PROSUS

Summary consolidated financial statements

for the year ended 31 March 2023

COMMENTARY

The operating environment in the fiscal year ended 31 March 2023 (FY23) was characterised by significant geopolitical and macroeconomic uncertainty. Amid that uncertainty, we acted decisively to strengthen our financial footing and deliver value for shareholders. Our focus remains on building long-term sustainable value in local marketplaces with peer-leading growth and materially improving profitability.

After years of investment and significant growth, our businesses have scaled meaningfully and each segment now demonstrates a clear path to profitability. We are committed to achieving consolidated ecommerce profitability during the first half of FY25. Our efforts to drive profits with peer-leading growth will deliver long-term value to the group's shareholders.

The growth rates discussed below represent a comparison between FY23 and FY22, unless otherwise stated. The percentages in brackets represent local currency growth, excluding impacts of acquisitions and disposals (M&A), and provide a clearer view of the underlying operating performance of our businesses.

The group's Ecommerce businesses maintained topline momentum as a result of actions taken throughout the year and improved profitability significantly in the second half of the year. This foundation will allow Prosus to deliver substantial profitability improvements in FY24 and beyond.

Consolidated revenue from continuing operations grew 10% (23%) to US$5.8bn, with the biggest contributors being Food Delivery, and Payments and Fintech. Trading losses increased year on year to US$790m from US$644m in the prior year. However, trading losses reduced by 23% in the second half of the year compared to the first half, demonstrating our commitment to achieve consolidated ecommerce profitability during the first half of FY25.

Core headline earnings, our measure of after-tax operating performance, were US$2.5bn - a decrease of 32% (13%). This was primarily due to lower contributions from associates, particularly Tencent, which was impacted by Covid-19 lockdowns and new regulations in China.

Ecommerce consolidated trading losses from continuing operations of US$617m reflected incremental investment in the group's ecommerce growth extensions as we continued to invest in high-conviction growth areas. Market conditions deteriorated significantly for this business in the second half of the year and the group is completing an exit of OLX Autos. Across the group, we drove efficiencies throughout the year and cut back aggressively on costs, including a 30% reduction in corporate-level workforce costs. These actions supported an improvement in trading loss from US$365m in the first half of the year to US$252m in the second half, despite the second half historically having higher customer-acquisition investment. For the year, growth extensions accounted for US$492m of the consolidated trading loss of US$617m. We are committed to a significant reduction in trading losses in each reporting period.

Food Delivery's performance remained strong, with revenue growing well ahead of peers and profitability improving meaningfully. iFood continued to benefit from sustained momentum in the core restaurant food-delivery businesses and improved extensions, with targeted and disciplined investment in quick commerce and grocery marketplace. Given the group's conviction in iFood, we acquired the remaining 33.3% stake of iFood from Just Eat Takeaway in November 2022 for €1.5bn, plus a contingent consideration of up to €300m.

The core Classifieds business delivered sustained growth and improved profitability through stable operating metrics and strong performance in Europe. The autos and real-estate verticals and pay-and-ship initiatives contributed to revenue growth. Like listed peers, the OLX Autos business faced significant challenges and the group announced its intention to exit this business. This decision was driven by a major deterioration of market conditions in this industry towards the end of the second half of the year. The exit of OLX Autos will lead to a sizeable improvement in Classifieds and Ecommerce profitability.

Payments and Fintech continued to see meaningful growth in the core payment service provider (PSP) business and in its burgeoning Indian credit business. India's payments business grew on the back of increased wallet share in existing merchants and further diversification of the revenue base. Trading profit margins have also improved on the back of diversification of revenue. The credit business in India continued to scale and improved its trading loss margin, now approaching breakeven, by diversifying funding sources and enhancing cost discipline and risk management. The Global Payments Operations (GPO) showed strong revenue growth, but profitability was impacted by a once-off loss provision. Excluding this provision, the GPO business remains profitable.

In Edtech, our majority-owned enterprise platforms, Stack Overflow and GoodHabitz, continued to grow, but investments weighed on profitability. We invested in sales, product enhancements and global footprint expansion to better position the businesses, improving their overall product offerings and bringing scale to the platforms as corporations look for alternative ways to upskill and reskill their workforces. The current focus of investment is to leverage our strong generative artificial intelligence (GenAI) in-house capabilities to deliver significant value to customers.

The group's strong balance sheet continues to provide the needed liquidity and optionality to navigate a volatile environment. During the year, the balance sheet was further strengthened by Tencent's distribution of  JD.com and Meituan shares. Prosus exited the JD.com stake at the beginning of the fiscal year and received US$3.7bn. The Meituan shares were received on 24 March 2023. In April 2023, Tencent announced a 50% increase in its dividend per share, which resulted in a dividend of US$758m received in June 2023.

