Wrap Text
Condensed Consolidated Interim Report for the six months ended 30 September 2018
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 6315122092
CONDENSED CONSOLIDATED INTERIM REPORT
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2018
COMMENTARY
Naspers executed well in the first half of the 2019 financial year, generating group revenue, measured on an
economic-interest basis of US$11.0bn. Driven by ecommerce and Tencent, this represents growth of 23% (or 29% in local
currency and adjusted for acquisitions and disposals). On a similar basis, group trading profit of US$2.0bn reflects
growth of 22% (or 34% in local currency and adjusted for acquisitions and disposals). Profitability in ecommerce
improved on the back of strong contributions from the classifieds and business-to-consumer (B2C) units. Tencent's
contribution further boosted trading profit growth. Core headline earnings, the board's measure of operating
performance, was up a healthy 39% at US$1.7bn.
Ecommerce reduced trading losses materially. The classifieds business (excluding letgo), which turned profitable in
the 2018 financial year, continued to show strong profit growth and is now profitable, including letgo. Trading-loss
margins in etail (online retail) and payments narrowed considerably as the businesses accelerated revenue growth and
continued to scale.
Acquisitions in the period totalled over US$700m as we continued to invest in existing and new businesses in
classifieds, payments and food-delivery verticals, as well as progressing our growth strategy through Naspers Ventures.
The acquisition spend includes: solidifying our presence in online food-delivery services with an additional investment
in Swiggy of US$79m; further expanding our global merchant capabilities in PayU through a US$60m investment in Zooz;
additional investments totalling US$379m in letgo and Dubizzle to acquire minority interests, thereby increasing our
stakes; and an investment of US$89m in Frontier Car Group to support classifieds' focus on the opportunities created
by convenient transaction models.
Following a US$2.2bn offer from US-based Walmart, we sold our 12% interest in Indian ecommerce company Flipkart in
August 2018, realising an internal annual rate of return of approximately 29%.
In September 2018 we reached an important milestone in our evolution into a global consumer internet company by
announcing our intention to separately list our video-entertainment business on the JSE Limited (JSE) and simultaneously
distribute our shares in this business (to be called MultiChoice Group) to our shareholders. We believe this will
unlock value for our shareholders and, at the same time, create an empowered, top 40 JSE-listed African entertainment
company, comprising MultiChoice South Africa, MultiChoice Africa, Showmax Africa and Irdeto. We believe the transaction
will create further value for Phuthuma Nathi shareholders, who have participated in one of the most successful
empowerment schemes in South Africa. On unbundling, Naspers will transfer 5% of its stake in MultiChoice South Africa
to Phuthuma Nathi shareholders, for no consideration, to increase MultiChoice South Africa's broad-based black economic
empowerment (BBBEE) participation. This significant step reinforces Naspers's transformation credentials.
Our earnings are significantly affected by foreign exchange volatility as our operations span over 120 countries and
markets globally. This volatility has the most pronounced impact in the video-entertainment business where revenues are
generated in local currencies while costs are predominantly US dollar-denominated. In the internet businesses, revenues
and costs are typically in the same currency, which softens this impact. Where relevant in this report, numbers have been
adjusted for the effects of foreign currency and acquisitions and disposals to reflect underlying trends. These
adjustments (pro forma financial information) are quoted in brackets, after the equivalent metrics reported under
International Financial Reporting Standards (IFRS). A reconciliation of pro forma financial information to the equivalent
IFRS metrics is provided in note 16 of this condensed consolidated interim report.
FINANCIAL REVIEW
Excluding equity-accounted investments (associates and joint ventures), consolidated revenue grew 8% (14%) to
US$3.3bn. Ecommerce was the main driver of growth, with revenues increasing 32% (29%). However, this performance was
slowed by the contribution from video entertainment. The disposal of Novus in the media segment during the previous
financial year also negatively impacted consolidated revenue growth. Consolidated trading profit improved considerably
by 83% to US$128m as the ecommerce businesses continued to scale and improve profitability.
Consolidated development spend (representing the trading losses of businesses not yet at scale) was down 30% (27%), as
many of our developing ecommerce businesses continued to scale and move towards profitability. Development spend on
more mature investments was down 12%, however, we continue to invest to accelerate growth and develop incremental revenue
opportunities over the long term. We invested US$78m in our consolidated newer initiatives, including letgo.
Equity-accounted investments contributed US$2.1bn to group earnings, an increase of 45%. This includes investment
disposal gains of US$152m, impairment losses of US$771m and fair-value adjustments on financial instruments of US$1.4bn
that have been recognised by these investees. In aggregate, equity-accounted investments contributed US$1.7bn to core
headline earnings - up 20%.
Notably, following the disposal of our interest in Flipkart (outlined above), a once-off gain of US$1.6bn was
recorded.
We recognised impairment losses of US$103m relating to an equity-accounted investment focused on the provision of
consumer lending and financial services. We impaired our investment (including convertible debt funding extended) as
performance and the opportunity to leverage the investment in some of our core markets fell below our expectations.
We had a strong net cash position of US$8.7bn (including short-term cash investments and net of interest-bearing debt,
excluding capitalised finance leases), primarily attributable to the proceeds retained from the Flipkart disposal and
sale of Tencent shares in the 2018 financial year. This resulted in net interest income of US$48m.
At 30 September 2018 put option liabilities were US$1.8bn. An aggregate remeasurement gain of US$239m was recognised
in the income statement on these liabilities in the period.
Consolidated free cash flow was US$271m, a marked improvement on last year. This reflects improved profitability in
the ecommerce businesses, dividend income of US$332m from Tencent and positive working capital effects in video
entertainment.
We adopted several new accounting standards in the period, including the new revenue recognition and financial
instrument guidance, and comparative information has been restated accordingly, where applicable. Refer to note 2
for further details.
The company's external auditor has not reviewed or reported on forecasts included in this condensed consolidated
interim report.
The following segmental reviews are prepared on an economic-interest basis (which includes consolidated subsidiaries
and a proportionate consolidation of associates and joint ventures), unless otherwise stated.
SEGMENTAL REVIEW
Internet
Revenues in the internet segment, which now contributes 82% of total group revenue compared to 77% a year ago, were up
31% (36%) to US$9.0bn, while trading profits rose 30% (39%) as ecommerce and Tencent continued to stimulate growth.
Ecommerce
Ecommerce revenue increased 28% (29%) to US$2.0bn with meaningful contributions from classifieds, payments, food
delivery and B2C.
Trading losses narrowed by a significant 34% (46%) to US$209m due to a noteworthy profit contribution from classifieds
and reduced trading losses at the payments, etail and travel units. Consequently, the trading-loss margin halved from
21% last year to 11% this year, continuing the trajectory of the prior financial year.
Revenues generated by our profitable ecommerce businesses totalled US$902m, with trading profits of US$223m. Compared
to US$465m and US$170m last year, this reflects growth of 94% (29%) and 31% (48%) respectively. eMAG Romania, which
became profitable in the second half of the 2018 financial year, was a major driver of the revenue improvement.
Classifieds
Classifieds continued its strong growth trajectory, generating revenue of US$405m - up 40% (37%) - driven by Avito,
Brazil and the European markets (particularly Poland and the Ukraine). Trading profit (excluding letgo) grew by more
than 100% (in local currency and adjusted for acquisitions and disposals) to US$95m. Including letgo, classifieds
was profitable in the first half of the year, although anticipated marketing spend may impact second-half results.
Avito's revenue increased 18% (31%) to US$162m, driven by enhanced product features and good traction in the cars
segment.
In Brazil, OLX grew revenues 29% (54%) and expanded profit margins, benefiting from its market position in car
verticals.
letgo began monetising, benefiting from continued growth in its user base, particularly the increase in retained users
due to product enhancements.
To access greater opportunities in new and existing markets, the classifieds business broadened its presence in car
and real estate verticals through acquisitions. This addresses a sizeable consumer need. Given our focus on convenient
transaction models to deepen market presence and enhance the consumer experience, we acquired a minority stake in Frontier
Car Group and, after the reporting period, a controlling stake in WeBuyCars, which is subject to regulatory approval.
Etail
Etail revenues, measured in local currency and adjusted for the disposals of Souq last year and Flipkart in August
2018, grew 19%. On the same basis, trading losses reduced 22% as the business continued to scale and gain market share.
We include seven months of results for Flipkart in our segmental results for the review period, representing our share
of its earnings for the period up to disposal as well as a catch-up of the lag period applied in reporting Flipkart's
results. Going forward, overall etail revenues are expected to reduce, with trading losses narrowing, following the
disposal of Flipkart.
eMAG, the leading B2C platform in Central and Eastern Europe, delivered a solid performance with revenue up 18% (18%).
In its home market of Romania, eMAG recorded gross merchandise value (GMV) growth of 31% with both the retail and
marketplace businesses contributing meaningfully to the result. eMAG improved profitability 52% (55%) year on year,
boosted by increased gross profit margins and cost control.
Takealot, South Africa's number one B2C platform, extended its market leadership and grew GMV 58%. Its electronics,
home and kitchen categories recorded the highest growth, while its food-delivery service, Mr D Food, increased market
share and grew GMV by almost 200%. Takealot also announced the merger of its online fashion brand, Superbalist, with
Spree, the online fashion brand owned by Media24.
