REG - Prosus NV Naspers Limited - Half-year Report
29/11/2023 07:00
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RNS Number : 9530U Prosus NV 29 November 2023
PROSUS
Reviewed condensed consolidated interim financial statements
for the six months ended 30 September 2023
COMMENTARY
September 2023 marked the fourth anniversary of listing Prosus on the Euronext
Amsterdam, creating Europe's largest consumer internet company. Last year, the
Group committed to deliver consolidated Ecommerce profitability during the
first half of FY25 (1H25); continue the open-ended share repurchase programme;
simplify our structure by removing the crossholding; and highlight value in
our portfolio of assets. As we take stock halfway through FY24, we have made
significant progress on all these commitments.
Consolidated revenue from continuing operations grew 13% (16%) to US$2.6bn.
The greatest contributors were Classifieds, Food Delivery, and Payments and
Fintech. Ecommerce consolidated trading losses from continuing operations
decreased by US$220m to US$36m in 1H24 as cost reductions and improved
efficiencies came through. Trading losses for this segment have reduced from
a peak of US$256m in 1H23 and demonstrate our accelerated approach to
breakeven. Free cash inflow was strong at US$645m.
Core headline earnings were US$2.0bn - an increase of 85% (118%). This was
primarily due to improved profitability of our ecommerce consolidated
businesses and equity-accounted investments, particularly Tencent, and higher
net interest income during the period.
The growth rates discussed in this commentary represent a comparison between
1H24 and 1H23, unless otherwise stated. The percentages
in brackets represent local currency growth, excluding the impact of
acquisitions and disposals (M&A), and provide a clearer view of the
underlying operating performance of our businesses.
The Group's ecommerce businesses have maintained topline growth. They also
continued to improve profitability in 1H24 and we are increasingly confident
of delivering ahead of commitments.
After years of investment and growth, our businesses are now at scale and
demonstrate improving profitability. We expect to maintain
peer-leading growth while continuing to drive profitability. Given better
results in the current period, we expect to achieve our ambition
of consolidated Ecommerce profitability earlier than 1H25. We are now
targeting profitability for 2H24. The goal is to build on the strong momentum
in recent halves, sustain profitability growth for each subsequent period and
reach good margins.
At 30 September 2023, the ongoing open-ended share repurchase programme has
reduced the Prosus net share count by 16% and generated US$25bn for our
shareholders. This was based on narrowing of the discount and an increase
in net asset value (NAV) per share. In the same month, we completed the
removal of the crossholding, which received overwhelming shareholder support.
Finally, we continue to build value for shareholders in our portfolio's
underlying assets.
Delivering on our commitments should result in meaningful long-term value
creation and shareholder returns.
Food Delivery's performance remained strong, with revenue growing ahead of
peers and profitability improving meaningfully. iFood sustained momentum in
the core restaurant food-delivery businesses, while taking a more considered
approach to its grocery growth extensions.
iFood's profitability margins in the core are comparable to its global peers
and margins will expand further.
OLX Europe's classifieds business has delivered growth and enhanced
profitability, driven by improved operational metrics and a strong performance
in the pay-and-ship offering. Following our strategic decision to exit OLX
Autos (the automobile transaction business), we made progress in finalising
deals across various markets. Where buyers have not been identified, we have
initiated closure processes and liquidated inventories.
Payments and Fintech recorded meaningful growth in the core payment service
provider (PSP) business, driven by India payments, Turkey (Iyzico) and India
credit. The consolidated trading loss narrowed due to improved profitability
in Global Payments Organisations (GPO),
lyzico and savings from new initiatives in PayU India. PayU announced the sale
of GPO for US$610m, which is expected to close in the first
half of calendar 2024. PayU GPO's financial results are included in continuing
operations.
In Edtech, Stack Overflow's monetisation initiatives have lagged expectations.
We recorded a further impairment in 1H24. Stack Overflow has taken
significant action to improve its operating profile and introduce generative
AI capabilities. GoodHabitz is benefiting from investment in product
enhancements and a more measured international rollout programme. In the
case of both Stack Overflow and GoodHabitz, the Group has intervened to
improve business performance. We will critically assess the impact of these
interventions in due course.
The Group's balance sheet is strong with central cash of US$15.1bn, including
short-term cash investments. We remain committed to our investment-grade
rating and disciplined capital allocation. In total, US$477m was invested
capital in 1H24.
In June 2023, we announced a proposal to simplify the Group's structure by
removing the crossholding between Naspers and Prosus. The transaction
delivered on its commitments to shareholders while preserving the benefits
of the exchange offer effected in 2021. In September 2023, the transaction
concluded. The resulting simplified structure maintains the current economic
ownership of Prosus by Naspers and ensures the Group can continue its
open-ended share repurchase programme.
The open-ended share repurchase programme launched in June 2022 is funded by
the daily sale of a small number of Tencent shares. From launch, to 30
September 2023, the combined holding company discount of Naspers and Prosus
reduced by around 17 percentage points. Over the same period, Prosus
repurchased 210 413 966 of its ordinary shares N, with a total value of
US$13.9bn, at a significant discount to their NAV, leading to a 7% accretion
in NAV per share. The narrowing of the discount and the increase in NAV per
share has created some US$25bn of value for shareholders. We remain committed
to this programme as it simultaneously creates value for shareholders while
increasing our exposure to Tencent and our ecommerce portfolio on a
per share basis.
Naspers funds its open-ended share repurchase programme with regular sales of
Prosus shares. By 30 September 2023, Naspers had sold 67 715 575 Prosus
ordinary shares N to the value of US$4.4bn and bought back 26 631 055 Naspers
N ordinary shares to the value of US$4.3bn.
A reconciliation of alternative performance measures to the equivalent IFRS
metrics is provided in 'Other information - Non-IFRS financial measures and
alternative performance measures' of these condensed consolidated interim
financial statements.
FINANCIAL REVIEW
Consolidated Group revenue from continuing operations increased US$287m, or
13% (16%), from US$2.3bn in the prior period to US$2.6bn. This was primarily
due to strong revenue growth in Classifieds, Food Delivery, and Payments
and Fintech. As a result, trading losses decreased to US$110m from US$338m.
The largest contributor of the reduction in continuing operations' trading
loss was the drop of US$220m in Ecommerce consolidated trading loss to just
US$36m. Our consolidated ecommerce businesses are now of scale and well on
track to achieve profitability.
Operating losses rose US$329m to US$415m, primarily due to an impairment loss
recognised on Edtech investments.
Amid challenging macroeconomic conditions and the decline in some industry
valuations, we recognised impairment losses on goodwill of US$440m in the
current period for Stack Overflow (US$340m) and in the OLX Autos business
classified as held for sale (US$100m).
We also recognised impairment losses on equity-accounted investments of
US$175m related to Skillsoft (US$42m) and unlisted equity-accounted associates
in the Prosus Ventures portfolio reported in the Other Ecommerce segment
(US$133m).
Profit from equity-accounted results (our share of equity-accounted
investments' net profit) increased by US$93m, or 9%, from US$1.1bn
in the prior period to US$1.2bn. This was driven by improved profitability
across our equity-accounted associates, particularly in the Food Delivery
segment.
In March 2023, we announced the decision to exit the OLX Autos business unit.
All operations of this business are presented as discontinued operations as
they have been disposed, classified as held for sale or closed down by 30
September 2023. OLX Autos operations, previously presented in continuing
operations for 31 March 2023, have been presented in discontinued operations
as of 30 September 2023.
Core headline earnings from continuing operations were US$2.0bn. This is an
increase of 85% (118%), primarily due to improved profitability of our
ecommerce consolidated businesses and equity-accounted investments,
particularly Tencent, and an increase in net interest income during the
period.
Headline earnings from continuing operations rose by US$1.2bn to US$1.4bn.
The Group sold 1% of Tencent's issued share capital to fund the open-ended
share repurchase programme, resulting in a gain of US$2.9bn during the period
(1H23: US$2.8bn).
Free cash inflow was US$645m, a sizeable US$754m improvement on the prior
period. This was due to improved profitability in Food Delivery and
Classifieds, as well as better working capital management in Etail, and
Payments and Fintech. Excluding OLX Autos, free cash inflow was US$725m.
Tencent remains a major contributor to our cash flow via an increased
dividend of US$758m (FY23: US$565m).
Prosus has a net debt position of US$18m, comprising US$15.1bn in central cash
and cash equivalents (including short-term cash investments), net of
US$15.1bn in central interest-bearing debt (excluding capitalised lease
liabilities). In addition, we have an undrawn US$2.5bn revolving credit
facility. During the period, we recorded a net interest income of US$159m.
There were no new or amended accounting pronouncements effective 1 April 2023
with a significant impact on the Group's condensed consolidated interim
financial statements.
The company's external auditor has not reviewed or reported on forecasts
included in these condensed consolidated interim financial statements.
SEGMENTAL REVIEW
Ecommerce
Ecommerce consolidated revenue from continuing operations increased US$287m,
or 13% (16%), from US$2.3bn in the prior period to US$2.6bn. This was
primarily due to revenue growth in Classifieds, Food Delivery, and Payments
and Fintech. Trading losses decreased to US$36m from US$256m, demonstrating
the operating leverage of the businesses, which are on a path to
profitability.
On an economic-interest basis, Ecommerce revenue grew 16% (18%) to US$4.9bn
and trading losses improved from US$805m to US$246m.
Food Delivery
iFood
iFood represents our consolidated food-delivery business. We also have several
associates, notably Delivery Hero and Swiggy.
iFood delivered revenue growth of 2% (17%) to US$679m, while total gross
merchandise value (GMV) grew 23% (15%), led by a strong performance from the
core food-delivery business. iFood's revenue growth from its new initiatives
remained meaningful at 21% (19%), even
as they took a more considered approach to growth. Overall, the trading profit
margin improved 11 percentage points to 3%, and trading
profit rose 149% (US$67m) in local currency, excluding M&A to US$23m.
iFood's core food-delivery business grew revenue 17% (US$86m) in local
currency, excluding M&A. It benefited from growing traction of its loyalty
programme (Clube) which supports increased use from iFood's most valuable
customers. Profitability grew significantly by 106% (US$57m) in local
currency, excluding M&A to US$114m, driven by operational efficiencies
such as lower staff costs and more targeted marketing. As a result, the core
restaurant profit margin improved 12 percentage points to 19%. GMV grew by
18%, a 5 percentage point increase on the 1H23 growth of 13%, driven by 17%
order growth to reach 417 million orders in 1H24, while average order value
(AOV) grew by 3%. iFood continues to focus on customer acquisition and
reactivating lapsed users by extending its loyalty programme's reach,
improving its app's relevance, and growing its WhatsApp order service.
In 1H24, iFood's extensions revenue grew 21% (19%). The business is in an
early stage but sees good opportunities in groceries and fintech leveraging
its platform. iFood has adopted a more measured approach to its grocery
marketplace business, targeting improved unit economics as the business
reached 19 million orders. Trading losses in the groceries extensions
decreased by US$16m in local currency, excluding M&A to US$43m,
demonstrating an ability to grow and improve profitability at the same time.
iFood is focused on sustaining growth while continuing profitability
improvements.
Delivery Hero
Prosus holds 29.53%1 of Delivery Hero at the end of the reporting period.
Delivery Hero's GMV grew 8% in the second quarter of 2023; excluding Asia, GMV
grew 18%. Revenue grew 27% to €4.8bn, ahead of peers. The business has
delivered on its path to improving profitability, reporting adjusted EBITDA of
€9m.
More information on Delivery Hero is available at https://ir.deliveryhero.com.
Swiggy
Prosus holds 32.7%(1) of Swiggy at the end of the reporting period. Its
GMV(2) growth remains strong at 28% as operating metrics continue to improve,
while trading losses reduced to US$208m (1H23: US$321m).
Swiggy's core food-delivery business grew 17% and delivered GMV of
US$1.43bn(3) in the first six months of the year. This was led by a rise
in transacting users that drove double-digit order growth and inflation in
AOV. Core food-delivery EBITDA losses in 1H24 shrunk 89%, led
by improvements in contribution margin and operating leverage. In combination,
this reflects customer willingness to pay for convenience
and restaurant willingness to advertise for growth.
1 Shareholding period refers to the six months ended 30 September 2023.
2 GMV is net of cancelled orders, includes rider fees. GMV growth rate is in
local currency.
3 Translated at average foreign exchange rate for period April - September
2023.
The quick-commerce business made rapid strides as customer adoption drove
order growth. Basket sizes grew well ahead of inflation. Instamart's store
count ended June 2023 19% higher, contributing to its GMV growth of 63%. With
the platform focused on gaining scale and moving towards profitability in the
25 cities where it operates, Instamart's first-half contribution losses fell
by around 75%. Broader product selection, densification of the store network
and faster delivery times have continued to aid customer acquisition
and retention.
Economic-interest revenue for the entire Food Delivery segment grew by 28%
(23%) to US$2.4bn. Trading losses reduced by US$214m in local currency,
excluding M&A to US$155m. Overall profit margin improvement of
14 percentage points was driven by increased take rates and improved margins
in the core restaurant food-delivery businesses.
Classifieds
OLX Europe's classifieds business remains one of the fastest-growing globally
and is well placed for margin expansion.
The business delivered a strong performance, with sustained growth and
significantly improved profitability.
Classifieds consolidated revenue from continuing operations grew 38% (32%) to
US$342m. This was supported by the European auto verticals and OLX
horizontals, which grew 46% and 30% respectively in local currency, excluding
M&A. It was led by pricing benefits across categories, predominantly in
Poland. Despite challenges created by the conflict in Ukraine, our business
demonstrated resilience and adaptability and we have recorded a promising
rebound in this region. Excluding Ukraine, revenue grew by 35% (27%).
Pay-and-ship transactions grew 19%, contributing US$18m of revenue. This
represents 65% revenue growth year on year, driven by increased buyer adoption
and retention.
Classifieds consolidated trading profit from continuing operations more than
doubled to US$94m, from US$38m in the same period last year, driven mainly by
higher revenue and increased cost efficiency.
We announced the decision to exit OLX Autos in March 2023. We made significant
progress in exiting several markets such as India, Indonesia, Chile and
Turkey, with aggregate proceeds from concluded deals of US$181m. Markets where
we could not find buyers, such as Colombia, Mexico and Argentina, have been
closed and inventories across these markets liquidated without major
writedowns.
The core Classifieds business is profitable, cash flow positive and
fast-growing. The segment is well positioned to continue its growth and
margin-expansion path, enhancing its value. Consistent with prior seasonality
trends, we expect to increase our investment in marketing spend in the second
half of our financial year, but with a clear focus on continued
profitable growth.
