Good day, ladies and gentlemen, and welcome to the Naspers and Prosus 2020 Results. Participants may be in listen only mode. There will be an opportunity to ask questions during the conference.
Please
Please note that this call is being recorded. I'd now like to turn the conference over to Owen Ryan. Please go ahead.
Thanks, Irene, and hello, everyone, and welcome to the full year 2020 results call for Prosus and Naspers. On the call with me today, we have our CEO, Bob Van Dyke our CFO, Basil Skordos, who will walk you through the operational and financial progress we made during the year, and then we'll open the call for questions. And for that section of the call, we'll have the broader team, including Martin, Larry and Laurent, our CEOs of Classified Food Delivery and Payments. As you know, Process is a subsidiary of Naspers and its financial results almost completely account for Naspers results. So to ensure that shareholders of Prosus and Naspers are provided with the information simultaneously, we're having just one results call.
So with that, I will turn it over to Bob. So Bob? Yes. Thanks, Owen, and thanks, everyone, for joining the call today. So on this call, we will cover process mainly as it represents the lion's share of Naspers II.
But of course, if there are any specific questions on our South African assets, we would be very happy to take them as well. So as the world begins to reemerge slowly from lockdown, we remain in a period of great uncertainty and change. And I wanted to start this call with my best wishes to you wherever you are in the world, and I hope that you and your loved ones are keeping safe and healthy. On the call we had in April, we took you through the impacts of COVID-nineteen on the business and our response to it. And we will spend additional time on that today.
But first, I thought it would be helpful for Basil and I to take you through the financial and operational progress for the full year 2020. And ultimately, that will serve as the basis for the group's longer term growth trajectory once we emerge fully from the pandemic. So let's start there. Financial year 2020 was a truly transformational year for the group in many respects and one which sets the company on a path to making a real difference for our partners, for our customers, for our employees and for the communities that we serve. And it's a path which I believe will generate significant value for shareholders going forward.
So let's turn to Slide 4, and I will walk you through the highlights. Suproze has ended its inaugural year in a position of significant strength with accelerating revenue in our e commerce portfolio, improved profitability and a substantial net cash position, which provide us with ample liquidity. Now this is an enviable position during normal times, but it's really a differential one in today's climate, and I'm confident that it will serve us well. So underpinning the results, Tencent continued to grow strongly and we remain very excited about Tencent's future potential. Beneath the financial figures, there is actually also significant strategic progress across our core segments.
And as economic lights begin to switch on again across the globe, it is increasingly clear that the impact of the lockdowns will be profound and it will be long lasting. And every day, we see data that consumers are increasing their usage and they're increasing their activity and their spending online. And that change is structural. And as a business that is 100% online, we expect Prosus to emerge from the crisis in a stronger position. So we can turn to Slide 5.
Let's touch briefly on the financial and strategic highlights, which Basil will discuss in more detail. So overall, revenue grew 23% with our e commerce revenue accelerating to 33% year on year. Trading profit and core headline earnings grew 16% 13% respectively, despite the fact that we stepped up our investment in food delivery. We saw really strong execution across our 3 core segments. So classifieds delivered excellent results, particularly strong results from Russia, from Europe and Brazil.
And in food delivery, we're starting to see very strong results from significant increase in investments that we've made over the last year. So Ifood, Swiggy and Delivery Euro all grew very strongly. And in total, the number of food orders increased 102% and GMV by 76% year over year from an already high base. In payments and fintech, transaction volumes increased 29% to $37,000,000,000 More than half of that comes from India, which contained to continue to gain momentum. So at the group level, we took perhaps the largest structural step in the company's history by successfully listing Prosus in Amsterdam in September.
We're at the beginning of our journey in Europe. Prosus is increasingly on the radar of a larger and deeper pool of international investors. And based on current data, Prosus has good prospects of joining the Eurostox 50 index in September this year. We will stay focused on creating and unlocking more value for our investors by building more valuable businesses, but also by taking sensible financial and structural steps where possible. And I can assure you that the team is hard at work there too.
While the world's become increasingly volatile, we actually have a lot of confidence in our operating structure, which has been tested through recessions and many periods of turmoil. On slide 6, we set out the group's long term strategy and priorities, and I am more convinced than ever that our approach is a real differentiator. So we are very active participants in our investments, and we have become increasingly close to our partners through the crisis, making sure they have our support. Now being both an operator and investor helps us to prioritize and share best practice at a very concrete level. We always take a long term view.
As many peers are cutting costs to the bone, our focus is on building sustainable leadership positions, which is key to reaching profitability on a sustainable basis. We continue to be disciplined in our capital allocation and we've walked away from high profit transactions where it was the right thing to do. And finally, we have a responsibility to all stakeholders. This has been at the heart of our response to COVID. Looking forward, our core objectives are unchanged and longer term, I believe strong underlying market dynamics underpin our structural growth.
So in 2020, we made progress in driving our core segments to profitability while outgrowing the market. We build out integrated ecosystems such as transactions in classifieds and logistics and food. And these can deliver superior consumer value, They can enhance winning positions and deepen moats around them. And finally, we pursued attractive consolidation deals in our segments. So underlying our strategy is a long track record of deploying capital and generating higher rates of return.
And if you turn to Slide 7, you can see our general philosophy. I thought it was worthwhile to spend some time on it here. So simply put, we look to invest early in quality assets in growth markets where we can make return for our investors far in excess of our cost of capital. This drives our decision making and it applies to all investments, big or small. And the strategy has already created enormous value over many years.
And if we can continue to do so, it will unlock value over time without a problem. In financial year 2020, we invested $1,300,000,000 in food, classifieds, payments and ventures. And behind that sum lies a very disciplined and highly selective and structured investment process. And to give you some context, over the course of the year, we considered over 5,000 potential deals and we executed 54. And this focus and diligence has enabled the group to maintain a low impairment rate of under 10%.
And going forward, you should expect us to continue to follow this playbook. So moving to our operating segments, Slide 8 sets out the key highlights for the classified segment, which had a transformative year in 2020. So ALEX grew revenue 37% year over year organically, which is about 3 times the pace of the industry. We continue to expand OLX's ecosystem to get even closer to our industry partners and end consumers as the business develops into a highly profitable global market leader. In financial year 2020, we held leading positions in all 22 of OLX's largest markets with over 300,000,000 active users per month, making it the leading classified group globally by usage.
Pre COVID-nineteen and before all the volatility began, a strong engagement drove monetization that enabled 22% average monthly paying listers growth. Of course, the onset of the pandemic negatively impacted the business, but we are now seeing real signs of improvement. In the year, the team executed 3 strategically important deals. So in Brazil, you would have seen we announced a $650,000,000 deal to buy Grupoza, which is the leading vertical online property classified site. And this will accelerate innovation and enhance user experience in a key vertical, which real estate is for us.
