REG - Prosus NV Naspers Limited - Annual Financial Results
27/06/2023 07:15
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RNS Number : 9455D Prosus NV 27 June 2023
PROSUS
Summary consolidated financial statements
for the year ended 31 March 2023
COMMENTARY
The operating environment in the fiscal year ended 31 March 2023 (FY23) was
characterised by significant geopolitical and macroeconomic uncertainty. Amid
that uncertainty, we acted decisively to strengthen our financial footing and
deliver value for shareholders. Our focus remains on building long-term
sustainable value in local marketplaces with peer-leading growth and
materially improving profitability.
After years of investment and significant growth, our businesses have scaled
meaningfully and each segment now demonstrates a clear path to profitability.
We are committed to achieving consolidated ecommerce profitability during the
first half of FY25. Our efforts to drive profits with peer-leading growth will
deliver long-term value to the group's shareholders.
The growth rates discussed below represent a comparison between FY23 and
FY22, unless otherwise stated. The percentages in brackets represent local
currency growth, excluding impacts of acquisitions and disposals (M&A),
and provide a clearer view of the underlying operating performance of our
businesses.
The group's Ecommerce businesses maintained topline momentum as a result of
actions taken throughout the year and improved profitability significantly in
the second half of the year. This foundation will allow Prosus to deliver
substantial profitability improvements in FY24 and beyond.
Consolidated revenue from continuing operations grew 10% (23%) to US$5.8bn,
with the biggest contributors being Food Delivery, and Payments and Fintech.
Trading losses increased year on year to US$790m from US$644m in the prior
year. However, trading losses reduced by 23% in the second half of the year
compared to the first half, demonstrating our commitment to achieve
consolidated ecommerce profitability during the first half of FY25.
Core headline earnings, our measure of after-tax operating performance, were
US$2.5bn - a decrease of 32% (13%). This was primarily due to lower
contributions from associates, particularly Tencent, which was impacted by
Covid-19 lockdowns and new regulations in China.
Ecommerce consolidated trading losses from continuing operations of US$617m
reflected incremental investment in the group's ecommerce growth extensions as
we continued to invest in high-conviction growth areas. Market conditions
deteriorated significantly for this business in the second half of the year
and the group is completing an exit of OLX Autos. Across the group, we drove
efficiencies throughout the year and cut back aggressively on costs, including
a 30% reduction in corporate-level workforce costs. These actions supported an
improvement in trading loss from US$365m in the first half of the year to
US$252m in the second half, despite the second half historically having higher
customer-acquisition investment. For the year, growth extensions accounted for
US$492m of the consolidated trading loss of US$617m. We are committed to a
significant reduction in trading losses in each reporting period.
Food Delivery's performance remained strong, with revenue growing well ahead
of peers and profitability improving meaningfully. iFood continued to benefit
from sustained momentum in the core restaurant food-delivery businesses and
improved extensions, with targeted and disciplined investment in quick
commerce and grocery marketplace. Given the group's conviction in iFood, we
acquired the remaining 33.3% stake of iFood from Just Eat Takeaway in November
2022 for €1.5bn, plus a contingent consideration of up to €300m.
The core Classifieds business delivered sustained growth and improved
profitability through stable operating metrics and strong performance in
Europe. The autos and real-estate verticals and pay-and-ship initiatives
contributed to revenue growth. Like listed peers, the OLX Autos business faced
significant challenges and the group announced its intention to exit this
business. This decision was driven by a major deterioration of market
conditions in this industry towards the end of the second half of the year.
The exit of OLX Autos will lead to a sizeable improvement in Classifieds and
Ecommerce profitability.
Payments and Fintech continued to see meaningful growth in the core payment
service provider (PSP) business and in its burgeoning Indian credit business.
India's payments business grew on the back of increased wallet share in
existing merchants and further diversification of the revenue base. Trading
profit margins have also improved on the back of diversification of revenue.
The credit business in India continued to scale and improved its trading loss
margin, now approaching breakeven, by diversifying funding sources and
enhancing cost discipline and risk management. The Global Payments Operations
(GPO) showed strong revenue growth, but profitability was impacted by a
once-off loss provision. Excluding this provision, the GPO business remains
profitable.
In Edtech, our majority-owned enterprise platforms, Stack Overflow and
GoodHabitz, continued to grow, but investments weighed on profitability. We
invested in sales, product enhancements and global footprint expansion to
better position the businesses, improving their overall product offerings and
bringing scale to the platforms as corporations look for alternative ways to
upskill and reskill their workforces. The current focus of investment is to
leverage our strong generative artificial intelligence (GenAI) in-house
capabilities to deliver significant value to customers.
The group's strong balance sheet continues to provide the needed liquidity
and optionality to navigate a volatile environment. During the year, the
balance sheet was further strengthened by Tencent's distribution of JD.com
and Meituan shares. Prosus exited the JD.com stake at the beginning of the
fiscal year and received US$3.7bn. The Meituan shares were received on 24
March 2023. In April 2023, Tencent announced a 50% increase in its dividend
per share, which resulted in a dividend of US$758m received in June 2023.
In October 2022, the group delivered on its commitment and completed the
disposal of its Russian classifieds business, Avito, receiving proceeds of
RUB151bn (US$2.4bn). This was a differential outcome amid very difficult
conditions. Avito and the OLX Autos operations, that have closed down or are
classified as held for sale, are presented as discontinued operations and thus
excluded from continuing operations. However, reported IFRS continuing
operations include OLX Autos operations whose exit process had not been
finalised at 31 March 2023 and is expected to be treated as discontinued
operations in FY24.
Given a sharp rise in the cost of capital, deployed external investment of
US$2.5bn was considerably lower than recent years. Of this, US$1.5bn reflects
the acquisition of additional shares in iFood. We continue to explore
opportunities, but remain very disciplined.
The group's resilient performance and financial footing in a difficult
macroeconomic environment, combined with the open-ended share repurchase
programme launched in June 2022, has delivered value for shareholders. At the
start of the 2022 calendar year, the turbulent environment reduced risk
appetite for many investors and depressed market valuations, particularly in
the tech and internet sectors. By mid calendar year, this led to a very
substantial widening in the group's discount to the sum of its net asset value
(NAV). To generate value for shareholders from this dislocation, we launched
an open-ended share repurchase programme funded by the daily sale of a limited
number of Tencent shares and concurrent repurchase of Prosus shares. Since
programme launch, the combined holding-company discount of Naspers and Prosus
has reduced by approximately 17 percentage points as of 31 March 2023. Also,
Prosus had repurchased 152 797 117 Prosus shares and 4 152 285 Naspers
shares, with a total value of US$10.5bn, leading to 4.5% accretion in NAV
per share. Combined, the discount narrowing and the NAV per share increase
have led to approximately US$29bn in value created for the group's
shareholders. We remain committed to this programme as it creates immediate
value for shareholders daily while increasing the group's exposure to Tencent
and its ecommerce portfolio on a per-share basis.
For Naspers to execute its open-ended share repurchase programme, it received
approval from the South African Reserve Bank to continue funding its buyback
with regular sales of Prosus shares. By 31 March 2023, Naspers had sold
43 356 695 Prosus shares and bought back 16 320 371 of its own shares to the
value of US$2.5bn. The Naspers buyback is facilitated by a subsidiary
company. This approach, due to South African regulation, limits the buyback
to 10% of the total N shares of Naspers in issue. We have received the
requisite approval from the South African Reserve Bank for a proposed
transaction in terms of which the crossholding between Naspers and Prosus will
be removed. The implementation of the proposed transaction will enable the
continuation of the share repurchase programme at the Naspers level. The
proposed transaction is also intended to remove the complexity created by the
crossholding between Naspers and Prosus while keeping the Naspers and Prosus
free-float effective economic interests the same as they were prior to its
implementation. This will be achieved through aligning the legal ownership in
Prosus with the current respective free-float effective economic interests.
The implementation of the proposed transaction is subject to the requisite
regulatory and Naspers and Prosus shareholder and final board approvals being
obtained. Please refer to the more detailed announcement on the proposed
transaction issued on 27 June 2023.
In FY24, the group commits to: taking meaningful steps towards delivering on
its target of consolidated Ecommerce profitability during the first half of
FY25; continuing the open-ended share repurchase programme; and crystallising
value for investors in the group's portfolio of assets as conditions present
themselves. We believe these drivers, acting in concert, will result in
meaningful value creation and shareholder return.
A reconciliation of the alternative performance measures to the equivalent
IFRS metrics is provided in 'Other information - non-IFRS financial measures
and alternative performance measures' of these summary consolidated financial
statements.
FINANCIAL REVIEW
Group revenue, measured on an economic-interest basis, grew by 7% in local
currency, excluding M&A. Revenue, in nominal terms, was impacted by a
broad devaluation of emerging-market and European currencies on translation to
US dollars, representing a negative foreign currency translation impact of
US$2.6bn. Ecommerce continued a strong growth trajectory, with revenue growing
22% (31%) in a challenging environment. Our economic-interest share in
Tencent's revenue declined by 12% (1%). Group trading profit declined by 31%
(16%) to US$3.4bn, reflecting Tencent's lower contribution and an increase in
the group's share of losses from ecommerce associates.
On a consolidated basis, total revenue from continuing operations increased by
US$600m, or 10% (23%), from US$5.2bn in the prior year to US$5.8bn. This was
primarily due to strong revenue growth in iFood, and Payments and Fintech.
Trading losses increased to US$790m from US$644m, representing increased
organic investments to scale ecommerce extensions. However, trading losses in
the second half of the year improved by 23% compared to the first half,
demonstrating our commitment to achieve consolidated ecommerce profitability
during the first half of FY25.
Operating losses increased by US$388m to US$1.3bn, primarily due to an
increase in impairment losses recognised on goodwill and other assets that
were offset by the reduction in share-based compensation expenses related to
the remeasurement of the group's cash-settled schemes.
Profit from equity-accounted results decreased by US$4.1bn, or 44%, from
US$9.3bn in the prior year to US$5.2bn. This is driven primarily by a decrease
in our share of associate fair value gains on financial instruments of
US$1.7bn, reduced gains on acquisitions and disposals of US$396m and
additional impairment losses of US$827m. This was in addition to reduced
year-on-year profitability in Tencent of US$1.2bn and a decrease in Tencent's
contribution to equity-accounted earnings as a result of the sale of shares to
fund the open-ended share repurchase programme which delivered a gain,
recorded in the income statement, of US$7.6bn.
The trim of 2% of the group's Tencent position in FY22 resulted in a gain of
US$12.3bn in that year.
As a result of challenging macroeconomic conditions and the decline in growth
expectations and valuations, we recognised impairment losses on
equity-accounted investments of US$1.7bn. Impairments for our listed
equity-accounted investments relate primarily to Delivery Hero (US$1bn
recorded in the first half of FY23) and Skillsoft (US$301m), given a decline
in market capitalisation and the increase in discount rates and country-risk
premiums for these.
In addition, we recognised impairment losses on goodwill of US$684m in the
current year, of which US$560m relate to Stack Overflow in the Edtech segment
and US$116m to the OLX Autos business unit. The impairment loss of the OLX
Autos business unit is as a result of our decision to exit the business.
Further impairments may be recognised for OLX Autos in FY24 as we complete the
exit of this business. Stack Overflow is a recent acquisition and has seen
performance challenges in the current year due to worsening macroeconomic
conditions. We are confident of the long-term potential and strategic
value-add of our investments, despite the short-term macroeconomic challenges
that drove the impairment.
Impairments for our unlisted equity-accounted investments relate primarily to
OfferUp (US$325m) due to the increase in market interest rates and a revised
business outlook.
Headline earnings decreased by US$2.4bn to US$628m. This was due to lower
profitability across the group's associates and increased operating losses
from our consolidated businesses. This was partially offset by reduced
share-based compensation expenses related to remeasurement of the group's
cash-settled scheme and no grants to executive directors, as well as lower net
finance costs due to increased interest income from cash balances.
Core headline earnings were US$2.5bn - a decrease of 32% (13%) or US$1.2bn
primarily due to lower contributions from the group's associates (US$1.3bn),
of which US$1.1bn relates to Tencent.
Following the announcement in May 2022 of our intention to exit the Russian
classifieds business, Avito was classified as held for sale until the date of
disposal in October 2022. In addition, Avito represents a separate major line
of business and is reflected as a discontinued operation.
In March 2023, we announced the decision to exit the OLX Autos business unit.
We believe that significant value exists in the business in its various local
markets. Based on this, and the ongoing disposal process, options for this
business are being considered across its geographical footprint. The
operations of this business classified as held for sale and those that were
closed by 31 March 2023 are presented as discontinued operations. The results
from continuing operations also include some losses from the OLX Autos
business unit where the group is still finalising its exit.
The group remains well positioned to navigate the difficult macro environment
due to its strong balance sheet. At a corporate level, Prosus has a net debt
position of US$0.5bn, comprising US$14.9bn in central cash and cash
equivalents (including short-term cash investments), net of US$15.4bn in
central interest-bearing debt (excluding capitalised lease liabilities). In
addition, we have an undrawn US$2.5bn revolving credit facility. During the
year, we recorded a net interest expense of US$79m.
The group's free cash outflow (excluding Avito) was US$410m, a sizeable
year-on-year improvement. This was due to improved working capital and lower
withholding tax due to fewer Avito dividends being received. Excluding OLX
Autos, free cash outflow was limited to just US$30m. Tencent remains a
meaningful contributor to our cash flow via a stable dividend of US$565m.
There were no new or amended accounting pronouncements effective 1 April 2022
with a significant impact on the group's summary consolidated financial
statements.
The company's external auditor has not reviewed or reported on forecasts
included in these summary consolidated financial statements.
SEGMENTAL REVIEW
Ecommerce
Ecommerce revenue from continued operations grew 22% (31%) to US$9.9bn on an
economic-interest basis, led by growth across all four core segments: Food
Delivery, Classifieds, Payments and Fintech and Edtech. Etail revenue declined
14% (4%) to US$2bn impacted by an elevated FY22 base, which in turn was
fuelled by pandemic-related demand, and lower demand in the current year as
offline retailers offloaded inventory as Covid-19 restrictions were lifted.
Excluding Etail, Ecommerce revenue grew 35% (44%). Aggregated trading losses
in the Ecommerce portfolio rose to US$1.5bn from US$1.2bn in the comparative
period but declined by 35% in the second half of FY23 from the first half of
FY23.
On a consolidated basis, Ecommerce revenue from continuing operations grew 10%
(23%) to US$5.8bn, 29% (43%), excluding Etail. The trading loss widened by
US$140m (US$95m) to US$617m, reflecting increased investment in adjacent
growth opportunities that we believe will contribute to long-term value.
These enhancements include a broader on-demand grocery-delivery ecosystem in
iFood, credit in Payments and Fintech, and expansion of our Edtech segment.
Trading losses improved meaningfully in the second half of the year,
driven by the benefits of increased scale at the core businesses, more
targeted investment in growth extensions and more general cost-cutting
measures across the segments. Profitability improved in our core Classifieds
business and iFood's restaurant-delivery business in Brazil. Results for our
Payments and Fintech core PSP business include a once-off loss provision of
US$23m related to merchants in Brazil and the travel industry. Excluding this
once-off adjustment, the core business remains profitable and reported a very
strong recovery in the second half.
We are committed to achieving consolidated Ecommerce portfolio profitability
during the first half of FY25, benefiting from increased scale as well as
growth extensions and cost reductions. As such, the first six months of FY23
represent the high-water mark for trading losses and these are now expected to
improve materially over time.
Classifieds
The core classifieds business of OLX Group continued to deliver a strong
performance through the financial year, with sustained growth and improved
profitability. It is well placed for further growth and margin expansion.
The core classifieds business was negatively impacted by currency movements.
On an economic-interest basis, revenue decreased in nominal terms, but grew
15% to US$722m in local currency, excluding M&A, and reported a trading
profit of US$60m.
The consolidated core classifieds business delivered revenue of US$486m for
the year, representing growth of 15% in local currency, excluding M&A.
Excluding Ukraine, core classifieds consolidated revenue grew 20%
and reported a trading profit margin of 19%, a 6 percentage point
improvement compared with the prior year(1).
Operating metrics across the group's core Classifieds business remained
stable, with 73 million active users, 45 million monthly active app users
and 1.8 million paying listers.
Europe, excluding Ukraine, grew revenue by 22% in local currency, excluding
M&A. Trading profit grew by US$38m to US$83m, representing a margin
improvement of 3 percentage points compared with last year. Poland remained
the largest country in the group's European portfolio, growing revenues by 24%
to US$281m and trading profit by US$34m to US$68m.
The strong performance in Europe was supported by solid retention and buyer
adoption of pay-and-ship services. Buyer adoption increased 3% year on year
to 34%, while monetisation also improved. The autos and real estate verticals
contributed meaningfully and delivered revenue growth of 5% (19%) and 9%
(24%) respectively, driven by improved commercial offerings. This offset a
slight decline in advertising revenues due to the weaker macro environment.
The group supported its employees in Ukraine and, despite a difficult year,
OLX Ukraine remained resilient. Demand has almost recovered to pre-conflict
levels, with daily active users for FY23 at 94% of the prior-year level, while
listings are at 80%. Despite the recovery in activity, monetisation has been
kept low and the business reported a 37% (19%) decline in revenue to US$36m,
and a trading loss of US$17m compared with revenue and trading profit of
US$57m and US$7m respectively in FY22.
OLX Brasil, the group's 50% joint venture with Adevinta, contributed revenue
of US$85m on an economic-interest basis, growing 12% (11%). Revenue growth
was driven by the autos vertical, which recorded higher revenue per user and
a significant increase in pay-and-ship transactions. This offset a decline in
advertising revenues which were impacted by lower traffic and a weaker
macroeconomic environment. The trading profit margin improved by
10 percentage points, to 15%, as the business implemented a cost-reduction
plan.
1 Classifieds' intra-segment corporate cost-allocation methodology was
updated in this year. The prior year has been restated in line with the
updated methodology.
OLX Autos, the car transaction business, was materially affected by
macroeconomic and market challenges later in the second half of FY23, similar
to listed peers. While OLX Autos has built leading positions across many of
its key markets, driven by strong technology platforms and local focus,
pursuing a global growth strategy was no longer the right approach for the
group to maximise shareholder value. The operations of this business
classified as held for sale and those that have been closed by 31 March 2023
are presented as discontinued operations. The portion of OLX Autos operations
still included in continuing operations relates to OLX Autos operations whose
exit process had not been finalised by 31 March 2023. These are expected to be
discontinued in FY24 as the group continues to explore options for these
remaining businesses and is committed to working through this process quickly
and efficiently in the interests of all stakeholders.
