Naspers Limited (NPN.JO) Earnings Call Transcript & Summary

Folks, hello, everyone, wherever you are in the world. And thank you very much for joining today. My name is Koos Bekker, and I'm the Chair of the Board of Naspers. I must say we had rather different expectations for this year's Annual General Meeting, and we would have liked to meet many more of you in person. Usually, in the Naspers AGM is well attended. However, due to the COVID pandemic, this meeting has to be online. Now we are trying to combine broadcasting fields from all over the world. And this is the first time that we've held an annual virtual meeting in this manner, so please forgive us if there are technical or human errors entirely possible. We'll try to keep the meeting as concise as possible, while at the same time, covering all the necessary ground. The structure will be as follows. If you'll allow me, I'd like to say a few opening words, then I'll hand you to Bob van Dijk, our Chief Executive Officer, who will sum up performance for the past year and give you a peek into ongoing strategy. Then Basil Sgourdos, our Financial Director, currently in Hong Kong, will take you through the numbers. Finally, Craig Enenstein, sitting in California, will outline how we are aligning remuneration to the shared ambition all of us have to grow the business as aggressively as possible, but at the same time, responsibly to deliver returns for you. Now some introductions have been prerecorded just in case technical glitches destroy our fluency. So you might see in the course of the meeting certain jump cuts as we move from section to section. Please forgive that. All the presenters are online. Everyone's speaking to you today, as are all our other Board members in different parts of the world and different continents. Following these introductions, we'll give you a short video overview for a sense of the global business. We operate in so many countries in the world. It's difficult in just a verbal picture to paint it properly to you. And then we'll move to the question-and-answer session. Now that will be the only opportunity for questions on the business and on the resolutions put to the meeting. You may vote in 2 ways. You may vote right through the meeting until the voting closes anytime you please. And then just before the end, we'll pause for a short moment to let the last votes be cast before we close. You can also use 2 manners of posing a question. [Operator Instructions] I'll now hand over to this same Gillian, namely Kisbey-Green, our Company Secretary, and she'll explain to you how the written Q&A and the voting process works. Gillian?

Thank you, Chair. Only shareholders or their representatives may ask questions. [Operator Instructions] As Koos said, you can start to ask your written questions now, and we will answer them in the Q&A session before we open the meeting to verbal questions using the Raise Your Hand function. The voting process will be by means of a poll. We've created a short video to show the voting procedure. [Presentation]

As Koos mentioned, voting is open for the duration of the meeting until the voting closes. After putting the resolutions to the meeting, there will be a further opportunity to complete the voting. Mr. Grant Edwards from Link Market Services, our transfer secretary, is the scrutineer who will count the votes. Koos, over to you.

Folks, as a quorum of shareholders is clearly present or represented, I can now declare the meeting properly constituted. The notice of this meeting was circulated as part of your summarized financial statements for the year to end March. I ask nicely that the notice be taken as read. Otherwise, we have to read it. Is there any objection to the procedure? You can object by raising your hand and address the meeting.

No objections, Chair.

Luckily, we saved time. As I've mentioned, we've prerecorded some small items for you in case anything goes wrong. And here, we'll go with it. You might see small jumps somewhere. Forgive that, please. Let's see. Folks, as shareholders, you've already received our summarized financial statements. They also appear on the website, along with our integrated annual report. For many years now, the Naspers group focused on creating value by improving people's lives all around the world. At heart, we are entrepreneurs, and we want to make an impact, a positive impact. We do this by being focused and disciplined, and we remain open to opportunities and to change, always looking to grow long-term sustainable value in a responsible way. Lastly, we took the transformative step of listing Prosus. Now the one thing that did not change is our commitment to South Africa. In fact, it deepened through further investment in these South African businesses. This includes our electronic and our print media as well as the retail leader Takealot. You would have noted that our media disseminated information by the hour right through the pandemic, and Takealot distributed PPE equipment. They kept running with no break at all, and I dare say they made a significant contribution to sustaining civil society. We also contributed tax income. In total, Naspers as a group paid ZAR 13.2 billion, not million, billion of taxes last year in South Africa. In addition, during April, we donated ZAR 1.5 billion in emergency aid to the government's response to the COVID crisis, and this comprised ZAR 0.5 billion to the Solidarity Response Fund announced by President Ramaphosa and ZAR 1 billion of personal protective equipment and other medical supplies. The latter, some of you would have seen, we sourced in China in partnership with the Chinese government and with Tencent, and the aim was to support South African health workers. We also invested more into Naspers Labs, our initiative focusing on tackling youth unemployment, a very big problem in South Africa, even more into the Naspers Foundry, where we invest in talented and ambitious young local entrepreneurs. We continue to transform our group, investing in new and existing businesses, also by creating innovative technology-enabled products and services. We back entrepreneurs. We back technology and business concepts that meet some fundamental human need. That's at the core of how we create value for all our stakeholders, including yourself. In our fast-changing, this high-growth world, we try also not to lose sight of a commitment to good corporate governance. We aim to conduct our business with ethics and with integrity. And we try to live sustainably and to evaluate where we can improve disclosures in general. I think our individual businesses share this same entrepreneurial spirit and a certain pride in their performance. On behalf of our Board, I'd like to thank all our diverse people all around the world for their outstanding commitment and contribution in a rather tough year. I now hand you over to our CEO, Bob van Dijk, for a quick summary of our performance this year, but also for a small flavor of the future.