We merged Letgo with OfferUp in the U. S. And we ended up with a 40% stake in the combined entity, which is now a truly national well capitalized business, which is ready to compete. And in May, we injected DuBisel and our Middle Eastern assets into eMPG for a 39% stake. And we're also participating in a $150,000,000 financing round from valuing the group at over $1,000,000,000 Furthermore, we are building our ecosystem by offering fully integrated transactions with pay and ship features.
We also help with the evaluation of an item. We help with offline inspections, instant cash offers and much more. In December, we moved to majority ownership of Frontier Car Group for $320,000,000 which will accelerate what we want to do on the transaction side of the business. So looking forward, we are well placed to grow our footprint organically, but we are also constantly screening the market for potential acquisitions. If we move to food, so food is a massive opportunity for us.
In terms of growth, our food business led the way in 2020 as we show in Slide 9. So as you know, we've invested heavily and early in this space, particularly in India and Brazil. And I think we're still in the early innings of what this can become. So already our investment is showing real return and across our three properties, order and GMV growth have remained very strong in 2020 and that translated to more than 100% growth in revenue year over year. And the growth that we see is driven by increased customer loyalty.
It's also driven by higher frequency of monthly orders and also by increased restaurant loyalty. And we're experimenting with several exciting growth adjacencies and some to call out our groceries and convenience deliveries, but also new food supply and restaurant software. And these will further expand the growth profile and improve the ability of the leading food platforms to compete successfully. If we can take you to Slide 10, financial year 2020 was also an important year of progress for our payment platform PayU. So payments in emerging markets is a huge opportunity and it's a data rich business and it's core to all e commerce.
In the financial year, PayU grew total payment volume to $38,000,000,000 which is up 29% year on year. And by now 52% of all transactions come from India and their volume grew by 32%. And the business in India actually continues to gain market share, and that's driven by gains in share of checkout in the enterprise segment, but also across the board by increased conversion, and that's thanks to our Wipmo integration. Peiyou has also delivered new payment products for small merchants and the bank has focused on deepening bank relationships and it's also gone into new verticals, so it's government and bill payments. Laurent and his team's strategy here is to broaden our fintech ecosystem in India and expand into credit by leveraging our strong PSP platform through the smart use of data.
In financial year 2020, we issued more than 2,000,000 consumer loans every month. In the short term, the current COVID-nineteen crisis presents challenges and we are proceeding with caution and credit as you would expect. On Slide 11, we turn to our ventures portfolio, where we invest in earlier stage companies that will be the next wave of growth for the group. So everything that we are today, once started small. So we've done this many times before.
And once we have sufficient proof points and conviction, there is the potential for business to graduate to a core segment. We've so far invested about $850,000,000 in our ventures portfolio. In the portfolio, India is a key focus area and that's because the underlying market drivers represent significant potential. In the last financial year, we invested in Micho and in Elastic Run. And in the year before, we invested in BYJU'S, and these are all great local Indian businesses.
Our adtech investment is by far the largest in the Ventures portfolio, and it's clear that the pandemic has had a transformative effect on the space. And we're supporting efforts to use our ad tech assets to provide remote learning for students while schools are closed and also for out of office training for businesses. Beyond the pandemic, it's becoming increasingly clear to us that all areas of schooling and professional life can and will be augmented by EdTech. So turning to Slide 12, I would like to touch briefly on the efforts we're making on our sustainability program. Over the last few years, we made good progress, but there's still more work to do.
So as an operator and an investor, we're looking for ways to best align to international frameworks from a responsible investor perspective and from a business sustainability perspective. We've identified a number of sustainable development goals, which we believe most closely reflect our business met reality, and we'll continue to make sure these are reflected in our strategy. We're a unique company, and there is no off the shelf approach that we can follow, and we will make sure to pursue an impactful and a tailored approach for the group. You'll see a lot more in our integrated report that we issued yesterday, which I encourage you to read. We're committed to making ESG central to our strategy and business.
Before I turn the call over to Basil, I wanted to touch briefly on our overarching approach to the COVID-nineteen pandemic, which is outlined on Slide 13, to help you better understand what we're doing, but more importantly, how are we positioning the business to emerge from it. So our main focus continues to be on 3 things. So first, we prioritize the health and the well-being of our people and the communities in which we operate. And I'm really proud as group CEO that this crisis has brought out the best in people across the Naspers and Prosus family, and I want to take this opportunity to thank our employees once again for that. 2nd, we look to help safeguard customers, partners and businesses.
As two main examples in South Africa, we contributed ZAR1.5 billion of aid to support the South African government's response to the COVID-nineteen crisis. And in April, we committed a ZAR100 core to the Indian government's response to navigate a challenging economic environment. And as you can see from our numbers today, the fundamentals of our business remain very strong and Pros is well positioned to weather the storm and also emerge successfully. So with that, I'll stop here and I'll turn the call over to Basil. So Basil, go for it.
Thank you, Bob. Hello, everyone, and thanks for joining us on the call today. I know many of you are new to these calls, so a special welcome to you. And I look forward to speaking with you more into the future. And to those that have supported us over the years, welcome back and thank you for your continued support.
Before I run through the headlines, a few important points to note when assessing our numbers. First, revenue and trading profit are on an economic interest basis, meaning they include our proportional share of results of our associates and joint ventures. 2nd, we report Tencent, Mail. Ru and Delivery Hero and our other associates on a 3 month lag basis. 3rd, free cash flow and core headline earnings are consolidating numbers.
And finally, I will focus on organic growth, that is growth in local currency excluding the impact of M and A. Since process makes up the bulk of NAST Pass, I will be focusing on Process' reported numbers in this call. So turning now to Slide 15. Overall, the group ended the financial year in a position of significant strength, and I'm very pleased with the progress we have made during the year. Revenue grew 22% year over year with an acceleration in our e commerce portfolio, both on a year on year basis and versus the first half.
Of course, this is great to see. So e commerce growth was 33% year on year. Profitability improved by 16% even as we significantly stepped up our investment in food delivery. This was mainly driven by classifieds and payments in FinTech, which remained profitable at the call. We are investing further to expand our ecosystem and reaching both new segments.
This bodes well for long term growth, but is suppressing profits in the near term. Excluding our increased investment in new initiatives in our 3 core segments, e commerce trading losses reduced by a healthy 28% or $78,000,000 Tencent continued to grow strongly and showed significant resilience in an uncertain macro environment. Our share of Kensington revenue and trading profit grew 21% 22%, respectively. Core headline earnings, a measure that reflects after tax operating performance, increased by 13% year over year in local currency, translating into $2.07 per share. In mid March, many of the markets in which we operate implemented lockdowns in response to COVID-nineteen.
And consequently, we did see some initial effects in the last 2 weeks of the financial year. However, the full impact of the trends, Bob Gretchen, will default most in the first half of the new financial year. I will also remind you that we report our associates, including Trencin's Nel. Blue deliveries around severe on a 3 month lag. Therefore, the impact of COVID-nineteen on these associates have not yet been reflecting the full year 2020 results.
