NPSN.L Regulatory News (NPSN)

Interim report

We are pleased to present the independently

reviewed results of the Naspers group for the

six months to 30 September 2014

Commentary

Our businesses continued to deliver strong growth for the six months to 30 September 2014, with revenues measured on an economic-interest basis (including our proportionate share of associates and joint ventures) expanding by 30% year on year. During the period we made solid progress in building our ecommerce and pay-television platforms. Core headline earnings increased by 24%.

In ecommerce we are investing in formats such as etail (online retail), classifieds and payments. These are proven winners for customers and gaining market share from other formats. We aim to build leading positions in markets that we believe have the potential to grow significantly faster than mature economies in the years ahead. Execution capacity and operations are strengthening throughout the group and the focus is on customer satisfaction, engagement and retention.

Our online classifieds footprint now covers about 40 countries, all showing good user and listings growth. An agreement was concluded with Schibsted, subject to regulatory approval, covering key classifieds assets in Latin America and South East Asia that should enhance our consumer proposition and improve the outlook to our classifieds platforms in these regions.

In many of our etail businesses, revenue growth is accelerating.

In our pay-television segment the digital terrestrial television (DTT) network is now largely in place. The DTT subscriber base is increasing steadily, and we are well placed to realise DTT growth prospects once analogue switch-offs occur in sub-Saharan Africa. We are focused on delivering a differentiated content offering and unique services to our DTT customers.

With our internet and ecommerce businesses growing ahead of pay television and print, 72% of revenues, measured on an economic-interest basis, are now earned offshore. Internet revenues make up 58% of total group revenues.

FINANCIAL REVIEW

Revenue on an economic-interest basis was up 30% year on year. Consolidated revenues for the period were R34,4bn, 20% higher than last year driven by growth in the ecommerce and pay-television segments.

Tencent concluded its transaction with JD.com, resulting in a transfer of ecommerce revenues and related development costs to JD.com. Prior year numbers included higher ecommerce revenues and development costs, resulting in improved year-on-year profitability. Tencent is performing well and contributed R6,2bn to core headline earnings. This is a stronger than expected performance. Tencent has since concluded a number of additional strategic investments and will continue investing in developing additional products and services with a strong mobile focus.

Impacted by geopolitical issues, Mail.ru recorded weaker advertising revenues. Nevertheless, it contributed R528m to core headline earnings, up 30% on the prior year.

Development spend measured on an economic-interest basis increased by 42% to R4,4bn, driven by increased spend in the etail (including increased shareholdings in Souq and Flipkart) and payment businesses to scale and expand market share. Our online classifieds footprint is also larger compared to the prior year, which carries higher development costs. Larger markets in which we are investing include India, Brazil and Indonesia. The ramp up in development spend began in the second half of last year and we expect the year-on-year increase for the second half of this fiscal to be lower.

Our pay-television segment grew trading profit by 11% to R5bn on the back of good subscriber growth and after taking into account development spend of R642m incurred on DTT and online video initiatives.

Net interest expense on borrowings rose 55% to R787m, largely due to drawdowns on the revolving credit facility to fund new acquisitions and development spend, a weaker rand and the US$1bn bond issued in July 2013.

Consolidated net gearing remained low at 29%, while Moody's recently reaffirmed its investment-grade rating of Baa3 for our bonds.

Our share of equity-accounted results increased to R9,9bn and includes once-off gains on the remeasurement of Mail.ru's interest in VK.com and the sale of Mail.ru's shares in Qiwi amounting to R3,87bn, as well as R887m representing our share of the gain realised by Tencent on the sale of investments.

Tax expense increased to R1,75bn due to higher profits in pay television, the Allegro marketplace and the online price-comparison businesses.

The growth in revenue and increased earnings contribution from Tencent, Mail.ru, pay-television and some ecommerce assets is partially offset by expanded development spend, resulting in core headline earnings growing 24% to R6,1bn.

Free cash outflow of R428m was recorded due to higher development spend, capex to build our DTT footprint and in-country pay-television production facilities in East and West Africa. Also making an impact is the higher tax charge. Working capital in the etail businesses remains well managed.

The second half of the year is traditionally the most active part of the year for most of our businesses and we expect some pickup in development spend as we capitalise on the holiday season. This could result in lower core headline earnings for that period.

No forecasts in this interim report have been reviewed or reported on by the company's external auditor.

SEGMENTAL REVIEW

This segmental review includes our consolidated subsidiaries plus a proportionate consolidation of associated companies and joint ventures.