Thanks, Koos. As ever, Naspers continues to move forward. With the successful listing of Prosus in September, last year was a transformational year for us. It sets the company on a path to making a real difference for our stakeholders and generating even more value for you, our shareholders, going forward. I'll let Basil take you through the numbers, but the essence is that we ended the year on a positive note, with accelerating revenue in our e-commerce portfolio, improved profitability and a substantial net cash position. This position of strength has been invaluable in the current challenging climate. As the world continues to confront the global COVID-19 crisis, we're focusing on ensuring our people, our customers and our communities are supported through these tough and uncertain times. While this crisis is debilitating on many fronts, it has also led to an acceleration of some core trends directly related to our business. Every day, we see that customers are increasing their usage, activity and spending online. And we anticipate that a meaningful part of this change will be structural. And as a 100% online business, we expect Naspers to emerge from this crisis even stronger. We remain committed to our strategy. I'm convinced that our approach is a real differentiator. We are very active participants in our investments, and we have become increasingly close to our partners during the pandemic to ensure we support them. Being both an operator and investor helps us to prioritize and share best practices at a very concrete level. We always take a long-term view, and our focus remains on building sustainable leadership positions across our core segments. This is key to reaching profitability on a sustainable basis. Through the year, we invested $1.3 billion in food delivery, classifieds, payment and fintech and in ventures. We continue to be highly disciplined in our capital allocation. During the year, we considered our 5,000 potential deals and executed on 54. We have also walked away from high-profile transactions where it was the right thing to do so. As Koos said, we also remain firmly committed to South Africa. Following the Prosus listing, Naspers is still the largest South African company on the JSE. We are one of the foremost investors in the South African technology sector, with the country's leading e-tailer and its leading print and digital media business. Through Naspers Foundry, we aim to invest ZAR 1.4 billion in the next generation of outstanding South African tech start-ups in the coming years. And Naspers Labs is pioneering an innovative hyperlocal program to tackle youth unemployment. Looking forward, our core objectives are unchanged. And longer term, I believe, strong market dynamics underpin our structural growth. So the fundamentals are strong, and we have real momentum. On that positive note, I'd like to pass you over to Basil.

Thanks, Bob. First, in talking through the financial headlines, I will focus on year-on-year organic growth, that is growth in local currency, excluding impact of M&A. Revenue and trading profit numbers are economic interest figures, meaning they include our proportional shareholder results of our associates and joint ventures. Core headline earnings and free cash flow are consolidated numbers. I'm pleased to start by saying that the group has made solid progress and ended the financial year in a strong position. Revenue increased 23% year-on-year, with revenue in e-commerce growing even faster at 32% to $4.2 billion. Profitability improved by 16%, notwithstanding our significant investment in food delivery. The improvement was mainly driven by Tencent, and improvements in classified and payments and fintech, are also investing further to expand our ecosystem in both these segments. This bodes well for the long term, but impacts profits in the near term. Excluding increased investment in new initiatives in our food delivery segment, e-commerce trading losses reduced by a healthy 28% or $78 million. Taking each of our segments in turn. Classifieds grew revenue 37% year-on-year and trading profit to $44 million, despite the step-up in investment to build out our transaction business, particularly in the cars vertical, which is growing very fast. Revenues from the cars transactions grew 164% year-on-year and now represent 31% of classified revenue. Food delivery is scaling well, driven by strong demand and order growth. In the second half of the year, we have also seen signs of improved efficiency and customer acquisition. Revenue was 105% up to $751 million. Trading losses increased to $624 million, reflecting continued investment in growth. Investment was primarily to expand into new cities and activate new customers. Retention and repeat buying trends are very encouraging and among the strongest we've seen across our portfolio. Turning to payments and fintech. PayU increased its revenue 21% year-on-year. In India, revenue accelerated even faster at 30% year-over-year. We're investing to build out a broader financial ecosystem in India, starting with building up a lending business. India also remains a key market for ventures. The underlying market drivers represent significant potential. This past year, we invested in Meesho and ElasticRun. And in the year before, we invested in BYJU'S. We have invested about $855 million in our ventures portfolio. Our edtech investments, such as BYJU'S, Udemy and Brainly, are the largest in the portfolio. COVID-19 is accelerating the demand of edtech, and we are determined to capitalize on the opportunity. Our retail business performed well. South Africa's leader, Takealot, grew gross merchandise value 46% year-on-year. Turning to Tencent. The company continued its excellent performance. Our share of Tencent's revenue and trading profit increased 21% and 22%, respectively. To highlight a couple of other key numbers. Core headline earnings, which we believe is an appropriate indicator of the group's performance as it adjusts for nonoperating items, decreased by 5% year-over-year in local currency. The decline was driven by the listing of Prosus, where 27.4% is now directly held by Naspers shareholders. Finally, you will note that we posted a free cash net outflow of $338 million as a result of increased investment in food delivery and expansion of the classifieds and payments ecosystem. This was partly offset from the cash flow generation from our profitable businesses and improved dividends from Tencent. We ended the year with a substantial net cash position. And together with our 2 recently completed bond offerings, we have strong liquidity to fund our growth strategy and to continue to create shareholder value. This is a good point for me to hand over to Craig, so he can take you through the key aspects of our remuneration strategy.

