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NASPERS LIMITED - Interim results announcement for the six months ended 30 September 2021

Release Date: 22/11/2021 08:00
Code(s): NPN     PDF:  
Wrap Text
Interim results announcement for the six months ended 30 September 2021

Naspers Limited
Incorporated in the Republic of South Africa
(Registration number: 1925/001431/06)
(Naspers or the group)
JSE share code: NPN   ISIN: ZAE000015889
LSE share code: NPSN  ISIN: US 6315122092



                                                         Six months ended     Year ended   
                                                           30 September         31 March   
                                                          2021      2020            2021    
                                                         US$'m     US$'m           US$'m   
Revenue                                                  3 575     2 497           5 934   
Operating loss                                            (315)     (274)         (1 189)  
Earnings per ordinary share (US cents)                   3 031       500           1 243   
Headline earnings per ordinary share (US cents)            368       404             970   
Core headline earnings per ordinary share (US cents)       416       376             814   

Over the past six months, the group posted a solid performance. Group revenue, measured on an economic-interest basis,
grew 32% (29%) to US$17.2bn. Our Ecommerce segment revenue accelerated 60% (52%) to US$4.6bn, after strong momentum in
the prior year. 

Group trading profit grew 8% (9%) to US$2.9bn, reflecting continued investment to fund growth by expanding our existing 
platforms, and building deeper relations with customers and partners. Core headline earnings per share were 416 US cents, 
an increase of 11%. Additionally, we invested US$5.3bn in new acquisitions to expand our ecosystems, mainly in Edtech and 
Food Delivery.

These results reflect a diverse Ecommerce portfolio, which has grown significantly in value. Five years ago this portfolio,
excluding Tencent, was valued by analysts at around US$13.0bn. Today that valuation is approaching US$50.0bn. We aim to 
increase the size of this portfolio over the coming years.

We back local entrepreneurs, invest through the economic cycle and adopt a long-term approach. This is evident in the
growth of our operations and the values of investments now publicly traded. These include Tencent, Delivery Hero,
VK/, (MakeMyTrip and ibibo) and, most recently, Remitly, Skillsoft, Sinch, SimilarWeb and Udemy. 

Over the last six months, we focused on maintaining growth and customer engagement, while leveraging increased scale
to develop opportunities in adjacent products and services. We are building ecosystems with multiple customer touchpoints
to improve both their experience and retention. We align technology and data with key customer needs such as convenience 
and ease of use. Given that long-term engagement with customers requires end-to-end capabilities, in the past six months 
we invested more in building products across our Ecommerce portfolio. 

With momentum across core segments, we have achieved scale in several markets. Classifieds emerged from the pandemic
stronger, with healthy growth at its core. We are amplifying that with a larger role in transactions. For example, OLX
Autos is merging online and offline car buying and finance to build the most trusted one-stop shop for transacting in

Food Delivery's performance remained strong. The scale achieved over the past 18 months has expanded the opportunity
beyond delivering food from restaurants to include convenience and grocery delivery. We participated in further funding
rounds in Swiggy and iFood, stepped up our investment in Delivery Hero, and invested in Flink and Oda, two young European
e-grocery (online grocery orders) businesses.

In Payments and Fintech, we recently announced the acquisition of BillDesk. After regulatory approval, this will create a 
top 10 online payments company globally by total payment volume. We also substantially increased our scale in India, one 
of the fastest-growing consumer internet markets. The combined business creates a platform to pursue additional 
opportunities to expand into digital banking. 

Edtech, our newest segment, grew well. The portfolio expanded with the acquisition of Skillsoft and its simultaneous listing, 
and the acquisitions of Stack Overflow and GoodHabitz. Our Edtech investments currently reach over 500 million users. 

Tencent delivered strong results and remains positioned for continued growth. In April 2021, to improve our financial
flexibility and reinforce our balance sheet, we sold 2% of its issued share capital, generating proceeds of US$14.6bn and 
reducing our holding to 28.9%. We have been investors in Tencent for over 20 years, with the only prior disposal being 2% 
in 2018. In both cases, proceeds were used to fund our strategic ambitions, resulting in meaningful net asset value
appreciation. The interests we acquired with proceeds from the initial sale of Tencent in 2018 include the majority of
our food assets, the Avito step-up investment and the Edtech portfolio. These are growing at an internal rate of return
of over 30%. We remain committed, long-term investors in Tencent and have agreed not to sell any further shares for a
three-year period. 