Internet

Our internet businesses remain the fastest-growing part of the group. Segment revenues were up 44% to R35,8bn. Within the internet segment, ecommerce grew at 43%, reporting revenues of R12,1bn. A strong performance by Tencent, partially offset by higher development spend in our own ecommerce businesses, resulted in a 67% increase in trading profit to R6,5bn.

Tencent

Tencent revenues were RMB38,1bn, up 37% year on year. This is a solid performance in a highly competitive market.

Increasing smartphone penetration and a growing Weixin base resulted in strong mobile revenue growth. Tencent also recorded a good pickup in advertising revenues, driven by video and performance-based social advertising. Weixin, known as WeChat internationally, increased monthly active users by 39% to 468m active accounts year on year.

Weixin enhances community and payment functionality and connects these capabilities with strategic partners. Tencent has continued to enrich its online-to-offline ecosystem through investments linked to tie-ups on its Weixin and other platforms. The ever-expanding range of products and services offered via smartphones bodes well for Tencent's future.

Mail.ru

A challenging economic environment that affected advertising revenues in particular and a weakening rouble have slowed Mail.ru's top-line growth to 22%. Revenues were RUB15,1bn in the first six months. The online games business performed relatively well despite the economic climate. The acquisition of the remaining shares in VK.com will allow Mail.ru to consolidate its leading position in the social network market in Russia.

Ecommerce

We are pleased with progress to date in our fastest-growing segment. Organic growth resulted in revenues for the period increasing by 43% to R12,1bn. The segment reported a trading loss of R2,4bn after incurring development spend of R3,6bn.

We stepped up our classifieds efforts to focus on 40 markets globally. Average daily new listings and daily active users on our sites in the second quarter of the financial year were 796 000 (+85%) and 16m (+73%), respectively. Globally about 42% of our traffic comes from mobile and, in some markets, it is as high as 81%. Continued improvement of our offering and focus on the customer resulted in a steady increase in engagement. Following recent brand migrations, the majority of our sites now operate under the OLX banner. Competition remains aggressive, but we have outgrown our competitors on the measures that matter most.

Our etail businesses are growing rapidly, with revenues on an economic-interest basis increasing by 65% year on year. Flipkart in India recorded a significant acceleration in its growth rates, driven by category expansion, exclusive supply and a differentiated logistics and fulfilment proposition on the ground. Souq in the Middle East is also scaling well. We are seeing meaningful increases in organic traffic in most of our markets as we deliver compelling customer propositions and scale our platforms. In South Africa the planned merger of Kalahari and Takealot will place the business on a better footing.

In our payment business, PayU, our new senior management team continues to strengthen talent across the business. We are transforming five existing regional payment businesses into one global company with a single brand and common supporting infrastructure, similar to the way in which we scaled our classifieds businesses. Daily payment transactions have increased 70% year on year. We will continue to grow our payment service provider business and are laying the groundwork for an innovative consumer electronic wallet or ewallet business.

Allegro, our large marketplace business, is improving top-line growth rates. Given the scale benefits of this platform, we have maintained high EBITDA margins. We continue to build our business, augmenting and increasing our consumer offerings and capabilities as well as our mobile products.

After consolidating our online price-comparison business under a single legal and management structure, we now operate the world's largest price-comparison business. The business is profitable and should continue to expand margins as it grows and leverages its scale.

The travel business in India is growing rapidly and outpacing competition by a significant margin. Based on the number of online transactions, it is already the largest online travel platform in India. Other online service businesses in Brazil are being developed, where Movile again delivered good results. Its Brazilian online food-ordering business, iFood, is scaling well, boosted by a merger with Just Eat's Brazilian subsidiary.

Pay television

This segment reported revenues of R20,2bn, growing 18% year on year. Trading profit of R5bn increased at a lower 11% due to investments to build DTT and online services and expand the local content offering.

The total subscriber base grew by 342 000 during the six months to over 8,4m households.

MultiChoice now operates DTT in 11 countries and has around 873 000 subscribers. We continue to scale our transmission platform and place decoders in markets where we expect analogue switch-offs in the foreseeable future. These switch-offs, once implemented, should provide momentum for further subscriber growth.

We continue to invest in local content and regional production hubs were established in Nigeria and Kenya. In South Africa we celebrated the significant milestone of over R1bn invested in local content in the past year.

Additional transponder capacity was purchased from Eutelsat and Intelsat to strengthen backup capacity and provide for future expansion of services.