On an economic-interest basis, Classifieds revenue from continuing operations
grew by 27% (23%) to US$466m and more than tripled trading profits to US$110m,
from US$33m.
OLX Brasil
OLX Brasil, a 50% joint venture with Adevinta, grew revenue 2% in local
currency, excluding M&A, as business performance remained impacted by a
weaker economic environment and a decline in advertising revenues. OLX
Brasil's revenue and trading profit amounted to BRL453m (US$92m) and BRL166m
(US$34m) respectively.
Payments and Fintech
The Payments and Fintech segment operates profitable core PSP businesses, and
a rapidly scaling credit business in India. It delivered a strong 1H24 result
in the core PSP and credit business, with revenue growth and improved
profitability, despite pending regulatory approvals in India that are also
impacting peer PSPs. The regulatory approvals relate to onboarding new online
merchants while we continue to provide payment services to our existing online
merchants. We are working closely with the relevant authorities and expect a
resolution soon.
The Payments and Fintech segment grew consolidated revenue 21% (32%) to
US$497m, driven by India payments, India credit, and Turkey. The consolidated
trading loss narrowed by US$62m in local currency, excluding M&A to
US$22m, due to improved profitability in GPO, Turkey and savings from the
closure of India's LazyCard business. GPO's improvement was partly due to the
once-off loss provisions of US$18m in 1H23 and operational efficiencies from
headcount rationalisation.
Core PSP revenue is primarily made up of payments operations in India, GPO
(Eastern Europe, Africa and Latin America), Iyzico (Turkey) and Red Dot
Payments (south-east Asia). Iyzico and Red Dot Payments are accounted for in
GPO. The core PSP business grew revenue by 21% (34%) to US$440m. It improved
its trading profit margin to 2%, a 9 percentage point improvement from 1H23
(4 percentage point improvement, excluding the US$18m once-off loss provision
in 1H23). Total payments volume (TPV) grew 18% (20%) to US$55bn, driven by
India 16% (21%) and GPO, including Turkey and Red Dot Payments 21% (19%).
India is our largest market in the core PSP business, contributing around 48%
of revenues. India's revenue grew 15% (20%) to US$211m, driven by growth from
existing merchants, Wibmo and its omnichannel business. Trading profit is
skewed to the second half due to holiday festivals, recorded a trading loss
margin of 3% compared to 1% in 1H23.
In 1H24, PayU agreed to sell its GPO business, excluding Turkey and Red Dot
Payments, to Rapyd, a fintech-as-a-service provider, for US$610m. After the
sale, which is expected to close in the first half of calendar 2024, the core
PSP business will constitute PayU India, Iyzico in Turkey and Red Dot Payments
in south-east Asia. GPO is included in the results from continuing operations
in 1H24. GPO, including Turkey and Red Dot Payments, grew revenue 28% (47%)
to US$231m, with the trading profit margin improving significantly to 7%,
from -14% in 1H23
(-4% excluding once-off loss provision in 1H23). Revenue growth and savings
from cost-optimisation measures contributed to the margin improvement.
Iyzico (Turkey) grew revenue 91% (176%) to US$65m, driven by TPV growth and
higher take rates. Iyzico now accounts for 15% of core PSP revenues, from 9%
in 1H23. The take-rate improvement was driven by better customer and mode mix,
which contributed to its trading margin improving 2 percentage points to
14%.
The credit business in India grew revenue by 23% (31%) to US$43m despite
regulatory headwinds. The trading margin for India credit is seasonally
stronger in the second half. During 1H24 it was impacted by regulatory
uncertainty. The loss ratio was 2.5% in line with the growing loan book and
remains below the industry average. India credit has a loan book of US$338m at
the end of September 2023 after issuing US$362m in credit during 1H24.
On an economic-interest basis, the Payments and Fintech segment grew revenue
23% (34%) to US$591m and trading losses improved from US$97m to US$34m.
Remitly
Prosus holds 20.61% of Remitly at the end of the reporting period. Remitly, a
digital remittance company, is the largest associate in the Payments and
Fintech segment. In the six months ended June 2023, Remitly grew revenues by
49% to US$438m and generated US$26m
of adjusted EBITDA, a margin improvement of 12 percentage points to 6%. These
strong results were driven by send-volume growth of 38%
to US$18bn.
More information on Remitly is available at https://ir.remitly.com/.
Edtech
Edtech's revenue growth was impacted by the adoption of generative AI and
macroeconomic factors. Our businesses are evolving their products to leverage
this new technology and address costs.
These challenges meant that the consolidated Edtech businesses, Stack Overflow
and GoodHabitz, grew revenues by 13% (11%) to US$71m, while trading losses
were flat at US$66m (1H23: US$68m).
Stack Overflow's revenue grew 4% (7%) to US$47m. Teams bookings declined 3%,
following a decline in small and medium-sized businesses and self-serve
bookings. Annual recurring revenue grew 15% to US$58m. In response, Stack
Overflow launched OverflowAI, a roadmap for integrating generative AI into its
public platform, Stack Overflow for Teams, and new product areas. The business
has also responded by managing costs, resulting in margins remaining in line
with last year. It continues to invest in its product while prioritising a
path to profitability.
GoodHabitz grew revenue at 33% (22%) to US$24m (1H23: 27%), driven by growth
across its core markets, particularly in the Netherlands and Germany. Annual
recurring revenue grew 30% to US$50m. Trading losses improved by US$6m in
local currency, excluding M&A to US$5m on lower marketing and overhead
costs.
The 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 8% in local currency,
excluding M&A to US$140m and trading losses improved to US$2m, with the
expectation of further improving metrics in 2H24.
On an economic-interest basis, Edtech segment revenues grew 9% in local
currency, excluding M&A to US$211m and trading losses reduced
by US$24m in local currency, excluding M&A to US$64m.
Skillsoft
Prosus holds 38.18% of Skillsoft at the end of the reporting period.
Skillsoft grew revenue 3% in local currency, excluding M&A, while its
trading profit margin improved by 5 percentage points to 13% in the six months
ending 31 July 2023. Skillsoft recorded a 1% decline in bookings, primarily
from instructor-led training (down 12%), and partially offset by content and
platform growth of 8%.
More information on Skillsoft is available at https://investor.skillsoft.com.
Etail
eMAG
In 1H24, eMAG's consolidated group revenue grew 10% (4%) to US$930m, driven by
growth in eMAG Romania of 12% (7%). eMAG's Sameday courier business, a leading
player in out-of-home deliveries, delivered revenue growth of 31% (25%) and
deliveries of 32%. Its grocery-delivery business, Freshful, and food-delivery
business, Tazz, made important contributions by growing 118% and 25%
respectively in local currency, excluding M&A.
eMAG group's GMV grew 5%, with the marketplace (third-party or 3p) business
posting double-digit year-on-year growth. GMV for the first-party (1p)
business grew 1.2%, led by the Romanian business.
eMAG's trading losses improved by US$14m in local currency, excluding M&A
to US$20m, and as it continued its path to profitability. eMAG Romania
contributed with a trading profit of US$15m, an increase of 67% (44%)
from the prior period.
On an economic-interest basis, Etail segment revenues grew 11% (4%) to
US$948m. Trading losses reduced by US$14m to US$25m in local currency,
excluding M&A.
Tencent
Prosus held 25% of Tencent at the end of the reporting period. For the six
months ended 30 June 2023, Tencent reported revenues of RMB299.2bn, up 11%
from last year. Non-IFRS profit attributable to shareholders (Tencent's
measure of normalised performance) increased 31% from RMB53.7bn to RMB70.1bn.
Revenues from value-added services increased 6% to RMB153.5bn, driven by the
strong performance of Goddess of Victory: Nikke, Triple Match 3D and Valorant
in international games markets, increased revenues from in-game virtual item
sales and music subscription services. Revenues from fintech and business
services were RMB97.3bn, up 15%, driven by the recovery of commercial payment
activities and an increase in live-streaming ecommerce transaction fees from
video accounts. Revenues from online advertising increased 26%, driven by the
addition of Video Accounts as a new advertising revenue stream, the recovery
of Tencent's mobile advertising network, growth in advertising activity
within mini programs and ongoing improvements in the machine-learning
advertising platform.
Combined monthly active users of Weixin and WeChat grew 2% to 1.33 billion.
User engagement increased. Video Account's total user time spent almost
doubled year on year. Monthly active users of mini programs exceeded 1.1
billion, driven by a notable contribution from mini games.
Tencent launched the Tencent Cloud MaaS (Model-as-a-Service) library of models
and solutions, leveraging its proprietary database and high-performance
computing clusters. Tencent's MaaS solutions enable enterprises to develop
customised large language models at higher efficiency and lower cost.
Tencent remains committed to its guiding principle of 'Value for users, tech
for good' and will continue its work to promote technological innovation and
contribute to the sustainable development of society.
More information on Tencent is available at
www.tencent.com/en-us/investors.html.
PROSPECTS
The Group is ahead of its plan to achieve consolidated ecommerce portfolio
profitability. With improved results in the current period, we expect to
achieve profitability for 2H24, ahead of the prior commitment to do so in
1H25 and to grow profitability further. We will invest to enhance our
ecosystems as value propositions to customers while delivering returns to our
shareholders.
We remain committed to unlocking shareholder value and benefit all
stakeholders. During the period, we removed the crossholding, delivering on
our commitment to simplify the Group structure and continue the open-ended
share repurchase programme. The latter remains a vital part of our drive to
enhance shareholder returns and increase NAV per share. We endeavour to
maximise shareholder value with a transparent, predictable and repeatable
process of identifying, scaling and highlighting value across our portfolio at
the right time.
Tencent is among the best technology companies in the world. Prosus is
committed to remaining a significant shareholder in Tencent, reflecting our
confidence in its leadership team to deliver value for shareholders.
Our balance sheet is strong, and our ambition remains to manage it within
our investment-grade rating. While searching for new investment
opportunities, we will remain disciplined.
Artificial intelligence is essential to compete. The Group hopes to
capitalise on the expertise it has built over the past five years. We have
embedded AI in our operations, making our capabilities available to businesses
to drive increased efficiencies. AI, and now increasingly generative AI, is a
significant value-creation opportunity.
Risks
While the Group focuses on growing value sustainably, we understand the
importance of effective risk management and therefore continue
to improve our governance processes. This helps in setting ambitious
objectives and managing related risks.
Through our organisational structures, we enable a proactive approach to risk
management. 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 three categories:
· Strategic risks and opportunities: Arising from strategic
choices we make, which are continuously assessed based on risk versus reward.
· Internal operational risks: These are managed by upholding
our code of business ethics and conduct. Also by clear roles, responsibilities
and policies, effective internal controls, and continuous 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 remain:
· Geopolitical tension and market conditions: The Ukraine and
Israel-Gaza wars plus broader geopolitical tensions strain the global economy.
We expect inflation and interest rates to remain elevated. In response, we
maintain a disciplined approach to deploying capital. We also closely monitor
our counterparty and credit risk exposures to safeguard our balance sheet.
· Technology developments: We stay close to advances in
technology. Generative AI brings both new opportunities and risks for our
products, services and business models. We focus on the responsible use of
data and related technologies to keep our customers safe, enhancing our
cyber-resilience, detection and response capabilities and building our AI
knowledge and skills.
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 leading long-term technology investor, we recognise the power of
technology to create solutions for some of the world's most-pressing needs.
Investments we make have the potential to reduce inequalities and drive
innovation. By investing in local entrepreneurs who are solving for local
needs, we support economic growth in those communities. This is the most
sustainable way of driving equitable access to opportunity in a society.
A major milestone was receiving the Science Based Targets initiative's (SBTi)
validation of our climate targets. This is an essential step on our journey
to decarbonise our business while we support a just and fair transition to a
low-carbon economy aligned with the Paris Agreement. We developed targets by
applying SBTi's guidance for investors, which best matches our diverse
portfolio of investments.
As a global company operating in many countries, we are keenly aware of the
need for urgent climate action. With most of our portfolio companies
operating in countries with low historical emissions footprint(1) but most
vulnerable to the impacts of global warming, it is critical to ensure a just
and fair transition. Our newly published environmental sustainability
programme details our targets and our climate transition plan and strategy.
Recognising the progress we made last year, we received improved scores from
leading sustainability rating agencies, S&P and ISS, for our
sustainability and environmental, social and governance (ESG) performance.
These ratings provide an external view of our sustainability performance and
help us improve our work to embed sustainability at the heart of all our
businesses.
As part of our mission to use technology to improve the everyday lives of
billions of people, we emphasise promoting inclusive, economically secure
communities by doing what we do best - supporting promising entrepreneurs to
make an impact on the communities around them. While conditions vary, local
company action is key to addressing societal challenges. We are proud of the
many businesses across our portfolio that are designing initiatives to meet
the needs of local communities.
1 Our World in Data: historical emissions:
https://ourworldindata.org/contributed-most-global-co2
DIRECTORATE
On 18 September 2023, the Group announced that Bob van Dijk stepped down as
chief executive and executive director of the boards.
We thank him for his leadership. Ervin Tu has been appointed interim chief
executive. Bob will assist in the transition and remains a consultant to the
boards, ending his consulting arrangement on 30 September 2024.
Remuneration for directors and key management will be disclosed in the
remuneration report for the year ended 31 March 2024, including Bob's
remuneration. Ervin's remuneration is unchanged as a result of his interim
appointment.
NOTICE FOR US SHAREHOLDERS
As Prosus' ownership in Tencent is expected to reduce below 25% before the end
of the calendar year, we advise US shareholders that Prosus may be treated
as a passive foreign investment company (PFIC) for US federal income tax
purposes from 1 April 2024 onwards. Prosus has been monitoring its PFIC
status for a while and when applying a monthly measurement period for PFIC
testing we believe that Prosus should not be a PFIC for its financial year
ending 31 March 2024 (FY24). It is, however, anticipated that Prosus may be a
PFIC in financial years commencing 1 April 2024 (FY25). A definite conclusion
cannot be drawn until the close of the financial year in question.
If Prosus is classified as a PFIC, similar to Naspers, Prosus intends to
provide information that a US holder of Prosus ordinary shares N would need to
make a 'qualified electing fund' (QEF) election starting from the period
1 April 2024 to 31 March 2025.
In addition, please note that it is expected that the income, which US
shareholders who will make the QEF election need to include and report, should
be relatively insignificant and will be lower than the PFIC income which
US Naspers shareholders who have made a QEF election will
pick up.
