FY17

Payments

PSP revenue growth - India

71%

Number of orders - Brazil

Source: Company data

1H FY16 1H FY17

Pursue scale: merging to create a leading Indian travel position

6

Total transactions (1)

34.1mAir (1)

9.7mHotel (1,3)

6.6mBus (1)

17.5mMobile (1,2)

45%

Key terms

• MMYT shareholders – 60% (Ctrip 10%)

• Ibibo shareholders – 40%

• Working capital contribution by Naspers

• Subject to regulatory approvals

• Closing by end Jan 2017

Note:1) Financials and KPIs for fiscal year ended 31 March 2016 and combined on a pro-forma basis2) Includes Air, Hotel and Bus transactions only3) Includes MMYT’s international standalone hotel transactions

Key benefits

• Increased operating scale

• Accelerated tech innovation

• Potential value creation from synergies

• Strengthened depth of management

+

Pursue scale – classifieds and payments

7

1.15x

1.25x

0.53x

0.55x

MAUs

Downloads

Source: Company data; AppAnnie; Press releases

Classifieds: LetGo accelerating vs. OfferUp* Payments: Citrus acquisition by PayU

* USA – Size vs. OfferUP

Sep 16

Jan 16

• Largest ever all-cash M&A deal in Indian fintech history

• Increased customer base to >30m customers and +200k merchants

• Benefits: – new verticals (airlines and telco), – innovative products (LazyPay and SellFie), – additional expertise

• Strong starting point for a consumer play and for expansion of financial services proposition to consumer credit

Transform further into mobile

8

Source: Company data

Mobile growth in % time spent across Naspers platformsClassifieds: Substantial active user growth on OLX app

55%

User time spent – Naspers platforms (mobile share)

37

66

Sep 15 Sep 16

App MAU (daily, m)*

77%

2Q FY172Q FY16

52%

*Reflects associates and JVs on a proportionate basis based on economic interest as per Sep 2016

Source: Similarweb

Allegro: disposal to realise value for shareholders

9

Financial summary (US$m)

313 321

148

193

135 129

62 83

144

10057

93

FY15 FY16 1H FY16 1H FY17

Revenue Trading profit Free cash flow

Transaction is tax neutral

Price implies FY16 EBITDA multiple of 18.3x

Sale consistent with strategy to find and realise value for shareholders

Terms and rationale

Proceeds to pay down debt, fund operations and future investments

Sold for US$3.253bnBuyers: Cinven, Permira and Mid-Europa private equity funds

Returns (US$m)

Announced 14 Oct 2016, subject to approvals; expect to close in Jan 2017

1,485 714

3,253

Initial investment Total return

Sale price

Net cash flows3 967

~3x

FINANCIALS

Synopsis of financials

11

5,861 6,788

548

1H FY16 1H FY17

Revenue* (US$m)

16% (27%)

1,214 1,473

196

1H FY16 1H FY17

Trading profit* (US$m)

21% (42%)

169 212

1H FY16 1H FY17

Core HEPS (USc)

25%

*Results reported on an economic interest basis, i.e. equity accounted investments are proportionately consolidated. Numbers in brackets represent year-on-year growth in local currency, excluding M&A

363 308

41 188

11

1H FY16 1H FY17New investments

Development spend* (US$m)

23% (27%)

Currency impact

Revenue: Tencent and ecommerce drives acceleration in growth rate

12

Incremental revenue* by segment, YoY (US$m)


1,178

(548)

5,861

1H FY16 Ecommerce Listed investments Video entertainment Media M&A and other Forex 1H FY17

6,788

258(3)

16% (27%)

110

24% 46% 6% n/a 9% 1% YoY change (%)

(68)

Revenue* by segment (US$m)

Ecommerce (20%)

Listed investments (52%)

Video entertainment (24%)

Media & other (4%)

YoY revenue growth rate* (%)

26%22% 20%

27%


*Growth rates in local currency, excluding M&A

Development spend: increase due to new growth initiatives

13*Results reported on an economic interest basis, i.e. equity accounted investments are proportionately consolidated. Numbers in brackets represent year-on-year growth in local currency, excluding M&A

Incremental development spend* by segment, YoY (US$m)

496

152

404

1H FY16 New investments Operating Associates Forex 1H FY17

(42)

23% (27%)>100% 17% 12% 3%

(7) (11)

Hotels

YoY change (%)

Classifieds (44%)

Etail (26%)

Other ecommerce (19%)

Video entertainment (9%)

Media (2%)

Development spend* by segment (US$m) Consolidated development spend (US$m)

737 820

708

239 199

41 188

6

FY14 FY15 FY16 1H FY16 1H FY17

Operating New investments

38% (42%)

