Prosus N : Financial results short-form release (PDF)

Annual results announcement

for the year ended 31 March 2022

(Prosus or the group)

Improving everyday life for billions

Prosus N.V.

Incorporated in the Netherlands

(Registration number: 34099856)

of people through technology

Euronext Amsterdam and JSE share code: PRX

ISIN: NL 0013654783

reduced significantly. These forces drove, for the first time in many years, a decline in the group's

Food Delivery's performance remained strong as it addresses a major consumer need that is

Salient features

net asset value. The discount to the group's sum of the parts increased to an unacceptable level.

being fundamentally transformed by technology. We are leveraging our logistics network and

Taking substantive action to reduce the discount is a priority. To navigate these turbulent times we

capabilities as well as our strong customer relationships to pursue this opportunity with a real

Year ended 31 March

will prioritise capital towards supporting our existing businesses and prudent balance sheet

competitive advantage. The online food and convenience industry is still in its early stages of

management, sustaining adequate financial liquidity.

development, and we are excited by its long-term prospects, and we believe it will ultimately

2022

2021

We invested US$6.2bn to increase our stakes in existing investments and in new assets where

yield a good return on investment.

US$'m

US$'m

we see substantial opportunity for future value creation. This investment was weighted largely

In Payments and Fintech, our growth momentum continued globally. We increased our

Revenue

6 866

5 116

to the first half of the year, in our Food Delivery and Edtech segments. While Delivery Hero's

scale in India, one of the fastest-growing consumer internet markets, and the closing of the

stock has declined in value since the last investment, we remain confident in the company's

Operating loss

(859)

(1 040)

acquisition of BillDesk will create further opportunity to expand into credit and digital banking.

future and in our continued ability to generate a return from it. In August, we also committed

Outside of India, the business continued to grow strongly.

Earnings per ordinary share (US cents)

1 243

459

US$4.7bn to acquire BillDesk, the leading bill-payment-processing company in India. The

Headline earnings per ordinary share (US cents)

204

360

transaction is under review by the Competition Commission of India.

Edtech's performance remained strong and we made substantial progress in expanding the

portfolio with acquisitions of market leaders in our areas of focus. During the year, we took

Core headline earnings per ordinary share (US cents)

247

299

In the second half of the year, we invested heavily through our income statement. We

a substantial stake in Skillsoft, which is now public, while acquiring Stack Overflow and

focused on maintaining growth and customer engagement, while leveraging increased

GoodHabitz. This positions us well within the key enterprise education market. Our Edtech

Commentary

scale to develop opportunities in adjacent products and services. We are building

investments currently reach over 500 million users and cover the full span of the sector from

ecosystems with multiple customer touchpoints to improve not only their experience but also

In a year marked with continued global turmoil and uncertainty,

retention. We aligned technology and data with key customer needs such as convenience

kindergarten through to grade 12 (K-12) and beyond, into third- and enterprise-level education.

and ease of use. We will need to continue to invest organically to build on the strong

In April 2021, to improve our financial flexibility and reinforce our balance sheet, we sold

which has made for a turbulent operating environment, the

progress we have made in autos in Classifieds, convenience in Food Delivery and India

2% of Tencent's issued share capital, generating proceeds of US$14.6bn and reducing our

financial year 2022 was a year of progress for Prosus. We

credit in Payments and Fintech segments. Our plans will recognise the uncertainty and

holding to 28.9%. Proceeds were used to fund our strategic ambitions and two share buyback

volatility and the need to preserve capital.

remained focused on executing our long-term strategy and

programmes that enhanced net asset value per share. Tencent has been impacted by

Throughout the year, the group continued to crystallise returns and return capital to

delivering strong operational growth across our core segments.

regulatory action and the economic impact of Covid-19, which has resulted in slower growth

shareholders. In February 2022, we completed a second US$5bn share buyback

and a tough macroeconomic environment. We are firm believers that the company will

At the same time, we made strategic investments and laid the

programme which followed the US$5bn share buyback programme in 2021. This generated

recover from this and generate significant value for shareholders and remain committed

foundation for future growth across the portfolio.

a meaningful enhancement to net asset value per share. Repurchased Prosus shares will

long-term investors in Tencent.

be cancelled in the following financial year. In total, Prosus has allocated US$50bn in

The group remains focused on building on the strong momentum in our Ecommerce portfolio.