Finally, full year 2020 was another year of improved cash flow from our profitable businesses. We ended the year with a substantial net cash position with sufficient liquidity to fund our growth strategy. So if you turn to Slide 16, you'll see the healthy growth in e commerce. E commerce revenue grew strongly up 33% year over year to $4,200,000,000 This was ahead of Tencent and most of our global peers. This growth represents a 7 percentage point acceleration from last year.
Classifieds grew their revenues 37% year on year. Payments and Fintech continued to accelerate growth, particularly in India. Free delivery grew 105% as we stepped up investment to capture the increasing market opportunity. Finally, on the right hand side of the slide, you can see we had strong second half of the year despite some COVID-nineteen related setbacks in March. All segments accelerated growth in the second half of the year, except for classifieds, where growth for the 6 months remains stable.
Now let's move on to the financial performance of our core segments, starting with classifieds on Slide 17. You can see that it's another strong year, growing revenues 37% year on year and trading profit $40,000,000 despite the step up in the investment to build out our transaction business. So in order to get a better view of the underlying trends, we've split the business into core classifieds and transactions as they operate on different revenue and margin models. So let's take a look at core classifieds. Revenue increased 20 percent to $888,000,000 and trading profit margin improved a strong 10 percentage points compared to last year.
Our large markets in Russia and Europe continue to drive growth with strength in Macao and real estate verticals where leading market positions and operational execution drove significantly improved monetization. Avico and OLEX in Poland continued to tie on all cylinders, growing revenue by 22% 21%, with exceptional trading profit margins of 51% 58%, respectively. This is particularly impressive as both continue to invest in transactions and pay and ship, thus extending their ecosystems. OLEX drills grew revenues by 20% year over year in a competitive market. As Dom mentioned, in March, we announced the acquisition of Grupo Zap, which when closed will position us well to compete in the fast growing Brazilian real estate market.
And finishing off on letgo, where revenue grew 60% year over year despite the tough competitive environment in the U. S. The let go and offer up combination will enable the business to better compete and reach breakeven more quickly. The combined Letgo and OfferUp entity will be accounted for as an associate in the new financial year. So in our transaction business, you will see that revenue is growing very fast, up 164% year on year.
Transactions revenue for the full year was $392,000,000 so 31% of overall classifieds revenue compared to just 12% last year. So these are really strong growth numbers. In India, Latin America and Indonesia, our focus in transactions is on building an end to end ecosystem for the purchase and sale of cars. This is centered on the offline capabilities of Frontier Car Group. We'll continue investing to expand our ecosystem by opening more inspection centers and offering more ancillary services such as finance and insurance to anchor our competitive advantage there.
COVID-nineteen lockdowns in many of our markets had some impact on our classified segments in March. We saw a decline in traffic on our marketplaces, and many of the inspection centers had to close. This continued for a couple of months, but we are now seeing clear signs of improvement as traffic levels rebound to pre COVID-nineteen levels in several markets. Revenue and profit recoveries will lag traffic as the price breaks we gave to our customers are winding down. So we expect a mid to short term impact on revenue and trading profit in the classified business.
So let's turn to food delivery on Slide 18, and you can see that the business is scaling very nicely, driven by strong demand and order growth. We're also seeing signs of improved efficiency in the customer acquisition, which is a big positive and has started to come through later in the year. This increase gives me confidence as the CFO and underpins the strong returns we target through our investment in this high potential sector. Segment saw orders increasing 102% and GMV increasing 76% year on year. Revenue grew 105% to $751,000,000 That's a considerable improvement of the first half growth, which was 69%.
Trading losses did increase to $624,000,000 reflecting the continued investment in growth by the respective businesses. However, encouragingly, the second half trading loss margins improved by 15 percentage points year over year, driven by decreased cost per order. Importantly, this was achieved by still maintaining high levels of order growth. In Brazil, iFood posted revenue growth of 113%, with orders growing 103%. ISee continued to roll out its own delivery model, which now accounts for 30% of total orders.
So that's significant progress. Other areas of investment included extending into new cities, adding new restaurants and investing in AI to improve efficiency. In April, we announced the merger of iFood and Delivery Hero in Colombia to build on iFood's momentum in Brazil and expand its operations in Colombia. In India, Swedish revenue grew 182% year over year, driven by its rapid expansion into new cities. In February, we invested a further $100,000,000 in Swiggy to support its continued growth.
Delivery Hero reported significant segmental revenue growth. Our share of Delivery Hero's revenue increased 85%. This is due to faster delivery times, efficiencies in customer acquisition and increased order frequency, all a result of investments in improving product and technology. We're still in the early days for food delivery and the sector is evolving rapidly and we continue to benefit from a very large global footprint in the space. You'll invest more here and I'm very pleased with the progress we've made in our operations and driving efficiency.
So on Slide 19, you'll see the highlights for the Payments and Syntax segment. PayU grew revenue 21% year over year on the back of 29% growth in total payment value in the payment processing business. In India, revenue grew even faster 31% year over year with total payment value growing by 32% year over year. India now represents 51% of total payment value. The main driver sector continued to be e commerce growth, the structural shift to digital payments and our ability to increase conversion rates for enterprise merchants.
And that's a key differentiator for PayU in the market. Payments and fintech's trading loss margins increased from 12% last year to 16% this year. PSV profitability was offset by increased investment in our credit offering in India and expanding our geographical footprint. We acquired a controlling stake in Red Dot to expand into Southeast Asia and then in IZICO to solidify our position in Turkey. So all in, a good performance for the year from our Payments and Fintech segment.
Now let's take a deeper look at the profit makeup of our e commerce portfolio. On Slide 20, we unpack how our profitable businesses increased the contribution to central cash flows. It's important to note that more than half of our e commerce revenues come from profitable businesses. Consolidated trading profit from these businesses increased 16% year over year and resulted in a greater contribution to overall central cash flow. Dividends to the holding company totaled a substantial $682,000,000 that's up 18% year on year.
In 2021, these dividends are, of course, expected to drop in the first half of the year due to COVID-nineteen, but these will recover as we come through the pandemic. Turning to cash flow on Slide 21, we walk through the ebbs and flows of our free cash flow. Free cash flow for the year was an outflow of $338,000,000 compared to a $102,000,000 outflow in the prior year. This was primarily due to our increased investment in Ifood of $260,000,000 and transaction related costs associated with the listing of process of $85,000,000 Working capital was impacted negatively due to the timing effects of merchant cash movements for the food building business. Effectively, what we did there is improved our payout ratios and that strengthened our position with the restaurants.
Working capital was further impacted by an increase in the number of shares purchased on the open market for our share based payment schemes. Dividend income from the $0.10 increased to $377,000,000 up 10% year over year. We have also received the 2021 dividend in the new financial year and that was $450,000,000 If we exclude the once off transaction costs of $85,000,000 and the increase in the shares purchased for our share streams of $172,000,000 the free cash flow outflow amounts to $81,000,000 Excluding the investment in food delivery, we have a free cash inflow of $179,000,000 reflecting the improved cash generation by classifieds, payments and fintech and etal as well as the increased dividends in Caintech. So turning to Slide 52, we see we have a strong balance sheet with a substantial net cash position and sufficient liquidity. We had cash of just over $8,000,000,000 and net cash position of just over $4,500,000 We also had an unrealized $2,500,000,000 revolving credit facility.