INDEPENDENT AUDITOR'S REVIEW OF THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
The condensed consolidated interim financial statements for the six months
ended 30 September 2023 have been reviewed by Deloitte, our independent
auditor, whose unmodified report is appended to these condensed consolidated
interim financial statements.
RESPONSIBILITY STATEMENT ON THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
We have prepared the condensed consolidated interim financial statements of
Prosus for the six months ended 30 September 2023, and the undertakings
included in the consolidation taken as a whole, in accordance with IAS 34
Interim Financial Reporting.
To the best of our knowledge:
1. The condensed consolidated interim financial statements give a true and
fair view of the assets, liabilities and financial position as at
30 September 2023, and of the result of our consolidated operations for the
six months ended 30 September 2023.
2. The condensed consolidated interim financial statements for the six
months ended 30 September 2023 include the information required pursuant to
article 5:25d, sections 8 and 9 of the Dutch Financial Supervision Act (Wet op
het Financieel Toezicht).
On behalf of the board
Koos
Bekker
Ervin Tu
Chair
Interim chief executive
Amsterdam
28 November 2023
CONDENSED CONSOLIDATED INCOME STATEMENT
Six months ended Year ended
30 September 31 March
Notes 2023 2022 2023
US$'m US$'m US$'m
Continuing operations
Revenue 8 2 556 2 269 4 947
Cost of providing services and sale of goods (1 523) (1 524) (3 310)
Selling, general and administration expenses (1 101) (828) (2 023)
Other (losses)/gains - net 10 (347) (3) (641)
Operating loss (415) (86) (1 027)
Interest income 9 438 140 475
Interest expense 9 (279) (277) (553)
Other finance income/(costs) - net 9 223 303 (55)
Dividend income - 61 61
Share of equity-accounted results(1) 1 152 1 059 5 174
Impairment of equity-accounted investments 12 (175) (1 458) (1 742)
Dilution (losses)/gains on equity-accounted investments 12 (143) (95) (252)
Gains on partial disposal of equity-accounted investment 12 2 861 2 771 7 622
Net gains/(losses) on acquisitions and disposals 10 7 136 54
Profit before taxation 3 669 2 554 9 757
Taxation (79) (16) (42)
Profit from continuing operations 3 590 2 538 9 715
(Loss)/profit from discontinued operations(2) 6 (223) (22) 307
Profit for the period 3 367 2 516 10 022
Attributable to:
Equity holders of the group 3 381 2 535 10 112
Non-controlling interests (14) (19) (90)
3 367 2 516 10 022
Per share information for the period from total operations(3)
Earnings per ordinary share N (US cents) 129 90 368
Diluted earnings per ordinary share N (US cents) 128 89 363
Per share information for the period from continuing operations3 7
Earnings per ordinary share N (US cents) 137 91 357
Diluted earnings per ordinary share N (US cents) 136 90 352
1 Includes equity-accounted results from associates. Refer to note 12.
2 The 30 September 2022 and 31 March 2023 amounts have been restated due to
the discontinued operation of OLX Autos. Refer to note 4.
3 Earnings per share is based on the weighted average number of shares
taking into account the impact of the removal of the group's cross-holding
structure in the current and prior period. Refer to note 7.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Six months ended Year ended
30 September 31 March
Notes 2023 Restated(1) Restated(1)
US$'m 2022 2023
US$'m US$'m
Profit for the period 3 367 2 516 10 022
Total other comprehensive loss, net of tax, for the period: (4 145) (7 087) (4 814)
Items that may be subsequently reclassified to profit or loss
Translation of foreign operations(2, 3) (1 844) (3 538) (2 448)
Equity-accounted investments' foreign currency translation reserve 723 301 797
Items that may not be subsequently reclassified to profit or loss
Fair value losses on financial assets through other comprehensive income 13 (1 292) (324) (158)
Share of equity-accounted investments' movement in other comprehensive 12 (1 732) (3 526) (3 005)
income(1, 4)
Total comprehensive (loss)/income for the period (778) (4 571) 5 208
Attributable to:
Equity holders of the group (772) (4 541) 5 308
Non-controlling interests (6) (30) (100)
(778) (4 571) 5 208
1 Relates to the voluntary change in accounting policy for the group's share
in the changes in NAV and share-based compensation reserve of equity-accounted
investments. Refer to note 4.
2 31 March 2023 includes the reclassification to the condensed consolidated
income statement of US$202m relating to the disposal of Avito. Refer to note
15.
3 The significant movement relates to the translation effects from
equity-accounted investments (refer to note 12). The current period also
includes a net monetary gain of US$23m (2022: US$67m and 31 March 2023:
US$102m) relating to hyperinflation accounting for the group's subsidiaries in
Turkey.
4 This relates mainly to (losses)/gains from the changes in share prices of
Tencent's listed investments carried at fair value through other comprehensive
income.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at As at
30 September 31 March
Notes 2023 2022 2023
US$'m US$'m US$'m
Assets
Non-current assets 37 626 42 039 41 707
Property, plant and equipment 571 541 620
Goodwill 11 1 040 2 336 1 412
Other intangible assets 343 429 367
Investments in associates 12 32 700 35 176 35 930
Investments in joint ventures 66 107 69
Other investments and loans(1) 13 2 644 3 286 3 117
Trade and financing receivables 196 105 133
Other receivables 54 41 43
Deferred taxation 12 18 16
Current assets 22 452 20 125 23 371
Inventory 269 390 324
Trade and financing receivables 475 479 526
Other receivables and loans 871 738 869
Derivative financial instruments - 1 5
Other investments and loans(1) 13 3 768 - 4 707
Short-term investments 13 481 7 391 6 726
Cash and cash equivalents 2 676 8 483 9 565
21 540 17 482 22 722
Assets classified as held for sale 15 912 2 643 649
Total assets 60 078 62 164 65 078
Equity and liabilities
Capital and reserves attributable to the group's equity holders 39 980 40 927 44 593
Share capital and premium 4 29 138 39 170 39 186
Treasury shares (3 920) (3 491) (10 043)
Other reserves (48 069) (48 474) (45 756)
Retained earnings 62 831 53 722 61 206
Non-controlling interests 29 144 32
Total equity 40 009 41 071 44 625
Non-current liabilities 15 721 15 500 16 048
Capitalised lease liabilities 139 147 150
Liabilities - interest bearing 15 435 14 999 15 596
- non-interest bearing 4 20 22
Other non-current liabilities(1) 17 146 140
Cash-settled share-based payment liabilities 16 43 75 57
Deferred taxation 83 113 83
Current liabilities 4 348 5 593 4 405
Current portion of long-term debt 394 277 467
Trade payables 327 332 356
Accrued expenses 1 489 1 564 1 802
Provisions 63 9 45
Other current liabilities(1) 625 2 207 775
Cash-settled share-based payment liabilities 16 570 648 656
Dividend payable 184 - -
Bank overdrafts 15 31 28
3 667 5 068 4 129
Liabilities classified as held for sale 15 681 525 276
Total equity and liabilities 60 078 62 164 65 078
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 current liabilities as a result of
them being immaterial.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Treasury Foreign Valuation Existing Share- Retained Share- Non- Total
capital shares currency reserve control based earnings holders' controlling US$'m
and US$'m translation US$'m business compen- US$'m funds interest
premium reserve combination sation US$'m US$'m
ordinary US$'m reserve reserve
shares US$'m US$'m
US$'m
Balance at 1 April 2023 39 186 (10 043) (1 990) (1 929) (45 681) 3 844 61 206 44 593 32 44 625
Total comprehensive income for the period - - (1 128) (3 025) - - 3 381 (772) (6) (778)
Profit for the period - - - - - - 3 381 3 381 (14) 3 367
Total other comprehensive loss for the period - - (1 128) (3 025) - - - (4 153) 8 (4 145)
Movements in equity-accounted investments equity reserves and NAV(1) - - - 225 - 399 - 624 - 624
Cancellation of treasury shares (10 043) 10 043 - - - - - - - -
Removal of the cross-holding structure(2) - - - 771 (204) - (771) (204) - (204)
Derecognition of Naspers residual asset - - - 771 (204) - (771) (204) - (204)
Repurchase of own shares(3) - (3 920) - - - - - (3 920) - (3 920)
Share-based compensation movements - - - - - (54) (19) (73) - (73)
Share-based compensation expense - - - - - 74 - 74 - 74
Contributions made to Naspers share trusts - - - - - (147) - (147) - (147)
Other share-based compensation movements - - - - - 19 (19) - - -
Direct equity movements (5) - - 647 277 (142) (777) - - -
Direct movements from associates - - - 660 - - (660) - - -
Realisation of reserves as a result of partial disposal of associates - - - (13) - (142) 155 - - -
Realisation of reserves as a result of disposals - - - - 277 - (277) - - -
Other direct movements (5) - - - - - 5 - - -
Remeasurement of written put option liabilities - - - - 231 - - 231 - 231
Cancellation of written put option liabilities - - - - 70 - (5) 65 - 65
Dividends payable(4) - - - - - - (184) (184) - (184)
Transactions with non-controlling shareholders - - - 1 (382) 1 - (380) 3 (377)
Balance at 30 September 2023 29 138 (3 920) (3 118) (3 310) (45 689) 4 048 62 831 39 980 29 40 009
1 Relates to the impact of the voluntary change in accounting policy for the
group's share in the changes in NAV and share-based compensation reserve of
equity-accounted investments. Refer to note 4.
2 Relates to the removal of the group's cross-holding structure. Refer to
note 4.
3 Refer to note 4 for details of the Prosus/Naspers share repurchase
programme.
4 Dividends payable consist of US$79m (2023: US$83m) attributable to Naspers
and US$105m (2023: US$107m) attributable to the Prosus free-float
shareholders.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY continued
Share Treasury Foreign Valuation Existing Share- Retained Share- Non- Total
capital shares currency reserve control based earnings holders' controlling US$'m
and US$'m translation US$'m business compen- US$'m funds interest
premium reserve combination sation US$'m US$'m
ordinary US$'m reserve reserve
shares 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 period - - (3 225) (3 851) - - 2 535 (4 541) (30) (4 571)
Profit for the period - - - - - - 2 535 2 535 (19) 2 516
Total other comprehensive loss for the period - restated(1) - - (3 225) (3 851) - - - (7 076) (11) (7 087)
Movements in equity-accounted investments equity reserves and NAV(1) - - - 141 - 595 - 736 2 738
Cancellation of treasury shares (4) 6 411 - - - - (6 407) - - -
Repurchase of own shares(2) - (3 491) - - - - - (3 491) - (3 491)
Acquisition of Naspers shares resulting - - - - (616) - - (616) - (616)
in a capital restructure(2)
Share-based compensation movements - - - - - (115) (8) (123) - (123)
Share-based compensation expense - - - - - 59 - 59 - 59
Contributions made to Naspers share trusts - - - - - (127) - (127) - (127)
Modification of share-based compensation benefits - - - - - (13) 9 (4) - (4)
Other share-based compensation movements - - - - - (34) (17) (51) - (51)
Direct equity movements (16) - - 549 - (119) (414) - - -
Direct movements from associates - - - 344 - - (344) - - -
Realisation of reserves as a result of partial disposal of associate - - - 18 - (119) 101 - - -
Realisation of reserves as a result of disposals - 187 - (187) -
Other direct movements (16) - - - - - 16 - - -
Cancellation of written put option liabilities - - - - 14 - - 14 - 14
Other movements - - - - - - 7 7 - 7
Dividends paid(3) - - - - - - (190) (190) - (190)
Transactions with non-controlling shareholders(4) - - (6) - (1 585) - - (1 591) 70 (1 521)
Balance at 30 September 2022 39 170 (3 491) (3 589) (3 096) (45 373) 3 584 53 722 40 927 144 41 071
1 Relates to the impact of the voluntary change in accounting policy for the
group's share in the changes in NAV and share-based compensation reserve of
equity-accounted investments. Refer to note 4.
2 Refer to note 4 for details of the Prosus/Naspers share repurchase
programme.
3 Dividends paid consist of US$83m attributable to Naspers and US$107m
attributable to the Prosus free-float shareholders.
4 Relates mainly to the liability recognised for the non-controlling
shareholders of iFood. Refer to note 4.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Six months ended Year ended
30 September 31 March
Notes 2023 2022 2023
US$'m US$'m US$'m
Cash flows from operating activities
Cash generated from/(utilised in) operating activities 5 (266) (349)
Interest income received 481 82 315
Dividends received from equity-accounted investments 759 572 572
Interest costs paid (291) (296) (551)
Taxation paid (50) (50) (107)
Net cash generated from/(utilised in) operating activities 904 42 (120)
Cash flows from investing activities
Acquisitions and disposals of tangible and intangible assets (32) (140) (252)
Acquisitions of subsidiaries, associates and joint ventures, net of cash 17 (19) (81) (322)
Disposals of subsidiaries, businesses, associates and joint ventures, net of 17 4 180 3 777 12 668
cash
Acquisition of short-term investments(1) (13 487) (7 355) (6 605)
Maturity of short-term investments(1) 6 709 3 924 3 924
Loans advanced to related parties 19 7 - 58
Cash paid for other investments(2) 17 (64) (130) (559)
Cash received from other investments(3) 17 11 3 723 3 764
Cash movement in other investing activities (26) (38) (33)
Net cash (utilised in)/generated from investing activities (2 721) 3 680 12 643
Cash flows from financing activities
Repurchase of own shares 4 (4 005) (3 377) (9 901)
Proceeds from long and short-term loans raised 13 81 104
Repayments of long and short-term loans (22) (46) (56)
Capital restructure as a result of the share repurchase programme - (615) (615)
Additional investment in existing subsidiaries (371) (14) (1 606)
Dividends and capital repayments paid to shareholders - (190) (191)
Contributions made to the Naspers share trusts 19 (147) (127) (191)
Repayments of capitalised lease liabilities (33) (35) (51)
Additional investment from non-controlling shareholders 3 67 67
Cash movements in other financing activities (3) (9) (11)
Net cash utilised in financing activities (4 565) (4 265) (12 451)
Net movement in cash and cash equivalents (6 382) (543) 72
Foreign exchange translation adjustments on cash and cash equivalents (114) (266) (69)
Cash and cash equivalents at the beginning of the period 9 537 9 628 9 628
Cash and cash equivalents classified as held for sale (380) (367) (94)
Cash and cash equivalents at the end of the period 2 661 8 452 9 537
1 Relates to short-term cash investments with maturities of more than three
months from date of acquisition.
2 Relates to payments for the group's fair value through other comprehensive
income investments.