OLX Autos revenue and trading loss for the year were US$1.8bn and US$418m
respectively, of which US$853m of revenue and US$216m of trading losses are
included in continuing operations.
Beyond OLX Autos, the core classifieds business in OLX is profitable,
cash-flow positive and fast-growing. The exit of OLX Autos will lead to
improved profitability profile of the Classifieds segment, and we expect this
to be further enhanced by cost-optimisation initiatives that promote improved
productivity and efficiency.
Food Delivery
The Food Delivery segment continued to deliver robust growth in the core
restaurant food-delivery business as well as in grocery marketplace and quick
commerce, while improving its overall profitability. Profit improvement was
driven by increased scale and margin improvement in the core restaurant
food-delivery businesses, as well as a more targeted investment in growth
extensions such as grocery and quick commerce. Total gross merchandise value
(GMV) grew 18% (27%), while revenue, on an economic-interest basis, increased
40% (44%) to US$4.2bn.
iFood represents our consolidated food-delivery business and we have several
associates, most notably Delivery Hero and Swiggy.
iFood
iFood grew revenue strongly, while meaningfully improving its overall
profitability during the year.
Revenue grew 39% (35%) to BRL7.1bn (US$1.4bn), driven by an increase in orders
and average order size as well as improved take rates and advertising fees.
In Brazil, orders increased 10% (7%) to over 832 million and GMV grew 27%
(20%) to BRL48bn (US$9.4bn). Trading loss reduced by US$127m to US$79m
as increased scale led to improved efficiency and margins in the core
restaurant food-delivery business, which were partially offset by investment
in the grocery marketplace, quick commerce and fintech extensions. During the
year, iFood's trading loss margin improved by 15 percentage points.
In the core restaurant food-delivery business, GMV and revenue grew 21% (14%)
and 27% (24%) respectively. The business is also benefiting from growing
traction with its loyalty programme (Clube) which supports increased frequency
from iFood's most valuable customers. As a result, iFood's core restaurant
business generated a trading profit of US$94m and trading margin of 8%, up
from -1% in FY22, reflecting higher gross margins and more efficient marketing
investment.
iFood operates a hybrid model of grocery marketplace and quick-commerce
delivery, with marketplace being the larger contributor to orders. Its
grocery marketplace and quick-commerce offering grew orders by 2% and GMV by
18% (14%) to over 43 million and BRL4.5bn (US$0.9bn) respectively. Revenues
grew by US$111m or 584% (563%) to account for 9% of total iFood revenues. In
quick commerce, iFood adopted a more focused and efficient approach to rolling
out new stores, with 61 dark stores now in operation, and continued to focus
on achieving higher average order value and improving the unit economics of
the business. iFood ceased operation in Colombia at the end of November 2022.
Delivery Hero
Delivery Hero contributed revenue of US$2.4bn and trading losses of US$267m to
the group on an economic-interest basis for the period. Its focus on
profitability continues to show results, as Delivery Hero's own metric of
adjusted EBITDA margin (as a percentage of GMV) improved to -1.4% from -2.9%
for the year ended 31 December 2022, while GMV grew by 18% to €44.6bn on a
pro forma basis.
Prosus retains conviction on the Delivery Hero outlook and acquired an
additional stake in this business for US$586m; increasing our ownership from
27.28% to 29.83% during the year.
More information on Delivery Hero is available at https://ir.deliveryhero.com.
Swiggy
Our share of Swiggy's revenue grew 40% (73%) to US$297m, reflecting higher
average order values and increased revenue from delivery fees and advertising
sales. The core restaurant food-delivery business recorded GMV(1) growth
of 26%, while Instamart grew GMV 459%(2). In the last two reporting
periods, Swiggy has concentrated on reactivating users, increasing monthly
frequency and improving user conversion. The benefits are reflected in its
results for FY23, with over 272 000 enabled restaurants on its platform, 155%
of pre-pandemic levels, with GMV at US$2.6bn.
1 GMV includes delivery fees.
2 Year in Swiggy's section refers to 1 January 2022 to 31 December
2022.
In FY23, Swiggy also redoubled its focus on the profitability of its core
restaurant food-delivery business, which its CEO recently announced had turned
profitable in March 2023 (after factoring all corporate costs excluding
share-based costs) following an investment phase. Our share of Swiggy's
trading loss increased to US$180m (FY22: US$100m), driven by investment in
Instamart, which peaked in the year.
Payments and Fintech
The Payments and Fintech segment grew its economic-interest revenue 32% (51%)
to US$1.1bn through strong growth in the core PSP business as well as its
fast-scaling India credit business. On a consolidated basis, the core PSP
business and credit drove PayU's revenue growth of 32% (52%) to US$903m. The
trading loss was US$83m (FY22: US$46m), with a negative margin of 9% (FY22:
-7%) due to a once-off loss provision of US$23m.
The core PSP business delivered revenue growth of 23% (43%) to US$790m, driven
by transactions and total payment volume (TPV) growing 19% and 24% (39%) to
2.7 billion and US$98bn respectively. While both India and GPO grew revenue
solidly, the core PSP business reported a trading loss of US$2m, mainly due to
GPO's once-off loss provision. Excluding this provision, the core PSP business
generated a 3% trading margin, down from 4% in FY22, as GPO incurred higher
merchant acquisition costs and invested in building new products.
India, the largest market in the group's PSP business, contributed 51% of the
core PSP business' revenues, up from 47% in FY22. India's TPV grew 33% (44%)
to US$58bn, driven by transaction growth of 25% to 1.4 billion. India
generated US$399m of revenue, which grew 31% (42%), fuelled by continued
growth in enterprise and small and medium-sized businesses, as well as
diversification into newer segments including government merchants,
omnichannel and other non-MDR (merchant discount rate) products. Revenue
growth and cost-saving initiatives led to an improvement in trading profit
margin to 3%.
PayU's Indian credit business continued to scale quickly, issuing US$742m in
loans, up 47% on last year, translating into a loan book of US$256m at 31
March 2023. The credit business grew revenue three times (three times) to
US$83m, largely through growth in personal loans. The trading loss of US$10m
represents a 63 percentage point improvement in margin to -12%, reflecting an
improved loss rate of 2.5% from 3% in FY22. The business is close to
breakeven. In FY23, in response to changes in regulations, the group stopped
its digital bank offering (LazyCard), which contributed the largest part of
the credit business' trading loss. As a result of the closure, the India
credit metrics exclude LazyCard. The group continues to look for new
opportunities to invest in further product diversification.
GPO grew solidly, but was impacted by currency translations. The GPO business
grew transactions and TPV 12% and 13% (32%) to 1.2 billion and US$39bn
respectively, through growth in global merchants and in Turkey, translating
into revenue growth of 15% (44%) to US$393m. Turkey, one of the largest
markets in GPO, contributed 22% of GPO's revenues, and grew 52% (154%) as
increases in instalment sales and customer mix led to an improved take rate.
GPO's gross profit margin was driven lower by higher merchant-acquisition
costs. GPO is working to offset this increase through cost-saving
initiatives, including headcount rationalisation, the benefits of which will
come through in the next financial year. GPO's trading loss margin was -4% (2%
excluding the once-off loss provision).
The largest Payments and Fintech investment in our associate portfolio,
Remitly, grew its send volumes 40% to US$29bn in the year ended 31 December
2022. Our share of Remitly's revenue and trading loss was US$147m, which grew
35% (43%), and US$27m respectively.
More information on Remitly is available at https://ir.remitly.com/.
Edtech
On an economic-interest basis, Edtech segment revenues grew by 28% (18%) to
US$545m and trading losses increased to US$258m. Growth was affected by
decreased demand in the macroeconomic downturn. Our portfolio companies have
reacted quickly to changing market conditions and are rationalising their cost
structures and investments. At the same time, our businesses are shifting
resources to take advantage of new AI technologies which promise to transform
the industry. By deploying GenAI technologies, our companies can better
personalise the content and user feedback on their platforms.
The consolidated Edtech businesses, Stack Overflow and GoodHabitz, grew
revenues in local currency, excluding M&A, by 21% to US$134m. Trading
losses increased to US$131m (FY22: US$55m), reflecting increased investment in
technology, sales and international expansion.
Stack Overflow continues to add an average of 200 000 new registrations every
month. It grew total bookings by 37%, driven by strong Stack Overflow for
Teams' bookings, advertising and employer branding. The business grew revenue
in local currency, excluding M&A, by 20% to US$94m, as Stack Overflow for
Teams contributed slightly over 50% of revenue. By March 2023, Stack Overflow
had over 950 paying teams generating annual recurring revenue of US$55m,
representing growth of 31% year on year. Increased investment in sales teams,
marketing activities and, engineering and product development initiatives
contributed to the trading loss of US$84m.
GoodHabitz increased the number of courses offered by 51% (1 753 at the end of
March 2023) and the number of enterprise customers it serves by 18% (2 656).
Revenue grew 38% (24%) to US$40m, driven by growth in its biggest existing
markets (the Netherlands, Germany, Italy, and Spain) and expansion into new
international markets. Annual recurring revenue grew 24% in local currency,
excluding M&A, to US$48m driven by the core markets, primarily Germany,
and the introduction of new products and markets. Geographic expansion drove
trading losses to US$16m.
Our Edtech minority investment portfolio comprises nine investments spanning
the sector, from kindergarten to grade 12 (K-12), into higher education and
workplace learning. Edtech associates revenue grew by 20% (17%) to US$412m and
trading losses were US$127m.
Skillsoft, a global leader in digital workplace learning, is our biggest
associate by revenue. Our share of Skillsoft's revenue was US$222m, with a
trading profit of US$22m.
More information on Skillsoft is available at https://investor.skillsoft.com.
The group has stopped equity accounting for BYJU'S and Udemy from September
2022.
Etail
eMAG
eMAG, a leading business-to-consumer ecommerce platform in Central and Eastern
Europe, had a mixed performance due to decreased consumer demand in a
deteriorating macroeconomic environment, the war in neighbouring Ukraine, and
a restructuring of its Hungarian business.
eMAG's revenue declined by 14% (4%) to US$2.0bn, reflecting a 17% (7%) decline
in its core Etail business, partially offset by strong growth from its
restaurant (Tazz) and grocery-delivery (Freshful) services. While overall GMV
decreased 13% (4%), third-party (3p) ecommerce business grew GMV 3% (14%),
which was offset by a first-party (1p) decline of 20% (11%). These changes
were driven by charges in the category mix, which is ultimately more
supportive of margins. In total, the business reported a trading loss of
US$53m, compared with a US$34m trading loss last year, reflecting continued
investments in Tazz, Freshful and Sameday, and once-off costs associated with
the Hungary operational merger, along with warehouse investment.
eMAG has made strategic investments in productivity and innovation in the core
business, while its popular loyalty programme (Genius) continues to support
growth. eMAG is scaling its new extensions and focusing on better stock and
warehouse management as it grows into its newly built capacity. In March
2023, the business returned to normalised year-on-year growth numbers as it
lapped a normal base for the first time in three years. The investments and
restructuring undertaken during the year are expected to continue improving
performance over the next year, bringing a return to top and bottom-line
growth.
Tencent
Tencent weathered a challenging 2022 with resilience, supported by its
diversified portfolio of products, businesses and investments. For the year
ended 31 December 2022, Tencent's revenue declined 1% to RMB555bn. Non-IFRS
profit attributable to shareholders (Tencent's measure of normalised
performance) declined 7% to RMB116bn.
Revenues from value-added services decreased by 1% to RMB288bn, driven by the
4% decrease in domestic games revenue and 3% growth in international games
revenue. Social networks revenues were broadly stable at RMB117bn. Revenues
from fintech and business services increased by 3% to RMB177bn. Revenues from
online advertising decreased 7% to RMB83bn.
Monthly active users of Weixin and WeChat reached 1.3 billion, up 4% year on
year. User time spent on Weixin continued to grow as it expanded its content,
service offerings and short-form video capability, with time spent on Mini
Programs and Video Accounts doubled and tripled year on year respectively in
the fourth quarter of 2022. Mini Programs has become a leading transaction
platform in China, contributing to the growth of the real economy. Video
Accounts has become a major short-form video and live-streaming platform in
China.
Tencent enlivened the video-chat experience for QQ by adding Super QQ Show
avatars using enhanced motion-capture technology to mirror users' facial
expressions and gestures in real time. Tencent enriched the content of anime,
comics and games for QQ's short-video service, Mini World, and launched
AI-powered video-creation tools, significantly increasing daily active users
and time spent per user.
Tencent continued to lead in the China online game market, with Honor of Kings
resuming year-on-year growth in daily active users in the fourth quarter of
2022. Internationally, Tencent elevated Valorant as a top global franchise and
published two of the top three new mobile games of the year.
In online media, Tencent Video's subscriptions moderated slightly to 119
million due to content-scheduling delays, while subscription revenue increased
year on year in the fourth quarter of 2022, driven by average revenue
per user growth.
In advertising, Tencent improved its long-term position by launching Video
Accounts in-feed ads, enhancing transaction-driven capability and
machine-learning infrastructure in 2022. In the fourth quarter of 2022,
Tencent advertising returned to year-on-year revenue growth. Click-to-message
and click-to-purchase advertisements accounted for over one third of Weixin's
advertising revenue.
In fintech, Tencent's commercial payment business was temporarily impacted by
Covid-19 outbreaks, resulting in a significant slowdown in volume growth.
Tencent is expanding its wealth management and exploring opportunities in
consumer loans and online insurance services.
In business services, Tencent further reduced loss-making activities and
optimised costs while focusing on healthier-margin, self-developed
platform-as-a-service (PaaS) solutions, such as video cloud and database.
Tencent made significant progress in its drive to create sustainable social
value. It announced its commitment to carbon-neutrality by 2030. Its digital
philanthropy platform raised donations for over 25 000 projects and engaged
more than 100 million users. In 2022, Tencent increased its return of capital
to shareholders through distribution in kind, share repurchase and cash
dividend.
The regulatory environment of China's internet industry continues to evolve,
reflecting the expanding economic and social importance of the industry. In
2022, Tencent increased its business efficiency, sharpened its focus on core
activities, and developed new services and revenue lines, successfully
repositioning it for sustainable and high-quality growth. It is investing in
AI capabilities and cloud infrastructure to embrace foundation models, which
the company believes will enhance the experience of its existing products and
services and allow it to explore new products.
Tencent is committed to enacting its vision of 'value for users, tech for
good' by continuing to develop advanced technologies and innovative products
and services that create shared value and promote the sustainable development
of society. Tencent sees ample opportunities in both the consumer and
industrial internet as technology continues to advance and as China reopens
after the pandemic.
More information on Tencent is available at www.tencent.com/en-us/investors.
PROSPECTS
The group is a long-term investor and has invested through various economic
downturns in volatile internet markets.
The fundamentals of our businesses remain sound. We continue to have
conviction in our platforms, and we are excited about the opportunities before
us. The group will continue to drive profitability in its ecommerce portfolio,
build scale and take action to manage expenses and free cash flow while
maintaining its leading value proposition to its customers. We will continue
to invest for growth by building our capabilities and enhancing our ecosystems
to deliver returns across our portfolio. The ambition is for our consolidated
Ecommerce portfolio to reach profitability during the first half of FY25.
We will continue the open-ended repurchase programme as long as the discount
remains elevated. Over time, the compounding effects of the buyback will
structurally improve returns on investment.
Tencent is a strong business with a unique position in the China internet
landscape. It is led by a world-class leadership team and has a proven track
record of operating through all types of environments. The group remains
committed to being a significant shareholder and still sees substantial upside
potential.
Subject to the requisite regulatory and Naspers and Prosus shareholder and
final board approvals being obtained, we intend to remove the crossholding
between Naspers and Prosus and continue with the share repurchase programme.
We endeavour to maximise value for shareholders, with a transparent,
predictable and repeatable process of identifying, scaling and then
crystallising value across our portfolio at the right time.
A healthy liquidity profile is helpful in uncertain times. The group's
ambition remains to manage the balance sheet within its investment-grade
rating. We will remain disciplined in our capital allocation and are very
focused on investments with the potential to deliver long-term returns to
shareholders.
As a global tech business, AI is essential for us. Across the group, AI has
become part of the fabric of our operations, how we innovate and keep
improving. At the scale we currently operate across our core segments, AI is
essential. We develop and deploy it as quickly as possible across the group to
support business growth, to innovate, and to improve our competitive ability.
We are increasingly focused on AI-by-design - using our technologies and
expertise to make operational improvements and to radically change the way we
do business. It is all about future-proofing and innovating - building AI into
the earliest stages and making it core to the process of exploring, designing,
developing, deploying and improving platforms, products and services. We will
continue to responsibly develop and deploy AI to drive improvements
throughout the group.
Risks
With the group's focus on developing its businesses and growing value
sustainably, we understand the importance of effective risk management and
therefore continue to foster our governance processes. These support in
setting ambitious objectives, and identifying and managing the risks opposing
these.
Through our organisational structures, we enable a proactive approach to risk
management, where local businesses can respond quickly to unexpected
opportunities as well as risks, ensuring Prosus remains resilient and well
positioned for growth.
Our risk management philosophy distinguishes between three categories of risks
managed as follows:
· Strategic risks and opportunities: Arise from strategic choices we
make, which are continuously assessed and monitored based on risk versus
reward.
· Internal operational risks: These are managed by upholding our code
of business ethics and conduct, clear roles, responsibilities and policies,
effective internal controls, and continuous risk monitoring.
· External risks: We reduce and mitigate, inter alia, by implementing
protective measures or risk transfer arrangements.
The board oversees risks and opportunities and sets the boundaries within
which those risks must be managed. Businesses keep the board updated through
regular reports. Current topical risks are:
· Geopolitical tension: The war in Ukraine and concerns about broader
geopolitical tensions have caused stress on the global economy and on capital
markets, which also impacts our access to capital. In such an environment,
investment focus is on growing the value potential of the core portfolio by
operating at leanest cost.
· Technology developments: We stay close to advances in technology,
such as GenAI. These bring opportunities to improve products and services, but
also new risks. In managing these risks, we focus on responsible use of data
and related technologies to keep our customers safe, as well as continuously
enhancing our cyber-resilience, detection and response capabilities.
Further details on our risk management approach and specific risks are
outlined in the FY23 annual report in the 'Choosing the right opportunities
and balancing risks' section. This report is available on our website.
