Slide 1: Analyst booklet – detailed financials
Analyst booklet – detailed financials For the six months ended 30 September 2018
Slide 2: Important information
Important information This report 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”, “endeavor” and similar expressions are intended to identify
Slide 3: Contents
Contents Operational review 01 Financial review 02 VE / MultiChoice Group (MCG) 03 Appendix 04 3
Slide 4: Operational review
OPERATIONAL REVIEW NASPERS 4
Slide 5: Classifieds: global leader, growing fast and enhancing value
Classifieds: global leader, growing fast and enhancing value We are the largest… we are growing fast. • Global leader in online classifieds with more than 20 brands across 40 Industry peers 2 : Global footprint - 40 countries1 countries. revenue growth rates (reported currency) • 5 000 employees in
Slide 6: Classifieds: monetisation metrics continue to improve
Classifieds: monetisation metrics continue to improve OLX Group: average revenue/internet user (ARPIU) 1 : Average monthly paying listers2 (m) • OLX continued to increase monetisation monetisation countries (US$) in the markets where it operates. 33% • User engagement continued to reach 19% record l
Slide 7: Classifieds: large countries performing strongly
Classifieds: large countries performing strongly • Avito’s revenue increased 31% to .pl US$162m, driven by enhanced product Brazil features and good traction in the cars # of # of # of segment. The business continued to professional +20% professional +10% professional 13% generate trading margins ab
Slide 8: Classifieds: US monetisation solid, ahead of competitors
Classifieds: US monetisation solid, ahead of competitors • US: Solid start to monetisation with continued improvement in user experience through product optimisation and lister retention and Monthly unique listers (MULs), (m) Monthly unique buyers, (m) Conversations, (m)1 engagement initiatives. +38
Slide 9: Classifieds: making transactions more convenient
Classifieds: making transactions more convenient Convenience is the future of classifieds. Extending the business model The convenient transactions model enhances the existing business and offers a Convenient transactions risk-free tool to buy and sell. The model plugs into the existing business and
Slide 10: Food delivery: expanding choice, delivering convenience
Food delivery: expanding choice, delivering convenience Global footprint - leadership position in 40 markets • Food delivery is at the beginning of its GMV (US$m)1 journey and the opportunity for 46% continued growth is immense. • Food delivery remains a focus area as this is a large, underpenetrate
Slide 11: Food delivery: leadership positions in high-growth markets
Food delivery: leadership positions in high-growth markets • Swiggy doubled its footprint in the six months and is now present in 34 cities across India, with over 40k restaurant partners on its platform. • iFood’s 10.8m monthly orders in Market leader in India Market leader in Latin America Global
Slide 12: Payments: scaling core business, gaining traction in new initiatives
Payments: scaling core business, gaining traction in new initiatives Global footprint – operations in 18 markets • PayU experienced strong growth in its Average daily transactions (m)1 core business, increasing the number of transactions processed to over 400m for 39% the period. • India now account
Slide 13: Etail: businesses scale and gain market share
Etail: businesses scale and gain market share eMAG Group: • eMAG generated strong GMV growth and extended market leadership in Romania. eMAG’s operations in Hungary, Bulgaria and Poland continue 22% (24%) to scale well. 55% (58%) Takealot Group: • Takealot.com’s leadership in South GMV (US$m)1 Afric
Slide 14: Financial review
FINANCIAL REVIEW NASPERS 1s
Slide 15: Synopsis of financials
Synopsis of financials Revenue (US$bn)1 Development spend (US$bn)1 23% (29%) -17% (-21%) 0.5 11.0 0.4 9.0 1H FY18 1H FY19 1H FY18 1H FY19 Trading profit (US$bn)1,2 Core headline earnings (US$bn)2 39% (39%) 22% (34%) 2.0 1.7 1.7 1.2 1H FY18 1H FY19 1H FY18 1H FY19 1 Results reported on an economic-in
Slide 16: Global business, pure-play consumer-internet group in future
Global business, pure-play consumer-internet group in future • 86% (1H FY18 82%) of revenues are 1H FY19 Revenue by geography1 1H FY19 Revenue by type1 now earned outside South Africa. • Annuity income (i.e. subscription revenues, IVAS and gaming) accounted for 52% of revenues, down 4% YoY due to th
