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NASPERS LIMITED - Reviewed Interim Financial Results for the six months to 30 September 2014

Release Date: 25/11/2014 07:05
Code(s): NPN     PDF:  
Wrap Text
Reviewed Interim Financial Results for the six months to 30 September 2014

Naspers Limited
Incorporated in the Republic of South Africa
(Registration number: 1925/001431/06)
("Naspers")
JSE share code: NPN     ISIN: ZAE000015889
LSE share code: NPSN    ISIN: US 6315121003

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

Ton Vosloo                  Bob van Dijk
Chair                       Chief executive

Cape Town
25 November 2014
                                           Revenue                                                EBITDA                                        Trading profit
                                       Six months ended                   Year ended         Six months ended             Year ended           Six months ended          Year ended
                                         30 September                       31 March           30 September                 31 March             30 September              31 March

                                     2014           2013                        2014       2014        2013                     2014       2014        2013                    2014
Segmental                        Reviewed       Reviewed           %         Audited   Reviewed    Reviewed          %       Audited   Reviewed    Reviewed         %       Audited
review                                R'm            R'm      Change             R'm        R'm         R'm     Change           R'm        R'm         R'm     Change          R'm
Internet                           35 817         24 887          44          57 018      7 619       4 748         60         8 540      6 477       3 879         67        6 638
– Tencent                          22 370         15 285          46          34 256      9 126       5 839         56        12 232      8 248       5 192         59       10 792
– Mail.ru                           1 306          1 100          19           2 407        714         601         19         1 286        655         546         20        1 175
– Ecommerce                         12 141         8 502          43          20 355    (2 221)     (1 692)       (31)       (4 978)    (2 426)     (1 859)       (31)      (5 329)
Pay television                     20 186         17 077          18          36 271      6 000       5 375         12        10 370      4 969       4 477         11        8 520
Print media                         5 979          5 642           6          11 692        269         408         34         1 073          8         214       (96)          606
Corporate services                      –              –           –               –       (96)        (63)       (52)         (150)       (98)        (64)       (53)        (151)
Segment                            61 982         47 606          30         104 981     13 792      10 468         32        19 833     11 356       8 506         34       15 613
Less: Equity-accounted
 investments                      (27 619)      (18 851)          47        (42 253)    (9 613)     (6 336)         52      (13 442)    (8 558)     (5 580)         53     (11 707)
Consolidated                       34 363         28 755          20          62 728      4 179       4 132          1         6 391      2 798       2 926        (4)        3 906

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

                                       Six months ended       Year ended
                                         30 September           31 March
                                         2014          2013         2014
Reconciliation of trading profit     Reviewed      Reviewed      Audited
to operating profit                       R'm           R'm          R'm
Trading profit                          2 798         2 926        3 906
Finance cost on transponder leases        182           173          356
Amortisation of intangible assets       (361)         (410)        (711)
Other gains/(losses) – net              (124)         (958)      (1 320)
Retention option expense                (124)          (74)        (132)
Equity-settled share-based charges      (118)          (36)         (81)
Operating profit                        2 253         1 621        2 018

