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Naspers Limited (NPSN)

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Wednesday 29 November, 2017

Naspers Limited

Half-year Report

RNS Number : 8614X
Naspers Limited
29 November 2017
 

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 6315121003

 

CONDENSED CONSOLIDATED INTERIM REPORT FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2017

 

COMMENTARY

 

Naspers delivered a solid performance for the six months to 30 September 2017 with group revenue, measured on an economic-interest

basis, increasing 33% year on year to US$9.0bn (or 39% in local currency and adjusted for acquisitions and disposals).

This is a 17% increase on last year's growth rate with the ecommerce businesses being key drivers of the acceleration.

Group trading profit increased by 40% (or 52% in local currency and adjusted for acquisitions and disposals) to US$2.1bn

due to a healthy boost from Tencent and increased profitability in the ecommerce businesses - most notably classifieds.

With this as backdrop, group core headline earnings, the board's measure of sustainable operating performance, was

US$1.5bn - a 65% increase year on year.

 

Ecommerce accelerated its topline growth and reduced losses (in local currency and adjusted for acquisitions and disposals)

as it increased its scale. Classifieds (excluding letgo) turned profitable and our payment service platforms within

PayU also scaled, reducing losses and moving closer to profitability. Notably, the group strengthened its presence in online

food delivery with significant investments in Delivery Hero and Swiggy. Tencent produced another excellent set of results.

Video entertainment, although still navigating weak African macroeconomic conditions - particularly weak currencies - stabilised

its losses in sub-Saharan Africa and saw a significant improvement in cash remittances from Nigeria.

 

The group's geographic footprint, across more than 120 countries and markets, exposes it to significant foreign exchange

volatility. This materially impacts on reported revenue and trading profit metrics, especially in video entertainment

where revenues are earned in local currencies but costs are predominantly US dollar based. The internet businesses are less

severely affected given their largely local currency denominated revenue and cost bases. Where relevant in this report we

have adjusted amounts and percentages 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.

 

The following financial commentary and segmental reviews are prepared on an economic-interest basis (including consolidated

subsidiaries and a proportionate consolidation of associated companies and joint ventures), unless otherwise stated.

 

FINANCIAL REVIEW

 

On a consolidated basis, excluding equity-accounted investments, group revenue increased 5% (15%) due to accelerating ecommerce

growth, the latter growing revenue 33% in local currency and adjusted for acquisitions and disposals (notably the disposals

of Allegro and Netretail). Consolidated trading profit improved by 56% (165%) to US$70m.

 

Development spend has reduced year on year on both a consolidated and economic-interest basis.

Development spend of consolidated businesses was down 18% from the prior year as earlier-stage investments improved

their competitive positions, therefore requiring lower investment while continuing to scale. Excluding the investment in

controlled newer initiatives such as letgo and Showmax, which totalled US$155m, development spend on older investments decreased 12%.

 

The group's share of the results of associates and joint ventures increased 59% year on year to US$1.5bn. Included in this

figure are once-off gains of US$414m and impairment losses of US$121m recognised by these entities. In aggregate, these

equity-accounted investments contributed US$1.7bn to core headline earnings, an improvement of 52% year on year.

 

Net interest expense on borrowings was down 27% to US$54m due to lower utilisation of credit facilities, the impact of the

proceeds from the Allegro disposal, and the 4.85% coupon achieved by the group on the US$1bn bond issued in July 2017.

Net debt was US$140m at 30 September 2017, reflecting gearing of 1%.

 

Consolidated free cash outflow of US$96m was recorded, benefiting from dividend income of US$247m from Tencent.

 

The company's external auditor has not reviewed or reported on forecasts included in the condensed consolidated interim report.

 

SEGMENTAL REVIEW

 

Internet

 

Robust growth saw internet revenues increasing 42% (52%) year on year to US$6.9bn. Boosted by classifieds and another

exceptional performance by Tencent, trading profit for the internet segment was US$1.8bn - up 47% (61%) year on year.

This segment now contributes 77% of group revenue, compared to 72% last year.

 

Ecommerce

 

Revenue in ecommerce increased 15% year on year to US$1.6bn. However, when measured in local currency and adjusted for

acquisitions and disposals, growth was 38% - an acceleration of 14 percentage points on last year's growth rate. This growth

was fuelled by strong performances by classifieds, food delivery, payments and etail. Overall trading losses increased 9%

to US$318m, with equity-accounted investments contributing 44% of the loss. Measured in local currency and adjusted for

acquisitions and disposals - in particular the US$83m in trading profits generated by Allegro last year - ecommerce trading

losses decreased by a meaningful 17%.

 

Trading losses declined in several ecommerce units including classifieds and payments. The group's profitable ecommerce

businesses delivered US$465m in revenues and US$170m in trading profits, growing these metrics by 50% (36%) and

55% (52%) respectively.

 

Classifieds continued to gain traction across the portfolio. Excluding the additional investment in letgo, the business

turned profitable during the reporting period. Revenue grew 47% (38%) year on year with OLX Europe benefiting from tailwinds

in the vertical businesses, and Avito showing consistent growth. OLX Brazil is on track to reach break-even by the end of

the financial year.

 

Etail revenues increased 16% year on year in nominal terms. However, in local currency and before the impact of acquisitions

and disposals, revenue was up 37% with strong year-on-year growth from Takealot and Flipkart.

 

eMAG powered growth in its home market of Romania and across Central and Eastern Europe with gross merchandise value (GMV)

increasing year on year by 33% in Romania, 50% in Hungary and 27% in Bulgaria.

 

Flipkart, the group's equity-accounted investment in India, continued its growth acceleration and further solidified its

market leadership. During the recent festive season sales period, Flipkart captured around 70% of the total ecommerce market.

Flipkart has also secured substantial capital from investors - including Tencent and Softbank - to continue building its

position as a leading business-to-consumer (B2C) platform in the fast-growing Indian market.

 

In August 2017 the group invested an additional US$74m to acquire a controlling stake in South Africa's leading etailer,

Takealot, resulting in the business now being consolidated. Takealot made strong progress over the reporting period, recording

GMV growth of 72%, a significant acceleration on last year.