In October 2022, the group delivered on its commitment and completed the disposal of its Russian classifieds business, Avito, receiving proceeds of RUB151bn (US$2.4bn). This was a differential outcome amid very difficult conditions. Avito and the OLX Autos operations, that have closed down or are classified as held for sale, are presented as discontinued operations and thus excluded from continuing operations. However, reported IFRS continuing operations include OLX Autos operations whose exit process had not been finalised at 31 March 2023 and is expected to be treated as discontinued operations in FY24.

Given a sharp rise in the cost of capital, deployed external investment of US$2.5bn was considerably lower than recent years. Of this, US$1.5bn reflects the acquisition of additional shares in iFood. We continue to explore opportunities, but remain very disciplined.

The group's resilient performance and financial footing in a difficult macroeconomic environment, combined with the open-ended share repurchase programme launched in June 2022, has delivered value for shareholders. At the start of the 2022 calendar year, the turbulent environment reduced risk appetite for many investors and depressed market valuations, particularly in the tech and internet sectors. By mid calendar year, this led to a very substantial widening in the group's discount to the sum of its net asset value (NAV). To generate value for shareholders from this dislocation, we launched an open-ended share repurchase programme funded by the daily sale of a limited number of Tencent shares and concurrent repurchase of Prosus shares. Since programme launch, the combined holding-company discount of Naspers and Prosus has reduced by approximately 17 percentage points as of 31 March 2023. Also, Prosus had repurchased 152 797 117 Prosus shares and 4 152 285 Naspers shares, with a total value of US$10.5bn, leading to 4.5% accretion in NAV per share. Combined, the discount narrowing and the NAV per share increase have led to approximately US$29bn in value created for the group's shareholders. We remain committed to this programme as it creates immediate value for shareholders daily while increasing the group's exposure to Tencent and its ecommerce portfolio on a per-share basis.

For Naspers to execute its open-ended share repurchase programme, it received approval from the South African Reserve Bank to continue funding its buyback with regular sales of Prosus shares. By 31 March 2023, Naspers had sold 43 356 695 Prosus shares and bought back 16 320 371 of its own shares to the value of US$2.5bn. The Naspers buyback is facilitated by a subsidiary company. This approach, due to South African regulation, limits the buyback to 10% of the total N shares of Naspers in issue. We have received the requisite approval from the South African Reserve Bank for a proposed transaction in terms of which the crossholding between Naspers and Prosus will be removed. The implementation of the proposed transaction will enable the continuation of the share repurchase programme at the Naspers level. The proposed transaction is also intended to remove the complexity created by the crossholding between Naspers and Prosus while keeping the Naspers and Prosus free-float effective economic interests the same as they were prior to its implementation. This will be achieved through aligning the legal ownership in Prosus with the current respective free-float effective economic interests. The implementation of the proposed transaction is subject to the requisite regulatory and Naspers and Prosus shareholder and final board approvals being obtained. Please refer to the more detailed announcement on the proposed transaction issued on 27 June 2023.

In FY24, the group commits to: taking meaningful steps towards delivering on its target of consolidated Ecommerce profitability during the first half of FY25; continuing the open-ended share repurchase programme; and crystallising value for investors in the group's portfolio of assets as conditions present themselves. We believe these drivers, acting in concert, will result in meaningful value creation and shareholder return.

A reconciliation of the alternative performance measures to the equivalent IFRS metrics is provided in 'Other information - non-IFRS financial measures and alternative performance measures' of these summary consolidated financial statements.

FINANCIAL REVIEW

Group revenue, measured on an economic-interest basis, grew by 7% in local currency, excluding M&A. Revenue, in nominal terms, was impacted by a broad devaluation of emerging-market and European currencies on translation to US dollars, representing a negative foreign currency translation impact of US$2.6bn. Ecommerce continued a strong growth trajectory, with revenue growing 22% (31%) in a challenging environment. Our economic-interest share in Tencent's revenue declined by 12% (1%). Group trading profit declined by 31% (16%) to US$3.4bn, reflecting Tencent's lower contribution and an increase in the group's share of losses from ecommerce associates.

On a consolidated basis, total revenue from continuing operations increased by US$600m, or 10% (23%), from US$5.2bn in the prior year to US$5.8bn. This was primarily due to strong revenue growth in iFood, and Payments and Fintech. Trading losses increased to US$790m from US$644m, representing increased organic investments to scale ecommerce extensions. However, trading losses in the second half of the year improved by 23% compared to the first half, demonstrating our commitment to achieve consolidated ecommerce profitability during the first half of FY25.

Operating losses increased by US$388m to US$1.3bn, primarily due to an increase in impairment losses recognised on goodwill and other assets that were offset by the reduction in share-based compensation expenses related to the remeasurement of the group's cash-settled schemes.

Profit from equity-accounted results decreased by US$4.1bn, or 44%, from US$9.3bn in the prior year to US$5.2bn. This is driven primarily by a decrease in our share of associate fair value gains on financial instruments of US$1.7bn, reduced gains on acquisitions and disposals of US$396m and additional impairment losses of US$827m. This was in addition to reduced year-on-year profitability in Tencent of US$1.2bn and a decrease in Tencent's contribution to equity-accounted earnings as a result of the sale of shares to fund the open-ended share repurchase programme which delivered a gain, recorded in the income statement, of US$7.6bn.

