Financial Results Presentation For the six months to September 2014
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
Overview Financials Internet Pay-TV Outlook Appendix 3
Pursuing simultaneous, significant growth opportunities 1 2 Becoming a major ecommerce player Mobile becoming dominant 3 mode of internet access 4 Focusing on growth markets 5 Prioritising fast-growing segments in ecommerce Optimising the structure 4
Becoming a major ecommerce player globally Monthly average desktop visits in billions, Y/Y growth % (excl. payments-related properties) 6 5 4 3 2 1 0 Alibaba Amazon Naspers eBay Mercadolibre Rocket Internet Rakuten JD.com 3Q'13 3Q'14 Source: ComScore, Naspers 5
Mobile becoming dominant mode of internet access Mobile internet users by region (m) Top Shopping Apps in the Google Play Store 2 000 Indonesia Saudi Arabia ~2bn 1 500 South Africa Poland 1 000 Brazil India 500 0 Developed markets Naspers markets 2014E vs 2018E Source: Similarweb, 5 November2014 As a group we are very well positioned 6
Focusing on high growth markets 1HFY15 M&A by country (ZAR3,9bn) 1H FY15 Development spend* by country (ZAR4,4bn) India (82%) Brazil (5%) India (15%) Brazil (13%) South Africa (14%) Nigeria (11%) South Africa (4%) Other (3%) Indonesia (4%) Other (43%) Turkey (3%) Romania (3%) * Based on economic interest, i.e. assuming equity accounted investments are proportionately consolidated 7
Prioritising fast growing segments in ecommerce Emerging markets: visits per segment (% change YoY) 45% +4.1% 30% -5.0 +4.2% 15% -2.1 % 0% Etail Classifieds 3Q 2012 3Q 2014 Source: IDC, Naspers 8
Strong asset base for growth in classifieds Population size (m) Our position* Brand China #1 58.com 1,357 India 1,252 #1 OLX US 316 - - Indonesia #1 OLX 250 Brazil 200 #1 OLX Pakistan 182 #1 OLX Nigeria 174 #1 OLX Bangladesh 157 #1 OLX Russia 143 #1 Avito Japan 127 - - Mexico 122 - - Philippines 98 #1 OLX Ethiopia 94 - - Vietnam 90 - - Egypt 82 #1 Dubizzle *Including associates Source: World Bank 9
Optimising the structure: rest of ecommerce Marketplaces Etail Other Restructured Merger Sold • Outside of focus area + • Strategic decision to focus on the • Two of SA’s leading etail businesses consumer ISP business, without • Transformation to create a more being an infrastructure player. combine to create a platform of customer-focused and agile business scale • Subject to Competition • Specific emphasis on removing • Customers to benefit from wider Commission approval corporate layers - likely to result in selection of products and headcount reduction of 300+ categories, as well as broader • Re-investing in mobile development delivery services — 80 engineers to be added • Deal subject to Competition • Fairly small and mature markets Commission approval. Strengthened management across operations 10
Overview Financials Internet Pay-TV Outlook Appendix 11
1H FY15: Synopsis of consolidated financials Revenue (ZARbn) Development spend (ZARbn) Sep 13 Sep 14 20% 35% 4.0 34.4 28.8 2.98 Core headline earnings (ZARbn) Core HEPS (ZAR) 24% 22% 6.1 4.9 15.28 12.48 12
Focus areas showing strong growth in revenue Incremental revenue* by segment, YoY (ZARm) 44% 18% 6% 30% 72% of revenues earned offshore 337 10,930 3,109 Internet Fastest growing revenue segment 61,982 Constitutes 58% of group revenues 47,606 Revenue trends: - Ecommerce +43% YoY - Tencent +46% YoY Sep 13 Internet Pay-TV Print Sep 14 - Mail.ru +19% YoY Pay-TV Revenue by business segment* Revenue* (ZARm) Benefited from : - 16% increase in subscribers YoY - 5% increase in subscription rates in SA 104,981 CAGR 5,979 30% Print media 76,776 Large scale structural changes in industry 20,186 61,982 Tough trading conditions continue: 35,817 56,522 - Media24 +1% YoY 47,606 45,108 Internet (58%) Pay TV (32%) Print (10%) Mar 11 Mar 12 Mar 13 Mar 14 Sep 13 Sep 14 * Based on economic interest, i.e. assuming equity accounted investments are proportionately consolidated 13