 

Since the merger of the group's travel business ibibo with MakeMyTrip in January 2017, the travel business has maintained its

rapid growth - increasing revenue by 91% (24%) year on year.

 

The group's payments and financial services business, PayU, continued to perform well in the key regions of India, Europe,

the Middle East and Africa, and Latin America. Revenue growth of 52% (36%) was recorded on the back of a 75% increase in

transaction volumes year on year. India is PayU's fastest growing market, representing 47% of total payment volumes and

growing payment volumes by 120% year on year. Overall, PayU processed payment volumes of US$11.7bn during the first six

months of the year.

 

PayU continues to realise scale efficiencies following the consolidation in India with Citrus Pay and from its drive to

automate and consolidate platforms in other markets. With healthy revenue growth and a focus on cost management, the core

payments service provider business is well on track to achieve break-even by the end of the financial year.

 

Executing on its strategy to expand into consumer credit, PayU invested US$99m for a non-controlling stake in Kreditech,

a credit-scoring business. PayU plans to extend these consumer credit services in its key markets.

 

The group is expanding its online food-delivery footprint. iFood, majority-owned by Movile, generated revenue growth of

145% (135%) year on year. The group also invested an initial US$426m in Delivery Hero in May 2017, followed by an additional

US$47m top-up when Delivery Hero successfully listed on the Frankfurt stock exchange. Delivery Hero reported 96% year-on-

year revenue growth in its second quarter results. In September 2017 the group entered into a further agreement, subject to

regulatory approval, to acquire an additional stake in Delivery Hero for EUR660m (approximately US$775m), taking the group's

total ownership to around 24% on a fully diluted basis. The group also led an investment round in Swiggy, a leading online

food-delivery business in India, in May 2017, investing US$61m for a 14.8% fully diluted interest.

 

Naspers Ventures has strengthened its position in the education technology sector with increased investments in Udemy and

Brainly, both global learning platforms in which the group originally invested during the 2017 financial year.

 

Tencent

 

Tencent had an outstanding six months, with revenues growing 57% year on year to RMB106.2bn and non-GAAP operating profit

increasing 37% year on year to RMB38.6bn. Smartphone and PC games, online advertising, digital content subscriptions and

payment-related services, all remain growth drivers. Margins contracted due to high channel costs for smartphone games,

revenue mix changes to low-margin products and increased investments in content.

 

Online games revenue increased by 36% year on year to RMB46.7bn, primarily driven by more smartphone game users and a higher

proportion of paying users, as well as increased average revenue per user (ARPU) from key PC games titles. In the second

quarter of 2017, smartphone titles (including the titles attributable to the social network business) generated more revenue

than PC-based titles for the first time. It is expected that PC client game revenue growth will decelerate in future.

 

Online advertising revenues increased by 52% year on year, boosted by increased traffic on video and growth in advertising on

Weixin, mobile browsers and other platforms. Digital-content revenue recorded rapid growth over the period, primarily driven

by the strong performance of video and music services subscriptions and virtual gifting within live broadcasts.

 

At the end of June 2017, Weixin and WeChat monthly active users (MAU) reached 963m, growing 19% year on year. Total MAU for

QQ was 850m, down around 5% from last year due to fewer casual users, while engagement with core users increased.

 

More information on Tencent's results is available at www.tencent.com/en-us/ir.

 

Mail.ru

 

Mail.ru grew overall revenues 33% year on year to RUB26.3bn, reflecting an improving Russian economic environment and solid

growth in advertising and online games revenues. Advertising revenue increased 26% over the period to RUB10.3bn, driven by

growth in advertising on social networks, video and mobile. Massively multiplayer online (MMO) games revenue was up 53% to

RUB7.8bn year on year, the result of both ongoing success in existing titles and new releases such as HAWK and the console

version of Skyforge. Internet value-added services (IVAS) revenue declines were reversed and saw year-on-year growth of 19%,

closing at RUB7.3bn, primarily on the back of cross-platform subscription offerings. VKontakte remains the largest social

network platform in Russia with 60m daily active users. Investments in leveraging Mail.ru's existing user engagement,

including in food delivery and classifieds, are encouraging.

 

More information on Mail.ru's results is available at https://corp.mail.ru/en/investors/.

 

Video entertainment

 

Overall, the video-entertainment business recorded modest subscriber growth over the period with the total subscriber base

closing at 12.2m households on 30 September 2017.

 

In South Africa, DStv had a stable performance and continued to deliver healthy profits and cash flows. A further development

was the combination of the group's Showmax offering with DStv Now, which is showing encouraging early results. However, the

business still operates against a difficult and weakening economic backdrop.

 

Outside South Africa, losses in the sub-Saharan African video-entertainment business stabilised year on year, with most

African currencies, except the Nigerian naira, showing less weakness than in the prior year. Assuming no further significant

currency weakness and continued momentum in subscriber growth, the group will be on track to bring the business back to

profitability in the coming years.

 

In October 2017, Zambia commenced the process of migrating terrestrial television broadcasting from an analogue to a digital

format - a process commonly referred to as analogue switchoff (ASO). The Zambian business is well prepared to capitalise on

this opportunity. Digital terrestrial television (DTT) networks have been rolled out in Mozambique, Nigeria and Ghana although

release dates for the ASO have not been confirmed in these territories.

 

Although monetary policy in several African economies continues to restrict liquidity due to the limited supply of foreign

currency, there has been a marked improvement in liquidity in Nigeria. This has allowed the group to regularly remit cash.

At 30 September 2017 cash balances of US$166m, held in Angola, Nigeria, Zimbabwe and Mozambique, remain exposed to weakening

currencies. This balance is down 43% since the end of March 2017.

 

The expansion of Showmax in Poland continued and a sharp focus on local content is showing traction in this market.

 

With the above as backdrop, the segment reported revenues of US$1.8bn, up 8% (7%) on the prior year. Trading profit was up

marginally by 4% (3%). Persistent currency weakness in Nigeria, where the naira weakened significantly year on year,

translated to lower US dollar revenues.

 

Management continues to engage regulators and participate in several regulatory reviews in various markets.