Currency impact

Increase in number of profitable ecommerce businesses

14

Number of profitable ecommerce entities

15

21

18

23


Financial progress of profitable entities* (US$m)

765 774

373

516

217 288

115

215

FY 15 FY 16 1H FY16 1H FY17

1 2 3 4 5 6 7 8 9 10 11 12 13 14

Trading profit

Revenue

87% (58%)

38% (25%)

*Organic growth on a pro-forma basis, i.e. adjusting prior year numbers on a like-for-like basis, would have been 18% for revenue and 50% for trading profit

Recent M&A activity focused on Edtech

15

Naspers Ventures (89%)

Classifieds (8%)

Travel (1%)

Other (2%)

1H FY17 M&A by segment (US$m) Acquisition spend over time (US$m)

465 420

213


Other

1,495

Other

5yr average US$406m*

139

* Calculated from March 2012 – March 2016 (excluding Avito)

16

Summarised income statement

US$m 1H FY16 1H FY17

Revenue* 5,861 6,788

Less: Equity-accounted investments (2,878) (3,830)

Consolidated revenue 2,983 2,958

Trading profit 232 45

Trading margin 8% 2%

Net finance costs (156) (165)

Share of equity accounted results 635 912

Impairments (141) (28)

Taxation (146) (144)

Net profit 636 541

Core headline earnings 696 914Core headline EPS (US$) 1.69 2.12

*Based on economic interest, i.e. Equity-accounted investments are proportionately consolidated.

Free cash flow impacted by reduced profitability of VE in SSA

17

FCF breakdown (US$m)

(174)

120

1H FY16 Cash from operations Working capital Capex Dividends received Other 1H FY17

(4)

24

46

(13)(1)

Balance sheet remains strong

18

US$m 1H FY17

Debt (1): (offshore US$2.9bn) 3,007

Cash: (South Africa US$550m) 1,511

Closing net debt 1,496

Gearing 13%

(1) Excludes satellite lease liabilities (US$1,232m) and non-interest bearing debt (US$161m)

Group net consolidated debt (US$m)

1,461

1,994

1,213

2,213

1,496

23%30%

12%

32%

13%

-30%

-20%

-10%

0%

10%

20%

30%

-


Net debt Gearing %

INTERNET

Ecommerce: continues to grow rapidly

20

Revenue splitRevenue and trading losses* (US$m)

Etail (55%)

Marketplace (14%)

Classifieds (14%)

Other (6%)

Payments (6%)

Travel (5%)

Constant currency revenue growth by type

76% 75%

30% 29%

16% -6%

Classifieds Travel Marketplace Payments Etail Other


1,986

2,492 2,647

1,210 1,379

(516) (543)(296) (292)

50

Revenue Trading losses

14% (24%)

1% (14%)

FY14 FY15

(541)

Currency impact

FY16 1H FY16 1H FY17

10

B2C: benefiting from steady increase in online penetration

21

B2C: 1H FY17 GMV by region*

India & SE Asia (35%)

Europe (60%)

Africa & Middle East (5%)

B2C: Revenue* (US$)

770

1,459

1,707

755

902

28


Currency impact

19% (20%)

*Includes etail, structured and unstructured marketplaces as well as travel but excludes Netretail and Ricardo which were sold. Results reported on an economic interest basis, i.e. equity accounted investments are proportionately consolidated. Numbers in brackets represent year-on-year growth in local currency, excluding M&A.

B2C: GMV (US$m)*

5,677

7,150

2,5393,249

4,133

FY15 FY16 1H FY15 1H FY16 1H FY17

27%

*Allegro accounted for 76% of Europe GMV

Flipkart: competitive market, still early days for India B2C

22

Flipkart mobile monthly active users (m)

1H FY16 1H FY17

27%

Source: Company data, excludes Myntra and Jabong

Source: KANTAR TNS, 1Top of mind brand awareness (responses from a survey of 1,508 Indian online shoppers across 8 tier 1 & 2 cities fielded in October 2016).