The trim of 2% of the group's Tencent position in FY22 resulted in a gain of US$12.3bn in that year.

As a result of challenging macroeconomic conditions and the decline in growth expectations and valuations, we recognised impairment losses on equity-accounted investments of US$1.7bn. Impairments for our listed equity-accounted investments relate primarily to Delivery Hero (US$1bn recorded in the first half of FY23) and Skillsoft (US$301m), given a decline in market capitalisation and the increase in discount rates and country-risk premiums for these.

In addition, we recognised impairment losses on goodwill of US$684m in the current year, of which US$560m relate to Stack Overflow in the Edtech segment and US$116m to the OLX Autos business unit. The impairment loss of the OLX Autos business unit is as a result of our decision to exit the business. Further impairments may be recognised for OLX Autos in FY24 as we complete the exit of this business. Stack Overflow is a recent acquisition and has seen performance challenges in the current year due to worsening macroeconomic conditions. We are confident of the long-term potential and strategic value-add of our investments, despite the short-term macroeconomic challenges that drove the impairment.

Impairments for our unlisted equity-accounted investments relate primarily to OfferUp (US$325m) due to the increase in market interest rates and a revised business outlook.

Headline earnings decreased by US$2.4bn to US$628m. This was due to lower profitability across the group's associates and increased operating losses from our consolidated businesses. This was partially offset by reduced share-based compensation expenses related to remeasurement of the group's cash-settled scheme and no grants to executive directors, as well as lower net finance costs due to increased interest income from cash balances.

Core headline earnings were US$2.5bn - a decrease of 32% (13%) or US$1.2bn primarily due to lower contributions from the group's associates (US$1.3bn), of which US$1.1bn relates to Tencent.

Following the announcement in May 2022 of our intention to exit the Russian classifieds business, Avito was classified as held for sale until the date of disposal in October 2022. In addition, Avito represents a separate major line of business and is reflected as a discontinued operation.

In March 2023, we announced the decision to exit the OLX Autos business unit. We believe that significant value exists in the business in its various local markets. Based on this, and the ongoing disposal process, options for this business are being considered across its geographical footprint. The operations of this business classified as held for sale and those that were closed by 31 March 2023 are presented as discontinued operations. The results from continuing operations also include some losses from the OLX Autos business unit where the group is still finalising its exit.

The group remains well positioned to navigate the difficult macro environment due to its strong balance sheet. At a corporate level, Prosus has a net debt position of US$0.5bn, comprising US$14.9bn in central cash and cash equivalents (including short-term cash investments), net of US$15.4bn in central interest-bearing debt (excluding capitalised lease liabilities). In addition, we have an undrawn US$2.5bn revolving credit facility. During the year, we recorded a net interest expense of US$79m.

The group's free cash outflow (excluding Avito) was US$410m, a sizeable year-on-year improvement. This was due to improved working capital and lower withholding tax due to fewer Avito dividends being received. Excluding OLX Autos, free cash outflow was limited to just US$30m. Tencent remains a meaningful contributor to our cash flow via a stable dividend of US$565m.

There were no new or amended accounting pronouncements effective 1 April 2022 with a significant impact on the group's summary consolidated financial statements.

The company's external auditor has not reviewed or reported on forecasts included in these summary consolidated financial statements.

SEGMENTAL REVIEW

Ecommerce

Ecommerce revenue from continued operations grew 22% (31%) to US$9.9bn on an economic-interest basis, led by growth across all four core segments: Food Delivery, Classifieds, Payments and Fintech and Edtech. Etail revenue declined 14% (4%) to US$2bn impacted by an elevated FY22 base, which in turn was fuelled by pandemic-related demand, and lower demand in the current year as offline retailers offloaded inventory as Covid-19 restrictions were lifted. Excluding Etail, Ecommerce revenue grew 35% (44%). Aggregated trading losses in the Ecommerce portfolio rose to US$1.5bn from US$1.2bn in the comparative period but declined by 35% in the second half of FY23 from the first half of FY23.

On a consolidated basis, Ecommerce revenue from continuing operations grew 10% (23%) to US$5.8bn, 29% (43%), excluding Etail. The trading loss widened by US$140m (US$95m) to US$617m, reflecting increased investment in adjacent growth opportunities that we believe will contribute to long-term value. These enhancements include a broader on-demand grocery-delivery ecosystem in iFood, credit in Payments and Fintech, and expansion of our Edtech segment. Trading losses improved meaningfully in the second half of the year, driven by the benefits of increased scale at the core businesses, more targeted investment in growth extensions and more general cost-cutting measures across the segments. Profitability improved in our core Classifieds business and iFood's restaurant-delivery business in Brazil. Results for our Payments and Fintech core PSP business include a once-off loss provision of US$23m related to merchants in Brazil and the travel industry. Excluding this once-off adjustment, the core business remains profitable and reported a very strong recovery in the second half.