3 Relates mainly to the group's investments measured at fair value.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for the six months ended 30 September 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, etail 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 condensed consolidated interim financial statements for the six months
ended 30 September 2023 were authorised for issue
by the board of directors on 28 November 2023.
2. BASIS OF PRESENTATION AND ACCOUNTING POLICIES
Information on the condensed consolidated interim financial statements
The condensed consolidated interim financial statements for the six months
ended 30 September 2023 have been prepared in accordance with and containing
the information required by International Financial Reporting Standard, IAS 34
Interim Financial Reporting, as adopted by the European Union (IFRS-EU).
The condensed consolidated interim financial statements do not include all the
disclosures required for complete annual financial statements prepared in
accordance with IFRS-EU. The accounting policies in these condensed
consolidated interim financial statements are consistent with those applied in
the previous consolidated annual financial statements as included in the
annual report for the year ended 31 March 2023, except for the voluntary
change in accounting policy for the group's share in the changes in net asset
value (NAV) and share-based compensation reserve of equity-accounted
investments detailed in note 4.
There were no new or amended accounting pronouncements effective from 1 April
2023 that have a significant impact on the group's condensed consolidated
interim financial statements.
The condensed consolidated interim 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) per class of ordinary shares. These are calculated as the
relationship of the number of ordinary shares (or dilutive ordinary shares
where relevant) of Prosus issued at 30 September 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 removal of the group's cross-holding structure with Naspers.
All amounts disclosed are in millions of US dollars (US$'m), unless otherwise
stated.
2. BASIS OF PRESENTATION AND ACCOUNTING POLICIES continued
Information on the condensed consolidated interim financial statements
continued
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.
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 disposed, classified as held for sale or closed
down by 30 September 2023 have been presented as discontinued operations and
are reviewed separately by the CODM.
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 as
a discontinued operation in the financial year ended 31 March 2023 in the
operating segment information up until the date of disposal in October 2022.
The comparative financial results of 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 to prior periods.
The change has no impact on the total group revenue, adjusted EBITDA and
trading (loss)/profit in prior periods.
The group proportionately consolidates its share of the results of its
associates and joint ventures in its disclosure of segment results in note 5.
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 or
30 September (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 condensed consolidated interim 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.
At 30 September 2023, the group recorded US$16.1bn in cash, comprising
US$2.6bn of cash and cash equivalents net of bank overdrafts and US$13.5bn in
short-term cash investments. The group had US$15.8bn 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 condensed consolidated interim financial statements.
2. BASIS OF PRESENTATION AND ACCOUNTING POLICIES continued
Information on the condensed consolidated interim financial statements
continued
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.
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 condensed
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 condensed 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 to 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 30 September 2023. The general price
inflation factor up to 30 September 2023 was 283.89%.
3. REVIEW BY THE INDEPENDENT AUDITOR
Deloitte replaced PwC as the group's independent auditor with effect from the
2024 financial year.
These condensed consolidated interim financial statements have been reviewed
by the company's external auditor, Deloitte, whose unmodified review report
appears at the end of the condensed consolidated interim financial statements.
4. SIGNIFICANT CHANGES IN FINANCIAL POSITION AND PERFORMANCE DURING THE REPORTING
PERIOD
Removal of the group's cross-holding structure
On 27 June 2023, the group announced its intention to remove the cross-holding
structure between Prosus and Naspers (the transaction). This transaction was
completed in September 2023. The transaction aimed to address the limitation
on the share repurchase programme at the Naspers level arising from the
cross-holding structure and the complexity arising from the cross-holding
structure.
The removal of the cross-holding structure was implemented by the completion
of the following key transaction steps:
1. Prosus undertook a share capitalisation issue of new ordinary shares N,
ordinary shares B and ordinary shares A1. The capitalisation issue of the
ordinary shares N was to Prosus' free-float shareholders. Naspers irrevocably
waived its entitlement
to ordinary shares N. The capitalisation issue of the ordinary shares B was to
Naspers and the capitalisation issue of ordinary shares A1 was to the holders
of the issued ordinary shares A1.
2. Immediately prior to the Naspers capitalisation issue, the Naspers N
ordinary shares held by its subsidiary MIH Treasury Services Proprietary
Limited (MIH Treasury) were distributed to Naspers and were immediately
cancelled.
3. Naspers undertook a capitalisation issue of new Naspers N ordinary
shares and A ordinary shares. The capitalisation issue of the N ordinary
shares was to Naspers' free-float shareholders. Prosus irrevocably waived its
entitlement to Naspers N ordinary shares. The capitalisation issue of A
ordinary shares was to the holders of the issued A ordinary shares.
4. Naspers converted its N ordinary shares and A ordinary shares from par
to no par value shares. Subsequent to the capitalisation issue, Naspers
facilitated the proportional share consolidation of N ordinary shares and A
ordinary shares to the respective holders of these issued shares, including
Prosus.
5. The share consolidation resulted in a Prosus minimal holding of Naspers
N ordinary shares, which were subsequently sold on the market.
4. SIGNIFICANT CHANGES IN FINANCIAL POSITION AND PERFORMANCE DURING THE REPORTING
PERIOD continued
Removal of the group's cross-holding structure continued
The memorandum of incorporation of Naspers and the articles of association of
Prosus were amended to facilitate the above transaction steps. Prior to the
implementation of the above transaction, the group obtained all regulatory and
shareholder approvals.
Naspers' voting interest and control of Prosus is determined by the total
voting rights that Naspers has in Prosus pursuant to the Prosus ordinary
shares N and the Prosus ordinary shares B that it holds. The control structure
of Prosus remained unchanged subsequent to the above transaction. Naspers
remained the controlling shareholder of Prosus as it retained a 72.96% voting
interest in Prosus. In addition, the tax status of Naspers and Prosus remained
unchanged subsequent to this transaction.
The cross-holding structure between Naspers and Prosus established the
effective economic interest (effective interest) of the Naspers free-float
shareholders in the Prosus group. Post the implementation of the above
transaction, the Naspers and Prosus free-float shareholders' respective
effective interest in Prosus remained similar to what it was immediately prior
to the removal of this cross-holding structure. The transaction therefore
allowed for the Prosus free-float shareholders to directly have an effective
interest in Prosus without the complexity of the cross-holding structure. The
legal ownership of Prosus is now aligned with the effective economic interests
of its shareholders.
The above key transaction steps happened simultaneously and in contemplation
of each other. They were therefore accounted for
as a single arrangement with the effective date of 18 September 2023, which is
the closing date when all the transaction steps
were completed.
Accounting for the removal of the group's cross-holding structure
The capitalisation issue of the ordinary shares N, A1 and B to free-float
shareholders is an issue of new shares in proportion to their existing
shareholding for no consideration. The capitalisation issue is granted out of
Prosus' capital reserves which is share premium. The shares were therefore
issued at par value. The group recognised a decrease in share premium and a
corresponding increase in share capital of US$243m.
The removal of the cross-holding structure results in the derecognition of the
Naspers residual asset and the recognition of the minimal investment in
Naspers shares prior to the disposal of the shares on the market. The Naspers
residual asset was initially recognised as a result of the cross-holding
arrangement between Naspers and Prosus. The removal of this cross-holding
structure resulted in the deemed disposal of this asset and a subsequent
disposal of the Naspers N ordinary shares on the market. The group
derecognised US$211m of the Naspers residual asset and recognised an
investment in Naspers amounting to US$7m. The excess of the residual
asset derecognised and the Naspers shares of US$204m was recognised in the
'Existing control business combination reserve' in equity, representing the
removal of the cross-holding structure with no change in the equity structure
of the group. In addition, accumulated losses of the residual interest asset
in the valuation reserve of US$771m were transferred to retained earnings
within equity upon derecognition. The group received US$7m as a result of the
sale of the N ordinary shares on the market.
Post the implementation of this transaction, the Naspers and Prosus free-float
effective interest in Prosus was 43.3% (31 March 2023: 43.5%) and 56.7% (31
March 2023: 56.5%) respectively.
4. SIGNIFICANT CHANGES IN FINANCIAL POSITION AND PERFORMANCE DURING THE REPORTING
PERIOD continued
Share repurchase programme
On 27 June 2022, the group announced the beginning of an open-ended,
repurchase programme of the Prosus ordinary shares N and Naspers N ordinary
shares. The group continued with the share repurchase programme for the six
months ended 30 September 2023.
The Prosus repurchase programme of its ordinary shares N continued to be
funded by an orderly, on-market sale of Tencent Holdings Limited (Tencent)
shares.
The Naspers repurchase programme of its N ordinary shares continued to be
funded by the disposal of some of the Prosus ordinary shares N that it holds.
During the period, the Naspers repurchase programme was implemented by MIH
Treasury up until the removal of the group's cross-holding structure.
Subsequent to the removal of the cross-holding structure, the share repurchase
programme was continued by Naspers and not MIH Treasury.
For the six months ended 30 September 2023, Prosus repurchased 57 616 849 (2%
of outstanding ordinary shares N in issue) ordinary shares N on the market for
a total consideration of US$3.9bn, which was funded by the sale of 92 412 000
Tencent shares yielding proceeds of US$4.0bn. Naspers repurchased 10 310 684
(6% of outstanding N ordinary shares in issue) N ordinary shares on the market
for a total consideration of US$1.8bn.
This transaction was funded by the disposal of 24 358 880 Prosus ordinary
shares N on the market yielding proceeds of US$1.6bn.
At 31 March 2023, the Naspers and Prosus free-float shareholders' effective
interest in Prosus was 56.5% and, subsequent to the removal of the
cross-holding structure detailed above and the continuation of the share
repurchase programme, the Naspers and Prosus free-float shareholders'
effective interest in Prosus at 30 September 2023 is 56.7%.
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 condensed
consolidated statement of financial position. The treasury shares were
recognised at a cost of US$3.9bn. 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.
Disposal of shares in Tencent
The group reduced its ownership interest in Tencent from 26% to 25%, yielding
US$4.0bn 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$2.9bn in the condensed consolidated income statement.
The group reclassified a loss of US$65m from the foreign currency translation
reserve to the condensed consolidated income statement related to this partial
disposal.
Sale of PayU GPO
In August 2023, the group announced that it reached an agreement with Rapyd, a
leading fintech service provider, to acquire the Global Payments Organisations
(GPO) within PayU for a cash transaction worth US$610m. The transaction
excludes the group's payments business in India as well as its businesses in
south-east Asia - Red Dot Payment - and Turkey - Iyzico.
As a result of this agreement, the group classified the GPO investments being
sold as a disposal group held for sale from August 2023. The disposal group
consists of the GPO businesses in Eastern Europe and Latin America.
Other transactions with non-controlling shareholders
In November 2022, the group acquired 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
shares were acquired from the non-controlling shareholders for the cash
consideration of US$1.5bn. At 30 September 2023, the fair value to be settled
in the second half of FY24 amounted to US$6m (31 March 2023: US$88m).
Exit of the OLX Autos business unit
In March 2023, the group announced its decision to exit the OLX Autos business
unit. The OLX Autos business unit is a second-hand car-sale ecommerce platform
which operates through a single technological platform located in various
regions. 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. All the operations
of this business are presented as discontinued operations as they have been
disposed, classified as held for sale or closed down by 30 September 2023. OLX
Autos operations previously presented in continuing operations for 31 March
2023 have been presented in discontinued operations as of 30 September 2023.
The group recognised a US$100m impairment for the period (2022: US$nil)
related primarily to goodwill that was classified as
held for sale as at 31 March 2023. Total impairment losses of US$164m
recognised in March 2023 are presented in discontinued operations related to
goodwill and other assets. The loss on disposal for the operations sold during
the period, including the reclassification of accumulated foreign currency
translation losses, was not material.
4. SIGNIFICANT CHANGES IN FINANCIAL POSITION AND PERFORMANCE DURING THE REPORTING
PERIOD continued
Share repurchase programme continued
iFood change in revenue model
From 1 April 2023, iFood - the group's food-delivery business - changed the
terms and conditions for the delivery services in its logistics operation and,
as a result, there was a change in its business model. This change in the
business model impacts the amount of revenue recognised from 1 April 2023 as
compared to the prior years. In prior years iFood controlled the food-delivery
service provided to customers and recognised revenue on a gross basis as a
principal. From 1 April 2023, the revenue recognised represents commissions
and services fees received as a result of facilitating food-delivery services
on behalf of third parties as an agent.
Profit from discontinued operations
Discontinued operations consist of the OLX Autos business unit. The
comparative periods include the group's Russian business up until the date of
disposal in October 2022. Refer to note 6 for financial information related to
the group's discontinued operations.
Voluntary change in accounting policy for changes in net asset value and
equity reserves of equity-accounted investments
Effective 1 April 2023, the group made a voluntary change to its accounting
policy for the recognition of changes in the NAV and equity reserves of its
equity-accounted investments. Changes in the NAV and equity reserves of
equity-accounted investments are now recognised directly in equity.
Previously, these changes were recognised in other comprehensive income in the
condensed consolidated statement of comprehensive income and accumulated in
equity in the 'Valuation reserve' due to the lack of prescriptive IFRS
guidance for transactions of this nature. These changes that will now be
recognised directly in equity will continue to be accumulated in the
'Valuation reserve'.
Voluntary change in accounting policy for changes in net asset value and
equity reserves of equity-accounted investments continued
The group considers that the voluntary change in the accounting policy will
provide more relevant and reliable information about the effects of underlying
transactions with equity-accounted investments as these changes impact their
equity and have no impact on the equity-accounted investments' other
comprehensive income.
The group has adopted this change in accounting policy retrospectively. The
change has no impact on the group's equity or 'Valuation reserve' as the
amounts previously recognised in the condensed consolidated statement of
comprehensive income
will continue to be accumulated in the 'Valuation reserve'. The group has
restated the condensed consolidated statement of comprehensive income for this
change.
Below is a summary of the impact of the change in accounting policy on the
condensed consolidated statement of comprehensive income:
Six months ended Year ended
30 September 2022 31 March 2023
Previously Change in Restated Previously Change in Restated
reported accounting US$'m reported accounting US$'m
US$'m policy(1) US$'m policy(1)
US$'m US$'m
Share of equity-accounted investments' movement in other comprehensive income (2 788) (738) (3 526) (1 741) (1 264) (3 005)
and NAV
Total comprehensive (loss)/income for the period (3 833) (738) (4 571) 6 472 (1 264) 5 208
Attributable to:
Equity holders of the group (3 805) (736) (4 541) 6 570 (1 262) 5 308
Non-controlling interests (28) (2) (30) (98) (2) (100)
(3 833) (738) (4 571) 6 472 (1 264) 5 208
1 Represents the impact of the voluntary change in accounting policy for
changes in the NAV and equity reserves of the group's equity-accounted
investments.