Travel
MakeMyTrip, the leading online travel agency in India, generated solid revenue growth across different verticals:
hotels and packages room nights increased 16% and standalone room nights were up 18%. Air travel transactions increased
28%. Over the period, the business moved closer to sustainable growth by improving the unit economics of its hotels
business, reducing trading losses (measured in local currency and adjusted for acquisitions and disposals) by 44% year
on year. The group's share of MakeMyTrip's revenue, measured in local currency and adjusted for acquisitions and
disposals, was up a healthy 22%. More information on MakeMyTrip's results is available at http://investors.makemytrip.com.
Payments
PayU, our payments business, recorded strong growth in its core (payment service provider) business. A 35% increase in
the number of transactions processed, to over 400m, generated total payment transaction value exceeding US$14bn - with
India accounting for more than half. The business delivered revenue growth of 36% (33%) to US$171m. We merged the
Europe, Middle East and Asia (EMEA) and Latin American businesses, realising significant efficiencies and cost
reductions. Revenue scaling, coupled with cost compression, enabled us to substantially improve profitability in
the segment.
In India, we continue to build a broader credit platform, which is supporting encouraging progress across all our
initiatives: LazyPay gained significant traction, reaching over 450 000 consumers and issuing more than US$4m in
loans per month. Our Indian credit-portfolio companies also continued to perform ahead of plan, with our minority
investments PaySense and ZestMoney each issuing over US$7m in loans per month, a significant acceleration year
on year.
The global merchant business grew 65% (85%) and, to accelerate it further, PayU acquired Zooz, an Israeli payments
technology company, in July 2018. This enables PayU to leverage the platform to serve its global merchants better.
Food delivery
Online food-delivery services continued to grow strongly, recording cumulative annualised GMV growth of 51% year on
year. Strong contributions from all businesses (Delivery Hero, iFood and Swiggy) tripled revenue growth to US$181m.
Further investment in scaling these operations expanded trading losses to US$41m.
Delivery Hero reported strong revenue growth of 48% to EUR357m and order volume growth of 46% to 184m in its half-year
ended June 2018. More information on Delivery Hero's results is available at https://ir.deliveryhero.com.
In India, Swiggy continues to record robust growth. The company doubled its footprint over the past six months and now
operates across 34 cities in India and has over 40 000 restaurant partners on its platform. In July 2018 we invested
an additional US$79m in Swiggy, bringing our effective interest to 25% (23% fully diluted) at 30 September 2018.
In Latin America, we invested US$124m in Movile to further expand and scale iFood, which continues to execute well and
deliver solid growth rates.
Tencent
Tencent grew total group revenue 39% year on year to RMB147.2bn for its six months to 30 June 2018. Key drivers were
payment-related services, digital-content subscriptions and sales, social advertising and smartphone games. Non-GAAP
profit attributable to shareholders (Tencent's measure of normalised performance) grew 23% to RMB47.5bn.
Revenues from value-added services increased 24% to RMB88.9bn, mainly driven by digital-content services such as video
streaming, live broadcast, music and in-game virtual item sales. Revenues from online advertising increased 46% to
RMB24.8bn as Tencent expanded its advertiser base and increased prices in Weixin Moments, QQ KanDian and other mobile
platforms. Other revenues were up a solid 95% at RMB33.5bn, reflecting continued strong growth in payment-related and
cloud services. Overall, margins declined as the business mix evolved and as the significant investment in research and
development, cloud and other new services continued.
Swift growth of Mini Programs and Weixin Pay supported a 9.9% increase in Weixin's monthly active users to 1.1bn. User
activity in Weixin Mini Games and Moments continued to increase, driving up time spent per user. Daily active users of
Tencent's smartphone games grew by double digits year on year, but monetisation per user and online games revenues
declined in the second quarter of 2018 as users shifted time to certain tactical tournament games for which regulatory
approvals for in-game virtual item sales were still pending. Tencent recently implemented stringent self-imposed
limitations on game-playing by minors and has introduced measures to enforce such policy.
Tencent continued to expand the user base of payment-related services, with monthly active users exceeding 800m at the
end of June 2018. Average daily transaction volume rose by over 40% year on year.
More information on Tencent's results is available at www.tencent.com/en-us/ir.
Mail.ru
Mail.ru grew total group revenue 29% year on year to RUB33.6bn. Advertising revenue was up 39% at RUB13.9bn, driven by
further user growth and engagement on Mail.ru's platform and the market's structural shift from traditional to online
advertising. Massively multiplayer online game revenue increased 33% to RUB10.4bn, driven by ongoing success in both
established and new titles. Warface and War Robots continued to perform well and Hustle Castle recorded significant
growth. Internet value-added service revenue increased 1% to RUB7.1bn. EBITDA declined 17% to RUB7.7bn, mainly due to
consolidating new acquisitions in the online-to-offline space, which were still loss-making.
VKontakte launched VK Pay, offering users the ability to conveniently accept payment for goods and services. Mail.ru
created Russia's largest licensed digital music ecosystem with a subscriber base of 1.5m across three platforms:
VKontakte, Odnoklassniki and BOOM.
In September 2018, Mail.ru announced that it will contribute its Pandao ecommerce business and cash in exchange for a
15% stake in AliExpress Russia. More information on Mail.ru's results is available at https://corp.mail.ru/en/investors/.
Video entertainment
The video-entertainment segment had a steady six months, growing subscriber numbers by a sizeable 400 000 households
to 13.9m households. Revenue increased 3% (7%) to US$1.8bn and trading profit remained relatively flat (up 6%) at
US$211m. The value strategy, aimed at growing the subscriber base and reducing costs, delivered a further US$15m in
cost savings. The Fifa World Cup provided a significant opportunity to drive growth on the back of significant
investment in content and subscriber acquisition (mainly through set-top box subsidies). This investment in the
review period skews the year-on-year comparison and masks the improvement in operating performance, particularly in
sub-Saharan Africa. Customers added by this promotion will contribute to second-half revenues and profitability,
driving year-on-year improvements.
The South African video-entertainment business delivered solid trading profits and generated meaningful cash flows.
Subscriber growth was strong in the middle- and mass-market segments, with some churn in premium subscribers as a
number of households in this segment appear to be experiencing strains on their disposable income. The ongoing change
in subscriber mix resulted in average revenue per user reducing from US$27 last year to US$25 this year.
In sub-Saharan Africa, subscriber growth accelerated and the business generated 9% (16%) growth in revenues to
US$524m. Trading losses were stable, with a decline in losses measured in local currency. This improvement would have
been stronger but for the Fifa World Cup promotional drive discussed above. Results were affected by the 42% devaluation
of the Angolan kwanza since January 2018. Despite ongoing economic and currency volatility, efforts to return these
operations to profitability are gaining traction.
We made significant progress with remittances from Angola over the period that has allowed us to reduce cash balances
and trade receivables impacted by illiquidity. Over the period, we were able to reduce the total balance of cash and
trade receivables affected by illiquidity from US$131m at 31 March 2018 to US$51m at 30 September 2018. However, the
limited availability of foreign currency in the Angolan and Zimbabwean economies continues to affect liquidity.
Media
Media24's revenue was down 7% (4%) due to pressure on advertising and circulation revenue (all figures exclude Novus,
which was distributed to shareholders last year). Revenue in Media24's ecommerce businesses increased 15% (19%) on
higher efulfilment volumes and satisfactory growth from Spree, ahead of the merger with Superbalist. The trading result
for the segment was flat year on year due to lower printing costs, cost-containment initiatives across the business, and
progress with migrating audiences from print to digital platforms.
PROSPECTS
Over the remainder of the financial year, we will maintain our focus on driving profitability in the ecommerce units.
Our strong balance sheet provides a basis for driving growth across the portfolio and unlocking new opportunities that
fit our criteria. Containing costs and weathering challenging macro conditions will remain a priority for our more
mature assets.
PREPARATION OF THE CONDENSED CONSOLIDATED INTERIM REPORT
The preparation of the condensed consolidated interim report was supervised by the group's financial director,
Basil Sgourdos CA(SA). These results were made public on 30 November 2018.
