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Naspers Limited
Incorporated in the Republic of South Africa
(Registration number: 1925/001431/06)
(Naspers or the Group)
JSE share code: NPN ISIN: ZAE000325783
Interim results announcement for the six months ended 30 September 2023
Salient features
Period Year
ended ended
30 September 31 March
2023 2022 2023
US$'m US$'m US$'m
Continuing operations
Revenue 3 007 2 759 5 960
Earnings per ordinary share (US cents) 812 501 2 014
Headline earnings per ordinary share (US cents) 311 28 143
Core headline earnings per ordinary share (US cents) 454 214 546
Commentary
September 2023 marked the fourth anniversary of listing Prosus on the Euronext Amsterdam, creating Europe's largest
consumer internet company. Last year, the Group committed to deliver consolidated Prosus Ecommerce profitability during
the first half of FY25 (1H25); continue the open-ended share repurchase programme; simplify our structure by removing
the crossholding; and highlight value in our portfolio of assets. As we take stock halfway through FY24, we have made
significant progress on all these commitments.
Consolidated revenue from continuing operations grew 9% (14%) to US$3bn. The greatest contributors were Classifieds,
Food Delivery, and Payments and Fintech. Ecommerce consolidated trading losses from continuing operations decreased
by US$232m to US$38m in 1H24 as cost reductions and improved efficiencies came through. Trading losses for this segment
have reduced from a peak of US$270m in 1H23 and demonstrate our accelerated approach to breakeven. Free cash inflow
was strong at US$597m.
Core headline earnings were US$0.9bn - an increase of 90% (112%). This was primarily due to improved profitability of
our ecommerce consolidated businesses and equity-accounted investments, particularly Tencent, and higher net interest
income during the period.
The growth rates discussed in this commentary represent a comparison between 1H24 and 1H23, unless otherwise stated.
The percentages in brackets represent local currency growth, excluding the impact of acquisitions and disposals (M&A),
and provide a clearer view of the underlying operating performance of our businesses.
The Group's Prosus ecommerce businesses have maintained topline growth. They also continued to improve profitability
in 1H24 and we are increasingly confident of delivering ahead of commitments.
After years of investment and growth, our businesses are now at scale and demonstrate improving profitability. We aim
to maintain peer-leading growth while continuing to drive profitability. Given better results in the current period,
we expect to achieve our ambition of Prosus consolidated Ecommerce profitability earlier than 1H25. We are now targeting
profitability for 2H24. The goal is to build on the strong momentum in recent halves, sustain profitability growth for
each subsequent period and reach good margins.
At 30 September 2023, the ongoing open-ended share repurchase programme has reduced the Naspers net share count by 14%
and generated US$25bn for our shareholders. This was based on narrowing of the discount and an increase in net asset
value (NAV) per share. In the same month, we completed the removal of the crossholding, which received overwhelming
shareholder support. Finally, we continue to build value for shareholders in our portfolio's underlying assets.
Delivering on our commitments should result in meaningful long-term value creation and shareholder returns.
Food Delivery's performance remained strong, with revenue growing ahead of peers and profitability improving meaningfully.
iFood sustained momentum in the core restaurant food-delivery businesses, while taking a more considered approach to its
grocery growth extensions. iFood's profitability margins in the core are comparable to its global peers and margins will
expand further.
OLX Europe's classifieds business has delivered growth and enhanced profitability, driven by improved operational metrics
and a strong performance in the pay-and-ship offering. Following our strategic decision to exit OLX Autos (the automobile
transaction business), we made progress in finalising deals across various markets. Where buyers have not been identified,
we have initiated closure processes and liquidated inventories.
Payments and Fintech recorded meaningful growth in the core payment service provider (PSP) business, driven by India
payments, Turkey (Iyzico) and India credit. The consolidated trading loss narrowed due to improved profitability in
Global Payments Organisations (GPO), lyzico and savings from new initiatives in PayU India. PayU announced the sale of GPO
for US$610m, which is expected to close in the first half of calendar 2024. PayU GPO's financial results are included in
continuing operations.
In Edtech, Stack Overflow's monetisation initiatives have lagged expectations. We recorded a further impairment in 1H24.
Stack Overflow has taken significant action to improve its operating profile and introduce generative AI capabilities.
GoodHabitz is benefiting from investment in product enhancements and a more measured international rollout programme.
In the case of both Stack Overflow and GoodHabitz, the Group has intervened to improve business performance. We will
critically assess the impact of these interventions in due course.
