Analyst Booklet detailed financials. For the year six months ended 30 September 2016

Transcription

1 Analyst Booklet detailed financials For the year six months ended 30 September 2016

2 Important information This presentation contains forward-looking statements as defined in the United States Private Securities Litigation Reform Act of 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

3 FINANCIALS

4 Synopsis of financials Currency impact Revenue* (US$m) Development spend* (US$m) Encouraging first six months 5,861 16% (27%) 548 6,788 23% (27%) Robust performance by Tencent and good operating performance by ecommerce 1H FY16 1H FY17 1H FY16 1H FY17 New investments Trading profit* (US$m) 21% (42%) 1, ,473 Core HEPS (USc) % 212 Results in functional currencies were translated into US$ for reporting purposes Weakness in emerging-market currencies dampened performance upon translation Growth in local currencies, excluding impact of M&A, quoted in brackets 1H FY16 1H FY17 1H FY16 1H FY17 All amounts quoted on an economicinterest 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. 4

5 Revenue: Tencent and ecommerce drives acceleration in growth rate YoY revenue growth rate* (%) 26% 27% 22% 20% FY15 FY16 1H FY16 1H FY17 *Growth rates in local currency, excluding M&A Incremental revenue* by segment, YoY (US$m) Revenue* by segment (US$m) Ecommerce (20%) Listed investments (52%) Video entertainment (24%) Media & other (4%) 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 YoY change (%) 24% 46% 6% 1% n/a 9% 16% (27%) 258 1, (3) (68) (548) 5,861 6,788 1H FY16 Ecommerce Listed investments Video entertainment Media M&A and other Forex 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 5

6 Revenue: YoY growth ahead of 3yr CAGR Revenue* (US$m) 3yr CAGR +11% 9,919 11,541 12,224 16% (27%) YoY revenue growth of 16% in US$ compares favourably to 3yr CAGR of 11% 5, ,788 FY14 FY15 FY16 1H FY16 1H FY17 Currency impact *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

7 Diversified business mix ongoing shift 1H FY17 Revenue* by geography 1H FY17 Revenue* by type 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 Asia (56%) South Africa (20%) Europe (14%) Rest of Africa (7%) Latin America (2%) Other (1%) 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 7

8 Development spend on an economic interest basis Development spend* (US$m) % (27%) FY14 FY15 FY16 1H FY16 1H FY17 Operating New investments Currency impact Incremental development spend* by segment, YoY (US$m) Development spend* by segment (US$m) Classifieds (44%) Etail (26%) Other ecommerce (19%) Video entertainment (9%) Media (2%) 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 YoY change (%) >100% 17% 12% 3% 23% (27%) 152 (42) (7) (11) 404 Hotels 496 1H FY16 New investments Operating Associates Forex 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. 8

9 Consolidated development spend Incremental development spend by segment, YoY (US$m) (10) (6) (6) % (42%) 42% increase YoY due to US$188m spend on new investments (letgo, Indian hotels, SVOD and classifieds verticals) H FY16 Ecommerce Video entertainment Other Forex 1H FY17 Development spend (US$m) Development spend by segment (US$m) % (42%) FY14 FY15 FY16 1H FY16 1H FY17 Classifieds (55%) Other ecommerce (23%) Etail (10%) Video entertainment (10%) Media (2%) Operating New investments Currency impact 9

10 Trading profit on an economic interest basis Incremental trading profit by segment, YoY (US$m) 1,214 (196) Split by segment (US$m) (53) Internet (84%) Video entertainment (15%) Media & corporate (1%) 42 (57) (5) 1H FY16 Forex M&A Listed internet Ecommerce Video Entertainment 529 Trading profit (US$m) 1,536 1,901 2,246 (1) 1,214 1,473 Media Corp 1H FY17 21% (42%) 196 1,473 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 FY 14 FY 15 FY 16 1H FY16 1H FY17 10

11 Increase in number of profitable ecommerce businesses Number of profitable ecommerce entities Financial progress of profitable entities (US$m) 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 30% (23%) % (67%) FY15 FY16 1H FY16 1H FY17 FY 15 FY 16 1H FY16 1H FY17 Revenue Trading profit 11