The listing of Prosus in Europe gave equity and debt investors exposure to fast-growing sectors in China, India and other 
emerging markets. In August 2021, Prosus concluded an exchange offer for 45.8% of Naspers N ordinary shares in issue. This 
transaction creates a capital structure that allows the inherent value of the group to be better reflected in the share 
prices of Naspers and Prosus. Naspers and Prosus are now better positioned on their home exchanges. Prosus rates as a top 
Euro Stoxx 50 company, and its free float had doubled its effective economic interest.

The group continued to crystallise returns and return capital to shareholders. In June, we completed a US$5.0bn share
purchase programme of Naspers and Prosus stock. In conjunction with the exchange offer, we also announced a further
US$5.0bn share repurchase programme of Prosus stock. This is being implemented through on-market acquisitions of Prosus
ordinary shares N. Up to 30 September, we paid US$1.5bn to repurchase Prosus ordinary shares N. 

We aim to build on the strong momentum in our businesses. Given the significant potential we have identified, we are
investing to maintain momentum and to expand reach and impact. We will continue to invest in our platforms and create
ecosystems, particularly in autos transactions, credit and digital banking, and food and grocery delivery. At the same
time, we are driving profitability and cash generation in more mature businesses. Our goal is to build a business that 
will deliver sustainable value creation over the long term for all stakeholders.

Given the wide geographical span of our operations, as well as significant mergers and acquisitions (M&A) in Ecommerce, 
reported earnings are materially impacted by foreign exchange movements and the effects of acquisitions and disposals.
Where relevant in this short-form results announcement, we have adjusted for these effects. These adjustments (pro forma 
financial information) are quoted in brackets after the equivalent metrics reported under International Financial Reporting 
Standards (IFRS).

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.


The group's financial highlights for the six months ended 30 September 2021 are outlined below:

                                                                         Six months ended 30 September 2021
                                        2020           2021           2021          2021        2021      2021         2021         2021   
                                           A              B              C             D           E       F(2)         G(3)         H(4)   
                                                      Group          Group                                                                 
                                                composition    composition       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   
Ecommerce                              2 854            (73)           227           108       1 445     4 561           52           60   
- Classifieds                            635             (7)            53           (10)        630     1 301         >100         >100   
- Food Delivery                          610             (2)            98            31         524     1 261           86         >100   
- Payments and Fintech                   252             (5)             7            (4)        109       359           44           42   
- Etail                                1 203             (1)             -            91         124     1 417           10           18   
- Edtech                                  51              6             33             1          29       120           51         >100   
- Other                                  103            (64)            36            (1)         29       103           74            -   
Social and Internet Platforms         10 082           (688)             -           931       2 138    12 463           23           24
- Tencent                              9 912           (684)             -           931       2 091    12 250           23           24   
- VK (previously                170             (4)             -             -          47       213           28           25
Media                                     84              -              -            21          24       129           29           54   
Corporate segment                          -              -              -             -           -         -
Intersegmental                            (1)             -              -             -           -        (1)           -            -   
Group economic interest               13 019           (761)           227         1 060       3 607    17 152           29           32
Trading profit Ecommerce                (220)            26            (72)           (9)        (99)     (374)         (51)         (70)  
- Classifieds                             33             12             (2)            5          60       108         >100         >100   
- Food Delivery                         (189)            15            (31)          (11)        (96)     (312)         (55)         (65)  
- Payments and Fintech                   (31)             3             (1)           (2)          -       (31)           -            -
- Etail                                   18              -              -             2         (32)      (12)       >(100)       >(100)   
- Edtech                                 (13)             1            (19)           (1)        (16)      (48)       >(100)       >(100)   
- Other                                  (38)            (5)           (19)           (2)        (15)      (79)         (35)       >(100)   
Social and Internet Platforms          2 983           (205)             -           259         348     3 385           13           13
- Tencent                              2 968           (205)             -           259         351     3 373           13           14   
- VK (previously                 15              -              -             -          (3)       12          (20)         (20)
Media                                    (16)             -              -             2          23         9         >100         >100   
Corporate segment                        (56)             -              -            (5)        (44)     (105)         (79)         (88)
Group economic interest                2 691           (179)           (72)          247         228     2 915            9            8
 *  During the 31 March 2021 financial year-end, the way that corporate costs were presented to the chief operating decision-maker (CODM) 
    was changed. Corporate costs, previously allocated and disclosed in the "Other Ecommerce" subsegment, are now included in the "Corporate 
    segment". This provides more clarity on the total corporate costs incurred by the group. This change had no impact on the overall group 
    trading (loss)/profit.
(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.