SUSTAINABILITY
As a global consumer internet group and a leading long-term technology
investor, we recognise the power of technology to create solutions for some of
the world's most pressing needs. Every investment we make has the potential to
reduce inequalities and drive innovation. By investing in local entrepreneurs
who are solving for local needs, we support local economic growth in those
communities. In the long run, this is the most sustainable way of driving
economic parity and equitable access to opportunity in a society.
In FY23, we implemented all necessary measures to ensure Prosus reached the
target to reduce scope 1 and scope 2 emissions from its operations, including
Naspers and Prosus corporate offices, to zero.
We also worked to build a real-world climate transition plan, both relevant
and practical in the context of our diversified holdings and structure. We
developed our targets applying the Science Based Targets initiative's (SBTi)
guidance for investors, which best matches our diverse and dynamic portfolio
of investments. The group is committed to a climate journey aligned with the
Paris Agreement to keep global warming to 1.5°C.
This year, we developed group principles and approaches to help portfolio
companies develop impactful packaging strategies. The group has determined 10
golden rules to help digital delivery platforms scale sustainable packaging
across their operations and value chains that have been cascaded across the
group. We also published a landscaping report on packaging to identify
solutions on new materials and strategies for reduction.
As part of our mission to use technology to improve the everyday lives of
billions of people, we place great emphasis on promoting inclusive,
economically secure communities by doing what we do best - supporting
promising entrepreneurs to make a lasting impact on the communities around
them. While conditions may vary, we believe local action by local companies is
key to addressing societal challenges. We are proud of the many businesses
across the portfolio that are designing scalable social-impact initiatives to
meet the needs of local communities.
DIRECTORATE
On 1 April 2022, in line with the group's retirement policy, Ben van der Ross
retired from the board as well as the Naspers social, ethics and
sustainability and the Prosus sustainability committees. The board thanks Ben
for his invaluable contribution over the years.
Shar Dubey was appointed to the board of Naspers from 1 April 2022. Her
appointment as an independent non-executive director of Prosus was approved
by shareholders at the annual general meeting on 24 August 2022. On 1 October
2022, she also became a member of the audit committee, enhancing the
composition of this committee.
DIVIDEND
The board recommends that, in total, shareholders receive a distribution (in
the form of a capital repayment for holders of ordinary shares N and
a dividend for holders of ordinary shares B and ordinary shares A1) of
approximately €175m, which currently represents an increase of approximately
7% for free-float shareholders. Holders of ordinary shares B and ordinary
shares A1 will receive an amount per share equal to their economic entitlement
as set out in the articles of association. Furthermore, the board recommends
that those holders of ordinary shares N as at 3 November 2023 (the dividend
record date) who do not wish to receive a capital repayment, can choose to
receive a dividend instead. A choice for one option implies an opt-out from
the other. If confirmed by shareholders at the annual general meeting on 23
August 2023, elections to receive a dividend instead of a capital repayment
will need to be made by holders of ordinary shares N by 20 November 2023.
More information regarding the distribution will be published in the notice of
annual general meeting.
Capital repayments and dividends will be payable to shareholders recorded in
our books on the dividend record date and paid on 28 November 2023. Capital
repayments will be paid from qualifying share capital for Dutch tax purposes.
No dividend withholding tax will be withheld on the amounts of capital
reductions paid to shareholders. However, if holders of ordinary shares N
rather elect to receive a dividend from retained earnings, dividends will be
subject to the Dutch dividend withholding tax rate of 15%.
Dividends payable to holders of ordinary shares N who elect to receive a
dividend and who hold their listed ordinary shares N through the listing of
the company on the JSE will, in addition to the 15% Dutch dividend withholding
tax, be subject to South African dividend tax at a rate of up to 20%. The
amount of additional South African dividend tax will be calculated
by deducting from the 20%, a rebate equal to the Dutch dividend tax paid in
respect of the dividend (without right of recovery). Shareholders holding
their listed ordinary shares N through the listing of the company on the JSE,
unless exempt from paying South African dividend tax or entitled to a reduced
withholding tax rate in terms of an applicable tax treaty, will be subject to
a maximum of 20% South African dividend tax.
INDEPENDENT AUDIT
The summary consolidated financial statements have been derived from the
consolidated financial statements included in our 2023 annual report. In
accordance with article 393 of book 2 of the Dutch Civil Code,
PricewaterhouseCoopers Accountants N.V. has issued an unqualified auditor's
opinion on those financial statements. The summary consolidated financial
statements should be read in conjunction with the consolidated financial
statements in the 2023 annual report dated 26 June 2023 and published on 27
June 2023.
On behalf of the board
Koos Bekker Bob van Dijk
Chair
Chief executive
Amsterdam
26 June 2023
SUMMARY CONSOLIDATED INCOME STATEMENT
for the year ended 31 March 2023
31 March
Notes 2023 2022
US$'m US$'m
Continuing operations
Revenue 7 5 765 5 220
Cost of providing services and sale of goods (4 108) (3 849)
Selling, general and administration expenses (2 248) (2 152)
Other (losses)/gains - net 9 (747) (169)
Operating loss (1 338) (950)
Interest income 8 476 52
Interest expense 8 (555) (398)
Other finance income/(cost) - net 8 18 (92)
Dividend income 61 -
Share of equity-accounted results(1) 11 5 174 9 257
Impairment of equity-accounted investments 11 (1 742) (581)
Dilution (losses)/gains on equity-accounted investments 11 (252) 95
Gains on partial disposal of equity-accounted investments 11 7 622 12 339
Net gains/(losses) on acquisitions and disposals 9 55 (1 127)
Profit before taxation 9 519 18 595
Taxation (39) (54)
Profit from continuing operations 9 480 18 541
Profit from discontinued operations 5 542 53
Profit for the year 10 022 18 594
Attributable to:
Equity holders of the group 10 112 18 733
Non-controlling interests (90) (139)
10 022 18 594
Per share information for the year from total operations (US cents)(2) 6
Earnings per ordinary share N(3) 745 1 243
Diluted earnings per ordinary share N(3) 736 1 232
Per share information for the year from continuing operations (US cents)(2) 6
Earnings per ordinary share N(3) 705 1 240
Diluted earnings per ordinary share N(3) 697 1 229
1 Includes equity-accounted results from associates. Refer to note 11.
2 Earnings per share information is significantly impacted by a lower
share in equity-accounted results and a lower gain on partial disposal of
equity-accounted investments. Refer to note 11.
3 Earnings per share is based on the weighted average number of shares
taking into account the cross-holding agreement from the share exchange. Refer
to note 6.
SUMMARY CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 March 2023
31 March
Notes 2023 2022
US$'m US$'m
Profit for the year 10 022 18 594
Total other comprehensive loss for the year - net of tax (3 550) (3 111)
Items that may be subsequently reclassified to profit or loss
Foreign exchange (losses)/gains arising on translation of foreign (2 448) 1 591
operations(1, 2)
Share of equity-accounted investments' movement in OCI(3) 797 (813)
Recognition of cash flow hedge - (99)
Derecognition of cash flow hedge - 119
Items that may not be subsequently reclassified to profit or loss
Fair value gains/(losses) on financial assets through OCI (158) (1 210)
Share of equity-accounted investments' movement in OCI and NAV(4) 11 (1 741) (2 699)
Total comprehensive income for the year 6 472 15 483
Attributable to:
Equity holders of the group 6 570 15 566
Non-controlling interests (98) (83)
6 472 15 483
1 31 March 2023 includes the reclassification to the summary
consolidated income statement of US$202m relating to the disposal of Avito
(2022: US$1.1bn relating to the loss of significant influence of VK Company
Limited (VK)).
2 The significant movement relates to the translation effects from
equity-accounted investments (refer to note 11). The current year also
includes a net monetary gain of US$102m relating to hyperinflation accounting
for the group's subsidiaries in Turkey.
3 This relates to movements in equity-accounted investment's foreign
currency translation reserve.
4 This relates mainly to (losses)/gains from the changes in share
prices of Tencent's listed investments carried at fair value through other
comprehensive income and the group's share in the share-based compensation
reserve of equity-accounted investments.
SUMMARY CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 March 2023
31 March
Notes 2023 2022
US$'m US$'m
Assets
Non-current assets 41 707 56 073
Property, plant and equipment 620 604
Goodwill 10 1 412 3 372
Other intangible assets 367 928
Investments in associates 11 35 930 44 457
Investments in joint ventures 69 144
Other investments and loans(1) 12 3 117 6 410
Trade and financing receivables(2) 133 91
Other receivables(2) 43 41
Deferred taxation 16 26
Current assets 23 371 15 265
Inventory 324 470
Trade and financing receivables(2) 526 370
Other receivables and loans(2) 869 790
Derivative financial instruments 5 27
Other investments 12 4 707 -
Short-term investments 6 726 3 924
Cash and cash equivalents 9 565 9 646
22 722 15 227
Assets classified as held for sale 14 649 38
Total assets 65 078 71 338
Equity and liabilities
Capital and reserves attributable to the group's equity holders 44 593 50 421
Share capital and premium 39 186 39 190
Treasury shares (10 043) (6 411)
Other reserves (45 756) (40 557)
Retained earnings 61 206 58 199
Non-controlling interests 32 102
Total equity 44 625 50 523
Non-current liabilities 16 048 16 402
Capitalised lease liabilities 150 200
Liabilities - interest bearing 15 596 15 611
- non-interest bearing 22 50
Other non-current liabilities(1) 140 170
Cash-settled share-based payment liabilities 15 57 163
Deferred taxation 83 208
Current liabilities 4 405 4 413
Current portion of long-term liabilities 467 312
Trade payables 356 549
Accrued expenses(3) 1 802 1 529
Provisions 45 9
Other current liabilities 775 1 032
Cash-settled share-based payment liabilities 15 656 964
Bank overdrafts 28 18
Liabilities classified as held for sale 14 276 -
Total equity and liabilities 65 078 71 338
1 Non-current derivative assets have been aggregated with other
investments and loans, and non-current derivative liabilities with other
non-current liabilities as a result of them being immaterial. Current
derivative liabilities have been aggregated with other non-current liabilities
as a result of them being immaterial.
2 Financing receivables of US$185m previously aggregated into 'Other
receivables' are now presented in 'Trade and financing receivables' due to the
group's growing credit business.
3 Accrued interest expense of US$124m previously aggregated into
'Accrued expenses' is now presented in 'Current portion of long-term
liabilities' to present the interest component with the interest bearing
liabilities.
SUMMARY CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2023
Share Treasury Foreign Valuation Existing Share- Retained Share- Non- Total
capital shares currency reserve control based earnings holders' control- US$'m
and US$'m translation US$'m business compen- US$'m funds ling
premium reserve combination sation US$'m interest
US$'m US$'m reserve reserve US$'m
US$'m US$'m
Balance at 1 April 2022 39 190 (6 411) (358) 65 (43 487) 3 223 58 199 50 421 102 50 523
Total comprehensive income for the year - - (1 641) (3 007) - 1 106 10 112 6 570 (98) 6 472
Profit for the year - - - - - - 10 112 10 112 (90) 10 022
Total other comprehensive loss for the year - - (1 641) (3 007) - 1 106 - (3 542) (8) (3 550)
Cancellation of treasury shares (4) 6 411 - - - - (6 407) - - -
Repurchase of own shares(1) - (10 043) - - - - - (10 043) - (10 043)
Capital restructure as a result of the share repurchase programme(2) - - - - (616) - - (616) - (616)
Share-based compensation movements - - - - - (120) 8 (112) - (112)
Share-based compensation expense - - - - - 135 - 135 1 136
Contributions made to Naspers share trusts - - - - - (191) - (191) (1) (192)
Modification of share-based compensation benefits - - - - - (13) 9 (4) - (4)
Other share-based compensation movements - - - - - (51) (1) (52) - (52)
Direct equity movements - - - 1 013 (148) (364) (501) - - -
Direct movements from associates - - - 338 - - (338) - - -
Transfer of reserves as a result of partial disposal of associates - - - 274 - (364) 90 - - -
Transfer of reserves as a result of disposals - - - 401 (169) - (232) - - -
Other direct movements - - - - 21 - (21) - - -
Remeasurement of written put option liabilities - - - 168 - - 168 - 168
Cancellation of written put option liabilities - - - - 41 - - 41 - 41
Other movements - - - - - - (14) (14) - (14)
Dividends paid(3) - - - - - - (191) (191) - (191)
Transactions with non-controlling shareholders(4) - - 9 - (1 639) (1) - (1 631) 28 (1 603)
Balance at 31 March 2023 39 186 (10 043) (1 990) (1 929) (45 681) 3 844 61 206 44 593 32 44 625
1 Relates to the repurchase of Prosus shares. Refer to note 3 for
details of the Prosus/Naspers share repurchase programme.
2 Relates to the purchase of Naspers shares as part of the share
repurchase programme. Refer to note 3 for details of the Prosus/Naspers share
repurchase programme.
3 Dividends paid consist of US$89m attributable to Naspers and US$102m
attributable to Prosus' free-float shareholders.
4 The current year relates mainly to the transaction with the
non-controlling shareholders of iFood. Refer to note 3.
SUMMARY CONSOLIDATED STATEMENT OF CHANGES IN EQUITY continued
for the year ended 31 March 2023
Share Treasury Foreign Valuation Existing Share- Retained Share- Non- Total
capital shares currency reserve control based earnings holders' control- US$'m
and US$'m translation US$'m business compen- US$'m funds ling
premium reserve combination sation US$'m interest
US$'m US$'m reserve reserve US$'m
US$'m US$'m
Balance at 1 April 2021 612 (1 416) (1 123) 6 707 (2 212) 2 446 38 055 43 069 117 43 186
Total comprehensive income for the year - - 722 (4 933) - 1 044 18 733 15 566 (83) 15 483
Profit for the year - - - - - - 18 733 18 733 (139) 18 594
Total other comprehensive loss for the year - - 722 (4 933) - 1 044 - (3 167) 56 (3 111)
Movement due to share exchange transaction(1) 38 517 - - - (41 304) - - (2 787) - (2 787)
Share-based compensation movements - - - - - (107) (136) (243) (86) (329)
Share-based compensation expense - - - - - 125 - 125 1 126
Contributions made to Naspers share trusts - - - - - (190) - (190) - (190)
Modification of share-based compensation benefits - - - - - (6) (172) (178) (87) (265)
Other share-based compensation movements - - - - - (36) 36 - - -
Direct equity movements (5) - 43 (1 709) 12 (160) 1 819 - - -
Direct movements from associates - - - (1 076) - - 1 076 - - -
Transfer of reserves as a result of partial disposal of associates - - - (455) - (160) 615 - - -
Transfer of reserves as a result of disposals - - 43 (178) 12 - 123 - - -
Other direct movements (5) - - - - - 5 - - -
Remeasurement of written put option liabilities - - - - 236 - - 236 - 236
Cancellation of written put option liabilities - - - - 76 - 5 81 - 81
Other movements - - - - - 2 (39) (37) - (37)
Repurchase of own shares(1) - (4 995) - - - - - (4 995) - (4 995)
Prosus ordinary shares B issued(1) 66 - - - - - - 66 - 66
Dividends paid(2) - - - - - - (238) (238) - (238)
Transactions with non-controlling shareholders(3) - - - - (295) (2) - (297) 154 (143)
Balance at 31 March 2022 39 190 (6 411) (358) 65 (43 487) 3 223 58 199 50 421 102 50 523
1 Relates to the group's share exchange transaction in August 2021.
2 Dividends paid consist of US$104m attributable to Naspers and
US$134m attributable to Prosus' free-float shareholders.
3 Relates to transactions with non-controlling interest resulted in
the derecognition of non-controlling interest of US$154m.
SUMMARY CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 March 2023
31 March
Notes 2023 2022
US$'m US$'m
Cash flows from operating activities
Cash utilised in operations (349) (644)
Interest income received 315 38
Dividends received from equity-accounted investments 572 571
Interest costs paid (551) (381)
Taxation paid (107) (189)
Net cash utilised in operating activities (120) (605)
Cash flows from investing activities
Acquisitions and disposals of tangible and intangible assets (252) (234)
Acquisitions of subsidiaries, associates and joint ventures, net of cash 16 (322) (4 580)
Disposals of subsidiaries, businesses, associates and joint ventures, net of 16 12 668 14 641
cash
Acquisition of short-term investments(1) (6 605) (3 922)
Maturity of short-term investments(1) 3 924 1 211
Repayment of loans/(loans advanced) to related parties 18 58 (21)
Cash paid for other investments(2) 16 (559) (1 477)
Cash received from other investment(2) 16 3 764 85
Acquisition of Naspers shares(3) - (1 287)
Cash movement in other investing activities (33) (24)
Net cash generated from investing activities 12 643 4 392
Cash flows from financing activities
Payments for the repurchase of own shares 3 (9 901) (4 995)
Proceeds from issue of share capital 3 - 66
Proceeds from long and short-term loans raised 104 9 564
Repayments of long and short-term loans (56) (1 619)
Capital restructure as a result of the share repurchase programme(4) (615) -
Additional investment in existing subsidiaries(5) (1 606) (148)
Dividends and capital repayments to shareholders 18 (191) (238)
Contributions made to Naspers share trusts (191) (190)
Repayments of capitalised lease liabilities (51) (51)
Additional investment from non-controlling shareholders 67 140
Cash movements in other financing activities(6) (11) (126)
Net cash (utilised in)/generated from financing activities (12 451) 2 403
Net movement in cash and cash equivalents 72 6 190
Foreign exchange translation adjustments on cash and cash equivalents (69) (124)
Cash and cash equivalents at the beginning of the year 9 628 3 562
Cash and cash equivalents classified as held for sale 14 (94) -
Cash and cash equivalents at the end of the year 9 537 9 628
1 Relates to short-term cash investments with maturities of more than
three months from date of acquisition.
2 Relates mainly to the group's investments measured at fair value.
Cash received from other investments includes US$54m dividends received from
the JD.com investment.
3 Relates to payments for the group's acquisition of Naspers shares
included in fair value through other comprehensive income investments prior to
the share exchange transaction and share repurchase.
4 Relates to the capital restructure from the group's acquisition of
Naspers shares. Refer to note 3.
5 Relates to transactions with non-controlling interest resulting in
changes in the effective interest of existing subsidiaries.
6 The prior year includes transaction costs relating to the Prosus
share exchange of US$122.4m.
NOTES TO THE SUMMARY CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 March 2023
1. GENERAL INFORMATION
Prosus N.V. (Prosus or the group) is a public company with limited liability
(naamloze vennootschap) incorporated under Dutch law, with its registered head
office located at Symphony Offices, Gustav Mahlerplein 5, 1082 MS Amsterdam,
the Netherlands (registered in the Dutch commercial register under number
34099856). Prosus is a subsidiary of Naspers Limited (Naspers), a company
incorporated in South Africa. Prosus is listed on the Euronext Amsterdam Stock
Exchange, with a secondary listing on the JSE Limited's stock exchange and A2X
Markets in South Africa.