12 Recent M&A activity focused on EdTech Acquisition spend over time (US$m) 1,495 Other Other 1H FY17 M&A by segment (US$m) M&A activity focused on EdTech in Naspers Ventures: Brainly Udemy Codecademy Excluding Avito, the 5yr average annual M&A spend was US$406m Naspers Ventures (89%) Classifieds (8%) Key considerations for acquisitions are: High-growth opportunities Ability to scale Potential for success across broad range of geographies Strong founder(s) yr average US$406m* Travel (1%) Other (2%) FY14 FY15 FY16 1H FY16 1H FY17 * Calculated from March 2012 March 2016 (excluding Avito) 12

13 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 Trading margin 8% 2% Net finance costs (156) (165) 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$74m after repayment of the group s revolving credit facility Strong performance by Tencent drove increase in equity accounted earnings Share of equity accounted results Impairments (141) (28) Taxation (146) (144) Net profit Core headline earnings Core headline EPS (US$) *Based on economic interest, i.e. Equity-accounted investments are proportionately consolidated. 13

14 Equity accounted results Associate and JV contributions (US$m) Once-off gains relate primarily to dilutions of Tencent s interest in certain of its associates, and gains arising on disposals of other investees , FY 14 FY 15 FY 16 1H FY16 1H FY17 Normal contribution Once-off adjustments 14

15 Contribution by associated and joint ventures 1H FY17 (US$m) Company results PPA adjustments IFRS results Other adjustments* Core HEPS contribution Tencent 1,009-1, ,183 Mail.ru 13 (2) Other (105) (3) (108) 10 (98) Equity-accounted investments contribution to core HEPS (US$m) 917 (5) 917 (5) , ,112 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 noncurrent assets Impairments Gains/losses on acquisitions and disposals Amortisation charges Company results PPA adjustments IFRS results Other adjustments Core HEPS Contribution 15

16 Net finance costs US$m 1H FY16 1H FY17 Interest paid (137) (136) Loans and overdrafts (109) (100) Transponder leases (16) (20) Other (12) (16) Interest received Loans and bank accounts Other 2 3 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.) 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) 16

17 Core headline earnings trend Trend in core headline earnings per share (US$) % 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 1.69 FY 14 FY 15 FY 16 1H FY16 1H FY17 17

18 Core headline earnings reconciliation US$m 1H FY16 1H FY17 Headline earnings Equity-settled share-based payment expenses 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 Deferred tax adjustments (1) - Amortisation of other intangible assets Business combination (gains)/losses 5 1 Retention option expense 2 1 Fair-value adjustments & currency translation differences Core headline earnings

19 Balance sheet strong US$m 1H FY17 Debt (1) : (offshore US$2.9bn) 3,007 Cash: (South Africa US$550m) 1,511 Group net consolidated debt (US$m) 30% 23% 12% 1,994 1,461 1,213 32% 2,213 13% 1,496 30% 20% 10% 0% 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 -10% Closing net debt 1,496-20% Gearing 13% - FY14 FY15 FY16 1H FY16 1H FY17 Net debt Gearing % -30% (1) Excludes satellite lease liabilities (US$1,232m) and non-interest bearing debt (US$161m) 19

20 Debt maturity profile and debt position Debt maturity profile (US$m) Repayment options for 2017 bond to be considered closer to the time Default option is to utilise RCF Group RCF US$2,500m Bond US$700m Bond US$1,000m Bond US$ 1,200 CY16 CY17 CY18 CY19 CY20 CY21-24 CY25 Split of net cash reserves (US$m) Sept 16 Split of debt obligations (US$m) Sept South Africa South Africa 961 Offshore (US$ & EUR) Offshore (US$ & EUR) 2,894 20

21 Current assets and liabilities Current assets (US$m) 1H FY16 1H FY17 Current liabilities (US$m) 1H FY16 1H FY17 Inventory Current portion of long-term debt Programme and film rights Trade receivables Other receivables Derivative financial assets Cash and deposits 1,003 1,545 Assets held for sale Provisions Trade payables Accrued expenses and other 1,181 1,260 Tax payable Derivative financial liabilities Bank overdraft and call loans Liabilities held for sale Total 2,787 3,144 Total 2,148 2,287 21

