Financial results presentation For the year ended 31 March 2013
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
Glossary of terms ARPU: Average revenue per user HEPS: Headline earnings per share B2C: Business to consumer HD: High definition DTH: Direct-to-home television IM: Instant messaging DTT: Digital terrestrial television MAU: Monthly average users FCF: Free cash flow MMOG: Massively multiplayer online game FEC: Forward exchange contract PCU: Peak concurrent users FX: Foreign exchange SNS: Social network service GEM: Global emerging markets SSA: Sub-Saharan Africa GMV: Gross merchandise value VAS: Value-added services 3 3
Group Overview Financial Results Internet Pay-TV Outlook Appendix 4
FY13 key financials: Synopsis Mar 12 Mar 13 Revenue (ZARbn) Trading profit (ZARbn) Development spend (ZARbn) 27% 1% 51% 4.3 5.7 50.2 5.7 39.5 2.8 Free cash flow (ZARbn) Core HEPS (ZAR) DPS (ZAR) 4% 20% 15% 22.16 3.6 3.5 3.85 18.50 3.35 5
Top line growth momentum Revenue (ZARm)* 36% 80,000 70,000 60,000 50,000 76,776 40,000 56,522 30,000 45,103 37,251 20,000 34,505 10,000 - Mar 09 Mar 10 Mar 11 Mar 12 Mar 13 * Based on economic interest, i.e. assuming all equity accounted investments are proportionately consolidated 6
Spreading risk by diversification Segmental revenue split* Geographic revenue split* Revenue by type* South Africa (38%) Subscription (33%) Internet (45%) VAS & games (23%) Asia (28%) Pay TV (39%) eCommerce (16%) Europe (14%) Print Media (16%) Advertising (11%) Rest of Africa (11%) Printing & distribution (7%) Latin America (8%) Other (7%) Other (1%) Technology (3%) * Based on economic interest, i.e. assuming all equity accounted investments are proportionately consolidated 7
Growing more organically Development spend vs. other operating costs*(ZARm) 45,000 4,267 36,000 2,823 1,535 27,000 1,240 1,211 38,361 18,000 29,520 25,712 21,311 20,363 9,000 - Mar 09 Mar 10 Mar 11 Mar 12 Mar 13 Other operating costs Development costs * Other operating costs = Revenue minus EBITDA minus development spend 8
Earnings growth boosted by currency uplift (once-off) Core headline earnings (ZARm)* 23% 9,000 FX 814 8,000 7,000 6,000 5,000 7,719 4,000 6,951 6,036 3,000 5,319 4,373 2,000 1,000 - Mar 09 Mar 10 Mar 11 Mar 12 Mar 13 9
Consistent dividend growth DPS (ZAc/share) 400 350 300 250 200 385 335 150 270 235 207 100 180 156 120 50 70 30 25 0 Mar 03 Mar 04 Mar 05 Mar 06 Mar 07 Mar 08 Mar 09 Mar 10 Mar 11 Mar 12 Mar 13 10
Group Overview Financial Results Internet Pay-TV Outlook Appendix 11
Summarised consolidated income statement Mar 12 Mar 13 Select information ZARm ZARm Finance costs up Revenue* 56,522 76,776 Less: Associates (17,035) (26,527) Higher debt levels to fund acquisitions Consolidated revenue 39,487 50,249 Normalised preference dividend income Trading profit 5,669 5,729 Income from associates Trading margin 14% 11% Includes ZAR2.6bn once-off book profit on Net finance costs (697) (1,316) Mail.ru’s partial sale of Facebook Share of equity accounted results 3,869 9,001 Other (834) (2,200) Other Taxation (2,059) (2,552) ZAR2.1bn impairment mainly on Abril Net profit 3,481 6,748 Core headline earnings 6,951 8,533 +23% Core headline earnings Core headline EPS (ZAR) 18.50 22.16 Increased 11% YoY in constant currency * Based on economic interest, i.e. assuming equity accounted investments are proportionately consolidated 12
Internet now largest revenue segment Incremental revenue YoY* (ZARm) FY13 revenue by business* 80% 20% 1% 36% 80,000 11,932 4,998 -139 76,776 15,395 60,000 34,587 40,000 56% of total revenue growth organic 56,522 30,257 20,000 – Internet (45%) Pay TV (39%) Print (16%) Mar 12 Internet Pay-TV Print Mar 13 * Based on economic interest, i.e. assuming equity accounted investments are proportionately consolidated Internet Pay-TV Print Expansion across all platforms 20% YoY increase in subscribers Negatively impacted by poor macro economy eCommerce revenue grew 100% YoY 6% increase in subscription rates and shift in advertising online Tencent & Mail.ru’s revenue +77% YoY 13
