FRONTIER DIGITAL VENTURES LIMITED — Interim / Quarterly Report 2017

Oct 26, 2017

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ASX Code: FDV

27 October 2017

+81% portfolio revenue growth on pcp

Frontier Digital Ventures Limited (“Frontier”, ASX: FDV) is pleased to announce its Third Quarter 2017 (“3Q 2017”) results.

• Standout revenue growth from Zameen (+107% on pcp) and Pakwheels (+114%)

• Record quarterly portfolio revenue growth to A$6.8m (100% basis) in 3Q 2017 (up +81% on 3Q 2016 revenues of A$3.8m)

• Frontier’s equity share of revenue was A$2.3m for the quarter (up +136% on 3Q 2016)

• Consistent revenue growth highlights the strength of Frontier’s portfolio approach and strategy of partnering with local entrepreneurs

• Investment made into Infocasas during the quarter; the #1 property portal in both Uruguay and Paraguay and the #2 property portal in Bolivia

• Cash balance at 30 September 2017 of A$16.3m

Frontier’s CEO and Founder, Shaun Di Gregorio said: “We are pleased with the consistently strong revenue growth we have experienced across our portfolio over the last 12 months. Since IPO in August 2016, our quarterly revenues have increased by +81%.”

“The growth also highlights our ability to identify high quality investments in each target market, and the ability of our entrepreneur partners to execute on a clear strategy of revenue growth and business optimisation. We will continue to diligently manage our portfolio and optimise for long term shareholder value.”

Figure 1: Quarterly portfolio revenue since IPO (A$m, pro-forma 100% basis)

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+81%
6.8
6.0
5.4
4.7
3.8
3Q 2016 4Q 2016 1Q 2017 2Q 2017 3Q 2017
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Frontier Digital Ventures Ltd

39-8 The Boulevard, Mid Valley City, Lingkaran Syed Putra 59200 Kuala Lumpur, Malaysia 1 Tel: +60 3 2201 0790 www.frontierdv.com

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Frontier has released another record quarter of revenue across its portfolio, driven by the continued progression towards monetisation across all of its portfolio businesses. Total portfolio revenues increased to A$6.8m (100% basis, unaudited).

Frontier’s equity share of portfolio revenues increased to A$2.3m for the quarter (A$9.3m on an annualised basis).

Table 1: Quarterly revenues by business (pro-forma unaudited, standalone basis)

Frontier ownership (%) 3Q 2016 Revenue A$ (100% basis) 3Q 2017 Revenue A$ (100% basis)	Growth (%)
Afribaba 65% 6,851 26,706	+290%
AutoDeal 33% 110,206 218,114	+98%
carsDB 76% 25,622 44,692	+74%
carWangu 60% - 258	n.m.
casaMozambique 42% 19,694 46,066	+134%
Encuentra24.com 42% 1,347,886 1,774,055	+32%
iMyanmarhouse 43% 113,004 229,830	+103%
LankaPropertyWeb 48% 28,067 72,996	+160%
meQasa 66% 1,725 12,365	+617%
Propzy 21% 35,064 247,078	+605%
TechAfrica 60% - -	n.m.
ToLet 39% 29,999 77,025	157%
Subtotal(consolidated investments) 1,718,119 2,749,185	+62%
Associates - Zameen - Pakwheels - Infocasas - Other associates 30% 37% 31% 1,566,429 212,671 241,185 43,993 3,247,008 454,402 322,627 58,381	+107% +114% +34% +33%
Total revenue 3,782,397 6,831,603	+81%

Figure 2: Quarterly revenue across portfolio and statutory cash receipts (A$m)

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Statutory cash receipts (controlled entities only)
New deals since 3Q 2016 (100% basis) 6.8
Revenue excluding new deals (100% basis)
6.0 0.8
5.4
0.7
4.7
0.6
3.8 0.6
0.4
6.0
5.4
4.8
4.1
3.4
2.7
1.7 2.0 2.3
0.7
3Q 2016 4Q 2016 1Q 2017 2Q 2017 3Q 2017
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Note:

1. New deals includes Infocasas, AutoDeal and Propzy

Frontier Digital Ventures Ltd

39-8 The Boulevard, Mid Valley City, Lingkaran Syed Putra 59200 Kuala Lumpur, Malaysia 2 Tel: +60 3 2201 0790 www.frontierdv.com

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OPERATIONAL PERFORMANCE

Monthly sessions (also known as site visits) are one of a number of leading indicators of brand position within a market. Frontier has a clear focus on increasing higher quality, free or non-paid sessions and actively limits reliance on paid sources (pay per click strategies).