22 Free cash flow US$m 1H FY16 1H FY17 Cash generated from operations Capital expenditure (102) (78) Finance leases (42) (51) Taxation (152) (157) Investment income Free cash flow (FCF) 120 (1) FCF breakdown (US$m) 120 1H FY16 (174) Cash from operations (4) Working capital 24 Capex 46 Dividends received (13) Other (1) 1H FY17 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 22

23 Capital expenditure US$m 1H FY 16 1H FY17 Land, buildings & manufacturing equipment Transmission equipment Computer, software & network equipment Split by business Maintenance capex expected to change as the business evolves Current estimates for maintenance capex are: Media24 <ZAR300m Ecommerce ~US$50m Video entertainment ~R1bn Other (including vehicles, furniture) Capital expenditure Capex/Revenue 3% 3% Video Entertainment (55%) Ecommerce (31%) Media (14%) 23

24 FX exposure: hedging US$ FX Cover US$m ZAR rate 12 months out months out EUR FX Cover EURm ZAR rate 12 months out months out Open FEC positions Video entertainment: US$439m and EUR66m (programming rights and leases) Corporate: US$354m (Bond/RCF interest hedge) Media: US$2m; EUR23m and GBP3m Hedging strategy 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 months forward Media: short-term commitments, cover maximum 12 months rolling input costs Almost all FEC s qualify for hedge accounting GBP FX Cover GBPm ZAR rate 12 months out * Excludes Irdeto FECs of US$117m used to hedge foreign exchange exposure arising on operating expenses Video entertainment currency dynamics Pricing in local currency ~60% of input costs in hard currency ~40% of those costs are hedged 24

25 INTERNET

26 Ecommerce: continues to scale Revenue and trading losses* (US$m) Topline growth of 24% driven by increased scale in our classifieds and payments segments as well as continued strength in our travel business 1,986 2,492 2,647 1,210 14% (24%) 50 1,379 1% (14%) 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 10 (516) (543) (541) (296) (292) FY14 FY15 FY16 1H FY16 1H FY17 Revenue Trading losses Currency impact *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 26

27 Ecommerce: continues to grow rapidly Revenue split Etail (55%) Marketplace (14%) Classifieds (14%) Other (6%) Payments (6%) Travel (5%) Constant currency revenue growth by type 76% 75% 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 3 rd 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 30% 29% 16% -6% Classifieds Travel Marketplace Payments Etail Other *Results reported on an economic interest basis, i.e. equity accounted investments are proportionately consolidated 27

28 B2C: benefiting from steady increase in online penetration B2C: Revenue* (US$) 770 1,459 1, FY14 FY15 FY16 1H FY16 1H FY17 Currency impact 19% (20%) *Includes all etail, structured and unstructured marketplaces, as well as travel - excludes Netretail and Ricardo which were sold. Results reported on an economic interest basis, i.e. equity accounted investments are proportionately consolidated. Numbers in brackets represent year-on-year growth in local currency, excluding M&A. 28 B2C: GMV (US$m)* 7,150 27% 5,677 4,133 3,249 2,539 FY15 FY16 1H FY15 1H FY16 1H FY17 B2C: 1H FY17 GMV by region* India & SE Asia (35%) Europe (60%) Africa & Middle East (5%) *Allegro accounted for 76% of Europe GMV 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 3 rd 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 28

29 Allegro: disposal to realise value for shareholders Financial summary (US$m) Sold for US$3.253bn Buyers: Cinven, Permira and Mid-Europa private equity funds Terms and rationale Sale consistent with strategy to find and realise value for shareholders Price implies FY16 EBITDA multiple of 18.3x Transaction is tax neutral Proceeds to pay down debt, fund operations and future investments Announced 14 Oct 2016, subject to approvals; expect to close in Jan 2017 Returns (US$m) Naspers acquired Allegro in 2008 as part of the US$1.9bn Tradus acquisition 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 ~3x 3,967 3,253 Sale price Net cash flows , FY15 FY16 1H FY16 1H FY17 Revenue Trading profit Free cash flow Initial investment Total return 29

30 Flipkart: competitive market, still early days for India B2C Flipkart is #1 ecommerce platform in India Brand awareness 1 49% 30% 14% Visited in past year 85% 79% 63% Purchased in past 6 months Most favourite brand 58% 45% 28% 47% 28% 16% NPS 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 mobile monthly active users (m) 27% 1H FY16 1H FY17 Source: Company data, excludes Myntra and Jabong Ecommerce/capita (US$, 2016) 937 India remains the single largest longterm 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 US China Russia Brazil India Source: Euromonitor 30