We are committed to achieving consolidated Ecommerce portfolio profitability during the first half of FY25, benefiting from increased scale as well as growth extensions and cost reductions. As such, the first six months of FY23 represent the high-water mark for trading losses and these are now expected to improve materially over time.

Classifieds

The core classifieds business of OLX Group continued to deliver a strong performance through the financial year, with sustained growth and improved profitability. It is well placed for further growth and margin expansion.

The core classifieds business was negatively impacted by currency movements. On an economic-interest basis, revenue decreased in nominal terms, but grew 15% to US$722m in local currency, excluding M&A, and reported a trading profit of US$60m.

The consolidated core classifieds business delivered revenue of US$486m for the year, representing growth of 15% in local currency, excluding M&A. Excluding Ukraine, core classifieds consolidated revenue grew 20% and reported a trading profit margin of 19%, a 6 percentage point improvement compared with the prior year¹.

Operating metrics across the group's core Classifieds business remained stable, with 73 million active users, 45 million monthly active app users and 1.8 million paying listers.

Europe, excluding Ukraine, grew revenue by 22% in local currency, excluding M&A. Trading profit grew by US$38m to US$83m, representing a margin improvement of 3 percentage points compared with last year. Poland remained the largest country in the group's European portfolio, growing revenues by 24% to US$281m and trading profit by US$34m to US$68m.

The strong performance in Europe was supported by solid retention and buyer adoption of pay-and-ship services. Buyer adoption increased 3% year on year to 34%, while monetisation also improved. The autos and real estate verticals contributed meaningfully and delivered revenue growth of 5% (19%) and 9% (24%) respectively, driven by improved commercial offerings. This offset a slight decline in advertising revenues due to the weaker macro environment.

The group supported its employees in Ukraine and, despite a difficult year, OLX Ukraine remained resilient. Demand has almost recovered to pre-conflict levels, with daily active users for FY23 at 94% of the prior-year level, while listings are at 80%. Despite the recovery in activity, monetisation has been kept low and the business reported a 37% (19%) decline in revenue to US$36m, and a trading loss of US$17m compared with revenue and trading profit of US$57m and US$7m respectively in FY22.

OLX Brasil, the group's 50% joint venture with Adevinta, contributed revenue of US$85m on an economic-interest basis, growing 12% (11%). Revenue growth was driven by the autos vertical, which recorded higher revenue per user and a significant increase in pay-and-ship transactions. This offset a decline in advertising revenues which were impacted by lower traffic and a weaker macroeconomic environment. The trading profit margin improved by 10 percentage points, to 15%, as the business implemented a cost-reduction plan.

1     Classifieds' intra-segment corporate cost-allocation methodology was updated in this year. The prior year has been restated in line with the updated methodology.

OLX Autos, the car transaction business, was materially affected by macroeconomic and market challenges later in the second half of FY23, similar to listed peers. While OLX Autos has built leading positions across many of its key markets, driven by strong technology platforms and local focus, pursuing a global growth strategy was no longer the right approach for the group to maximise shareholder value. The operations of this business classified as held for sale and those that have been closed by 31 March 2023 are presented as discontinued operations. The portion of OLX Autos operations still included in continuing operations relates to OLX Autos operations whose exit process had not been finalised by 31 March 2023. These are expected to be discontinued in FY24 as the group continues to explore options for these remaining businesses and is committed to working through this process quickly and efficiently in the interests of all stakeholders.

OLX Autos revenue and trading loss for the year were US$1.8bn and US$418m respectively, of which US$853m of revenue and US$216m of trading losses are included in continuing operations.

Beyond OLX Autos, the core classifieds business in OLX is profitable, cash-flow positive and fast-growing. The exit of OLX Autos will lead to improved profitability profile of the Classifieds segment, and we expect this to be further enhanced by cost-optimisation initiatives that promote improved productivity and efficiency.

Food Delivery

The Food Delivery segment continued to deliver robust growth in the core restaurant food-delivery business as well as in grocery marketplace and quick commerce, while improving its overall profitability. Profit improvement was driven by increased scale and margin improvement in the core restaurant food-delivery businesses, as well as a more targeted investment in growth extensions such as grocery and quick commerce. Total gross merchandise value (GMV) grew 18% (27%), while revenue, on an economic-interest basis, increased 40% (44%) to US$4.2bn.

iFood represents our consolidated food-delivery business and we have several associates, most notably Delivery Hero and Swiggy.

iFood

iFood grew revenue strongly, while meaningfully improving its overall profitability during the year.

Revenue grew 39% (35%) to BRL7.1bn (US$1.4bn), driven by an increase in orders and average order size as well as improved take rates and advertising fees. In Brazil, orders increased 10% (7%) to over 832 million and GMV grew 27% (20%) to BRL48bn (US$9.4bn). Trading loss reduced by US$127m to US$79m as increased scale led to improved efficiency and margins in the core restaurant food-delivery business, which were partially offset by investment in the grocery marketplace, quick commerce and fintech extensions. During the year, iFood's trading loss margin improved by 15 percentage points.