We have ample financial flexibility to fund our growth conditions and pursue M and A. In January this year, we successfully priced a 1,250,000 dollars 10 year bond, which has a coupon of 3.68%. This replaced the 1.6% coupon due in July 2020. We have no debt maturing until 2025. Turning now to a review of our returns on Slide 23, which illustrates our strong investment returns despite the impacts of COVID-nineteen in March.
We show you the IRRs, both including and excluding pension. To remind you, these are calculated and audited using market prices for our listed assets and the average of analyst valuations for our private businesses. You can see that the IRRs remain well ahead of our market of the market and of our cost of capital. However, you can also see that they decreased by 1% to 2% since we reported our income results for last year. This is a direct consequence of the impact of COVID-nineteen.
The figures are locked in at the end of March at the height of the coronavirus market dip. If we update for the subsequent rally, the IRRs are around 1% higher. We are often asked what sort of IRR we target as we think about capital allocation. It's an important topic, so it's worth mentioning a couple of points here. First, our goal is to deliver strong IRRs at scale over a long period of time.
This is important as over the last few years, we've invested significantly higher amounts in capital that will take a few years to come to fruition. Risk is also a critical component. When we invest early, we need higher returns, and we target returns in excess of 20%. However, as our bigger businesses mature, the risks are, of course, reduced and we can accept a somewhat lower IRR on more profitable businesses with a proven track record and which are complementary to our segment strategy. Across the group, we have a mix of growth and more mature assets.
Getting the risk reward mix right is something we spent a good making on how we account for our share appreciation rights. And this will happen only in the new financial year. I want to make sure you understand why we did it as well as the implications as we treat all our SARs as cash settled from full year 2021 onwards. First, as you know, SaaS played integral role in employee compensation and the purpose is to incentivize the team to create value in the core e commerce portfolio. Historically, SARs once exercised was settled in us as shares.
To ensure we were not diluting shareholders, we acquired those shares in the open market. So essentially, that was a share buyback. Now that we have 2 listed shares, NASDAQ's in process, the settlement of our SARs can become quite complicated. So to keep things simple and to be transparent, we'll be amending the settlement of the SARs fees to be directly in cash rather than using NASDAQ shares. All futures in the schemes remain unchanged back to the settlement.
Of course, the cash impact under both methods remains the same. However, from an accounting perspective, the cash settled approach will increase the share based expense and therefore negatively impact trading profit. This only happens, of course, if we're able to continue to build value in our e commerce portfolio. So before I close, I would like to spend some time on COVID-nineteen impacts, and that's laid out on Slide 25. I think we've covered the key themes already, but it's good to reiterate these.
1st, it's increasingly clear that e commerce will be a longer term beneficiary of the shifts in consumer consumption. 2nd, our strong and liquid financial position provide us with flexibility to continue growing and investing. 3rd, we are encouraged by the early indications of stabilization and improvement we see across many of our businesses. And finally, the reality is that like our peers, we expect COVID-nineteen to have a significant impact on the financials in full year 2021. This will be more prominent in the first half of the year where revenues will be more impacted than profitability and free cash flow.
So let's move into what we're seeing across our segments. As a general point, in countries and regions where the lockdown regulations have been more flexible, predominantly Europe and Latin America, our payments, food and e comm businesses remain buoyant and have actually grown strongly. In classifieds, as we mentioned earlier in the year, we saw an approximate 30% fall in average traffic volumes across our verticals compared to pre COVID-nineteen levels. Of late, we are encouraged to see a pickup in traffic volumes and KPIs in our main markets. Activity levels are generally at or above the pre COVID levels.
Back in March, as was the case with many of our peers, we've decided to support our partners with initiatives like extended listing durations and discounted or free listing fees. This was the right thing to do. For the most part, with a few exceptions, pricing is now returning back to key COVID levels. Therefore, the revenue recovery lands the KPI recovery. In the medium term, classifieds particularly performed as well during periods of economic stress.
With the actions we are taking and encouraging trends we are seeing, we remain confident that our business will continue to do well over the long term. In food delivery, in areas where our food platforms have been able to operate like in Brazil, growth has been strong and customer acquisition costs are naturally falling. We are, however, investing meaningfully to support restaurants and delivery partners during these difficult times. In India, Swiggy continues to be meaningfully impacted by the lockdown restrictions. There are signs of a widening and improvement, but there is still some way to go.
A full recovery will require an improvement in the COVID-nineteen pandemic outlook and the return of migrant workers to the big cities so that restaurant supply can continue to increase. Meanwhile, Swayze has done a very good job building our border a border ecosystem and adding new categories like grocery and dairy delivery, which are less impacted by the lockdown and areas where Swiggy is gaining meaningful traction. This represents a broad opportunity for food delivery business in many of our markets. In payments, while the initial impact in India was meaningful, activity levels have recovered quickly to pre COVID-nineteen levels, fueled by swan growth in e commerce and the shift to digital payments. Europe and Latin America continued to rank strongly throughout the pandemic, given the large skew to e commerce merchants.
In e tail, EMAG is performing well with accelerated growth as e commerce thrives in its key markets of Romania and Hungary. Take a lot was initially negatively impacted by the early phases of the lockdown in South Africa, but it is now growing strongly again as restrictions have been eased. And finally, in our ventures portfolio, as Bob pointed out, we are seeing significant growth in EdTech. We are very glad to have been very early investors there and we'll continue to look for ways to increase our exposure to this space. So overall, the short term picture is mixed.
The trends are improving and the good news is that the underlying activity has picked up with trends very much in our favor for the long term. So I hope you found that update helpful, and I'm going to now hand back to Bob to close this off.
Yes. Thanks, Basil. And before we hand to questions, would like to summarize our key priorities to navigate at uncertain times we're in, which you can see on Slide 27. So first, the fundamentals of the group are strong and we ended the year with real momentum. And the second point is around our focus on the long term.
We believe our business will benefit from a further acceleration of trends towards increased online commerce. And third, that throughout the pandemic, we intend to continue to invest in our businesses to position them well for future growth. And finally, we will always stay disciplined in allocating capital. So you should expect us to continue investing in high quality assets that are operating growth industries with an expected return in excess of a cost of capital. And finally, we face a challenging period from a position that we see as one of financial strength.
We can navigate the changing environment and at the same time find new opportunities. So with that, I want to thank you for your time and let's open up the lines for questions. So if the operator can help us with that, I will be grateful.
Thank you. Our first question is from Cesar Tarrin of Bank of America.
Hi, everyone. Thanks for the call and thanks for the opportunity to ask questions and congrats on the numbers. I have two questions, one on food delivery and the second one on classifieds. So on food delivery, quite encouraging to see revenue growth ahead of GMV growth. Is that mainly driven by a reduction in subsidies?
