REG - Prosus NV Naspers Limited - Trading Statement

Prosus NVAnnouncement

20/11/2023 16:00

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RNS Number : 0303U  Prosus NV  20 November 2023

Prosus N.V.

(Incorporated in the Netherlands) (Trade Reg No 34099856)

AEX and JSE Share Code: PRX   ISIN: NL0013654783

("Prosus")

 

Trading statement

 

Shareholders are advised that the Prosus group ("the Group") is finalising its
condensed consolidated interim financial statements for the period ended 30
September 2023.

 

Prosus N.V. ("Prosus") is a subsidiary of Naspers Limited ("Naspers"), a
company incorporated in South Africa and listed on the Johannesburg Stock
Exchange ("JSE") in South Africa.

 

For context, in terms of the JSE Listings Requirements, South African listed
entities with a primary listing on the exchange are obliged to issue a trading
statement as soon as they are reasonably certain that the upcoming financial
results would differ by at least 20% from those of the previous corresponding
period. Trading statements are generally issued to provide shareholders with a
range of outcomes in respect of key financial metrics.

 

The financial results of Prosus almost completely account for Naspers's
results. Based on Naspers's anticipated results for the period ended 30
September 2023, Naspers is required to issue a trading statement in terms of
the above JSE Listings Requirements. To ensure that shareholders of Prosus are
provided with equivalent information simultaneously, Prosus is issuing this
trading statement.

 

For the six months to September 2023, our consolidated ecommerce portfolio
excluding Tencent delivered peer-leading growth and accelerated profitability.
We are on track to fulfil our commitment of consolidated ecommerce
profitability and cash flow generation. This performance, combined with
improved profitability from equity accounted investments and the continuation
of the share repurchase programme, led to significant growth in core headlines
earnings per share.

 

During the period, we delivered on our commitment to simplify the Group's
structure, with the successful removal of the cross- holding. We thank
shareholders for their vote of support. The Group has made significant
progress on its strategic priorities and will continue to target peer-leading
growth and improving profitability. Furthermore, the Group will continue the
open- ended repurchase while the holding company discount remains elevated and
deliver a clear capital allocation strategy focused on high conviction
opportunities. Strong business performance and increased scale will create
opportunities to highlight the value of our investments. There is significant
opportunity to increase returns in the Group's investments and deliver long
term value to shareholders.

 

The Group has illustrated below the anticipated changes in earnings, headline
earnings and core headline earnings per share for continuing operations and
total operations for the period ended 30 September 2023 as compared to the
restated 30 September 2022 operations. Prior period numbers have been adjusted
to reflect the impact of the removal of the cross holding and in the case of
continuing operations both the removal of the cross-holding and the exit of
the OLX Auto businesses. (Details discussed later in the statement):

 

                                                 Restated            30 September 2023 expected increase  Expected increase

 Continuing operations                           30 September 2022   US cents                             %

                                                 US cents
 Earnings per N share ((1))                      91                  42-49                                46%-54%
 Headline earnings(***)per N share ((1))         7                   46-48                                664%-679%
 Core headline earnings(****) per N share ((1))  39                  35-38                                91%-98%

 

                                                 Restated            30 September 2023 expected increase  Expected increase

 Total operations                                30 September 2022   US cents                             %

                                                 US cents
 Earnings per N share ((1))                      90                  43-50                                48%-55%
 Headline earnings(***)per N share ((1))         7                   46-48                                664%-679%
 Core headline earnings(****) per N share ((1))  38                  36-39                                95%-103%

Core headline earnings per share and headline earnings per share for the
period are expected to increase in the current period. This growth is driven
by improved profitability of our ecommerce consolidated businesses and
equity-accounted investments, in particular Tencent, and an increase in our
net interest income. Shareholders are reminded that the board considers core
headline earnings an appropriate indicator of the operating performance of the
Group, as it adjusts for non-operational items.

 

 

The increase in earnings per sharewas positively impacted by the Group's
improved profitability and lower number of shares due to the ongoing
open-ended share repurchase. Earnings per share growth further benefitted from
improved interest income received of US$0.4bn (H1 FY23: US$0.1bn) and lower
impairment losses of approximately US$0.5bn (H1 FY23: US$1.5bn) on assets
within the Group's portfolio compared to the prior year. The Group's gains
realised on the sell down of Tencent and the Group's share of fair value
losses/gains from investees have remained fairly consistent period on period.