More opportunities resulting in increased spending Incremental development* spend by segment, YoY (ZARm) 48% 13% 87% 42% Further investment Major investments in high growth markets Focus on building leading positions 71 72 Ecommerce 1,154 Larger classifieds footprint resulted in higher spend Increased spend in etail, also impacted by larger holdings in Souq and Flipkart 4,374 Bigger investment in payments to scale and expand market share Larger markets of investment include India, 3,077 Brazil and Indonesia Pay-TV ZAR465m invested in DTT Additional ZAR177m spent on: - online and mobile technologies Sep 13 Ecommerce Pay-TV Print Sep 14 - decoder development • Based on economic interest, i.e. assuming equity accounted investments are proportionately consolidated 14
Summarised consolidated income statement Sep 13 Sep 14 ZARm ZARm Currency impact Revenue* 47,606 61,982 Revenue* up 24% on constant currency basis Less: Associates and joint ventures (18,851) (27,619) Consolidated revenue 28,755 34,363 Trading margin Decline due to increase in development spend Trading profit 2,926 2,798 Net finance cost Trading margin 10% 8% 55% increase in net interest on loans due to: - Higher debt levels to fund acquisitions Net finance costs (915) (1,208) Negative effect of currency translation - US$1bn bond issued in July 2013 - Share of equity accounted results 5,139 9,932 Income from associates Impairments (1,841) (173) Includes ZAR4.8bn (Sep 13 ZAR1.3bn) book profit from: - Re-measurement of Mail.ru’s interest in VK and Taxation (1,447) (1,755) its sale of shares in Qiwi (ZAR3.9bn) Tencent’s sale of some investments (ZAR887m) - Net profit 3,423 9,269 Taxation Core headline earnings 4,920 6,077 Increase due to higher profits in pay-TV, Allegro Core headline EPS (ZAR) 12.48 15.28 marketplace and OCS * Based on economic interest, i.e. assuming equity accounted investments are proportionately consolidated 15
Core headline earnings drivers Incremental core headline earnings drivers, YoY (ZARm) 24 % (601) 588 (35) 6,077 1,940 (1,298) 564 4,920 Sep 13 Development Pay-TV profit* Profits from listed Ecommerce* Tax & Interest Other Sep 14 spend* assets * Based on economic interest, i.e. assuming equity accounted investments are proportionately consolidated ** Excludes development spend on an economic interest basis 16
Investment in growth opportunities dampens FCF Sep 13 Sep 14 Operating cashflow ZARm ZARm Down due to higher development spend Working capital Operating cash flow 3,904 2,490 Almost all etail operations now generating negative working capital Capex (1,978) (1,435) Capex Finance leases (382) (445) Pay-TV ZAR1bn (mainly DTT and facilities) Ecommerce ZAR278m Tax (1,591) (2,086) Finance leases Impacted by new satellite lease for MCSA Investment income 834 1,047 Investment income Free cash flow (FCF) 787 (429) Includes ZAR1bn dividend from Tencent 17
Balance sheet solid Sep 14 ZARm Increase US$369m of debt-funded acquisitions Debt: (offshore US$2.9bn) (33,203) Some currency impact on translation Net debt Cash: (South Africa R4.2bn) 10,755 Excludes transponder leases of ZAR7.6bn, considered to be an operating cost Closing net debt (22,448) Gearing 29% Interest cover 9x Net debt/ Adjusted EBITDA 1.36x Value of marketable listed securities/Debt 24.5x 18
Overview Financials Internet Pay-TV Outlook Appendix 19
Ecommerce growing strongly: YoY performance metrics Etail Classifieds Other Daily visitors Monthly active users Daily payment transactions +70% +39% 226m New listings Items sold Payments TPV +36% +83% +36% Average daily GMV New mobile listings Items sold on marketplaces 753k / day +59% +345% 20
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