Or is it also an increase in the tech rate? Do you think it's sustainable? And overall, is it fair to think that losses have peaked in this cluster? Are there any material changes in competition? Second question on classifieds.
Just wanted to dig a little bit into the transaction business. Can you please discuss how much investment do you think this business requires over how many years? And whether you think this business can breakeven at some point? Thank you so much.
Yes. Thanks, Cesar, for those two questions. And maybe I'll give the start of the answer on the food question and then leave it to Larry to elaborate a little bit. And I'll ask Martin to speak to the transaction business afterwards. So I think the short answer on why we've seen revenue grow faster than GMV is twofold indeed.
It is reduced subsidies in most of our markets. Actually, I think in just about every market we're in. At the same time, there's also been a shift towards more 1P in the mix, which also makes revenue grow faster than GMV. But maybe, Larry, you can elaborate on that a bit. If you're still with us.
Can you hear me? Hello, can you hear me?
Yes. Yes.
I think you touched on it, Bob. I think the primary driver is going to be a mix effect as the market shifts to 1P from 3P. And then there's also some country mix effects in there across the portfolio, but that's going to be the primary driver and then also the management of subsidies that you flagged.
Thanks. Larry and then Martin, would you mind addressing Cesar's question on transactions, Canadian transactions?
Yes, absolutely. So thank you for the question. So I mean transaction business is a bit of an umbrella. It's an umbrella game for many different activities where we facilitate and actually part of the transaction. When Bob and Basil mentioned in the numbers, they mainly referred to the cars part of the transaction business where we buy cars that we hold for a short while before we sell it again.
And that's indeed, at this point, in an investment cycle to scale the business by opening up new inspection centers and investing in marketing to get customers to use them. What makes us very enthusiastic about this investment is that, well, A, there's clear customer demand for it, especially in growth markets, buying and selling cars comes with a lot of difficulties that we can solve on the spot and people are happy to pay for that. Secondly, there is important synergies with the OLX business where we have both in both sourcing and in distributing cars. And thirdly, we've seen where we active for we've been active for somewhat longer period of time that even on the, let's say, the flipping the car on the trade margin, we can make the double digits, which is before we add adjacent products like financing or insurance. So we fully believe that this is a business worth investing into and that long term it will drive significant cash flows of, let's say, large revenues and somewhat lower profitability than in the core classifieds business, but nonetheless an important activity and instrument to monetize in growth markets.
Thank you. That was very clear. And if I can just ask just on the food delivery, I know you guys don't really give guidance, but is it fair to conceptually think that the bulk of the investment in food delivery is behind assuming no deterioration of competition?
Yes. Cesar, it's hard to answer that question, right? Because I indeed, the need we don't give guidance. And I think it's unclear. I mean, we could see further opportunity in food delivery that would lead to that picture to change.
But I think it is fair to say that we've seen a significant investment cycle and we're seeing the results of those come through. So I think that is something that we can say. But the opportunity is very large, and I think we can't say too much about what it will look like. Thank you so much for your care. Thank you again.
Next question is from Lisa Yang of Goldman Sachs.
Good afternoon. I have three questions, please. The first one is on the margin incentives. I think in the remuneration report you put out today, it's the first time I see that incentives are now being directly linked to the HoldCo discount, I think, at the both at the STI and LTI level. Could you give us a bit more color in terms of how that works?
How much of that is based on the process discount or NASHUS discount and NASHUS discount versus process? And you guys have a target and it's discount in line? That was the first question. The second one is on MA.
I'm just wondering if
you can share your latest thoughts on the global consolidation opportunities in classifieds. And marginally, split speaking, what do you think Prosus could bring to the table if there were to be a deal? And could you also remind us of where do you think the synergies would come from? Is that from the existing platform or more from the future opportunity to invest in sort of new business models? And last question is on classifieds.
Clearly, the margin continues to improve, which is great to see. But I noticed that Aviso and OLEX Poland margin both went down. So clearly the margin is improvements coming from all the assets within core classifieds. Could you maybe talk about the moving parts there and what happened in Russia and Poland? Again, I know you don't give guidance, but it
would be helpful to understand how
you think about just in general the level of investments in those markets and being part of margin going forward. Thank you.
Elisa, I think I got your first question, and I'll give a brief answer to it. And maybe I'll ask Eileen, our Chief People Officer, to comment further if necessary and I'll ask Maarten to cover the question around margins in Eastern Europe. But I didn't fully get your second question. Would you mind repeating that?
Yes. The second question is more on your thought from global consolidation in classifieds. What do you think process could bring to the table if there were to be if you were to be involved in a deal? And what in general are the synergies that you see in basically in global consolidation in classifieds?
Okay. Yes. Thank you. Got it. So I think Martin is probably best placed to answer that question as well, and I can chime in as well.
So let me start on the dependence on of the short term incentive and long term incentive on the discount. So there's a few components to that. There's one direct component in objectives that you may have seen in the results. But I think the more important one is around the value creation in e commerce, where the executive directors have a meaningful part of their long term incentive in SARS in the e commerce scheme. So as value gets created in that part of the business, that results in an alignment with shareholders.
And that's if that value of that part of the business will grow, that should have a positive impact on the discount as well. Eileen, anything to add on that point? Or did I capture that well?
Hi, Bob. Thanks. It's Aileen here. Lisa, thanks for the question. As we talked about before, the long term incentives are indeed an indirect incentive on closing the discount.
And the things that the management team can control are bringing the e commerce assets to scale and profitability. It's the best way to do that. And that's incentivized through the SARs that Bob mentioned, but also through the performance share units, which is a relative measure of how e commerce performs against peer companies. So both of those are included and are the same as last year in terms of structure. What you see is new, as Bob mentioned, is the short term incentive element for the CFO that's specifically around proposing solutions to the Board in terms of closing the discount.
And that's something that you've seen the management team work on over previous years as well. It just didn't appear in the STIs explicitly.
Thanks, Helene. That was very helpful. And Martin, would you mind getting us started on the question around what we bring in a potential global consolidation in classifieds?
Yes. And I'll also answer the question on margins in Russia and Poland, by line assets. Yes, so I mean it's important to understand that our classifieds portfolio has been built from the ground up. That's I and my team have spent the vast majority of our time on over the last 5 to 8 years. And we consider ourselves to be the global leader in the space on many different dimensions, growing the fastest as per Basil's presentation and also sustainably profitable now.
So our returns have been excellent and our track record speaks to itself. And with regards to consolidation, the answer is always the same. We do not respond to speculation or specific deals. But I can give you some insight on how we think about M and A and capital allocation in general and specifically on larger deals. So pure size is not a driving factor.
It's about returns. And we have a long history of being disciplined about returns. And our overarching strategy and our intent is to build global market leading platforms that leverage scale to drive innovation in a world of increasing customer expectations, driven by excellent products from Silicon Valley and China alike. And again, so the main lever here is organic. And if we apply M and A, we only do so we believe we can accelerate the strategy.