5. SEGMENTAL REVIEW
Reconciliation of consolidated cash utilised in operating activities, adjusted
EBITDA and trading loss to consolidated operating loss from continuing
operations
Six months ended Year ended
30 September 31 March
2023 2022 2023
US$'m US$'m US$'m
Cash generated from/(utilised in) operating activities 5 (266) (349)
Non-cash adjustments (171) (130) (295)
Working capital outflow 33 200 178
Operating cash flows of discontinued operations, net of adjustments for 76 (95) (14)
non-cash and other items
Consolidated adjusted EBITDA from continuing operations(1) (57) (291) (480)
Depreciation (44) (40) (90)
Amortisation of software (6) (5) (11)
Interest on capitalised lease liabilities (3) (2) (5)
Consolidated trading loss from continuing operations(2) (110) (338) (586)
Interest on capitalised lease liabilities 3 2 5
Interest paid on merchant payables - - -
Amortisation of other intangible assets (36) (36) (68)
Other (losses)/gains - net (347) (3) (641)
Retention option expense 61 15 (20)
Other - 4 7
Remeasurement of cash-settled share-based incentives expenses 16 273 285
Share-based incentives for share options settled in Naspers shares(3) (2) (3) (9)
Consolidated operating loss from continuing operations (415) (86) (1 027)
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 and impairment
losses. For share-based compensation expenses (SAR, RSU and PSU), adjusted
EBITDA includes the grant date fair value of these expenses, however, excludes
expenses deemed to arise from shareholder transactions by virtue of
employment; subsequent fair value remeasurement of cash-settled share-based
compensation expenses (SAR); equity-settled share-based compensation expenses
for group share option schemes; and those deemed to arise on shareholder
transactions, except where 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.
5. SEGMENTAL REVIEW continued
Revenue
Six months ended Year ended
30 September 31 March
2023 2022 % 2023
US$'m US$'m change US$'m
Continuing operations
Ecommerce 4 939 4 246 16 9 124
Classifieds(1, 2) 466 368 27 755
Food Delivery(3) 2 444 1 911 28 4 203
Payments and Fintech 591 480 23 1 052
Edtech 211 334 (37) 545
Etail 948 852 11 1 953
Other 279 301 (7) 616
Social and internet platforms 10 675 11 309 (6) 22 269
Tencent 10 675 11 309 (6) 22 269
Corporate segment - - - -
Total economic interest from continuing operations 15 614 15 555 - 31 393
Less: Equity-accounted investments (13 058) (13 286) (2) (26 446)
Total consolidated from continuing operations 2 556 2 269 13 4 947
Total from discontinued operations(1, 2) 618 1 511 (59) 2 444
Total consolidated 3 174 3 780 (16) 7 391
1 From 1 April 2022, following the separation from the OLX Group, the CODM
reviewed the financial results of Avito separately. Subsequent to the group's
decision to exit this Russian business, Avito was presented as a discontinued
operation up until the date of disposal. The comparative financial results of
Avito, previously presented in the Classifieds Ecommerce segment, have been
reclassified and presented in discontinued operations.
2 From 1 March 2023, following the group's decision to exit the OLX Autos
business unit, its operations disposed, classified as held for sale or closed
down by
30 September 2023 were presented as a discontinued operation. The OLX Autos
business unit is a separate major line of business, both in terms of the
distinct nature of the business and its contribution to the operational
performance of the group. The comparative financial results of these
operations, previously presented in the Classifieds Ecommerce segment, have
been reclassified and presented in discontinued operations. Refer to note 4.
3 From 1 April 2023, iFood changed its revenue recognition from a gross
basis to a net basis as a result to a change in the services rendered to its
customers. Refer to note 4.
5. SEGMENTAL REVIEW continued
Adjusted EBITDA
Six months ended Year ended
30 September 31 March
2023 2022 % 2023
US$'m US$'m change US$'m
Continuing operations
Ecommerce (117) (700) (83) (1 082)
Classifieds(1, 2) 122 46 >100 74
Food Delivery(3) (86) (333) 74 (545)
Payments and Fintech (28) (93) 70 (108)
Edtech (58) (167) 65 (239)
Etail 3 (14) 121 (10)
Other (70) (139) 50 (254)
Social and internet platforms 3 374 3 142 7 6 295
Tencent 3 374 3 142 7 6 295
Corporate segment (71) (78) 9 (166)
Total economic interest from continuing operations 3 186 2 364 35 5 047
Less: Equity-accounted investments (3 243) (2 655) 22 (5 527)
Total consolidated from continuing operations (57) (291) 80 (480)
Total from discontinued operations(1, 2) (109) 40 >(100) (142)
Total consolidated (166) (251) 34 (622)
1 From 1 April 2022, following the separation from the 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. The comparative financial results of
Avito, previously presented in the Classifieds Ecommerce segment, have been
reclassified and presented in discontinued operations.
2 From 1 March 2023, following the group's decision to exit the OLX Autos
business unit, its operations disposed, classified as held for sale or closed
down by
30 September 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 4.
3 From 1 April 2023, iFood changed its revenue recognition from a gross
basis to a net basis as a result to a change in the services rendered to its
customers. Refer to note 4.
5. SEGMENTAL REVIEW continued
Trading (loss)/profit
Six months ended Year ended
30 September 31 March
2023 2022 % 2023
US$'m US$'m change US$'m
Continuing operations
Ecommerce (246) (805) 69 (1 306)
Classifieds(1, 2) 110 33 >100 47
Food Delivery(3) (155) (381) 59 (649)
Payments and Fintech (34) (97) 65 (116)
Edtech (64) (178) 64 (258)
Etail (25) (38) 34 (63)
Other (78) (144) 46 (267)
Social and internet platforms 2 875 2 497 15 5 085
Tencent 2 875 2 497 15 5 085
Corporate segment (74) (82) 10 (173)
Total economic interest from continuing operations 2 555 1 610 59 3 606
Less: Equity-accounted investments (2 665) (1 948) 37 (4 192)
Total consolidated from continuing operations (110) (338) 67 (586)
Total from discontinued operations(1, 2) (115) 17 >(100) (178)
Total consolidated (225) (321) 30 (764)
1 From 1 April 2022, following the separation from the 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. The comparative financial results of
Avito, previously presented in the Classifieds Ecommerce segment, have been
reclassified and presented in discontinued operations.
2 From 1 March 2023, following the group's decision to exit the OLX Autos
business unit, its operations disposed, classified as held for sale or closed
down by
30 September 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 4.
3 From 1 April 2023, iFood changed its revenue recognition from a gross
basis to a net basis as a result to a change in the services rendered to its
customers. Refer to note 4.
6. PROFIT FROM DISCONTINUED OPERATIONS
Discontinued operations in the current and prior period relate to the OLX
Autos business unit. The prior year also includes the financial performance of
Avito up until the date of disposal in October 2022.
Discontinued operations for the OLX Autos business include the operations
disposed, classified as held for sale or closed down by
30 September 2023. Refer to note 15 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
Six months ended Year ended
30 September 31 March
2023 2022 2023
US$'m US$'m US$'m
Revenue from contracts with customers 618 1 511 2 444
Online sale of goods revenue 605 950 1 759
Classifieds listings revenue 7 497 602
Advertising revenue 2 41 52
Other revenue 4 23 31
Expenses (846) (1 492) (2 660)
Impairment of goodwill and other assets(1) (102) (5) (125)
Other expenses (744) (1 487) (2 535)
(Loss)/profit before tax (228) 19 (216)
Taxation (4) (41) (45)
Loss for the period (232) (22) (261)
Gain on disposal of discontinued operation 9 - 568
(Loss)/profit from discontinued operations (223) (22) 307
(Loss)/profit from discontinued operations attributable to:
Equity holders of the group (222) (21) 303
Non-controlling interest (1) (1) 4
(223) (22) 307
1 Relates to impairment losses of goodwill and other assets in the OLX Autos
business unit.
Cash flow statement information of discontinued operations
Six months ended Year ended
30 September 31 March
2023 2022 2023
US$'m US$'m US$'m
Net cash (utilised in)/generated from operating activities (22) 95 42
Net cash generated from/(utilised in) investing activities 136 (48) 1 981
Net cash (utilised in)/generated from financing activities (162) 182 270
Cash (utilised in)/generated from discontinued operations (48) 229 2 293
Per share information from discontinued operations(1)
Six months ended Year ended
30 September 31 March
2023 2022 2023
US$'m US$'m US$'m
Earnings per ordinary share N (8) (1) 11
Diluted earnings per ordinary share N (8) (1) 11
Headline earnings per ordinary share N (5) - (5)
Diluted headline earnings per ordinary share N (5) - (5)
1 Refer to note 7 for further details on earnings per share from
discontinued operations.
7. EARNINGS PER SHARE
Calculation of headline earnings
Six months ended Year ended
30 September 31 March
2023 2022 2023
US$'m US$'m US$'m
Earnings from continuing operations
Basic earnings attributable to shareholders 3 603 2 556 9 809
Impact of dilutive instruments of subsidiaries, associates and joint ventures (26) (33) (116)
Diluted earnings attributable to shareholders 3 577 2 523 9 693
Headline adjustments for continuing operations
Adjusted for: (2 194) (2 357) (8 949)
Impairment of other assets - - 33
Impairment of goodwill, plant and equipment, and other intangible assets 341 10 612
Loss on sale of assets 4 - 4
Gain recognised on loss of control - (23) (23)
Gain recognised on loss of significant influence - (99) (30)
Gain on remeasurement of previously held interest (10) - -
Net gains on acquisitions and disposals of investments - (25) (30)
Gain on partial disposal of equity-accounted investments (2 861) (2 771) (7 622)
Dilution losses on equity-accounted investments 143 95 252
Remeasurements included in equity-accounted earnings(1) 14 (1 002) (3 887)
Impairment of equity-accounted investments 175 1 458 1 742
1 409 199 860
Total tax effects of adjustments - - -
Total adjustment for non-controlling interest - 1 (104)
Basic headline earnings from continuing operations(2) 1 409 200 756
Diluted headline earnings from continuing operations 1 383 167 640
1 Remeasurements included in equity-accounted earnings include US$14m (2022:
US$1.8bn and 31 March 2023: US$5.9bn) relating to gains arising on
acquisitions and disposals by associates and US$25m relating to net
impairments of assets recognised by associates (2022: impairment of US$783m
and
31 March 2023: impairment of US$1.9bn).
2 Headline earnings represent net profit for the year attributable to equity
holders of the group, excluding certain defined, separately identifiable
remeasurements. The headline earnings measure is pursuant to the JSE Listings
Requirements calculated in terms of the SAICA guide of Circular 1/2023.
Six months ended Year ended
30 September 31 March
2023 2022 2023
US$'m US$'m US$'m
Earnings from discontinued operations
Basic earnings attributable to shareholders (222) (21) 303
Diluted earnings attributable to shareholders (222) (21) 303
Headline adjustments for discontinued operations(1)
Adjusted for: 94 8 (437)
Loss on sale of property, plant and equipment and other intangible assets 1 3 6
Impairment of goodwill, intangible assets and other assets 102 5 125
Net gains on acquisitions and disposals of investments (9) - (568)
(128) (13) (134)
Total adjustment for non-controlling interest - - 6
Basic headline earnings from discontinued operations(1) (128) (13) (128)
Diluted headline earnings from discontinued operations (128) (13) (128)
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.
7. EARNINGS PER SHARE continued
Earnings per share information
The earnings per share represent the economic interest per share, taking into
account the impact of the cross-holding structure between Prosus and Naspers
up until the date of its removal in September 2023 (refer to note 4).
The cross-holding agreement dealt with how distributions by Prosus will be
attributed to its N ordinary shareholders. Under the cross-holding agreement,
Naspers had waived its entitlement to any distributions from Prosus for a
calculated number of the ordinary shares N it holds in Prosus, as these
represented the portion of the ordinary shares N that Prosus indirectly owns
in itself by virtue of its interest in Naspers. These ordinary shares N
(cross-holding ordinary shares N) were excluded from the earnings per share
calculation, as they contractually do not have an economic interest in the
earnings of the group. These cross-holding ordinary shares N were excluded
from the earnings per share calculation as they were considered N
non-participating shares. The removal of the cross-holding agreement allowed
for these ordinary shares N held by Naspers to now have economic interest in
the earnings of the group and become participating shares like the rest of the
ordinary shares N in issue.
The inclusion of the cross-holding ordinary shares N in the earnings per share
calculation was for no consideration and had no change to the resources of the
group. In addition, as part of the removal of the cross-holding transaction,
the share capitalisation in the current period was for no consideration.
The cross-holding ordinary shares N (which become participating shares upon
removal of the cross-holding agreement) and the newly issued shares (as a
result of the capitalisation issue) are included in the weighted average
number of shares outstanding from 1 April 2022 in accordance with IFRS to
allow for a like-for-like comparison. This therefore restates the FY23
earnings per share because the removal of the cross-holding changes the issued
and participating ordinary shares N of the group with no change in resources
of the group or economic benefits for the shareholders.
In addition to the above transaction and the group's open-ended share
repurchase programme, the number of ordinary shares N 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 4 for the impact of the share
repurchase programme.
The A and B ordinary shareholders are entitled to one voting right per share.
The A ordinary shareholders are entitled to one-fifth of the economic rights
attributable to the Prosus free-float shareholders. The B ordinary
shareholders are entitled to one-millionth of the economic rights of the
Prosus ordinary shares N.
Six months ended Year ended
30 September 31 March
2023 2022 2023
US$'m US$'m US$'m
Earnings attributable to shareholders from continuing operations 3 603 2 556 9 809
Headline earnings from continuing operations 1 409 200 756
7. EARNINGS PER SHARE continued
Earnings per share information continued
Six months ended Year ended
30 September 31 March
2023 2022 2023
US$'m US$'m US$'m
Number of Number of Number of
participating participating participating
ordinary ordinary ordinary
shares N shares N shares N
('000) ('000) ('000)
Issued shares
Net number of shares in issue at period-end (net of treasury shares) 2 601 937 1 949 826 1 851 021
Cross-holding ordinary shares N - (596 010) (596 444)
Net number of shares at period-end 2 601 937 1 353 816 1 254 577
Weighted average number of ordinary shares
Issued net of treasury shares at the beginning of the period 1 254 576 1 419 444 1 419 444
Capitalisation issue(1) 808 533 808 533 808 533
Weighting of share repurchase (25 000) (11 203) (54 342)
Weighting of cross-holding ordinary shares N (1 953) (3 519) (7 734)
Removal of cross-holding arrangement(1) 596 444 584 373 584 373
Weighted average number of shares in issue during the period(2) 2 632 600 2 797 628 2 750 274
Adjusted for the effect of future share-based payment transactions - - -
Diluted weighted average number of shares in issue during the period 2 632 600 2 797 628 2 750 274
Per share information from continuing operations for the period(3)
Earnings per ordinary share N (US cents) 137 91 357
Diluted earnings per ordinary share N (US cents) 136 90 352
Headline earnings per ordinary share N (US cents) 54 7 27
Diluted headline earnings per ordinary share N (US cents) 53 6 23
1 The capitalisation issue and removal of the cross-holding ordinary shares
N are included in the weighted average number of shares from 1 April 2022.