 

Media

 

Media24 (excluding Novus) achieved satisfactory results with the structural decline in traditional revenue streams offset by

significant cost-reduction initiatives throughout the business. Revenue increased 11% (5%) year on year to US$315m, while

trading profit grew 75%.

 

The growth businesses, largely the ecommerce and digital media initiatives, contributed 8% of total revenue and grew 24% over

the period in local currency. The segment's focus on audience migration to digital formats and cost containment remains.

 

In September 2017 the group unbundled the majority of Media24's investment in the listed South African print business Novus,

to Naspers's shareholders. Post unbundling, Media24 retained a 19% interest in Novus and accordingly no longer consolidates

the business. Media24's remaining portfolio comprises newspapers, magazine and book publishing, ecommerce, digital media,

online job classifieds and online travel.

 

Prospects

 

Going forward, the group will continue to drive scale to bring its ecommerce business to profitability and cash generation.

In addition, it will manage macro challenges in the more mature businesses through tight cost controls and continued

innovation and repositioning of businesses to counter increasing competition by global players. The group will also continue

to invest in emerging businesses that may power future growth. Naspers's balance sheet remains strong and the group's current

business plan is fully funded.

 

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 29 November 2017.

 

Condensed consolidated income statement

 



Six months ended

Year ended



30 September

31 March



2017

2016

2017



Reviewed

Reviewed

Audited


Notes

US$'m

US$'m

US$'m  

Revenue


3 107

2 958

6 098  

Cost of providing services and sale of goods


(1 824)

(1 627)

(3 574)  

Selling, general and administration expenses


(1 252)

(1 334)

(2 827)  

Other gains/(losses) - net


(20)

(27)

(57)  

Operating profit/(loss)


11

(30)

(360)  

Interest received

5

54

29

70  

Interest paid

5

(132)

(136)

(278)  

Other finance income/(costs) - net

5

(47)

(58)

(259)  

Share of equity-accounted results

7

1 447

912

1 829  

Impairment of equity-accounted investments


(17)

-

-  

Dilution losses on equity-accounted investments


(41)

(71)

(119)  

(Losses)/gains on acquisitions and disposals


(51)

39

2 169  

Profit before taxation

6

1 224

685

3 052  

Taxation


(148)

(144)

(244)  

Profit for the period


1 076

541

2 808  

Attributable to:





Equity holders of the group


1 098

554

2 921  

Non-controlling interest


(22)

(13)

(113)  



1 076

541

2 808  

Core headline earnings for the period (US$'m)

4

1 510

914

1 752  

Core headline earnings per N ordinary share





(US cents)


350

212

Diluted core headline earnings per N ordinary share





(US cents)


344

209

Headline earnings for the period (US$'m)

4

916

555

Headline earnings per N ordinary share (US cents)


212

129

Diluted headline earnings per N ordinary share





(US cents)


207

126

Earnings per N ordinary share (US cents)


254

129

Diluted earnings per N ordinary share (US cents)


249

125

Net number of shares issued ('000)





- at period-end


431 690

431 290

431 540  

- weighted average for the period


431 540

431 085

431 207  

- diluted weighted average


433 191

432 715

432 684    

 

Condensed consolidated statement of comprehensive income

 


Six months ended

Year ended


30 September

31 March


2017

2016

2017


Reviewed

Reviewed

Audited


US$'m

US$'m

US$'m

Profit for the period

1 076

541

2 808

Total other comprehensive income, net of tax, for the




period(1)

842

291

1 545

Translation of foreign operations(2)

7

(115)

326

Net fair value (losses)/gains

(2)

4

(1)

Cash flow hedges

12

(43)

(85)

Share of other comprehensive income and reserves of




equity-accounted investments

836

438

1 293

Tax on other comprehensive income

(11)

7

12

Total comprehensive income for the period

1 918

832

4 353

Attributable to:




Equity holders of the group

1 974

896

4 492

Non-controlling interest

(56)

(64)

(139)


1 918

832

4 353

 

Notes

(1) These components of other comprehensive income may subsequently be reclassified to profit or loss except for gains

      of US$142m (2016: US$141m and 31 March 2017: US$292m) 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.

 

Condensed consolidated statement of financial position

 



30 September

31 March



Reviewed

Reviewed

Audited



2017

2016

2017


Notes

US$'m

US$'m

US$'m  

Assets





Non-current assets


19 111

15 080

16 291  

Property, plant and equipment


1 556

1 861

1 638  

Goodwill

8

2 497

3 041

2 442  

Other intangible assets


1 137

1 104

1 104  

Investments in associates


13 563

8 670

10 784  

Investments in joint ventures


84

200

79  

Other investments and loans


102

62

82  

Other receivables


28

23

32  

Derivative financial instruments


5

-

Deferred taxation


139

119

128  

Current assets


4 960

3 144

5 639  

Inventory


214

222

154  

Programme and film rights


413

400

193  

Trade receivables


470

465

420  

Other receivables and loans


669

472

456  

Derivative financial instruments


23

14

Cash and cash equivalents


3 171

1 545

4 007  



4 960

3 118

5 236  

Assets classified as held for sale

10

-

26

403  

Total assets


24 071

18 224

21 930  

Equity and liabilities





Share capital and reserves


16 574

11 103

14 958  

Share capital and premium


4 954

4 939

4 944  

Other reserves


1 199

(320)

518  

Retained earnings


10 421

6 484

9 496  

Non-controlling interest


278

348

403  

Total equity


16 852

11 451

15 361  

Non-current liabilities


4 707

4 486

3 641  

Capitalised finance leases


1 111

1 167

1 142  

Liabilities - interest bearing


3 193

3 005

2 198  

                - non-interest bearing


34

13

Post-employment medical liability


15

14

14  

Derivative financial instruments


76

23

13  

Deferred taxation


278

264

265  

Current liabilities


2 512

2 287

2 928  

Current portion of long-term debt


355

222

915  

Trade payables


675

599

487  

Accrued expenses and other current liabilities


1 426

1 341

1 333  

Derivative financial instruments


50

86

119  

Bank overdrafts and call loans


6

34



2 512

2 282

2 858  

Liabilities classified as held for sale

10

-

5

70  

Total equity and liabilities


24 071

18 224

21 930  

Net asset value per N ordinary share (US cents)