Table 2: Monthly sessions by business (Google Analytics, standalone basis)

Frontier ownership (%) September 2016 sessions (#) September 2017 sessions (#)	Growth (%)
Afribaba 65% 493,923 458,770	(7%)
AutoDeal 33% n.a. 1,611,425	n.m.
carsDB 76% 719,922 713,486	(1%)
carWangu 60% 11,700 6,154	(47%)
casaMozambique 42% 33,746 44,433	+32%
Encuentra24.com 42% 6,276,005 6,925,263	+10%
iMyanmarhouse 43% 306,634 552,071	+80%
LankaPropertyWeb 48% 278,576 330,935	+19%
meQasa 66% 39,290 65,284	+66%
Propzy 21% n.a. 141,283	n.m.
TechAfrica 60% 18,401 26,977	+47%
ToLet 39% 101,329 320,176	+216%
Subtotal(consolidated investments) 8,279,526 11,196,257	+35%
Associates - Zameen - Pakwheels - Infocasas - Other associates 30% 37% 31% 2,725,038 4,734,034 n.a. 1,989,961 3,868,964 5,864,383 727,459 1,691,390	+42% +24% n.m. (15%)
Total sessions 17,728,559 23,348,453	+32%

Zameen , the #1 property portal in Pakistan, continued its rapid growth in revenues to A$3.2m for 3Q 2017, an increase of +107% on pcp. Zameen is successfully expanding its transactional revenue streams, with an increase of +612% in 1H 2017 on pcp.

Figure 3: Zameen quarterly revenue performance (A$m, 100% basis unaudited)

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+24% QoQ 3.2
2.6
2.4
2.0
1.6
1.3
2Q 2016 3Q 2016 4Q 2016 1Q 2017 2Q 2017 3Q 2017
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Frontier Digital Ventures Ltd

39-8 The Boulevard, Mid Valley City, Lingkaran Syed Putra 59200 Kuala Lumpur, Malaysia 3 Tel: +60 3 2201 0790 www.frontierdv.com

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Pakwheels , the #1 automotive portal in Pakistan, continued its strong operational and financial performance as quarterly revenues increased to A$454,402. Substantial monetisation progress has been achieved over the last 12 months across the core business and with the launch of their car inspection services among other transactional revenue streams.

Figure 4: Pakwheels quarterly revenue performance (A$000, 100% basis unaudited)

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Once-off spike
in revenues due +23% QoQ
to event sales 454
371
458
272
213
168
2Q 2016 3Q 2016 4Q 2016 1Q 2017 2Q 2017 3Q 2017
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Propzy achieved significant revenue growth in 3Q 2017 following its successful focus on increasing transaction volumes through its portal. Propzy is an online classifieds platform that originates and facilitates property sale and leasing transactions in Vietnam. Propzy increased its quarterly revenue to A$247,078 in 3Q 2017, up from A$162,060 in 2Q 2017 and A$122,296 in 1Q 2017.

During the quarter the Frontier management team continued to work closely with its portfolio companies to ensure the on-going rollout of initiatives that get closer to transaction-focused revenue opportunities, while continuing to unlock ancillary revenue streams across the portfolio (i.e. valuation data, home and vehicle inspection services, commissions from selling insurance and financing services).

PORTFOLIO MANAGEMENT

Frontier continues to actively manage its portfolio and considers opportunities to increase or divest its current holdings, as well as evaluating new investments in line with the Company’s stated strategy.

Frontier is currently in discussions to rationalise a number of its lower tier investments. Frontier’s intention is to structure a transaction that would reduce its overall exposure to its lower tier investments while providing greater exposure to its more progressed, monetising assets.

Activity within the existing portfolio

During 3Q 2017, Frontier rationalised its investment in IMCongo , an online property portal in the Democratic Republic of Congo. Under an agreement with Frontier, the IMCongo vendors sold their Frontier shares for A$242,725 and used the sale proceeds to repurchase Frontier’s shareholding in IMCongo. The decision to exit was made by Frontier as a result of its portfolio optimisation process and underperformance of IMCongo relative to the high performance hurdles established across all Frontier’s investments.

Frontier Digital Ventures Ltd 39-8 The Boulevard, Mid Valley City, Lingkaran Syed Putra 59200 Kuala Lumpur, Malaysia 4 Tel: +60 3 2201 0790 www.frontierdv.com

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New investments and opportunities

During 3Q 2017, Frontier announced it acquired an initial 31.3% interest in Infocasas for US$952k in cash consideration. Infocasas is the #1 property portal in Uruguay and Paraguay and the #2 property portal in Bolivia. The investment was a highly strategic entry into the South American online classifieds market into less competitive geographies. Infocasas is the clear leader in these markets, generating A$322,627 revenue in 3Q 2017. Frontier also acquired an option to increase its interest in Infocasas to 51% through the acquisition of vendor shares over the next 2 years.