And if there are any sort of tangible deals, we will obviously get back to you as soon as we've done with the deals that Walt covered in his prelude around Sappi in Brazil, EMPG from Pakistan and OfferUp in the U. S. That's where we are on consolidation. On margins in Russia and Poland, I think you're right to point out that they have come down slightly and that was very deliberate to a degree profitability in strong platforms like Avital and Poland is a choice. Whether to invest or not.
We decided to invest into continuous improvement of business model, especially around pay and ship solutions, which were significant in significant demand during the lockdown period. So we strengthened our market share and solidified our position in end to end delivery, especially around goods in both Poland and Russia. It comes on top of typical seasonality. The second half, we usually spend more in marketing in the first half. And then there was a small effect of the COVID crisis, which wiped out some of the revenues in the second half of March.
Can I just confirm one thing? Thank you. Can I just come back to the first question? Can you just confirm whether the direct component related to closing the discount in the STI, is that closing the discount at the network level or process level or both? And what's the split?
Thank you.
Sorry, I couldn't quite follow. Could you say that again?
Sorry. Yes. So it's just related to the FTI element, which is now directly linked to closing the discount. So when you talk about closing discount, is it related to closing the NASBERS discount or process discount or both? And if it's
both, what's the split between the 2?
No. So I think in the if I remember well, and Eileen, you can correct me if I'm wrong, this refers to the previous financial year. So that would and it's about actions taken to reduce the discount. And at the time, that was, I think, primarily referring to Naspers. I think going forward, what is clear to us is that we actually want to ensure that the discount at both levels is as low as possible.
So both matter. There was no specific weighting for the 2.
Understood. Thank you. Our next question is from Raveed Jain of HSBC.
Hi, thank you so much for taking the time. A couple of quick ones from my end. First one is more on the capital allocation. You obviously have $8,000,000,000 on the balance sheet. You mentioned your thoughts around it.
But when you look around the world, the food delivery space is quickly consolidating, at least in the bigger markets. And you're already the classifieds leader in a lot of markets that you operate in. As you look to kind of deploy this money over the next 3, 5 years, how should we think about what business verticals look attractive to you? What geographies look attractive to you? Where I mean, 3, 5 years from now, where do you think a big chunk of this money would be invested if you were to think of it today when you look at all the opportunities that come to you?
The second one is more on food delivery business, especially in for Swiggy as right now. It's taking a longer time for the business to come back to the pre COVID level. I know you mentioned about them getting into groceries and dairy. What else do you think a food delivery business like Swiggy can do maybe in the short term or maybe even in the long term? Do you think of adding to the Cloud Kitchen investments?
I know you kind of pulled back a little bit of it, but does it make sense now to kind of go a little bit more aggressive? Do you think there is more space in the B2B supply chain of restaurants? Just some thoughts on where this business how can you transition this into an even stronger business in a post COVID world that would help? Thank you.
Yes. Thanks for the questions. And maybe I'll answer the first one, and I can get started on the second and then ask Larry to give a bit more color. So I think when it comes to capital allocation, and indeed we have capital to allocate, the most important thing for us is around value creation, right? So we have the strategy of further shoring up our core verticals.
So what I can say is that the vast majority of our available capital will go into our core verticals and not into something new. That will be quite unlikely. And within that, first of all, we can't really make statements around future M and A because that typically depends on things that are not fully within our control. And so therefore, it's not very wise to do. But again, like we look for opportunities where there is substantial value creation opportunity, where there's real synergy with our current portfolio and where we are sure we can deliver returns that are well in excess of our cost of capital.
And where that exactly will be, that remains to be seen, but that will be in our core verticals. I think that is something you can count on. When it comes to Swiggy, I think Swiggy is doing a number of very interesting things. Indeed, I should say, the lockdown in India has obviously been very severe and supply chains have been disrupted because of some of the things that Basel also talked about. But there's been some really interesting developments, particularly in grocery delivery, right?
Grocery is obviously a segment that gets a huge demand surge in a situation like COVID. And actually, if you have studied the Chinese numbers, they're particularly impressive how grocery is actually grocery delivery has taken a tremendous flight as a result of the crisis. And the dairy is another area. But maybe Larry, there are other things you would want to comment on?
Yes. Kind of getting to the root of the question you asked around profitability. And I think even in a pre COVID environment, the Swiggy team was focused on cost saving measures, including marketing spend, with the objective of deploying it in some of the areas that Bob mentioned. And if you step back, the company has phenomenal amount of consumer and restaurant partner relationships. They have a delivery fleet, some massive delivery fleet.
All of those pieces are highly leverageable and where they're deploying that cost savings as well as those assets are in areas, and Bob flagged is really in grocery right now with COVID as a tailwind. And it's grocery in a couple of different flavors ranging from what you might consider the traditional milkman type model to a convenience store model to a more traditional grocery type model. And that grocery space is seeing generational tailwind right now and Swiggy has the consumer opportunity. So it's a combination of cost savings and investment in high growth adjacencies that are leading to what we expect will lead to greater scale and profitability improvements.
That's helpful. Thank you, Stephen. Thanks, Larry.
Our next question is from Maria Matisse of Morgan Stanley.
Hi, good afternoon, everyone. Three questions from me. Firstly, just another follow-up on capital allocation and the current M and A environment. You mentioned, Bob, about having about 5,000 deals that you're looking at. Just wondering if there's been anything that's prevented you from deploying more capital.
If you could just comment on what you think the current environment is like in terms of valuation and also the quality of assets that are out there? And then secondly on food delivery, could you talk a bit about how COVID has impacted on customer acquisition costs, if that comes down materially in Brazil? And then also anything around the changes in cohort behavior around retention and order frequency? And then finally, just on the investment priorities, have you do you think that your investment priorities have changed since COVID in any of your key verticals, both in terms of where you're willing to allocate budget, but then also the absolute amount you're willing to spend? I'm thinking of something like EMAG where you've seen an acceleration.
Does that mean we may see a bit more investment going into that business? Thanks.
Yes. Thanks a lot for those questions. I will answer the first one and the third one. And I'll ask Larry to cover the question around acquisition cost and cohort retention, etcetera, for the Food business. I would say in terms of sort of the way we look at strategic investments and the availability of targets, I don't think a lot has changed really as a result of COVID.
I think we still look at things with the perspective of generating a long term return. I think there's been some there was definitely initially some uncertainty around valuations, but I would say a lot of the assets we look at have sort of fairly stabilized in terms of where they're priced at and the quality. I think, yes, that's always a variety, obviously, even what ends up on your plate. So I wouldn't say anything has structurally changed, right? So and if you look at our investment horizon, it's for the long term, right?
Say, we think ahead of often for many years. So it actually also shouldn't change as a result of a short term shock. So I hope that answers your question. But I would say generally, our sort of approach to capital allocation remains very long term, very deliberate, very selective and it needs to strategically work as well as generate a good return and that hasn't changed. To your third question around investment priorities.