The Prosus group is a global consumer internet group and one of the largest
technology investors in the world. Operating and investing globally in markets
with long-term growth potential, Prosus builds leading consumer internet
companies that empower people and enrich communities. The group is focused on
building meaningful businesses in the online classifieds, payments and
fintech, food delivery and education technology sectors in markets that
include Europe, India and Brazil. Through its Ventures team, Prosus actively
seeks new opportunities to partner with exceptional entrepreneurs who are
using technology to address big societal needs. Every day, millions of people
use the products and services of companies that Prosus has invested in,
acquired or built. The group operates and partners with a number of leading
internet businesses across the Americas, Africa, Central and Eastern Europe,
and Asia in sectors including online classifieds, food delivery, payments and
fintech, edtech, health, etail and social and internet platforms.
The summary consolidated financial statements for the year ended 31 March 2023
have been authorised for issue by the board of directors on 26 June 2023.
2. BASIS OF PRESENTATION AND ACCOUNTING POLICIES
Information on the summary consolidated financial statements
The summary consolidated financial statements have been prepared in accordance
with the accounting policies as applied by Prosus and consistent with those
applied in the consolidated financial statements for the year ended 31 March
2023. These summary consolidated financial statements contain the information
required by IAS 34 Interim Financial Reporting (IAS 34) with the exception of
IAS 34.20(b) and accordingly, the financial information for the second half of
the current year is not presented separately. These summary consolidated
financial statements do not constitute the full financial statements within
the meaning of Part 9 of Book 2 of the Dutch Civil Code.
The summary consolidated financial statements do not include all the
disclosures required for a complete set of financial statements prepared in
accordance with IFRS-EU. The summary financial information included in these
financial statements are derived from the consolidated financial statements as
included in the annual report for the year ended 31 March 2023. The summary
consolidated financial statements should be read in conjunction with the
annual report that has been authorised for issue and is available on the
Prosus website https://www.prosus.com.
There were no new or amended accounting pronouncements effective from 1 April
2022 that have a significant impact on the group's summary consolidated
financial statements.
The summary consolidated financial statements presented here report earnings
per share, diluted earnings per share, headline earnings per share and diluted
headline earnings per share (collectively referred to as earnings per share).
These are calculated as the relationship of the number of ordinary shares (or
dilutive ordinary shares where relevant) of Prosus issued at 31 March 2023
(net of treasury shares) to the relevant net profit measure attributable to
the shareholders of Prosus.
The earnings per share information presented takes into account the impact of
the cross-holding agreement with Naspers.
All amounts disclosed are in millions of US dollars (US$'m) unless otherwise
stated.
Operating segments
The group's operating segments reflect the components of the group that are
regularly reviewed by the chief operating decision-maker (CODM) as defined in
note 21 'Segment information' in the consolidated financial statements as
included in the annual report for the year ended 31 March 2023. The group
proportionately consolidates its share of the results of its associates and
joint ventures in its disclosure of segment results in note 4.
From 1 April 2022, following the operational separation from the OLX Group,
the CODM reviewed the financial results of Avito separately from the
Classifieds Ecommerce segment. The financial results of Avito are presented
separately as a discontinued operation in the operating segment information up
until the date of disposal as a result of the group's decision to exit the
Russian business.
2. BASIS OF PRESENTATION AND ACCOUNTING POLICIES continued
Information on the summary consolidated financial statements continued
Operating segments continued
In March 2023, the group announced its decision to exit the OLX Autos business
unit. The exit process is being executed for each operation within the
business unit in its local market. The business unit as a whole represents a
separate major line of business, both in terms of the distinct nature of the
business and its contribution to the operational performance of the group. As
such, the operations that are classified as held for sale and the operations
that are closed down by 31 March 2023 have been presented as discontinued
operations and are reviewed separately by the CODM. OLX Autos operations
whose exit process has not been finalised as at
31 March 2023 are presented as continuing operations. These operations will be
classified as discontinued operations in the financial year that the exit
process is completed.
The comparative financial results of Avito and the relevant operations in the
OLX Autos business described above, previously presented in the Classifieds
Ecommerce segment, have been reclassified and presented in discontinued
operations to allow the current performance of the business to be compared
with prior periods. The change has no impact on the total group revenue,
adjusted EBITDA and trading (loss)/profit in prior periods.
Lag periods applied when reporting results of equity-accounted investments
Where the reporting periods of associates and joint ventures (equity-accounted
investments) are not coterminous with that of the group and/or it is
impracticable for the relevant equity-accounted investee to prepare financial
statements as of 31 March (for instance due to the availability of the results
of the equity-accounted investee relative to the group's reporting period),
the group applies an appropriate lag period of not more than three months in
reporting the results of the equity-accounted investees. Significant
transactions and events that occur between the non-coterminous reporting
periods are adjusted for. The group exercises significant judgement when
determining the transactions and events for which adjustments are made.
Going concern
The summary consolidated financial statements are prepared on the
going-concern basis. Based on forecasts and available cash resources, the
group has adequate resources to continue operations as a going concern in the
foreseeable future. As at 31 March 2023, the group recorded US$16.2bn in cash,
comprising US$9.5bn of cash and cash equivalents net of bank overdrafts and
US$6.7bn in short-term cash investments. The group had US$15.9bn
of interest-bearing debt (excluding capitalised lease liabilities) and an
undrawn US$2.5bn revolving credit facility.
In assessing going concern, the impact of internal and external economic
factors on the group's operations and liquidity was considered in preparing
the forecasts and in assessing the group's actual performance against budget.
The board is of the opinion that the group has sufficient financial
flexibility to continue as a going concern in the year subsequent to the date
of these summary consolidated financial statements.
Hyperinflation
In June 2022, the International Monetary Fund declared Turkey as a
hyperinflationary economy. Accordingly, the group applied the
hyperinflationary accounting requirements of IAS 29 Financial Reporting in
Hyperinflationary Economies for the group's subsidiaries in Turkey. As the
presentation currency of the group is that of a non-hyperinflationary economy,
comparative amounts are not adjusted for changes in the price level or
exchange rates in the current year.
On initial application of hyperinflationary accounting, opening equity for the
group's subsidiaries is restated by applying a general price index from the
date transactions arose. These restatements are recognised directly in equity.
Subsequent to initial application, all components of equity are restated by
applying a general price index from the beginning of the period or the date of
contribution, if later. The restatement of opening equity on initial
application is not material.
The results, cash flows and financial position for the group's subsidiaries in
Turkey are adjusted using a general price index to reflect the current
purchasing power at the end of the reporting period. The carrying amounts of
non-monetary assets and liabilities are adjusted to reflect the change in the
general price index from the date of acquisition of these subsidiaries to the
end of the reporting period. The gain or loss on the net monetary position
from translation of the financial information is recognised in the summary
consolidated income statement, except for goodwill, other intangible assets
and deferred tax liabilities arising at acquisition of these subsidiaries. The
impact of the gain on the net monetary position in the summary consolidated
income statement is not material.
Goodwill, other intangible assets and deferred tax liabilities arising at
acquisition of these subsidiaries are restated using the general price index
at the end of the reporting period. The gain or loss on the net monetary
position from the adjustment of these assets and liabilities is recognised in
other comprehensive income and accumulated in the foreign currency translation
reserve in equity.
The general price index as published by the Turkish Statistical Institute was
used in adjusting the results, cash flows and financial position for the
group's subsidiaries in Turkey up to 31 March 2023. The general price
inflation factor up to 31 March 2023 was 275.99%.
3. SIGNIFICANT CHANGES IN FINANCIAL POSITION AND PERFORMANCE DURING THE
REPORTING PERIOD
Share repurchase programme
On 27 June 2022, the group announced the beginning of an open-ended repurchase
programme of Prosus ordinary shares N and Naspers N ordinary shares.
The Prosus repurchase programme of its ordinary shares N is funded by an
orderly on-market sale of Tencent Holdings Limited (Tencent) shares. Until 12
August 2022, Prosus also purchased Naspers N ordinary shares.
In September 2022, Naspers began to dispose of some of the Prosus shares that
it holds in order to repurchase Naspers shares pursuant of the repurchase
programme.
The group has appointed agents of the group to execute the repurchase
programme and sale of Tencent shares within parameters set by the group and
subject to applicable laws and regulations.
As part of the repurchase programme, for the period between 28 June 2022 and
31 March 2023, Prosus purchased 4 152 285 Naspers N ordinary shares for a
total consideration of US$626m and repurchased 152 797 117 Prosus ordinary
shares N for a total consideration of US$10.0bn of which US$9.9bn was settled
in cash by 31 March 2023. These transactions were mainly funded by the sale of
267 664 800 Tencent shares yielding proceeds of US$10.7bn. Furthermore, for
the year ended 31 March 2023, Naspers through its subsidiary MIH Treasury
Services (Pty) Ltd, purchased 16 320 371 Naspers N ordinary shares on the
market for a total consideration of US$2.5bn. This transaction was funded by
Naspers disposal of 43 356 695 Prosus ordinary shares N on the market yielding
proceeds of US$2.8bn.
Subsequent to the above transactions, Prosus now holds a 52.5%(1) (2022:
49.5%) fully diluted interest representing a 52.7%(2) (2022: 49.9%) economic
interest in Naspers. Prosus' legal ownership in Naspers remains less than 50%
as at 31 March 2023.
The accounting for the share repurchase programme takes into consideration the
cross-holding agreement between Prosus and Naspers and is implemented in
accordance with the applicable laws and regulations as well as the authority
granted by shareholders. The repurchase programme has no impact on the control
structure of the group. Prosus' interest in Naspers does not represent control
or significant influence. Naspers therefore continues to hold the majority of
the shareholder voting rights of Prosus.
The cross-holding agreement between Naspers and Prosus became effective at the
time of closing of the voluntary share exchange in August 2021. The
cross-holding agreement takes into account Prosus' indirect interest in itself
from holding Naspers shares and deals with how distributions between the two
groups will be managed. It eliminates the need for flows back and forth
between the two groups as a result of the cross-shareholding, through a waiver
by Prosus of its entitlement to distributions on the Naspers shares that it
holds, and provides clarity to both Prosus and Naspers' free-float
shareholders of their economic interest in distributions made by Prosus. The
cross-holding agreement relates to Prosus' fully diluted interest in Naspers
and Naspers' legal ownership of Prosus ordinary shares N. At 31 March 2023,
subject to this agreement and subsequent to the repurchase transactions above,
Prosus' free-float shareholder's economic interest in the Prosus group is
56.5% (2022: 57.7%).
1 Interest in Naspers based on the cross-holding agreement formula,
which was approved in the shareholder resolution.
2 Interest based on distribution rights to each class of shareholders.
Repurchase of Prosus shares
The Prosus ordinary shares N acquired by the group are classified as treasury
shares. These are recognised in 'Treasury shares' on the summary consolidated
statement of financial position. The treasury shares were recognised at a cost
of US$10.0bn. The group intends to cancel the Prosus shares repurchased in due
course once the relevant approvals have been obtained, so as to reduce its
issued share capital.
Acquisition of Naspers shares
The Naspers N ordinary shares acquired by the group are subject to the
cross-holding agreement. The agreement mandates that Prosus waives all rights
to all distributions (including dividend flows) from its Naspers shares held,
other than the portion attributable to the residual interest in the Naspers
group (primarily Takealot, Media24 and corporate entities). Based on the
substance of this cross-holding agreement, the portion of Prosus' economic
interest in Naspers attributable to the residual interest in the Naspers group
is recognised as a financial asset at fair value through other comprehensive
income (FVOCI). The remaining portion of the interest in Naspers attributable
to Prosus' underlying investments is accounted for in equity representing a
capital restructure.
Accordingly, the consideration paid for Naspers N ordinary shares representing
the increase in Prosus' residual interest in Naspers was recognised as a FVOCI
investment with the remaining portion representing the value of Prosus'
underlying investments being recognised in equity. The group recognised US$10m
of the consideration as a FVOCI investment and the remaining US$616m in the
'Existing control business combination reserve' in equity.
3. SIGNIFICANT CHANGES IN FINANCIAL POSITION AND PERFORMANCE DURING THE
REPORTING PERIOD continued
Share repurchase programme continued
Repurchase of Naspers shares
During the current year Naspers repurchased 16 320 371 Naspers N ordinary
shares through its subsidiary MIH Treasury Services (Pty) Ltd. The transaction
impacted Prosus' fully diluted and economic interest in Naspers and
consequently impacted the value of Prosus' residual interest in the Naspers
group. This transaction resulted in an increase in the residual interest
in the Naspers group which was recognised in other comprehensive income. In
addition, at 31 March 2023, the residual interest in the Naspers group was
revalued to US$206m. The group, as a result of this revaluation, recognised a
fair value loss of US$179m.
Disposal of shares in Tencent
The group reduced its ownership interest in Tencent from 28.81% to 26.16%,
yielding US$10.7bn in proceeds. This is a partial disposal of an associate
that does not result in a loss of significant influence. The group recognised
a gain on partial disposal of US$7.6bn in the summary consolidated income
statement. The group reclassified a loss of US$155m from the foreign currency
translation reserve to the summary consolidated income statement related to
this partial disposal.
Transactions with non-controlling shareholders
In August 2022, the group entered into an agreement through its subsidiary MIH
Movile Holdings B.V. (Movile) to acquire the remaining 33.3% stake in iFood
Holdings B.V. (iFood) and IF-JE Holdings B.V., from non-controlling
shareholder Just Eat Holding Limited (Just Eat) for €1.5bn in cash, plus a
contingent consideration of up to a maximum of €300m at a future date. The
transaction was approved by Just Eat shareholders in November 2022. This
agreement represents a contractual obligation to acquire shares from
non-controlling interest. The group recognised US$1.6bn in 'Other current
liabilities' at inception of this agreement consisting of the cash and the
fair value of the contingent consideration. The liability was raised from the
'Existing control business combination reserve' in equity prior to the
transfer of the risks and rewards of ownership of these shares.
In November 2022, the shares were acquired from the non-controlling
shareholders for the cash consideration of US$1.5bn resulting in part
settlement of the liability raised. At 31 March 2023, the fair value of the
contingent consideration to be settled at a future date amounted to US$88m.
The group derecognised US$68m of non-controlling interest.
Exit of the OLX Autos business unit
In March 2023, the group announced the decision to exit the OLX Autos business
unit. The OLX Autos business unit is a second-hand car-sale ecommerce
marketplace which operates through a single technological platform located in
various regions. The group believes that significant value exists in the
business within its various local markets. Based on this and the ongoing exit
process, options for the business are being considered, resulting in the
decision to sell or close down each operation in its local market. The
business unit as a whole represents a separate major line of business both in
terms of the distinct nature of the business and its contribution to the
operational performance of the group. The operations of this business
classified as held for sale and those that have been closed down by 31 March
2023 are presented as discontinued operations.
The OLX Autos operations whose exit process has not been finalised as at 31
March 2023 are presented as continuing operations given the phased exit
process for this business. These operations will be classified as
discontinued operations in the financial year that the exit process is
completed.
OLX Autos revenue and trading loss for the year were US$1.8bn (2022: US$1.6bn)
and US$418m (2022: US$230m) respectively, of which US$853m (2022: US$601m) of
revenue and US$216m (2022: US$107m) of trading losses are included in
continuing operations.
The group recognised total impairment losses of US$164m of which US$19m is
included in discontinued operations. The impairment losses relate to US$116m
of goodwill and US$48m of other assets. The other assets impaired are
property, plant and equipment and other intangible assets that will not be
recovered through the sale of the business.
Profit from discontinued operations
Discontinued operations consist of the group's Russian business and the OLX
Autos business unit. Refer to note 5 for financial information related to the
group's discontinued operations.
4. SEGMENTAL REVIEW
Reconciliation of consolidated EBITDA and trading loss to consolidated
operating loss from continuing operations
Year ended
31 March
2023 2022
US$'m US$'m
Consolidated adjusted EBITDA from continuing operations(1) (668) (544)
Depreciation (102) (88)
Amortisation of software (13) (7)
Interest on capitalised lease liabilities (7) (5)
Consolidated trading loss from continuing operations(2) (790) (644)
Interest on capitalised lease liabilities 7 5
Amortisation of other intangible assets (75) (73)
Other (losses)/gains - net (747) (169)
Retention option expense (20) (30)
Other 6 8
Remeasurement of cash-settled share-based incentive expenses 291 (18)
Share-based incentives for share options settled in Naspers Limited shares(3) (9) (29)
Consolidated operating loss from continuing operations (1 337) (950)
1 Adjusted EBITDA is a non-IFRS measure that represents operating
profit/loss, as adjusted, to exclude: depreciation; amortisation; retention
option expenses linked to business combinations; other losses/gains - net,
which includes dividends received from investments, profits and losses on sale
of assets, fair value adjustments of financial instruments, impairment losses,
cash-settled share-based compensation expenses deemed to arise from
shareholder transactions by virtue of employment; and subsequent fair value
remeasurement of cash-settled share-based compensation expenses,
equity-settled share-based compensation expenses for group share option
schemes as well as those deemed to arise on shareholder transactions (but not
excluding share-based payment expenses for which the group has a cash cost on
settlement with participants). It is considered a useful measure to analyse
operational profitability.
2 Trading profit/(loss) is a non-IFRS measure that refers to adjusted
EBITDA adjusted for depreciation, amortisation of software and interest on
capitalised lease liabilities. It is considered a useful measure to analyse
operational profitability.
3 Refers to share-based incentives settled in equity instruments of
the Naspers group, where the Prosus group has no obligation to settle the
awards with participants, ie they are settled by Naspers.
4. SEGMENTAL REVIEW continued
Revenue
Year ended 31 March
2023 2022 %
US$'m US$'m change
Continuing operations
Ecommerce 9 944 8 174 22
Classifieds(1, 2) 1 575 1 324 19
Food Delivery 4 203 2 992 40
Payments and Fintech 1 052 796 32
Edtech 545 425 28
Etail 1 953 2 259 (14)
Other 616 378 63
Social and internet platforms 22 269 25 794 (14)
Tencent 22 269 25 261 (12)
VK(3) - 533 (100)
Corporate segment - - -
Total economic interest from continuing operations 32 213 33 968 (5)
Less: Equity-accounted investments (26 448) (28 748) 8
Total consolidated from continuing operations 5 765 5 220 10
Total from discontinued operations(1, 2) 1 626 1 646 (1)
Total consolidated 7 391 6 866 8
1 From 1 April 2022, following the separation from OLX Group, the CODM
reviewed the financial results of Avito separately. Subsequent to the group's
decision to exit this Russian business, Avito was presented as a discontinued
operation up until the disposal date. The comparative financial results of
Avito, previously presented in the Classifieds Ecommerce segment, have been
reclassified and presented in discontinued operations. Refer to note 5.
