Wrap Text
Interim results announcement
Naspers Limited (Registration number: 1925/001431/06)
(Naspers or the group)
JSE share code: NPN ISIN: ZAE000015889
LSE code: NPSN ISIN: US 6315122092
Interim results announcement
Commentary
The past six months have been transformational for the Naspers group. We completed several significant strategic
initiatives to transition Naspers to a 100% consumer internet company.
Notably, on 11 September 2019, we listed our international internet assets on Euronext Amsterdam as Prosus N.V.
(Prosus), comprising our international internet interests outside of South Africa, including operations and
investments in online classifieds, food delivery, payments and fintech, etail, travel, education, and social
and internet platforms. Prosus also has a secondary, inward listing on the JSE Limited (JSE) in South Africa.
Prosus is 73.84% owned by Naspers with a free float of 26.16%. As Europe's largest listed consumer internet
company by asset value, Prosus gives global internet investors direct access to our portfolio of international
internet assets through exposure to China, India and other high-growth markets, as well as to the global tech
sector. At the end of the review period, the listing has already unlocked around US$10bn of value for
shareholders by reducing the discount to the combined net asset value of Prosus and Naspers.
Another significant moment was successfully listing our Video Entertainment business (MultiChoice Group) on the
JSE in February 2019. This also unlocked over US$4bn of value for our shareholders and created another listed
South African champion on the JSE. Accordingly, all income statement information from continuing operations
excludes the contribution from MultiChoice Group which was reported as a discontinued operation in the
previous financial year.
Tencent delivered a good financial performance. A strong performance in areas such as payments and cloud
bodes well for continued growth over the long term. Tencent's expanding ecosystem continues to drive
very strong user engagement which is significantly ahead of local and international peers. This positions
Tencent well to continue to offer a number of new products and services for its users. In ecommerce all
key segments made good progress against financial and strategic objectives in the period, and we believe
each segment will continue to benefit from sectoral growth trends. The Classifieds as well as Payments and
Fintech segments have now reached profitability at their cores and continue to grow strongly while investing
to drive future growth. Food Delivery was the most significant investment area in the period. We believe
this industry fits well into our strategy as it targets a significant consumer need that can be
fundamentally transformed by technology. In addition, food delivery allows for strong local players,
which suits our DNA. Encouragingly, investment in the period supported strong revenue and order growth.
Food Delivery will remain the largest investment area for the group this year, underscoring our confidence
in the strong underlying unit economics of this business.
As a result of these initiatives, the 2020 financial year reflects a streamlined group, with virtually all
revenues now generated from online activities.
SALIENT FEATURES
Six months ended
30 September Year ended
2019 2018 31 March 2019
Reviewed Reviewed Audited
US$'m US$'m US$'m
CONTINUING OPERATIONS
Revenue 1 730 1 512 3 291
Operating loss (282) (236) (567)
Earnings per ordinary share (US cents) 518 774 963
Headline earnings per ordinary share (US cents) 326 624 850
Core headline earnings per ordinary share (US cents) 380 353 685
FINANCIAL REVIEW
The group's financial highlights for the period ended 30 September 2019 are outlined below:
Period ended 30 September
2018 2019 2019 2019 2019 2019 2019 2019
A B C D E F(2) G(3) H(4)
Group Group
composition composition Foreign Local Local
disposal acquisition currency currency currency
IFRS(1) adjustment adjustment adjustment growth IFRS(1) growth IFRS
US$'m US$'m US$'m US$'m US$'m US$'m % change % change
Revenue
Internet 9 028 (399) 198 (453) 1 732 10 106 20 12
