NASPERS LIMITED - Interim results announcement for the six months ended 30 September 2020

Interim results announcement for the six months ended 30 September 2020

Naspers Limited 
(Registration number: 1925/001431/06)
(Naspers or the group)
JSE share code: NPN  ISIN: ZAE000015889 
LSE code: NPSN  ISIN: US6315122092

Interim results announcement
for the six months ended 30 September 2020

September 2020 marked the first anniversary of the listing of Prosus on the Euronext Amsterdam stock exchange. 
This created Europe's largest consumer internet company and a new investment opportunity on the global technology 
stage, improving the group's access to international internet investors. A year on, ownership of Prosus continues 
to expand and diversify. The group's recent inclusion in Europe's leading index, the Euro Stoxx 50, is expected to 
attract additional European investor interest over time.

Given the wide geographical span of our operations and significant mergers and acquisitions (M&A) activity in
ecommerce, reported earnings are materially impacted by foreign exchange movements and the effects of acquisitions and
disposals. Where relevant in this report, 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 earnings for the period ended 30 September 2020 compared to 30 September 2019 are impacted by the contribution
from the Prosus group post its listing and creation of the free float resulting in a significant non-controlling 
interest of the group. As at 30 September 2019 we recognised 100% of the earnings compared to 72.66% in the 
current period.

The following segmental reviews are prepared on an economic-interest basis (which include consolidated subsidiaries
and a proportionate consolidation of associates and joint ventures), unless otherwise stated.

                                                          Six months ended      Year ended    
                                                            30 September          31 March    
                                                           2020       2019            2019     
                                                          US$'m      US$'m           US$'m    
Revenue                                                   2 497      1 730           4 001    
Operating loss                                             (274)      (282)           (720)   
Earnings per ordinary share (US cents)                      500        517             709    
Headline earnings per ordinary share (US cents)             404        324             496    
Core headline earnings per ordinary share (US cents)        363        379             646    

The group's financial highlights for the period ended 30 September 2020 are outlined below:

                                                                 Six months ended 30 September 2020
                            2019           2020          2020         2020       2020     2020        2020       2020    
                               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    
Ecommerce                  2 089           (229)          262         (238)       970    2 854          52         37    
- Classifieds                596            (38)          140          (43)       (20)     635          (4)         7    
- Payments and Fintech       199             (8)           24          (18)        55      252          29         27    
- Food Delivery              306             (7)            2         (112)       421      610        >100         99    
- Etail                      695             (6)           81          (39)       472    1 203          69         73    
- Travel                     146           (146)            -            -          -        -           -       (100)   
- Other                      147            (24)           15          (26)        42      154          34          5    
Social and internet                                                                                          
platforms                  8 017            (82)            -          (55)     2 202   10 082          28         26    
- Tencent                  7 800            (25)            -          (33)     2 170    9 912          28         27    
-                    217            (57)            -          (22)        32      170          20        (22)   
Media                        139              -             2          (15)       (42)      84         (30)       (40)   
Corporate segment             (2)             -             -            2          -        -           -        100    
Intersegmental                 -              -             -           (1)         -       (1)          -          -    
Group economic interest   10 243           (311)          264         (307)     3 130   13 019          32         27    
Trading profit                                                                                                           
Ecommerce                   (433)            46           (35)          (3)        86     (339)         22         22    
- Classifieds                 42             16           (21)         (12)       (10)      15         (17)       (64)   
- Payments and Fintech       (38)             3            (2)          (1)         -      (38)          -          -    
- Food Delivery             (283)             3            (1)           3         91     (187)         33         34    
- Etail                      (37)             3            (1)           3         42       10        >100       >100    
- Travel                     (21)            21             -            -          -        -           -        100    
- Other                      (96)             -           (10)           4        (37)    (139)        (39)       (45)   
Social and internet                                                                                          
platforms                  2 334            (63)            -          (18)       730    2 983          32         28    
- Tencent                  2 264             (7)            -          (16)       727    2 968          32         31    
-                     70            (56)            -           (2)         3       15          21        (79)   
Media                          4              -             -            4        (24)     (16)      >(100)     >(100)    
Corporate segment             (9)             -            (1)           4         (3)      (9)        (33)         -    
Group economic interest    1 896            (17)          (36)         (13)       789    2 619          42         38    
(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 good results for the first six months ended 30 September 2020, despite Covid-19. Group revenue,
measured on an economic-interest basis, was US$13.0bn, reflecting growth of 27% (32%), a meaningful acceleration of 16pp
(12pp) over the same period last year. Ecommerce revenues grew 37% (52%) year on year. Tencent grew revenues by a healthy
27% (28%). Group trading profit grew 38% (42%) to US$2.6bn. Tencent's contribution to the group's trading profit
improved 31% (32%).  