Thanks, Basil. Throughout the group, we aim to attract, motivate and retain the best people to create sustainable shareholder value. Our people are at the heart of our success. We operate in a highly competitive global market for the digital talent we need. To attract and retain the best and achieve our goals, we focus on pay for performance, encourage ownership and an entrepreneurial spirit in our teams around the world and align compensation with the creation of shareholder value over time. We want you and everyone involved to share in our success as we continue to grow the business and deliver strong returns. Turning to COVID-19. From the outset, our aim has been to preserve the health and well-being of our people, to manage the situation as well as possible, and at the same time, to act responsibly for our shareholders. We have taken this responsibility into account when making executive remuneration decisions for the coming year. We successfully listed Prosus on the Euronext Amsterdam Stock Exchange in September 2019. As a strategic investor and operator, we focus on long-term value creation by building leading technology companies that improve people's daily lives in high-growth markets. As a global consumer Internet group, we are one of the largest technology investors in the world. Our business moves fast as technology trends and consumer adoption change. And we seek to run businesses that have broad potential, can address big societal needs and can attain market leadership over time. Our executives continue to be compensated based on both Naspers and Prosus performance. This year, 60% of the longer-term incentive awards, or LTIs, to senior executives will be made in performance share units, or PSUs, which will vest after 3 years only if performance metrics are met. PSUs, as part of our remuneration toolkit, including also share options, or SOs, and share appreciation rights, or SARs, create a truly balanced mix of LTIs with value-based performance hurdles that will help drive the right longer-term outcomes for stakeholders. Below the executive level, we are using restricted share units, or RSUs, more broadly across the organization to better align our compensation practices with our peers and increase the opportunity for our people to own shares in the company. RSUs will be complemented with SAR allocations in our unlisted assets to further align incentives to performance, delivery and value creation. Societal fairness is very important to us, particularly as we operate in developing economies, where socioeconomic disparity can be large. We take our responsibilities in that respect seriously, and ensure that our pay practices around the world are fair and competitive. And pay is an important aspect, but not the only consideration. In general, our people join us because of the opportunity to do meaningful work, where they have the opportunity to make a difference, to learn and grow. Looking ahead, we will continue to engage closely with our investors, listening and responding to feedback, and above all, focusing on strongly aligning our remuneration to Nasper's strategy and performance so we can all share in the success together. Thank you, Chair.

Thank you, Craig. Folks, today, our companies and our associates are working to improve the daily lives of hundreds of millions of people living in different parts of the world. In fact, more than 1/5 of the total world population use one of our products. So here's a short video to give you a quick look into that. [Presentation]

Folks, thank you for hearing us out. We now move to the formal question-and-answer session of the meeting. Gillian, could you please give us some pointers now to navigate this new Zoom meeting platform?

Thank you, Koos. We've received some questions ahead of the meeting and also through the Q&A function in today's meeting. The opportunity to submit written questions is now closed. [Operator Instructions] We will start by answering the written questions that we've received and then move on to the verbal questions. Questions are going to be taken one by one, and the job of answering will be allocated to the best person. This is the question-and-answer session for the entire meeting. Please ask questions in relation to the business, our strategy as well as the resolutions that were included in the notice of the meeting. Okay. We've got a question coming in, Chair, from [ Anthony Wilmott ]. His question is, you have made a significant investment in BYJU'S in India and have several investments in online education businesses. Is edtech the next new wave for Naspers to focus on?

Let's ask our CEO, Bob van Dijk. Bob, what do you say?

Yes. Thank you for the question. And we are definitely very excited about our investment in BYJU'S. I think, in general, when we look at education, I think it very well exemplifies the kind of opportunity we look for, right? It's a big societal need, where people spend a lot of time and money. And we are convinced that technology will make education better over time. And actually, if you look historically, technology has not played such a big role in education as it has in other sectors. So that is something we think will change over the next few years. And therefore, we've done investments in about 6 education technology companies, and we are excited about the sector.

Gillian?

Yes. Thank you, Koos. And we have another question. This time, it's from Mr. Hans Bütter. And the question is, India has been hard hit by COVID-19. How has it impacted your businesses there? And do you think the impact will be enduring?

Well, tough one. Bob, you've had dealings directly in India, I know, including providing some support for the COVID fight. Do you want to take that?

No. Absolutely. And I think Mr. Bütter is right. India has been hit hard by the COVID pandemic. And we've contributed to Prime Minister Modi's CARES Fund to address some of the issues in the country. If I look at the specific businesses that we've invested in, in India, we have quite a few. They have not developed in the same way. Some of them have actually been impacted quite significantly. Others have done relatively well. It's really quite dependent on what business model it is exactly. For example, in food delivery, we've seen supply chains -- actually, supply chains have been disrupted significantly because restaurants saw a lot of their employees leave for their hometowns and their villages. And as well, there's been also a delivery driver shortage as a result of migrant workers moving back to where they were originally from. So that's been relatively hard hit, although it is recovering slowly. Other businesses, like our payments business, have actually seen growth because people prefer to pay with electronic means rather than with cash in a situation like it's playing out in the world. So I think the effects are different for different businesses. In some, we see actually acceleration of the business; others, we've seen some slowdown and a slower recovery over time. We don't expect it to be actually structurally held back. I think, in fact, we are in online business models that I think, structurally, will get a boost from this rather than be held back permanently.

Good.

Here, we also received a question from First Manhattan in New York, from the CEO, Bob Gottesman. The question is, does the Board of Directors of Naspers take into consideration that the company's stock currently trades at a roughly 50% discount to its NAV as part of its determination to issue stock compensation awards to employees? In light of the current significant discount, what is the likelihood that the Board will, in the future, a, consider offering cash compensation in lieu of stock; b, acknowledge the dilutive effects on existing shareholders for future issuance of shares as a component of employee compensation, if it is issued at such a large discount? And he notes that if he reads the proxy correctly, the company does purchase shares in the market relating to satisfying stock compensation obligations.