In the core restaurant food-delivery business, GMV and revenue grew 21% (14%) and 27% (24%) respectively. The business is also benefiting from growing traction with its loyalty programme (Clube) which supports increased frequency from iFood's most valuable customers. As a result, iFood's core restaurant business generated a trading profit of US$94m and trading margin of 8%, up from -1% in FY22, reflecting higher gross margins and more efficient marketing investment.

iFood operates a hybrid model of grocery marketplace and quick-commerce delivery, with marketplace being the larger contributor to orders. Its grocery marketplace and quick-commerce offering grew orders by 2% and GMV by 18% (14%) to over 43 million and BRL4.5bn (US$0.9bn) respectively. Revenues grew by US$111m or 584% (563%) to account for 9% of total iFood revenues. In quick commerce, iFood adopted a more focused and efficient approach to rolling out new stores, with 61 dark stores now in operation, and continued to focus on achieving higher average order value and improving the unit economics of the business. iFood ceased operation in Colombia at the end of November 2022.

Delivery Hero

Delivery Hero contributed revenue of US$2.4bn and trading losses of US$267m to the group on an economic-interest basis for the period. Its focus on profitability continues to show results, as Delivery Hero's own metric of adjusted EBITDA margin (as a percentage of GMV) improved to -1.4% from -2.9% for the year ended 31 December 2022, while GMV grew by 18% to €44.6bn on a pro forma basis.

Prosus retains conviction on the Delivery Hero outlook and acquired an additional stake in this business for US$586m; increasing our ownership from 27.28% to 29.83% during the year.

More information on Delivery Hero is available at https://ir.deliveryhero.com.

Swiggy

Our share of Swiggy's revenue grew 40% (73%) to US$297m, reflecting higher average order values and increased revenue from delivery fees and advertising sales. The core restaurant food-delivery business recorded GMV¹ growth of 26%, while Instamart grew GMV 459%². In the last two reporting periods, Swiggy has concentrated on reactivating users, increasing monthly frequency and improving user conversion. The benefits are reflected in its results for FY23, with over 272 000 enabled restaurants on its platform, 155% of pre-pandemic levels, with GMV at US$2.6bn.

1     GMV includes delivery fees.

2     Year in Swiggy's section refers to 1 January 2022 to 31 December 2022.

In FY23, Swiggy also redoubled its focus on the profitability of its core restaurant food-delivery business, which its CEO recently announced had turned profitable in March 2023 (after factoring all corporate costs excluding share-based costs) following an investment phase. Our share of Swiggy's trading loss increased to US$180m (FY22: US$100m), driven by investment in Instamart, which peaked in the year.

Payments and Fintech

The Payments and Fintech segment grew its economic-interest revenue 32% (51%) to US$1.1bn through strong growth in the core PSP business as well as its fast-scaling India credit business. On a consolidated basis, the core PSP business and credit drove PayU's revenue growth of 32% (52%) to US$903m. The trading loss was US$83m (FY22: US$46m), with a negative margin of 9% (FY22: -7%) due to a once-off loss provision of US$23m.

The core PSP business delivered revenue growth of 23% (43%) to US$790m, driven by transactions and total payment volume (TPV) growing 19% and 24% (39%) to 2.7 billion and US$98bn respectively. While both India and GPO grew revenue solidly, the core PSP business reported a trading loss of US$2m, mainly due to GPO's once-off loss provision. Excluding this provision, the core PSP business generated a 3% trading margin, down from 4% in FY22, as GPO incurred higher merchant acquisition costs and invested in building new products.

India, the largest market in the group's PSP business, contributed 51% of the core PSP business' revenues, up from 47% in FY22. India's TPV grew 33% (44%) to US$58bn, driven by transaction growth of 25% to 1.4 billion. India generated US$399m of revenue, which grew 31% (42%), fuelled by continued growth in enterprise and small and medium-sized businesses, as well as diversification into newer segments including government merchants, omnichannel and other non-MDR (merchant discount rate) products. Revenue growth and cost-saving initiatives led to an improvement in trading profit margin to 3%.

PayU's Indian credit business continued to scale quickly, issuing US$742m in loans, up 47% on last year, translating into a loan book of US$256m at 31 March 2023. The credit business grew revenue three times (three times) to US$83m, largely through growth in personal loans. The trading loss of US$10m represents a 63 percentage point improvement in margin to -12%, reflecting an improved loss rate of 2.5% from 3% in FY22. The business is close to breakeven. In FY23, in response to changes in regulations, the group stopped its digital bank offering (LazyCard), which contributed the largest part of the credit business' trading loss. As a result of the closure, the India credit metrics exclude LazyCard. The group continues to look for new opportunities to invest in further product diversification.