Slide 17: Strong revenue growth and improving profitability
Strong revenue growth and improving profitability • Revenue growth remains strong at Constant currency revenue and trading profit growth by segment (%)1 29% YoY. Profitability has significantly improved, with trading profit growth Revenue reported at 34%. Trading profit • Ecommerce revenue increased
Slide 18: Improving operating leverage across ecommerce
Improving operating leverage across ecommerce YoY change in trading loss/profit margins (%)1 • Ecommerce negative trading margin TP Margin 1H FY18 halved from 21% to 11%. TP Margin 1H FY19 28% • Margins improved across the ecommerce segment – the only 10% exception being food delivery, where losses
Slide 19: Development spend down as businesses increase profitability
Development spend down as businesses increase profitability Development spend (US$m)1 • Development spend was down 21%. Older investments • Proportionate share of development 1 084 New investments spend of associates and joint ventures 956 (i.e. the difference between -17% (-21%) development spend o
Slide 20: Consolidated development spend also trending downwards
Consolidated development spend also trending downwards Development spend (US$m)1 Older investments • Consolidated development spend was New investments down 27% YoY (US$98m) as the ecommerce businesses continued to scale and move toward profitability. 861 669 -30% (-27%) • Development spend on more
Slide 21: Classifieds: now profitable including letgo
Classifieds: now profitable including letgo Revenue and trading profit/(loss), (US$m)1 • Classifieds is now profitable including Revenue letgo, although anticipated marketing Trading profit/(loss) spend may impact second-half results. 628 • Classifieds continued its strong growth trajectory, driven
Slide 22: Food delivery: strong topline growth, further strategic investment
Food delivery: strong topline growth, further strategic investment Revenue and trading loss/profit (US$m)1 • Strong contributions from all businesses Revenue with revenue growth of 79%. Trading loss • Further investment in scaling operations resulted in trading losses expanding to US$41m. 223% (79%)
Slide 23: Payments: investment in credit as PSP approaches profitability
Payments: investment in credit as PSP approaches profitability Revenue and trading loss (US$m)1 • PayU reported strong progress in its Revenue PSP (payment service provider) Trading loss business, growing revenue while containing costs. 294 • Revenue growth of 33% was driven by a 35% increase in tra
Slide 24: Travel: sustainable growth by improving unit economics
Travel: sustainable growth by improving unit economics Revenue and trading loss (US$m)1,2 Revenue • MakeMyTrip (MMT) reported solid Trading loss revenue growth. • All MMT segments performed well: - hotels and packages room nights increased 16% - room nights were up 18% 211 - air travel transactions
Slide 25: Etail: increased profitability, improved margins
Etail: increased profitability, improved margins Revenue and trading loss (US$m)1 • eMAG Group revenue grew 18% YoY. eMAG further improved its profitability Revenue by 55% YoY, boosted by increased 2 060 Trading loss gross-profit margins and cost control. • Takealot, extended its market 1 659 leader
Slide 26: Social and internet platforms: healthy contributions to earnings growth
Social and internet platforms: healthy contributions to earnings growth • Tencent grew revenue 33% YoY to RMB228bn in the first nine months of Tencent revenue (RMBm)1 Mail.ru revenue (RUBm)2 2018, with growth in value-added 33% services, online advertising and other 30% services, such as payment-rel
Slide 27: Segmental detail
Segmental detail Revenue EBITDA Trading profit 1H FY18 1H FY19 % 1H FY18 1H FY19 % 1H FY19 1H FY19 % US#039;m US#039;m Change US#039;m US#039;m Change US#039;m US#039;m Change Internet 6 906 9 028 31% 1 564 2 056 31% 1 418 1 846 30% Ecommerce 1 549 1 987 28% (292) (180) 38% (318) (209) 34% - Classifieds 289 405 40% (
Slide 28: FCF: higher ecommerce profitability converts into cash generation