Okay. Let us ask Bob to respond, and Craig might add to that if he wishes to. Bob, over to you.

Yes, no. Bob, thanks for the question. And too bad, we can't see you in person at the meeting today. So when we look at how we compensate our employees, we are very much focused on pay for performance. And I think it's fair to say that our employees are our lifeblood, right? And we compete for talent in consumer technology. And as you know well, the competition for talent is fierce. And if you look at stock as part of equity -- as part of compensation, we think it's an essential piece. So we'll continue to have those long-term incentives in stock for our employees going forward. To the second part of your question, so we actually do not dilute our shareholders with any equity compensation. We buy shares in the market when we make allocation. So that's the way that works.

Craig, are you happy with that? Or do you want to add to that?

I'll add just one thought. First of all, thank you for the question. I think one thing that's very important is when we think about alignment, what we want to do is make sure that our team from the senior executives down to any party that's going to be a beneficiary of the consideration about what you're asking has an opportunity to effectively feel the way you're going to feel as a shareholder. We want them to win when you win. And while cash is absolutely a critical part of compensation, both in current payment as well as in short-term incentives, we believe that the alignment around the long-term value creation puts them effectively in the shareholders' shoes and ensures that they're thinking about the drivers of value creation, and that includes all aspects that will eventually and ultimately hit the stock price.

Thanks for that, Craig. Gillian?

Thank you, Chair. We have a question from Meloy Horn. And that is, having lost out on the Takeaway transaction and given that Just Eat Takeaway is acquiring Grubhub, where do you see opportunities to consolidate in the food sector? And is there any chance that you will buy out Just East Takeaway's interest in iFood?

Well. For those that don't know, Meloy is particularly knowledgeable about this business, so I'd like to hear what she says. But over to Bob, what do you say?

Thanks, Meloy, for the question. So I think one starting point to answer any question would be that, I think to classify this as a lost transaction, I would disagree with, right? So there was another party involved in this transaction that was willing to pay very substantially more than we were willing to pay, and that's why we ended up not being the buyer of the asset. So having said that, I think there are several other exciting opportunities in the food space all around the world, and we have been looking at them and pursuing certain of them. And I believe there's the potential for further activity for the group there. I think the long-term potential in food delivery is very meaningful, and we're looking carefully at opportunities there. Specifically to the iFood question that you asked, we are already the controlling shareholder in iFood, and we're happy with the performance of the company. If there's an opportunity to buy remaining shares in that business at the right price that will generate a return for us, we'll always consider it.

Good. Gillian?

Thank you, Chair. We now have a question from [ Jacques Feri ]. And he says, do you see real growth potential for e-commerce in South Africa? And how is Takealot faring in the current climate?

[ Jacques ], Bob can answer the question, but it's very interesting. The start of the COVID crisis was quite different to the last part, sort of a story of two halves. Bob, over to you.

Yes. And maybe I'll start there actually. When initially, the COVID crisis hit and level -- and the highest level of alarm was put in place, Takealot was almost entirely shut down and could do nothing except deliver certain essential goods, and turnover declined very, very sharply. When the level was reduced over time, then there was obviously a lot of demand for people to get things delivered to their homes. And that's been a relatively more dynamic and more beneficial for Takealot. I think Takealot generally has been growing well over time. I think there's a real consumer need there. I think Takealot has been doing a good job at delivering a good product, delivering with a good level of accuracy and performance. So it's doing well. And we believe that while e-commerce as a percentage of total retail in South Africa is still relatively low, it is growing. And I think over the long term, it will be, I think, as prevalent in South Africa as it is in other markets, and Takealot is in a good position to benefit from that.

[ Jacques ], it's interesting that some businesses were paralyzed by the COVID lockdowns completely and some energized, so I think there's a book in there. It's also interesting how people react. My own impression is older people took it much better than younger people. We haven't seen much trouble in their lives and tended to close the door of the flat. Any case, Gillian? Give us a question.

Thank you, Chair. We have another question from Bob from First Manhattan. And that is, what is the thinking of the Naspers Board relating to the broad topic of what part of stock compensation, whether it be the CEO, Chairman or other C-suite officers of both companies, should be paid by the Prosus board? And what part should be considered by the Naspers Board separately from the Prosus board?

Folks, I think the best responder would be Basil Sgourdos in Hong Kong. He doesn't like paying anyone in any case. So Basil, over to you.

Thank you, Koos. And first of all, Bob, thanks for your question and thanks for attending the meeting. It's great to see you participating. We apply a very meticulous and considerable approach in how we allocate the cost. And effectively, what underpins who picks up what cost is where the activity happens. So for executive directors, the bulk of the work is done in Prosus, and that's -- and therefore, Prosus picks up 90% of the cost, including all related compensation charges and 10% goes to Naspers. For non-executive directors, it's 70% to Prosus and 30% to Naspers.

Yes. Gillian?

Yes. We have another question from Bob. I think that's his final question. This is Bob from First Manhattan. And the question is, should there be specific mention in the Naspers annual report and proxy statement about the trend of discount of the share price to the underlying net asset value and tracking the discount over time and updated in future annual reports and proxy statements, and whether it has narrowed or widened? He believes that there was no specific mention this year. And it appears even with establishing Prosus as a publicly traded security on the Amsterdam Stock Exchange, Naspers' discount to net asset value over the past year has widened.

