PROSUS N.V. – Annual results announcement for the year ended 31 March 2022 – SENS

                            

Annual results announcement for the year ended 31 March 2022

Prosus N.V.
Incorporated in the Netherlands
(Registration number: 34099856)
(Prosus or the group)
Euronext Amsterdam and JSE share code: PRX
ISIN: NL 0013654783

Annual results announcement for the year ended 31 March 2022

Salient features
Year ended 31 March
2022 2021
US$’m US$’m
Revenue 6 866 5 116
Operating loss (859) (1 040)
Earnings per ordinary share (US cents) 1 243 459
Headline earnings per ordinary share (US cents) 204 360
Core headline earnings per ordinary share (US cents) 247 299

Commentary
In a year marked with continued global turmoil and uncertainty, which has made for a turbulent operating environment,
the financial year 2022 was a year of progress for Prosus. We remained focused on executing our long-term strategy and
delivering strong operational growth across our core segments. At the same time, we made strategic investments and laid
the foundation for future growth across the portfolio.

Ecommerce segment revenue grew 58% (51%) to US$9.8bn and was the key contributor to group revenue growth of 24% (24%)
to US$35.6bn (measured on an economic-interest basis). This is strong growth on a scaled base following similar growth
and momentum in the prior year. Percentages in brackets represent growth in local currency, excluding mergers and
acquisitions (M&A).

Group trading profit reduced 10% (6%) to US$5bn, reflecting investment to expand the market opportunity for each segment
and strengthen the customer ecosystems of our businesses. Core headline earnings were US$3.7bn, a reduction of 23% (20%)
which reflects ongoing investment in the Ecommerce portfolio and a period of slower growth at Tencent as it adapted to
regulatory changes in China.

Despite a strong operational performance across the portfolio, the group, like many technology companies, faced significant
macroeconomic and geopolitical headwinds, leading to highly volatile capital markets in the latter part of the financial year.
The combination of the war in Ukraine, higher inflation and rising interest rates drove up the cost of capital and increased
uncertainty. Valuations of global peer group companies in tech and internet sectors declined sharply in recent months as the
level of risk appetite reduced significantly. These forces drove, for the first time in many years, a decline in the group’s
net asset value. The discount to the group’s sum of the parts increased to an unacceptable level. Taking substantive action
to reduce the discount is a priority. To navigate these turbulent times we will prioritise capital towards supporting our
existing businesses and prudent balance sheet management, sustaining adequate financial liquidity.

We invested US$6.2bn to increase our stakes in existing investments and in new assets where we see substantial opportunity
for future value creation. This investment was weighted largely to the first half of the year, in our Food Delivery and
Edtech segments. While Delivery Hero’s stock has declined in value since the last investment, we remain confident in the
company’s future and in our continued ability to generate a return from it. In August, we also committed US$4.7bn to acquire
BillDesk, the leading bill-payment-processing company in India. The transaction is under review by the Competition Commission
of India.

In the second half of the year, we invested heavily through our income statement. We focused on maintaining growth and
customer engagement, while leveraging increased scale to develop opportunities in adjacent products and services. We
are building ecosystems with multiple customer touchpoints to improve not only their experience but also retention. We
aligned technology and data with key customer needs such as convenience and ease of use. We will need to continue to
invest organically to build on the strong progress we have made in autos in Classifieds, convenience in Food Delivery
and India credit in Payments and Fintech segments. Our plans will recognise the uncertainty and volatility and the need
to preserve capital.

Throughout the year, the group continued to crystallise returns and return capital to shareholders. In February 2022, we
completed a second US$5bn share buyback programme which followed the US$5bn share buyback programme in 2021. This generated
a meaningful enhancement to net asset value per share. Repurchased Prosus shares will be cancelled in the following financial
year. In total, Prosus has allocated US$50bn in capital over the past six years with approximately 57% of that capital being
invested into the business and new growth opportunities; approximately 25% returned to shareholders in the form of share
buybacks and dividends; and approximately 18% being held in cash.

Against the backdrop of deteriorating geopolitical and economic conditions, our ecommerce businesses were resilient, growing
revenues 56% (50%) in the second half of the year, in many cases significantly outperforming global peers.