 

The gains relating to the sell down of Tencent and impairment charges
impacting earnings per share are excluded from headline and core headline
earnings per share.

 

 

The Group has restated the 30 September 2022 published information following
OLX Auto's classification as Discontinued operations and the removal of the
Group's cross-holding structure.

 

We have made meaningful progress in exiting our OLX Autos businesses. All of
our OLX Autos operations that have been disposed of, classified as held for
sale or closed down by 30 September 2023 are presented as discontinued
operations. Prior period published earnings have been adjusted as follows:

 

 30 September 2022                       Published US$'m  Restated US$'m
 Earnings from Total operations          2 535            2 535
 Earnings from Continuing operations     2 345            2 556
 Earnings from Discontinuing operations  190              (21)

 

The successful removal of the cross-holding between Naspers and Prosus was
concluded in September 2023. The previous year's earnings per share have been
restated to reflect the capitalisation issue and removal of the cross holding
and gives a like-for-like comparison to the financial year 2024 earnings per
share. The financial year 2023 earnings per share is lower than in the past
due to the additional shares issued to remove the cross holding. Prosus
shareholders now own more shares than prior to the removal of the cross
holding.

 

Below is a representation of the impact of the removal of the Group's
cross-holding structure on the number of shares utilised in the determination
of the Earnings per share.

 

 Period             Published WANOS(*)  Capitalisation issue and removal  Restated WANOS(*)

                                        of cross holding structure
 30 September 2022  1 404 721 230       1 392 906 871(**)                 2 797 628 101

(*)Weighted average number of shares in issue

(**)The Group issued 808 533 377 ordinary shares N and reinstated 584 373 494
ordinary shares N

 

Consequent to the capitalisation issue, and the classification of OLX Autos to
discontinued operations, the per share information from continuing and total
operations for 30 September 2022 has been restated as follows:

 

 30 September 2022 - Continuing operations  Published US cents  Restated US cents
 Earnings per N share                       167                 91
 Headline earnings per N share              -                   7
 Core headline earnings per N share         64                  39

 

 30 September 2022 - Total operations  Published US cents  Restated US cents
 Earnings per N share                  181                 90
 Headline earnings per N share         14                  7
 Core headline earnings per N share    77                  38

More details will be published with the condensed consolidated interim
financial statements on Wednesday, 29 November 2023.

 

Financial information on which this trading statement is based has not been
subject to an independent audit or review by the Group's auditors.

 

*** Headline earnings represents net profit for the year attributable to the
Group's equity holders, excluding certain defined separately identifiable
remeasurements relating to, amongst others, impairments of tangible assets,
intangible assets (including goodwill) and equity-accounted investments, gains
and losses on acquisitions and disposals of investments as well as assets,
dilution gains and losses on equity-accounted investments, remeasurement gains
and losses on disposal groups classified as held for sale and remeasurements
included in equity-accounted earnings, net of related taxes (both current and
deferred) and the related non-controlling interests. These remeasurements are
determined in accordance with Circular 1/2021, headline earnings, as issued by
the South African Institute of Chartered Accountants, at the request of the
JSE Limited in relation to the calculation of headline earnings and disclosure
of a detailed reconciliation of headline earnings to the earnings numbers used
in the calculation of basic earnings per share in accordance with the
requirements of IAS 33 - Earnings per Share, under the JSE Listings
Requirements.

**** 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)
one- 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 us, as well as our share of earnings of associates
and joint ventures, to the extent that the information is available.

 

 

((1)) Per share information is based on the net number of N ordinary shares in
issue during the respective periods. The A ordinary shareholders and B
ordinary shareholders share 1/5(th) and 1/1 000 000(th) respectively of the
earnings attributable to the external N shareholders as at 30 September 2023.
The earnings will be expected to increase in the same ratio as N ordinary
shareholders.

 

20 November 2023 Symphony Offices Gustav Mahlerlaan 5

1082 MS Amsterdam The Netherlands

 

Sponsor:

Investec Bank Limited

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