Our customers rent some 600 000 movies per month on our BoxOffice service and we will soon expand this service into sub-Saharan Africa. The personal video recorder (PVR) base has also expanded to nearly 1,2m subscribers. We continue to invest in our online products and offerings.

An agreement to sell MWEB's infrastructure and business services to Dimension Data was signed. This will allow us to focus on consumer offerings instead of infrastructure. As part of the agreement, we will take a minority stake in a wi-fi business housing the infrastructure assets of MWEB and Always On.

Regulatory environments in our markets continue to evolve. A number of reviews are under way and we continue to engage with the regulatory authorities. With growing competition in sub-Saharan Africa, we are adding to our already-strong content and customer offerings.

Print media

This segment continues to face tough trading conditions and large-scale structural changes to the industry.

Revenues grew slightly but margins contracted further due to accelerated investment in digital solutions and new growth areas to diversify the revenue base. We will continue to adjust our structure and cost base to the challenging business reality.

DIRECTORATE

As previously reported, Steve Pacak (financial director) retired on 30 June 2014, but remained on the board as an alternate non-executive director.

Basil Sgourdos was appointed to the board as financial director effective 1 July 2014.

PREPARATION OF THE INTERIM REPORT

The preparation of the interim report was supervised by the financial director, Basil Sgourdos CA(SA). These results were made public on 25 November 2014.

On behalf of the board

Cape Town

25 November 2014

EBITDA refers to earnings before interest, tax, depreciation and amortisation.

Note: For a reconciliation of operating profit to profit before taxation, refer to the consolidated income statement.

* All components of other comprehensive income may subsequently be reclassified to profit or

loss, except for R611m (2013: R365m and 31 March 2014: R552m) included in the share of other

comprehensive income and reserves of equity-accounted investments.

Notes to the interim financial results

1. General information

Principal activities of Naspers and its operating subsidiaries, joint ventures and associated companies

(collectively "the group") are the operation of internet and media platforms. Our principal operations

are in ecommerce and other internet services, pay-television services and print media.

2. Basis of presentation and accounting policies

The interim report is prepared in accordance with International Financial Reporting Standard

(IAS) 34 Interim Financial Reporting, the SAICA Financial Reporting Guides as issued by the

Accounting Practices Committee and Financial Pronouncements as issued by the Financial

Reporting Standards Council and the requirements of the Companies Act of South Africa.

The accounting policies used in preparing the interim results are consistent with those applied in the

previous annual financial statements.

The group has adopted all new and amended accounting pronouncements issued by the

International Accounting Standards Board (IASB) that are effective for financial years commencing

1 April 2014. None of the new or amended accounting pronouncements that are effective for the

financial year commencing 1 April 2014 are expected to have a material impact on the group.

Trading profit excludes amortisation of intangible assets (other than software), equity-settled share-

based charges, retention option expenses and other gains/losses, but includes the finance cost on

transponder leases.

Core headline earnings exclude once-off and non-operating items. We believe it is a useful measure

of the group's sustainable operating performance. However, this is not a defined term under

International Financial Reporting Standards (IFRS) and may not be comparable with similarly titled

measures reported by other companies.

3. Review by the independent auditor

This interim report has been reviewed by the company's auditor, PricewaterhouseCoopers Inc.,

whose unqualified report appears at the end of this interim report. The auditor's report does not

necessarily cover all information contained in this interim report.

4. Headline and core headline earnings

5. Interest received/(paid)

6. Equity-accounted results

The group's equity-accounted associated companies and joint ventures contributed to the interim

financial results as follows:

7. Profit before taxation

In addition to the items detailed above, profit before taxation has been determined after taking into

account, inter alia, the following:

8. Goodwill

Goodwill arises on the acquisition of interests in subsidiaries and is subject to an annual impairment

assessment. Movements in the group's goodwill for the period are detailed below:

9. Investments and loans

The following relates to the group's investments and loans as at the end of the reporting period:

10. Commitments and contingent liabilities

Commitments relate to amounts for which the group has contracted, but that have not yet been

recognised as obligations in the statement of financial position.

The group operates a number of businesses in jurisdictions where withholding taxes are payable

on certain transactions or payments. In some circumstances transactions could potentially lead to

withholding taxes being payable. Our current assessment of possible withholding tax exposures,

including interest and potential penalties, amounts to approximately R2bn (31 March 2014: R1,6bn).

The group signed an agreement with Intelsat Satellite LLC for additional transponder capacity

effective 2017, to cater for future growth in satellite services and to provide for in-orbit backup of

existing capacity.