3 839

2 574

3 466  

 

Condensed consolidated statement of changes in equity

 


Six months ended

Year ended


30 September

31 March


2017

2016

2017


Reviewed

Reviewed

Audited


US$'m

US$'m

US$'m  

Balance at the beginning of the period

15 361

10 654

10 654  

Changes in share capital and premium




Movement in treasury shares

(74)

(77)

(77)  

Share capital and premium issued

84

51

56  

Changes in reserves




Total comprehensive income for the period

1 974

896

4 492  

Movement in share-based compensation reserve

(74)

66

(376)  

Movement in existing control business combination reserve

(121)

61

47  

Direct retained earnings and other reserve movements

88

10

720  

Dividends paid to Naspers shareholders

(261)

(158)

(158)  

Changes in non-controlling interest




Total comprehensive income for the period

(56)

(64)

(139)  

Dividends paid to non-controlling shareholders

(124)

(96)

(116)  

Movement in non-controlling interest in reserves

55

108

258  

Balance at the end of the period

16 852

11 451

15 361  

Comprising:




Share capital and premium

4 954

4 939

4 944  

Retained earnings

10 421

6 484

9 496  

Share-based compensation reserve

1 216

1 438

1 147  

Existing control business combination reserve

(257)

(123)

(137)  

Hedging reserve

(33)

6

(30)  

Valuation reserve

1 873

819

1 387  

Foreign currency translation reserve

(1 600)

(2 460)

(1 849)  

Non-controlling interest

278

348

403  

Total

16 852

11 451

15 361

 

Condensed consolidated statement of cash flows

 



Six months ended

Year ended



30 September

31 March



2017

2016

2017



Reviewed

Reviewed

Audited


Notes

US$'m

US$'m

US$'m

Cash flows from operating activities





Cash generated from operating activities


(68)

92

294

Interest income received


46

27

63

Dividends received from investments and equity-





accounted companies


250

193

193

Interest costs paid


(123)

(126)

(257)

Taxation paid


(175)

(157)

(333)

Net cash (utilised in)/generated from





operating activities


(70)

29

(40)

Cash flows from investing activities





Acquisitions and disposals of tangible and





intangible assets


(45)

(78)

(173)

Acquisitions of subsidiaries, associates and joint





ventures

11

(857)

(127)

(397)

Disposals of subsidiaries, businesses, associates





and joint ventures

11

179

159

3 383

Cash movement in other investments and loans


2

4

1

Net cash (utilised in)/generated from





investing activities


(721)

(42)

2 814

Cash flows from financing activities





Proceeds from long- and short-term loans raised


1 114

122

584

Repayments of long- and short-term loans


(703)

(24)

(602)

Outflow from share-based compensation





transactions


(9)

(8)

(36)

Dividends paid by the holding company and its





subsidiaries


(313)

(261)

(281)

Other movements resulting from financing





activities


(88)

4

(76)

Net cash generated from/(utilised in)





financing activities


1

(167)

(411)

Net movement in cash and cash equivalents


(790)

(180)

2 363

Foreign exchange translation adjustments on cash





and cash equivalents


(48)

(19)

(50)

Cash and cash equivalents at the beginning of the





period


4 003

1 713

1 713

Cash and cash equivalents classified as held for





sale


-

(3)

(23)

Cash and cash equivalents at the end of the





period


3 165

1 511

4 003

 

Segmental review

 


Revenue




Six months ended


Year ended


30 September


31 March


2017

2016


2017


Reviewed

Reviewed

%

Audited


US$'m

US$'m

change

US$'m

Internet

6 938

4 889

42

10 621

Social network services

5 357

3 510

53

7 692

  - Tencent

5 241

3 426

53

7 506

  - Mail.ru

116

84

38

186

Ecommerce

1 581

1 379

15

2 929

  - Etail

877

753

16

1 659

  - Travel

128

67

91

123

  - Marketplaces

193

(100)

327

  - Payments

126

83

52

186

  - Classifieds

289

196

47

426

  - Food delivery

56

20

>100

  - Other

105

67

57

155

Video entertainment

1 777

1 645

8

3 401

Media(2)

315

284

11

588

Corporate services

1

-

2

Intersegmental

(10)

(31)

68

(50)

Economic interest

9 021

6 788

33

14 562

Less: Equity-accounted investments

(5 914)

(3 830)

(54)

(8 464)

Consolidated

3 107

2 958

5

6 098

 


EBITDA(1)




Six months ended


Year ended


30 September


31 March


2017

2016


2017


Reviewed

Reviewed

%

Audited


US$'m

US$'m

change

US$'m

Internet

1 966

1 365

44

2 706

Social network services

2 258

1 632

38

3 388

  - Tencent

2 227

1 593

40

3 312

  - Mail.ru

39

(21)

76

Ecommerce

(292)

(267)

(9)

(682)

  - Etail

(123)

(116)

(6)

(258)

  - Travel

(29)

(58)

50

(87)

  - Marketplaces

-

89

(100)

146

  - Payments

(32)

(29)

(10)

(66)

  - Classifieds

(38)

(113)

66

(319)

  - Food delivery

(7)

2

>(100)

5

  - Other

(63)

(42)

(50)

(103)

Video entertainment

363

331

10

520

Media(2)

21

19

40

Corporate services

(8)

(6)

(33)

(14)

Economic interest

2 346

1 711

37

3 252

Less: Equity-accounted investments

(2 128)

(1 535)

(39)

(3 180)

Consolidated

218

176

24

72

 

Notes

(1) EBITDA refers to earnings before interest, taxation, depreciation and amortisation.

(2) Includes revenue of US$133.0m (2016: US$107.9m and 31 March 2017: US$222.4m), EBITDA of US$33.3m

     (2016: US$29.1m and 31 March 2017: US$55.1m) and trading profit of US$33.3m (2016: US$22.4m and 31 March 2017:

     US$40.3m) 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 10).

