analyst booklet detailed financials · 2019-08-14 · ‐ udemy ‐ codecademy • excluding avito,...

Analyst Booklet – detailed financialsFor the year 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.

FINANCIALS

Synopsis of financials

4

• Results in functional currencies were translated into US$ for reporting purposes

• Weakness in emerging-market currencies dampened performance upon translation

• Growth in local currencies, excluding impact of M&A, quoted in brackets

• All amounts quoted on an economic-interest basis unless otherwise stated

*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.

Currency impact

5,861 6,788

548

1H FY16 1H FY17

Revenue* (US$m)

16% (27%)

363 308

41 188

11

1H FY16 1H FY17

Development spend* (US$m)

23% (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%

New investments

• Encouraging first six months

• Robust performance by Tencent and good operating performance by ecommerce

Revenue: Tencent and ecommerce drives acceleration in growth rate

5

• Growth rate accelerated to +27% YoY

• Tencent revenues + 48% YoY (LC) on the back of strong performance by smart phone games and online performance-based advertising

• Internet now accounts for 72% of revenues (64% in 1HFY16)

• Video entertainment reported revenues down 8%, but +6% YoY if forex impact is excluded

1,178(548)

5,861

1H FY16 Ecommerce Listedinvestments

Videoentertainment

Media M&A and other Forex 1H FY17

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

*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

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%

FY15 FY16 1H FY16 1H FY17

*Growth rates in local currency, excluding M&A

Revenue: YoY growth ahead of 3yr CAGR

6

Revenue* (US$m)

9,919

11,541 12,224

5,861 6,788

548

FY14 FY15 FY16 1H FY16 1H FY17

Currency impact

16% (27%)


3yr CAGR +11%

• YoY revenue growth of 16% in US$ compares favourably to 3yr CAGR of 11%

Diversified business mix – ongoing shift

7

• 80% of revenues now earned offshore

• SA accounts for only 20% of revenue (1H FY16 25%) and 73% in 2005

• Annuity income (i.e. subscription revenues, IVAS and gaming) account for 58% of revenues

• Cyclical advertising revenue is only 13% of total revenue

• Diversity of revenue streams reduce the risk of exposure to any one territory/currency or business model

1H FY17 Revenue* by geography

Asia (56%)

South Africa (20%)

Europe (14%)

Rest of Africa (7%)

Latin America (2%)

Other (1%)

1H FY17 Revenue* by type

IVAS & games (38%)

Subscription (20%)

Ecommerce (20%)

Advertising (13%)

Print, circulation & distribution (2%)

Technology (2%)

Other (5%)

* Based on economic interest, i.e. assuming equity accounted investments are proportionately consolidated

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 (%)

Development spend* (US$m)

Classifieds (44%)

Etail (26%)

Other ecommerce (19%)


Media (2%)

Development spend* by segment (US$m)

781

953 961

363 308

41 188 11


Operating New investments Currency impact

23% (27%)

Development spend on an economic interest basis

8

• Proportionate share of development spend from equity accounted investments, which is the main difference between economic interest and consolidated development spend, amounted to US$109m (US$124m in 1H FY16)

• Step up in spending on new investments announced in FY16 (i.e. letgo, India hotels and ShowMax) increased by US$152m

• This was offset by a 17% decline (US$42m) in funding established businesses


737 820

708

239 199

41 188

6


Operating New investments

38% (42%)

Currency impact

Consolidated development spend

9

• 42% increase YoY due to US$188m spend on new investments (letgo, Indian hotels, SVOD and classifieds verticals)

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

387

129

280

1H FY16 Ecommerce Video entertainment Other Forex 1H FY17

(10) (6)

Development spend (US$m)

Classifieds (55%)

Other ecommerce (23%)

Etail (10%)


Media (2%)

Development spend by segment (US$m)

(6)

38% (42%)

Trading profit on an economic interest basis

10

• Trading profit increased 21% (42% in local currency, excluding the impact of M&A)

• This was driven by expansion of 41% (50%) in the group’s share of Tencent’s trading profit

• Strengthened further by a contraction in trading losses of etail assets and growth in profitable ecommerce businesses, offset by new investments in letgo and India hotels