Core headline earnings were US$1.6bn - down 6% (5%). Core headline earnings are largely impacted by reduced earnings
contributions in the current year from the Prosus group, post its listing in September 2019 and the creation of the free
float resulting in a significant non-controlling interest of the group. As at 30 September 2019 we recognised 100% of
the Prosus earnings compared to 72.66% in the current period. The non-controlling interest share in the core headline
earnings for the period is US$591m. We refer shareholders to the separate Prosus condensed consolidated interim financial
statements which are free of the impacts outlined in this paragraph and outline the good increases in headline earnings
and core headline earnings delivered by the group's operations. We remind shareholders that Prosus represents most of 
the group's operations. Overall, core headline earnings reflect strong performance of the group, driven by improved
profitability from our Ecommerce units and the growing contribution from Tencent.

We ended the period with a strong and liquid balance sheet. We had a net cash position of US$4.6bn, comprising
US$10.3bn in cash and cash equivalents (including short-term cash investments), net of US$5.7bn in interest-bearing debt
(excluding capitalised lease liabilities). We hold an undrawn US$2.5bn revolving credit facility. Overall, we recorded 
net interest expense for the period of US$41m. 

In July 2020, Prosus, Naspers's 72.66%-owned subsidiary, successfully raised more than US$2bn in debt, comprising its
longest-dated US dollar offering to date and its debut euro notes offering. The offerings drew strong investor demand,
resulting in attractive pricing that reduced the group's average funding cost while extending the blended maturity
profile of its outstanding notes to almost 12 years. The proceeds will be used for general corporate purposes, including
future M&A activity, and to further augment the company's liquidity. Issuances consisted of 2050 US$1bn 4.027% notes, 
2028 Euro500m 1.593% notes and 2032 Euro500m 2.031% notes. The group has no debt maturities due until 2025. 

Consolidated free cash inflow was US$292m, a significant improvement on the prior year's free cash inflow of US$19m.
This reflects growth in our Ecommerce unit's profitability, dividends received from Tencent of US$458m (2019: US$377m)
and improved working capital management. 

There were no new or amended accounting pronouncements effective from 1 April 2020 with a significant impact on the
group's condensed consolidated interim financial statements.

Effective 1 April 2020, the group made a voluntary change to its accounting policy on the subsequent measurement of
written put option arrangements with non-controlling shareholders. Subsequent changes in the carrying value of put option
liabilities previously recognised in the income statement in "Other finance income/(costs) - net" are now recognised
through equity. We believe the change in accounting policy will provide more relevant information about the effects of
underlying transactions with non-controlling shareholders. Written put option arrangements are considered equity
transactions because the settlement with non-controlling shareholders does not result in losing control over a subsidiary.
Furthermore, on initial recognition of the written put option liability, the group simultaneously recognises the 
non-controlling interest because the risks and rewards of ownership are not deemed to have transferred to the group 
until the written put option liability is settled. 

The group has adopted this change in accounting policy retrospectively, however, the impact is insignificant to the
consolidated statement of financial position as all previous remeasurements recognised through the income statement 
are already accumulated in equity as at the effective date of the change. The previous remeasurements accumulated in 
retained earnings have been reclassified to the "existing control business combination reserve". Consequently, comparative
figures on the statement of financial position have been restated for the reclassification between retained earnings and 
other reserves. The carrying value of the written put option liabilities and the total equity of the group in the comparative
periods remain unchanged. The condensed consolidated income statement and finance income/costs note have been restated
for the remeasurement of written put option liabilities as these are now recognised directly in equity. 

The company's external auditor has not reviewed or reported on forecasts included in this interim results

We continue to explore growth opportunities to advance our strategy, expand our ecosystem and position the business
for sustainable growth. In our Classifieds segment, we merged letgo and OfferUp, resulting in a business with national
reach across the United States (US), well positioned for growth in a highly competitive market. The merger included a new
US$120m investment round led by Prosus. Furthermore, we injected our Middle Eastern Classifieds assets into Emerging
Markets Property Group (EMPG) and participated in a US$150m financing round that valued the business at over US$1bn. OLX
Brazil has subsequently completed the US$520m (BRL2.9bn) acquisition of leading real estate vertical Grupo ZAP, announced
in March 2020. In our Payments and Fintech segment, we made an additional investment of US$53m in Remitly to expand its
footprint in the US, United Kingdom (UK) and Canada. We participated in's capital raise to fund growth
initiatives, investing US$25m. Finally, we are focused on increasing our exposure to edtech (educational technology) by 
investing US$60m in Eruditus, a global professional higher-education online platform. In November we announced a total 
investment of US$500m in Churchill Capital Corp II's planned acquisition of Software Luxembourg Holding S.A. (Skillsoft) 
and Global Knowledge Training LLC (Global Knowledge). The transaction will create the world's leading digital learning 
company with a comprehensive suite of on-demand and live virtual content. 