Ecommerce 1 987 (384) 142 (94) 438 2 089 27 5
- Classifieds 405 (2) 55 (14) 152 596 38 47
- Payments
and Fintech 171 (2) 8 (12) 34 199 20 16
- Food Delivery 181 (6) 21 (11) 121 306 69 69
- Etail 984 (340) - (52) 103 695 16 (29)
- Travel 137 (29) 34 - 4 146 4 7
- Other 109 (5) 24 (5) 24 147 23 35
Social and
internet platforms 7 041 (15) 56 (359) 1 294 8 017 18 14
- Tencent 6 905 (13) - (357) 1 265 7 800 18 13
- Mail.ru 136 (2) 56 (2) 29 217 22 60
Media 170 (12) - (11) (8) 139 (5) (18)
Corporate services (10) - - - 8 (2) (80) (80)
Economic interest 9 188 (411) 198 (464) 1 732 10 243 20 11
DISCONTINUED
OPERATIONS
Video Entertainment 1 832 (1 832) - - - - - -
Group economic
interest 11 020 (2 243) 198 (464) 1 732 10 243 20 (7)
Trading profit
Internet 1 810 43 (18) (88) 154 1 901 8 5
Ecommerce (245) 47 (74) 17 (178) (433) (90) (77)
- Classifieds 47 1 (12) 5 1 42 (2) 11
- Payments
and Fintech (24) 1 (9) (1) (5) (38) (22) (58)
- Food Delivery (41) (4) (46) 9 (201) (283) >(100) >(100)
- Etail (106) 48 - 3 18 (37) 31 65
- Travel (19) (4) (2) - 4 (21) 17 (11)
- Other (102) 5 (5) 1 5 (96) 5 6
Social and
internet platforms 2 055 (4) 56 (105) 332 2 334 16 14
- Tencent 2 043 (4) - (105) 330 2 264 16 11
- Mail.ru 12 - 56 - 2 70 17 >100
Media (10) 9 - 1 4 4 >(100) >(100)
Corporate services (12) - - - 3 (9) 25 25
Economic interest 1 788 52 (18) (87) 161 1 896 9 6
DISCONTINUED
OPERATIONS
Video Entertainment 251 (251) - - - - - -
Group economic
interest 2 039 (199) (18) (87) 161 1 896 9 (7)
(1) Figures presented on an economic-interest basis as per the segmental review.
(2) A + B + C + D + E.
(3) [E/(A + B)]x100.
(4) [(F/A)-1]x100.
Naspers delivered solid results for the six months ended 30 September 2019. Group revenue, measured on an
economic-interest basis, was US$10.2bn, reflecting growth of 11% (or 20% in local currency, adjusted for
acquisitions and disposals). Measured similarly, and including the stepped-up investment in Food Delivery, group
trading profit grew 6% year on year (or 9% in local currency, adjusted for acquisitions and disposals) to
US$1.9bn. Tencent grew revenues by a healthy 13% (18%) year on year. Driven by Classifieds, Etail (online retail),
and Payments and Fintech, the ecommerce business posted a strong performance. Overall revenue growth in ecommerce,
adjusted for acquisitions and disposals, grew a strong 27% in local currency, led by a strong performance in the
Food Delivery segment which grew orders 110% and revenues by 69% (69% in local currency, adjusted for acquisitions
and disposals). On a nominal basis, revenue grew 5%. Tencent's profitability improved by 11% (16%) year on year.
Trading losses in ecommerce rose to US$433m, reflecting our investment in Food Delivery to grow the markets in
which we operate and sustain our leading positions. Excluding this increased investment, ecommerce trading losses
reduced by a healthy 26% or US$54m.
Core headline earnings from continuing operations were US$1.7bn - up 8% (10%) on the back of improving
profitability in Tencent and the more established ecommerce businesses. Trading profits in the Classifieds
business reduced marginally year on year due to our investment in convenient transactions. However, in local
currency, excluding acquisitions and disposals, trading profits increased on improved performance by letgo and
higher trading profits from Avito. Year-on-year growth will continue to improve throughout the year, driven by
strong revenue growth from growth in listings and margin improvement. Classifieds' revenue from convenient
transactions grew nearly fivefold from the prior year. Our other ecommerce assets also continued to scale,
with Etail's trading losses more than halving. In contrast, the Payments and Fintech business's trading loss
margin increased from 12% last year to 19% in the current year. This was driven by continued improvement in
profitability in the core payment services provider (PSP) business, offset by the investment in the payments
platform technology. Outside the core PSP business, our Payments and Fintech businesses continue to invest
to build a credit offering, primarily in India, which we believe has significant growth potential.