I would say actually the example you mentioned, EMAC is a good one where I think there's a lot of momentum in that business, and we most certainly want to make sure that we don't starve businesses of investment when there is momentum in the business. And that's something we, I think, have done across the board in our business, right? If we see opportunity and momentum, we'll be the last to hold back our leaders and our entrepreneurs, and we would gladly provide them with the opportunity to build on that momentum. Maybe, Larry, you can comment on the food question.
Yes. So kind of the 2 pieces of it on the COVID impact on CAGNY. Obviously, a big factor in that is whether the markets are open and considered a necessary service as they are in Brazil. And in Brazil, I seem to see a pretty significant tailwind as a result of COVID. Specific to your question on CAG, in Brazil and in many other markets, we've been able to take consumer marketing down dramatically.
People are just finding these services organically, frankly, out of necessity. So the binding constraint, if you think about the different sides of the marketplace, is absolutely not on the demand side, but really on restaurant supply and driver supply. CAC has come down. And then to the last part of your question on cohort behavior, we're seeing improvement in the cohorts on pretty much every relevant dimension. So users are more sticky.
We are seeing basket size increase with a greater focus on family ordering versus more a la carte behavior that we would see in a pre COVID environment. And then we're seeing a in many markets, including Brazil, we're seeing a slightly higher AOV with a SKU away from lunchtime behavior and even more dinner behavior.
Great. Thank you.
Thanks, Larry. Are there more questions? Irene, we'll take the next question please.
Question is from Will Packer of Exane.
Hi there. It's Will Packer from Exane BNP Paribas. Thanks for taking my Firstly,
could you give us
a bit more detail on the discounts activity in your key classified markets, Poland, Russia, Brazil? You talk about winding down. How long did they last or how long will they last? And is the reduction of those discounts sustainable if COVID deteriorates as it looks possible in some of those markets? And then just in terms of the generalist portion of your classified business, how has that bounced back?
Secondly, I'd be interested to hear a bit more on the synergies between Frontier Car Group and the classified business. Which geographies are you focused on? What kind of upside are you seeing? Is it guaranteed parts exchange? A bit more color there.
And then just finally on M and A, there's a lot of speculation on big deals. If we put that to one side, you've done some really interesting deals in classifieds consolidating in market. Is there a pipeline ahead of similar deals? Or have you done the key ones so far? Thanks.
Thanks for the questions. I'll do Martin a favor of answering the last one, and then I'll ask him to answer to the discounting question and the SDG question. I think fundamentally, we don't speculate about forward looking M and A. So that we're not going to do here either. I think the reality is that looking at smart consolidation deals that fit into extensions, particularly in our vertical space, for example, or places where we can create strength like let go of route fits in that mold, EMPG fits in that mold, Grupo's UP fits in that mold.
That's something we look for those type of transactions always across the world and not just in classifieds, but we do the same in other markets, right? If we look in FinTech, we've done Wipmo, we've done Red Dot, We've done EasyCo. They all fit in, hey, highly synergistic value creating deals that may not have been huge, but actually in aggregate will create immense amount of value. So we always look for those and that's certainly not over. But maybe Martin, if you wouldn't mind addressing the first two questions?
Sure.
Yes. So thank you, Will, for the question. So let me answer the discount 1 in the context of what we saw in the business following the COVID crisis. So as Bob and Basil mentioned in the beginning, the initial impact was significant globally speaking and closely related to lockdowns. When quite obviously people are reluctant to meet strangers, they have other priorities, they have stress and anxieties or postpone large purchases and many of our paying business customers simply had to close down.
And as restrictions were eased on key countries, we covered quickly led by the goods category, in line with trends in detail, customers sitting at home eager to buy and sell items for the house and personal belongings. So EMAG and Paykel benefited from that, but also the goods part of our horizontal businesses in many countries saw the same phenomenon. So Russia and Europe, they've shown positive year on year trade volumes since the end of April already. So initially, there was a downward trend, larger in Poland than in Russia, but back to year on year growth since the end of April. Revenue indeed lags those trends because there were still discounts in place in most of May.
And specifically on discounts, they varied by market and by category, by type of product. But in some cases, they were significant, which was the right thing to do in order to maintain the content and relationships. And I think it helped us to, let's say, to increase spend again with these customers when the ease of restrictions permitted that. So we're also back to year on year growth revenue growth again in June. So India, Brazil and the U.
S, they take longer due to the continued restrictions of movement, as you're well aware. But also there, the trend is positive, especially on demand side. So I'm very, very confident that following this shift online Bob talked about, also our classified business will benefit in the medium to long term. But yes, obviously, this is all the short term isn't certain, especially in cities and states with continued lockdown measures. That to your point like will we apply discounts again in next lockdown phases, That is in the realm of speculation again.
I simply have no idea if and when and to what degree and where lockdowns will be applied again. But we have seen it's a strong instrument to maintain the content and relationships with paying customers. That's an instrument we'll use again, but only selectively if needed. Then on to FCG, as I mentioned in one of the previous answers, there's important synergies between the buy the expecting and buying of cars that FCD does at its core and our Allnex businesses, because one of the impediments for growth in FCGs proper is the customer acquisition cost, which have reduced considerably since we can source potential sellers on Auronext. And the same thing with cost of disposing of cars again, which is also much easier if that can be done on the leading horizontal and car site in the country.
And yes, we are obviously in fairly early days of integrating these companies.
It's been
a couple of months, which were interrupted by COVID. That was the part the business was hit hardest. Our inspection center had to close simply due to regulation. They have reopened in parts, about half are open again, but operating in limited capacity in most cases due to inevitable health and safety measures. So that will take a while to fully materialize.
But as I mentioned, the customer demand is clearly there, especially for end to end customer journeys. I have a car, but I want to upgrade. So I first sell and then I buy and then I get all the services around it in terms of buying with trust and with convenience and with financing. I think it's a very, very strong USP that where we do trials and experiments, we can pick a very good traction. So that's an area that's a main globally speaking, our main organic development area that we'll pursue with the vengeance over the next months quarters.
Thanks, Martin. Just one quick follow-up. Should we assume that SCG or SCG like services be rolled out in all your major classified markets? Or is it more targeted?
Well, I think the customer demand for this type of service is universal. So where we don't have SGD like services such as in Russia, we either we're looking for ways to get that trust into the transaction. And in Russia specifically, we have a service called Autoteca, which is a comprehensive car history report that is partly founded on proprietary data from a car dealer network. So nobody else has it, not also that are you not wrong, nobody else proprietary data, which serves in a way as a light inspection. So if you buy a car with Autoteca, it's not physically inspected, but it comes with a much higher level of trust than a car without it.
And yes, one of the questions I've posed to the team is, hey, can this be complemented with inspection services of sorts, which would also allow us to actually go into purchasing cars ourselves. So that's something we're studying. Russia is not the easiest market to do this. And good other companies have failed, but that's something we're looking into.