Ecommerce segment revenue grew 58% (51%) to US$9.8bn and was the key contributor to

capital over the past six years with approximately 57% of that capital being invested into

group revenue growth of 24% (24%) to US$35.6bn (measured on an economic-interest basis).

the business and new growth opportunities; approximately 25% returned to shareholders

We will continue to invest in our platforms and to grow the opportunity set within each

This is strong growth on a scaled base following similar growth and momentum in the prior

in the form of share buybacks and dividends; and approximately 18% being held in cash.

segment. We aim to build on the underlying strength of each business through the creation of

year. Percentages in brackets represent growth in local currency, excluding mergers and

Against the backdrop of deteriorating geopolitical and economic conditions, our ecommerce

customer ecosystems, particularly in autos transactions, credit and digital banking, and food,

acquisitions (M&A).

convenience and grocery delivery. At the same time, we are driving profitability and cash

businesses were resilient, growing revenues 56% (50%) in the second half of the year, in many

generation in more mature core businesses. Our goal is to build an Ecommerce portfolio that

Group trading profit reduced 10% (6%) to US$5bn, reflecting investment to expand the market

cases significantly outperforming global peers.

will deliver sustainable value creation over the long term for all stakeholders. Furthermore, the

opportunity for each segment and strengthen the customer ecosystems of our businesses.

Within our Ecommerce portfolio, all segments made good progress against their financial

group will endeavour to take further steps to crystallise the value we have created over time.

Core headline earnings were US$3.7bn, a reduction of 23% (20%) which reflects ongoing

and strategic objectives. Classifieds demonstrated healthy growth at its core, well ahead

investment in the Ecommerce portfolio and a period of slower growth at Tencent as it

Given the wide geographical span of our operations and significant M&A activity in

of global peers. OLX Autos experienced strong triple-digit growth this year as it creates a

adapted to regulatory changes in China.

Ecommerce, reported earnings were materially impacted by foreign exchange movements

differentiated customer experience. Our Classifieds business has been deeply impacted

and the effects of acquisitions and disposals. Where relevant in this short-form results

Despite a strong operational performance across the portfolio, the group, like many

by Russia's invasion of Ukraine. We are appalled by the war in Ukraine and we continue

announcement, we have adjusted for these effects. These adjustments (alternative

technology companies, faced significant macroeconomic and geopolitical headwinds,

to do all we can for our Ukrainian employees and the people of Ukraine. Consequently,

leading to highly volatile capital markets in the latter part of the financial year. The

in March 2022, we announced the separation of the Russian classifieds business Avito

performance measures) are quoted in brackets after the equivalent metrics reported under

combination of the war in Ukraine, higher inflation and rising interest rates drove up the

from our OLX Group. Following completion of this operational separation, in May 2022,

International Financial Reporting Standards (IFRS) as adopted by the European Union

cost of capital and increased uncertainty. Valuations of global peer group companies

we announced our intention to exit the Russian business. We have started the search for

(IFRS-EU). These growth rates represent a comparison between the year ended 31 March 2022

in tech and internet sectors declined sharply in recent months as the level of risk appetite

an appropriate buyer for our shares in Avito.

and the previous year ended 31 March 2021, unless otherwise stated.

Financial review

Consolidated free cash outflow was US$562m, a decrease on the prior year's free cash inflow

The group financial

highlights for the year ended 31 March 2022 are outlined below:

of US$126m. We stepped up operational working capital, and capital expenditure investment

Year ended 31 March

across our businesses. Working capital requirements have increased as we invest in OLX Autos

and the Payments and Fintech segment. In autos, we are taking on more inventory as the

2021

2022

2022

2022

2022

2022

2022

2022

business expands and moves towards a consumer-facing business. In Payments and Fintech,

we accelerated the pace to scale our India credit initiatives, resulting in increased receivables

A

B

C

D

E

F2

G3

H4

outstanding at year-end. The increased capital expenditure was mainly driven by distribution

Group

Group

centre equipment and expansions at eMAG. This was offset by increased dividends from

composition

composition

Foreign

Local

Local

Tencent of US$571m (FY21: US$458m). Tencent dividends remain a meaningful and stable

disposal

acquisition

currency

currency

currency

contributor to our cash flow. After year-end in June 2022, we received our annual cash dividend

IFRS 81

adjustment

adjustment

adjustment

growth

IFRS 81

growth

IFRS 8

of US$565m from Tencent for FY23.

US$'m

US$'m

US$'m

US$'m

US$'m

US$'m

% change

% change

In addition, Tencent paid a special interim dividend in the form of a distribution in specie of

Revenue

JD.com shares. The group received 131 873 028 JD.com shares in March 2022, representing

Ecommerce

6 230

(133)

822

(224)

3 130

9 825

51

58

a 4% effective interest in JD.com valued at US$3.9bn at 31 March 2022. Subsequently, the

- Classifieds

1 599

(33)

81

(121)

1 449

2 975

93

86

group disposed of its full stake in JD.com for proceeds of approximately US$3.6bn.