Note: For a reconciliation of operating profit to profit before taxation, refer to the consolidated income
statement.
                                                        Six months ended         Year ended
                                                          30 September             31 March
                                                         2014          2013            2014
Consolidated                                         Reviewed      Reviewed         Audited
income statement                               Note       R'm           R'm             R'm
Revenue                                                34 363        28 755          62 728
Cost of providing services and sale of goods         (18 751)      (15 856)        (35 416)
Selling, general and administration expenses         (13 235)      (10 320)        (23 974)
Other gains/(losses) – net                              (124)         (958)         (1 320)
Operating profit                                        2 253         1 621           2 018
Interest received                                5        206           257             606
Interest paid                                    5    (1 332)       (1 055)         (2 466)
Other finance income/(costs) – net               5       (82)         (117)           (267)
Share of equity-accounted results                6      9 932         5 139          10 835
– excluding net gain on disposal of
  investments                                           5 178         3 853           7 906
– net gain on disposal of investments                   4 754         1 286           2 929
Impairment of equity-accounted investments                  –         (753)         (1 201)
Dilution losses on equity-accounted
 investments                                             (71)         (836)           (852)
Gains on acquisitions and disposals                       118           614             751
Profit before taxation                           7     11 024         4 870           9 424
Taxation                                              (1 755)       (1 447)         (2 895)
Profit for the period                                   9 269         3 423           6 529
Attributable to:
Equity holders of the group                             8 937         3 112           5 751
Non-controlling interest                                  332           311             778
                                                        9 269         3 423           6 529
Core headline earnings for the period (R'm)      4      6 077         4 920           8 616
Core headline earnings per N ordinary
 share (cents)                                          1 528         1 248           2 181
Fully diluted core headline earnings per
 N ordinary share (cents)                               1 486         1 215           2 125
Headline earnings for the period (R'm)           4      4 484         3 641           5 981
Headline earnings per N ordinary
 share (cents)                                          1 128           923           1 514
Fully diluted headline earnings per
 N ordinary share (cents)                               1 096           899           1 475
Earnings per N ordinary share (cents)                   2 248           789           1 456
Fully diluted earnings per N ordinary
 share (cents)                                          2 185           769           1 418
Net number of shares issued ('000)
– At period end                                       409 527       395 883         397 625
– Weighted average for the period                     397 625       394 272         395 078
– Fully diluted weighted average                      409 078       404 898         405 469

                                                     Six months ended       Year ended
                                                       30 September           31 March
                                                       2014         2013          2014
Condensed consolidated                             Reviewed     Reviewed       Audited
statement of comprehensive income                       R'm          R'm           R'm
Profit for the period                                 9 269        3 423         6 529
Total other comprehensive income, net of tax,
 for the period*                                      2 107        5 313         6 727
Translation of foreign operations                       888        3 750         4 910
Net fair value gains/(losses)                             4            –           (7)
Cash flow hedges                                        123         (34)         (204)
Share of other comprehensive income and reserves
 of equity-accounted investments                      1 116        1 561         1 951
Tax on other comprehensive income                      (24)           36            77

Total comprehensive income for the period            11 376        8 736        13 256
Attributable to:
Equity holders of the group                          11 103        8 372        12 492
Non-controlling interest                                273          364           764
                                                     11 376        8 736        13 256

* 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.

                                                          Six months ended       Year ended
                                                            30 September           31 March
                                                            2014          2013         2014
Condensed consolidated                                  Reviewed      Reviewed      Audited
statement of changes in equity                               R'm           R'm          R'm
Balance at beginning of the period                        68 205        55 853       55 853
Changes in share capital and premium
Movement in treasury shares                                1 813         (245)         (17)
Share capital and premium issued                             234           304        1 293
Changes in reserves
Total comprehensive income for the period                 11 103         8 372       12 492
Movement in share-based compensation reserve                 347           214          487
Movement in existing control business combination
 reserve                                                   (225)          (52)        (340)
Direct retained earnings movements                             –             –           23
Dividends paid to Naspers shareholders                   (1 702)       (1 525)      (1 526)
Changes in non-controlling interest
Total comprehensive income for the period                    273           364          764
Dividends paid to non-controlling shareholders           (1 264)       (1 034)      (1 142)
Movement in non-controlling interest in reserves             378           237          318
Balance at end of the period                              79 162        62 488       68 205
Comprising:
Share capital and premium                                 18 385        15 120       16 337
Retained earnings                                         39 205        29 310       31 971
Share-based compensation reserve                           5 817         4 576        5 082
Existing control business combination reserve            (1 068)         (733)      (1 065)
Hedging reserve                                            (176)         (155)        (262)
Valuation reserve                                          3 513         2 817        3 005
Foreign currency translation reserve                     12 047         9 874        11 085
Non-controlling interest                                   1 439         1 679        2 052
Total                                                     79 162        62 488       68 205