2 From 1 March 2023, following the group's decision to exit the OLX
Autos business unit, its operations classified as held for sale and those that
have been closed by 31 March 2023 were presented as a discontinued operation.
The OLX Autos business unit is a separate major line of business, both in
terms of the distinct nature of the business and its contribution to the
operational performance of the group. The comparative financial results of
these operations previously presented in the Classifieds Ecommerce segment,
have been reclassified and presented in discontinued operations. Refer to note
5.
3 During the year ended 31 March 2022, the group lost significant
influence in VK Company Limited (VK). In November 2022, the group signed an
agreement with VK to renounce all VK shares and shareholder rights for no
consideration.
4. SEGMENTAL REVIEW continued
Adjusted EBITDA
Year ended 31 March
2023 2022 %
US$'m US$'m change
Continuing operations
Ecommerce (1 269) (1 022) (24)
Classifieds(1, 2) (113) (37) >(100)
Food Delivery (545) (651) 16
Payments and Fintech (108) (52) >(100)
Edtech (239) (100) >(100)
Etail (10) 12 >(100)
Other (254) (194) (31)
Social and internet platforms 6 295 7 623 (17)
Tencent 6 295 7 502 (16)
VK(3) - 121 (100)
Corporate segment (166) (160) (4)
Total economic interest from continuing operations 4 860 6 441 (25)
Less: Equity-accounted investments (5 528) (6 985) 21
Total consolidated from continuing operations (668) (544) (23)
Total from discontinued operations(1, 2) 46 133 (65)
Total consolidated (622) (411) (51)
1 From 1 April 2022, following the separation from OLX Group, the CODM
reviewed the financial results of Avito separately. Subsequent to the group's
decision to exit this Russian business, Avito was presented as a discontinued
operation up until the disposal date. The comparative financial results of
Avito, previously presented in the Classifieds Ecommerce segment, have been
reclassified and presented in discontinued operations. Refer to note 5.
2 From 1 March 2023, following the group's decision to exit the OLX
Autos business unit, its operations classified as held for sale and those that
have been closed by 31 March 2023 were presented as a discontinued operation.
The OLX Autos business unit is a separate major line of business, both in
terms of the distinct nature of the business and its contribution to the
operational performance of the group. The comparative financial results of
these operations previously presented in the Classifieds Ecommerce segment,
have been reclassified and presented in discontinued operations. Refer to note
5.
3 During the year ended 31 March 2022, the group lost significant
influence in VK Company Limited (VK). In November 2022, the group signed an
agreement with VK to renounce all VK shares and shareholder rights for no
consideration.
4. SEGMENTAL REVIEW continued
Trading (loss)/profit
Year ended 31 March
2023 2022 %
US$'m US$'m change
Continuing operations
Ecommerce (1 509) (1 206) (25)
Classifieds(1, 2) (156) (70) >(100)
Food Delivery (649) (724) 10
Payments and Fintech (116) (60) (93)
Edtech (258) (117) >(100)
Etail (63) (35) (80)
Other (267) (200) (34)
Social and internet platforms 5 085 6 319 (20)
Tencent 5 085 6 273 (19)
VK(3) - 46 (100)
Corporate segment (173) (167) (4)
Total economic interest from continuing operations 3 403 4 946 (31)
Less: Equity-accounted investments (4 193) (5 590) 25
Total consolidated from continuing operations (790) (644) (23)
Total from discontinued operations(1, 2) 26 97 (73)
Total consolidated (764) (547) (40)
1 From 1 April 2022, following the separation from OLX Group, the CODM
reviewed the financial results of Avito separately. Subsequent to the group's
decision to exit this Russian business, Avito was presented as a discontinued
operation up until the disposal date. The comparative financial results of
Avito, previously presented in the Classifieds Ecommerce segment, have been
reclassified and presented in discontinued operations. Refer to note 5.
2 From 1 March 2023, following the group's decision to exit the OLX
Autos business unit, its operations classified as held for sale and those that
have been closed by 31 March 2023 were presented as a discontinued operation.
The OLX Autos business unit is a separate major line of business, both in
terms of the distinct nature of the business and its contribution to the
operational performance of the group. The comparative financial results of
these operations previously presented in the Classifieds Ecommerce segment,
have been reclassified and presented in discontinued operations. Refer to note
5.
3 During the year ended 31 March 2022, the group lost significant
influence in VK Company Limited (VK). In November 2022, the group signed an
agreement with VK to renounce all VK shares and shareholder rights for no
consideration.
5. PROFIT FROM DISCONTINUED OPERATIONS
Discontinued operations consist of the group's Russian business and the OLX
Autos business unit.
In May 2022, as a result of the continued conflict in the region, the group
announced its decision to exit its Russian business. Accordingly, Avito was
presented as a discontinued operation. The group entered into an agreement to
sell its shareholding in Avito to Kismet Capital Group (Kismet) for a total
cash consideration of US$2.4bn. Kismet is a private investment group with a
track record of investing in technology and telecommunications businesses in
Russia. The transaction was completed in October 2022. The group recognised a
gain on disposal of the subsidiary of US$568m, including a reclassification of
the accumulated foreign currency translation gains of US$202m.
Discontinued operations for the OLX Autos business include the operations
classified as held for sale and the operations closed down by 31 March 2023.
Refer to note 14 for details of this business unit's disposal group.
The financial information relating to the group's discontinued operations is
set out below.
Income statement information of discontinued operations
31 March
2023 2022
US$'m US$'m
Revenue 1 626 1 646
Online sale of goods revenue 944 980
Classifieds listings revenue 601 582
Advertising revenue 50 50
Other revenue 31 34
Expenses (1 606) (1 550)
Impairment of goodwill and other assets(1) (19) -
Other expenses (1 587) (1 550)
Profit before tax 20 96
Taxation (46) (43)
(Loss)/profit for the period (26) 53
Gain on disposal of discontinued operation 568 -
Profit from discontinued operations 542 53
Profit from discontinued operations attributable to:
Equity holders of the group 537 52
Non-controlling interest 5 1
542 53
1 Relates to impairment losses of goodwill and other assets in the OLX
Autos business unit.
5. PROFIT FROM DISCONTINUED OPERATIONS continued
Cash flow statement information of discontinued operations
31 March
2023 2022
US$'m US$'m
Net cash generated from operating activities 145 153
Net cash generated from/(utilised in) investing activities(1) 1 985 (22)
Net cash generated from/(utilised in) financing activities 130 (86)
Cash generated by discontinued operations 2 260 45
1 Includes the net cash inflow from the disposal of Avito. Refer to
note 16.
Per share information from discontinued operations for the year (US cents)(1)
31 March
2023 2022
US cents US cents
Earnings per ordinary share N 40 3
Diluted earnings per ordinary share N 39 3
Headline earnings per ordinary share N - 4
Diluted headline earnings per ordinary share N - 4
1 Refer to note 6 for further details on earnings per share from
discontinued operations.
6. EARNINGS PER SHARE
Year ended
31 March
2023 2022
US$'m US$'m
Earnings from continuing operations
Basic earnings attributable to shareholders 9 575 18 681
Impact of dilutive instruments of subsidiaries, associates (116) (170)
and joint ventures
Diluted earnings attributable to shareholders 9 459 18 511
Headline adjustments for continuing operations
Adjustments for: (8 843) (15 660)
Impairment of other assets 33 -
Impairment of goodwill, PPE and other intangible assets 718 246
Loss on sale of assets 4 -
Gains recognised on loss of control transactions (23) -
(Gains)/losses recognised on loss of significant influence (30) 1 112
Net gains on acquisitions and disposals of investments (30) (34)
Gains on partial disposal of equity-accounted investments (7 622) (12 339)
Dilution losses/(gains) on equity-accounted investments 252 (95)
Remeasurements included in equity-accounted earnings(1) (3 887) (5 131)
Impairment of equity-accounted investments 1 742 581
732 3 021
Total tax effects of adjustments - -
Total adjustment for non-controlling interest (104) -
Basic headline earnings from continuing operations(2) 628 3 021
Diluted headline earnings from continuing operations 512 2 851
1 Remeasurements included in equity-accounted earnings include
US$5.9bn (2022: US$6.3bn) relating to gains arising on acquisitions and
disposals by associates and US$1.9bn relating to net impairments of assets
recognised by associates (2021: US$1.1bn).
2 Headline earnings represent net profit for the year attributable to
equity holders of the group, excluding certain defined separately identifiable
remeasurements. The headline earnings measure is pursuant to the JSE Listings
Requirements.
6. EARNINGS PER SHARE continued
Year ended
31 March
2023 2022
US$'m US$'m
Earnings from discontinued operations
Basic earnings attributable to shareholders 537 52
Diluted earnings attributable to shareholders 537 52
Headline adjustments for discontinued operations(1)
Adjustments for: (543) 3
Loss on sale of property, plant and equipment 6 -
Impairment of goodwill, intangible assets and other assets 19 -
Net (gains)/loss on acquisitions and disposals of investments (568) 3
(6) 55
Total adjustment for non-controlling interest 6 -
Basic headline earnings from discontinued operations - 55
Diluted headline earnings from discontinued operations - 55
1 Headline earnings represent net profit for the year attributable to
equity holders of the group, excluding certain defined, separately
identifiable remeasurements. The headline earnings measure is pursuant to the
JSE Listings Requirements.
Earnings per share information
The earnings per share information represents the economic interest per share,
taking into account the impact of the cross-holding agreement between Prosus
and Naspers, which became effective at the time of the closing of the
voluntary share exchange. The cross-holding agreement deals with how
distributions by Prosus will be attributed to its ordinary shareholders N.
Under the cross-holding agreement, Naspers has waived its entitlement to any
distributions from Prosus for a calculated number of the ordinary shares N it
holds in Prosus, as these represent the portion of the Prosus ordinary shares
N that Prosus indirectly owns in itself, by virtue of its 52.5% (2022: 49.5%)
fully dilutive interest in Naspers. These ordinary shares N (cross-holding
ordinary shares N) are excluded from the earnings per share calculation, as
they contractually do not have an economic interest in the earnings of the
group.
The number of shares in issue used in the earnings per share information is
weighted for the period that the shares were in issue and not recognised as
treasury shares. Refer to note 3 for the impact of the share repurchase
programme.
6. EARNINGS PER SHARE continued
The ordinary shareholders A and B are entitled to one voting right per share.
The ordinary shareholders A are entitled to one fifth of the economic rights
attributable to the Prosus free-float shareholders. The ordinary shareholders
B are entitled to one millionth of the economic rights of the Prosus ordinary
shares N.
Year ended
31 March
2023 2022
US$'m US$'m
Earnings attributable to shareholders 9 575 18 681
Headline earnings 628 3 021
Number of Number of
participating participating
ordinary ordinary
shares N shares N
Issued shares
Net number of shares in issue at year-end 1 851 020 628 2 003 817 745
(net of treasury shares)(1)
Cross-holding ordinary shares N (596 444 361) (584 373 494)
Net number of shares at year-end 1 254 576 267 1 419 444 251
Weighted average number of ordinary shares
Issued net of treasury shares at the beginning of the year 1 419 444 251 1 612 777 577
Weighting of share repurchase (54 343 317) (21 496 865)
Weighting of cross-holding ordinary shares N (7 733 518) (365 033 306)
Weighting of ordinary shares N issued to Naspers shareholders - 280 465 945
Weighted average number of shares in issue during the year(2) 1 357 367 416 1 506 713 351
Adjusted for effect of future share-based payment transactions - -
Diluted weighted average number of shares in issue during the year 1 357 367 416 1 506 713 351
Per share information from continuing operations for the year (US cents)(3)
Earnings per ordinary share N 705 1 240
Diluted earnings per ordinary share N 697 1 229
Headline earnings per ordinary share N 46 201
Diluted headline earnings per ordinary share N 38 189
1 Includes 448 991 535 ordinary shares N issued to Naspers
shareholders in the prior period due to share exchange. The Prosus free-float
shareholders hold
714 127 311 ordinary shares N (2022: 823 567 733) with the remaining
1 136 893 317 ordinary shares N (2022: 1 180 250 012) held by Naspers.
2 The number of shares in issue is weighted for the period that the
shares were not recognised as treasury shares as a result of the share
repurchase programme. Refer to note 3.
3 Total earnings per share for ordinary shareholders A amount to 62 US
cents (2022: 108 US cents) and ordinary shareholders B amount to nil US cents.
Earnings per share for ordinary shareholders A from continuing operations
amount to 59 US cents (2022: 108 US cents) and ordinary shareholders B amount
to nil US cents for all periods.
7. REVENUE
Year ended
31 March
Reportable segment(s) where revenue is included 2023 2022
US$'m US$'m
Online sale of goods revenue Etail and Classifieds 2 695 2 826
Classifieds listings revenue Classifieds 436 426
Payment transaction commissions and fees(1) Various 987 703
Mobile and other content revenue Other Ecommerce 51 71
Food-delivery revenue Food Delivery 1 366 986
Advertising revenue Classifieds 32 35
Educational technology revenue Edtech 134 83
Other revenue Various 64 90
5 765 5 220
1 This revenue is generated primarily from the Payments and Fintech
segment and includes interest income revenue relating to the group's credit
business across various segments.
Revenue in the table above relates to revenue from contracts with customers
except for interest income revenue of US$91m (2022: US$14m) from the group's
credit business in various segments.
Revenue is presented on an economic-interest basis (ie including the
proportionate consolidation of the revenue of associates and joint ventures)
in the group's segmental review and is accordingly not directly comparable to
the above consolidated revenue figures. Below is the group's revenue by
geographic area.
Year ended
31 March
Geographical area 2023 2022
US$'m US$'m
From continuing operations
Asia 528 358
Europe 2 833 2 956
Central Europe 641 736
Eastern Europe 2 130 2 121
Western Europe 62 99
Latin America 2 252 1 776
North America 87 65
Other 65 65
Total 5 765 5 220
8. FINANCE (COSTS)/INCOME
Year ended
31 March
2023 2022
US$'m US$'m
Interest income 476 52
Loans and bank accounts(1) 444 34
Other 32 18
Interest expense (555) (398)
Loans and overdrafts (512) (384)
Capitalised lease liabilities (7) (5)
Other (36) (9)
Other finance income/(costs) - net 18 (92)
Gains/(losses) on translation of assets and liabilities 100 133
Gains/(losses) on derivative and other financial instruments(2) (82) (225)
1 The increase in the current year relates primarily to increased cash
and short-term investments.
2 The prior year included a cost of US$217m related to the early
settlement of portions of the 2025 and 2027 bonds.
9. PROFIT BEFORE TAXATION
In addition to the items already detailed, profit before taxation has been
determined after taking into account, inter alia, the following:
Year ended
31 March
2023 2022
US$'m US$'m
Depreciation 102 88
Amortisation 88 80
Software 13 7
Other intangible assets 75 73
Impairment losses on financial assets measured at amortised cost 37 12
Net realisable value adjustments on inventory, net of reversals(1) 14 6
Other (losses)/gains - net (747) (169)
Loss on sale of assets (4) -
Impairment of goodwill, PPE and other intangible assets (718) (246)
Impairment of other assets (33) -
Income on business support services 8 34
Dividends received from investments - 45
Other - (2)
Net gains/(losses) on acquisitions and disposals 55 (1 127)
Gains on disposal of investments - net 30 34
Gains recognised on loss of control transactions 23 -
Gains/(losses) on loss of significant influence(2) 30 (1 112)
Remeasurement of contingent consideration 1 (6)
Transaction-related costs (31) (42)
Other 2 (1)
1 Net realisable value writedowns relate primarily to the Classifieds
and Etail segments.
2 In the 31 March 2022 financial year, the group reclassified a
portion of the foreign currency translation reserves related to VK from 'Other
comprehensive income' to the summary consolidated income statement, amounting
to a loss of US$1.1bn as a result of the loss of significant influence.
10. GOODWILL
Movements in the group's goodwill for the year are detailed below:
Year ended
31 March
2023 2022
US$'m US$'m
Goodwill
Cost 3 727 2 261
Accumulated impairment (355) (159)
Opening balance 3 372 2 102
Foreign currency translation effects(1) 372 (168)
Acquisitions of subsidiaries and businesses 11 1 692
Disposals of subsidiaries and businesses (10) (8)
Transferred to assets classified as held for sale(2, 3) (1 649) -
Impairment (684) (246)
Closing balance 1 412 3 372
Cost 2 383 3 727
Accumulated impairment (971) (355)
1 The current period includes a net monetary gain of US$95m relating
to hyperinflation accounting for the group's subsidiaries in Turkey.
2 Includes US$15m foreign currency translation gains relate primarily
to Avito that was classified as held for sale prior to its disposal in October
2022.
3 Relates primarily to Avito which was classified as held for sale in
May 2022 prior to its disposal in October 2022 as well as the OLX Autos
disposal group classified as held for sale in March 2023. Refer to note 5.
Goodwill is tested annually as at 31 December or more frequently if there is a
change in circumstances that indicates that it might be impaired. The group
has allocated goodwill to various cash-generating units (CGUs). The
recoverable amounts of these CGUs have been determined based on the higher of
the value in use calculations and the fair value less costs of disposal.
During the current year and prior financial year, the recoverable amounts for
CGUs were determined by predominantly using value in use calculations. Value
in use is based on discounted cash flow calculations. These cash flow
calculations are based on 10-year forecast information as many businesses have
monetisation timelines longer than five years.
For the year ended 31 March 2023, the impairment assessment took into
consideration the increase in market interest rates and country risk premiums
and the overall business performance. The overall performance of the CGUs
during the year was compared against budgets and forecasts. The group based
its cash flow calculations on 10-year budgeted and forecast information
approved by senior management and/or the various boards of directors of group
companies. The 10-year budgets and forecasts consisted of cash flow
projections including macroeconomic factors and trends.