On behalf of the board
Koos Bekker Bob van Dijk
Chair Chief executive
Cape Town
30 November 2018
CONDENSED CONSOLIDATED INCOME STATEMENT
Six months ended Year ended
30 September 31 March
Restated Restated
2018 2017 2018
Reviewed Reviewed Audited
Notes US$'m US$'m US$'m
Revenue 5 3 344 3 105 6 657
Cost of providing services and sale of goods (1 981) (1 824) (4 025)
Selling, general and administration expenses (1 284) (1 250) (2 782)
Other gains/(losses) - net (30) (20) (47)
Operating profit/(loss) 49 11 (197)
Interest received 6 168 54 88
Interest paid 6 (142) (132) (267)
Other finance income/(costs) - net 6 140 (65) (319)
Share of equity-accounted results 8 2 098 1 447 3 277
Impairment of equity-accounted investments (82) (17) (46)
Dilution (losses)/gains on equity-accounted
investments (62) (41) 9 216
Gains/(losses) on acquisitions and disposals 1 602 (51) (93)
Profit before taxation 7 3 771 1 206 11 659
Taxation (317) (148) (360)
Profit for the period 3 454 1 058 11 299
Attributable to:
Equity holders of the group 3 422 1 092 11 358
Non-controlling interest 32 (34) (59)
3 454 1 058 11 299
Core headline earnings for the period (US$'m) 4 1 664 1 196 2 508
Core headline earnings per N ordinary share (US cents) 385 277 581
Diluted core headline earnings per N ordinary
share (US cents) 378 271 568
Headline earnings for the period (US$'m) 4 2 766 910 1 795
Headline earnings per N ordinary share (US cents) 640 211 416
Diluted headline earnings per N ordinary
share (US cents) 632 206 403
Earnings per N ordinary share (US cents) 792 253 2 631
Diluted earnings per N ordinary share (US cents) 783 248 2 612
Net number of shares issued ('000)
- at period-end 431 943 431 690 432 126
- weighted average for the period 432 126 431 540 431 635
- diluted weighted average 433 522 433 191 433 003
Refer to note 2 for details of the group's adoption of new accounting pronouncements during the period.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Six months ended Year ended
30 September 31 March
Restated Restated
2018 2017 2018
Reviewed Reviewed Audited
US$'m US$'m US$'m
Profit for the period 3 454 1 058 11 299
Total other comprehensive income, net of tax,
for the period(1) (1 865) 842 1 742
Translation of foreign operations(2) (2 116) 7 996
Net fair-value gains/(losses) 1 (2) (4)
Cash flow hedges 149 12 (98)
Share of other comprehensive income and reserves of
equity-accounted investments 143 836 835
Tax on other comprehensive income (42) (11) 13
Total comprehensive income for the period 1 589 1 900 13 041
Attributable to:
Equity holders of the group 1 604 1 968 13 026
Non-controlling interest (15) (68) 15
1 589 1 900 13 041
(1) These components of other comprehensive income may subsequently be reclassified to profit or loss, except for
"Net fair-value gains/(losses)" and gains of US$178m (2017: US$142m and 31 March 2018: US$361m) included in the
"Share of other comprehensive income and reserves of equity-accounted investments".
(2) The movement on the foreign currency translation reserve relates primarily to the effects of foreign exchange
rate fluctuations related to the translation of the group's investments in its foreign operations.
Refer to note 2 for details of the group's adoption of new accounting pronouncements during the period.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at
As at 30 September 31 March
Restated Restated
2018 2017 2018
Reviewed Reviewed Audited
Notes US$'m US$'m US$'m
Assets
Non-current assets 19 843 19 111 22 386
Property, plant and equipment 173 1 556 1 638
Goodwill 9 2 115 2 497 2 607
Other intangible assets 894 1 137 1 143
Investments in associates 16 439 13 563 16 666
Investments in joint ventures 85 84 78
Other investments and loans 64 102 115
Other receivables 17 28 21
Derivative financial instruments 27 5 1
Deferred taxation 29 139 117
Current assets 15 921 4 960 13 065
Inventory 201 214 231
Programme and film rights 18 413 240
Trade receivables 187 470 452
Other receivables and loans 561 669 762
Derivative financial instruments 14 23 11
Short-term investments 8 591 - -
Cash and cash equivalents 3 388 3 171 11 369
12 960 4 960 13 065
Assets classified as held for distribution/sale 11 2 961 - -
Total assets 35 764 24 071 35 451
Equity and liabilities
Capital and reserves attributable to the
group's equity holders 26 816 14 464 25 523
Share capital and premium 4 908 4 954 4 965
Other reserves (2 392) (319) 425
Retained earnings 24 300 9 829 20 133
Non-controlling interest 117 161 169
Total equity 26 933 14 625 25 692
Non-current liabilities 4 014 6 424 5 623
Capitalised finance leases 5 1 111 1 086
Liabilities - interest-bearing 3 235 3 193 3 202
- non-interest bearing 10 34 22
Other non-current liabilities 455 1 717 867
Post-employment medical liability 24 15 30
Derivative financial instruments 79 76 157
Deferred taxation 206 278 259
Current liabilities 4 817 3 022 4 136
Current portion of long-term debt 31 355 280
Trade payables 248 675 564
Accrued expenses and other current liabilities 2 164 1 936 3 162
Derivative financial instruments 22 50 129
Bank overdrafts and call loans 1 6 1
2 466 3 022 4 136
Liabilities classified as held for distribution/sale 11 2 351 - -
Total equity and liabilities 35 764 24 071 35 451
Net asset value per N ordinary share (US cents) 6 208 3 351 5 906
Refer to note 2 for details of the group's adoption of new accounting pronouncements during the period.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Six months ended Year ended
30 September 31 March
Restated Restated
2018 2017 2018
Reviewed Reviewed Audited
US$'m US$'m US$'m
Balance at the beginning of the period 25 692 15 361 13 142
Change in accounting policy (refer to note 2) - (2 219) -
Restated balance at the beginning of the period 25 692 13 142 13 142
Changes in share capital and premium
Movement in treasury shares (57) (74) (64)
Share capital and premium issued - 84 85
Changes in reserves
Total comprehensive income for the period 1 604 1 968 13 026
Movement in share-based compensation reserve (45) (74) (48)
Movement in existing control business combination reserve 37 (111) (195)
Direct retained earnings and other reserve movements (51) 88 125
Dividends paid to Naspers shareholders (196) (261) (262)
Changes in non-controlling interest
Total comprehensive income for the period (15) (68) 15
Dividends paid to non-controlling shareholders (114) (124) (153)
Movement in non-controlling interest in reserves 78 55 21
Balance at the end of the period 26 933 14 625 25 692
Comprising:
Share capital and premium 4 908 4 954 4 965
Retained earnings 24 300 9 829 20 133
Share-based compensation reserve 1 593 1 216 1 460
Existing control business combination reserve (1 810) (1 775) (1 847)
Hedging reserve (25) (33) (106)
Valuation reserve 635 1 873 1 679
Foreign currency translation reserve (2 785) (1 600) (761)
Non-controlling interest 117 161 169
Total 26 933 14 625 25 692
Refer to note 2 for details of the group's adoption of new accounting pronouncements during the period.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Six months ended Year ended
30 September 31 March
2018 2017 2018
Reviewed Reviewed Audited
Notes US$'m US$'m US$'m
Cash flows from operating activities
Cash generated from operating activities 233 (68) 141
Interest income received 102 46 81
Dividends received from investments and
equity-accounted companies 335 250 251
Interest costs paid (135) (123) (240)
Taxation paid (165) (175) (391)
Net cash generated from/(utilised in) operating activities 370 (70) (158)
Cash flows from investing activities
Acquisitions and disposals of tangible and intangible assets (77) (45) (138)
Acquisitions of subsidiaries, associates and joint ventures 12 (309) (857) (1 957)
Disposals of subsidiaries, associates and joint ventures 12 1 930 179 9 941
Acquisition of short-term investments(1) (8 591) - -
Cash movement in other investments and loans (32) 2 7
Net cash (utilised in)/generated from investing activities (7 079) (721) 7 853
Cash flows from financing activities
Proceeds from long- and short-term loans raised 46 1 114 1 124
Repayments of long- and short-term loans (19) (703) (827)
Outflow from share-based compensation transactions (127) (9) (22)
Additional investments in existing subsidiaries (424) (45) (219)
Dividends paid by the holding company and its subsidiaries (313) (313) (344)
Other movements resulting from financing activities (18) (43) (100)
Net cash (utilised in)/generated from financing activities (855) 1 (388)
Net movement in cash and cash equivalents (7 564) (790) 7 307
Foreign exchange translation adjustments on
cash and cash equivalents (123) (48) 58
Cash and cash equivalents at the beginning of the period 11 368 4 003 4 003
Cash and cash equivalents classified as held for
distribution/sale (294) - -
Cash and cash equivalents at the end of the period 3 387 3 165 11 368
(1) Relates to short-term cash investments with maturities of more than three months from date of acquisition.
SEGMENTAL REVIEW
Revenue
Six months ended Year ended
30 September 31 March
Restated Restated
2018 2017 2018
Reviewed Reviewed % Audited
US$'m US$'m change US$'m
Internet 9 028 6 906 31 15 863
Ecommerce 1 987 1 549 28 3 582
- Classifieds 405 289 40 628
- Payments 171 126 36 294
- Food delivery 181 56 >100 166
- Etail 984 877 12 2 060
- Travel(1) 137 96 43 211
- Other 109 105 4 223
Social and internet platforms 7 041 5 357 31 12 281
- Tencent 6 905 5 241 32 12 024
- Mail.ru 136 116 17 257
Video entertainment 1 834 1 775 3 3 677
Media(2) 170 315 (46) 507
Corporate services 1 1 - 3
Intersegmental (11) (10) (10) (21)
Economic interest 11 022 8 987 23 20 029
Less: Equity-accounted investments (7 678) (5 882) (31) (13 372)
Consolidated 3 344 3 105 8 6 657
(1) Travel revenue for the period ended 30 September 2017 has been reduced by US$32m (31 March 2018: US$65m) due to
the effect of the adoption of IFRS 15 Revenue from Contracts with Customers on the group's associate MakeMyTrip
Limited. These adjustments did not have an impact on EBITDA or trading profit.