2 The weighted average number of shares excludes the shares repurchased as
part of the share repurchase programme from the date they are recognised as
treasury shares. Refer to note 4.
3 Total earnings per share for A ordinary shareholders amounts to 15 US
cents (2022: 11 US cents and 31 March 2023: 44 US cents) and B ordinary
shareholders amounts to nil US cents. Earnings per share for A ordinary
shareholders from continuing operations amounts to 16 US cents (2022: 11 US
cents and 31 March 2023: 42 US cents) and B ordinary shareholders amounts to
nil US cents for all periods.
8. Revenue
Reportable segment(s) where revenue Six months ended Year ended
is included 30 September 31 March
2023 2022 2023
US$'m US$'m US$'m
From continuing operations
Online sale of goods revenue Classifieds and Etail 900 825 1 879
Classifieds listings revenue Classifieds 285 208 435
Payment transaction commissions and fees1 Various 556 447 987
Mobile and other content revenue Other Ecommerce 22 26 51
Food-delivery revenue Food Delivery 679 661 1 367
Advertising revenue Various 18 14 30
Educational technology revenue Edtech 71 63 134
Other revenue Various 25 25 64
2 556 2 269 4 947
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$56m
(2022: US$36m and 31 March 2023: US$91m) from the group's credit business in
various segments.
Revenue is presented on an economic-interest basis (ie, including the
proportionate consolidation of the revenue of associates and joint ventures)
in the group's segmental review and is, accordingly, not directly comparable
to the above consolidated revenue figures. Below is the group's revenue by
geographical area:
Six months ended Year ended
30 September 31 March
Geographical area 2023 2022 2023
US$'m US$'m US$'m
Asia 276 242 526
Europe 1 381 1 158 2 615
Central Europe 354 297 641
Eastern Europe 989 815 1 912
Western Europe 38 46 62
Latin America 827 803 1 651
North America 38 32 87
Other 34 34 68
Total 2 556 2 269 4 947
9. FINANCE (COSTS)/INCOME
Six months ended Year ended
30 September 31 March
2023 2022 2023
US$'m US$'m US$'m
Interest income 438 140 475
Loans and bank accounts(1) 437 139 473
Other 1 1 2
Interest expense (279) (277) (553)
Loans and overdrafts (261) (255) (512)
Capitalised lease liabilities (3) (2) (5)
Other (15) (20) (36)
Other finance income/(costs) - net 223 303 (55)
Gains/(losses) on translation of assets and liabilities 76 326 26
Gains/(losses) on derivative and other financial instruments 147 (23) (81)
1 The increase in the current year relates primarily to increased cash and
short-term investments.
10. PROFIT BEFORE TAXATION
In addition to the items already detailed, profit before taxation from
continuing operations has been determined after taking into account, inter
alia, the following:
Six months ended Year ended
30 September 31 March
2023 2022 2023
US$'m US$'m US$'m
Depreciation of property, plant and equipment 44 40 90
Amortisation 42 41 79
Software 6 5 11
Other intangible assets 36 36 68
Impairment losses on financial assets measured at amortised cost 6 2 14
Net realisable value adjustments on inventory, net of reversals(1) (8) (7) 4
Other (losses)/gains - net (347) (3) (641)
Loss on sale of assets (4) - (4)
Impairment of goodwill, property, plant and equipment and other intangible (341) (9) (612)
assets
Impairment of other assets - - (33)
Income on business support services - 7 8
Other (2) (1) -
Net gains/(losses) on acquisitions and disposals 7 136 54
Gains/(losses) on disposal of investments - net - 25 30
Gains on loss of control transactions - 23 23
Loss recognised on sale of business - net - - -
Gains/(losses) recognised on loss of significant influence - 99 30
Remeasurement of contingent consideration 5 - 1
Transaction-related costs (8) (11) (31)
Remeasurement of previously held interest 10 - -
Other - - 1
1 Net realisable value writedowns relate primarily to the Etail segment.
11. GOODWILL
Movements in the group's goodwill for the period are detailed below:
Six months ended Year ended
30 September 31 March
2023 2022 2023
US$'m US$'m US$'m
Goodwill
Cost 2 383 3 727 3 727
Accumulated impairment (971) (355) (355)
Opening balance 1 412 3 372 3 372
Foreign currency translation effects(1) (17) 357 372
Acquisitions of subsidiaries and businesses 38 11 11
Disposals of subsidiaries and businesses - (10) (10)
Transferred to assets classified as held for sale(2) (53) (1 388) (1 649)
Impairment (340) (6) (684)
Closing balance 1 040 2 336 1 412
Cost 2 325 2 683 2 383
Accumulated impairment (1 285) (347) (971)
1 The current period includes a net monetary gain of US$21m (2022: US$71m
and 31 March 2023: US$95m) relating to hyperinflation accounting for the
group's subsidiaries in Turkey. Refer to note 2.
2 The current period primarily relates to PayU GPO which was classified as
held for sale in August 2023. The prior year relates to Avito and the OLX
Autos operations classified in that year. Refer to note 15.
Goodwill is tested annually 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 period and prior financial year, the recoverable amounts
for CGUs were determined 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 six months ended 30 September 2023, the group considered whether there
was a change in circumstances that indicated that a CGU might be impaired. The
impairment assessment took into consideration the increase in market interest
rates and country risk premiums and the overall business performance compared
against budgets and forecasts. Based on the above indicators an impairment
test was performed for Stack Overflow in the Edtech segment, primarily as a
result of a decline in the business performance in a challenging macroeconomic
environment. The value-in-use calculation was based on 10-year budgeted and
forecast cash flow information approved by senior management. The 10-year
budgets and forecasts consisted of cash flow projections including
macroeconomic factors and trends.
The carrying amount of goodwill tested for impairment was US$653m. The inputs
used in the value-in-use calculation are as follows:
Six months Year
ended ended
30 September 31 March
2023 2023
% %
Pre-tax discount rate 18.9 15.4
Post-tax discount rate 16.5 13.5
Growth rate used in extrapolation of cash flows 3.0 2.3
Average revenue growth rate 3.6 - 36.5 22.9 - 36.9
The calculation of value-in-use is most sensitive to the following
assumptions:
· projected revenue and EBITDA growth rates;
· growth rates used to extrapolate cash flows beyond the budget and
forecast period, including the terminal growth rate applied in the final
projection year; and
· discount rates.
The group recognised impairment losses on goodwill of US$340m (2022: US$6m and
31 March 2023: US$684m). The impairment in the current period related to Stack
Overflow. The prior year impairment loss related primarily to Stack Overflow
(US$560m) and the OLX Autos business unit (US$116m). An adverse adjustment to
any of the above key assumptions used in the value-in-use calculations would
result in additional impairment losses being recognised on Stack Overflow in
the current period.
12. INVESTMENTS IN ASSOCIATES
The movements in the carrying value of the group's investments in associates
are detailed in the table below:
Six months ended Year ended
30 September 31 March
2023 2022 2023
US$'m US$'m US$'m
Opening balance 35 930 44 457 44 457
Associates acquired - gross consideration 35 150 769
Associates disposed of - - (1)
Associates transferred to held for sale (8) (5) (5)
Share of changes in other comprehensive income and NAV (1 108) (2 788) (1 741)
Share of equity-accounted results 1 155 1 081 5 321
Impairment (175) (1 458) (1 725)
Dividends received(1) (759) (565) (5 089)
Foreign currency translation effects (1 162) (3 959) (2 122)
Loss of significant influence (9) (630) (743)
Partial disposal of interest in associate(2) (1 056) (1 009) (2 930)
Dilution (losses)/gains(3) (143) (98) (261)
Closing balance 32 700 35 176 35 930
1 In the current year, the dividend received from Tencent amounted to a cash
dividend of US$759m (31 March 2023: US$565m cash dividend and dividend in
specie of US$4.5bn in Meituan shares).
2 The gains on partial disposal recognised in the condensed consolidated
income statement relate to the partial disposal of Tencent. The group
recognised a gain on partial disposal of US$2.9bn (2022: US$2.8bn and 31 March
2023: US$7.6bn).
3 The total dilution (losses)/gains presented in the condensed consolidated
interim income statement relate to the group's diluted effective interest in
associates and the reclassification of a portion of the group's foreign
currency translation reserves from the condensed consolidated statement of
other comprehensive income to the condensed 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. When an impairment indicator is identified, the
group performs an impairment assessment. Impairment losses are recognised for
equity-accounted investments when the carrying amount exceeds the recoverable
amount of an investment. The recoverable amounts of equity-accounted
investments are determined based on the higher of the value-in-use
calculations and the fair value less costs of disposal.
For the six months ended 30 September 2023, the impairment 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 business's overall performance compared against budgets and forecasts.
Impairment indicator assessments were performed for the group's listed
equity-accounted investments - Delivery Hero and Skillsoft - as a result of a
decline in the market capitalisation.
Management assessed the investment in Delivery Hero for potential impairment
indicators, which included taking into account market price movements, analyst
consensus forecasts, actual company performance as well as company guidance
issued. Management concluded that no further impairment testing was required.
The recoverable amount for Skillsoft was determined based on the market price
at 30 September 2023. The market price is considered a more supportable
representation of the recoverable amount for this investment due to the
consistent decline in the share price over time. Accordingly, Skillsoft was
impaired to its market value at 30 September 2023. The market price of
Skillsoft is level 1 on the fair value hierarchy.
Impairment indicator assessments for the group's unlisted equity-accounted
investments related primarily to investments in the Prosus Ventures portfolio
reported in the Other Ecommerce segment. The impairment indicator assessment
was as a result of a decrease in the enterprise value used in a capital raise
transaction.
For the six months ended 30 September 2023, an impairment loss of US$175m
(2022: US$1.5bn and 31 March 2023: US$1.7bn) was recognised for
equity-accounted investments of which US$42m related to Skillsoft (2022:
US$204m and 31 March 2023: US$301m) in the Edtech segment and US$133m related
primarily to unlisted equity-accounted investments in the Prosus Ventures
portfolio reported in the Other Ecommerce segment.
At 30 September 2023, the carrying value for Skillsoft and the unlisted
equity-accounted investment impaired was US$54m and US$73m respectively.
13. OTHER INVESTMENTS AND LOANS
Six months ended Year ended
30 September 31 March
2023 2022 2023
US$'m US$'m US$'m
Investments at fair value through other comprehensive income 6 083 2 771 7 528
Investments at fair value through profit or loss 41 82 34
Investments at amortised cost 12 - 8
Other investments and loans 276 433 254
Total investments and loans 6 412 3 286 7 824
Current portion of other investments (3 768) - (4 707)
Investments at fair value through other comprehensive income (3 768) - (4 707)
Non-current portion of other investments 2 644 3 286 3 117
Reconciliation of investments at fair value through other comprehensive income
Opening balance 7 528 5 918 5 918
Fair value adjustments recognised in other comprehensive income(1) (1 292) (324) (158)
Purchases/additional contributions(2) 81 160 4 724
Loss of significant influence of an investment in associate(3) - 785 830
Disposals(4) (11) (3 733) (3 775)
Transfers to equity-accounted investments (12) - -
Impact of the crossholding(5) (211) 10 10
Foreign currency translation effects - (45) (21)
Closing balance 6 083 2 771 7 528
1 The significant movement in the current year relates primarily to the
revaluation of Meituan.
2 The significant movement in the prior year relates to the Meituan dividend
in specie received from Tencent.
3 The significant movement in the prior year relates to the investments in
BYJU'S and Udemy upon loss of significant influence.
4 The significant movement in the prior year relates to the disposal of the
JD.com investment.
5 The current period includes the deemed disposal of the residual asset in
Naspers, which was derecognised due to the removal of the group's
cross-holding structure. Refer to note 4.
14. 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.
Six months ended Year ended
30 September 31 March
2023 2022 2023
US$'m US$'m US$'m
Commitments 310 135 307
Other service commitments 309 130 306
Lease commitments(1) 1 5 1
1 In the current period, lease commitments include the group's short-term
lease arrangements as well as other contractual lease agreements whose
commencement date is after 30 September 2023. Short-term lease commitments
relate to leasing arrangements with lease terms of 12 months or less that are
not recognised in the condensed 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$192m
(2022: US$nil and 31 March 2023: US$191m).
15. DISPOSAL GROUPS CLASSIFIED AS HELD FOR SALE
In August 2023, the group announced that it reached an agreement with Rapyd, a
leading fintech service provider, to acquire the Global Payments Organisations
(GPO) within PayU for a cash transaction worth US$610m. As a result of this
agreement, the group classified GPO investments being sold as a disposal group
held for sale from August 2023. The disposal group consists of GPO businesses
in Eastern Europe and Latin America.
Following the initial decision to sell Zoop Tecnologia e Meios de Pagamento
S.A. (Zoop) in September 2022, the group has not been able to conclude the
disposal to date due to challenging market conditions. Accordingly, Zoop
ceased to be classified as held for sale in September 2023.
In March 2023, the group announced the decision to exit the OLX Autos business
unit. The disposal group that is classified as held for sale consists of
assets and liabilities of the operations that management has committed to a
plan to sell and operations for which the completion of the sale is pending
regulatory approval. Efforts to sell the disposal group are in progress and it
is expected to be finalised in the 2024 financial year.
In May 2022, following the group's announcement to exit its Russian business,
Avito's assets and liabilities were classified as held for sale up until its
disposal in October 2022.