FCF: higher ecommerce profitability converts into cash generation • Improved ecommerce profitability, Consolidated trading profit from profitable ecommerce Sources of free cash inflow excluding VE (US#039;m)1 particularly in classifieds, resulted in a businesses (US$m) greater contribution to overall c
Slide 29: Strong turn around in FCF
Strong turn around in FCF US$m 1H FY18 1H FY19 Free cash flow (FCF) positively impacted by: • US$118m increase in cash from EBITDA 218 276 operations (excluding working capital) Non-cash items 45 105 due to a higher contribution from Working capital (333) (148) profitable businesses and lower Cash g
Slide 30: Holding company sources of cash and commitments
Holding company sources of cash and commitments • Inflows increased by 47%. US$m 1H FY18 1H FY19 • Interest income has been included in the analysis as it is now meaningful for Cash remitted to/generated at Holdco level: the group given cash and short term Tencent dividend 247 332 investment balance
Slide 31: Healthy returns from disposals, M&A focused on core segments
Healthy returns from disposals, M&A focused on core segments Acquisitions/Investments over time (US$m) Exits (US$m) • In FY19 the group invested around 1 005 US$750m. Significant transactions 2 200 included: ‐ Dubizzle (US$190m) ‐ Ambatana/letgo (US$189m) 37 ‐ Frontier Car Group (US$89m) 750 ‐ Swigg
Slide 32: Continuing to generate excellent returns
Continuing to generate excellent returns All internet investments excluding Tencent Current internet portfolio excluding Tencent (US$bn)2 • By comparing all internet investments (FY08 –1HFY19), (US$bn)1 (excluding Tencent) since 2008 against current market valuations, the group 17% IRR generated an
Slide 33: Summarised income statement
Summarised income statement • An increase of US$651m in share of US$m 1H FY182 1H FY19 equity accounted investments was attributable to: Revenue1 8 987 11 022 ‐ Tencent (US$598m), Less: Equity-accounted investments (5 882) (7 678) ‐ Reduced losses from MMT and Delivery Hero. Consolidated revenue 3 1
Slide 34: Finance costs down YoY
Finance costs down YoY Interest paid and received US$m 1H FY181 1H FY19 • Interest paid remained stable. • Interest received increased by US$114m YoY, due to higher cash and short-term Interest paid (132) (142) cash investment balances. Loans and overdrafts (100) (101) Transponder leases (26) (25) O
Slide 35: Contribution by associates and joint ventures
Contribution by associates and joint ventures 1H FY19 (US$m) Company PPA IFRS Other Core HEPS • Equity-accounted results include, results adjustments results adjustments contribution amongst others, the group’s share of Tencent1 2 213 - 2 213 (438) 1 775 earnings of Tencent, Mail.ru, MMT, Mail.ru1 (
Slide 36: Healthy increase in core headline earnings
Healthy increase in core headline earnings Trend in core headline earnings per share (US$)1 • Core headline earnings (which excludes once-off and non-operating items such CAGR +45% as amortisation of intangible assets recognised in business combinations, 5.81 39% etc.), is not defined under IFRS, bu
Slide 37: Core headline earnings reconciliation
Core headline earnings reconciliation • The main contributor of core headline earnings growth was Tencent, contributing US$1.8bn (+17% YoY). US$m 1H FY181 1H FY19 • A consolidated trading profit improvement of 83% YoY further fuelled growth. Headline earnings 910 2 766 • Fair-value adjustments and c
Slide 38: Tencent contribution to core headline earnings
Tencent contribution to core headline earnings 1H FY18 1 H FY19 Tencent June 17 Naspers’s share Tencent June 18 Naspers’s share (RMBm)1 (US$m)3 (RMBm)1 (US$m)3 Tencent profit attributable to equity holders 32 707 1 615 41 157 1 944 Adjustments to core: (2 105) (99) (3 128) (169) - Impairment of inve
Slide 39: Strong balance sheet provides flexibility to pursue growth ambitions
Strong balance sheet provides flexibility to pursue growth ambitions • The group has a strong net cash position US$m FY18 1H FY19 of US$8.7bn, attributable to proceeds retained from the sale of Flipkart and Debt1: (offshore US$3.2bn) (3 216) (3 251) the disposal of Tencent shares in FY18. Cash2: (So
Slide 40: Debt maturity profile and debt position
Debt maturity profile and debt position Debt Debt maturity profile (US$m) • US$1bn 7yr bond issued July 2013 (6% coupon). • US$1.2bn 10yr bond issued July 2015 (5.5% coupon). Group RCF • US$1bn 10yr bond issued July 2017 US$2 500m (4.85% coupon). Bond Bond Bond Revolving credit facility (RCF) US$1 2