(2) 30 September 2017 includes revenue of US$133m, relating to Novus Holdings Limited (Novus). The group distributed
the majority of its shareholding in Novus to its shareholders in September 2017.
Refer to note 2 for details of the group's adoption of new accounting pronouncements during the period.
EBITDA(1)
Six months ended Year ended
30 September 31 March
Restated Restated
2018 2017 2018
Reviewed Reviewed % Audited
US$'m US$'m change US$'m
Internet 2 056 1 564 31 3 382
Ecommerce (180) (292) 38 (615)
- Classifieds 54 (38) >100 (99)
- Payments (22) (32) 31 (60)
- Food delivery (39) (7) >(100) (20)
- Etail (95) (123) 23 (248)
- Travel (17) (29) 41 (59)
- Other (61) (63) 3 (129)
Social and internet platforms 2 236 1 856 20 3 997
- Tencent(2) 2 213 1 825 21 3 925
- Mail.ru 23 31 (26) 72
Video entertainment 337 363 (7) 628
Media(3) (5) 25 >(100) 10
Corporate services (12) (8) (50) (22)
Economic interest 2 376 1 944 22 3 998
Less: Equity-accounted investments (2 100) (1 726) (22) (3 739)
Consolidated 276 218 27 259
(1) EBITDA refers to earnings before interest, taxation, depreciation and amortisation.
(2) EBITDA for the period ended 30 September 2017 has been restated to include amortisation expenses of US$402m
regarding Tencent's digital content business.
(3) 30 September 2017 includes EBITDA of US$33.3m relating to Novus Holdings Limited (Novus). The group distributed
majority of its shareholding in Novus to its shareholders in September 2017.
Refer to note 2 for details of the group's adoption of new accounting pronouncements during the period.
Trading profit
Six months ended Year ended
30 September 31 March
Restated Restated
2018 2017 2018
Reviewed Reviewed % Audited
US$'m US$'m change US$'m
Internet 1 846 1 418 30 3 053
Ecommerce (209) (318) 34 (673)
- Classifieds 47 (45) >100 (114)
- Payments (24) (33) 27 (64)
- Food delivery (41) (8) >(100) (30)
- Etail (106) (134) 21 (270)
- Travel (19) (31) 39 (61)
- Other (66) (67) 1 (134)
Social and internet platforms 2 055 1 736 18 3 726
- Tencent(1) 2 043 1 713 19 3 675
- Mail.ru 12 23 (48) 51
Video entertainment 211 234 (10) 370
Media(2) (10) 21 >(100) 3
Corporate services (12) (8) (50) (22)
Economic interest 2 035 1 665 22 3 404
Less: Equity-accounted investments (1 907) (1 595) (20) (3 444)
Consolidated 128 70 83 (40)
(1) Trading profit for the period ended 30 September 2017 has been restated to include amortisation expenses of
US$402m regarding Tencent's digital content business.
(2) 30 September 2017 includes trading profit of US$33.3m relating to Novus Holdings Limited (Novus). The group
distributed the majority of its shareholding in Novus to its shareholders in September 2017.
Refer to note 2 for details of the group's adoption of new accounting pronouncements during the period.
RECONCILIATION OF CONSOLIDATED TRADING PROFIT/(LOSS) TO CONSOLIDATED OPERATING PROFIT/(LOSS)
Six months ended Year ended
30 September 31 March
Restated
2018 2017 2018
Reviewed Reviewed Audited
US$'m US$'m US$'m
Consolidated trading profit/(loss) 128 70 (40)
Finance cost on transponder leases 25 26 51
Amortisation of other intangible assets (50) (47) (101)
Other gains/(losses) - net (30) (20) (47)
Retention option expense (6) - (8)
Share-based incentives settled in treasury shares (18) (18) (52)
Consolidated operating profit/(loss) 49 11 (197)
For a reconciliation of consolidated operating profit/(loss) to consolidated profit before taxation, refer to the
condensed consolidated income statement.
Refer to note 2 for details of the group's adoption of new accounting pronouncements during the period.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM REPORT
1. General information
Naspers Limited (Naspers or the group) is a global internet and entertainment group and one of the largest technology
investors in the world. Founded in 1915, we now operate in more than 120 countries and markets with long-term growth
potential. Naspers builds leading companies that empower people and enrich communities. It runs some of the world's
leading platforms in internet, video entertainment and media.
2. Basis of presentation and accounting policies
The condensed consolidated interim financial statements for the six months ended 30 September 2018 have been prepared
in accordance with International Financial Reporting Standards (IFRS), 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 as well as the requirements of the Companies Act of South Africa and the
JSE Listings Requirements.
The condensed consolidated interim financial statements do not include all the disclosures required for complete
annual financial statements prepared in accordance with IFRS as issued by the International Accounting Standards Board
(IASB). The accounting policies used in preparing the condensed consolidated interim financial statements are consistent
with those applied in the previous consolidated annual financial statements, except as set out below.
The group has adopted all new and amended accounting pronouncements issued by the IASB that are relevant to its
operations and that are effective for financial years commencing on 1 April 2018. The impact of the adoption of new and
amended accounting pronouncements is set out below.
The group's reportable segments reflect the components of the group that are regularly reviewed by the chief executive
officer and other senior executives who make strategic decisions. The group proportionately consolidates its share of
the results of its associates and joint ventures in its reportable segments.
Trading profit excludes amortisation of intangible assets (other than software), equity-settled share-based payment
expenses relating to transactions to be settled through the issuance of treasury shares, 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
operating performance. However, this is not a defined term under IFRS and may not be comparable with similarly titled
measures reported by other companies.
The group adopted the following new accounting pronouncements, during the current period.
Adoption of new and amended accounting pronouncements
Pronouncements adopted on a retrospective basis
Accounting pronouncement Adoption impact
IFRS 15 Revenue from The group has applied IFRS 15 on a retrospective basis and has
Contracts with Customers accordingly restated the comparative information contained in
(IFRS 15). this condensed consolidated interim report. The application of
IFRS 15 did not have a significant impact on the group's results
IFRS 15 replaces the previous or financial position. The cumulative net impact of adopting
revenue recognition guidance IFRS 15 on the period ended 30 September 2017 was a reduction
applied by the group as in consolidated revenue of US$2m (31 March 2018: reduction of
contained in IAS 18 Revenue. US$3m). IFRS 15 had no impact on the group's profit for the
period ended 30 September 2017 (31 March 2018: increase of
US$1m). The aforementioned changes related to the group's
video-entertainment segment.
Change in accounting policy The group changed its accounting policy regarding written
regarding written put option put option liabilities during the year ended 31 March 2018.
liabilities. Accordingly, comparative information contained in this
condensed consolidated interim report, relating to the period
ended 30 September 2017, has been restated. Refer to the
group's consolidated annual financial statements for the year
ended 31 March 2018 for further details regarding this change.
Pronouncements adopted with adjustments to the opening balance of retained earnings
Accounting pronouncement Adoption impact
IFRS 9 Financial Instruments The group has applied IFRS 9 from 1 April 2018 and elected not
(IFRS 9). to restate comparatives on transition, with the impact of
adoption recognised as an adjustment to the opening balance of
IFRS 9 replaces the previous retained earnings as at 1 April 2018. The most significant impact
financial instrument of adoption was an increase in impairment allowances on trade
recognition and measurement receivables due to the IFRS 9 requirement to consider forward-
guidance applied by the group looking information when determining impairment allowances.
as contained in IAS 39 The cumulative net impact of adopting IFRS 9 was an increase of
Financial Instruments: US$14m in impairment allowances on trade receivables and a
Recognition and Measurement. corresponding decrease of US$14m in retained earnings. The
impact related mainly to the group's video-entertainment
segment.
The group recognised an increase in retained earnings of
US$838m, as a transfer of US$838m from other reserves,
relating to the impact of IFRS 9 on its associate, Tencent Holdings
Limited. The impact relates to gains on investments classified as
available-for-sale financial assets in terms of IAS 39 that are now
accounted for as financial assets at fair value through profit or
loss in terms of IFRS 9.
IFRIC 22 Foreign Currency The group has applied IFRIC 22 on a prospective basis, with the
Transactions and Advance impact of adoption recognised as an adjustment to the opening
Consideration (IFRIC 22). balance of retained earnings as at 1 April 2018. The impact of
adoption was an increase in prepaid expenses of US$10m, a
IFRIC 22 clarifies that decrease in deferred revenue of US$4m and a corresponding
non-monetary assets and increase of US$14m in retained earnings.
liabilities arising from the
payment/receipt of advance
consideration (eg prepaid
expenses and deferred
revenue) are not retranslated
to the entity's functional
currency after initial
recognition.