The assets and liabilities classified as held for sale are detailed in the
table below:
Six months ended Year ended
30 September 31 March
2023 2022 2023
US$'m US$'m US$'m
Assets 912 2 643 649
Property, plant and equipment 24 160 26
Goodwill 158 1 388 302
Other intangible assets 7 580 29
Investments in associates - 5 -
Deferred taxation assets 1 4 2
Inventory 24 - 32
Trade and other receivables 240 139 164
Cash and cash equivalents 458 367 94
Liabilities 681 525 276
Capitalised finance leases 17 - -
Derivative financial instruments - 3 1
Deferred taxation liabilities 2 113 13
Long-term liabilities 2 68 29
Provisions 1 1 2
Trade payables 27 150 165
Accrued expenses and other current liabilities 632 190 66
16. EQUITY COMPENSATION BENEFITS
Liabilities arising from share-based payment transactions
Reconciliation of the cash-settled share-based payment liability is as
follows:
Six months ended Year ended
30 September 31 March
2023 2022 2023
US$'m US$'m US$'m
Opening balance 713 1 127 1 127
SAR scheme charge per the income statement 48 (209) (187)
Employment-linked put option charge per the income statement (62) (18) 14
Additions 1 - -
Settlements (83) (90) (165)
Modification - - 5
Transferred to liabilities classified as held for sale(1) (5) (47) (37)
Foreign currency translation effects 1 (40) (44)
Closing balance 613 723 713
Less: Current portion of share-based payment liability (570) (648) (656)
Non-current portion of share-based payment liability 43 75 57
1 The prior year relates primarily to Avito that was classified as held for
sale in May 2022 prior to its disposal in October 2022 as well as the OLX
Autos disposal group classified as held for sale in March 2023.
17. BUSINESS COMBINATIONS, OTHER ACQUISITIONS AND DISPOSALS
The following sets out the group's significant transactions related to
business combinations and other investments for the six months ended 30
September 2023:
Amount invested US$'m
Company Classification Net Non- Cash in Total
cash cash entity consi-
paid/ consi- (acquired)/ deration
(received) deration disposed
Acquisition of subsidiaries Subsidiary 2 - - 2
Additional investment in existing equity-accounted investments Associate 17 - - 17
Other investments FVOCI/FVPL 64 - - 64
Disposal/partial disposal of investments (4 191) 12 6 (4 173)
a. Tencent Holdings Limited (Tencent) Associate (4 037) 56 - (3 981)
b. OLX Autos Subsidiary (143) (44) 6 (181)
Other(1) (11) - - (11)
1 'Other' includes various acquisitions and disposals of subsidiaries,
associates and other investments that are not individually material.
Disposal/partial disposal of investments
a. From April 2023 to the end of September 2023, the group sold 1% of
Tencent's issued share capital. The group reduced its stake in Tencent from
26% to 25%, for total proceeds of US$4.0bn of which US$56m was receivable at
30 September 2023. The group recognised a gain on partial disposal of
US$2.9bn, including a reclassification of accumulated foreign currency
translation losses of US$65m. Proceeds from this disposal are used to fund the
group's share repurchase programme.
b. During the current period, the group sold operations of the OLX business
unit for total proceeds of US$181m of which US$143m was received by 30
September 2023. The loss on disposal, including the reclassification of
accumulated foreign currency translation losses, was not material.
18. FINANCIAL INSTRUMENTS
The group's activities expose it to a variety of financial risks such as
market risk (including currency risk, fair value interest rate risk, cash flow
interest rate risk and price risk), credit risk and liquidity risk.
The condensed consolidated interim financial statements do not include all
financial risk management information and disclosures as required in the
annual consolidated financial statements and should be read in conjunction
with the group's risk management information disclosed in note 40 of the
consolidated financial statements, published in the annual report of Prosus
for the year ended 31 March 2023. There have been no material changes in the
group's credit, liquidity or market risks, or key inputs used in measuring
fair value since 31 March 2023.
The fair values of the group's financial instruments that are measured at fair
value at each reporting period, are categorised as follows:
Fair value measurements at 30 September 2023 using:
Carrying Quoted prices Significant Significant
value in active other unobservable
US$'m markets for observable inputs
identical inputs (level 3)
assets or (level 2) US$'m
liabilities US$'m
(level 1)
US$'m
Assets
Financial assets at fair value through other comprehensive income 6 083 5 039 - 1 044
Financial assets at fair value through profit or loss 41 1 - 40
Cash and cash equivalents(1) 200 - 200 -
Liabilities
Forward exchange contracts 4 - 4 -
Earn-out obligations 10 - - 10
Derivatives contained in lease agreements 1 - - 1
Fair value measurements at 31 March 2023 using:
Carrying Quoted prices Significant Significant
value in active other unobservable
US$'m markets for observable inputs
identical inputs (level 3)
assets or (level 2) US$'m
liabilities US$'m
(level 1)
US$'m
Assets
Financial assets at fair value through other comprehensive income 7 528 6 044 - 1 484
Financial assets at fair value through profit or loss 34 4 - 30
Forward exchange contracts 5 - 5 -
Cash and cash equivalents(1) 447 - 447 -
Liabilities
Forward exchange contracts 1 - 1 -
Earn-out obligations 109 - - 109
1 Relates to short-term bank deposits which are money market investments
held with major banking groups and high-quality institutions that have AAA
money market fund credit ratings from internationally recognised rating
agencies.
There was no transfer from level 2 to level 1 (31 March 2023: US$nil) and no
transfer from level 3 to level 1 (31 March 2023: a transfer of US$1m). There
was a transfer of US$12m from level 3 to an investment in associate (31 March
2023: a transfer of US$622m to level 3 due to investments in associates that
lost significant influence during the year). There were no significant changes
to the valuation techniques and inputs used in measuring fair value.
18. FINANCIAL INSTRUMENTS continued
Valuation techniques and key inputs used to measure significant level 2 and
level 3 fair values
Level 2 fair value measurements
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.
Cash and cash equivalents - relate to short-term bank deposits which are money
market investments held with major banking groups and high-quality
institutions that have AAA money market fund credit rating from
internationally recognised ratings 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 - relate 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.
Level 3 fair value measurements
Financial assets at fair value - relate predominantly to unlisted equity
investments. The fair value of unlisted equity investments is based on either
the most recent funding transactions for these investments, a discounted cash
flow calculation (DCF) or a market approach using market multiples. At 30
September 2023, the group used the DCF valuations at 31 March 2023 as there
were no significant changes in the underlying equity investments that
suggested that the fair value had changed, except for an unlisted equity
investment in the Edtech segment. For this investment, a market approach was
used to determine its fair value at 30 September 2023 due to the limited
available recent financial information. The market approach applied historical
financial information to a revenue multiple relative to that of a publicly
traded peer group.
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.
The following table shows a reconciliation of the group's level 3 financial
instruments:
30 September 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$'m
Balance at 1 April 2023 1 484 30 (109) -
Additions 73 10 - 1
Total losses recognised in other comprehensive income (289) - - -
Total gains recognised in the income statement - - 99 -
Derecognition of residual interest asset (211) - - -
Transfer to investments in associates (13) - - -
Balance at 30 September 2023 1 044 40 (10) 1
1 Financial assets at fair value through other comprehensive income.
2 Financial assets at fair value through profit or loss.
18. FINANCIAL INSTRUMENTS continued
Valuation techniques and key inputs used to measure significant level 2 and
level 3 fair values continued
Instruments not measured at fair value for which fair value is disclosed
continued
The following table shows a reconciliation of the group's level 3 financial
instruments:
31 March 2023
Financial Financial Earn-out Derivatives
assets at assets at obligations embedded
FVOCI(1) FVPL(2) US$'m in leases
US$'m US$'m US$'m
Balance at 1 April 2022 1 153 44 (20) 9
Additions 38 41 (96) -
Total (losses)/gains recognised in the income statement - (11) 7 -
Total losses recognised in other comprehensive income (270) - - -
Settlements/disposals (65) (35) - (9)
Impact of share exchange 10 - - -
Transfers to held for sale - (9) - -
Transfers from investments in associates 622 - - -
Foreign currency translation effects (4) - - -
Balance at 31 March 2023 1 484 30 (109) -
1 Financial assets at fair value through other comprehensive income.
2 Financial assets at fair value through profit or loss.
The carrying value of financial instruments is a reasonable approximation of
their fair value, except for the publicly traded bonds detailed below:
30 September 2023 31 March 2023
Financial liabilities Carrying Fair Carrying Fair
value value value value
US$'m US$'m US$'m US$'m
Publicly traded bonds 15 229 11 245 15 377 12 009
The fair values of the publicly traded bonds have been determined with
reference to the listed prices of the instruments at the end of the reporting
period. The fair values of the publicly traded bonds are level 2 financial
instruments. The publicly traded bonds are listed on the Irish Stock Exchange
(Euronext Dublin).
19. RELATED PARTY TRANSACTIONS AND BALANCES
The group entered into various related party transactions in the ordinary
course of business with a number of related parties, including associates and
joint ventures. Transactions that are eliminated on consolidation as well as
gains or losses eliminated through the application of the equity method are
not included. The transactions and balances with related parties are
summarised below:
Six months Year
ended ended
30 September 31 March
2023 2023
US$'m US$'m
Sale of goods and services to related parties(1)
Skillsoft Corp - 8
MIH Holdings Proprietary Limited 5 11
Bom Negócio Atividades de Internet Limitada (OLX Brasil) 13 28
Various other related parties 2 1
20 48
1 The group receives revenue from a number of its related parties in
connection with service agreements. The nature of these related party
relationships is that of Naspers group subsidiaries, group associates and
joint ventures.
Six months Year
ended ended
30 September 31 March
2023 2023
US$'m US$'m
Services received from related parties(1)
MIH Holdings Proprietary Limited 5 9
Various other related parties 1 2
6 11
1 The group receives corporate and other services rendered by a number of
its related parties. The nature of these related party relationships is that
of entities under the common control of the group's ultimate controlling
parent, Naspers Limited.
During the current year, the group recharged US$5m (2022: US$5m and 31 March
2023: US$11m) to Naspers companies in respect of services performed on their
behalf. In addition, Naspers recharged costs of US$5m (2022: US$5m and 31
March 2023: US$9m) to the group's companies.
19. RELATED PARTY TRANSACTIONS AND BALANCES continued
The balances of advances, deposits, receivables and payables between the group
and related parties are as follows:
Six months Year
ended ended
30 September 31 March
2023 2023
US$'m US$'m
Dividends payable/paid to holding company
Naspers Limited 79 89
79 89
Loans and receivables(1)
MIH Treasury Services Limited - 11
MIH Ecommerce Holdings Proprietary Limited 19 -
MIH Holdings Proprietary Limited 5 5
Bom Negócio Atividades de Internet Limitada (OLX Brasil)(2) 162 150
MIH Internet Holdings B.V. Share Trust(3) 89 102
Inversiones CMR S.A.S. 1 1
GoodGuyz Investments B.V. 6 6
Silvergate Capital Corporation 2 2
Various other related parties 11 17
Less: Allowance for impairment of loans and receivables(4) - -
Total related party receivables 295 294
Less: Non-current portion of related party receivables (277) (254)
Current portion of related party receivables 18 40
Payables
MIH Holdings Proprietary Limited 4 3
Zitec Com SRL 2 3
Various other related parties 2 2
Total related party payables 8 8
Less: Non-current portion of related party payables (2) (2)
Current portion of related party payables 6 6
Dividend payable
Naspers Limited 77 -
Total dividend payable included in current liabilities 77 -
1 The group provides services and loan funding to a number of its related
parties.
2 The loan is repayable by October 2035 and 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 condensed
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.
19. RELATED PARTY TRANSACTIONS AND BALANCES continued
Terms of significant related party current receivables and payables
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 the
group's share repurchase programme, Prosus held a 52.5% fully diluted interest
in Naspers, representing a 52.7% economic interest. Prosus' legal ownership in
Naspers remained at less than 50%. The fully diluted and economic interest was
determined based on the terms of the cross-holding agreement with Naspers. The
cross-holding agreement governed how distributions between the two groups
would be managed.
Based on the substance of the above transactions, the portion of the effective
interest in Naspers that relates to Prosus' underlying investments was
accounted for as a shareholder distribution in equity. Only Prosus' residual
interest in the Naspers group was recognised as an investment at fair value
through other comprehensive income on the condensed consolidated statement of
financial position.
In September 2023, following the removal of the group's cross-holding
structure, the residual asset in Naspers was derecognised and the Naspers N
ordinary shares held by Prosus were subsequently disposed on the market. The
group derecognised US$211m (31 March 2023: US$206m) of the Naspers residual
asset and recognised an investment in Naspers amounting to US$7m. The excess
of the residual asset derecognised and the Naspers shares of US$204m was
recognised in the 'Existing control business combination reserve' in equity,
representing the cancellation of the cross-holding structure with no change in
the equity structure of the group. The group received US$7m as a result of the
sale of these N ordinary shares on the market.
Refer to note 4 for details of the accounting treatment for the above
transactions.
Group contributions to Naspers share trusts
The group made contributions to Naspers share trusts amounting to US$147m
(2022: US$127m and 31 March 2023: US$191m) during the current period.
Executive leadership and board changes
On 18 September 2023, the group announced that Bob van Dijk stepped down as
chief executive and executive director of the boards. We thank him for his
leadership. Ervin Tu has been appointed as interim chief executive. Bob will
assist in the transition and will remain as a consultant to the boards, ending
his consulting arrangement on 30 September 2024.
Remuneration for directors and key management will be disclosed in the
remuneration report for the year ended 31 March 2024, including Bob's
remuneration. Ervin's remuneration remains unchanged as a result of his
interim appointment.
20. EVENTS AFTER THE REPORTING PERIOD
As part of the open-ended share repurchase programme, Prosus acquired 33 763
633 Prosus ordinary shares N for US$1.0bn and Naspers acquired 2 608 759
Naspers N ordinary shares for US$438m between October and 24 November 2023.
Furthermore, Naspers disposed of 14 201 281 Prosus ordinary shares N for
US$428m between October and 24 November 2023. The group will account for this
transaction in the same manner that it was accounted for in the year ended 30
September 2023.
The group sold 26 217 600 shares of Tencent Holdings Limited (Tencent) between
October and 24 November 2023, yielding US$1.0bn 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.
INDEPENDENT AUDITOR'S REVIEW REPORT ON THE INTERIM FINANCIAL STATEMENTS
To the Board of Directors of Prosus N.V.
Our conclusion
We have reviewed the condensed consolidated interim financial information of
Prosus N.V. based in Amsterdam, The Netherlands.
Based on our review, nothing has come to our attention that causes us to
believe that the accompanying interim financial information of Prosus N.V. is
not prepared, in all material respects, in accordance with IAS 34, 'Interim
Financial Reporting' as adopted by the European Union.