Flipkart is #1 ecommerce platform in India

175489

268

937

IndiaBrazilRussiaChinaUS

eCommerce/capita (US$, 2016)

Source: Euromonitor

Brand awareness 1 49% 30% 14%

Visited in past year 85% 79% 63%

Purchased in past 6 months 58% 45% 28%

Most favourite brand 47% 28% 16%

NPS 42 39 31

Classifieds: global footprint for the OLX Group

23

25Offices

44Countries

Global footprint

+4.4APP RATING

#1 app 22 COUNTRIES (1)

Mobile leadership

+1.9bnMONTHLY

VISITS

+37bMONTHLY

PAGE VIEWS

Scale2

1) Google play store; shopping/lifestyle categories2) Numbers reflect proportionate pickup of JVs

24

Classifieds: top line growth while managing profitability

1H FY16 1H FY17

letgo213

267

124

196

24


Currency impact

1H FY17 Marketing spend* Revenue* (US$m)

58% (77%)

34%

*Data reflects 100% of controlled entities and proportionate share of JVs. Historic numbers presented on a pro-forma basis for the increased investment in Avito from 22.2% at 1H FY16 to 71% at 1H FY17. YoY revenue growth on a reported basis was 115%.

1.5 2.0

Sep 15 Sep 16

Classifieds: continue to monetise while entering new markets

25

Naspers positions (number of countries)

16

2

12

25 5

21

63 3

24

8

1

5

25

9

1

5

24

10

46

23

11

Entering Fighting Leading Leading and monetising

2014 1HFY15 2HFY15 1HFY16 2HFY16 1HFY17

Monthly unique listers (m)*

11.715.8

Sep 15 Sep 16

Net new listings (daily, m)*35% 32%

37.2

65.7

Sep 15 Sep 16

App MAU (m)*77%

*Data reflects 100% of controlled entities and proportionate share of JVs as per September 2016.

Sep

-14

No

v-1

4

Jan

-15

Mar

-15

May

-15

Jul-

15

Sep

-15

No

v-1

5

Jan

-16

Mar

-16

May

-16

Jul-

16

Sep

-16

Avito Poland

Classifieds: C2C trade drives our business

5%

55%

17%

17%

31%

8%

28%

20%

19%Revenue

NNL

C2C Goods Cars Prop Other Ad

Our traffic engine continues to spin…(App MAU, indexed to Sep 14)*

…allowing us to monetize in the verticals(NNL and Revenue share by category)*

+3.5x

+6.7x

NNL15m

US$23m

100% =

26*Data reflects information relating to our classifieds sites in Poland and Russia

# of paid listings

MULs

MAUs

4.7

7.7

3.3

6.1


Classifieds: Russia (Avito)… expanding monetisation

27

+84%

Revenue (RUBb) EBITDA (RUBb)

Revenue split – listing fees growing strongly

Note: 1H FY17 Revenue/Internet User = RUB64 Note: 1H FY17 EBITDA/Internet User = RUB38

2.4

3.8

1.8

3.7


+101%

59%44%

28%

22%

8%30%

6% 3%

1H FY16 1H FY17

Shop fees

Listing fees

Advertising

Value-added services

YoY growth in key metrics (Sep 15 vs. Sep 16)

+16%

+18%

+6x

2.8

3.4

4.4

1H FY16 2H FY16 1H FY17

Classifieds: Poland… extending leadership in key verticals

28

Format Brand

Horizontal

Vehicles

Real estate

Revenue (PLN per internet user)

+57%

Classifieds: letgo… increasing investment to accelerate growth

29

Mobile Monthly Active Users (Mobile MAUs)

Source: AppAnnie Pro

Monthly unique listers

Jan

-16

Feb

-16

Mar

-16

Ap

r-1

6

May

-16

Jun

-16

Jul-

16

Au

g-1

6

Sep

-16

Returning New

72% of total

Source: Letgo DB

Jan

-16

Feb

-16

Mar

-16

Ap

r-1

6

May

-16

Jun

-16

Jul-

16

Au

g-1

6

Sep

-16

letgo OfferUp 5Miles Close5

+15%

20

,49

6

30

,41

1

41

,76

4

19

,71

5

28

,17

1

2013 2014 2015 1H FY15 1H FY16

Listed internet: Tencent continues to perform

30

Tencent operating profit (RMBm)*

CAGR +43%

Revenue mix 1H FY16

Value-added services (75%)

Online advertising (17%)

Other (8%)

Monthly active user accounts (m): Weixin & WeChat

651846

3Q 15 3Q 16

30%

*Reflects 100% of Jan-Jun 2016 (1H FY16) results on a non-GAAP basis; detailed results available at www.tencent.com. Fx rate: 1H FY17 US$/RMB6.616 (6.361)

43%

Note: Monthly active users reflect the most current update from Tencent

15

,08

7

16

,85

0

18

,12

3

8,4

21

8,6

91

2013 2014 2015 1H FY15 1H FY16

Listed internet: Mail.ru delivers strong VK performance but slower games

31

Mail.ru EBITDA (RUBm)

CAGR +10%

Revenue mix 1H FY16*

Online advertising (43%)

Community IVAS (32%)

MMO Games (22%)

Other (3%)

