Naspers profits massively from Tencent disposal

Naspers on Friday announced its financial results for the year to 31 March 2018, showing a 9% rise in consolidated revenue to US$6.66 billion, “as e-commerce continued to scale”.

The group said that e-commerce revenues grew 15% or 32% in local currency and adjusted for the impact of acquisitions and disposals (including Allegro and Netretail).

Revenues, measured on an economic interest basis (including the proportionate contribution from associates and joint ventures), increased 38% year on year to US$20.1 billion. Core headline earnings grew 72% to US$2.5 billion, Naspers said.

Group consolidated trading loss was US$41 million – a marked improvement on last year (US$57 million).

The group said it reduced its operating loss to US$198 million from a prior loss of US$360 million, however profit for the year soared to US$11.3 billion, from US$2.16 billion, due to the disposal of a 2% interest in Tencent Holdings.

“To reinforce the balance sheet and pursue growth opportunities in, among others, the classifieds, online food-delivery and fintech (financial technology) businesses, we sold a 2% interest in Tencent in March 2018, generating proceeds of US$9.8 billion,” it said.

Diluted headline earnings per N ordinary share increased to 403 US cents, from 38 cents previously.

The board recommended that the annual gross dividend be increased by 12% to 650 cents (previously 580 cents) per listed N ordinary share and 130 cents (previously 116 cents) per unlisted A ordinary share.

Businesses outside South Africa contributed 84% of revenues, compared to 80% a year ago, Naspers said.

“We made good progress this year. Financial performance was strong. Growth in both revenue and trading profit accelerated,” said Naspers chair Koos Bekker. “We benefited from scale effects in ecommerce and a positive contribution from Tencent. Video entertainment’s
results were steady.”

Naspers said that internet revenues grew 50% (51%) to US$15.9 billion and trading profit was up 50% (56%) to US$3.1 billion, fuelled by ecommerce and Tencent’s strong results. This segment now contributes 79% of group revenue – up from 73% last year.

Ecommerce revenue increased 25% (36%) to US$3.6 billion. Classifieds, business-to-consumer (B2C), payments and food delivery all contributed meaningfully to the segment’s 9% revenue acceleration. Increased scale resulted in trading losses reducing 8% (24%) to US$673 million and a considerable improvement in trading loss margins from 25% last year to 18% this year.

Profitable ecommerce businesses generated revenues of US$1.7 billion and trading profits of US$352 million (2017: US$699 million and US$229 million respectively).

Shares in Naspers climbed  3.76% to R3,328 in afternoon trade on the JSE.


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