We invested US$377m to accelerate growth and scale in several existing and new businesses. Notably: through
PayU, an investment of US$66m in Wibmo to expand our Indian footprint in payment security, mobile payment
solutions and processing services; and US$45m in Red Dot Payments, providing payment solutions across Asia.
In Classifieds, we increased our exposure to the fast-growing Southeast Asian market with a stake in Carousell,
one of the world's largest and fastest-growing classifieds marketplaces. Ventures invested US$80m in Meesho Inc.,
a leading social commerce online marketplace in India, and another US$25m in our education associate Brainly.
We had a strong net cash position of US$5.9bn.This comprises US$9.1bn of cash and cash equivalents
(including short-term cash investments) and primarily reflects proceeds retained from the Flipkart disposal and
sale of Tencent shares in the 2018 financial year. We had US$3.2bn of interest-bearing debt, excluding capitalised
leases.This resulted in net interest income of US$40m. Following the announcement of the Just Eat offer, Prosus
secured a bridge loan facility that will be used to finance the cash consideration payable under this offer.
Naspers is fully committed to its investment-grade rating and confident it will have sufficient capacity at its
current ratings level to assume this additional debt to finance the offer. Prosus plans to replace the bridge
loan facility with long-term funding through new debt capital and using existing cash resources.
The progress of our core segments, which are growing fast and scaling well, gives us confidence in our
ability to continue identifying opportunities to unlock significant value.
Consolidated free cash inflow was US$19m compared to the prior-year inflow of US$153m, from continuing
operations (thus excluding Video Entertainment). This change reflects the increased investment in the Food
Delivery business as well as negative working-capital effects related primarily to merchant cash timing differences
and transaction costs incurred in unbundling MultiChoice Group and listing Prosus. Dividend income received from
Tencent increased US$45m to US$377m.
We adopted the new accounting standard IFRS 16 Leases in the current period on a prospective basis and,
accordingly, comparative information has not been restated.
Preparation of the short-form results announcement
The preparation of the short-form results announcement was supervised by the group's financial director,
Basil Sgourdos CA(SA). These results were made public on 22 November 2019.
ADR programme
The Bank of New York Mellon maintains a GlobalBuyDIRECTSM plan for Naspers Limited. For additional
information, please visit The 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: The Bank of New York Mellon, Shareholder Relations
Department - GlobalBuyDIRECTSM, 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. 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.
Further information
This short-form results announcement is the responsibility of the directors and is only a summary of the
information in the full condensed consolidated interim financial statements. This short-form results announcement
was released on SENS on 22 November 2019 and the full condensed consolidated interim financial statements can
be found on the company's website, www.naspers.com and can be viewed on the JSE link,
https://senspdf.jse.co.za/documents/2019/JSE/ISSE/NPN/Interims.pdf. Copies of the full condensed consolidated
interim financial statements may also be requested from the company's registered office, at no charge, during
office hours. Any investment decision should be based on the full condensed consolidated interim financial
statements that appear on the company's website.
The information in this short-form results announcement has been extracted from the reviewed information in
the full condensed consolidated interim financial statements, but the short-form results announcement itself
was not reviewed.
On behalf of the board
Koos Bekker Bob van Dijk
Chair Chief executive
Cape Town
22 November 2019
Directors: J P Bekker (chair), B van Dijk (chief executive), E M Choi, H J du Toit, C L Enenstein,
D G Eriksson, M Girotra, R C C Jafta, F L N Letele, 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 (PO Box 2271, Cape Town 8000, South Africa)
JSE transfer secretaries: Link Market Services South Africa Proprietary Limited,
13th Floor Rennie House, 19 Ameshoff Street, Braamfontein 2001
(PO Box 4844, Johannesburg 2000, South Africa)
JSE sponsor: Investec Bank Limited
www.naspers.com
Date: 22/11/2019 03:00:00
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