 


Trading profit




Six months ended


Year ended


30 September


31 March


2017

2016


2017


Reviewed

Reviewed

%

Audited


US$'m

US$'m

change

US$'m

Internet

1 820

1 241

47

2 454

Social network services

2 138

1 533

39

3 185

  - Tencent

2 115

1 501

41

3 125

  - Mail.ru

23

32

(28)

60

Ecommerce

(318)

(292)

(9)

(731)

  - Etail

(134)

(128)

(5)

(281)

  - Travel

(31)

(58)

47

(88)

  - Marketplaces

-

83

(100)

137

  - Payments

(33)

(30)

(10)

(69)

  - Classifieds

(45)

(117)

62

(328)

  - Food delivery

(8)

1

>(100)

5

  - Other

(67)

(43)

(56)

(107)

Video entertainment

234

226

4

287

Media(2)

21

12

75

19

Corporate services

(8)

(6)

(33)

(14)

Economic interest

2 067

1 473

40

2 746

Less: Equity-accounted investments

(1 997)

(1 428)

(40)

(2 960)

Consolidated

70

45

56

(214)

 

Notes

(1) EBITDA refers to earnings before interest, taxation, depreciation and amortisation.

(2) Includes revenue of US$133.0m (2016: US$107.9m and 31 March 2017: US$222.4m), EBITDA of US$33.3m

     (2016: US$29.1m and 31 March 2017: US$55.1m) and trading profit of US$33.3m (2016: US$22.4m and 31 March 2017:

     US$40.3m) 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 10).

 

Reconciliation of trading profit/(loss) to operating profit/(loss)   

 


Six months ended

Year ended


30 September

31 March


2017

2016

2017


Reviewed

Reviewed

Audited


US$'m

US$'m

US$'m  

Trading profit/(loss)

70

45

(214)  

Finance cost on transponder leases

26

20

46  

Amortisation of other intangible assets

(47)

(46)

(99)  

Other gains/(losses) - net

(20)

(27)

(57)  

Retention option expense

-

(1)

(1)  

Share-based incentives settled in treasury shares

(18)

(21)

(35)  

Operating profit/(loss)

11

(30)

(360) 

 

Note

For a reconciliation of operating profit/(loss) to profit before taxation, refer to the condensed consolidated income

statement.

 

Notes to the condensed consolidated interim report for the six months ended 30 September

 

1.  General information

 

    Naspers Limited (Naspers) 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 2017 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 Limited 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 annual financial statements.

 

    The group has adopted all new and amended accounting pronouncements issued by the IASB that are effective for

    financial years commencing 1 April 2017. None of the new or amended accounting pronouncements that are effective

    for the financial year commencing 1 April 2017 had a material impact on the group.

 

    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

    sustainable operating performance. However, this is not a defined term under IFRS and may not be comparable with

    similarly titled measures reported by other companies.

 

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


2017

2016

2017


Reviewed

Reviewed

Audited


US$'m

US$'m

US$'m

    Net profit attributable to shareholders

1 098

554

2 921

    Adjusted for:




    - impairment of property, plant and equipment and other




      assets

18

2

26

    - impairment of goodwill and other intangible assets

1

24

28

    - (profit)/loss on sale of assets

(3)

(1)

1

    - loss on remeasurement of disposal groups classified as




      held for sale to fair value less costs of disposal

-

2

2

    - losses/(gains) on disposals of investments

62

(40)

(2 219)

    - remeasurement of previously held interest

(21)

-

-

    - dilution losses on equity-accounted investments

41

71

119

    - remeasurements included in equity-accounted earnings

(292)

(57)

(102)

    - impairment of equity-accounted investments

17

-

-


921

555

776

    Total tax effects of adjustments

-

(1)

(17)

    Total adjustment for non-controlling interest

(5)

1

13

    Headline earnings

916

555

772

    Adjusted for:




    - equity-settled share-based payment expenses

173

124

296

    - amortisation of other intangible assets

398

177

467

    - fair-value adjustments and currency translation




      differences

13

56

172

    - retention option expense

-

1

1

    - business combination losses

10

1

44

    Core headline earnings

1 510

914

1 752

   

    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$20m (2016: US$11m and 31 March 2017:

    US$24m) relating to the future dilutive impact of potential ordinary shares issued by equity-accounted investees.

 

5.  Interest received/(paid)

 


Six months ended

Year ended


30 September

31 March


2017

2016

2017


Reviewed

Reviewed

Audited


US$'m

US$'m

US$'m

    Interest received

54

29

70

    - loans and bank accounts

46

26

56

    - other

8

3

14

    Interest paid

(132)

(136)

(278)

    - loans and overdrafts

(100)

(100)

(198)

    - transponder leases

(26)

(20)

(46)

    - other

(6)

(16)

(34)

    Other finance income/(costs) - net

(47)

(58)

(259)

    - net foreign exchange differences and fair-value




      adjustments on derivatives

(47)

(58)

(259)

   

6.  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


2017

2016

2017


Reviewed

Reviewed

Audited


US$'m

US$'m

US$'m

    Depreciation of property, plant and equipment

108

99

214

    Amortisation

62

59

128

    - other intangible assets

47

46

99

    - software

15

13

29

    Net realisable value adjustments on inventory, net of




    reversals(1)

6

15

51

    Other gains/(losses) - net

(20)

(27)

(57)

    - profit/(loss) on sale of assets

3

1

(1)

    - impairment of goodwill and other intangible assets

(1)

(24)

(30)

    - impairment of property, plant and equipment and other




      assets

(18)

(2)

(26)

    - dividends received on investments

2

1

1

    - remeasurement of disposal groups classified as held for




      sale to fair value less costs of disposal

-

(2)

(2)

    - fair-value adjustments on financial instruments

(6)

(1)

1

    (Losses)/gains on acquisitions and disposals

(51)

39

2 169

    - (losses)/gains on disposal of investments

(56)

40

1 990

    - gains recognised on loss of control transactions

-

-

228

    - remeasurement of contingent consideration

(6)

1

1

    - acquisition-related costs

(10)

(2)

(50)

    - remeasurement of previously held interest

21

-

-

   

    Note

    (1) Net realisable value writedowns relate primarily to set-top box subsidies in the video-entertainment segment.