Gillian, since you compile this report, how many pages does it run to?

Koos, 100-odd.

That's a little. Bob, over to you. Would you like to respond to whether that should be further included or further expanded?

No. Bob, thanks for the question. Again, I think what I would like to start with is just be crystal clear that for management, it is a top priority to maximize the value of Naspers. That is a top priority for us. And one of the key things we see that we have done and will continue to focus on is to look at our core businesses and grow them further and bring them to profitability and bring them to their full potential. And we're confident that over the long term, that will result in a discount not widening, but actually contracting. And if you look -- the question is around disclosure. I think if you look at the last few years, that big annual report that Koos refers to has grown substantially. And we have started to disclose substantially more of our business to help our shareholders understand what we're doing, what we're up to. And I think a lot of those changes and improvements were actually the result of great suggestions from our shareholders. So I think -- we appreciate the suggestion. We'll take it into consideration, and we'll come back with an even bigger annual report next year.

Gillian, further questions?

Yes, Koos. We have quite a few that have still come in through the written chat forum. The next one is another question from [ Anthony Wilmott ]. And he wants to know, how will the U.S. Executive Order affect Tencent? Will it impact its financial results? And what about Americans that have shares in Tencent? Will they be forced to sell down their holdings?

Well, folks, we have on the line Charles Searle, also sitting in Hong Kong, who is very well positioned to answer that. Charles?

Thanks very much, Chair. Anthony, thank you too for your question. As you know, Tencent is a publicly listed company. And we have to -- we need to be mindful that all questions of this nature should be left to Tencent to address. And so I would therefore kindly ask that you reach out directly to Tencent and -- for any questions you might have in this regard.

Charles, just to be sure that he gets to the right person there, Gillian, just send the details and please just connect him to the correct people at Tencent to get the best answer.

Certainly, Koos. I will do that after the meeting.

Of course, these things move fairly quickly. Okay?

Okay. And Meloy Horn has another question for us. And that is, how are the classifieds businesses shaping up against Facebook Marketplace? And are we worried about Facebook?

Everyone is worried about Facebook. But Bob, okay, over to you.

Yes. Thanks for that question. I think the reality is that classifieds is a very competitive industry, right? And we face competition everywhere. And as Koos says, I think if you don't take Facebook seriously as a competitor, that is a very risky approach. So we do take them quite serious. They have tremendous technical capability, and obviously, distribution on billions of devices and billions of customers. Sort of the relative strength of Facebook Marketplace is actually quite different in different parts of the world. There are parts of the world where they're not particularly liquid and other parts where they're very strong. For example, in the Philippines and certain parts of Latin America, they are doing extremely well. I think if we look at our core markets there, again, there are some markets where Facebook is not particularly present or successful. There are other markets where they are present. And what we have done in response to the Facebook presence is to really make sure we strengthen our verticals very much. We are typically leaders in real estate and in auto. And those are verticals that require a great deal of specific technology development to make them successful. We've also migrated our classified business to a large degree to be more transactional. And we'll continue to do that in the years to come where we help customers further down the value chain and be successful there, which we think is harder for Facebook to replicate with a sort of one-size-fits-all model.

Indeed. Gillian?

Mr. [ Jacques Feri ] asks, you merged your classifieds business in the Middle East with EMPG and you merged letgo with offer up in the U.S. Is this a trend?

Well, that's an interesting question. Bob, would you say it's a trend that you merge 2 competitors in markets? Is more to come?

No. I would say that both cases are actually a good illustration of what I mentioned earlier, right? So the combination with EMPG was an exciting one because they are in a similar business and actually quite well developed in that transactional business that I mentioned earlier. They're also very verticalized. And in many ways, it was a very natural match for us to join forces with them and actually take a leap on that journey to verticalization and to transactions. So that was very much the rationale between -- or the rationale behind that combination. So if I look at letgo-OfferUp, I think that was much more a market consolidation question where the U.S. is a fantastic market for classifieds, but it's also probably the most competitive one, with many, many competitors heading in the same direction. And we saw OfferUp as being a very similar company that was trying to do the same as we do. Actually, Facebook Marketplace is quite strong or actually very strong in the United States, and we felt that, together, we have a much stronger proposition to be successful in that very large market.

Thank you, Bob. Gillian?

We have a question from [ JP Morel ]. And that is, we heard last year about the investment that Naspers Foundry made in SweepSouth. What other investments has Naspers Foundry made?

Yes, SweepSouth is quite interesting. Bob, you can tell the story better than I. Okay?

Yes. In SweepSouth, we did make an investment. And actually, we were looking at recently how that business has been doing. It was on a great growth trajectory prior to the COVID crisis. I think when the COVID crisis hit, there was obviously a lot of…

I think just explain what they do. Just explain maybe what they do.

Yes. So what SweepSouth does is they help people who need assistance in cleaning their houses to match them with vetted, qualified people who can provide those cleaning services. And they make sure that both sides of that equation are well organized, so people get the right quality of service and as well, the people who do the work get a fair wage for it. So that's what SweepSouth does. They've done really well pre COVID and have seen, obviously, a significant slowdown as a result of the pandemic. But I must say that in the last few weeks, it looks much brighter. I think the need hasn't gone away, and that's something we believe is going to be, again, a potentially very valuable service for customers and also helpful for the people who provide the service because they get paid a decent wage and find a way to sustain themselves. So that's SweepSouth. Then recently, we've made another investment in a business that fundamentally uses technology to monitor crops. And they are fundamentally helping farmers to look at how their crops are developing, whether they are being fertilized efficiency -- sufficiently, whether there's a need for pest control, et cetera. I think they're called Aerobotics, if I'm not mistaken, a recent investment.