The group recognised impairment losses on goodwill of US$684m (2022: US$246m)
in the current year of which US$560m relate to Stack Overflow in the Edtech
segment and US$116m relates to the OLX Autos business unit. The impairment
loss of the OLX Autos business unit is as a result of the group's decision to
exit the business and the assessment of the value that cannot be realised. The
remainder of the goodwill related to this business is transferred to the
disposal group classified as held for sale. The goodwill was allocated to the
disposal group based on the relative fair values of the operations within the
business (refer to note 14). Stack Overflow is a recent acquisition; however,
the increase in risk-free rates resulted in an increase in the discount rate
used in the value in use calculation for this investment. In addition, the
business has not performed as expected in the current year due to challenging
macroeconomic conditions. The recoverable amount was therefore below the
carrying amount and resulted in the impairment loss. The prior year impairment
related to Stack Overflow as a result of increased discount rates used in the
value in use calculation for this investment.
11. INVESTMENTS IN ASSOCIATES
The movement in the carrying value of the group's investments in associates is
detailed in the table below:
Year ended
31 March
2023 2022
US$'m US$'m
Opening balance 44 457 40 556
Associates acquired - gross consideration 769 4 823
Associates disposed of (1) (10)
Associates transferred to held for sale (5) (38)
Share of current year changes in OCI and net asset value (1 741) (2 699)
Share of equity-accounted results 5 321 9 307
Impairment (1 725) (581)
Dividends received(1) (5 089) (4 426)
Loss of significant influence (743) -
Foreign currency translation effects (2 122) (252)
Partial disposal of interest in associate(2) (2 930) (2 316)
Dilution (losses)/gains(3) (261) 93
Closing balance 35 930 44 457
1 In the current year, the dividend received from Tencent amounted to
US$565m cash and dividend in specie of US$4.5bn in Meituan shares (2022:
US$570m cash dividend and dividend in specie of US$3.9bn in JD.com shares).
2 Relates to partial disposal of Tencent. During the current year the
group recognised a gain on partial disposal of US$7.6bn (2022: US$12.3bn).
3 The total dilution gains represented in the summary consolidated
income statement relate to the group's diluted effective interest in associate
and the reclassification of a portion of the group's foreign currency
translation reserves from the summary consolidated statement of other
comprehensive income to the summary consolidated income statement following
the shareholding dilutions.
Impairment of equity-accounted investments
The group assesses whether there is an indication that its equity-accounted
investments are impaired. For the year ended 31 March 2023, the group
assessment took into consideration the market capitalisation of the listed
equity-accounted investments, the increase in market interest rates and
country risk premiums, and the overall business performance.
Impairment assessments for the group's listed equity-accounted investments
related to Delivery Hero and Skillsoft as a result of a decline in the market
capitalisation and the increase in country risk premiums for these
investments. Impairment assessments for the group's unlisted equity-accounted
investments related primarily to an investment in the Classifieds segment
as a result of the increase in market interest rates and the overall business
performance.
The recoverable amounts of equity-accounted investments have been determined
based on the higher of the value in use calculations and the fair value less
costs of disposal. During the current year and prior financial year, the
recoverable amounts were determined using value in use calculations except
for Skillsoft which was determined using fair value less costs of disposal
(market price) as at 31 March 2023. The recoverable amount for Skillsoft was,
however, based on a value in use calculation as at 30 September 2022. As at 31
March 2023, Skillsoft was impaired to its market value due to the significant
decline in the share price over time. Accordingly, the market price is
considered the supportable representation of the recoverable amount for the
investment. The value in use calculation was determined using the discounted
cash flow method. The market price of Skillsoft is level 1 on the fair value
hierarchy. The group used 10-year projected cash flow models as many
businesses have monetisation timelines of longer than five years.
For Delivery Hero, the value in use calculations were higher than the market
price for this investment because market prices include current market
sentiment, while value in use calculations consider a longer-term horizon. The
increase of the market price following the release of the December 2022 and
first quarter 2023 financial results, supports the recoverable amount
determined by the value in use calculations.
The value in use calculations for the listed equity-accounted investments were
determined using the sum-of-the-parts approach. Delivery Hero's 10-year
projected cash flow models incorporated market views and publicly available
analyst projections. Skillsoft's 10-year projected cash flow models as at
September 2022 incorporated forecast cash flow information based on the
company's latest guidance.
For the unlisted equity-accounted investments, the 10-year projected cash flow
models incorporated forecast cash flow information based on the latest
management guidance provided.
11. INVESTMENTS IN ASSOCIATES continued
Impairment of equity-accounted investments continued
The value in use calculations determined the equity values for the investments
which took into consideration the following key assumptions:
Revenue and expenses
Revenue and expenses in the cash flow models were based on past experience,
management's future expectations of business performance and the latest
guidance announced by Delivery Hero and Skillsoft.
Growth rates
The growth rates were consistent with publicly available information relating
to long-term average growth rates for the markets in which the
equity-accounted investments operate. The annual growth rate used for revenue
and expenses over the 10-year forecast period ranged between 5% to 41% (2022:
2% to 47%) for equity-accounted investments.
Discount rates
The discount rates used reflect specific risks relating to the relevant
operations and the regions in which they operate, while for certain
operations, risk adjustments are made to discount rates used when calculating
the value in use. Discount rates take into account country risk premiums and
inflation differentials, as appropriate. Post-tax discount rates used ranged
between 11% to 29% (2022: 10% to 20%). Pre-tax discount rates used ranged
between 13% to 35% (2022: 11% to 25%) for equity-accounted investments.
Terminal growth rates
The terminal growth rates considered the steady growth rates that would
appropriately extrapolate cash flows beyond the forecast periods once the
business segment is assumed to have reached maturity. The terminal growth
rates ranged between 2% to 8% (2022: 2% to 5%) for equity-accounted
investments. The terminal growth rate was based on the expected growth in
perpetuity in the markets where these businesses operate.
The recoverable amounts for the above investments were lower than the
respective carrying amounts. Accordingly, for the year ended 31 March 2023, an
impairment loss of US$1.7bn (2022: US$584m) was recognised for
equity-accounted investments of which US$997m (recognised in the first half of
the financial year) related to Delivery Hero (2022: US$nil), US$301m related
to Skillsoft (2022: US$111m) and US$425m related primarily to unlisted
equity-accounted investments (2022: US$nil). For the Skillsoft impairment loss
the group recognised US$204m at September 2022 and a further US$97m as at 31
March 2023. The impairment loss for unlisted equity-accounted investments
includes US$326m related to an investment in the Classifieds segment.
At 31 March 2023, the carrying value for Delivery Hero and Skillsoft was
US$3.4bn and US$123m (2022: US$4.9bn and US$383m) respectively, while the
group share in the market capitalisation of these investments was US$2.7bn
and US$123m (2022: US$3.0bn and US$302m) respectively.
Sensitivity to changes in assumptions
An adverse adjustment to any of the above key assumptions used in the value in
use calculations would result in additional impairment losses being
recognised.
12. OTHER INVESTMENTS AND LOANS
Year ended
31 March
2023 2022
US$'m US$'m
Investments at fair value through other comprehensive income (OCI) 7 528 5 918
Investments at fair value through profit or loss 34 63
Investments at amortised cost 8 -
Other investments and loans 254 429
Total investments and loans 7 824 6 410
Current portion of other investments (4 707) -
Investments at fair value through OCI (4 707) -
Non-current portion of other investments 3 117 6 410
Reconciliation of investments at fair value through other comprehensive income
Opening balance 5 918 4 122
Fair value adjustments recognised in OCI (158) (1 210)
Purchases/additional contributions(1) 4 724 5 646
Loss of significant influence of investments in associate 830 26
Disposals(2) (3 775) (45)
Impact of the share repurchase programme and share exchange transaction(3, 4) 10 (2 665)
Foreign currency translation effects (21) 44
Closing balance 7 528 5 918
1 Significant movement in the current year relates to the Meituan
dividend in specie received from Tencent. The prior year related to the
acquisition of Naspers shares prior to the share exchange transaction and the
JD.com dividend in specie received from Tencent. Refer to note 16.
2 The significant movement in the current year relates to the disposal
of the JD.com investment. Refer to note 16.
3 The current period includes the movement in the residual interest in
the Naspers group as a result of the purchase of Naspers shares.
4 Significant movement in prior year relates to the share exchange
transaction in August 2021.
13. COMMITMENTS AND CONTINGENT LIABILITIES
Commitments relate to amounts for which the group has contracted, but that
have not yet been recognised as obligations in the statement of financial
position.
Year ended
31 March
2023 2022
US$'m US$'m
Commitments 307 149
Capital expenditure - -
Other service commitments 306 132
Lease commitments(1) 1 17
1 Lease commitments include the group's short-term lease arrangements
as well as other contractual lease agreements whose commencement dates are
after
31 March 2023. Short-term lease commitments relate to leasing arrangements
with lease terms of 12 months or less that are not recognised in the summary
consolidated statement of financial position.
As a global technology investor, the group's portfolio of businesses is well
diversified by sector and geography. The group operates on a decentralised
basis in numerous countries. Businesses are based in the countries where their
operations, their users and consumers are. As a result, the group's businesses
pay taxes locally, in the jurisdictions where they operate and where the
group's products and services are consumed. Where relevant and appropriate,
the group seeks advice and works with its advisers to identify and quantify
contingent tax exposures. Our current assessment of possible tax exposures,
including interest and potential penalties, amounts to approximately US$191m
(2022: US$nil).
14. DISPOSAL GROUPS CLASSIFIED AS HELD FOR SALE
In September 2022, the assets and liabilities of the group's subsidiary Zoop
Tecnologia e Meios de Pagamento S.A. (Zoop) were classified as held for sale
following the decision to sell the investment. The group is in negotiations
with potential buyers.
In March 2023, the group announced the decision to exit the OLX Autos business
unit. The disposal group that is classified as held for sale consists of
assets and liabilities of the operations that management has committed to a
plan to sell. Efforts to sell the disposal group are in progress and is
expected in the 2024 financial year.
The assets and liabilities of the businesses classified as held for sale are
detailed below:
Year ended
31 March
2023 2022
US$'m US$'m
Assets 649 38
Property, plant and equipment 26 -
Goodwill 302 -
Other intangible assets 29 -
Investments in associates - 38
Inventory 32 -
Deferred taxation assets 2 -
Trade and other receivables 164 -
Cash and cash equivalents(1) 94 -
Liabilities 276 -
Derivative financial instruments 1 -
Deferred taxation liabilities 13 -
Long-term liabilities 29 -
Provisions 2 -
Trade payables 165 -
Accrued expenses and other current liabilities 66 -
1 Included in cash and cash equivalents is US$45m related to
restricted cash from Zoop.
15. EQUITY COMPENSATION BENEFITS
Liabilities arising from cash-settled share-based payment transactions
Reconciliation of the cash-settled share-based payment liability is as
follows:
Year ended
31 March
2023 2022
US$'m US$'m
Opening carrying amount of cash-settled share-based payment liability 1 127 1 056
SAR scheme charge per the income statement(1) (187) 129
Employment linked put option charge per the income statement 14 23
Additions - 5
Settlements (165) (372)
Modification(2) 5 265
Transferred to liabilities classified as held for sale(3) (37) -
Foreign currency translation effects (44) 21
Closing carrying amount of cash-settled share-based payment liability 713 1 127
Less: Current portion of cash-settled share-based payment liability (656) (964)
Non-current portion of cash-settled share-based payment liability 57 163
1 The decrease in the expense is as a result of the decline in the
fair values of the underlying businesses that decreased the estimated cash
settlement for the schemes.
2 Some of the group's equity-settled compensation plans were
prospectively modified to cash settled due to the change in settlement policy
of the share option schemes. In the 31 March 2022 financial year, the
modification relates primarily to the iFood share option scheme to cash
settled.
3 Relates primarily to Avito which was classified as held for sale in
May 2022 prior to its disposal in October 2022 as well as the OLX Autos
disposal group classified as held for sale in March 2023.
16. Business combinations, other acquisitions and disposals
The following relates to the group's significant transactions related to
business combinations and other investments for the year ended 31 March 2023:
Amount invested US$'m
Company Classification Net Non-cash Cash in Total
cash consi- entity consi-
paid/ deration acquired/ deration
(received) (disposed)
Acquisition of subsidiaries
Other(1) Subsidiary 18 - 1 19
18 - 1 19
Acquisition of equity-accounted investments
Other(1) Associate 12 - - 12
12 - - 12
Additional investment in existing equity-accounted investments
a Delivery Hero SE (Delivery Hero) Associate 194 288 - 482
Other(1) Associate 98 - - 98
292 288 - 580
Other investments
b DoorDash Inc. (DoorDash) FVOCI - 58 - 58
e Think & Learn Private Limited (BYJU'S) FVOCI - 578 - 578
f Udemy Inc. (Udemy) FVOCI - 207 - 207
h Oda Norway AS (Oda) FVOCI - 45 - 45
g Meituan FVOCI - 4 523 - 4 523
Other(1, 2) FVOCI/FVPL 559 - - 559
559 5 411 - 5 970
Disposal/Partial disposal of investments
b Wolt Enterprises OY (Wolt) FVOCI - (58) - (58)
c JD.com FVOCI (3 666) - - (3 666)
d Tencent Holdings Limited (Tencent) Associate (10 613) (103) - (10 716)
e Think & Learn Private Limited (BYJU'S) Associate - (578) - (578)
f Udemy Inc. (Udemy) Associate - (207) - (207)
h Oda Norway AS (Oda) Associate - (45) - (45)
Other(1) (44) - - (44)
(14 323) (991) - (15 314)
Disposal of subsidiaries
i Avito Subsidiary (2 039) - (326) (2 365)
Other(1) Subsidiary (14) (21) (14) (49)
(2 053) (21) (340) (2 414)
1 'Other' includes various acquisitions and disposals of subsidiaries,
associates, joint-ventures and other investments that are not individually
material.
2 Includes the call options acquired for Delivery Hero shares prior to
them being exercised.
16. BUSINESS COMBINATIONS, OTHER ACQUISITIONS AND DISPOSALS continued
Additional investment in existing equity-accounted investments
a. During the current year the group acquired an additional investment in
Delivery Hero between December 2022 and March 2023, which increased its
shareholding by approximately 4% to 29.95%. The additional interest was
acquired by the purchase of shares on the market for US$194m and the purchase
of a call option to acquire additional shares which was exercised in March
2023.
Other investments
b. In June 2022, in exchange for the group's entire interest in Wolt (a food and
grocery-delivery marketplace), the group received shares in DoorDash to the
value of US$58m. DoorDash is a predominantly US-focused, food, grocery, and
retail delivery marketplace, listed on the NYSE. The investment is not held
for trading, therefore, the group accounts for this as an investment at fair
value through other comprehensive income.
Disposal/Partial disposal of investments
c. In March 2022, the group received a special interim dividend from Tencent in
the form of a distribution in specie of 131 873 028 JD.com shares. The group
completed the sale of the 131 873 028 JD.com shares in June 2022, for total
proceeds of US$3.7bn. Accumulated fair value losses related to these shares of
US$189m were reclassified from the valuation reserve to retained earnings
within equity as a result of this disposal.
d. From June 2022 to the end of March 2023, the group sold approximately 3% of
Tencent's issued share capital. The group reduced its stake in Tencent from
29% to 26%, for total proceeds of US$10.7bn of which US$103m was receivable at
31 March 2023. The group recognised a gain on partial disposal of US$7.6bn,
including a reclassification of accumulated foreign currency translation
losses of US$155m. Proceeds from this disposal are used to fund the group's
share repurchase programme.
e. In September 2022, the group lost significant influence in BYJU'S as it no
longer exerts significant influence over the financial and operating policies
of the entity. The group recognised a gain on loss of significant influence of
the associate of US$22m, including a reclassification of the accumulated
foreign currency translation losses of US$55m. The group accounted for its
9.60% effective interest in BYJU'S at fair value through other comprehensive
income. The fair value of the BYJU'S investment subsequent to the loss
of significant influence is US$578m.
f. In September 2022, the group lost its board representation in Udemy. The group
recognised a gain on loss of significant influence of the associate of US$77m.
The group accounts for its 11.78% effective interest in Udemy at fair value
through other comprehensive income. The fair value of the Udemy investment
subsequent to the loss of significant influence is US$207m.
g. In November 2022, Tencent declared a special interim dividend in the form of a
distribution in specie of 958 121 562 class B ordinary shares of Meituan to
its shareholders on the basis of one (1) class B ordinary share of Meituan for
every 10 shares held. As a result of this distribution the group obtained a 4%
effective interest (257 460 450 class B ordinary shares) in Meituan. Meituan
is a Chinese shopping platform for locally found consumer products and retail
services including entertainment, dining, delivery, travel and other services.
The investment is not held for trading; however, the group expects to sell the
shares in due course. The group accounts for this as an investment at fair
value through other comprehensive income.
The group recognised a dividend receivable up until the distribution date of
24 March 2023. The dividend in specie distribution of the investment in
Meituan has reduced the investment in Tencent by US$4.5bn, representing the
fair value of the investment on the distribution date.
h. In December 2022, the group lost its significant influence in Oda due to the
loss of its board representation. The group recognised a loss of US$68m on
loss of significant influence of the associate, including a reclassification
of the accumulated foreign currency translation losses of US$14m. The group
accounts for its 12.87% effective interest in Oda at fair value through other
comprehensive income. The fair value of the Oda investment subsequent to the
loss of significant influence is US$45m.
Disposal of subsidiaries
i. In October 2022, the group entered into an agreement to sell its shareholding
in Avito to Kismet Capital Group (Kismet) for a total cash consideration of
US$2.4bn. Kismet is a private investment group with a track record of
investing in technology and telecommunications businesses in Russia. The group
recognised a gain on disposal of the subsidiary of US$568m, including a
reclassification of the accumulated foreign currency translation gain of
US$202m.
17. FINANCIAL INSTRUMENTS
The group's activities expose it to a variety of financial risks such as
market risk (including currency risk, fair value interest rate risk, cash flow
interest rate risk and price risk), credit risk and liquidity risk.
The summary consolidated financial statements do not include all financial
risk management information and disclosures as required in the annual
consolidated financial statements and should be read in conjunction with the
group's risk management information disclosed in note 40 of the consolidated
financial statements, published in the annual report of Prosus for the year
ended 31 March 2023. There have been no material changes in the group's
credit, liquidity, market risks or key inputs used in measuring fair value
since 31 March 2022.
The fair values of the group's financial instruments that are measured at fair
value at each financial year end presented, are categorised as follows:
Fair value measurements at 31 March 2023 using:
Carrying Quoted Significant Significant
value prices in other unobservable
US$'m active observable inputs
markets inputs (level 3)
for (level 2) US$'m
identical US$'m
assets or
liabilities
(level 1)
US$'m
Assets
Financial assets at fair value through other comprehensive income 7 528 6 044 - 1 484
Financial assets at fair value through profit or loss 34 4 - 30
Forward exchange contracts 5 - 5 -
Cash and cash equivalents(1) 447 - 447 -
Liabilities
Forward exchange contracts 1 - 1 -
Earn-out obligations 109 - - 109
1 Relates to short-term bank deposits which are money market funds
held with major banking groups and high-quality institutions that have AAA
money market fund credit ratings from internationally recognised ratings
agencies.