 

7.  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


2017

2016

2017


Reviewed

Reviewed

Audited


US$'m

US$'m

US$'m

    Share of equity-accounted results

1 447

912

1 829

    - sale of assets

-

8

3

    - disposal of investments

(414)

(206)

(381)

    - impairment of investments

121

145

    Contribution to headline earnings

1 154

859

1 719

    - amortisation of other intangible assets

376

150

    - equity-settled share-based payment expenses

157

106

    - fair-value adjustments and currency translation




      differences

3

(3)

-

    Contribution to core headline earnings

1 690

1 112

2 391

    Tencent

1 827

1 183

2 535

    Mail.ru

20

27

52

    Other

(157)

(98)

(196)

 

8.  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


2017

2016

2017


Reviewed

Reviewed

Audited


US$'m

US$'m

US$'m

    Goodwill




    - cost

2 790

3 175

3 175

    - accumulated impairment

(348)

(357)

(357)

    Opening balance

2 442

2 818

2 818

    - foreign currency translation effects

(30)

95

    - acquisitions of subsidiaries and businesses

85

138

    - disposals of subsidiaries and businesses

-

-

(786)

    - transferred to assets classified as held for sale

-

(7)

(37)

    - impairment

-

(3)

    - remeasurement to fair value less costs of disposal

-

-

    Closing balance

2 497

3 041

2 442

    - cost

2 845

3 416

2 790

    - accumulated impairment

(348)

(375)

(348)

 

9.  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


2017

2017


Reviewed

Reviewed

Audited


US$'m

US$'m

US$'m

    Commitments

2 626

2 322

2 464

    - capital expenditure

14

24

13

    - programme and film rights

2 132

1 856

2 015

    - network and other service commitments

123

166

158

    - transponder leases

-

17

-

    - operating lease commitments

198

187

163

    - set-top box commitments

159

72

115

 

    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$155.5m (2016: US$243.8m and 31 March 2017: US$256.7m). No provision has

    been made as at 30 September 2017 and 30 September 2016 for these possible exposures.

 

10. Disposal groups classified as held for sale

 

    During the year ended 31 March 2017, the group announced the unbundling of the majority of its shareholding in its

    subsidiary Novus Holdings Limited (Novus), operating in the print industry in South Africa. The assets and liabilities

    of Novus were classified as held for distribution as at 31 March 2017. In August 2017 the group received regulatory

    approval for the unbundling which was finalised during September 2017. Refer to note 11 for further details.

   

    In May 2017 the group concluded the disposal of its joint venture Souq Group Limited (Souq), following the receipt of

    regulatory approval. Souq was classified as held for sale as at 31 March 2017. Refer to note 11 for further details.

   

    The group also concluded the disposals of various other smaller units of which the assets and liabilities were

    classified as held for sale as at 31 March 2017.

   

    The group had no assets and liabilities classified as held for sale as at 30 September 2017. Assets and liabilities

    classified as held for sale in prior periods are detailed in the following table:

 


Six months ended

Year ended


30 September

31 March


2017

2016

2017


Reviewed

Reviewed

Audited


US$'m

US$'m

US$'m

    Assets

-

26

403

    Property, plant and equipment

-

6

176

    Goodwill and other intangible assets

-

7

35

    Investment in joint venture

-

-

102

    Deferred taxation assets

-

3

7

    Inventory

-

2

26

    Trade and other receivables

-

5

34

    Cash and cash equivalents

-

3

23

    Liabilities

-

5

70

    Deferred taxation liabilities

-

1

19

    Long-term liabilities

-

-

6

    Trade payables

-

1

-

    Accrued expenses and other current liabilities

-

3

18

    Bank overdraft

-

-

27

 

    The group recognised a loss of US$nil (2016: US$1.6m and 31 March 2017: US$1.6m) on remeasuring the net assets

    of businesses classified as held for sale to their fair value less costs of disposal. Fair value was determined based on

    third-party sales prices and accordingly represent level 3 fair-value measurements.

 

11. Business combinations, other acquisitions and disposals

 

    In August 2017 the group invested US$74m to acquire a controlling interest in its associate Takealot Online (RF)

    Proprietary Limited (Takealot), the leading etailer in South Africa. Following the investment, the group holds a 58%

    effective interest (54% fully diluted) in Takealot. The transaction was accounted for as a business combination with

    an effective date of August 2017. The total purchase consideration amounted to US$123m representing the fair value

    of the group's previously held equity interest in Takealot. A gain of US$20m has been recognised in "(Losses)/gains

    on acquisitions and disposals" in the income statement on the remeasurement of the group's previously held equity

    interest in Takealot to its fair value. The US$74m cash invested remains within the group following the transaction

    and is accordingly not disclosed as part of the consideration transferred by the group or assets of Takealot acquired,

    although it did affect the amount of goodwill recognised in the business combination. The purchase price allocation:

    property, plant and equipment US$13m; cash and deposits US$105m; inventories US$28m; trade and other

    receivables US$4m; intangible assets US$107m; trade and other payables US$27m; deferred tax liabilities US$30m

    and the balance of US$81m to goodwill. The main classes of intangible assets recognised in the business combination

    were trade names and brands, customer relationships and technology. The transaction gave rise to the recognition of

    non-controlling interest of US$83m, which has been measured at the non-controlling interest's proportionate share of

    the identifiable net assets of Takealot as at the acquisition date.

 

    The main factor contributing to the goodwill recognised in the acquisition is Takealot's market presence. The goodwill

    that arose is not expected to be deductible for income tax purposes.

 

    The following relates to the group's investments in its equity-accounted investees:

 

    In May 2017 the group invested US$426m in Delivery Hero AG (Delivery Hero), a global online food-ordering and

    delivery marketplace. On 30 June 2017, Delivery Hero successfully completed an initial public offering of its shares,

    a process during which the group invested a further US$47m. Following these investments, the group holds an 11%

    effective interest (10% fully diluted) in Delivery Hero. In June 2017 the group invested US$61m in Bundl Technologies

    Private Limited (Swiggy), the operator of a first-party food-delivery marketplace in India. Following the investment,

    the group holds a 16% effective interest (15% fully diluted) in Swiggy. The group accounts for its interests in these

    investees as investments in associates on account of its board representation.

