Financial Results Presentation For the year ended 31 March 2011
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 Highlights Key Messages Financial Results Operational performance Outlook Appendix 3
FY11 Group highlights • Revenue up 18% and EBITDA up 10% • EBITDA margin relatively stable at 22% Financial • Core headline earnings grew 13% to ZAR6bn • Generated ZAR4bn in free cash flow • Internet: lively growth • Pay-TV: sub growth +25%, but competition increased costs Operational • Print: modest recovery in advertising • Technology: margin improvement • Investing in future growth, more to come Strategic • Spent ZAR7bn ($1bn) on acquisitions and development costs in FY11 4
FY11 Financial highlights Mar 10 Mar 11 Revenue (ZARbn) EBITDA (ZARbn) Up 18% Up 10% 33.1 7.1 6.5 28.0 Core HEPS (ZAR) DPS (ZAR) Up 13% Up 15% 16.12 2.70 14.26 2.35 5
Group Highlights Key Messages Financial Results Operational performance Outlook Appendix 6
FY11 Key highlights 1 Internet revenues grew +47% 2 Mail.ru Group listed: market cap ~US$7bn 3 Exceptional pay-TV subscriber growth; costs up 4 Investing in future growth = higher development spend 5 More finance costs 7
Internet revenues continue to grow strongly Internet revenue (ZARm)* 12,000 12,091 10,000 8,000 8,237 6,000 6,470 4,000 2,000 2,121 1,265 0 Mar 07 Mar 08 Mar 09 Mar 10 Mar 11 * Based on economic interest, i.e. assuming all investments, including Tencent & Mail.ru Group, are proportionately consolidated 8
Exceptional pay-TV subscriber growth Gross Additions (‘000) 500 400 Average = 329 300 200 100 - Mar 07 Sept 07 Mar 08 Sept 08 Mar 09 Sept 09 Mar 10 Sept 10 Mar 11 • 1H growth related to campaigns around 2010 Soccer World Cup • 2H growth, predominantly driven by SSA, attributed to : - Start of the soccer season - Strong local content line-up, including Big Brother Africa - Increased decoder subsidies • Growth likely to slow in future 9
Growth phase: development cost accelerating Development costs (ZARm) 1,600 1,535 1,200 1,240 1,211 1,129 800 876 400 535 0 Mar 06 Mar 07 Mar 08 Mar 09 Mar 10 Mar 11 Cost of growth impacting: • Operating expenses: development costs, decoder subsidies, transponder leases • Capital expenditure • Finance costs 10
Debt increased, gearing still low at 10% Interest bearing debt (ZARm)* 12,000 11,315 10,897 10,000 8,000 7,471 6,000 6,594 4,000 2,000 1,053 991 0 Mar 06 Mar 07 Mar 08 Mar 09 Mar 10 Mar 11 * Excluding transponder leases and short-term overdrafts 11
Group Highlights Key Messages Financial Results Operational performance Outlook Appendix 12
Summary consolidated income statement Mar 10 Mar 11 ZARm ZARm 1 Revenue growth +18% (+22% in constant Revenue 27,998 33,085 1 currency) 2 EBITDA 6,496 7,149 EBITDA +10%; development costs, decoder 2 subsidies and higher programming expenses EBITDA margins 23% 22% impacted margins 3 Trading profit 5,447 5,838 Net finance costs up mainly due to debt- funded acquisitions Net finance costs (421) (1,018) 3 4 Share of equity accounted results 2,058 3,290 Once-off dilution gain of ZAR1.5bn due to roll-up of stake into listed Mail.ru Group Other 82 1,480 4 Taxation (1,808) (1,861) Net profit 3,952 5,947 Core headline earnings 5,319 6,036 Core headline EPS (ZAR) 14.26 16.12 13
Maintained top line growth momentum Revenue* – historic growth (ZARm) Revenue* (ZARm) Mar 10 Mar 11 % Change 50,000 45,000 Economic interest 37,251 45,103 21% 45,103 40,000 35,000 37,251 34,505 30,000 • Pay-TV revenues grew 19%, driven by: 25,000 - 25% increase in subscribers 25,305 20,000 - rebound in advertising revenue 15,000 • Internet delivered 47% growth YoY 10,000 - Tencent’s contribution +48% 5,000 Mar 08 Mar 09 Mar 10 Mar 11 - Other internet grew +45% Revenue* (ZARm) • Print reported 5% growth as advertising 24,000 recovered only modestly March 10 21,000 21,025 March 11 18,000 17,603 15,000 12,000 12,092 9,000 10,758 10,204 8,237 6,000 3,000 1,207 1,228 - Pay-TV Internet Technology Print 14 * Based on economic interest, i.e. assuming all investments are proportionately consolidated