• The ecommerce trading loss narrowed by US$42m

• Fx movements had a negative impact of US$196m (16% YoY)

• The lower opening subscriber base in SSA and effects of foreign exchange resulted in video-entertainment trading profits declining 14% YoY

Incremental trading profit by segment, YoY (US$m)

Split by segment (US$m)

Internet (84%)


Media & corporate (1%)

Trading profit (US$m)

1,536

1,901

2,246

1,214 1,473

196

FY 14 FY 15 FY 16 1H FY16 1H FY17

1,473(196)

42 (57) (5)

(53)

529(1)

1,214

1H FY16 Forex M&A Listed internet Ecommerce VideoEntertainment

Media Corp 1H FY17

21% (42%)

Increase in number of profitable ecommerce businesses

11

• Revenue from profitable businesses +23% YoY and trading profit +67% YoY

• Trading margin 42% vs. 29% in prior year due to increased revenues from higher margin businesses

Number of profitable ecommerce entities

15

21

18

23


Financial progress of profitable entities (US$m)

765 774

397

518

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

Revenue Trading profit

87% (67%)

30% (23%)

465 420

213


Recent M&A activity focused on EdTech

12

• M&A activity focused on EdTech in Naspers Ventures:

‐ Brainly

‐ Udemy

‐ Codecademy

• Excluding Avito, the 5yr average annual M&A spend was US$406m

• Key considerations for acquisitions are:

‐ High-growth opportunities

‐ Ability to scale

‐ Potential for success across broad range of geographies

‐ Strong founder(s)

Acquisition spend over time (US$m)

Naspers Ventures (89%)

Classifieds (8%)

Travel (1%)

Other (2%)

1H FY17 M&A by segment (US$m)

139

Other

1,495

Other

5yr average US$406m*

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

13

Summarised income statement

• Finance costs impacted by:

‐ Net finance costs increased US$17m due to foreign exchange differences

‐ However net interest expense on borrowings decreased 18% to US$74m after repayment of the group’s revolving credit facility

• Strong performance by Tencent drove increase in equity accounted earnings

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 696 914

Core headline EPS (US$) 1.69 2.12

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

Equity accounted results

14

Associate and JV contributions (US$m)

773 977 1,038

517 706

285

498 251

118

206

FY 14 FY 15 FY 16 1H FY16 1H FY17

Normal contribution Once-off adjustments

• Once-off gains relate primarily to dilutions of Tencent’s interest in certain of its associates, and gains arising on disposals of other investees

Contribution by associated and joint ventures

15

1H FY17 (US$m)Company

results PPA

adjustments IFRS

results Other

adjustments*Core HEPS

contribution

Tencent 1,009 - 1,009 174 1,183

Mail.ru 13 (2) 11 16 27

Other (105) (3) (108) 10 (98)

917 (5) 912 200 1,112

Equity-accounted investments’ contribution to core HEPS (US$m)

1,112(5)

912

200

917

Company results PPA adjustments IFRS results Other adjustments Core HEPS Contribution

• “Other adjustments” relate to headline and core earnings adjustments similar to Naspers methodology.

• These include:

‐ Equity-settled share-based payments

‐ Fair-value adjustments and forex

‐ Profit/losses on disposals of non-current assets

‐ Impairments

‐ Gains/losses on acquisitions and disposals

‐ Amortisation charges

Net finance costs

16


Interest paid (137) (136)

Loans and overdrafts (109) (100)

Transponder leases (16) (20)

Other (12) (16)

Interest received 21 29

Loans and bank accounts 19 26

Other 2 3

Other finance costs, net (40) (58)

Net FX differences and FV adjustments on derivatives (41) (58)

Preference dividends received 1 -

Total finance costs (156) (165)

Debt

• US$700m 7-year bond issued July 2010 (6.375% coupon)

• US$1bn 7-year bond issued July 2013 (6% coupon)

• US$1.2bn 10-year bond issued July 2015 (5.5% coupon)

Transponders

• SSA - various leases (avg. cost ~US$12m p.a.)

- 15-yr agreement from Feb 2016 (avg. cost ~US$21m p.a.)

• SA: 15-yr agreement effective Sep 2016 (avg. cost ~US$36m p.a.)