The Group's balance sheet is strong with central cash of US$15.1bn, including short-term cash investments. We remain
committed to our investment-grade rating and disciplined capital allocation. In total, US$477m was invested capital in
1H24.
In June 2023, we announced a proposal to simplify the Group's structure by removing the crossholding between Naspers
and Prosus. The transaction delivered on its commitments to shareholders, while preserving the benefits of the exchange
offer effected in 2021. In September 2023, the transaction concluded. The resulting simplified structure maintains the
current economic ownership of Prosus by Naspers and ensures the Group can continue its open-ended share repurchase
programme.
The open-ended share repurchase programme launched in June 2022 is funded by the daily sale of a small number of Tencent
shares. From launch to 30 September 2023, the combined holding company discount of Naspers and Prosus reduced by around
17 percentage points. Over the same period, Prosus repurchased 210 413 966 of its ordinary shares N, with a total value
of US$13.9bn, at a significant discount to their NAV, leading to a 7% accretion in NAV per share. The narrowing of the
discount and the increase in NAV per share has created some US$25bn of value for shareholders. We remain committed to
this programme as it simultaneously creates value for shareholders while increasing our exposure to Tencent and our
ecommerce portfolio on a per share basis.
Naspers funds its open-ended share repurchase programme with regular sales of Prosus shares. By 30 September 2023, Naspers
had sold 67 715 575 Prosus ordinary shares N to the value of US$4.4bn and bought back 26 631 055 Naspers N ordinary shares
to the value of US$4.3bn.
A reconciliation of alternative performance measures to the equivalent IFRS metrics is provided in 'Other information -
Non-IFRS financial measures and alternative performance measures' of these condensed consolidated interim financial
statements.
Financial review
The Group's financial highlights for the six months ended 30 September 2023 are outlined below:
Six months ended 30 September 2023
2022 2023 2023 2023 2023 2023 2023 2023
A B C D E F(2) G(3) H(4)
Group Group
composition composition Foreign Local Local
disposal acquisition currency currency currency
IFRS 8(1) adjustment adjustment adjustment growth IFRS 8(1) growth IFRS 8
US$'m US$'m US$'m US$'m US$'m US$'m % change % change
Continuing operations
Revenue
Ecommerce 4 631 (290) 179 58 731 5 309 17 15
Classifieds(5), (6) 368 (3) - 17 84 466 23 27
Food Delivery(7) 1 911 (129) 160 94 408 2 444 23 28
Payments and Fintech 480 (7) 1 (45) 162 591 34 23
Edtech 334 (141) - 1 17 211 9 (37)
Etail 1 236 3 8 (2) 72 1 317 6 7
Other 302 (13) 10 (7) (12) 280 (4) (7)
Social and internet platforms 11 309 (1 156) - (594) 1 116 10 675 11 (6)
Tencent 11 309 (1 156) - (594) 1 116 10 675 11 (6)
Media 111 (3) - (12) (9) 87 (8) (22)
Corporate segment - - - - - - - -
Intersegmental (2) - - - 1 (1) (50) (50)
Economic interest from
continuing operations 16 049 (1 449) 179 (548) 1 839 16 070 13 -
Discontinued operations(5), (6) 1 511 (625) - (93) (175) 618 (20) (59)
Group economic interest 17 560 (2 074) 179 (641) 1 664 16 688 11 (5)
Continuing operations
Trading profit
Ecommerce (820) 122 (14) 3 460 (249) 66 70
Classifieds(5), (6) 33 - - 7 70 110 >100 >100
Food Delivery(7) (381) 22 (10) - 214 (155) 60 59
Payments and Fintech (97) 1 (2) (2) 66 (34) 69 65
Edtech (178) 91 - (1) 24 (64) 28 64
Etail (51) - - (1) 25 (27) 49 47
Other (146) 8 (2) - 61 (79) 44 46
Social and internet platforms 2 497 (255) - (159) 792 2 875 35 15
Tencent 2 497 (255) - (159) 792 2 875 35 15
Media 3 - - - (3) - (100) (100)
Corporate segment (98) - - 1 12 (85) 12 13
Intersegmental - - - - - - - -
Economic interest from
continuing operations 1 582 (133) (14) (155) 1 261 2 541 87 61
Discontinued operations(5), (6) 17 (193) - 9 52 (115) (30) >(100)
Group economic interest 1 599 (326) (14) (146) 1 313 2 426 >100 52
(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.