GPO grew solidly, but was impacted by currency translations. The GPO business grew transactions and TPV 12% and 13% (32%) to 1.2 billion and US$39bn respectively, through growth in global merchants and in Turkey, translating into revenue growth of 15% (44%) to US$393m. Turkey, one of the largest markets in GPO, contributed 22% of GPO's revenues, and grew 52% (154%) as increases in instalment sales and customer mix led to an improved take rate. GPO's gross profit margin was driven lower by higher merchant-acquisition costs. GPO is working to offset this increase through cost-saving initiatives, including headcount rationalisation, the benefits of which will come through in the next financial year. GPO's trading loss margin was -4% (2% excluding the once-off loss provision).

The largest Payments and Fintech investment in our associate portfolio, Remitly, grew its send volumes 40% to US$29bn in the year ended 31 December 2022. Our share of Remitly's revenue and trading loss was US$147m, which grew 35% (43%), and US$27m respectively.

More information on Remitly is available at https://ir.remitly.com/.

Edtech

On an economic-interest basis, Edtech segment revenues grew by 28% (18%) to US$545m and trading losses increased to US$258m. Growth was affected by decreased demand in the macroeconomic downturn. Our portfolio companies have reacted quickly to changing market conditions and are rationalising their cost structures and investments. At the same time, our businesses are shifting resources to take advantage of new AI technologies which promise to transform the industry. By deploying GenAI technologies, our companies can better personalise the content and user feedback on their platforms.

The consolidated Edtech businesses, Stack Overflow and GoodHabitz, grew revenues in local currency, excluding M&A, by 21% to US$134m. Trading losses increased to US$131m (FY22: US$55m), reflecting increased investment in technology, sales and international expansion.

Stack Overflow continues to add an average of 200 000 new registrations every month. It grew total bookings by 37%, driven by strong Stack Overflow for Teams' bookings, advertising and employer branding. The business grew revenue in local currency, excluding M&A, by 20% to US$94m, as Stack Overflow for Teams contributed slightly over 50% of revenue. By March 2023, Stack Overflow had over 950 paying teams generating annual recurring revenue of US$55m, representing growth of 31% year on year. Increased investment in sales teams, marketing activities and, engineering and product development initiatives contributed to the trading loss of US$84m.

GoodHabitz increased the number of courses offered by 51% (1 753 at the end of March 2023) and the number of enterprise customers it serves by 18% (2 656). Revenue grew 38% (24%) to US$40m, driven by growth in its biggest existing markets (the Netherlands, Germany, Italy, and Spain) and expansion into new international markets. Annual recurring revenue grew 24% in local currency, excluding M&A, to US$48m driven by the core markets, primarily Germany, and the introduction of new products and markets. Geographic expansion drove trading losses to US$16m.

Our Edtech minority investment portfolio comprises nine investments spanning the sector, from kindergarten to grade 12 (K-12), into higher education and workplace learning. Edtech associates revenue grew by 20% (17%) to US$412m and trading losses were US$127m.

Skillsoft, a global leader in digital workplace learning, is our biggest associate by revenue. Our share of Skillsoft's revenue was US$222m, with a trading profit of US$22m.

More information on Skillsoft is available at https://investor.skillsoft.com.

The group has stopped equity accounting for BYJU'S and Udemy from September 2022.

Etail

eMAG

eMAG, a leading business-to-consumer ecommerce platform in Central and Eastern Europe, had a mixed performance due to decreased consumer demand in a deteriorating macroeconomic environment, the war in neighbouring Ukraine, and a restructuring of its Hungarian business.

eMAG's revenue declined by 14% (4%) to US$2.0bn, reflecting a 17% (7%) decline in its core Etail business, partially offset by strong growth from its restaurant (Tazz) and grocery-delivery (Freshful) services. While overall GMV decreased 13% (4%), third-party (3p) ecommerce business grew GMV 3% (14%), which was offset by a first-party (1p) decline of 20% (11%). These changes were driven by charges in the category mix, which is ultimately more supportive of margins. In total, the business reported a trading loss of US$53m, compared with a US$34m trading loss last year, reflecting continued investments in Tazz, Freshful and Sameday, and once-off costs associated with the Hungary operational merger, along with warehouse investment.

eMAG has made strategic investments in productivity and innovation in the core business, while its popular loyalty programme (Genius) continues to support growth. eMAG is scaling its new extensions and focusing on better stock and warehouse management as it grows into its newly built capacity. In March 2023, the business returned to normalised year-on-year growth numbers as it lapped a normal base for the first time in three years. The investments and restructuring undertaken during the year are expected to continue improving performance over the next year, bringing a return to top and bottom-line growth.

Tencent

Tencent weathered a challenging 2022 with resilience, supported by its diversified portfolio of products, businesses and investments. For the year ended 31 December 2022, Tencent's revenue declined 1% to RMB555bn. Non-IFRS profit attributable to shareholders (Tencent's measure of normalised performance) declined 7% to RMB116bn.

Revenues from value-added services decreased by 1% to RMB288bn, driven by the 4% decrease in domestic games revenue and 3% growth in international games revenue. Social networks revenues were broadly stable at RMB117bn. Revenues from fintech and business services increased by 3% to RMB177bn. Revenues from online advertising decreased 7% to RMB83bn.