31 Classifieds: global footprint for the OLX Group Global footprint OLX is our main brand 44 Countries Increased footprint from 40 at FY16 to 44 countries added Norway, Australia, Czech Republic and Slovenia Focus is on building engaging mobile products 25 Offices Mobile leadership #1 app 22 COUNTRIES (1) +4.4 APP RATING 1) Google play store; shopping/lifestyle categories 2) Numbers reflect proportionate pickup of JVs Scale2 +1.9bn MONTHLY VISITS +37b MONTHLY PAGE VIEWS 31

32 Classifieds: top line growth while managing profitability Revenue* (US$m) 1H FY17 Marketing spend* (US$m) Adjusting financials to include Avito on a pro-forma basis, suggests YOY growth of 58% % (77%) Operating leverage improved due to operational excellence and stronger competitive positions letgo Excluding letgo, marketing spend reduced 34% YoY % FY15 FY16 1H16 1H17 Currency impact 1H FY16 1H FY17 *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%. 32

33 Classifieds: continue to monetise and extend current positions Naspers positions (number of countries) 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 Entering Fighting Leading Leading and monetising HFY15 2HFY15 1HFY16 2HFY16 1HFY17 Monthly unique listers (m)* Net new listings (daily, m)* 35% 32% App MAU (daily, m)* 77% Sep 15 Sep 16 Sep 15 Sep 16 Sep 15 Sep 16 *Reflects equity-accounted investments on a proportionate basis based on economic interest as per September

34 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Classifieds: C2C trade drives our business 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)* +6.7x 100% = NNL 55% 17% 8% 20% NNL15m +3.5x Revenue 5% 17% 31% 28% 19% US$23m Avito Poland C2C Goods Cars Prop Other Ad *Data reflects information relating to our classifieds sites in Poland and Russia 37

35 Classifieds: ramping monetisation in Russia YoY growth in key metrics (Sep 15 vs. Sep 16) MAUs MULs # of paid listings +16% +18% +6x Revenue split 6% 3% 8% 30% 28% 22% 59% 44% Shop fees Listing fees Advertising Value-added services 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 1H FY16 1H FY17 Revenue (RUBb) % 6.1 EBITDA (RUBb) % FY15 FY16 1H FY16 1H FY17 FY15 FY16 1H FY16 1H FY17 Note: 1H FY17 Revenue/Internet User = RUB64 Note: 1H FY17 EBITDA/Internet User = RUB38 35

36 Classifieds: Poland extending leadership in key verticals Format Brand Revenue (PLN per internet user) +57% Strong position in verticals help drive increased revenue per internet user Horizontal Vehicles Real estate 1H FY16 2H FY16 1H FY17 36

37 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Classifieds: letgo increasing investment to accelerate growth Mobile Monthly Active Users (Mobile MAUs) +15% Monthly unique listers 72% of total letgo investment paying off Competition in the US in this apponly 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 letgo OfferUp Returning Source: AppAnnie Pro Source: letgo DB 37

38 20,496 19,715 28,171 30,411 41,764 Listed internet: Tencent continues to perform Tencent operating profit (RMBm)* Revenue mix 1H FY16 Results incorporated on a 3-month lag basis Strong performance in all segment CAGR +43% 43% Value-added services (75%) Online advertising (17%) Other (8%) 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 MAU (m): Weixin & WeChat 30% Strategic initiatives: Invested in Supercell Increased investment in online video content Expanded cloud capabilities Drove penetration of online payments H15 1H16 *Reflects 100% of Jan-Jun 2016 (1H FY16) results on a non-gaap basis; detailed results available at 1H FY17 US$/RMB6.616 (6.361) 3Q 15 3Q 16 Note: Monthly active users reflect the most current update from Tencent 38

