Naspers has announced a 28% increase in consolidated revenue to R28.8 billion for the six months ending 30 September. Chairman Ton Vosloo said the growth was largely driven by the company’s offshore internet businesses and boosted by a depreciating rand.
“In recent times the composition of Naspers has changed. Offshore revenues now exceed those generated in South Africa, whilst internet has surpassed pay-TV as our main business,” said Naspers CEO, Koos Bekker said. “We are busy building e-commerce platforms, in particular online classifieds, and are rolling out digital terrestrial television (DTT) across more cities in West and East Africa.”
The pay television business grew revenues 18% to R17.1 billion. Subscribers increased by 560 000 and now total 7.3 million households across 48 countries on the African continent. Due to expanding DTT services, as well as the costs of launching new channels and services, trading profits nudged up by only 11% to R4.5 billion.
The company reported e-commerce revenues almost doubled to R7.9 billion. Investment in marketing, people and product cost R2.3 billion and led to an aggregate trading loss of R1.8 billion in this segment. The classified businesses in most markets, Brazil and India in particular, widened their lead over competitors, it said in a statement.
Globally, conditions remained challenging for print. Media24 managed some top line and profit growth and continues to reinvent itself by launching digital initiatives. The investment in Abril was further impaired.
Naspers’s share of core earnings from associates, including Tencent in China and Mail.ru Group in Russia, increased by 47% to R4.5 billion.
“The pace of investment in new growth opportunities will accelerate sharply over the next months. We expect development spend of about R7.0 billion for the full financial year to March, compared to R4.3 billion last year,” Naspers financial director Steve Pacak said. He added: “As this investment is made largely through the income statement, it will have a dampening effect on both earnings and cash flows. However, we expect these growth opportunities to deliver shareholder value over the long term.”
Core headline earnings, considered by the board to be an indication of sustainable earnings performance, were up 16% on the previous year to R12.48 per share (R4.9 billion in total). This was despite investing R3 billion in developing future growth opportunities (referred to as development spend and expensed through the income statement). Positive free cash flow amounted to R787 million.