Good. Gillian?

Thank you, Chair. We have a question from [ Tracey Davies ]. It's quite a long question. It's in relation to resolutions 7 and 8, and those resolutions relate to the remuneration policy and the implementation report. So the question is as follows. Your 2020 remuneration report describes how Naspers considers its executive remuneration to be fair and responsible. However, Naspers has devised its own definitions of fair and responsible, which failed to address the key requirement of the King Code, that fair and responsible remuneration encompasses the need to address the gap between the remuneration of executives and those at the lower end of the pay scale. It's a comment more than a question.

Okay. I think…

Sorry, David. Thank you. It's just come through on my screen, the question continues. She also says that we disclose a global average remuneration ratio, but this is not helpful to determine whether the pay of your lowest-paid workers is fair and responsible. This lack of transparency is reflected in Mr D's rating of 0 out of 10 by the Fairwork Foundation, which evaluates digital platforms against measures of fairness. How can your shareholders be confident that your remuneration policy is fair and responsible when you do not provide them with any information about the wages of your many workers at the lower end of the pay scale?

Okay. I think the best person maybe, Aileen O'Toole, our Head of HR. Just implicit in the question is sort of a comparison of society, the lowest and the highest of society, the sort of Gini factor. What's interesting is we and some other companies operate over 100 different countries. And for instance, the delivery driver in Denmark and the delivery driver in India earn completely unrelated packages. And then there's the industry difference, that some industries are expanding at the moment, adding people, increasing salaries and some are going bust. So it's a very vibrant world. Okay. Aileen, do you want to take that?

Thank you, Chair, and thanks, Tracey, for the question. We absolutely agree. Societal fairness is a really important element in our pay practices, and it's something that we take very seriously. And to a certain extent, a global pay ratio is quite a crude measure of whether pay, in particular, pay for the lowest-paid members of our community is actually fair. We also disclosed though that we benchmark locally to make sure that the pay we offer locally is fair and competitive and compelling. And for all of the jobs we have, there is a significant amount of competition locally. So we do need to be cognizant of our competitiveness. In addition, we also need to pay attention to the working conditions of those people. And we do take a lot of care to ensure that their work environment is safe and that we're indeed checking for health and safety, particularly with the likes of the delivery drivers that you mentioned. So I think it's a very important topic for us in South Africa and globally. And we'll certainly look at our disclosures next year to make sure we provide a more detailed picture of all of the actions that we take in that respect.

Okay. Gillian?

Yes, Chair. We have a question from [ Joe Freitas ]. Given the importance of the valuation of the unlisted business for the size outcomes in the context of the LTI scheme, please, could Mr. Enenstein explain why the RemCo has decided against publishing the aggregate valuation of these businesses. There is no commercial sensitivity on the portfolio value of all investments.

Craig, there is a question for you.

Thank you. There's really 2 underlying pieces there, and I appreciate the question in general. Let me speak first to the underlying valuations. As I think everyone is quite aware, the company is buying and selling a lot, and disclosing exact valuations that we place on each business would definitely compromise our competitive position if we were in the process of trying to, for example, dispose of an asset, it wouldn't be in the best interest of shareholders. That said, we do believe that an index which links the progression of the main share appreciation rights program with our remuneration report, is sensible. We have included that index and attempted to make it clearer than last year in an effort to show the link between management compensation outcomes and the value that's being created for shareholders in that underlying portfolio. We've also disclosed much more about the financial performance of our main Internet businesses over the last few years. And so if there is specific objectives that you have in better presentment of the index, the aggregation, I would say, please, by all means, send us a letter on that point. We take all of those very seriously. We respond to them comprehensively. And we're very open to ideas around how to do that work better.

Okay. So I think, Craig, it's fair to say that over the past few years, maybe the last 3, we've changed quite a lot how we disclose these things. And you gave another taking, you looked at it again and flex as you can. Okay. Gillian?

Koos, we have another question from [ Tracey Davies ]. And that is, where can shareholders find information relating to the working conditions of your lowest-paid workers? For example, what steps does Mr D take to ensure that the motorcycles of food delivery drivers are roadworthy and that drivers have access to medical care if they are involved in a road accident?

[ Tracey ], I can see you care a lot about this topic. And it's, of course, globally, quite a hot topic. I see Uber has done -- has been answering a lot of questions around its drivers. Bob, do you want to respond specifically to Mr D and the drivers?

No. Absolutely. And we care deeply about that as well, right? So these are our people on the front line, and we are making sure that they are insured. So they are insured for disability and death coverage. They're also insured for ambulance transport as well as for any medical issues that might occur as a result of anything that happens on the job. So they are covered for that. And there are standards for the vehicles they use, right? So in many cases, it's franchisee drivers that do the work, but there are clear standards for the motorbikes and the other vehicles that they use.

Thank you, Bob. I think, Tracey, it's a hot topic. People are struggling with it because the gig economy opens new opportunities, but also new risks, and there's the issue of relative power in negotiation. So no doubt, that's not the last word on it. Gillian?

Chair, that actually concludes all the questions that have come in on the written chat function.

Folks, it seems we've answered the written questions. Thank you for that. Now we will try to answer your verbal questions. Now that's a little bit more tricky technically. The opportunity for things to go wrong are vast. Nonetheless, let's try. [Operator Instructions] Gillian, over to you.