Thanks a lot, Martin. I think we maybe have time for 1 or 2 more questions as we're running a little bit over here.
Our next question is from Catherine O'Neill of Citi.
Thank you. I certainly just wanted to ask or go back to the comments on e tail or eMag. Given the appetite for e commerce now or the positive views of e commerce and what COVID has done there, Could value creation for your Etail business be back on the agenda? And the other thing I wanted to ask about is I've seen some articles about delivery drivers planning to go on strike tomorrow in Brazil across the different services. Is this something that's happening across the country?
And how do we think about the, I guess, tension between the business and delivery drivers in Brazil and perhaps some other markets? And then finally, just one other question on payments. It seems to have been quite resilient during the whole sort of COVID-nineteen pandemic. What's the plan for credit lending in terms of how quickly you plan to ramp that up and how we should think about that impacting
profitability? Yes. Thanks for the questions. Definitely answer the first one. I think, Larry, maybe you can give a general answer to the second without going into the Brazil specific situation.
And then I'll briefly comment on the payments. Well, actually Laurent is on the line, so let Laurent give us a brief answer on that one. So in etail, we see indeed good momentum driven by extraordinary circumstance. And I think what will happen as a result of it is actually not too unlike what we see in other of our segments, right? So I think you see a desire of customers to do more from their home because they initially because they have to and later because they either gotten used to it or they still prefer not to come outside.
And particularly that first effect of, hey, people building a new habit in the pandemic is a structural one, right? And I think we're lucky to know quite a lot about China. And it seems indeed that a number of the models that we're in, food delivery, but also things like ad tech, also online payments are actually habits that get accelerated. And e deals in specific case, but I think across the board, you see online models accelerate in a structural way, and I believe that will even last beyond this. So I think we're in the right kind of businesses, and we'll see that structural shift.
Maybe, Larry, you want to comment a bit more general on delivery drivers and how we make sure that we treat them as well as we possibly can?
Yes. Thanks, Bob. Yes, and especially in the context of the pandemic, we've done a bunch of initiatives across our companies to make sure that they the delivery executives are treated well, ranging from the extreme case, we've created funds for drivers that have been affected by COVID or for high risk groups who can't work. We've offered subsidized health services and life insurance. We've created a tipping program for drivers and including bonus on top of the tips that We've given masks and hand sanitizers to drivers and established driver sanitization stations, as well as within our product itself accelerated initiatives towards online payments and contactless delivery.
So we've done a lot of things across our portfolio to support drivers.
Thanks, Larry. And Laurent, would you mind giving a very brief answer on what our view is on credit given the situation we're in, particularly in India?
Yes, absolutely. Look, I mean, a lot has been said already about the shift to digital payment online and offline, right, because of the lockdown. And we see this. This is true across the world with double of growth rates and we had a very strict recovery actually in India. When it comes to credit, 2 things.
The first one is the type credit we do is credit at the point of sale. In Europe, we just distribute the credit solutions of banking partners. So what it means is basically we don't have increased risk exposure, no problems of profitability there. In India though, what we do is actually provide credit on our balance sheet and also with co lending agreements. And in that market specifically, what we have done right now is basically just shut down the issuance of new loans to new consumers.
And the reason for that is just that at the moment, there is limited visibility into the risk. There is a moratorium on credit in India until the end of August. So for us, before September, it is prudent to look at the existing portfolio, assess the risk when the moratorium will be over and then go back to the market only with the core lender. So this is the plan for the moment. Okay.
Thanks. I just quickly wanted to go back to etail. I'm not sure my question was clear the way I asked it. I actually just wanted to check whether it's an asset you still don't view as core and therefore in the, I guess, short to medium term, you could look at sort of crystallizing the value there and exiting in some way, which I think has been on the cards pre COVID. I just wondered whether that's back on the agenda or still on the agenda.
The question was about EMAC, is that right?
Yes. Yes. And just the plans to crystallize value there and whether that is still on the agenda as it has been sort of pre COVID or appear to be?
Yes. So I think EMAG is a fantastic business, performing well. I think it has a good amount of runway. So there are no active plans for that. I think the business, if we ever would decide to do so, is in a great position, but that's probably what we could say about it.
I think we can do one more question, and then I think we need to close off for today.
Thank you. Our last question is from Andrew Ross of Barclays.
Great. Thanks very much for squeezing me in at the end of a marathon call. It's been a Eurovision song contest type event. I've got 2 questions, if that's okay. First one is very quick.
There's been a lot of speculation here around U. S. Food delivery in the last few weeks. Can I just ask straight out if the U? S.
Market is remotely interesting to you guys? Or should we be assuming that you're not interested at all? And then the second question, a bit longer perhaps, and that is if there's any update in the long term ownership of Prosus by Naspers. I know there's a line in the report saying that Naspers is committing to not selling down more of Prosus, but
it doesn't talk about
kind of more distributions and reaching 70%. So it would be helpful to understand if there's any update there. Thank you.
Great. Larry, would you mind answering the first question? And Basil, you want to take the second one?
Yes. I'm sorry, my line cut out there. Can you repeat the question?
Yes. It was just on food delivery and the U. S. Obviously, a lot of speculation as to consolidation going on there. And it was basically a simple question, is that a market, but is at all appealing to you guys or should we be assuming that's not at all a focus?
Yes. It's a good question. Obviously, a lot of activity in the last few weeks in the U. S. I think we don't really start with a geographic strategy per se.
This is structurally a very local business. So we assess opportunities on a case by case basis. But I think as we've covered with this group before, the U. S. Is certainly a highly competitive market and definitely predictable that some consolidation makes sense here.
We'll continue to assess opportunities, but it's one of the more hotly contested markets we see around the world.
And if I can deal with your second question, I think there's a couple of things to call out. First of all, the sell down that happened was the fulfilling obligation of Saab, but it actually created value too because we did a buyback and we're not ZAR3.3 billion from us per shareholders. What we're saying is we're not trying to do anything like that going forward. And that's primarily driven by the fact that we don't want to create an overhang on proceeds. So we're not going to be selling more shares.
We have no plans to sell more shares through the market. That doesn't mean we're not working on thinking about what other structural action we can take to address the discount, and that's been discussed earlier in the call. But we want to do it in a way, as Bob outlined, that actually is helpful both for the NASBAS and the process shareholders.
That's very helpful. And maybe just a follow-up, Basil. Are there any other obligations from the South African Reserve Board that we need to be aware of? Or was that it?
In terms of the transaction that we did with the listing, we've now fulfilled all our obligations, right? So that's done. Of course, if we wanted to do anything else going forward, we would have to engage with Saab and get the relevant approvals depending on what we construct and what we put together.
Great. Thank you.
Okay. Would you like
to make any closing comments?
Yes. No, I wanted to thank everybody for joining and for what I thought were very, very interesting and engaging questions. And if you have further questions, then please do reach out to Owen and team. We'll be very pleased to cover anything that we haven't managed to cover today. But thanks everybody for joining and for asking great questions.