Subsequent to the quarter end, Frontier announced it acquired an initial 20.59% interest in Hoppler for US0.7m, an online platform used by vendors, buyers and real estate agents in the Philippines to enable property transactions. Frontier can also increase its ownership to 40.23% for US$1.03m payable subject to revenue targets.

Opportunities to monetise existing investments

Frontier’s Board and management team remain focused on working towards the optimal monetisation outcome for each portfolio asset. Potential options include a trade sale, IPO or sell down to existing shareholders with a focus on increasing shareholder value.

NOTE: UNDERLYING VS STATUTORY ACCOUNTING

The 3Q 2017 Appendix 4C statement released alongside this announcement reports the statutory cash flows for the 3 month period ended 30 September 2017. Due to the nature of Frontier’s investment portfolio there is a difference between the economic interest in group cash receipts and statutory cash receipts reported. The current portfolio contains 12 investments which are accounted for on a consolidated basis (including Encuentra24.com) and 6 investments (including Zameen and Hoppler which was acquired subsequent to the quarter end) which are reported as “associates” under the equity method in AASB 128.

As a result, revenue from equity accounted investments are excluded from the statutory receipts. Using Zameen as an illustration:

	3Q 2017	revenue (A$)
Standalone revenue for 3Q 2017(Zameen only)		3,247,008
Frontier’s economic share(currentlyowns 30% of Zameen)		974,103
Statutoryrevenue(Zameen excluded from statutoryaccounts)		-

The statutory figures report 100% of consolidated business financials, using Encuentra24.com as an illustration:

	3Q 2017	revenue (A$)
Standalone revenue for 3Q2017(Encuentra24.com only)		1,774,055
Frontier’s economic share(currentlyowns 42.1% of Encuentra24.com)		746,327
Statutoryrevenue(100% of revenue recognised in statutoryaccounts)		1,774,055

• ENDS -

Frontier Digital Ventures Ltd 39-8 The Boulevard, Mid Valley City, Lingkaran Syed Putra 59200 Kuala Lumpur, Malaysia 5 Tel: +60 3 2201 0790 www.frontierdv.com

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For more information, please contact:

Shaun Di Gregorio Chief Executive Officer Tel: +60 17 207 6221 Email: shaundig@frontierdv.com

About Frontier Digital Ventures Limited

Frontier Digital Ventures is a leading operator of online classifieds businesses in underdeveloped, emerging countries or regions. With a track record of building and supporting market leading online businesses, Frontier Digital Ventures are experts in the online classifieds space with a particular focus on property and automotive verticals and general classifieds websites. Its portfolio currently consists of 18 market leading companies, operating businesses across 22 markets. With the extensive support offered to the local operating companies, coupled with their own energy and work ethic, Frontier Digital Ventures is bringing outstanding companies of global significance to their full potential and setting a new global standard of excellence in the field.

Frontier Digital Ventures Ltd 39-8 The Boulevard, Mid Valley City, Lingkaran Syed Putra 59200 Kuala Lumpur, Malaysia 6 Tel: +60 3 2201 0790 www.frontierdv.com

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Table 3: Quarterly revenues by business (FDV share, unaudited)

Current ownership (%) 3Q 2016 Revenue A$ (FDV basis) 3Q 2017 Revenue A$ (FDV basis)	Growth (%)
Afribaba 65% 3,437 17,315	+404%
AutoDeal 33% - 72,705	n.m.
carsDB 76% 15,389 34,182	+122%
carWangu 60% - 155	n.m.
casaMozambique 42% - 19,196	n.m.
Encuentra24.com 42% 341,690 746,327	+118%
iMyanmarhouse 43% 41,845 97,986	+134%
LankaPropertyWeb 48% 8,865 34,859	+293%
meQasa 66% 983 8,186	+732%
Propzy 21% - 52,010	n.m.
TechAfrica 60% - -	n.m.
ToLet 39% 11,674 30,407	+160%
Subtotal(consolidated investments) 423,884 1,113,326	+163%
Associates - Zameen - Pakwheels - Infocasas - Other associates 30% 37% 31% 469,929 74,808 - 13,782 974,103 212,850 - 22,704	+107% +185% n.m. +65%
Total revenue 982,403 2,322,983	+136%

Frontier Digital Ventures Ltd 39-8 The Boulevard, Mid Valley City, Lingkaran Syed Putra 59200 Kuala Lumpur, Malaysia 7 Tel: +60 3 2201 0790 www.frontierdv.com