- Food Delivery

1 486

(9)

374

(1)

1 142

2 992

77

>100

There were no new or amended accounting pronouncements effective 1 April 2021 with a

- Payments and Fintech

577

(7)

9

(38)

255

796

45

38

significant impact on the group's consolidated financial statements.

- Edtech

115

14

225

-

71

425

55

>100

Preparation of the short-form results announcement

- Etail

2 250

(2)

10

(61)

62

2 259

3

-

The preparation of the short-form results announcement was supervised by the group's

financial

director, Basil Sgourdos CA(SA). These results were made public on 27 June 2022.

- Other

203

(96)

123

(3)

151

378

>100

86

Social and Internet Platforms

22 526

(1 497)

70

1 305

3 390

25 794

16

15

ADR programme

Bank of New York Mellon maintains a Global BuyDIRECTSM plan for Prosus N.V. For additional

- Tencent

22 155

(1 493)

-

1 302

3 297

25 261

16

14

information, please visit Bank of New York Mellon's website at www.globalbuydirect.com

- VK (previously Mail.ru)

371

(4)

70

3

93

533

25

44

or call Shareholder Relations at 1-888-BNY-ADRS or 1-800-345-1612 or write to: Bank of New

York Mellon, Shareholder Relations Department - Global BuyDIRECTSM, Church Street Station,

Group economic interest

28 756

(1 630)

892

1 081

6 520

35 619

24

24

PO Box 11258, New York, NY 10286-1258, USA.

Trading profit

Important information

Ecommerce

(429)

45

(218)

3

(512)

(1 111)

<(100)

<(100)

This short-form results announcement contains forward-looking statements as defined in the

- Classifieds

9

13

9

7

(13)

25

(59)

>100

United States Private Securities Litigation Reform Act of 1995 concerning our financial condition,

- Food Delivery

(355)

33

(129)

(2)

(271)

(724)

(84)

<(100)

results of operations and businesses. These forward-looking statements are subject to a number

- Payments and Fintech

(68)

6

(1)

(5)

8

(60)

13

12

of risks and uncertainties, many of which are beyond our control and all of which are based on

our current beliefs and expectations about future events. Forward-looking statements are typically

- Edtech

(14)

1

(48)

(1)

(55)

(117)

<(100)

<(100)

identified

by the use of forward-looking terminology such as 'believes', 'expects', 'may', 'will',

- Etail

68

-

(3)

3

(103)

(35)

<(100)

<(100)

'could', 'should', 'intends', 'estimates', 'plans', 'assumes' or 'anticipates', or associated negative,

- Other

(69)

(8)

(46)

1

(78)

(200)

<(100)

<(100)

or other variations or comparable terminology, or by discussions of strategy that involve risks and

uncertainties. These forward-looking statements and other statements contained in this short-form

Social and Internet Platforms

6 154

(413)

(5)

342

241

6 319

4

3

results announcement on matters that are not historical facts involve predictions. No assurance can

- Tencent

6 126

(413)

-

342

218

6 273

4

2

be given that such future results will be achieved. Actual events or results may differ materially as

- VK (previously Mail.ru)

28

-

(5)

-

23

46

82

64

a result of risks and uncertainties implied in such forward-looking statements. A number of factors

could affect our future operations and could cause those results to differ materially from those

Corporate segment

(110)

-

-

1

(58)

(167)

(53)

(52)

expressed in the forward-looking statements, including (without limitation): (a) changes to IFRS

Group economic interest

5 615

(368)

(223)

346

(329)

5 041

(6)

(10)

and associated interpretations, applications and practices as they apply to past, present and

future periods; (b) ongoing and future acquisitions, changes to domestic and international business

1 Figures presented on an economic-interest basis as per the segmental review.

and market conditions such as exchange rate and interest rate movements; (c) changes in

2 A + B + C + D + E.

3 [E/(A + B)] x 100.

4 [(F/A) - 1] x 100.

domestic and international regulatory and legislative environments; (d) changes to domestic and

international operational, social, economic and political conditions; (e) labour disruptions and

The group delivered strong progress for the year ended 31 March 2022. Group revenue,

the group's directors resigned with immediate effect from the VK board and discontinued

industrial action; and (f) the effects of both current and future litigation. The forward-looking

measured on an economic-interest basis, grew 24% (24%) to US$35.6bn. This was driven by

equity-accounting the investment going forward on account of a loss of significant influence.

statements contained in this short-form results announcement apply only as of the date of this

short-form results announcement. We are not under any obligation to (and expressly disclaim

Ecommerce revenues, which rose 58% (51%). Our economic-interest share in Tencent's revenue

The group reclassified the foreign currency translation reserve amounting to a loss of

any such obligation to) revise or update any forward-looking statements to reflect events or

grew 14% (16%) off

a sizable prior-year base. Group trading profit reduced 10% (6%) to US$5bn.