Pronouncements adopted on a retrospective basis
The impact of the above changes is shown in the following tables:
INCOME STATEMENT (extract)
30 September 2017 31 March 2018
Change in Change in
accounting Previously accounting Previously
Restated policy reported Restated policy reported
US$'m US$'m US$'m US$'m US$'m US$'m
Revenue(1) 3 105 (2) 3 107 6 657 (3) 6 660
Cost of providing services and sale of goods (1 824) - (1 824) (4 025) - (4 025)
Selling, general and administration
expenses(1) (1 250) 2 (1 252) (2 782) 4 (2 786)
Other gains/(losses) - net (20) - (20) (47) - (47)
Operating profit/(loss) 11 - 11 (197) 1 (198)
Other finance (costs)/income - net(2) (65) (18) (47) (319) - (319)
Profit before taxation 1 206 (18) 1 224 11 659 1 11 658
Taxation (148) - (148) (360) - (360)
Profit for the period 1 058 (18) 1 076 11 299 1 11 298
Attributable to:
Equity holders of the group 1 092 (6) 1 098 11 358 1 11 357
Non-controlling interests (34) (12) (22) (59) - (59)
1 058 (18) 1 076 11 299 1 11 298
Core headline earnings for the period 1 196 (314) 1 510 2 508 1 2 507
Core headline earnings per N ordinary
share (US cents)
Basic 277 (73) 350 581 - 581
Diluted 271 (73) 344 568 - 568
Earnings for the period 1 092 (6) 1 098 11 358 1 11 357
Earnings per N ordinary share (US cents)
Basic 253 (1) 254 2 631 - 2 631
Diluted 248 (1) 249 2 612 - 2 612
Headline earnings for the period 910 (6) 916 1 795 1 1 794
Headline earnings per N ordinary share
(US cents)
Basic 211 (1) 212 416 - 416
Diluted 206 (1) 207 403 - 403
(1) Represents the impact of adopting IFRS 15 Revenue from Contracts with Customers.
(2) Represents the impact of adopting the group's change in accounting policy regarding written put option liabilities.
STATEMENT OF COMPREHENSIVE INCOME (extract)
30 September 2017 31 March 2018
Change in Change in
accounting Previously accounting(2) Previously
Restated policy(1) reported Restated policy reported
US$'m US$'m US$'m US$'m US$'m US$'m
Profit for the period 1 058 (18) 1 076 11 299 1 11 298
Other comprehensive income for the period 842 - 842 1 742 - 1 742
Total comprehensive income for the period 1 900 (18) 1 918 13 041 1 13 040
Attributable to:
Equity holders of the group 1 968 (6) 1 974 13 026 1 13 025
Non-controlling interests (68) (12) (56) 15 - 15
1 900 (18) 1 918 13 041 1 13 040
(1) Represents the impact of adopting the group's change in accounting policy regarding written put option liabilities.
(2) Represents the impact of adopting IFRS 15 Revenue from Contracts with Customers.
STATEMENT OF FINANCIAL POSITION (extract)
As at 30 September 2017
Change in
accounting Previously
Restated policy(1) reported
US$'m US$'m US$'m
EQUITY AND LIABILITIES
Capital and reserves attributable to the
group's equity holders 14 464 (2 110) 16 574
Share capital and premium 4 954 - 4 954
Other reserves (319) (1 518) 1 199
Retained earnings 9 829 (592) 10 421
Non-controlling interests 161 (117) 278
TOTAL EQUITY 14 625 (2 227) 16 852
Non-current liabilities 6 424 1 717 4 707
Other non-current liabilities 1 717 1 717 -
Current liabilities 3 022 510 2 512
Accrued expenses and other current liabilities 1 858 510 1 348
TOTAL EQUITY AND LIABILITIES 24 071 - 24 071
(1) Represents the impact of adopting the group's change in accounting policy regarding written put option liabilities.
The adoption of IFRS 15 Revenue from Contracts with Customers had no impact on the group's statement of financial
position as at 30 September 2017.
The impact of adopting the group's change in accounting policy regarding written put option liabilities reduced the
opening balance of total equity on 1 April 2017 by US$2.2bn.
As at 31 March 2018
Change in
accounting Previously
Restated policy(1) reported
US$'m US$'m US$'m
EQUITY AND LIABILITIES
Capital and reserves attributable to the
group's equity holders 25 523 1 25 522
Share capital and premium 4 965 - 4 965
Other reserves 425 - 425
Retained earnings 20 133 1 20 132
Non-controlling interests 169 - 169
TOTAL EQUITY 25 692 1 25 691
Non-current liabilities 5 623 - 5 623
Current liabilities 4 136 (1) 4 137
Accrued expenses and other current liabilities 3 162 (1) 3 163
TOTAL EQUITY AND LIABILITIES 35 451 - 35 451
(1) Represents the impact of adopting IFRS 15 Revenue from Contracts with Customers.
Pronouncements adopted with adjustments to the opening balance of retained earnings
The impact of the above changes is shown in the following table:
ADJUSTMENTS TO THE OPENING BALANCES OF THE STATEMENT OF FINANCIAL POSITION (extract)
As at 1 April 2018
Change in
accounting
Restated policy(1) Restated(2)
US$'m US$'m US$'m
ASSETS
Non-current assets 22 386 - 22 386
Current assets 13 061 (4) 13 065
Trade receivables 438 (14) 452
Other receivables and loans 772 10 762
TOTAL ASSETS 35 447 (4) 35 451
EQUITY AND LIABILITIES
Capital and reserves attributable to the
group's equity holders 25 523 - 25 523
Share capital and premium 4 965 - 4 965
Other reserves (413) (838) 425
Retained earnings 20 971 838 20 133
Non-controlling interests 169 - 169
TOTAL EQUITY 25 692 - 25 692
Non-current liabilities 5 623 - 5 623
Current liabilities 4 132 (4) 4 136
Accrued expenses and other current liabilities 3 158 (4) 3 162
TOTAL EQUITY AND LIABILITIES 35 447 (4) 35 451
(1) Represents the impacts of adopting IFRS 9 Financial Instruments and IFRIC 22 Foreign Currency Transactions
and Advance Consideration as of 1 April 2018.
(2) IFRS 15 Revenue from Contracts with Customers has been adopted on a retrospective basis and accordingly the
31 March 2018 statement of financial position has already been restated for its impact.
3. Review by the independent auditor
This condensed consolidated interim report has been reviewed by the company's auditor, PricewaterhouseCoopers Inc.,
whose unqualified report appears at the end of the condensed consolidated interim report.
4. Calculation of headline and core headline earnings
Six months ended Year ended
30 September 31 March
Restated Restated
2018 2017 2018
Reviewed Reviewed Audited
US$'m US$'m US$'m
Net profit attributable to shareholders 3 422 1 092 11 358
Adjusted for:
- impairment of property, plant and equipment and other assets 1 18 39
- impairment of goodwill and other intangible assets - 1 4
- loss/(profit) on sale of assets 1 (3) (1)
- (gains)/losses on disposal of investments (1 594) 62 95
- remeasurement of previously held interest (10) (21) (21)
- dilution losses/(gains) on equity-accounted investments 62 41 (9 216)
- remeasurements included in equity-accounted earnings 623 (292) (524)
- impairment of equity-accounted investments 82 17 46
2 587 915 1 780
Total tax effects of adjustments 176 - 18
Total adjustment for non-controlling interest 3 (5) (3)
Headline earnings 2 766 910 1 795
Adjusted for:
- equity-settled share-based payment expenses 238 173 435
- amortisation of other intangible assets(1) 130 84 190
- fair-value adjustments and currency translation differences(2) (1 483) 19 60
- retention option expense 6 - 8
- business combination losses 7 10 20
Core headline earnings 1 664 1 196 2 508
(1) Amortisation of other intangible assets for the period ended 30 September 2017 has been adjusted to include
amortisation expenses of US$314m regarding Tencent's digital content business.
(2) Fair-value adjustments and currency translation differences for the period ended 30 September 2017 have been
adjusted by US$6m for the impact of remeasurements of written put option liabilities.
The diluted earnings, headline earnings and core headline earnings per share figures presented on the face of the
condensed consolidated income statement include a decrease of US$27m (2017: US$20m and 31 March 2018: US$49m)
relating to the future dilutive impact of potential ordinary shares issued by equity-accounted investees and
subsidiaries.
5. Revenue
Six months ended Year ended
30 September 31 March
Restated Restated
2018 2017 2018
Reviewed Reviewed Audited
US$'m US$'m US$'m
Subscription revenue(1) 1 527 1 469 2 996
Ecommerce revenue(2) 1 367 1 042 2 529
Advertising revenue(3) 192 192 388
Hardware sales and maintenance revenue(1) 91 88 192
Technology revenue(1) 50 57 128
Printing, circulation, publishing and distribution revenue(4) 62 194 270
Sublicence and reconnection fee revenue(1) 32 28 71
Other revenue 23 35 83
3 344 3 105 6 657
Revenue is presented on an economic-interest basis (ie including a proportionate consolidation of the revenue
of associates and joint ventures) in the group's segmental review and is accordingly not directly comparable
to the above consolidated revenue figures. The relationship between the above consolidated revenue figures
and revenue as presented in the segmental review is outlined below:
(1) Relates primarily to the video-entertainment segment.
(2) Relates primarily to the etail, payments, classifieds, food-delivery and other ecommerce businesses.
(3) Relates primarily to the video-entertainment and media segments.
(4) Relates primarily to the media segment.