39 8,421 8,691 15,087 16,850 18,123 Listed internet: Mail.ru delivers strong VK performance but slower games Mail.ru EBITDA (RUBm)* Revenue mix 1H FY16* Results incorporated on a 3-month lag basis CAGR +10% Affected by tough macro environment, continues to grow albeit at modest pace VK audience and engagement continues to grow 3% Advertising revenues benefiting from: Growing mobile audience Increased advertising inventory Successful implantation of new advertising technologies Online advertising (43%) Community IVAS (32%) Weak consumer environment negatively affected IVAS and gaming revenues Making strategic investments to strengthen the product offerings MMO Games (22%) H15 1H16 *Reflects 100% of 1H FY16 aggregate segment performance as reported. For IFRS results with full disclosure refer to 1H FY17 US$/RUR (58.367) Other (3%) 39

40 VIDEO ENTERTAINMENT

41 VE: solid subscriber growth, changing mix Video entertainment subscriber homes ( 000) 8% Total 6,005 7,259 8,402 10,234 11,002 2, ,243 2, ,019 1,686 4,699 5,174 5,563 4,168 2,553 +7% 2,401 +5% +9% 6,048 Change in subscriber mix 2,005 2,240 2,626 3,266 5,368 5,730 1H FY16 1H FY17 22% 18% 26% 30% 52% 52% 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 1H FY13 1H FY14 1H FY15 1H FY16 1H FY17 SA DTH SSA DTH SSA DTT 1H FY16 1H FY17 Premium Compact Lower-end 41

42 VE: financials hit by local currency pricing vs. USD input costs Video entertainment financials (US$m) 3,582 3,830 3, ,790 1,645 FY14 FY15 FY16 1H FY16 1H FY17 Revenue Trading profit 8% % Financials hard-hit by local currency pricing vs. US$ 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 Development spend (US$m) Capital expenditure (US$m) Programming and production costs (US$m) ,133 1, % % % FY14 FY15 FY16 1H16 1H17 FY14 FY15 FY16 1H16 1H17 FY14 FY15 FY16 1H16 1H17 One-off 42

43 ,100 1,272 1,135 VE: SSA operational progress negated by Naira devaluation SSA net additions SSA ( 000) net additions ( 000) month average (321) 1H13 2H13 1H14 2H14 1H15 2H15 1H16 2H16 1H17 YoY currency declines Nigeria Zambia Kenya Angola 0% 3% -11% significantly impacting trading profit (US$m) Subscriber growth recovered following a change in pricing and content strategy Ongoing currency weakness negated a similar improvement in financial performance Billing in local currency resulted in lower US$ 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 -59% Weighted average -23% 72 6 (56) (38) (103) FY14 FY15 FY16 1H16 1H17 *Based on monthly Naspers average closing rates. Revenue Trading profit 43

44 1,358 1,341 2,702 2,855 2,604 VE: solid results by DTH South Africa SA net additions ( 000) average H13 2H13 1H14 2H14 1H15 2H15 1H16 2H16 1H17 SA currency declined materially, but cost controls muted margin pressure 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 1H FY15 1H FY16 1H FY17-9% -18% -14% FY14 FY15 FY16 1H16 1H17 Revenue Trading profit 44

45 VE: DTT moving toward profitability Subscribers (m) Sep 16 Mar 16 Sep 15 Mar 15 Sep 14 Mar 14 Sep 13 Mar 13 Sep 12 Mar ,553 2,404 2,428 2,256 Subscriber growth 5%, affected by absence of any ASO s Business segment approached breakeven in the aggregate 4 individual countries already profitable DTT trading margin (%) FY14 1H FY15 FY15 1H FY16 FY16 1H FY17 (27%) (23%) (16%) (83%) (140%) (115%) 45

46 Print Media: ZARm 1H FY16 1H FY17 % change Revenue Operating profit (31%) Operating margin 4,7% 3,3% (1%) *Data reflects Media24 s stand-alone results in local currency available on Revenue mix Advertising (26%) Printing (36%) Circulation (14%) 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 Books (5%) Distribution (3%) Other (16%) 46

47 OUTLOOK

48 FY17 Outlook: continue building our platforms 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 LEAD IN ECOMMERCE Build strong global or regional leaders TARGET HIGH-GROWTH BUSINESS MODELS Classifieds, Fintech, O2O and Connected video PURSUE SCALE Pursue further scale through organic growth TRANSFORM FURTHER INTO MOBILE Mobile first or only across the business OPTIMISE RETURNS Reduce development spend in existing footprint. Deploy capital to highest return opportunities 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 48

49 APPENDIX

50 Glossary of terms 50

51 THANK YOU Meloy Horn