Monthly active users of Weixin and WeChat reached 1.3 billion, up 4% year on year. User time spent on Weixin continued to grow as it expanded its content, service offerings and short-form video capability, with time spent on Mini Programs and Video Accounts doubled and tripled year on year respectively in the fourth quarter of 2022. Mini Programs has become a leading transaction platform in China, contributing to the growth of the real economy. Video Accounts has become a major short-form video and live-streaming platform in China.

Tencent enlivened the video-chat experience for QQ by adding Super QQ Show avatars using enhanced motion-capture technology to mirror users' facial expressions and gestures in real time. Tencent enriched the content of anime, comics and games for QQ's short-video service, Mini World, and launched AI-powered video-creation tools, significantly increasing daily active users and time spent per user.

Tencent continued to lead in the China online game market, with Honor of Kings resuming year-on-year growth in daily active users in the fourth quarter of 2022. Internationally, Tencent elevated Valorant as a top global franchise and published two of the top three new mobile games of the year.

In online media, Tencent Video's subscriptions moderated slightly to 119 million due to content-scheduling delays, while subscription revenue increased year on year in the fourth quarter of 2022, driven by average revenue per user growth.

In advertising, Tencent improved its long-term position by launching Video Accounts in-feed ads, enhancing transaction-driven capability and machine-learning infrastructure in 2022. In the fourth quarter of 2022, Tencent advertising returned to year-on-year revenue growth. Click-to-message and click-to-purchase advertisements accounted for over one third of Weixin's advertising revenue.

In fintech, Tencent's commercial payment business was temporarily impacted by Covid-19 outbreaks, resulting in a significant slowdown in volume growth. Tencent is expanding its wealth management and exploring opportunities in consumer loans and online insurance services.

In business services, Tencent further reduced loss-making activities and optimised costs while focusing on healthier-margin, self-developed platform-as-a-service (PaaS) solutions, such as video cloud and database.

Tencent made significant progress in its drive to create sustainable social value. It announced its commitment to carbon-neutrality by 2030. Its digital philanthropy platform raised donations for over 25 000 projects and engaged more than 100 million users. In 2022, Tencent increased its return of capital to shareholders through distribution in kind, share repurchase and cash dividend.

The regulatory environment of China's internet industry continues to evolve, reflecting the expanding economic and social importance of the industry. In 2022, Tencent increased its business efficiency, sharpened its focus on core activities, and developed new services and revenue lines, successfully repositioning it for sustainable and high-quality growth. It is investing in AI capabilities and cloud infrastructure to embrace foundation models, which the company believes will enhance the experience of its existing products and services and allow it to explore new products.

Tencent is committed to enacting its vision of 'value for users, tech for good' by continuing to develop advanced technologies and innovative products and services that create shared value and promote the sustainable development of society. Tencent sees ample opportunities in both the consumer and industrial internet as technology continues to advance and as China reopens after the pandemic.

More information on Tencent is available at www.tencent.com/en-us/investors.

PROSPECTS

The group is a long-term investor and has invested through various economic downturns in volatile internet markets.

The fundamentals of our businesses remain sound. We continue to have conviction in our platforms, and we are excited about the opportunities before us. The group will continue to drive profitability in its ecommerce portfolio, build scale and take action to manage expenses and free cash flow while maintaining its leading value proposition to its customers. We will continue to invest for growth by building our capabilities and enhancing our ecosystems to deliver returns across our portfolio. The ambition is for our consolidated Ecommerce portfolio to reach profitability during the first half of FY25.

We will continue the open-ended repurchase programme as long as the discount remains elevated. Over time, the compounding effects of the buyback will structurally improve returns on investment.

Tencent is a strong business with a unique position in the China internet landscape. It is led by a world-class leadership team and has a proven track record of operating through all types of environments. The group remains committed to being a significant shareholder and still sees substantial upside potential.

Subject to the requisite regulatory and Naspers and Prosus shareholder and final board approvals being obtained, we intend to remove the crossholding between Naspers and Prosus and continue with the share repurchase programme.

We endeavour to maximise value for shareholders, with a transparent, predictable and repeatable process of identifying, scaling and then crystallising value across our portfolio at the right time.

A healthy liquidity profile is helpful in uncertain times. The group's ambition remains to manage the balance sheet within its investment-grade rating. We will remain disciplined in our capital allocation and are very focused on investments with the potential to deliver long-term returns to shareholders.

As a global tech business, AI is essential for us. Across the group, AI has become part of the fabric of our operations, how we innovate and keep improving. At the scale we currently operate across our core segments, AI is essential. We develop and deploy it as quickly as possible across the group to support business growth, to innovate, and to improve our competitive ability. We are increasingly focused on AI-by-design - using our technologies and expertise to make operational improvements and to radically change the way we do business. It is all about future-proofing and innovating - building AI into the earliest stages and making it core to the process of exploring, designing, developing, deploying and improving platforms, products and services. We will continue to responsibly develop and deploy AI to drive improvements throughout the group.