11. Assets classified as held-for-sale

At 30 September 2014 the group classified the net assets of its MWEB Business, Optinet Services,

Networks and Wi-fi divisions, amounting to R575m as held-for-sale. The wi-fi assets will form part

of the purchase price for the group's interest in a joint venture to be established with Dimension

Data. The composite transaction is expected to be completed by 31 March 2015, pending regulatory

approval.

An impairment loss of R106m was recognised in the income statement as part of "Other gains/

(losses) - net" with respect to this transaction.

12. Business combinations and other acquisitions

Various acquisitions were made within the Movile group during the reporting period. These

acquisitions resulted in the recognition of intangible assets amounting to R139m and goodwill of

R326m. The remainder of the increase in goodwill during the reporting period relates to various

smaller acquisitions.

With respect to investments in associated companies, the group participated in two funding rounds

of Flipkart Private Limited (Flipkart), a leading ecommerce platform in India. These funding rounds,

during May and August 2014, resulted in additional investments of R555m and R2,67bn respectively

in cash. The group now has a 16,63% interest in Flipkart on a fully diluted basis.

The investments were primarily funded through the utilisation of existing credit facilities.

13. Financial instruments

The group's activities expose it to a variety of financial risks such as market risk (including currency

risk, fair value interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity

risk.

The interim report does not include all financial risk management information and disclosures

required in the annual financial statements and should be read in conjunction with the group's

annual financial statements as at 31 March 2014. There have been no material changes in the

group's credit, liquidity, market risks or key inputs used in measuring fair value since 31 March 2014.

The fair values of the group's financial instruments that are measured at fair value at each reporting

period are categorised as follows:

 The fair values of level 2 and 3 instruments are measured as follows:

 - Foreign exchange contracts - market observable quotes of forward foreign exchange rates on

instruments that have a similar maturity profile.

 - Interest rate swaps - discounted cash flow techniques using only market observable

information.

 - Shareholders' liabilities - option pricing models and discounted cash flow techniques.

Significant inputs include: fair values of underlying shares, strike prices, risk-free interest rates,

calculated volatilities and the period to exercise.

 - Earn-out obligations - discounted cash flow techniques. Key inputs include: forecasts of the

extent to which performance criteria are expected to be met, discount rates and contractually

specified earn-out payments.

A reconciliation of the movement in the carrying value of level 3 fair value measurements is

provided below:

The group discloses the fair values of the following financial instruments as their carrying values are

not a reasonable approximation of their fair values:

14. Events after the reporting period

Subsequent to the end of the reporting period, the group entered into an agreement with Takealot

Online (RF) Proprietary Limited (Takealot) for the merger of the group's Kalahari business with

Takealot. The transaction is subject to regulatory approval.

The group also invested a further US$27m in its joint venture Konga Online Shopping Limited

(Konga), a leading etail platform in Nigeria, during October 2014 in cash. The group now has a

40,22% interest in Konga on a fully diluted basis.

During November 2014, Naspers, Schibsted Media Group, Telenor Holdings and Singapore Press

Holdings entered into an agreement to establish joint ventures for the development of their online

classifieds platforms in Brazil, Indonesia, Thailand and Bangladesh. The transactions are subject to

European Union approvals.

Directors

T Vosloo (chair), B van Dijk (chief executive), C L Enenstein, D G Eriksson, F-A du Plessis, R C C Jafta, F L N Letele, Y Ma, D Meyer, R Oliveira de Lima, T M F Phaswana, V Sgourdos, J D T Stofberg, B J van der Ross, J J M van Zyl

Alternate directors

S J Z Pacak, M R Sorour

Company secretary

G Kisbey-Green

Registered office

40 Heerengracht, Cape Town 8001

(PO Box 2271, Cape Town 8000)

Transfer secretaries

Link Market Services South Africa Proprietary Limited

13th Floor, Rennie House, 19 Ameshoff Street, Braamfontein 2001

(PO Box 4844, Johannesburg 2000)

Sponsor

Investec Bank Limited

ADR programme

Bank of New York Mellon maintains a GlobalBuyDIRECTTM plan for Naspers Limited. For additional information, please visit Bank of New York Mellon's website at www.globalbuydirect.com or call Shareholder Relations at 1-888-BNY-ADRS or 1-800-345-1612 or write to: Bank of New York Mellon, Shareholder Relations Department - GlobalBuyDIRECTTM, Church Street Station, PO Box 11258, New York, NY 10286-1258, USA.

Important information

The 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", "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 judgements 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 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.

www.naspers.com