Core headline earnings trend

17

Trend in core headline earnings per share (US$)

2.16

2.55

2.98

1.69

2.12

FY 14 FY 15 FY 16 1H FY16 1H FY17

• Core headline earnings per share increased 25% YoY

• 3-year CAGR 17%

• Adjustments to reported earnings to arrive at core headline earnings are also applied to the contribution from associates

• These adjustments have tax effects that are similarly adjusted for in arriving at the tax on core headline earnings

25%

Core headline earnings reconciliation

18


Headline earnings 468 555

Equity-settled share-based payment expenses 88 124

Deferred tax adjustments (1) -

Amortisation of other intangible assets 98 177

Business combination (gains)/losses 5 1

Retention option expense 2 1

Fair-value adjustments & currency translation differences 36 56

Core headline earnings 696 914

• Increase in equity share based payments expense mainly attributed to Tencent

• Amortisation of intangible assets mainly relates to Avito and Tencent

• Currency translation differences relate to changes in underlying foreign exchange rates

Balance sheet strong

19

• Net debt declined after the repayment of the group’s RCF

• The US$2.5bn RCF facility was undrawn at 30 Sept 2016

• Balance sheet does not reflect proceeds from the Allegro disposal as the transaction has not yet closed

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 %

Debt maturity profile and debt position

20

Debt maturity profile (US$m)

Group RCF US$2,500m

Bond US$1,000m

Bond US$ 1,200

CY16 CY17 CY18 CY19 CY20 CY21-24 CY25

Bond US$700m

Split of net cash reserves (US$m) Sept 16 Split of debt obligations (US$m) Sept 16

550

961

South Africa

Offshore (US$ & EUR)

113

2,894

South Africa

Offshore (US$ & EUR)

• Repayment options for 2017 bond to be considered closer to the time

• Default option is to utilise RCF

Current assets and liabilities

21

Current assets (US$m) 1H FY16 1H FY17

Inventory 223 222

Programme and film rights 321 400

Trade receivables 405 465

Other receivables 440 472

Derivative financial assets 78 14

Cash and deposits 1,003 1,545

Assets held for sale 317 26

Total 2,787 3,144

Current liabilities (US$m) 1H FY16 1H FY17

Current portion of long-term debt 208 222

Provisions 16 30

Trade payables 528 599

Accrued expenses and other 1,181 1,260

Tax payable 46 51

Derivative financial liabilities 50 86

Bank overdraft and call loans 17 34

Liabilities held for sale 102 5

Total 2,148 2,287

Free cash flow

22

• FCF negatively impacted by:

‐ Reduction in the profitability of the SSA video entertainment business

‐ Higher consolidated development spend mainly on letgo, ShowMax and our Indian hotels offering

• Offset somewhat by higher dividends received from Tencent (US$191m compared to US$146m in the prior year)

• Cash extraction in Nigeria, Angola and Mozambique remains problematic, but have extracted US$105m YTD

• US$202m currently trapped in Africa


Cash generated from operations 269 92

Capital expenditure (102) (78)

Finance leases (42) (51)

Taxation (152) (157)

Investment income 147 193

Free cash flow (FCF) 120 (1)

FCF breakdown (US$m)

(174)

120

1H FY16 Cash fromoperations

Workingcapital

Capex Dividendsreceived

Other 1H FY17

(4)

24

46

(13)

(1)

Capital expenditure

23

US$m 1H FY 16 1H FY17

Land, buildings & manufacturing equipment 25 13

Transmission equipment 15 20

Computer, software & network equipment 28 26

Other (including vehicles, furniture) 34 19

Capital expenditure 102 78

Capex/Revenue 3% 3%

Split by business

Video Entertainment (55%)

Ecommerce (31%)

Media (14%)

• Maintenance capex expected to change as the business evolves

• Current estimates for maintenance capex are:

‐ Media24 <ZAR300m

‐ Ecommerce ~US$50m

‐ Video entertainment ~R1bn

FX exposure: hedging

24

US$ FX Cover US$m ZAR rate

12 months out 523 15.72

24 months out 272 15.82

EUR FX Cover EURm ZAR rate

12 months out 56 17.81


GBP FX Cover GBPm ZAR rate


• Video entertainment: US$439m and EUR66m (programming rights and leases)