6. Interest received/(paid)
Six months ended Year ended
30 September 31 March
Restated
2018 2017 2018
Reviewed Reviewed Audited
US$'m US$'m US$'m
Interest received 168 54 88
- loans and bank accounts 149 46 74
- other 19 8 14
Interest paid (142) (132) (267)
- loans and overdrafts (101) (100) (196)
- transponder leases (25) (26) (51)
- other (16) (6) (20)
Other finance income/(cost) - net 140 (65) (319)
- net foreign exchange differences and fair-value
adjustments on derivatives (99) (43) (67)
- remeasurement of written put option liabilities 239 (22) (252)
7. Profit before taxation
In addition to the items already detailed, profit before taxation has been determined after taking into
account, inter alia, the following:
Six months ended Year ended
30 September 31 March
2018 2017 2018
Reviewed Reviewed Audited
US$'m US$'m US$'m
Depreciation of property, plant and equipment 106 108 219
Amortisation 68 62 133
- other intangible assets 50 47 101
- software 18 15 32
Costs related to programme and film rights, including amortisation 433 409 912
Impairment losses on financial assets measured at amortised cost 4 5 15
Net realisable value adjustments on inventory, net of reversals(1) 38 6 48
Other gains/(losses) - net (30) (20) (47)
- (loss)/profit on sale of assets (1) 3 2
- impairment of goodwill and other intangible assets - (1) (4)
- impairment of property, plant and equipment and other assets (1) (18) (39)
- dividends received on investments 4 2 2
- fair-value adjustments on financial instruments (27) (6) (6)
- other (5) - (2)
Gains on acquisitions and disposals 1 602 (51) (93)
- gains/(losses) on disposal of investments 1 594 (56) (91)
- remeasurement of contingent consideration 3 (6) (5)
- acquisition-related costs (5) (10) (18)
- remeasurement of previously held interest 10 21 21
(1) Net realisable value writedowns relate primarily to set-top box subsidies in the video-entertainment segment.
8. Equity-accounted results
The group's equity-accounted investments contributed to the condensed consolidated interim financial
results as follows:
Six months ended Year ended
30 September 31 March
Restated
2018 2017 2018
Reviewed Reviewed Audited
US$'m US$'m US$'m
Share of equity-accounted results 2 098 1 447 3 277
- sale of assets - - 1
- disposal of investments (152) (414) (692)
- impairment of investments 771 121 159
Contribution to headline earnings 2 717 1 154 2 745
- amortisation of other intangible assets 92 62 135
- equity-settled share-based payment expenses 220 157 385
- fair-value adjustments and currency translation differences (1 372) 3 (224)
Contribution to core headline earnings 1 657 1 376 3 041
Tencent 1 775 1 516 3 288
Mail.ru 9 20 37
MakeMyTrip (27) (48) (76)
Delivery Hero (24) (14) (21)
Other (76) (98) (187)
The group applies an appropriate lag period in reporting the results of equity-accounted investments where the
year-ends of investees are not coterminous with that of Naspers Limited.
9. Goodwill
Goodwill is subject to an annual impairment assessment. Movements in the group's goodwill for the period are
detailed below:
Six months ended Year ended
30 September 31 March
2018 2017 2018
Reviewed Reviewed Audited
US$'m US$'m US$'m
Goodwill
- cost 2 961 2 790 2 790
- accumulated impairment (354) (348) (348)
Opening balance 2 607 2 442 2 442
- foreign currency translation effects (291) (30) 41
- acquisitions of subsidiaries and businesses 88 85 124
- disposals of subsidiaries and businesses (6) - -
- transferred to assets classified as held for distribution/sale (283) - -
Closing balance 2 115 2 497 2 607
- cost 2 341 2 845 2 961
- accumulated impairment (226) (348) (354)
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
2018 2017 2018
Reviewed Reviewed Audited
US$'m US$'m US$'m
Commitments(1) 3 044 2 626 3 537
- capital expenditure 10 14 17
- programme and film rights 2 463 2 132 2 906
- network and other service commitments 171 123 104
- operating lease commitments 295 198 327
- set-top box commitments 105 159 183
(1) The above commitments include capital expenditure of US$8m (2017: US$12m and 31 March 2018: US$9m);
programme and film rights of US$2.4bn (2017: US$2.1bn and 31 March 2018: US$2.8bn); network and other
service commitments of US$149m (2017: US$80m and 31 March 2018: US$86m); operating lease commitments of
US$82m (2017: US$104m and 31 March 2018: US$108m); and set-top box commitments of US$105m (2017: US$159m
and 31 March 2018: US$183m) relating to the video-entertainment business that has been classified as held
for distribution as at 30 September 2018.
The group operates a number of businesses in jurisdictions where taxes are payable on certain transactions or
payments. The group continues to seek relevant advice and works with its advisers to identify and quantify such
tax exposures. Our current assessment of possible withholding and other tax exposures, including interest and
potential penalties, amounts to approximately US$194.3m (2017: US$155.5m and 31 March 2018: US$226.1m).
No provision has been made as at 30 September 2018 and 2017 for these possible exposures.
11. Disposal groups classified as held for distribution/sale
In September 2018 the group announced its intention to list its video-entertainment business separately on the
JSE and to subsequently unbundle its shareholding therein to shareholders. The assets and liabilities of the
video-entertainment business were accordingly classified as held for distribution/sale as at 30 September 2018.
The listing and subsequent unbundling is subject to regulatory and other approvals and is anticipated to be
completed in the first half of the 2019 calendar year.
The assets and liabilities of other smaller units were also classified as held for distribution/sale as at
30 September 2018. Assets and liabilities classified as held for distribution/sale as at 30 September 2018
are detailed in the table below:
Six months ended Year ended
30 September 31 March
2018 2017 2018
Reviewed Reviewed Audited
US$'m US$'m US$'m
Assets 2 961 - -
Property, plant and equipment 1 250 - -
Goodwill and other intangible assets 329 - -
Programme and film rights 380 - -
Other investments and loans 9 - -
Derivative financial instruments 21 - -
Deferred taxation 94 - -
Inventory 72 - -
Trade and other receivables 512 - -
Cash and cash equivalents 294 - -
Liabilities 2 351 - -
Capitalised finance leases 1 118 - -
Programme and film rights 124 - -
Derivative financial instruments 4 - -
Deferred taxation 18 - -
Long-term liabilities 4 - -
Trade payables 382 - -
Accrued expenses and other current liabilities 701 - -
12. Business combinations, other acquisitions and disposals
In August 2018 the group invested US$60m for a 100% effective interest in the issued share capital of Zooz
Mobile Limited (Zooz), a management and optimisation payment provider based in Israel. The transaction was
accounted for as a business combination with an effective date of August 2018. The provisional purchase price
allocation: cash and deposits US$2m; trade and other receivables US$3m; intangible assets US$2m; trade and
other payables US$2m; loan liabilities US$3m; and the balance of US$58m to goodwill. The main intangible
asset recognised in the business combination was technology.
The revenue and net results of Zooz, had the acquisition taken place on 1 April 2018, were not significant
to the group's income statement.
The main factor contributing to the goodwill recognised in the acquisition is Zooz's market presence and
engineering capabilities. The goodwill that arose is not expected to be deductible for income tax purposes.
In April 2018 the group acquired the share capital held by non-controlling shareholders of its subsidiary
Dubizzle Limited (Dubizzle) for US$190m. Following the acquisition, the group holds a 100% effective
interest in Dubizzle.
In August 2018 the group's subsidiary Ambatana Holdings B.V. (Ambatana) acquired the entire share capital
held by non-controlling shareholders of Letgo USA B.V. (letgo) for US$189m. Following a US$150m funding
round in June 2018, the group's shareholding in Ambatana increased from an effective 73.4% at 31 March 2018
to 80% (77% fully diluted) at 30 September 2018.
The following relates to the group's investments in its equity-accounted investees:
In May 2018 the group invested US$35m for a 16% effective interest (15% fully diluted) in Honor Technology,
Inc. (Honor) a comprehensive home-care company for older adults in the US. The group accounts for its
interest as an investment in an associate.
In May 2018 the group invested US$89m in Frontier Car Group, Inc. (Frontier Car Group), an online car
marketplace headquartered in Berlin and currently operating in six countries, for a 36% effective (35%
fully diluted) shareholding. The group accounts for its interest as an investment in an associate.
In July 2018 the group invested an additional US$12m in PaySense Services India Private Limited (PaySense),
a technology platform providing Indian consumers with access to credit lines based on an alternative-data
decisioning model. Following this investment, the group holds a 19% effective interest (17% fully diluted)
in PaySense. The group now accounts for its interest in PaySense as an investment in an associate.
The group invested an additional US$79m in Bundl Technologies Private Limited (Swiggy), a leading online
food-ordering and delivery platform in India, during July 2018. Following the investment, the group holds
a 25% effective interest (23% fully diluted) in Swiggy. The group accounts for its interest as an investment
in an associate.