Slide 41: Current assets and liabilities
Current assets and liabilities • The assets and liabilities of the video- entertainment business were classified Current assets (US$m) FY18 1H FY19 Current liabilities (US$m) FY18 1H FY19 as held for distribution at the end of the period following the announcement of Inventory 231 201 Current portio
Slide 42: Capital expenditure
Capital expenditure Split by business • Current estimates for maintenance US$m 1H FY18 1H FY19 capex are: ‐ Media24 <ZAR100m ‐ Ecommerce ~US$50m Land, buildings & manufacturing equipment 14 39 ‐ Video entertainment ~ZAR1bn • The increase in capital expenditure Transmission equipment 4 6 relates main
Slide 43: FX exposure: hedging
FX exposure: hedging SA video entertainment, media and corporate Open FEC positions ZAR/US$ FX Cover US$m ZAR rate • Video entertainment SA: US$2.1bn and €53m (programming rights and leases). 12 months out 995 13.78 • Video entertainment SSA: ZAR16.7bn and US$144m (programming rights). 13 to 36 mont
Slide 44: VE/MultiChoice Group (MCG)
VE/MULTICHOICE GROUP (MCG) 44
Slide 45: MCG: healthy subscriber growth, changing mix
MCG: healthy subscriber growth, changing mix • The macroeconomic environment remains a challenge, notably the VAT hike in SA, ongoing macro pressures Video-entertainment subscriber homes (‘000) and currency volatility in SSA, 14% particularly the Angolan kwanza. • The segment nonetheless recorded To
Slide 46: MCG: subscriber growth underpinning revenue growth
MCG: subscriber growth underpinning revenue growth Video entertainment financials (US$m)1 Revenue • The segment reported 3% YoY revenue growth (+7% YoY in local currency), led 3 677 mainly by subscription revenue growth 3 396 in sub-Saharan Africa. +3% (+7%) • The FIFA World Cup drove subscriber net
Slide 47: MCG: value strategy offset tough macro
MCG: value strategy offset tough macro ZAR1 weakened vs US$ … … which, together with absorbing VAT increase, affected results (US$m) • Financials impacted by local currency pricing vs US$ input costs. FY17 FY18 1H FY19 0% (3%) • SA revenues were marginally higher in local currency as a function of 8
Slide 48: MCG: SA - solid performance in tough macro environment
MCG: SA - solid performance in tough macro environment SA net additions (‘000) • SA added 285k subscribers in 1H 2019, with a total base of 7.2m households at September 2018. 309 6 month average 316 311 286 • The growth trend in the mass-market 278 285 continued, while the premium tier is 248 232 un
Slide 49: MCG: SSA - YoY subscriber growth momentum intact
MCG: SSA - YoY subscriber growth momentum intact SSA DTH net additions (‘000) • Despite macro challenges, value strategy continues to support business 6 month average turnaround via subscriber growth. 418 • SSA retained a higher degree of 215 121 208 33 126 182 32 108 110 volatility than SA with reg
Slide 50: MCG: SSA - turnaround continues
MCG: SSA - turnaround continues ARPU (US$) Cash/receivables impacted by illiquidity (US$m) • Further ARPU reduction in the SSA DTH business was due to currency 1H FY18 devaluations (mainly Angola) and 1H FY19 limited price increases under the value strategy. 61% • DTT ARPUs rose marginally due to th
Slide 51: MCG: listing and simultaneous unbundling will unlock value
MCG: listing and simultaneous unbundling in 1H calendar year 2019 will unlock value Pre-transaction structure MCG post-transaction Existing Naspers Single class of shares JSE listed shareholders 20% 80% Internet Media VE JSE listed 25% 75% South Africa Transaction rationale MCG investment case • Nas
Slide 52: Appendix
APPENDIX NASPERS 52
Slide 53: Group structure
Group structure Global platform operator Internet Video Media entertainment6 Social & internet Classifieds B2C Payments Naspers Ventures platforms 100%1 80% 97.6% Food Ventures 31.2% 80% 85% 71.1% 96.1% 22.6% 80.3% 24.5% 28.4% 100% 43.1%3 21.4% 53.5%4 12.1% 100% 80%2 18.8% 22.8% 21.1% 35.7% 37.6% 24
Slide 54: Glossary of terms
Glossary of terms — M&A: Mergers and acquisitions — ARPU: Average revenue per user — MCG: MultiChoice Group — ARPIU: Average revenue per internet user — MAU: Monthly active user — CAGR: Cumulative annual growth rate — MUL: Monthly unique lister — DTH: Direct-to-Home — PSP: Payments service provider
Slide 55: Thank you
Eoin Ryan +1-347-210-4305 THANK YOU InvestorRelations@naspers.com www.naspers.com 55