The group delivered encouraging results for the six months ended 30 September 2021. Group revenue, measured on an economic-
interest basis, grew 32% (29%) to US$17.2bn. This was driven by Ecommerce revenues, which rose 60% (52%), representing an 
acceleration of 23 percentage points (ppt) (0ppt). Our economic-interest share in Tencent's revenue grew 24% (23%), an 
impressive performance given the size of its base. Group trading profit expanded 8% (9%) to US$2.9bn. Tencent's contribution 
to the group's trading profit improved 14% (13%). 

Core headline earnings were US$1.5bn - a decrease of 6% (+4%), driven by a decrease in the economic interest in the Prosus 
group as well as bigger investments to grow our ecommerce ecosystems and platforms. This was partially offset by a
contribution from Tencent, despite our sale of a 2% holding in that group. 

On a consolidated basis, total revenue increased by US$1.0bn, or 43%, from US$2.5bn in the prior period to US$3.6bn for the 
six months ended 30 September 2021 - primarily due to the Classifieds segment. The operating loss increased from US$274m to 
US$315m as a result of investments to expand ecommerce units.

Our equity-accounted results increased with US$1.2bn, or 42%, from US$2.9bn in the prior period to US$4.1bn in the review period. 
The increase is driven primarily by Tencent and Delivery Hero. The equity-accounted results include investment disposal gains of 
US$1.1bn and net fair-value gains on financial instruments of US$993m. This was offset by the trimming of our holding in Tencent.

As a result of trimming our holding in Tencent, we recognised a gain of US$12.3bn.

Headline earnings decreased in the current period by US$391m to US$1.3bn. This was due to higher expenses for equity-settled 
share schemes recognised by equity-accounted investments as well as the increase in net finance cost and the increase in 
fair-value gains contributed by equity-accounted investments. The increase in finance cost is as a result of the issuance of 
new notes together with the market-value premium (ie the difference between the carrying value of the bond at amortised cost 
and the market value of the future contractual payments) of the redemption of the 2025 and 2027 notes.

In July 2021, we raised US$4.0bn in debt from a US dollar and euro offering. Some of the net proceeds were used to settle US$1.6bn 
2025 and 2027 notes. Lively investor demand for these offerings resulted in attractive pricing, and enabled us to increase our debt 
capacity and reduce our average funding cost. The group has no debt maturities due until 2025.

We ended the period with a strong and liquid balance sheet. We hold net cash of US$3.2bn, comprising US$13.8bn in cash and cash 
equivalents (including short-term cash investments), net of US$10.6bn in interest-bearing debt (excluding capitalised lease 
liabilities). We also hold an undrawn US$2.5bn and R4.0bn revolving credit facility. Overall, we recorded a net interest expense 
of US$150m for the six months. 

Consolidated free cash inflow was US$48m, a decrease on the prior year's free cash inflow of US$292m. Tencent remains a meaningful 
contributor to our cash flow via a stable and increasing dividend stream. Dividends from Tencent of US$571m (FY21: US$458m) offset 
the increased capital investment in Etail and additional working capital requirements in our Etail and Classifieds segments. 

There were no new or amended accounting pronouncements effective 1 April 2021 with a significant impact on the group's consolidated 
financial statements. 

The company's external auditor has not reviewed or reported on forecasts included in this short-form results announcement.

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 will be made public on 22 November 2021.

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 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.
We are not under any obligation to (and expressly disclaim any such obligation to) revise or update any forward-looking
statements contained in this short-form results announcement, 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 report. This short-form results announcement will be released on 22 November 2021 and 
the full condensed consolidated interim financial statements can be found on the company's website, and can 
be viewed on the JSE link, The condensed consolidated 
interim financial statements for the six months ended 30 September 2021 have been reviewed by PricewaterhouseCoopers Inc., 
our independent auditor. Their unqualified report is appended to the condensed consolidated interim financial statements 
available on Copies of the full condensed consolidated interim report 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 report published on SENS and on the company's website.

The information in this short-form results announcement has been extracted from the reviewed information published on
SENS, 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 2021

Directors: JP Bekker (chair), B van Dijk (chief executive), HJ du Toit, CL Enenstein, M Girotra, RCC Jafta, AGZ Kemna, 
FLN Letele, D Meyer, R Oliveira de Lima, SJZ Pacak, V Sgourdos, MR Sorour, JDT Stofberg, BJ van der Ross, Y Xu

Company secretary: L Bagwandeen

Registered office: 40 Heerengracht, Cape Town 8001 (PO Box 2271, Cape Town 8000)

Transfer secretaries: JSE Investor Services Proprietary Limited, 13th Floor Rennie House, 19 Ameshoff Street,
Braamfontein 2001 (PO Box 4844, Johannesburg 2000, South Africa)

Sponsor: Investec Bank Limited
Date: 22-11-2021 08:00:00
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