• Corporate: US$354m (Bond/RCF interest hedge)

• Media: US$2m; EUR23m and GBP3m

Open FEC positions

• FECs not viable outside of SA, thus exposure in rest of Africa mostly not hedged

• Video entertainment: cover 100% of net SA exposure under 18 months; up to 100% between 18-24 months forward

• Media: short-term commitments, cover maximum 12 months rolling input costs

• Almost all FEC’s qualify for hedge accounting

Hedging strategy

* Excludes Irdeto FECs of US$117m used to hedge foreign exchange exposure arising on operating expenses

• Pricing in local currency

• ~60% of input costs in hard currency

• ~40% of those costs are hedged

Video entertainment currency dynamics

INTERNET

Ecommerce: continues to scale

26

• Topline growth of 24% driven by increased scale in our classifieds and payments segments as well as continued strength in our travel business

• Trading losses improved YoY due to contraction in the trading losses of etail assets and growth in profitable entities

• Solid earnings contribution from classifieds in Poland and Russia (Avito) also impacted positively on trading losses

Revenue and trading losses* (US$m)

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

10

FY16 1H FY16 1H FY17

*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

Ecommerce: continues to grow rapidly

27

Revenue split

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

• Classifieds share of revenue impacted by the fact that we are only monetising 11 of the 44 countries where we operate

• Classifieds revenue growth benefited from the increase in countries being monetised from 9 to 11, as well as contribution from Avito

• Etail revenue increased by 16% in local currency

• The acceleration in 3rd party sales is negatively affecting etail revenue growth (due to accounting treatment), but driving improved margins

• Payment revenue growth driven by increased transaction volumes and ticket-size improvements

*Results reported on an economic interest basis, i.e. equity accounted investments are proportionately consolidated

B2C: benefiting from steady increase in online penetration

28

• B2C ecommerce includes etail, marketplaces and travel

• Etail is the single largest revenue opportunity in ecommerce and very cash generative, at scale

• The focus for us is on building and improving operational efficiencies

• GMV outpaced revenue growth due to strong growth in the 3rd party marketplace business on our platforms

• This trend is healthy for customers, because it increases selection on the platform, and for our business as often this revenue comes at a higher margin given lower fulfillment costs

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 all etail, structured and unstructured marketplaces, as well as travel - 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

Allegro: disposal to realise value for shareholders

29

Terms and rationale

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

Financial summary (US$m)

313 321

148

193

135 129

6283

144

100

5793


Revenue Trading profit Free cash flow

Returns (US$m)

1,485 714

3,253

Initial investment Total return

Sale price

Net cash flows

3,967

~3x

• Naspers acquired Allegro in 2008 as part of the US$1.9bn Tradusacquisition

• The Allegro assets were valued at US$1.485bn at the time

• Over the years, these assets generated US$714m in net cash flows

• Adding that to the sales price of US$3.253bn, implies proceeds of US$4bn and thus a return of almost 3x on our investment

• Transaction is tax neutral

• Expected to close January 2017

• Sale consistent with strategy to find and realise value for shareholders

• Price implies FY16 EBITDA multiple of 18.3x

• Transaction is tax neutral

• Proceeds to pay down debt, fund operations and future investments

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

Flipkart: competitive market, still early days for India B2C

30

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

• India remains the single largest long-term market opportunity for B2C

• Flipkart the leading platform in India, but battle for market share intense

• Recent strategic initiatives delivered healthy numbers for Flipkart over Diwali sales period

‐ Achieved GMV ~70-80% higher than closest competitor, spending ~60% less on marketing

‐ Enjoyed ~75% online market share in fashion and 2x market share of nearest competitor in smartphones, TV & large appliances

Classifieds: global footprint for the OLX Group

31

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

• OLX is our main brand

• Increased footprint from 40 at FY16 to 44 countries – added Norway, Australia, Czech Republic and Slovenia

• Focus is on building engaging mobile products

213

267

124

196

24

FY15 FY16 1H16 1H17

Currency impact

32

Classifieds: top line growth while managing profitability

• Adjusting financials to include Avito on a pro-forma basis, suggests YOY growth of 58%

• Operating leverage improved due to operational excellence and stronger competitive positions

• Excluding letgo, marketing spend reduced 34% YoY

Revenue* (US$m)

58% (77%)

1H FY16 1H FY17

1H FY17 Marketing spend* (US$m)

34%

letgo

*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%.