17. FINANCIAL INSTRUMENTS continued
Fair value measurements at 31 March 2022 using:
Carrying Quoted Significant Significant
value prices in other unobservable
US$'m active observable inputs
markets inputs (level 3)
for (level 2) US$'m
identical US$'m
assets or
liabilities
(level 1)
US$'m
Assets
Financial assets at fair value through other comprehensive income 5 918 4 765 - 1 153
Financial assets at fair value through profit or loss 63 19 - 44
Cash and cash equivalents(1) 928 - 928 -
Forward exchange contracts 27 - 27 -
Derivatives contained in lease agreements 11 - - 11
Cross-currency interest rate swap 2 - 2 -
Liabilities
Forward exchange contracts 18 - 18 -
Earn-out obligations 20 - - 20
Derivatives contained in lease agreements 2 - - 2
1 Relates to short-term bank deposits which are money market funds
held with major banking groups and high-quality institutions that have AAA
money market fund credit ratings from internationally recognised ratings
agencies.
There was a transfer of US$nil (2022: US$4m) from level 2 to level 1 and a
transfer of US$1m (2022: US$10m) from level 3 to
level 1. There was another transfer of US$622m (2022: US$nil) to level 3 due
to investments in associates that lost significant influence during the
current year. There were no significant changes to the valuation techniques
and inputs used in measuring fair value.
Valuation techniques and key inputs used to measure significant level 2 and
level 3 fair values
Level 2 Fair value measurement
Forward exchange contracts - in measuring the fair value of forward exchange
contracts, the group makes use of market observable quotes of forward foreign
exchange rates on instruments that have a maturity similar to the maturity
profile of the group's forward exchange contracts. Key inputs used in
measuring the fair value of forward exchange contracts include: current spot
exchange rates, market forward exchange rates and the term of the group's
forward exchange contracts.
Cross-currency interest rate swap - the fair value of the group's interest
rate and cross-currency swaps is determined through the use of discounted cash
flow techniques using only market observable information. Key inputs used in
measuring the fair value of interest rate and cross-currency swaps include:
spot market interest rates, contractually fixed interest rates, foreign
exchange rates, counterparty credit spreads, notional amounts on which
interest rate swaps are based, payment intervals, risk-free interest rates as
well as the duration of the relevant interest rate and cross-currency swap
arrangement.
Cash and cash equivalents - relate to short-term bank deposits which are money
market funds held with major banking groups and high-quality institutions that
have AAA money market fund credit ratings from internationally recognised
rating agencies. The fair value of these deposits is determined by the amounts
deposited and the gains or losses generated by the funds as detailed in the
statements provided by these institutions. The gains/losses are recognised in
the income statement.
Financial assets at fair value - relates to a contractual right to receive
shares or cash. The fair value is based on a listed share price on the date
the transaction was entered into.
17. FINANCIAL INSTRUMENTS continued
Valuation techniques and key inputs used to measure significant level 2 and
level 3 fair values continued
Level 3 fair value measurements
Financial assets at fair value - relate predominantly to unlisted equity
investments and the residual interest in the Naspers group. The fair value of
unlisted equity investments is based on the most recent funding transactions
for these investments, a discounted cash flow calculation (DCF), or a
weighted-income and market approach using a discounted cash flow calculation
and market multiples. The unlisted equity investments based on a DCF or
weighted-income and market approach relate to investments in the Edtech
segment. The fair value of these unlisted equity investments is based on the
following unobservable inputs:
Revenue growth rates and EBITDA margins
Revenue growth rates and EBITDA margins are based on past experience and
management's future expectations of business performance.
Long-term growth rate
The long-term growth rate is based on expectations for inflation in the
regions in which the business operates - the data is sourced from publicly
available information. The long-term growth rate is spread over a 10-year
forecast period. The annual growth rate used for revenue and expenses over the
10-year forecast period ranged between 2% to 6%.
Discount rate
The discount rate used is a weighted average cost of capital. The weighted
average cost of capital takes into account the cost of equity and cost of
debt. The cost of equity is based on a risk-free rate adjusted for specific
risks such as a country risk and equity risk premium. The cost of debt is
based on the pre-tax cost of debt adjusted with a sovereign spread premium net
of tax. Discount rates used ranged between 12% to 15%.
Terminal growth rate
The terminal growth rate considered the steady growth rates that would
appropriately extrapolate cash flows beyond the forecast periods once the
business segment has assumed to reach maturity. The terminal value assumes
that free cash flow in the terminal period grows at the long-term growth rate
and is then calculated using the Gordon Growth Model. Terminal growth rates
used ranged between 1% to 5%.
For our largest investment in the Edtech segment, a 1% increase in the
discount rates would result in a decrease in the valuation of this investment
by US$53m and a 1% decrease in the discount rates would result in an increase
in the valuation of this investment by US$60m.
The fair value of the residual interest in the Naspers group was assessed
based on the sum of the parts considering the fair value of the underlying
components on a marketable and controlling basis, applying a consistent
valuation model. The group further applied a marketability discount (45%) to
arrive at the fair value of the residual interest on a non-marketable and
non-controlling basis (unit of account). A marketability discount factors in
the indirect interest in the residual assets as Prosus cannot directly or
indirectly dispose of any Naspers shares without Naspers' approval, and cannot
direct the activities or decide on the distributions (be it dividends or the
actual shares) from the residual interest in Naspers to its shareholders. A
movement in the marketability discount rate of 1% will result in an increase
or decrease of US$4m.
Derivatives contained in lease agreements - relate to foreign currency
forwards embedded in lease contracts. The fair value of the derivatives is
based on forward foreign exchange rates that have a maturity similar to the
lease contracts and the contractually specified lease payments.
Earn-out obligations - relate to amounts that are payable to the former owners
of businesses now controlled by the group, provided that contractually
stipulated post-combination performance criteria are met. These are remeasured
to fair value at the end of each reporting period. Key inputs used in
measuring fair value include: current forecasts of the extent to which
management believes performance criteria will be met, discount rates
reflecting the time value of money and contractually specified earn-out
payments.
Instruments not measured at fair value for which fair value is disclosed
Level 2 - the fair values of the publicly traded bonds have been determined
with reference to the listed prices of the instruments at the reporting date.
As the instruments are not actively traded, this is a level 2 disclosure.
17. FINANCIAL INSTRUMENTS continued
The following table shows a reconciliation of the group's level 3 financial
instruments:
31 March 2023
Financial Financial Earn-out Derivatives
assets at assets at obligations embedded
FVOCI(1) FVPL(2) US$'m in leases
US$'m US$'m US$'m
Balance at 1 April 2022 1 153 44 (20) 9
Additions 38 41 (96) -
Total (losses)/gains recognised in the income statement - (11) 7 -
Total losses recognised in other comprehensive income (270) - - -
Settlements/disposals (65) (35) - (9)
Impact of share exchange 10 - - -
Transfer to held for sale - (9) - -
Transfers from investments in associates 622 - - -
Foreign currency translation effects (4) - - -
Balance at 31 March 2023 1 484 30 (109) -
31 March 2022
Financial Financial Earn-out Derivatives
assets at assets at obligations embedded
FVOCI(1) FVPL(2) US$'m in leases
US$'m US$'m US$'m
Balance at 1 April 2021 133 16 (13) 7
Additions 967 22 - -
Total gains/(losses) recognised in the income statement - 6 (9) 2
Total gains recognised in other comprehensive income 107 - - -
Settlements/disposals (46) - 1 -
Transfers (10) - - -
Foreign currency translation effects 2 - 1 -
Balance at 31 March 2022 1 153 44 (20) 9
1 Financial assets at fair value through other comprehensive income.
2 Financial assets at fair value through profit or loss.
17. FINANCIAL INSTRUMENTS continued
The carrying value of financial instruments are a reasonable approximation of
their fair value, except for the publicly traded bonds detailed below:
31 March 2023 31 March 2022
Financial liabilities Carrying Fair Carrying Fair
value value value value
US$'m US$'m US$'m US$'m
Publicly traded bonds 15 377 12 009 15 492 13 056
The fair values of the publicly traded bonds have been determined with
reference to the listed prices of the instruments as at the end of the
reporting period. The fair value of the publicly traded bonds are level 2
financial instruments. The publicly traded bonds are listed on the Irish Stock
Exchange (Euronext Dublin).
18. RELATED PARTY TRANSACTIONS AND BALANCES
The group entered into transactions and has balances with a number of related
parties, including equity-accounted investments, directors (key management
personnel), shareholders, and entities under common control. Transactions that
are eliminated on consolidation as well as gains or losses eliminated through
the application of the equity method are not included. The transactions and
balances with related parties are summarised below:
Year ended
31 March
2023 2022
US$'m US$'m
Sale of goods and services to related parties(1)
EMPG Holdings Limited - 12
MIH Holdings Proprietary Limited 11 12
Bom Negocio Atividades de Internet Ltda (OLX Brasil) 28 14
Skillsoft Corp. 8 34
Various other related parties 1 1
48 73
1 The group receives revenue from a number of its related parties in
connection with service agreements. The nature of these related party
relationships are that of equity-accounted investments and subsidiaries of
Naspers outside of the group.
Year ended
31 March
2023 2022
US$'m US$'m
Services received from related parties(1)
MIH Holdings Proprietary Limited 9 10
Various other related parties 2 1
11 11
1 The group receives corporate and other services rendered by a number
of its related parties. The nature of these related party relationships are
that of entities under the common control of the group's controlling parent,
Naspers.
During the current year the group recharged US$11m (2022: US$12m) to Naspers
companies in respect of services performed on their behalf. In addition,
Naspers recharged costs of US$9m (2022: US$10m) to the group's companies.
18. RELATED PARTY TRANSACTIONS AND BALANCES continued
Year ended
31 March
2023 2022
US$'m US$'m
Dividends paid to holding company
Naspers Limited 89 104
89 104
The balances of receivables and payables between the group and related parties
are as follows:
Year ended
31 March
2023 2022
US$'m US$'m
Loans and receivables(1)
Myriad/MIH (Malta) Limited - 6
MIH Holdings Proprietary Limited 5 1
Bom Negocio Atividades de Internet Ltda (OLX Brasil)(2) 150 219
MIH Treasury Services (Pty) Ltd 11 16
MIH Internet Holding B.V. Share Trust(3) 102 154
Inversiones CMR S.A.S. 1 21
GoodGuyz Investments B.V. 6 6
Silvergate Capital Corporation 2 4
Various other related parties 17 6
Less: Allowance for impairment of loans and receivables(4) - -
Total related party receivables 294 433
Less: Non-current portion of related party receivables (254) (416)
Current portion of related party receivables 40 17
Payables
Zitec Com SRL 3 2
MIH Holdings Proprietary Limited 3 3
Myriad/MIH (Malta) Limited - 2
Various other related parties 2 3
Total related party payables 8 10
Less: Non-current portion of related party payables (2) (2)
Current portion of related party payables 6 8
1 The group provides services and loan funding to a number of its
related parties.
2 During the current year a portion of the loan was capitalised to the
investment in joint venture. The loan is repayable by October 2035 and is
interest-free until April 2022. Subsequently, interest is charged annually
at SELIC+2%.
3 Relates to related party loan-funding provided to Naspers group
share trust for equity compensation plans. The loan is interest-free and
repayable in 2031, or upon winding up of the trust, if earlier. Cash flows for
this transaction are disclosed as investing activities in the summary
consolidated statement of cash flows.
4 Impairment allowance for non-current receivables from related
parties is based on a 12-month expected credit loss model and was not
material.
18. RELATED PARTY TRANSACTIONS AND BALANCES continued
There was no movement in the allowance for impairment of related party
receivables during the year (2022: US$nil).
Terms of significant related party current receivables and payables
The current portion of related party payables amount to US$6m (2022: US$8m).
The above current receivables and payables relate primarily to cost recharges
to/by entities under the common control of Naspers Limited, the group's
ultimate controlling parent. These current receivables and payables are
interest-free.
Shares held in holding company
At 31 March 2023, as a result of the share exchange transaction and share
repurchase programme, Prosus held 52.5% (2022: 49.5%) fully diluted interest,
representing a 52.7% (2022: 49.9%) economic interest in Naspers. Prosus'
legal ownership in Naspers remains less than 50% as at 31 March 2023. The
accounting for the share repurchase programme and the share exchange
transaction takes into consideration the cross-holding agreement between
Prosus and Naspers. The cross-holding agreement governs how distributions
between the two groups should be managed.
Based on the substance of the above transactions, the portion of the effective
interest in Naspers that relates to Prosus' underlying investments is
accounted for as a shareholder distribution in equity. Only Prosus' residual
interest in the Naspers group is recognised as an investment at fair value
through other comprehensive income on the summary consolidated statement of
financial position.
From June 2022, as part of the group's share repurchase programme, Prosus
acquired an additional 4 152 285 Naspers N ordinary shares amounting to
US$626m.
Prosus' residual interest in the Naspers group amounting to US$206m is
recognised as an FVOCI investment.
Refer to note 3 for details of the accounting treatment for the above
transaction.
Naspers guarantees
The group's bonds amounting to US$839m are guaranteed by Naspers Limited. This
is the maximum potential exposure to credit risk under the financial
guarantee contract.
Group equity contributions to Naspers share trusts
The group made contributions to Naspers share trusts amounting to US$191m
(2022: US$190m) during the current year.
19. Events after the reporting period
As part of the share repurchase programme announced in June 2022, Prosus
acquired 27 741 167 Prosus ordinary shares N for US$2.02bn and Naspers
acquired 5 480 549 Naspers N ordinary shares for US$940m between April and 22
June 2023. Furthermore, Naspers disposed of 10 591 976 Prosus ordinary shares
N for US$766m between April and 22 June 2023. The group will account for this
transaction in the same manner that it was accounted for in the year ended 31
March 2023.
The group sold 46 789 700 shares of Tencent Holdings Limited (Tencent) between
April and 22 June 2023 yielding US$2.05bn in proceeds. An accurate estimate
for the gain on disposal of these shares cannot be made until the
corresponding equity-accounted results for the period have been finalised.
In June 2023, the group received the requisite approval from the South African
Reserve Bank for a proposed transaction in terms of which the crossholding
between Naspers and Prosus will be removed. The implementation of the proposed
transaction will enable the continuation of the share repurchase programme at
the Naspers level. The proposed transaction is also intended to remove the
complexity created by the crossholding between Naspers and Prosus while
keeping the Naspers and Prosus free-float effective economic interests the
same as they were prior to its implementation. This will be achieved through
aligning the legal ownership in Prosus with the current respective free-float
effective economic interests. The implementation of the proposed transaction
is subject to the requisite regulatory and Naspers and Prosus shareholder and
final board approvals being obtained.
INDEPENDENT AUDITOR'S REPORT ON THE SUMMARY CONSOLIDATED FINANCIAL STATEMENTS
To: the Board of Directors of Prosus N.V.
Our opinion
In our opinion, the accompanying summary consolidated financial statements of
Prosus N.V. (the Company), are consistent, in all material respects, with the
audited consolidated financial statements, on the basis described in note 2
'Basis of presentation and accounting policies'.
The summary consolidated financial statements
The Company's summary consolidated financial statements derived from the
audited consolidated financial statements for the year ended
31 March 2023 comprise:
· the summary consolidated income statement;
· the summary consolidated statement of comprehensive income;
· the summary consolidated statement of financial position;
· the summary consolidated statement of changes in equity;
· the summary consolidated statement of cash flows; and
· the related notes to the summary consolidated financial statements.
The summary consolidated financial statements do not contain all the
disclosures required by International Financial Reporting Standards as adopted
by the European Union (IFRS-EU) and Part 9 of Book 2 of the Dutch Civil
Code. Reading the summary consolidated financial statements and the auditor's
report thereon, therefore, is not a substitute for reading the audited
consolidated financial statements and the auditor's report thereon.
The audited consolidated financial statements and our report thereon
We expressed an unmodified audit opinion on the audited consolidated financial
statements in our report dated 26 June 2023. That report also includes the
communication of other key audit matters. Key audit matters are those matters
that, in our professional judgement, were of most significance in our audit of
the audited consolidated financial statements of the current period.
Management's responsibility for the summary consolidated financial statements
Management is responsible for the preparation of the summary consolidated
financial statements on the basis described in note 2 'Basis of presentation
and accounting policies' which states that the summary consolidated financial
statements have been prepared in accordance with the accounting policies as
applied by Prosus and consistent with those applied in the consolidated
financial statements for the year ended
31 March 2023.
Auditor's responsibility
Our responsibility is to express an opinion on whether the summary
consolidated financial statements are consistent, in all material respects,
with the audited consolidated financial statements based on our procedures,
which were conducted in accordance with Dutch law, including the Dutch
Standard 810, 'Engagements to Report on Summary Financial Statements'.
Amsterdam, 26 June 2023
PricewaterhouseCoopers Accountants N.V.
Original has been signed by Ennél van Eeden RA
OTHER INFORMATION TO THE SUMMARY CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 March 2023
A. NON-IFRS FINANCIAL MEASURES AND ALTERNATIVE PERFORMANCE MEASURES
A.1 Core headline earnings
Core headline earnings, a non-IFRS performance measure, represent headline
earnings for the period, excluding certain non-operating items. Specifically,
headline earnings are adjusted for the following items to derive core headline
earnings: (i) equity-settled share-based payment expenses on transactions
where there is no cash cost to the group. These include those relating to
share-based incentive awards settled by issuing treasury shares, as well as
certain share-based payment expenses that are deemed to arise on shareholder
transactions; (ii) subsequent fair value remeasurement of cash-settled
share-based incentive expenses; (iii) cash-settled share-based compensation
expenses deemed to arise from shareholder transactions by virtue of
employment; (iv) deferred taxation income recognised on the first-time
recognition of deferred tax assets as this generally relates to multiple prior
periods and distorts current-period performance; (v) fair value adjustments on
financial and unrealised currency translation differences, as these items
obscure our underlying operating performance; (vi) once-off gains and losses
(including acquisition-related costs) resulting from acquisitions and
disposals of businesses as these items relate to changes in our composition
and are not reflective of our underlying operating performance; and (vii) the
amortisation of intangible assets recognised in business combinations and
acquisitions. These adjustments are made to the earnings of businesses
controlled by the group, as well as our share of earnings of associates and
joint ventures, to the extent that the information is available.