The interim financial information comprises:
· The condensed consolidated statement of financial position as at 30
September 2023.
· The condensed consolidated income statement for the period from 1
April 2023 to 30 September 2023.
· The condensed consolidated statement of comprehensive income for
the period from 1 April 2023 to 30 September 2023.
· The condensed consolidated statement of changes in equity for the
period from 1 April 2023 to 30 September 2023.
· Condensed consolidated statement of cash flows for the period from
1 April 2023 to 30 September 2023.
· The notes comprising of a summary of the accounting policies and
other explanatory information.
Basis for our conclusion
We conducted our review in accordance with Dutch law, including the Dutch
Standard 2410, 'Het beoordelen van tussentijdse financiële informatie door de
accountant van de entiteit' (Review of interim financial information performed
by the independent auditor of the entity). A review of interim financial
information in accordance with the Dutch Standard 2410 is a limited assurance
engagement. Our responsibilities under this standard are further described in
the 'Our responsibilities for the review of the interim financial information'
section of our report.
We are independent of Prosus N.V. in accordance with the Verordening inzake de
onafhankelijkheid van accountants bij assurance-opdrachten (ViO, Code of
Ethics for Professional Accountants, a regulation with respect to
independence) and other relevant independence regulations in the Netherlands.
Furthermore, we have complied with the Verordening gedrags- en beroepsregels
accountants (VGBA, Dutch Code of Ethics).
We believe the assurance evidence we have obtained is sufficient and
appropriate to provide a basis for our conclusion.
Responsibilities of the board of directors and the supervisory board for the
interim financial information
The board of directors is responsible for the preparation of the interim
financial information in accordance with IAS 34, 'Interim Financial Reporting'
as adopted by the European Union. Furthermore, the board of directors is
responsible for such internal control as it determines is necessary to enable
the preparation of the interim financial information that are free from
material misstatement, whether due to fraud or error.
The supervisory board is responsible for overseeing the company's financial
reporting process.
Our responsibilities for the review of the interim financial information
Our responsibility is to plan and perform the review in a manner that allows
us to obtain sufficient and appropriate assurance evidence for our conclusion.
The level of assurance obtained in a limited assurance engagement is
substantially less than the level of assurance obtained in an audit conducted
in accordance with the Dutch Standards on Auditing. Accordingly, we do not
express an audit opinion.
We have exercised professional judgement and have maintained professional
skepticism throughout the review, in accordance with Dutch Standard 2410.
INDEPENDENT AUDITOR'S REVIEW REPORT ON THE INTERIM FINANCIAL STATEMENTS
continued
Our review included among others:
· Obtaining an understanding in the entity and its environment,
including its internal control, and the applicable financial reporting
framework, in order to identify areas in the interim financial information
where material misstatements are likely to arise due to fraud or error,
designing and performing procedures to address those areas, and obtaining
assurance evidence that is sufficient and appropriate to provide a basis for
our conclusion.
· Obtaining an understanding of internal control, as it relates to
the preparation of the interim financial information.
· Making inquiries of the board and others within the company.
· Applying analytical procedures with respect to information included
in the interim financial information.
· Obtaining assurance evidence that the interim financial information
agrees with or reconciles to the company's underlying accounting records.
· Evaluating the assurance evidence obtained.
· Considering whether there have been any changes in accounting
principles or in the methods of applying them and whether any new transactions
have necessitated the application of a new accounting principle.
· Considering whether the board has identified all events that may
require adjustment to or disclosure in the interim financial information.
· Considering whether the interim financial information has been
prepared in accordance with the applicable financial reporting framework and
represents the underlying transactions free from material misstatement.
Amsterdam, November 28, 2023
Deloitte Accountants B.V.
I.A. Buitendijk
OTHER INFORMATION TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for the six months ended 30 September 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 us. 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
Six months ended Year ended
30 September 31 March
2023 2022 2023
US$'m US$'m US$'m
Headline earnings from continuing operations (refer to note 7) 1 409 200 756
Adjusted for:
Equity-settled share-based payment expenses 501 806 1 449
Remeasurement of cash-settled share-based incentive expenses (17) (249) (257)
Amortisation of other intangible assets 243 348 664
Fair value adjustments and currency translation differences (108) (13) (13)
Retention option expense (61) (13) 23
Transaction-related costs 45 11 91
Core headline earnings from continuing operations 2 012 1 090 2 713
Per share information for the period
Core headline earnings per ordinary share N (US cents)(1) 76 39 99
Diluted core headline earning per ordinary share N (US cents)(2) 75 38 94
1 Core headline earnings per share are based on the weighted average number
of shares taking into account the impact of the removal of the group's
cross-holding structure in the current and prior period.
2 The diluted core headline earnings per share include a decrease of US$26m
(2022: US$33m and March 2023: US$116m) relating to the future dilutive impact
of potential ordinary shares issued by equity-accounted investees.
A. NON-IFRS FINANCIAL MEASURES AND ALTERNATIVE PERFORMANCE MEASURES continued
A.1 Core headline earnings continued
Reconciliation of core headline earnings continued
Six months ended Year ended
30 September 31 March
2023 2022 2023
US$'m US$'m US$'m
Headline earnings from discontinued operations (refer to note 7) (128) (13) (128)
Adjusted for:
Remeasurement of cash-settled share-based incentive expenses (2) (33) (41)
Amortisation of other intangible assets - 12 15
Fair value adjustments and currency translation differences 4 18 (60)
Transaction-related costs 9 - -
Core headline earnings from discontinued operations (117) (16) (214)
Per share information for the period
Core headline earnings per ordinary share N (US cents) (4) (1) (8)
Diluted core headline earnings per ordinary share N (US cents) (4) (1) (8)
Equity-accounted results
The group's equity-accounted investments contributed to the condensed
consolidated interim financial statements as follows:
Six months ended Year ended
30 September 31 March
2023 2022 2023
US$'m US$'m US$'m
Share of equity-accounted results from continuing operations 1 152 1 059 5 174
Sale of assets 1 3 5
Gains on acquisitions and disposals (14) (1 823) (5 873)
Impairment of investments 25 783 1 919
Contribution to headline earnings from continuing operations 1 164 22 1 225
Amortisation of other intangible assets 229 335 641
Equity-settled share-based payment expenses 500 803 1 440
Fair value adjustments and currency translation differences 116 292 (75)
Acquisition-related costs 16 34 62
Contribution to core headline earnings from continuing operations 2 025 1 486 3 293
Tencent 2 285 2 098 4 326
Delivery Hero (103) (206) (374)
Other (157) (406) (659)
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 condensed consolidated interim financial statements to present
the growth in such metrics in local currency, 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:
Six months ended
30 September
Currency (1FC = US$) 2023 2022
South African rand (ZAR) 0.0533 0.0602
Euro (EUR) 1.0836 1.0297
Chinese yuan renminbi (RMB) 0.1396 0.1473
Brazilian real (BRL) 0.2031 0.1952
Indian rupee (INR) 0.0121 0.0127
Polish zloty (PLN) 0.2403 0.2184
Russian rouble (RUB) 0.0112 0.0160
British pound sterling (GBP) 1.2566 1.2028
Turkish lira (TRY) 0.0407 0.0585
Hungarian forint (HUF) 0.0029 0.0026
· 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.
Core headline earnings and the growth in local currency, excluding
acquisitions and disposals, are the responsibility of the board of directors
of the group. The auditor, Deloitte, has issued an ISAE 3420 Assurance
Engagements to Report on the Compilation of Pro Forma Financial Information
and their unmodified report has been issued and is available for inspection at
the group's registered office.
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 six months 1 April 2023 to 30 September 2023
Transaction Basis of Reportable Acquisition/
accounting segment Disposal
Dilution of the group's interest in Tencent Associate Social and internet platforms Disposal
Dilution of the group's interest in EMPG Associate Ecommerce Disposal
Dilution of the group's interest in OfferUp Associate Ecommerce Disposal
Disposal of the group's interest in Oda Associate Ecommerce Disposal
Dilution of the group's interest in Flink Associate Ecommerce Disposal
Disposal of the group's interest in iFood Colombia Associate Ecommerce Disposal
Disposal of the group's interest in PayU Russia Subsidiary Ecommerce Disposal
Acquisition of the group's interest in Ding Subsidiary Ecommerce Acquisition
Step-up in the group's interest in Flip, together with the Subsidiary Ecommerce Acquisition/Disposal
impact of the lag-period catch-up adjustment
Increase in the group's interest in Delivery Hero Associate Ecommerce Acquisition
Increase in the group's interest in Swiggy Associate Ecommerce Acquisition
Increase/dilution in the group's interest in Emicotransit Associate Ecommerce Acquisition/Disposal
Increase/dilution in the group's interest in ElasticRun Associate Ecommerce Acquisition/Disposal
Acquisition of the group's interest in Azos Associate Ecommerce Acquisition
Increase in the group's interest in PharmEasy Associate Ecommerce Acquisition
Acquisition of the group's interest in Planet24 Associate Ecommerce Acquisition
Acquisition of the group's interest in Alwans Associate Ecommerce Acquisition
Increase in the group's interest in Captain Fresh Associate Ecommerce Acquisition
Increase in the group's interest in Sangvhi Beauty Associate Ecommerce Acquisition
Increase/dilution in the group's interest in Bux Associate Ecommerce Acquisition/Disposal
Increase/dilution in the group's interest in Klar Associate Ecommerce Acquisition/Disposal
Dilution of the group's interest in Remitly Associate Ecommerce Disposal
Increase in the group's interest in FinWizard Associate Ecommerce Acquisition
Loss of control of the group's interest in Udemy Associate Ecommerce Disposal
Loss of control of the group's interest in BYJU'S Associate Ecommerce Disposal
Dilution of the group's interest in Skillsoft Associate Ecommerce Disposal
The net adjustment made for all acquisitions and disposals on continuing
operations that took place during the period ended 30 September 2023 amounted
to a negative adjustment of US$1.3bn on revenue and a negative adjustment of
US$147m on trading profit. The group composition disposal adjustments include
the impact of a change in revenue recognition related to iFood.
A. NON-IFRS FINANCIAL MEASURES AND ALTERNATIVE PERFORMANCE MEASURES continued
A.2 Growth in local currency, excluding acquisitions and disposals continued
The adjustments to the amounts, reported in terms of IFRS, that have been made
in arriving at the pro forma financial information are presented in the table
below:
Six months ended 30 September
2022 2023 2023 2023 2023 2023 2023 2023
A B C D E F(2) G(3) H(4)
IFRS 8(1) Group Group Foreign Local IFRS 8(1) Local IFRS 8
US$'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 4 246 (290) 179 108 696 4 939 18 16
Classifieds(5, 6) 368 (3) - 17 84 466 23 27
Food Delivery(7) 1 911 (129) 160 94 408 2 444 23 28
Payments and
Fintech 480 (7) 1 (45) 162 591 34 23
Edtech 334 (141) - 1 17 211 9 (37)
Etail 852 3 8 47 38 948 4 11
Other 301 (13) 10 (6) (13) 279 (5) (7)
Social and internet platforms 11 309 (1 156) - (594) 1 116 10 675 11 (6)
Tencent 11 309 (1 156) - (594) 1 116 10 675 11 (6)
Corporate segment - - - - - - - -
Economic interest from continuing operations 15 555 (1 446) 179 (486) 1 812 15 614 13 -
Discontinued operations(5, 6) 1 511 (625) - (93) (175) 618 (20) (59)
Group economic interest 17 066 (2 071) 179 (579) 1 637 16 232 11 (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 the 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 disposed, classified as held for sale or closed
down by
30 September 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 From 1 April 2023, iFood changed its revenue recognition from a gross
basis to a net basis as a result of a change in the services rendered to its
customers. Refer to note 4.
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:
Six months ended 30 September
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 (805) 122 (14) 2 449 (246) 66 69
Classifieds(5, 6) 33 - - 7 70 110 >100 >100
Food Delivery(7) (381) 22 (10) - 214 (155) 60 59
Payments and Fintech (97) 1 (2) (2) 66 (34) 69 65
Edtech (178) 91 - (1) 24 (64) 28 64
Etail (38) - - (1) 14 (25) 37 34
Other (144) 8 (2) (1) 61 (78) 45 46
Social and internet platforms 2 497 (255) - (159) 792 2 875 35 15
Tencent 2 497 (255) - (159) 792 2 875 35 15
Corporate segment (82) - - - 8 (74) 10 10
Economic interest from continuing operations 1 610 (133) (14) (157) 1 249 2 555 85 59
Discontinued operations(5, 6) 17 (193) - 9 52 (115) (30) >(100)
Group economic interest 1 627 (326) (14) (148) 1 301 2 440 100 50
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 the 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.
6 From 1 March 2023, following the group's decision to exit the OLX Autos
business unit, its operations disposed, classified as held for sale or closed
down by
30 September 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 From 1 April 2023, iFood changed its revenue recognition from a gross
basis to a net basis as a result of a change in the services rendered to its
customers. Refer to note 4.
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), 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
Lynelle 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
Deloitte Netherlands
Gustav Mahlerlaan 2970
1081 LA 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 Biermann 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: +27 (0)11 286 7326
Fax: +27 (0)11 286 9986
ADR programme
Bank of New York Mellon maintains a GlobalBuyDIRECT(SM) plan for Prosus N.V.
For additional information, please visit 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:
Bank of New York Mellon, Shareholder
Relations Department - GlobalBuyDIRECT(SM)
Church Street Station
PO Box 11258
New York, NY 10286-1258
USA
Attorney
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 concerning our
financial condition, results of operations and businesses. These
forward-looking statements are subject to a number 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 identified by the use of forward-looking terminology such as
'believes', 'expects', 'may', 'will', 'could', 'should', 'intends',
'estimates', 'plans', 'assumes' or 'anticipates', or associated negative, 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 report on matters that are not historical facts
involve predictions.
No assurance can be given that such future results will be achieved. Actual
events or results may differ materially as 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 expressed in the forward-looking
statements, including (without limitation): (a) changes to IFRS 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 and market conditions such as exchange rate and
interest rate movements; (c) changes in domestic and international regulatory
and legislative environments;
(d) changes to domestic and international operational, social, economic and
political conditions; (e) labour disruptions and industrial action; and (f)
the effects of both current and future litigation. The forward-looking
statements contained in this report apply only as of the date of the report.
We are not under any obligation to (and expressly disclaim any such obligation
to) revise or update any forward-looking statements to reflect events or
circumstances after the date of the report or to reflect the occurrence of
unanticipated events. We cannot give any assurance that forward-looking
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