                                                            30 September           31 March
                                                            2014          2013         2014
Condensed consolidated statement                        Reviewed      Reviewed      Audited
of financial position                            Note        R'm           R'm          R'm
Assets
Non-current assets                                       116 650        90 304      100 212
Property, plant and equipment                             17 280        15 644       17 053
Goodwill                                            8     25 935        24 609       25 811
Other intangible assets                                    5 767         5 738        5 702
Investments in associates                           9     64 063        41 364       47 755
Investments in joint ventures                       9      1 719           838        1 727
Investments and loans                               9        742         1 119        1 193
Derivative financial instruments                   13         30            16            2
Deferred taxation                                          1 114           976          969
Current assets                                            36 524        30 965       28 390
Inventory                                                  4 204         2 486        2 882
Programme and film rights                                  3 955         3 147        1 979
Trade receivables                                          4 983         5 007        4 849
Other receivables and loans                               10 518         3 530        4 807
Derivative financial instruments                   13        219           501          209
Cash and cash equivalents                                 12 061        16 262       13 664
                                                          35 940        30 933       28 390
Assets classified as held-for-sale                 11        584            32            –

Total assets                                             153 174       121 269      128 602
Equity and liabilities
Share capital and reserves                                77 723        60 809       66 153
Share capital and premium                                 18 385        15 120       16 337
Other reserves                                            20 133        16 379       17 845
Retained earnings                                         39 205        29 310       31 971
Non-controlling shareholders' interest                     1 439         1 679        2 052
Total equity                                              79 162        62 488       68 205
Non-current liabilities                                   42 052        36 223       36 549
Capitalised finance leases                                 7 026         6 730        6 768
Liabilities – interest bearing                            32 842        27 225       27 395
            – non-interest bearing                           452           463          452
Post-employment medical liability                            182           173          176
Derivative financial instruments                   13        317           336          364
Deferred taxation                                          1 233         1 296        1 394
Current liabilities                                       31 960        22 558       23 848
Current portion of long-term debt                          2 826         2 192        2 628
Trade payables                                             6 448         5 669        5 318
Accrued expenses and other current liabilities            20 529        12 245       13 981
Derivative financial instruments                   13        842           875          840
Bank overdrafts and call loans                             1 306         1 577        1 081
                                                          31 951        22 558       23 848
Liabilities classified as held-for-sale            11          9             –            –

Total equity and liabilities                             153 174       121 269      128 602
Net asset value per N ordinary share (cents)              18 979        15 360       16 637

                                                         Six months ended        Year ended
                                                           30 September            31 March
                                                          2014          2013           2014
Condensed consolidated                                Reviewed      Reviewed        Audited
statement of cash flows                                    R'm           R'm            R'm
Cash flows from operating activities
Cash generated from operating activities                 2 490         3 904          7 383
Interest income received                                   208           261            734
Dividends received from equity-accounted companies       1 048           833            841
Interest costs paid                                    (1 139)         (810)        (2 365)
Taxation paid                                          (2 086)       (1 590)        (3 319)
Net cash generated from operating activities               521         2 598          3 274
Cash flows from investing activities
Acquisitions and disposals of tangible
 and intangible assets                                 (1 435)       (1 978)        (4 442)
Acquisitions and disposals of subsidiaries,
 associates and joint ventures                         (3 332)       (3 127)        (4 434)
Cash movement in other investments and loans               323           895            840
Net cash utilised in investing activities              (4 444)       (4 210)        (8 036)
Net cash generated from financing activities             1 729         1 552          2 114
Net movement in cash and cash equivalents              (2 194)          (60)        (2 648)
Foreign exchange translation adjustments                   366           515          1 001
Cash and cash equivalents at beginning of the period    12 583        14 230         14 230
Cash and cash equivalents at end of the period          10 755        14 685         12 583

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
                                                           Six months ended          Year ended
                                                             30 September              31 March
                                                             2014          2013            2014
     Calculation of headline                             Reviewed      Reviewed         Audited
     and core headline earnings                               R'm           R'm             R'm
     Net profit attributable to shareholders                8 937         3 112           5 751
     Adjusted for:
     – impairment of property, plant and equipment
       and other assets                                       148            24             112
     – impairment of goodwill and intangible assets            24         1 063           1 461
     – profit on sale of property, plant and equipment
       and intangible assets                                  (3)          (99)            (58)
     – gains on acquisitions and disposals of
       investments                                          (107)         (111)            (45)
     – remeasurement of previously held interest             (36)         (516)           (700)
     – dilution losses on equity-accounted investments         71           836             852
     – remeasurements included in equity-accounted
       earnings                                           (4 534)       (1 286)         (2 447)
     – impairment of equity-accounted investments               –           753           1 201
                                                            4 500         3 776           6 127
     Total tax effects of adjustments                         (4)         (103)            (81)
     Total adjustment for non-controlling interest           (12)          (32)            (65)
     Headline earnings                                      4 484         3 641           5 981