The following relates to significant disposals by the group during the reporting period:
During May 2018 the group announced the disposal of its 12% effective interest (11% fully diluted) in
Flipkart Limited (Flipkart) - its equity-accounted etail investment in India - to US-based retailer Wal-Mart
International Holdings, Inc. (Walmart) for US$2.2bn. The transaction was concluded in August 2018 following
regulatory approval. A gain on disposal of US$1.6bn has been recognised as part of "Gains/(losses) on
acquisitions and disposals" in the income statement. This gain includes the reclassification of a foreign
currency translation reserve of US$97m to the income statement. Related income tax expenses of US$177m have
been included as part of "Taxation" in the income statement.
In September 2018 the group concluded the sale of its 52% interest in Tek Travels Private Limited (Travel
Boutique Online), its online B2B travel distribution business, for US$37m. A gain on disposal of US$6m has
been recognised as part of "Gains/(losses) on acquisitions and disposals" in the income statement.
13. Financial instruments
The group's activities expose it to a variety of financial risks such as market risk (including currency
risk, fair-value interest rate risk, cash flow interest rate risk and price risk), credit risk and
liquidity risk.
The condensed consolidated interim report does not include all financial risk management information
and disclosures required in the annual financial statements and should be read in conjunction with the
group's annual financial statements for the year ended 31 March 2018. There have been no material
changes in the group's credit, liquidity, market risks or key inputs used in measuring fair value
since 31 March 2018.
The fair values of the group's financial instruments that are measured at fair value at each reporting
period, are categorised as follows:
Fair-value measurements at 30 September 2018 using:
Quoted
prices in
active
markets for Significant
identical other Significant
assets or observable unobservable
Carrying liabilities inputs inputs
value (level 1) (level 2) (level 3)
US$'m US$'m US$'m US$'m
Assets
Financial assets at fair value through
other comprehensive income(1) 63 26 3 34
Investments in preference shares and
convertible notes of associates 1 - - 1
Foreign exchange contracts(1) 57 - 57 -
Derivatives embedded in leases 1 - - 1
Currency devaluation features(1) 3 - - 3
Liabilities
Foreign exchange contracts(1) 26 - 26 -
Earn-out obligations 22 - - 22
Cross-currency swap 79 - 79 -
(1) Includes assets and liabilities classified as held for distribution/sale.
Fair-value measurements at 31 March 2018 using:
Quoted
prices in
active
markets for Significant
identical other Significant
assets or observable unobservable
Carrying liabilities inputs inputs
value (level 1) (level 2) (level 3)
US$'m US$'m US$'m US$'m
Assets
Available-for-sale investments 35 33 2 -
Foreign exchange contracts 9 - 9 -
Derivatives embedded in leases 1 - - 1
Currency devaluation features 2 - - 2
Liabilities
Foreign exchange contracts 162 - 162 -
Earn-out obligations 58 - - 58
Interest rate and cross-currency swaps 124 - 124 -
There have been no transfers between levels 1 or 2 during the reporting period, nor were there any significant
changes to the valuation techniques and inputs used in measuring fair value.
Currency devaluation features relate to clauses in content-acquisition agreements that provide the group with
protection against significant currency devaluations. The fair value of currency devaluation features is
measured through the use of discounted cash flow techniques.
For earn-out obligations, current forecasts of the extent to which management believes performance criteria
will be met, discount rates reflecting the time value of money and contractually specified earn-out
payments are used.
Changes in these assumptions could affect the reported fair value of these financial instruments.
The fair value of level 2 financial instruments is determined with the use of exchange rates quoted in active
markets and interest rate extracts from observable yield curves.
The group discloses the fair values of the following financial instruments as their carrying values are not
a reasonable approximation of their fair values:
30 September 2018
Carrying Fair
value value
US$'m US$'m
Financial liabilities
Capitalised finance leases(1) 1 127 1 250
Publicly traded bonds 3 200 3 266
(1) Includes financial liabilities classified as held for distribution/sale.
31 March 2018
Carrying Fair
value value
US$'m US$'m
Financial liabilities
Capitalised finance leases 1 158 1 125
Publicly traded bonds 3 200 3 357
The fair values of capitalised finance leases have been determined through discounted cash flow analysis.
The fair values of publicly traded bonds have been determined with reference to the listed prices of the
instruments as at the end of the reporting period.
14. Related party transactions and balances
The group entered into various related party transactions in the ordinary course of business. There have
been no significant changes in related party transactions and balances since the previous reporting period.
15. Events after the reporting period
In September 2018 the group signed an agreement to invest R1.4bn (approximately US$99m) for a controlling
interest in We Buy Cars Proprietary Limited (WeBuyCars), a South African online used-car marketplace
offering a specialised car-buying service to sellers. The transaction is subject to regulatory approval.
16. Pro forma financial information
The group has presented certain revenue and trading profit metrics in local currency, excluding the effects
of changes in the composition of the group (the pro forma financial information) in the following tables.
The pro forma financial information is the responsibility of the board of directors (the board) of Naspers
and is presented for illustrative purposes. Information presented on a pro forma basis has been extracted
from the group's management accounts, the quality of which the board is satisfied with.
Shareholders are advised that, due to the nature of the pro forma financial information and the fact that
it has been extracted from the group's management accounts, it may not fairly present the group's financial
position, changes in equity, results of operations or cash flows.
The pro forma financial information has been prepared to illustrate the impact of changes in foreign exchange
rates and changes in the composition of the group on its results for the period ended 30 September 2018. The
following methodology was applied in calculating the pro forma financial information:
1. Foreign exchange/constant currency adjustments have been calculated by adjusting the current period's results
to the prior period's average foreign exchange rates, determined as the average of the monthly exchange rates
for that period. The local currency financial information quoted is calculated as the constant currency
results, arrived at using the methodology outlined above, compared to the prior period's actual IFRS results.
The relevant average exchange rates (relative to the US dollar) used for the group's most significant
functional currencies, were: South African rand (2018: 0.0741; 2017: 0.0757), Polish zloty (2018: 0.2728;
2017: 0.2714), Russian rouble (2018: 0.0156; 2017: 0.0172), Chinese yuan renminbi (2018: 0.1505; 2017: 0.1483),
Indian rupee (2018: 0.0145; 2017: 0.0155), Brazilian real (2018: 0.2612; 2017: 0.3134), Angolan kwanza
(2018: 0.0039; 2017: 0.0006) and Nigerian naira (2018: 0.0028; 2017: 0.0028).
2. Adjustments made for changes in the composition of the group relate to acquisitions and disposals of
subsidiaries and equity-accounted investments, as well as to changes in the group's shareholding in its
equity-accounted investments. For mergers, the group composition adjustments include a portion of the
prior-year results of the entity with which the merger took place. The following significant changes in
the composition of the group during the respective reporting periods have been adjusted for in arriving
at the pro forma financial information.
Period ended 30 September 2018
Transaction Basis of accounting Reportable segment Acquisition/Disposal
Dilution of the group's interest Social and
in Tencent Associate internet platforms Disposal
Disposal of the group's interest
in Flipkart Associate Ecommerce Disposal
Effect of merger of ibibo with Acquisition
MakeMyTrip Associate Ecommerce and disposal
Acquisition of the group's interest
in Delivery Hero Associate Ecommerce Acquisition
Acquisition of the group's interest
in Kreditech Associate Ecommerce Acquisition
Acquisition of the group's interest
in Swiggy Associate Ecommerce Acquisition
Acquisition of the group's interest
in Frontier Car Group Associate Ecommerce Acquisition
Disposal of the group's interest
in Souq Joint venture Ecommerce Disposal
Acquisition of the group's interest
in Takealot Subsidiary Ecommerce Acquisition
Acquisition of the group's interest
in AutoTrader Subsidiary Ecommerce Acquisition
Disposal of the group's interest
in Novus Subsidiary Media Disposal
Disposal of the group's interest Video
in MWEB Subsidiary entertainment Disposal
The net adjustment made for all acquisitions and disposals that took place during the period ended
30 September 2018 amounted to a negative adjustment of US$351m on revenue and a negative adjustment
of US$170m on trading profit.
An assurance report issued in respect of the pro forma financial information, by the group's external
auditor, is available at the registered office of the company.
The adjustments to the amounts, reported in terms of IFRS, that have been made in arriving at the pro forma
financial information are presented in the table below:
Six months ended 30 September
2017 2018 2018 2018 2018 2018 2018 2018
A B C D E F(2) G(3) H(4)
Group Group
composi- composi-
tion tion Foreign Local Local
IFRS(1) disposal acquisition currency currency currency
Restated adjustment adjustment adjustment growth IFRS(1) growth IFRS
US$'m US$'m US$'m US$'m US$'m US$'m % change % change
Revenue
Internet 6 906 (464) 257 (12) 2 341 9 028 36 31
Ecommerce 1 549 (134) 257 (97) 412 1 987 29 28
- Classifieds 289 (2) 35 (24) 107 405 37 40
- Payments 126 - 17 (14) 42 171 33 36
- Food delivery 56 - 97 (16) 44 181 79 >100
- Etail 877 (145) 104 (25) 173 984 24 12
- Travel 96 14 - (1) 28 137 25 43
- Other 105 (1) 4 (17) 18 109 17 4
Social and
internet
platforms 5 357 (330) - 85 1 929 7 041 38 31
- Tencent 5 241 (329) - 99 1 894 6 905 39 32
- Mail.ru 116 (1) - (14) 35 136 30 17
Video
entertainment 1 775 (14) 3 (54) 124 1 834 7 3
Media 315 (133) - (4) (8) 170 (4) (46)
Corporate
services 1 - - - - 1 - -
Intersegmental (10) - - - (1) (11) (10) (10)
Economic interest 8 987 (611) 260 (70) 2 456 11 022 29 23
(1) Figures presented on an economic-interest basis as per the segmental review.