Classifieds: continue to monetise and extend current positions

33

• Continue to expand market share and drive engagement

• Now leading in 34 of our 44 markets

• Monetise 11 markets, i.e. in Russia, UAE, Portugal, Brazil, Poland, Bosnia, Bulgaria, Romania, Ukraine, Kazakhstan and Ecuador

• 9 of these markets are profitable

Naspers positions (number of countries)

*Reflects equity-accounted investments on a proportionate basis based on economic interest as per September 2016

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

1.5 2.0

Sep 15 Sep 16

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 (daily, m)*

77%

Sep

-14

Dec

-14

Mar

-15

Jun

-15

Sep

-15

Dec

-15

Mar

-16

Jun

-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% =

37

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

4.7

7.7

3.3

6.1


Classifieds: ramping monetisation in Russia

35

• Avito performing ahead of expectations and extend market leadership

• Continues to scale, increasing MAU’s and MUL’s

• Growing VAS listing fees

• Financial performance remained strong

+84%

Revenue (RUBb) EBITDA (RUBb)

Revenue split

59%44%

28%

22%

8%30%

6% 3%

1H FY16 1H FY17

Shop fees

Listing fees

Advertising

Value-addedservices

Note: 1H FY17 Revenue/Internet User = RUB64

2.4

3.8

1.8

3.7


+101%

Note: 1H FY17 EBITDA/Internet User = RUB38

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

# of paidlistings

MULs

MAUs

+6x

+16%

+18%

Classifieds: Poland… extending leadership in key verticals

36

Format Brand

Horizontal

Vehicles

Real estate

2.8 3.4

4.4

1H FY16 2H FY16 1H FY17

Revenue (PLN per internet user)

+57%

• Strong position in verticals help drive increased revenue per internet user

Classifieds: letgo… increasing investment to accelerate growth

37

Mobile Monthly Active Users (Mobile MAUs)

Source: AppAnnie Pro

Jan

-16

Feb

-16

Mar

-16

Ap

r-1

6

May

-16

Jun

-16

Jul-

16

Au

g-1

6

Sep

-16

letgo OfferUp

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

72% of total

Source: letgo DB

+15%

• letgo investment paying off

• Competition in the US in this app-only segment is now down to 2 players

• Growth has been driven by organic returning listers, underlying the strength of our platform and user experience

• Consolidation with Wallapop drove increased scale

• Strong growth across all key performance indicators

Value-added services (75%)

Online advertising (17%)

Other (8%)

Listed internet: Tencent continues to perform

38

• Results incorporated on a 3-month lag basis

• Strong performance in all segment

• Growth in new smartphone games drove VAS revenues higher

• Growth in online advertising driven by:

‐ Enlarged advertiser base

‐ Higher traffic on mobile platforms

‐ Improved utilisation of advertising inventories

• Strategic initiatives:

‐ Invested in Supercell

‐ Increased investment in online video content

‐ Expanded cloud capabilities

‐ Drove penetration of online payments

20

,49

6

30

,41

1

41

,76

4

19

,71

5

28

,17

1

2013 2014 2015 1H15 1H16

Tencent operating profit (RMBm)*

CAGR +43%

Revenue mix 1H FY16

MAU (m): Weixin & WeChat

651846

3Q 15 3Q 16

30%

43%

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

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

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

39

• Results incorporated on a 3-month lag basis

• Affected by tough macro environment, continues to grow albeit at modest pace

• VK audience and engagement continues to grow

• Advertising revenues benefiting from:

‐ Growing mobile audience

‐ Increased advertising inventory

‐ Successful implantation of new advertising technologies

• Weak consumer environment negatively affected IVAS and gaming revenues

• Making strategic investments to strengthen the product offerings

Mail.ru EBITDA (RUBm)*1

5,0

87

16

,85

0

18

,12

3

8,4

21

8,6

91

2013 2014 2015 1H15 1H16

CAGR +10%

Revenue mix 1H FY16*

Online advertising (43%)

Community IVAS (32%)

MMO Games (22%)