Within our Ecommerce portfolio, all segments made good progress against their financial and strategic objectives. Classifieds
demonstrated healthy growth at its core, well ahead of global peers. OLX Autos experienced strong triple-digit growth this
year as it creates a differentiated customer experience. Our Classifieds business has been deeply impacted by Russia’s invasion
of Ukraine. We are appalled by the war in Ukraine and we continue to do all we can for our Ukrainian employees and the people
of Ukraine. Consequently, in March 2022, we announced the separation of the Russian classifieds business Avito from our OLX
Group. Following completion of this operational separation, in May 2022, we announced our intention to exit the Russian
business. We have started the search for an appropriate buyer for our shares in Avito.

Food Delivery’s performance remained strong as it addresses a major consumer need that is being fundamentally transformed
by technology. We are leveraging our logistics network and capabilities as well as our strong customer relationships to
pursue this opportunity with a real competitive advantage. The online food and convenience industry is still in its early
stages of development, and we are excited by its long-term prospects, and we believe it will ultimately yield a good return
on investment.

In Payments and Fintech, our growth momentum continued globally. We increased our scale in India, one of the fastest-growing
consumer internet markets, and the closing of the acquisition of BillDesk will create further opportunity to expand into
credit and digital banking. Outside of India, the business continued to grow strongly.

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 a substantial stake in Skillsoft, which is now public, while acquiring
Stack Overflow and GoodHabitz. This positions us well within the key enterprise education market. Our Edtech investments currently
reach over 500 million users and cover the full span of the sector from kindergarten through to grade 12 (K-12) and beyond, into
third- and enterprise-level education.

In April 2021, to improve our financial flexibility and reinforce our balance sheet, we sold 2% of Tencent’s issued share capital,
generating proceeds of US$14.6bn and reducing our holding to 28.9%. Proceeds were used to fund our strategic ambitions and two
share buyback programmes that enhanced net asset value per share. Tencent has been impacted by regulatory action and the economic
impact of Covid-19, which has resulted in slower growth and a tough macroeconomic environment. We are firm believers that the
company will recover from this and generate significant value for shareholders and remain committed long-term investors in Tencent.

The group remains focused on building on the strong momentum in our Ecommerce portfolio. We will continue to invest in our
platforms and to grow the opportunity set within each segment. We aim to build on the underlying strength of each business
through the creation of customer ecosystems, particularly in autos transactions, credit and digital banking, and food,
convenience and grocery delivery. At the same time, we are driving profitability and cash generation in more mature core
businesses. Our goal is to build an Ecommerce portfolio that will deliver sustainable value creation over the long term for
all stakeholders. Furthermore, the group will endeavour to take further steps to crystallise the value we have created over
time.

Given the wide geographical span of our operations and significant M&A activity in Ecommerce, reported earnings were
materially impacted by foreign exchange movements and the effects of acquisitions and disposals. Where relevant in this
short-form results announcement, we have adjusted for these effects. These adjustments (alternative performance measures)
are quoted in brackets after the equivalent metrics reported under International Financial Reporting Standards (IFRS)
as adopted by the European Union (IFRS-EU). These growth rates represent a comparison between the year ended 31 March 2022
and the previous year ended 31 March 2021, unless otherwise stated.

Financial review
The group financial highlights for the year ended 31 March 2022 are outlined below:
Year ended 31 March
2021 2022 2022 2022 2022 2022 2022 2022
A B C D E F(2) G(3) H(4)
Group Group
composition composition Foreign Local Local
disposal acquisition currency currency currency
IFRS 8(1) adjustment adjustment adjustment growth IFRS 8(1) growth IFRS 8
US$’m US$’m US$’m US$’m US$’m US$’m % change % change
Revenue
Ecommerce 6 230 (133) 822 (224) 3 130 9 825 51 58
– Classifieds 1 599 (33) 81 (121) 1 449 2 975 93 86
– Food Delivery 1 486 (9) 374 (1) 1 142 2 992 77 >100
– Payments and Fintech 577 (7) 9 (38) 255 796 45 38
– Edtech 115 14 225 – 71 425 55 >100
– Etail 2 250 (2) 10 (61) 62 2 259 3 –
– 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
– Tencent 22 155 (1 493) – 1 302 3 297 25 261 16 14
– VK (previously Mail.ru) 371 (4) 70 3 93 533 25 44
Group economic interest 28 756 (1 630) 892 1 081 6 520 35 619 24 24
Trading profit
Ecommerce (429) 45 (218) 3 (512) (1 111) 100
– Food Delivery (355) 33 (129) (2) (271) (724) (84)

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