US$1.14bn from 'Other comprehensive income' to the income statement as a result of the

circumstances after the date of this short-form results announcement or to reflect the occurrence

Tencent's contribution to the group's trading profit improved by 2% (4%).

loss of significant influence over the investment.

of unanticipated events. We cannot give any assurance that forward-looking statements will prove

Core headline earnings were US$3.7bn - down 23% (20%), impacted by our sale of 2% interest

Headline earnings decreased by US$2.8bn to US$3.1bn. This is mainly due to the decrease

correct and investors are cautioned not to place undue reliance on any forward-looking statements.

in Tencent and Tencent's reduced contribution to core as a result of increased losses from its

in contribution to headline earnings from associates of US$2.8bn, the increase in trading losses

Further information

associates.

in Ecommerce and the increase in net finance cost (US$141m). This was partially offset by the

This short-form results announcement is the responsibility of the directors and is only a

decrease in the share-based compensation expenses of the group (US$599m).

On a consolidated basis, total revenue increased by US$1.8bn, or 34% (39%), from US$5.1bn in

summary of the information in the annual report. The annual report was released on SENS

the prior year to US$6.9bn, with strong contributions from all the segments. As we continue to

Investments have been funded from upstreamed dividends, asset sales and more efficient use

on 27 June 2022 and can be found on the company's website, www.prosus.com, and can also

invest in organically building out customer ecosystems across our segments, trading losses

of the group's balance sheet. During the year, we raised additional capital of US$9.25bn in

be viewed on the JSE link, https://senspdf.jse.co.za/documents/2022/jse/isse/PRXE/YE22.pdf.

expanded from US$163m to US$547m, mostly driven by investment in Food Delivery, our Etail

bonds at attractive interest rates, further enhancing our financial position, improving liquidity,

Copies of the annual report may also be requested from the company's registered office,

segment and acquisitions in Edtech.

and extending debt maturities. Some of the proceeds were used to settle US$1.6bn 2025 and

at no charge, during office hours. The annual report for year ended 31 March 2022 has been

Equity-accounted results from our associate investments increased to US$9.3bn, or 31%, from

2027 notes. The group has no debt maturities due until 2025, and 87% of our debt is due after

audited by PricewaterhouseCoopers N.V., our independent auditor. Their unqualified report

five years and just under 60% due in the next 10 years.

which includes key audit matters is appended to the annual report and is available on

US$7.1bn in the prior year, with positive contributions from Tencent and Delivery Hero. Share

www.prosus.com. Any investment decision should be based on the annual report published

of equity-accounted results includes investment disposal gains of US$6.2bn, net fair-value gains

We ended the year with a strong and liquid balance sheet comprising US$13.6bn in cash

on SENS and the company's website. The information in this short-form results announcement

on financial instruments of US$1.8bn, and impairment losses of US$1.1bn recognised in

and cash equivalents (including short-term cash investments) and interest-bearing debt of

has been extracted from the reviewed information published on SENS, but the short-form

Tencent and Delivery Hero reported results.

US$15.7bn (excluding capitalised lease liabilities). We also hold an undrawn US$2.5bn

results announcement itself was not reviewed.

The group recognised a gain of US$12.3bn on the income statement due to the trimming of

revolving credit facility. This sound financial

position will enable us to deliver on our strategy

On behalf of the board

to scale our businesses and, over time, deliver significant and sustainable profitability and

our holding in Tencent. Furthermore, the group recognised impairment losses on goodwill and

cash flow generation.

Koos Bekker

Bob van Dijk

equity-accounted investments. Impairment losses of US$246m recognised on goodwill related to

Chair

Chief executive

Stack Overflow, primarily as a result of the current market conditions and the increase in risk-free

Overall, we recorded a net interest expense of US$345m for the year, elevated from the prior

rates which resulted in an increase in the discount rate. Equity-accounted investments were

year, given new bond issuances and an additional US$217m related to early settlement of

Amsterdam

impaired by US$584.1m, of which US$474m related to the impairment of VK. In March 2022,

the 2025 and 2027 bonds.

25 June 2022

1082 PP Amsterdam, the Netherlands  Sponsor: Investec Bank Limited		www.prosus.com
Directors: JP Bekker (chair), B van Dijk (chief executive), 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
Registered office: Symphony Offices, Gustav Mahlerplein 5, 1082 MS Amsterdam, the Netherlands  Euronext listing agent: ING Bank N.V.	Euronext paying agent: ABN AMRO Bank N.V., Corporate Broking and Issuer Services, HQ 7212, Gustav Mahlerlaan 10,