Step-up in development spend to build eCommerce Incremental development spend YoY (ZARm) FY13 split by business 75% 23% 53% 51% 111 166 (124) 897 1,402 4,267 3,259 2,823 Internet (76%) Pay-TV (21%) Print (3%) Mar 12 Internet Pay-TV Print Mar 13 Internet Pay-TV Focus on eCommerce ZAR804m for DTT, mobileTV and online More engineers ZAR93m for other technologies Increased marketing to build brands 14
Development cost reducing trading profit Trading profit* (ZARm) FY13 trading profit by business* 44% 18% 32% 23% 743 15,000 1,180 (347) 1,870 14,465 12,000 6,163 9,000 7,559 11,762 Increased 12% YoY in constant currency 6,000 3,000 - Mar 12 Internet Pay-TV Print Mar 13 Internet (43%) Pay TV (52%) Print (5%) * Based on economic interest, i.e. assuming equity accounted investments are proportionately consolidated Internet Pay-TV Print Boosted by Tencent and Mail.ru DTT roll-out SA holding up Trimmed by ecommerce loss of ZAR2bn Added local content Cut costs Building breadth of products Stable margins Abril suffered decline in profitability 15
Free cash flow trimmed by DTT capex Mar 12 Mar 13 FCF from operations ZARm ZARm Capex +36% Operating cash flow 7,505 8,440 Pay-TV (incl. DTT) ZAR2bn Internet ZAR434m Capex (2,034) (2,767) Print ZAR305m Finance leases (477) (586) Investment income Tax (1,923) (2,689) Includes ZAR510m dividend from Tencent, ZAR111m from Abril and Investment income 547 1,075 ZAR388m ordinary dividend from Mail.ru Free cash flow 3,619 3,473 Free cash flow (ZARm) 4% 6,000 4,000 3,473 3,619 3,991 2,000 - Mar 11 Mar 12 Mar 13 16
More bolt-on acquisitions Total acquisition spend (US$m) 800 634 600 Other 400 754 517 200 260 214 - Mar 09 Mar 10 Mar 11 Mar 12 Mar 13 17
Balance sheet healthy Increase Mar 13 Group net consolidated debt ZARm a consequence of debt-funded acquisitions Net debt – offshore (US$1.4bn) (12,975) Net debt Minus: Net cash – South Africa 6,354 Excludes transponder leases of ZAR6.2bn, considered to be an operating cost Closing net debt (6,621) Gearing 12% Interest cover 10x 18
Group Overview Financial Results Internet Pay-TV Outlook Appendix 19
Internet: eCommerce evolution eCommerce as % of total retail (2012) 12% 11% 10% 10% UK was 1% in 2004 USA was 4% in 2003 8% 6% 6% 6% 4% 4% 3% 3% 3% 2% 2% 2% 2% 2% 1% 1% 1% 0% UK USA Czech China Poland Brazil Turkey Hungary Argentina Chile Romania Russia Mexico Ukraine South Africa Source: Euromonitor, Centre for Retail Research, yStats.com, Forrester Research, select GEM markets in orange 20
eCommerce strategy 21
eCommerce financials Revenue by type Further scaling of operations e-Tail (84%) ZARm Mar 12 Mar 13 % Change Classifieds (7%) Payments (6%) Revenue 5,736 11,433 100% Other (3%) Trading profit (914) (2,192) -140% Strategy Financial More markets and product categories Revenue growth 20% organic, 11% currency and rest acquisitive Some acquisitions in e-tail and classifieds Classifieds to be monetised only longer-term Mobile development a priority Development spend R3.23bn Facing competition 22
eCommerce: financial growth Revenue and development spend (ZARm) 12,000 100% 10,000 88% 8,000 11,433 6,000 4,000 5,736 3,235 3,684 2,000 1,725 575 - Mar 11 Mar 12 Mar 13 Revenue Development spend 23
eCommerce: classifieds Strategic Daily visits (m)* Market presence in 23 countries Consolidated position in Russia, now own 18.6% of Avito 15 65% Acquired Tokobagus (Indonesia) and Fixeads (Portugal) Accelerated investment across all key operations 10 Operational 10.2 5 6.2 Leading position in most markets we operate in Increased marketing spend to build brands - Monetisation still some years off Mar 12 Mar 13 Daily page views (m)* Page views by region* 127% 150 Eastern Europe (38%) Southeast Asia (31%) 100 Western Europe (12%) 136 Africa & Middle East (10%) 50 60 Latin America (9%) - Mar 12 Mar 13 * Select criteria as measured for the month of March, adjusted for acquisitions 24
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