(5) From 1 April 2022, following the separation from the OLX Group, the chief operating decision-maker reviewed the financial results of
Avito separately. Subsequent to the Group's decision to exit this Russian business, Avito was presented as a discontinued operation
up until the date of disposal.
(6) From 1 March 2023, following the Group's decision to exit the OLX Autos business unit, its operations disposed, classified as
held for sale or closed down by 30 September 2023 were presented as a discontinued operation. The OLX Autos business unit is a
separate major line of business both in terms of the distinct nature of the business and its contribution to the operational
performance of the Group.
(7) From 1 April 2023, iFood changed its revenue recognition from a gross basis to a net basis as a result of a change in the services
rendered to its customers.
Consolidated Group revenue from continuing operations increased US$248m, or 9% (14%), from US$2.8bn in the prior period to US$3bn.
This was primarily due to strong revenue growth in Classifieds, Food Delivery, and Payments and Fintech. As a result, trading losses
decreased to US$124m from US$365m. The largest contributor of the reduction in continuing operations' trading loss was the drop of
US$232m in Ecommerce consolidated trading loss to just US$38m. Our Prosus consolidated ecommerce businesses are now of scale and well
on track to achieve profitability.
Operating losses rose US$315m to US$426m, primarily due to an impairment loss recognised on Edtech investments.
Amid challenging macroeconomic conditions and the decline in some industry valuations, we recognised impairment losses on
goodwill of US$440m in the current period for Stack Overflow (US$340m) and in the OLX Autos business classified as
held for sale (US$100m).
We also recognised impairment losses on equity-accounted investments of US$175m related to Skillsoft (US$42m) and unlisted
equity-accounted associates in the Prosus Ventures portfolio reported in the Other Ecommerce segment (US$133m).
Profit from equity-accounted results (our share of equity-accounted investments' net profit) increased by US$93m, or 9%,
from US$1.1bn in the prior period to US$1.2bn. This was driven by improved profitability across our equity-accounted
associates, particularly in the Food Delivery segment.
In March 2023, we announced the decision to exit the OLX Autos business unit. All operations of this business are presented
as discontinued operations as they have been disposed, classified as held for sale or closed down by 30 September 2023. OLX
Autos operations, previously presented in continuing operations for 31 March 2023, have been presented in discontinued operations
as of 30 September 2023.
Core headline earnings from continuing operations were US$0.9bn. This is an increase of 90% (112%), primarily due to improved
profitability of our ecommerce consolidated businesses and equity-accounted investments, particularly Tencent, and an increase
in net interest income during the period.
Headline earnings from continuing operations rose by US$533m to US$593m.
The Group sold 1% of Tencent's issued share capital to fund the open-ended share repurchase programme, resulting in a gain of
US$2.9bn during the period (1H23: US$2.8bn).
Free cash inflow was US$597m, a sizeable US$755m improvement on the prior period. This was due to improved profitability in
Food Delivery and Classifieds, as well as better working capital management in Etail, and Payments and Fintech. Excluding OLX
Autos, free cash inflow was US$677m. Tencent remains a major contributor to our cash flow via an increased dividend of US$758m
(FY23: US$565m).
Naspers has a net debt position of US$88m, comprising US$15.1bn in central cash and cash equivalents (including short-term cash
investments), net of US$15.2bn in central interest-bearing debt (excluding capitalised lease liabilities). In addition, we have
an undrawn US$2.5bn revolving credit facility. During the period, we recorded a net interest income of US$148m.
There were no new or amended accounting pronouncements effective 1 April 2023 with a significant impact on the Group's condensed
consolidated interim 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 chief financial officer, Basil Sgourdos CA(SA).
These results were made public on 29 November 2023.
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. 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 report. The full condensed consolidated interim report will be released on SENS
on 29 November 2023 and can be found on the company's website at www.naspers.com and can be viewed on the JSE link,
https://senspdf.jse.co.za/documents/2023/JSE/ISSE/NPN/Interims.pdf. The condensed consolidated interim financial statements
for the six months ended 30 September 2023 have been reviewed by Deloitte & Touche, our independent auditor. Their unmodified
report is appended to the condensed consolidated interim financial statements available at https://www.naspers.com/investors.
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 Ervin Tu
Chair Interim chief executive
Cape Town
29 November 2023
Directors: JP Bekker (chair), S Dubey, 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, 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 (Registration number 2000/007239/07),
PO Box 10462, Johannesburg 2000, South Africa (Tel: +27(0)86 140 0110/+27 (0)11 029 0253)
Sponsor: Investec Bank Limited
www.naspers.com