(2) A + B + C + D + E.
(3) [E/(A + B)] x 100.
(4) [(F/A) - 1] x 100.
Refer to the segmental review and note 2 for details of the group's adoption of new accounting pronouncements
during the period.
The adjustments to the amounts, reported in terms of IFRS, that have been made in arriving at the pro forma
financial information are presented in the table below:
Six months ended 30 September
2017 2018 2018 2018 2018 2018 2018 2018
A B C D E F(2) G(3) H(4)
Group Group
composi- composi-
tion tion Foreign Local Local
IFRS(1) disposal acquisition currency currency currency
Restated adjustment adjustment adjustment growth IFRS(1) growth IFRS
US$'m US$'m US$'m US$'m US$'m US$'m % change % change
Trading profit
Internet 1 418 (74) (63) 47 518 1 846 39 30
Ecommerce (318) 34 (63) 8 130 (209) 46 34
- Classifieds (45) 1 (3) (1) 95 47 >100 >100
- Payments (33) - (10) - 19 (24) 58 27
- Food delivery (8) - (29) 1 (5) (41) (63) >(100)
- Etail (134) 38 (18) 5 3 (106) 3 21
- Travel (31) (5) - - 17 (19) 47 39
- Other (67) - (3) 3 1 (66) 1 1
Social and
internet
platforms 1 736 (108) - 39 388 2 055 24 18
- Tencent 1 713 (108) - 40 398 2 043 25 19
- Mail.ru 23 - - (1) (10) 12 (43) (48)
Video
entertainment 234 (1) 1 (36) 13 211 6 (10)
Media 21 (33) - - 2 (10) 17 >(100)
Corporate
services (8) - - 1 (5) (12) (63) (50)
Economic interest 1 665 (108) (62) 12 528 2 035 34 22
(1) Figures presented on an economic-interest basis as per the segmental review.
(2) A + B + C + D + E.
(3) [E/(A + B)] x 100.
(4) [(F/A) - 1] x 100.
Refer to the segmental review and note 2 for details of the group's adoption of new accounting pronouncements
during the period.
The adjustments to the amounts, reported in terms of IFRS, that have been made in arriving at the pro forma
financial information are presented in the table below:
Six months ended 30 September
2017 2018 2018 2018 2018 2018 2018 2018
A B C D E F(2) G(3) H(4)
Group Group
composi- composi-
tion tion Foreign Local Local
IFRS(1) disposal acquisition currency currency currency
Restated adjustment adjustment adjustment growth IFRS(1) growth IFRS
US$'m US$'m US$'m US$'m US$'m US$'m % change % change
Other metrics
reported
Development
spend(1)
- economic
interest 470 (51) 64 (7) (88) 388 (21) (17)
- consolidated 331 (25) 12 (2) (83) 233 (27) (30)
Consolidated
revenue 3 105 (162) 125 (130) 406 3 344 14 8
Consolidated
trading profit 70 (25) (17) (31) 131 128 >100 83
Consolidated
ecommerce
revenue 1 031 (15) 122 (72) 290 1 356 29 32
Consolidated
Avito revenue 137 - - (17) 42 162 31 18
Consolidated
video-entertainment
revenue 1 772 (14) 3 (54) 126 1 833 7 3
Core headline earnings, calculated on a constant-currency basis, amounted to US$1.66bn.
(1) Development spend is excluded from the assurance report issued by the group's external auditor.
(2) A + B + C + D + E.
(3) [E/(A + B)] x 100.
(4) [(F/A) - 1] x 100.
Refer to note 2 for details of the group's adoption of new accounting pronouncements during the period.
INDEPENDENT AUDITOR'S REVIEW REPORT
on interim financial statements
To the shareholders of Naspers Limited
We have reviewed the condensed consolidated interim financial statements of Naspers Limited in the accompanying
interim report, which comprise the condensed consolidated statement of financial position as at 30 September 2018
and the related condensed consolidated income statement and condensed consolidated statements of comprehensive
income, changes in equity and cash flows for the six months then ended, and selected explanatory notes 1 to 15.
Directors' responsibility for the interim financial statements
The directors are responsible for the preparation and presentation of these interim financial statements in
accordance with the 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, and for
such internal control as the directors determine is necessary to enable the preparation of interim financial
statements that are free from material misstatement, whether due to fraud or error.
Auditor's responsibility
Our responsibility is to express a conclusion on these interim financial statements. We conducted our review
in accordance with International Standard on Review Engagements 2410, Review of Interim Financial Information
Performed by the Independent Auditor of the Entity. ISRE 2410 requires us to conclude whether anything has
come to our attention that causes us to believe that the interim financial statements are not prepared in
all material respects in accordance with the applicable financial reporting framework. This standard also
requires us to comply with relevant ethical requirements.
A review of interim financial statements in accordance with ISRE 2410 is a limited assurance engagement.
We perform procedures, primarily consisting of making enquiries of management and others within the entity,
as appropriate, and applying analytical procedures, and evaluate the evidence obtained.
The procedures in a review are substantially less than and differ in nature from those performed in an audit
conducted in accordance with International Standards on Auditing. Accordingly, we do not express an audit
opinion on these interim financial statements.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the accompanying condensed
consolidated interim financial statements of Naspers Limited for the six months ended 30 September 2018 are not
prepared, in all material respects, in accordance with the 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.
Other matter
We have not reviewed future financial performance and expectations expressed by the directors included in the
commentary in the accompanying interim financial statements and accordingly do not express an opinion thereon.
PricewaterhouseCoopers Inc.
Director: Brendan Deegan
Registered Auditor
Cape Town
30 November 2018
PricewaterhouseCoopers Inc.
5 Silo Square, V&A Waterfront, Cape Town 8002, PO Box 2799, Cape Town 8000
T: +27 (0) 21 529 2000, F: +27 (0) 21 529 3300, www.pwc.co.za
Chief Executive Officer: T D Shango
Management Committee: S N Madikane, J S Masondo, P J Mothibe, C Richardson, F Tonelli, C Volschenk
The Company's principal place of business is at 4 Lisbon Lane, Waterfall City, Jukskei View, where a
list of directors' names is available for inspection.
Reg. no. 1998/012055/21, VAT reg. no. 4950174682
ADMINISTRATION AND CORPORATE INFORMATION
NASPERS HEAD OFFICE
+27 (0)21 406 2121
Street address
40 Heerengracht
Cape Town
8001
South Africa
Directors
J P Bekker (chair), B van Dijk (chief executive), E M Choi, H J du Toit, C L Enenstein, D G Eriksson,
R C C Jafta, F L N Letele, G Liu, D Meyer, R Oliveira de Lima, S J Z Pacak, T M F Phaswana, V Sgourdos,
M R Sorour, J D T Stofberg, B J van der Ross
Company secretary
G Kisbey-Green
Registered office
40 Heerengracht, Cape Town 8001, South Africa
(PO Box 2271, Cape Town 8000, South Africa)
Transfer secretaries
Link Market Services South Africa Proprietary Limited
13th Floor, Rennie House, 19 Ameshoff Street, Braamfontein 2001, South Africa
(PO Box 4844, Johannesburg 2000, South Africa)
Sponsor
Investec Bank Limited
ADR programme
Bank of New York Mellon maintains a GlobalBuyDIRECT(SM) 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 -
GlobalBuyDIRECT(SM), Church Street Station, PO Box 11258, New York, NY 10286-1258, USA.
Important information
This report contains forward-looking statements as defined in the United States Private Securities Litigation
Reform Act of 1995. Words such as "believe", "anticipate", "intend", "seek", "will", "plan", "could", "may",
"endeavour" and similar expressions are intended to identify such forward-looking statements, but are not the
exclusive means of identifying such statements. By their nature, forward-looking statements involve risk and
uncertainty because they relate to future events and circumstances and should be considered in light of various
important factors. 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. The key factors that could cause our actual results performance, or achievements
to differ materially from those in the forward-looking statements include, among others: changes to IFRS and the
interpretations, applications and practices subject thereto as they apply to past, present and future periods;
ongoing and future acquisitions; changes to domestic and international business and market conditions such as
exchange rate and interest rate movements; changes in the domestic and international regulatory and legislative
environments; changes to domestic and international operational, social, economic and political conditions; the
occurrence of labour disruptions and industrial action; and the effects of both current and future litigation.
This includes factors that can negatively affect our businesses and financial performance. We are not under any
obligation to (and expressly disclaim any such obligation to) revise or update any forward-looking statements
contained in this report, whether as a result of new information, future events or otherwise. We cannot give
any assurance that forward-looking statements will prove to be correct and investors are cautioned not to place
undue reliance on any forward-looking statements contained herein.
www.naspers.com
Date: 30/11/2018 03:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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