Trading profit growing Trading Profit* – historic growth (ZARm) Trading profit (ZARm) 1 Mar 10 Mar 11 % Change Economic interest 8,537 10,220 20% 12,000 Trading margin 23% 23% 10,000 10,220 1 Before amortisation, other gains/losses and including transponder leases 8,000 8,537 7,173 6,000 5,243 • Pay-TV profit margins affected by growth initiatives: 4,000 - more investment in content 2,000 - increased decoder subsidies & transmission costs - - ramp-up in development spend Mar 08 Mar 09 Mar 10 Mar 11 Trading Profit* (ZARm) • Internet margin maintained - increased profitability of Allegro and Tencent 6,000 5,727 Mar 10 Mar 11 - offset by increased development costs of 5,000 5,232 e-commerce businesses 4,000 • Technology benefitted from efficient management of 3,493 3,000 products and structure 2,000 2,362 • Print margins flat 1,000 896 872 47 128 47 - Pay-TV Internet Technology Print * Based on economic interest, i.e. assuming all investments are proportionately consolidated 15
Development cost accelerating Development costs per business division 1 Mar 10 Mar 11 % Change ZAR452m for e-commerce ZARm ZARm ZAR92m for ibibo Internet 511 705 38% ZAR161m for internet value-added services 1 2 Pay-TV 424 607 43% 2 ZAR289m for mobile TV ZAR318m for new pay-TV technologies Other 305 223 (27%) Total 1,240 1,535 24% Development costs split Mar 11 Development costs (ZARm) 1,800 Internet (46%) 1,535 1,400 Pay-TV (40%) 1,240 1,211 Other (14%) 1,093 1,000 600 200 Mar 08 Mar 09 Mar 10 Mar 11 -200 16
Substantial contribution from associates Associate contribution to core headline earnings Mar 10 Mar 11 1 % Change Benefited from expanding online ZARm ZARm game leadership and increased Tencent 2,148 3,164 47% user focus 1 2 Mail.ru 70 152 117% 2 Increased due to enlarged group Abril 318 250 (21%) and organic growth 3 Other (13) 28 +100% 3 Disposal of school book business TOTAL 2,523 3,594 42% * Tencent, Mail.ru Group and Abril numbers reflect their financial periods Jan-Dec2010 17
Free cash flow affected by higher capex and tax Free cash flow from operations 1 Mar 10 Mar 11 Internet ZAR193m ZARm ZARm Pay-TV ZAR1,148m Technology ZAR45m Operating cash flow 7,264 7,386 Print ZAR169m Capex (1,403) (1,555) 1 2 2 Finance leases (439) (473) 2 Increased transponder capacity; now ~US$60m p.a. Tax (1,786) (1,983) 2 3 3 Investment income 487 616 Dividends received from associates Free cash flow 4,123 3,991 Free cash flow at 31 March (ZARm) 5,000 4,000 4,123 3,991 3,000 2,432 2,000 2,189 2,062 1,861 1,000 0 Mar 06 Mar 07 Mar 08 Mar 09 Mar 10 Mar 11 18
Strong balance sheet, group gearing low Group net consolidated debt 1 Mar 11 ZARm A consequence of debt-funded acquisitions Net debt – offshore (US$1.0bn) 6,971 1 2 Minus: Net cash – South Africa 3,023 Excludes transponder leases of ZAR2.1bn, considered operating cost Closing net debt (3,948) 2 RCF facility increased to US$2.0bn at Group gearing (excl. transponder leases) 10% lower rates and extended to 2016 Interest cover 14x 19
Significant acquisitions FY11 Company Date Total cost Total cost Percentage FCm ZARm acquired DST/mail.ru Group Aug 10 US$388 2,858 29% OLX Aug & Dec 10 US$181 1,291 72% Multiply Sep 10 US$46 324 75% LevelUp Nov 10 US$51 365 100% Dineromail Feb 11 US$28 206 78% Trendsales Nov 10 DKK122 157 88% Other May - Jul 10 US$38 289 N/A TOTAL 5,490 20
Mail.ru Group listed in Nov 2010 Return on investment to date 2,000 1,800 1,600 1,400 1,200 US$1,928m 1,000 800 600 US$780m 400 200 0 Investment over 4yrs Current market value of stake* *Market capitalisation as of 17 June 2011 21
Group Highlights Key Messages Financial Results Operational performance Outlook Appendix 22
Emerging market footprint 23
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