Thank you. I'm sure you'll notice that when you're watching the news on the television, and the studio goes live to a reporter somewhere outside in the rest of the world, there's a slight delay before the reporter starts to talk. This is going to be the same here. So let's be -- if we can just be a little bit patient. There'll be probably a brief pause before we actually hear the shareholder talking. So I have -- so far, I've got 2 hands raised. The first one is [ Johannes Bütter ]. We're not hearing from [ Mr. Johannes Bütter ]. So we have another hand raised.

Gillian, just try again. [ Mr. Bütter ], just unmute your mic. Let's just try one more time. Now Gillian, go to the next and [ we'll repeat after a turn ].

Okay. That's fine. We have [ Chris Logan ] on the line.

Yes. I hope you can hear me.

Yes. Good.

Great. If I may just start off by saying thank you for all the great things you do as a company. And in particular, not forgetting about us down here in South Africa. It's very important, we need leading companies helping us found the way. I've got 3 questions. The first question deals with, why do you not emulate Amazon in terms of how they pay their non-execs? Amazon give their non-execs no cash whatsoever. All their remuneration is in share options. And surely, that is far, far better from a maximizing of shareholder value and alignment point of view.

Chris, just a very interesting question. Pause there. We're going to answer it and come back to you. Can we do that, Gillian?

Yes, we can do that.

Chris, pause just there. Craig, I would really like to receive Naspers shares rather than stupid cash. Over to you for comments.

Yes. I agree with the Chair. I'm looking forward to that change. The work that we do in terms of the benchmarking is one of the forms of inputs that goes into our determinations, but the fundamental premise behind the way that we do this compensation for the directors, the non-executive directors, is really to ensure impartiality. The idea of providing cash for effort, it is well substantiated across many businesses of our scale. And the idea is to really provide us with the degree of compensation that aligns with the level of complexity of the organization, the scope of work that we have given the nature of the organization and to really put us in a place where we're not spending time worrying about nickel-and-dime behavior around time management. We're effectively paid for the totality of our time. The idea of providing incentives through shares might influence behavior such that we take either short-term actions or actions that don't necessarily create long-term alignment with shareholders and stakeholders. And it's the belief that by providing a cash form of compensation, we're maintaining impartiality and, ultimately, alignment such that our highest and best duty is to ensure that all of the various aspects of the requirements for compliance and value creation over time are being adhered to.

Chris, I'm sympathetic to your cause. But Gillian here is a friend of [ Moven King ]. And I think Mr. King will look unfavorably on this proposal. Gillian?

That's correct, Chair. And in terms of the King Code on corporate governance, any remuneration that is based on the performance of the company is actually not something that it recommends, as to Craig's point, to basically keep impartiality from a director's perspective.

Chris? Okay. You're welcome to ask the second question.

Yes. If I may just point out, on the King Code, Mr. Rupert addressed the [indiscernible] issue and talked about the King Code #58 missing the point on this, but I'll leave it at that.

Yes. Mr. Rupert is sometimes very clear, call it, from his perspectives.

Yes.

Good? You're welcome to go ahead.

The second question, it's technical somewhat. A top priority is to minimize the discount and sort of maximize value. But have you ever given any consideration to -- on your website, not your annual report, tracking a discount to NAV? There are a couple of companies who do it in SA. Actually, a couple of them updated every 15 minutes, believe it or not. Just as a suggestion.

Incidentally, who does it, Chris?

Zeder and PSG.

Okay. I've not seen it, but I'll have a look. Yes. Gillian, do you have any response? Or shall we come back?

I think Basil may want to respond on that question?

Okay. He's not in charge of the website, but you're welcome, Basil.

Thank you, Chair, and thanks for the question. I think it goes similar to the question that was asked by Bob from First Manhattan earlier. So it's something that we appreciate the feedback on and we'll take a look at. And if it makes sense and then we can contextualize correctly, then we'll see what we can do.

Yes. So Chris, many factors feed in, political changes and currency moves. It's a rather grab bag of many influences that deliver the discount. Okay? You're welcome to ask your other question.

Sorry. And my last question, it's somewhat cheeky and a bit personal. But Mr. Chairman, I'd like to know how you managed to look so relaxed during these meetings. I've never seen a Chairman who handle so many questions with such a relaxed air about them. Perhaps you could just let us know. It's something a lot of other Chairman would…

Probably ignorance. Only pure ignorance. Okay. Gillian, can you…

Okay. Koos, we have another raised hand. And maybe we could go back to [ Johannes Bütter ] again. I see he's come back up again.

Yes. Johannes, welcome.

Can you hear me now?

Yes.

That's great. I have a question around India. Is that a country of focus for Naspers? Or is it more of an establishment of a beachhead from which to expand into Southeast Asia?

That's actually quite an interesting and penetrating question. Bob, over to you.

No. [ Mr. Bütter ], thanks for the question. And I think it's indeed one that could warrant a relatively long answer. I think the short answer is that India is a very specific focus for us as a group. And it has much to do with what we see as being one of the largest opportunities in terms of Internet audience in the world, right? So Internet audience in India now is about 400 million or 500 million users, which is second only to China. And it's growing very fast, which means that India is for us a top priority. And we have looked at just about any consumer Internet model in the country and we invested in many because we believe it's going to be a tremendous opportunity. Now the second part of the question is, is it a beachhead into the rest of Southeast Asia? I would say, the rest of Southeast Asia is very interesting as well, although very different at the same time, right? So Indonesia is another very populous country. But in terms of culture, language, characteristics, logistics, again, a completely different market from India. We have actually done a number of investments recently in the rest of Southeast Asia and Indonesia, but also in markets like Singapore. So we're definitely interested in other opportunities in Southeast Asia. But I wouldn't say that is with India as a beachhead. So very interesting geography with great opportunities, but also quite different and one we are exploring very actively.