Other (3%)

3%

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

VIDEO ENTERTAINMENT

VE: solid subscriber growth, changing mix

41

• Total customer base now 11m households

• Strong growth by DTH

‐ Added 591,968 subs in total

‐ 316,205 of these were added to the SA base

• DTT business recorded 149,875 additional customers

• Ongoing change in mix with growth mainly driven by mid- and lower-end bouquets

Video entertainment subscriber homes (‘000)

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

8%

Change in subscriber mix

52% 52%

26% 30%

22% 18%

1H FY16 1H FY17

Premium Compact Lower-end

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

5,368 5,730

2,626 3,266

2,240 2,005

1H FY16 1H FY17

+7%

+5%

+9%

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

42

• Financials hard-hit by local currency pricing vs. US$ input costs

• Excluding fx weakness revenue growth would have been +6% YoY

• Reduction in development spend mainly due to DTT, offset somewhat by SVOD spend following launch of ShowMax in August 2015

• Programming costs affected by one-off events and increase in local content

Video entertainment financials (US$m)

Development spend (US$m)

166

206

85

47 40

FY14 FY15 FY16 1H16 1H17

Capital expenditure (US$m)

462

203

127

67 43

FY14 FY15 FY16 1H16 1H17

36%

Programming and production costs (US$m)

977

1,133 1,046

461 534

31

FY14 FY15 FY16 1H16 1H17

23%

15%

3,582 3,830

3,413

1,790 1,645

841 732 610 399 226



8%

43%

One-off

1,1

00

1,2

72

1,1

35

59

7

49

4

72

(56) (38)6

(103)FY14 FY15 FY16 1H16 1H17


VE: SSA operational progress negated by Naira devaluation

43

• Subscriber growth recovered following a change in pricing and content strategy

• Ongoing currency weakness negated a similar improvement in financial performance

• Billing in local currency resulted in lower US$ revenues upon conversion

• The impact of an increase in programming costs and 17% lower US$ revenues results in a trading loss

• We remain focused on driving costs down

SSA net additions (‘000)

78

225 108

215 121

208

(321)

33 126

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

6 month average

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)

VE: solid results by DTH South Africa

44

• Solid performance by SA in a challenging environment

• Net sub growth the highest ever over 6 months

• Growth coming from mid- and lower-end bouquets

• Change in subscriber mix negatively impacting revenue uplift

• Weaker ZAR resulted in cost inflation and margin pressure

• Continued focus on cost controls

187

283 248

309

166

232

156 169

316

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

SA net additions (‘000)

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 701410 368

FY14 FY15 FY16 1H16 1H17


VE: DTT moving toward profitability

45

• Subscriber growth 5%, affected by absence of any ASO’s

• Business segment approached break-even in the aggregate

• 4 individual countries already profitable

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

Print Media:

46

ZARm 1H FY16 1H FY17 % change

Revenue 3 986 3 989 -

Operating profit 188 130 (31%)

Operating margin 4,7% 3,3% (1%)

Revenue mix

Advertising (26%)

Printing (36%)

Circulation (14%)

Books (5%)

Distribution (3%)

Other (16%)

*Data reflects Media24’s stand-alone results in local currency available on www.media24.com

• Continues to face the effects of structural decline in traditional print media businesses

• Revenue growth of ecommerce initiatives ahead of expectations

• Margin negatively affected by lower revenues – exacerbated by a weak South African economy – and higher printing and production costs

• Continued focus on cost reductions and unlocking operational efficiencies

• Solid growth in page views across digital platforms, particularly on mobile

http://www.media24.com/

OUTLOOK

FY17 Outlook: continue building our platforms

48

LEAD IN ECOMMERCE

TARGET HIGH-GROWTH

BUSINESS MODELS

PURSUE 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

• Remain focused to deliver revenue growth

• Scale the more established ecommerce businesses

• Continue to invest in long-term growth opportunities like letgo, where we expect to accelerate development spend

• Seek further new promising models in internet

• Ongoing fx weakness in SSA likely to weigh on financial performance of VE for some time to come

APPENDIX

Glossary of terms

50

THANK YOU

Meloy Horn

+27 11 289 3320

+27 82 7727 123

[email protected]

www.naspers.com

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