 

    In May 2017 the group invested US$99m in Kreditech Holding SSL GmbH (Kreditech), a provider of consumer lending

    and financial services. The group has also committed to provide convertible loan funding of up to EUR20m to Kreditech

    in future. Following the investment, the group holds a 38% effective interest (31% fully diluted) in Kreditech. The group

    accounts for its interest in Kreditech as an investment in an associate.

 

    During May 2017 the group invested US$132m in its associate MakeMyTrip Limited (MakeMyTrip) as part of a funding

    round. In August and September 2017, following MakeMyTrip's issue of share options to its employees, the group

    invested US$23m to maintain its relative shareholding. Following these transactions, the group holds a 43% effective

    interest (40% fully diluted) in MakeMyTrip.

 

    The group invested US$71m for an additional interest in its associate Flipkart Limited (Flipkart) in April 2017. The

    additional interest was acquired from existing shareholders of Flipkart. Flipkart undertook various funding rounds

    during the reporting period in which the group did not participate. These funding rounds resulted in a dilution of the

    group's interest in Flipkart and in the recognition of an aggregate net dilution gain of US$11m in "Dilution losses on

    equity-accounted investments" in the income statement. Following the dilutions, the group holds a 14% effective

    interest (13% fully diluted) in Flipkart.

 

    The following relates to significant disposals by the group during the reporting period:

 

    During May 2017 the group disposed of its investment in its joint venture Souq Group Limited for a consideration of

    US$173m. A gain on disposal of US$89m has been recognised in "(Losses)/gains on acquisitions and disposals" in

    the income statement following the transaction.

 

    In September 2017, following the receipt of regulatory approval, the group distributed the majority of its shareholding

    in Novus Holdings Limited (Novus) to its shareholders. The group recognised the distribution as an in specie dividend,

    reducing retained earnings by US$69m, being the fair value of the distributed Novus shares. A loss on disposal of

    US$145m has been recognised in "(Losses)/gains on acquisitions and disposals" in the income statement following

    the distribution, being the difference between the fair value of the distributed Novus shares and the book value of

    the assets distributed as well as the reclassification of reserves of US$112m. After the distribution, the group holds a

    19% shareholding in Novus and accounts for its interest as an available-for-sale investment.

 

12. Issue of listed bond

 

    The group issued a 10-year US$1bn international bond in July 2017. The bond matures in July 2027 and carries a fixed

    interest rate of 4.85% per annum. The proceeds were partially utilised to repay the group's US$700m international

    bond which matured in July 2017. The remaining proceeds will be utilised for general corporate purposes, including

    acquisitions.

 

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 2017. 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 2017.

 

    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 2017 using:


Quoted prices




in active




markets for

Significant



identical

other

Significant


assets

observable

unobservable


or liabilities

inputs

inputs


(level 1)

(level 2)

(level 3)


US$'m

US$'m

US$'m

    Assets




    Available-for-sale investments

40

2

-

    Forward exchange contracts

-

24

-

    Currency devaluation features

-

-

4

    Liabilities




    Forward exchange contracts

-

50

-

    Earn-out obligations

-

-

64

    Interest rate and cross-currency swaps

-

74

-

 

    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.

 

    The fair value of shareholders' liabilities is determined using a discounted cash flow model. Business-specific

    adjusted discount rates are applied to estimated future cash flows.

 

    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.

 

 


Fair-value measurements at


31 March 2017 using:


Quoted prices




in active




markets for

Significant



identical

other

Significant


assets

observable

unobservable


or liabilities

inputs

inputs


(level 1)

(level 2)

(level 3)


US$'m

US$'m

US$'m

    Assets




    Available-for-sale investments

11

2

-

    Forward exchange contracts

-

2

-

    Currency devaluation features

-

-

6

    Liabilities




    Forward exchange contracts

-

106

-

    Shareholders' liabilities

-

-

18

    Earn-out obligations

-

-

24

    Interest rate swaps

-

8

-

 

    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 2017


Carrying

Fair


value

value

    Financial liabilities

US$'m

US$'m

    Capitalised finance leases

1 177

1 171

    Publicly traded bonds

3 200

3 423

 


31 March 2017


Carrying

Fair


value

value

    Financial liabilities

US$'m

US$'m

    Capitalised finance leases(1)

1 211

1 199

    Publicly traded bonds

2 900

3 041

   

  Note

    (1) Includes financial liabilities classified as held for sale.

 

    The fair values of the capitalised finance leases have been determined through discounted cash flow analysis. The

    fair values of the 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

 

    The group signed an agreement to invest EUR660m (approximately US$775m) in its associate Delivery Hero AG (Delivery

    Hero) during September 2017. The transaction is subject to regulatory approval. Following the investment, the group

    will hold an approximate 24% interest in Delivery Hero on a fully diluted basis.

 

    In October 2017 the group committed to an investment of US$100m in Remitly Inc. (Remitly), the largest independent

    digital remittance company in North America. The transaction is subject to regulatory approval. Following the

    investment, the group will hold an approximate 20% interest in Remitly on a fully diluted basis.

 

    Following the receipt of regulatory approval in November 2017, the group acquired a 100% interest in The Car Trader

    Proprietary Limited (Auto Trader) for cash consideration of R514m (approximately US$36m).

 

16. Pro forma financial information

 

    The group has presented certain revenue and trading profit metrics on a constant currency, organic basis

    (the pro forma financial information) in the tables below. The pro forma financial information is the responsibility

    of the board of directors (the board) of Naspers Limited 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 periods ended 30 September 2017

    and 30 September 2016 respectively. 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 organic pro forma 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 used for the most significant currencies were: South African rand (2017: 0.0757; 2016:

       0.0690); Polish zloty (2017: 0.2714; 2016: 0.2572); Russian rouble (2017: 0.0172; 2016: 0.0154); Chinese yuan renminbi

       (2017: 0.1483; 2016: 0.1512); Indian rupee (2017: 0.0155; 2016: 0.0149); Brazilian real (2017: 0.3134; 2016: 0.3000); and

       Nigerian naira (2017: 0.0028; 2016: 0.0037).