Reconciliation of core headline earnings
Year ended
31 March
2023 2022
US$'m US$'m
Headline earnings from continuing operations (refer to note 6) 628 3 021
Adjusted for:
Equity-settled share-based payment expenses 1 449 1 535
Remeasurement of cash-settled share-based incentive expenses (259) 15
Amortisation of other intangible assets 666 695
Fair value adjustments and currency translation differences (88) (1 671)
Retention option expense 23 29
Transaction-related costs 91 46
Core headline earnings from continuing operations 2 510 3 670
Per share information for the year
Core headline earnings per ordinary share N (US cents) 185 244
Diluted core headline earnings per ordinary share N (US cents)(1) 176 232
1 The diluted core headline earnings per share include a decrease of
US$116m (2022: US$170m) relating to the future dilutive impact of potential
ordinary shares issued by equity-accounted investees.
A. NON-IFRS FINANCIAL MEASURES AND ALTERNATIVE PERFORMANCE MEASURES continued
A.1 Core headline earnings continued
Reconciliation of core headline earnings continued
Year ended
31 March
2023 2022
US$'m US$'m
Headline earnings from discontinued operations (refer to note 6) - 55
Adjusted for:
Remeasurement of cash-settled share-based incentive expenses (39) (20)
Amortisation of other intangible assets 10 52
Fair value adjustments and currency translation differences 14 (14)
Retention option expense - (15)
Core headline earnings from discontinued operations (15) 58
Per share information for the year
Core headline earnings per ordinary share N (US cents) (1) 4
Diluted core headline earnings per ordinary share N (US cents) (1) 4
Equity-accounted results
The group's equity-accounted investments contributed to the summary
consolidated financial statements as follows:
Year ended
31 March
2023 2022
US$'m US$'m
Share of equity-accounted results 5 174 9 256
Sale of assets 5 -
Gains on acquisitions and disposals (5 873) (6 269)
Impairment of investments 1 919 1 092
Contribution to headline earnings from continuing operations 1 225 4 079
Amortisation of other intangible assets 641 680
Equity-settled share-based payment expenses 1 440 1 512
Fair value adjustments and currency translation differences (75) (1 761)
Acquisition-related cost 62 42
Contribution to core headline earnings from continuing operations 3 293 4 552
Tencent 4 326 5 413
VK - (51)
Delivery Hero (374) (409)
Other (659) (401)
The group applies an appropriate lag period of not more than three months in
reporting the results of equity-accounted investments.
A. NON-IFRS FINANCIAL MEASURES AND ALTERNATIVE PERFORMANCE MEASURES continued
A.2 Growth in local currency, excluding acquisitions and disposals
The group applies certain adjustments to segmental revenue and trading profit
reported in the summary consolidated financial statements to present the
growth in such metrics in local currency and excluding the effects of changes
in the composition of the group. Such underlying adjustments provide a view of
the company's underlying financial performance that management believes is
more comparable between periods by removing the impact of changes in foreign
exchange rates, hyperinflation adjustments and changes in the composition of
the group on its results. Such adjustments are referred to herein as 'growth
in local currency, excluding acquisitions and disposals'. The group applies
the following methodology in calculating growth in local currency, excluding
acquisitions and disposals:
· Foreign exchange/constant currency adjustments have been calculated
by adjusting the current period's results to the prior period's average
foreign exchange rates, determined as the average of the monthly exchange
rates for that period. The local currency financial information quoted is
calculated as the constant currency results, arrived at using the methodology
outlined above, compared to the prior period's actual IFRS results. The
relevant average exchange rates (relative to the US dollar) used for the
group's most significant functional currencies, were:
Year ended
31 March
Currency (1FC = US$) 2023 2022
South African rand (ZAR) 0.0583 0.0670
Euro (EUR) 1.0415 1.1586
Chinese yuan renminbi (RMB) 0.1453 0.1562
Brazilian real (BRL) 0.1943 0.1891
Indian rupee (INR) 0.0124 0.0134
Polish zloty (PLN) 0.2213 0.2525
British pound sterling (GBP) 1.2036 1.3620
Turkish lira (YTL) 0.0557 0.0927
Romanian lei (RON) 0.2114 0.2346
Hungarian forint (HUF) 0.0026 0.0032
· Adjustments made for changes in the composition of the group relate
to acquisitions, mergers and disposals of subsidiaries and equity-accounted
investments, as well as to changes in the group's shareholding in its
equity-accounted investments. For acquisitions, adjustments are made to remove
the revenue and trading profit/(loss) of the acquired entity from the current
reporting period and, in subsequent reporting periods, to ensure that the
current reporting period and the comparative reporting period contain revenue
and trading profit/(loss) information relating to the same number of months.
For mergers, adjustments are made to include a portion of the prior period's
revenue and trading profit/(loss) of the entity acquired as a result of a
merger. For disposals, adjustments are made to remove the revenue and trading
profit/(loss) of the disposed entity from the previous reporting period to the
extent that there is no comparable revenue or trading profit/(loss)
information in the current period and, in subsequent reporting periods, to
ensure that the previous reporting period does not contain revenue and trading
profit/(loss) information relating to the disposed business.
A. NON-IFRS FINANCIAL MEASURES AND ALTERNATIVE PERFORMANCE MEASURES continued
A.2 Growth in local currency, excluding acquisitions and disposals continued
The following significant changes in the composition of the group during the
respective reporting periods have been adjusted for in arriving at the pro
forma financial information:
For the year ended 31 March 2023
Transaction Basis of Reportable Acquisition/
accounting segment Disposal
Dilution of the group's interest in Tencent Associate Social and internet platforms Disposal
Loss of control of the group's interest in VK Associate Social and internet platforms Disposal
Disposal of the group's interest in AasaanJobs Subsidiary Ecommerce Disposal
Dilution and subsequent step down of the group's interest in Selency Subsidiary/ Associate Ecommerce Disposal
Acquisition of the group's interest in Oda Associate Ecommerce Acquisition
Acquisition of the group's interest in Flink Associate Ecommerce Acquisition
Acquisition of the group's interest in Flip Associate Ecommerce Acquisition
Acquisition of the group's interest in Delivery Solutions Subsidiary Ecommerce Acquisition
Increase in the group's interest in Delivery Hero Associate Ecommerce Acquisition
Acquisition of the group's interest in Eruditus together with the impact of Associate Ecommerce Acquisition
change in revenue recognition
Acquisition of the group's interest in GoodHabitz Subsidiary Ecommerce Acquisition
Acquisition of the group's interest in Platzi Associate Ecommerce Acquisition
Acquisition of the group's interest in Stack Overflow Subsidiary Ecommerce Acquisition
Acquisition of the group's interest in Skillsoft Associate Ecommerce Acquisition
Dilution of the group's interest in Udemy together with the impact of change Associate Ecommerce Disposal
in revenue recognition
Increase in the group's interest in ElasticRun together with the impact of Associate Ecommerce Acquisition
change in revenue recognition
Increase in the group's interest in Meesho Associate Ecommerce Acquisition
Increase in the group's interest in DeHaat Associate Ecommerce Acquisition
Acquisition of the group's interest in PharmEasy Associate Ecommerce Acquisition
Acquisition of the group's interest in Aruna Associate Ecommerce Acquisition
Acquisition of the group's interest in 99 Minutos Associate Ecommerce Acquisition
A. NON-IFRS FINANCIAL MEASURES AND ALTERNATIVE PERFORMANCE MEASURES continued
A.2 Growth in local currency, excluding acquisitions and disposals continued
For the year ended 31 March 2023
Transaction Basis of Reportable Acquisition/
accounting segment Disposal
Acquisition of the group's interest in Alwans Associate Ecommerce Acquisition
Acquisition of the group's interest in Facily Associate Ecommerce Acquisition
Acquisition of the group's interest in Captain Fresh Associate Ecommerce Acquisition
Acquisition of the group's interest in Sangvhi Beauty Associate Ecommerce Acquisition
Acquisition of the group's interest in Bux Associate Ecommerce Acquisition
Dilution of the group's interest in Swiggy Associate Ecommerce Disposal
Dilution of the group's interest in Remitly Associate Ecommerce Disposal
Dilution and lag period catch-up adjustment following the subsequent loss of Associate Ecommerce Disposal/
significant influence of the group's interest in BYJU'S
Acquisition
Disposal of the group's interest in PlayKids Subsidiary Ecommerce Disposal
Disposal of the group's interest in Codecademy Associate Ecommerce Disposal
Acquisition of the group's interest in ShareBite Associate Ecommerce Acquisition
Acquisition of the group's interest in A55 Associate Ecommerce Acquisition
Acquisition of the group's interest in Frexco Associate Ecommerce Acquisition
Acquisition of the group's interest in Anota Subsidiary Ecommerce Acquisition
Acquisition of the impact of the fair value adjustment on cash-settled Associate Ecommerce Acquisition
schemes in Eruditus
Acquisition of the impact of the hyper-inflation adjustment in Subsidiary Ecommerce Foreign currency adjustment
Classifieds OLX Autos
The net adjustment made for all acquisitions and disposals on continuing
operations that took place during the year ended
31 March 2023 amounted to a negative adjustment of US$1 387m on revenue and a
negative adjustment of US$482m on
trading profit.
A. NON-IFRS FINANCIAL MEASURES AND ALTERNATIVE PERFORMANCE MEASURES continued
A.2 Growth in local currency, excluding acquisitions and disposals continued
The adjustments to the amounts, reported in terms of IFRS, that have been made
in arriving at the pro forma financial information are presented in the table
below:
Year ended 31 March
2022 2023 2023 2023 2023 2023 2023 2023
A B C D E F(2) G(3) H(4)
IFRS 8(1) Group Group Foreign Local IFRS 8(1) Local IFRS 8
US$'m composition composition currency currency US$'m currency % change
disposal acquisition adjustment growth growth
adjustment adjustment US$'m US$'m % change
US$'m US$'m
Continuing operations
Revenue
Ecommerce 8 174 (197) 448 (923) 2 442 9 944 31 22
Classifieds(5, 6) 1 324 (18) 1 (276) 544 1 575 42 19
Food Delivery 2 992 (58) 208 (238) 1 299 4 203 44 40
Payments and Fintech 796 (6) 2 (144) 404 1 052 51 32
Edtech 425 (72) 135 (6) 63 545 18 28
Etail 2 259 (1) 21 (233) (93) 1 953 (4) (14)
Other 378 (42) 81 (26) 225 616 67 63
Social and internet platforms 25 794 (1 638) - (1 649) (238) 22 269 (1) (14)
Tencent 25 261 (1 105) - (1 649) (238) 22 269 (1) (12)
VK(7) 533 (533) - - - - - (100)
Corporate segment - - - - - - - -
Economic interest from continuing operations 33 968 (1 835) 448 (2 572) 2 204 32 213 7 (5)
Discontinued operations(5, 6) 1 651 (279) 1 48 205 1 626 15 (2)
Group economic interest 35 619 (2 114) 449 (2 524) 2 409 33 839 7 (5)
1 Figures presented on an economic-interest basis as per the segmental
review.
2 A + B + C + D + E. 3 [E/(A + B)] x 100. 4 [(F/A) - 1] x 100.
5 From 1 April 2022, following the separation from OLX Group, the CODM
reviewed the financial results of Avito separately. Subsequent to the group's
decision to exit this Russian business, Avito was presented as a discontinued
operation up until the date of disposal.
6 From 1 March 2023, following the group's decision to exit the OLX
Autos business unit, its operations classified as held for sale and those that
have been closed by 31 March 2023 were presented as a discontinued operation.
The OLX Autos business unit is a separate major line of business both in terms
of the distinct nature of the business and its contribution to the operational
performance of the group.
7 During the year ended 31 March 2022, the group lost significant
influence in VK and the group accounted for its investment at fair value
through other comprehensive income. In November 2022, the group signed an
agreement with VK to renounce all VK shares and shareholder rights for no
consideration.
A. NON-IFRS FINANCIAL MEASURES AND ALTERNATIVE PERFORMANCE MEASURES continued
A.2 Growth in local currency, excluding acquisitions and disposals continued
The adjustments to the amounts, reported in terms of IFRS, that have been made
in arriving at the pro forma financial information are presented in the table
below:
Year ended 31 March
2022 2023 2023 2023 2023 2023 2023 2023
A B C D E F(2) G(3) H(4)
IFRS 8(1) Group Group Foreign Local IFRS 8(1) Local IFRS 8
US$'m composition composition currency currency US$'m currency % change
disposal acquisition adjustment growth growth
adjustment adjustment US$'m US$'m % change
US$'m US$'m
Continuing operations
Trading profit
Ecommerce (1 206) 41 (231) 50 (163) (1 509) (14) (25)
Classifieds(5, 6) (70) (4) - (5) (77) (156) <(100) <(100)
Food Delivery (724) 23 (78) 48 82 (649) 12 10
Payments and Fintech (60) - (2) (11) (43) (116) (72) (93)
Edtech (117) 16 (106) 4 (55) (258) (54) <(100)
Etail (35) - (5) 5 (28) (63) (80) (80)
Other (200) 6 (40) 9 (42) (267) (22) (34)
Social and internet platforms 6 319 (292) - (381) (561) 5 085 (9) (20)
Tencent 6 273 (246) - (381) (561) 5 085 (9) (19)
VK(7) 46 (46) - - - - - (100)
Corporate segment (167) - - 1 (7) (173) (4) (4)
Economic interest from continuing operations 4 946 (251) (231) (330) (731) 3 403 (16) (31)
Discontinued operations(5, 6) 95 (42) 24 40 (91) 26 <(100) (73)
Group economic interest 5 041 (293) (207) (290) (822) 3 429 (17) (32)
1 Figures presented on an economic-interest basis as per the segmental
review.
2 A + B + C + D + E. 3 [E/(A + B)] x 100. 4 [(F/A) - 1] x 100.
5 From 1 April 2022, following the separation from OLX Group, the CODM
reviewed the financial results of Avito separately. Subsequent to the group's
decision to exit this Russian business, Avito was presented as a discontinued
operation up until the date of disposal.
6 From 1 March 2023, following the group's decision to exit the OLX
Autos business unit, its operations classified as held for sale and those that
have been closed by 31 March 2023 were presented as a discontinued operation.
The OLX Autos business unit is a separate major line of business both in terms
of the distinct nature of the business and its contribution to the operational
performance of the group.
7 During the year ended 31 March 2022, the group lost significant
influence in VK and the group accounted for its investment at fair value
through other comprehensive income. In November 2022, the group signed an
agreement with VK to renounce all VK shares and shareholder rights for no
consideration.
ADMINISTRATION AND CORPORATE INFORMATION
Prosus N.V.
Incorporated in the Netherlands
(Registration number: 34099856)
(Prosus or the group)
Euronext Amsterdam and
JSE share code: PRX
ISIN: NL 0013654783
Directors
JP Bekker (chair), B van Dijk (chief executive), S Dubey, HJ du Toit, CL
Enenstein, M Girotra, RCC Jafta, AGZ Kemna, FLN Letele, D Meyer, R Oliveira
de Lima, SJZ Pacak, V Sgourdos, MR Sorour, JDT Stofberg, Y Xu
Company secretary
L Bagwandeen
Gustav Mahlerplein 5
Symphony Offices
1082 MS Amsterdam
The Netherlands
Registered office
Gustav Mahlerplein 5
Symphony Offices
1082 MS Amsterdam
The Netherlands
Tel: +31 20 299 9777
www.prosus.com
Independent auditor
PricewaterhouseCoopers Accountants N.V.
Thomas R. Malthusstraat 5
1066 JR Amsterdam
The Netherlands
Euronext listing agent
ING Bank N.V.
Bijlmerplein 888
1102 MG Amsterdam
The Netherlands
Euronext paying agent
ABN AMRO Bank N.V.
Corporate broking and issuer services
HQ 7212
Gustav Mahlerlaan 10
1082 PP Amsterdam
The Netherlands
JSE transfer secretary
Computershare Investor Services
Proprietary Limited
Rosebank Towers, 15 Bierman Avenue
Rosebank
Johannesburg 2196
South Africa
Tel: +27 (0)86 110 0933
Cross-border settlement agent
Citibank, N.A. South Africa Branch
145 West Street
Sandown
Johannesburg 2196
South Africa
JSE sponsor
Investec Bank Limited
(Registration number: 1969/004763/06)
PO Box 785700
Sandton 2146
South Africa
Tel: +24 (0)11 286 7326
Fax: +27 (0)11 286 9986
ADR programme
The Bank of New York Mellon maintains a GlobalBuyDIRECT(SM) plan for Prosus
N.V.
For additional information, please visit The Bank of New York Mellon's website
at www.globalbuydirect.com
or call Shareholder Relations at 1-888-BNY-ADRS or 1-800-345-1612 or write
to:
The Bank of New York Mellon, Shareholder
Relations Department - GlobalBuyDIRECT(SM)
Church Street Station
PO Box 11258
New York, NY 10286-1258
USA
Attorneys
Allen & Overy LLP
Apollolaan 15
1077 AB Amsterdam
The Netherlands
Investor relations
Eoin Ryan
InvestorRelations@prosus.com
Tel: +1 347-210-4305
FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements as defined in the United
States Private Securities Litigation Reform Act of 1995. Words such as
'believe', 'anticipate', 'intend', 'seek', 'will', 'plan', 'could', 'may',
'endeavour' and similar expressions are intended to identify such
forward-looking statements, but are not the exclusive means of identifying
such statements. By their nature, forward-looking statements involve risk and
uncertainty because they relate to future events and circumstances and should
be considered in light of various important factors. While these
forward-looking statements represent our judgements and future expectations, a
number of risks, uncertainties and other important factors could cause actual
developments and results to differ materially from our expectations. The key
factors that could cause our actual results performance, or achievements to
differ materially from those in the forward-looking statements include, among
others, changes to IFRS and the interpretations, applications and practices
subject thereto as they apply to past, present and future periods; ongoing and
future acquisitions; changes to domestic and international business and market
conditions such as exchange rate and interest rate movements; changes in the
domestic and international regulatory and legislative environments; changes to
domestic and international operational, social, economic and political
conditions; the occurrence of labour disruptions and industrial action; and
the effects of both current and future litigation. We are not under any
obligation to (and expressly disclaim any such obligation to) revise or update
any forward-looking statements contained in this report, whether as a result
of new information, future events or otherwise. We cannot give any assurance
that forward-looking statements will prove to be correct and investors are
cautioned not to place undue reliance on any forward-looking statements
contained herein.
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