*Reflects 100% of 1H FY16 aggregate segment performance as reported. For IFRS results with full disclosure refer to www.corp.mail.ru. Fx rate: 1H FY17 US$/RUR64.939 (58.367)

3%

VIDEO ENTERTAINMENT

4,168 4,699 5,174 5,563 6,048

1,686

2,019

2,355 2,243

2,401

151

541

873

2,428

2,553

1H FY13 1H FY14 1H FY15 1H FY16 1H FY17

SA DTH SSA DTH SSA DTT

VE: solid subscriber growth, changing mix

33

Video entertainment subscriber homes (‘000)8%

Change in subscriber mix

52% 52%

26% 30%

22% 18%

1H FY16 1H FY17

Premium Compact Lower-end

+5%

+7%

+9%

6,005 7,259 8,402 10,234 11,002

5,368 5,730

2,626 3,266

2,240 2,005

1H FY16 1H FY17

Total

VE: financials hit by local currency pricing vs. USD input costs

34

Video entertainment (VE) financials (US$m)

Development spend (US$m)

166

206

85

47 40

FY14 FY15 FY16 1H16 1H17

Capital expenditure (US$m)

462

203 127 79 43

FY14 FY15 FY16 1H16 1H17

36%

15%

Programming and production costs (US$m)

977 1,133

1,046

461 534

31

FY14 FY15 FY16 1H16 1H17

One-off

23%

3,582 3,830

3,413

1,790 1,645

841 732 610 399 226


Revenue Trading profit

8%

43%

78

225 108

215 121

208

(321)

33 126

1H13 2H13 1H14 2H14 1H15 2H15 1H16 2H16 1H17

6 month average

VE: SSA operational progress negated by Naira devaluation

SSA net additions (‘000)

YoY currency declines…

-59%

-11%

0% 3%Nigeria Zambia Kenya Angola

Weighted average -23%

*Based on monthly Naspers average closing rates

…significantly impacting trading profit (US$m)

35

(103)

(42)

(58)

1,1

00

1,2

72

1,1

35

59

7

49

4

72

(56) (38)

6

(103)FY14 FY15 FY16 1H FY16 1H FY17


VE: solid results by DTH South Africa

36

187

283248

309

166

232

156 169

316

1H13 2H13 1H14 2H14 1H15 2H15 1H16 2H16 1H17

SA DTH net additions (‘000) mainly middle and lower tiers

6 month average

-9%

-18%-14%

1H FY15 1H FY16 1H FY17

SA currency declined materially, but… … cost controls muted margin pressure

2,7

02

2,8

55

2,6

04

1,3

58

1,3

41

771 805 701 410 368



VE: DTT moving toward profitability

37

DTT trading margin (%)

Subscribers (m)

23

151

377

541

817

873

2,256

2,428

2,404

2,553

Mar 12

Sep 12

Mar 13

Sep 13

Mar 14

Sep 14

Mar 15

Sep 15

Mar 16

Sep 16

(140%)

(83%)

(115%)

(27%) (23%) (16%)

FY14 1H FY15 FY15 1H FY16 FY16 1H FY17

OUTLOOK

FY17 Outlook: continue building our platforms

39

LEAD IN ECOMMERCE

TARGET HIGH-GROWTH

BUSINESS MODELSPURSUE SCALE

TRANSFORM FURTHER INTO

MOBILE

OPTIMISE RETURNS

Mobile first or only across the business

Reduce development spend in existing footprint. Deploy capital to highest

return opportunities

Pursue further scale through organic

growth

Classifieds, Fintech,O2O and

Connected video

Build strong global or regional leaders

APPENDIX

Glossary of terms

41

— ARPU: Average Revenue Per User

— B2C: Business to Consumer

— C2C: Consumer to Consumer

— CAGR: Cumulative Annual Growth Rate

— DPS: Dividend per Share

— DTH: Direct-to-Home

— DTT: Digital Terrestrial Television

— EPS: Earnings per Share

— FCF: Free Cash Flow

— GMV: Gross Merchandise Value

— HEPS: Headline Earnings per Share

— IVAS: Internet Value-Added Service

— LC: Local currency

— M&A: Mergers and Acquisitions

— O2O: Online to Offline

— OTA: Online Travel Agent

— PVR: Personal Video Recorder

— ROI: Return on Investment

— SSA: Sub-Saharan Africa

— SVOD: Subscription Video-On-Demand

— TPV: Total Payment Value

— VE: Video Entertainment

THANK YOUMeloy Horn

+27 11 289 3320

+27 82 7727 123

[email protected]

www.naspers.com

financial results presentation - naspers financial results presentation ... classifieds: substantial...

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