 

    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. 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 2017

 


Basis of

Reportable

Acquisition/

       Transaction

accounting

Disposal



Social network


       Dilution of the group's interest in Tencent

Associate

services

Disposal

       Dilutions of the group's interest in Flipkart

Associate

Ecommerce

Disposal

       Disposal of the group's interest in Souq

Joint venture

Ecommerce

Disposal

       Acquisition of the group's interest in Delivery Hero

Associate

Ecommerce

Acquisition

       Acquisition of the group's interest in Kreditech

Associate

Ecommerce

Acquisition

       Effect of merger of ibibo with MakeMyTrip

Associate

Ecommerce

Acquisition and




disposal

       Acquisition of the group's interest in Swiggy

Associate

Ecommerce

Acquisition

       Acquisition of the group's interest in Takealot

Subsidiary

Ecommerce

Acquisition

       Disposal of the group's interest in Novus

Subsidiary

Media

Disposal

       Disposal of Allegro and Ceneo

Subsidiary

Ecommerce

Disposal

       Disposal of Netretail

Subsidiary

Ecommerce

Disposal

      

       The net adjustment made for all acquisitions and disposals that took place during the period ended

       30 September 2017 amounted to a negative adjustment of US$298m on revenue and a negative adjustment

       of US$101m 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


2016

2017

2017

2017

2017

2017

2017

2017


A

B

C

D

E

F(2)

G(3)

H(4)




Group








Group

composi-








composi-

tion








tion

acquisi-

Foreign



Local




disposal

tion

currency

Local


currency




adjust-

adjust-

adjust-

currency


growth

IFRS


IFRS(1)

ment

ment

ment

growth

IFRS(1)

%

%


US$'m

US$'m

US$'m

US$'m

US$'m

US$'m

change

change

    Revenue









    Internet

4 889

(345)

82

(36)

2 348

6 938

52

42

    Social network









    services

3 510

(29)

14

(81)

1 943

5 357

56

53

      - Tencent

3 426

(26)

-

(93)

1 934

5 241

57

53

      - Mail.ru

84

(3)

14

12

9

116

11

38

    Ecommerce

1 379

(316)

68

45

405

1 581

38

15

      -   Etail

753

(163)

51

17

219

877

37

16

      -   Travel

67

52

(20)

1

28

128

24

91

      -   Marketplaces

193

(193)

-

-

-

-

-

(100)

      -   Payments

83

(5)

17

3

28

126

36

52

      -   Classifieds

196

-

-

18

75

289

38

47

      -   Food delivery

20

-

8

1

27

56

>100

>100

      -   Other

67

(7)

12

5

28

105

47

57

    Video entertainment

1 645

(28)

-

40

120

1 777

7

8

    Media

284

(7)

-

24

14

315

5

11

    Corporate services

1

-

-

-

-

1

-

-

    Intersegmental

(31)

-

-

-

21

(10)

68

68

    Economic interest

6 788

(380)

82

28

2 503

9 021

39

33

    Trading profit









    Internet

1 241

(69)

(37)

(34)

719

1 820

61

47

    Social network









    services

1 533

(12)

(6)

(38)

661

2 138

43

39

      - Tencent

1 501

(11)

-

(41)

666

2 115

45

41

      - Mail.ru

32

(1)

(6)

3

(5)

23

(16)

(28)

    Ecommerce

(292)

(57)

(31)

4

58

(318)

17

(9)

      -   Etail

(128)

23

(14)

(3)

(12)

(134)

(11)

(5)

      -   Travel

(58)

11

4

-

12

(31)

26

47

      -   Marketplaces

83

(83)

-

-

-

-

-

(100)

      -   Payments

(30)

(6)

(8)

(1)

12

(33)

33

(10)

      -   Classifieds

(117)

-

-

8

64

(45)

55

62

      -   Food delivery

1

-

(8)

1

(2)

(8)

>(100)

>(100)

      -   Other

(43)

(2)

(5)

(1)

(16)

(67)

(36)

(56)

    Video entertainment

226

(3)

-

4

7

234

3

4

    Media

12

-

8

1

-

21

-

75

    Corporate services

(6)

-

-

-

(2)

(8)

(33)

(33)

    Economic interest

1 473

(72)

(29)

(29)

724

2 067

52

40

 

    Notes

    (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.

 


Six months ended


30 September


2016

2017

2017

2017

2017

2017

2017

2017


A

B

C

D

E

F(1)

G(2)

H(3)




Group








Group

composi-








composi-

tion








tion

acquisi-

Foreign



Local 




disposal

tion

currency

Local


currency 




adjust-

adjust-

adjust-

currency


growth

IFRS


IFRS

ment

ment

ment

growth

IFRS

%

%


US$'m

US$'m

US$'m

US$'m

US$'m

US$'m

change

change

    Other metrics









    reported









    Development spend









    - economic interest

496

-

(9)

12

(29)

470

(6)

(5)

    - consolidated

387

-

(57)

11

(10)

331

(3)

(14)

    Consolidated revenue

2 958

(403)

69

94

389

3 107

15

5

    Consolidated









    ecommerce revenue

1 068

(370)

69

32

232

1 031

33

(3)

    Consolidated









    trading profit

45

(19)

(11)

12

43

70

165

56

 

    Core headline earnings, calculated on a constant currency basis, amounted to US$1.53bn.

    Development spend is not an IFRS measure and has therefore been excluded from the assurance report

    issued by the group's external auditor.

 

    Notes

    (1) A + B + C + D + E.

    (2) [E/(A+B)] x 100.

    (3) [(F/A)-1)] x 100.

 

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 2017 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 inquiries 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 2017 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

29 November 2017

 

Administration and corporate information

 

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)

 

NASPERS LIMITED

+27 (0)21 406 2121

40 Heerengracht

Cape Town 8001

 

www.naspers.com

 

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 GlobalBuyDIRECTSM 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 - GlobalBuyDIRECTSM, Church

Street Station, PO Box 11258, New York, NY 10286-1258, USA.

 

Important information

The 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. 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. These include factors that could adversely affect our businesses and financial performance. We are not

under any obligation to (and expressly disclaim any such obligation to) update or alter our forward-looking statements,

whether as a result of new information, future events or otherwise. Investors are cautioned not to place undue reliance on

any forward-looking statements contained herein.

 

 


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