We started the financial year in April 2020 responding to the onset of the Covid-19 pandemic, which has proven to be 
a global challenge. Despite the social and economic impact across the world, Naspers remained resilient and performed
well in the first half of the current financial year - accelerating revenue growth, improving profitability and cash 
flow generation, and growing customer numbers as consumers moved online. Ecommerce revenues grew 37% (52%) year on 
year. Group trading profit grew 38% (42%). 

Like most companies, Naspers faced challenges, particularly in countries where government lockdown regulations were
extensive and protracted, reducing economic activity. We quickly implemented our contingency plans and we saw a sharp
recovery in all of our businesses as lockdown regulations began easing.

Throughout the crisis, we prioritised the health and wellbeing of our employees, safeguarded jobs as far as possible,
and protected and positioned our business for the long term. When necessary, we extended support to our partners to
ensure the supply chain remained strong, and donated to government Covid-19 response programmes. 

After the easing of lockdowns and curfews in many countries in the second quarter, almost all business activities have
resumed year-on-year growth. In addition, Tencent remained resilient throughout the pandemic and is performing well.
Unfortunately, a second Covid-19 wave is impacting some markets in which we operate, however, we remain confident that 
the plans we have put in place and our firm financial position will ensure that we manage the potential impacts going
forward. Longer term, we believe we will benefit from the acceleration of the underlying trends to online platforms 
which propel the growth of the consumer internet market, and we will ensure our businesses are positioned to emerge 
well from the crisis.  

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 23 November 2020.

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 concerning our financial condition, results of operations and businesses. These forward-looking statements
are subject to a number of risks and uncertainties, many of which are beyond our control and all of which are based on our
current beliefs and expectations about future events. Forward-looking statements are typically identified by the use of
forward-looking terminology such as "believes", "expects", "may", "will", "could", "should", "intends", "estimates",
"plans", "assumes" or "anticipates", or the negative thereof, or other variations thereon or comparable terminology, or 
by discussions of strategy that involve risks and uncertainties. These forward-looking statements and other statements
contained in this report regarding matters that are not historical facts involve predictions. No assurance can be given
that such future results will be achieved. Actual events or results may differ materially as a result of risks and
uncertainties facing us and our subsidiaries. Such risks and uncertainties could cause actual results to vary materially 
from the future results indicated, expressed or implied in such forward-looking statements. There are a number of factors 
that could affect our future operations and could cause those results to differ materially from those expressed in the
forward-looking statements, including (without limitation): (a) changes to IFRS and associated interpretations, applications
and practices as they apply to past, present and future periods; (b) ongoing and future acquisitions, changes to domestic
and international business and market conditions such as exchange rate and interest rate movements; (c) changes in
domestic and international regulatory and legislative environments; (d) changes to domestic and international operational,
social, economic and political conditions; (e) labour disruptions and industrial action; and (f) the effects of both
current and future litigation. The forward-looking statements contained in the report speak only as of the date of the
report. We are not under any obligation to (and expressly disclaim any such obligation to) revise or update any
forward-looking statements to reflect events or circumstances after the date of the report or to reflect the occurrence 
of unanticipated events. We cannot give any assurance that forward-looking statements will prove correct and investors 
are cautioned not to place undue reliance on any forward-looking statements.

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 was released on 23 November 2020
and the full condensed consolidated interim financial statements can be found on the company's website,
and can be viewed on the JSE link, Copies of the
full condensed consolidated interim report may also be requested from the company's registered office, at no charge, during
office hours. The condensed consolidated interim financial statements for the six months ended 30 September 2020 have
been reviewed by PricewaterhouseCoopers Inc., our independent auditor. Their unqualified report is appended to these
condensed consolidated interim financial statements available on Any investment decision should be based 
on the full condensed consolidated interim report published on SENS and 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
23 November 2020

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, V Sgourdos, M R Sorour, 
J D T Stofberg, B J van der Ross, Y Xu

Company secretary: L Bagwandeen

Registered office: 40 Heerengracht, Cape Town 8001 (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 (PO Box 10462, Johannesburg 2000, South Africa)

Sponsor: Investec Bank Limited

Date: 23-11-2020 07:45:00
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