Yes. Gillian?

Here's 2. We have -- we actually have 2 more shareholders with their hands up. The first one is [ JP Morel ]. [Operator Instructions]

Are you able to hear me?

Yes. Yes.

Great. I have 2 questions, if possible. The first question is, I picked up in Basil's financial report that he threw out the word lending as a maybe a sneak peek, but what types of sort of new investments are on Naspers' radar? And what is sort of the next big waves that you guys are looking at, is my first question?

Okay. [ JP ], just pause there, then we answer that one. Basil, what do you mean by lending?

I think the reference is to the building of our credit initiatives in India under PayU. So what we're trying to do there is leverage the great position we have in India. We have a very fast-growing payment processing business that is now also profitable. And we're trying to build a broader ecosystem around it. And one of -- and the first opportunity we're looking to go towards is actually providing credit, so scoring credit and providing credit to consumers. And on that front, since the financial are published, we've completed a acquisition of a company that will help us on this journey, a company called PaySense, where we've acquired the control of the company. And so that's definitely on the card. So that's something that we think we can do well at, but we need to build it over time. You can't just open the floodgate and give everyone money. You've got to prove the credit scoring engine, you've got to sort of build the funnel and build confidence and then scale the book over time. And we've been very disciplined about that.

Okay? Then you have a second question, [ JP ]?

Yes. My second question is, there seems to be a bit of a sentiment, global sentiment recently, probably driven by the creators of Fortnite that Apple has been quite mean at how they charge for space on the App Store. I was just wondering, with all the Naspers' Internet assets, whether they would join that conversation and put a bit of pressure on Apple to reduce those costs.

Well, you've seen that the Apple market cap exceeded $2 trillion. So Bob, do you want to take them on? Is that your size?

I think the question is very valid, right? So -- and I think there's criticism coming from various angles towards Apple for their revenue model. It's around the level at which they charge, but also around differentiating those charges for different companies, which I think has led to a certain amount of dissatisfaction. If you look at our business models, even though many of our businesses have apps, actually, typically, the revenue model does not run through Apple at all. So it is not in -- if you look in food delivery, it's a direct revenue model. You don't actually pay Apple fees or anything like that. So I think it doesn't matter that much for our direct economics of our controlled businesses. There are obviously exceptions. I think, definitely, for games, that is a consideration.

Okay. Well, that's interesting. It's a wonderful ecosystem Apple has built. Gillian, any more questions?

Koos, I don't see any more hands up in the meeting, so I think we're done with our question-and-answer session and we can move on.

So folks, thank you very much for the lively exchange. Hopefully, next year, we can do so in person, which is always more pleasant. Now as we mentioned earlier, shareholders had the opportunity to ask questions ahead of the meeting in the chat room, in writing as well as verbally through your raise hand function. And we've addressed some of the themes that apply to the resolutions put to the meeting. Now let's get to the voting part, which is set out in the AGM notice that all of you have received. I'm going to hand back to Gillian to put the resolutions to you and to actually conduct the voting process.

Thank you, Chair. Okay. So the notice was posted to all shareholders some time ago, and you've all had a chance to consider the resolutions to be put to the meeting today. I've been notified that one of our shareholders who was busy answering -- asking us questions earlier on in the meeting, that's [ Anthony Wilmott ], he has seconded all resolutions to be put to the meeting. I'm now going to put each resolution to the meeting and just note the number of the resolution, and the resolution will be displayed on the screen. So the first resolution is ordinary resolution #1, then ordinary resolution #2, ordinary resolution #3, ordinary resolution 4.1 and 4.2, ordinary resolutions 5.1 to 5.4, ordinary resolution numbers 6.1 to 6.4, ordinary resolution #7, ordinary resolution #8, ordinary resolution #9, ordinary resolution #10, ordinary resolution #11, ordinary resolution #12, ordinary resolution #13, ordinary resolution #14, ordinary resolution #15. And now we move on to the special resolutions. It's special resolution numbers 1.1 to 1.4, special resolution numbers 1.5 to 1.8, special resolution numbers 1.9 to 1.13. Then we move to special resolution #2, special resolution #3, special resolution #4, special resolution #5, and finally, special resolution #6. Thank you. And I would like to remind shareholders who have not yet voted to please click on the voting link as we showed you how to do that earlier on in the meeting and cast your vote now. We will leave the voting open for another minute. If you have not yet voted, please do so now. [Voting]

Thank you, everybody. The voting is now closed, so I'm going to proceed with the announcement of the results. If we can have a look, first of all, at the ordinary resolutions. They have all been passed with the required majority. And also, if we move on to the special resolutions, they have also been passed with the required majority. The full details of the voting will be published on the Stock Exchange News Service this afternoon. Thank you, Chair.

Ladies and gentlemen, as all the businesses on the agenda has been dealt with, I can now declare the meeting closed. I want to thank, first of all, you for your attendance. We value communication to our shareholders. And then I want to thank the executive team who put all this together. It's a complex operation. And much appreciation to Bob, Gillian and the whole team. Thank you, and have a good day.

Ladies and gentlemen, thank you for all your attendance. It was a good show. Thank you.