                                                          Six months ended      Year ended
                                                            30 September          31 March
                                                           2014         2013          2014
    Calculation of headline                            Reviewed     Reviewed       Audited
    and core headline earnings                              R'm          R'm           R'm
    Headline earnings                                     4 484        3 641         5 981
    Adjusted for:
    – equity-settled share-based charges                    587          429         1 120
    – (recognition)/reversal of deferred tax assets           –         (49)            58
    – amortisation of intangible assets                     741          690         1 385
    – fair value adjustments and currency translation
      differences                                           135          125          (47)
    – retention option expense                              109           72           128
    – business combination losses/(gains)                    21           12           (9)
    Core headline earnings                                6 077        4 920         8 616

5.    Interest received/(paid)
                                                           Six months ended      Year ended
                                                             30 September          31 March
                                                             2014         2013         2014
                                                         Reviewed     Reviewed      Audited
                                                              R'm          R'm          R'm
     Interest received                                        206          257          606
     – loans and bank accounts                                176          242          456
     – other                                                   30           15          150

     Interest paid                                        (1 332)      (1 055)      (2 466)
     – loans and overdrafts                                 (963)        (656)      (1 717)
     – transponder leases                                   (182)        (173)        (356)
     – other                                                (187)        (226)        (393)
     Other finance income/(cost) – net                       (82)        (117)        (267)
     – net foreign exchange differences and fair value
       adjustments on derivatives                           (111)        (165)        (344)
     – preference dividends received                           29           48           77

6.    Equity-accounted results

      The group's equity-accounted associated companies and joint ventures contributed to the interim
      financial results as follows:
                                                            Six months ended           Year ended
                                                              30 September               31 March
                                                             2014             2013           2014
                                                         Reviewed         Reviewed        Audited
                                                              R'm              R'm            R'm
     Share of equity-accounted results                      9 932            5 139         10 835
     – sale of assets                                           –                –           (19)
     – sale of investments                                (4 754)          (1 286)        (2 929)
     – impairment of assets                                   239                –            532
     Contribution to headline earnings                      5 417            3 853          8 419
     – amortisation of intangible assets                      474              376            897
     – equity-settled share-based charges                     469              393            987
     – fair value adjustments and currency translation
       differences                                             77             (72)          (181)
     – (recognition)/reversal of deferred tax assets            –             (49)             35
     Contribution to core headline earnings                 6 437            4 501         10 157
     Tencent                                                6 197            4 380          9 724
     Mail.ru                                                  528              405            911
     Abril                                                      –            (153)          (110)
     Other                                                  (288)            (131)          (368)

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:
                                                               Six months ended            Year ended
                                                                 30 September                31 March
                                                                 2014             2013           2014
                                                             Reviewed         Reviewed        Audited
                                                                  R'm              R'm            R'm
     Depreciation of property, plant and equipment              1 089              940          1 942
     Amortisation                                                 472              503            898
     – intangible assets                                          361              410            711
     – software                                                   111               93            187
     Other gains/(losses) – net                                 (124)            (958)        (1 320)
     – profit on sale of property, plant and equipment
       and intangible assets                                        3               99             58
     – impairment of goodwill and intangible assets              (24)          (1 063)        (1 461)
     – impairment of property, plant and equipment
       and other assets                                         (148)             (24)          (112)
     – fair value adjustments on financial instruments             45               30            195
     Gains on acquisitions and disposals                          118              614            751
     –   gain on sale of investments                              107              111             44
     –   remeasurement of earn-out obligations                      –                –             48
     –   acquisition-related costs                               (25)             (13)           (41)
     –   remeasurement of previously held interest                 36              516            700

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:

                                                               Six months ended            Year ended
                                                                 30 September                31 March
                                                                 2014             2013           2014
                                                             Reviewed         Reviewed        Audited
                                                                  R'm              R'm            R'm
     Goodwill
     – cost                                                    29 405           24 077         24 077
     – accumulated impairment                                 (3 594)          (2 484)        (2 484)
     Opening balance                                           25 811           21 593         21 593
     – foreign currency translation effects                     (115)            1 988          3 226
     – acquisitions                                               428            1 701          2 003
     – disposals                                                (179)              (9)           (18)
     – impairment                                                (10)            (664)          (993)
     Closing balance                                           25 935           24 609         25 811
     – cost                                                    29 537           27 873         29 405
     – accumulated impairment                                 (3 602)          (3 264)        (3 594)

9.    Investments and loans

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

                                                               Six months ended            Year ended
                                                                 30 September                31 March
                                                                2014              2013           2014
                                                             Reviewed         Reviewed        Audited
                                                                  R'm              R'm            R'm
     Investments and loans                                     66 524           43 321         50 675
     – listed investments                                      57 016           37 417         44 194
     – unlisted investments and loans                           9 508            5 904          6 481

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.

                                                         Six months ended         Year ended
                                                           30 September             31 March
                                                          2014            2013          2014
                                                      Reviewed        Reviewed       Audited
                                                           R'm             R'm           R'm
    Commitments                                         27 424          18 088        22 417
    –   capital expenditure                                425             837           740
    –   programme and film rights                       16 532          13 491        17 701
    –   network and other service commitments            1 475           1 244         1 530
    –   transponder leases                               6 916             422           424
    –   operating lease commitments                      1 453           1 577         1 413
    –   set-top box commitments                            623             517           609

     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:
                                               Fair value measurements at
                                               30 September 2014 using:
                                     Quoted prices
                                         in active
                                       markets for    Significant
                                         identical          other      Significant
                                            assets     observable     unobservable
                                    or liabilities         inputs           inputs
                                         (Level 1)      (Level 2)        (Level 3)
Recurring fair value measurements              R'm            R'm              R'm
Assets
 Available-for-sale investments                135              –                –
 Foreign exchange contracts                      –            249                –
Liabilities
 Foreign exchange contracts                      –             30                –
 Shareholders' liabilities                       –              –              823
 Earn-out obligations                            –              –              372
 Interest rate swaps                             –            306                –

                                               Fair value measurements at
                                                  31 March 2014 using:
                                     Quoted prices
                                         in active
                                       markets for    Significant
                                         identical          other     Significant
                                            assets     observable    unobservable
                                    or liabilities         inputs          inputs
                                         (Level 1)      (Level 2)       (Level 3)
Recurring fair value measurements              R'm            R'm             R'm
Assets
 Available-for-sale investments                120              –               –
 Foreign exchange contracts                      –            210               –
 Interest rate swaps                             –              1               –
Liabilities
 Foreign exchange contracts                      –             66               –
 Shareholders' liabilities                       –              –             806
 Earn-out obligations                            –              –             263
 Interest rate swaps                             –            332               –

 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:

                                                30 September 2014
                                                 Share-
                                               holders'      Earn-out
                                            liabilities   obligations
                                                    R'm           R'm
Opening balance at 1 April 2014                     806           263
Total (gains)/losses in the income statement       (21)             3
Issues                                                –            90
Foreign currency translation effects                 38            16
Closing balance at 30 September 2014                823           372

                                                   31 March 2104
                                                 Share-
                                               holders'      Earn-out
                                            liabilities   obligations
                                                    R'm           R'm
Opening balance at 1 April 2013                     704           185
Total gains in the income statement               (145)          (13)
Issues                                              284           155
Settlements                                        (82)          (91)
Foreign currency translation effects                 45            27
Closing balance at 31 March 2014                    806           263

The group discloses the fair values of the following financial instruments as their carrying values are
not a reasonable approximation of their fair values:

                                                30 September 2014
                                              Carrying           Fair
                                                 value          value
Financial liabilities                              R'm            R'm
Loans from non-controlling shareholders            485            592
Capitalised finance leases                       7 600          7 636
Publicity traded bonds                          19 222         20 963

                                                  31 March 2014
                                              Carrying           Fair
                                                 value          value
Financial liabilities                              R'm            R'm
Loans from non-controlling shareholders            480            478
Capitalised finance leases                       7 277          7 074
Publicity traded bonds                          17 784         19 706

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
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