Risks

With the group's focus on developing its businesses and growing value sustainably, we understand the importance of effective risk management and therefore continue to foster our governance processes. These support in setting ambitious objectives, and identifying and managing the risks opposing these.

Through our organisational structures, we enable a proactive approach to risk management, where local businesses can respond quickly to unexpected opportunities as well as risks, ensuring Prosus remains resilient and well positioned for growth.

Our risk management philosophy distinguishes between three categories of risks managed as follows:

·     Strategic risks and opportunities: Arise from strategic choices we make, which are continuously assessed and monitored based on risk versus reward.

·     Internal operational risks: These are managed by upholding our code of business ethics and conduct, clear roles, responsibilities and policies, effective internal controls, and continuous risk monitoring.

·     External risks: We reduce and mitigate, inter alia, by implementing protective measures or risk transfer arrangements.

The board oversees risks and opportunities and sets the boundaries within which those risks must be managed. Businesses keep the board updated through regular reports. Current topical risks are:

·     Geopolitical tension: The war in Ukraine and concerns about broader geopolitical tensions have caused stress on the global economy and on capital markets, which also impacts our access to capital. In such an environment, investment focus is on growing the value potential of the core portfolio by operating at leanest cost.

·     Technology developments: We stay close to advances in technology, such as GenAI. These bring opportunities to improve products and services, but also new risks. In managing these risks, we focus on responsible use of data and related technologies to keep our customers safe, as well as continuously enhancing our cyber-resilience, detection and response capabilities.

Further details on our risk management approach and specific risks are outlined in the FY23 annual report in the 'Choosing the right opportunities and balancing risks' section. This report is available on our website.

SUSTAINABILITY

As a global consumer internet group and a leading long-term technology investor, we recognise the power of technology to create solutions for some of the world's most pressing needs. Every investment we make has the potential to reduce inequalities and drive innovation. By investing in local entrepreneurs who are solving for local needs, we support local economic growth in those communities. In the long run, this is the most sustainable way of driving economic parity and equitable access to opportunity in a society.

In FY23, we implemented all necessary measures to ensure Prosus reached the target to reduce scope 1 and scope 2 emissions from its operations, including Naspers and Prosus corporate offices, to zero.

We also worked to build a real-world climate transition plan, both relevant and practical in the context of our diversified holdings and structure. We developed our targets applying the Science Based Targets initiative's (SBTi) guidance for investors, which best matches our diverse and dynamic portfolio of investments. The group is committed to a climate journey aligned with the Paris Agreement to keep global warming to 1.5°C.

This year, we developed group principles and approaches to help portfolio companies develop impactful packaging strategies. The group has determined 10 golden rules to help digital delivery platforms scale sustainable packaging across their operations and value chains that have been cascaded across the group. We also published a landscaping report on packaging to identify solutions on new materials and strategies for reduction.

As part of our mission to use technology to improve the everyday lives of billions of people, we place great emphasis on promoting inclusive, economically secure communities by doing what we do best - supporting promising entrepreneurs to make a lasting impact on the communities around them. While conditions may vary, we believe local action by local companies is key to addressing societal challenges. We are proud of the many businesses across the portfolio that are designing scalable social-impact initiatives to meet the needs of local communities.

DIRECTORATE

On 1 April 2022, in line with the group's retirement policy, Ben van der Ross retired from the board as well as the Naspers social, ethics and sustainability and the Prosus sustainability committees. The board thanks Ben for his invaluable contribution over the years.

Shar Dubey was appointed to the board of Naspers from 1 April 2022. Her appointment as an independent non-executive director of Prosus was approved by shareholders at the annual general meeting on 24 August 2022. On 1 October 2022, she also became a member of the audit committee, enhancing the composition of this committee.

DIVIDEND

The board recommends that, in total, shareholders receive a distribution (in the form of a capital repayment for holders of ordinary shares N and a dividend for holders of ordinary shares B and ordinary shares A1) of approximately €175m, which currently represents an increase of approximately 7% for free-float shareholders. Holders of ordinary shares B and ordinary shares A1 will receive an amount per share equal to their economic entitlement as set out in the articles of association. Furthermore, the board recommends that those holders of ordinary shares N as at 3 November 2023 (the dividend record date) who do not wish to receive a capital repayment, can choose to receive a dividend instead. A choice for one option implies an opt-out from the other. If confirmed by shareholders at the annual general meeting on 23 August 2023, elections to receive a dividend instead of a capital repayment will need to be made by holders of ordinary shares N by 20 November 2023. More information regarding the distribution will be published in the notice of annual general meeting.

Capital repayments and dividends will be payable to shareholders recorded in our books on the dividend record date and paid on 28 November 2023. Capital repayments will be paid from qualifying share capital for Dutch tax purposes. No dividend withholding tax will be withheld on the amounts of capital reductions paid to shareholders. However, if holders of ordinary shares N rather elect to receive a dividend from retained earnings, dividends will be subject to the Dutch dividend withholding tax rate of 15%.

Dividends payable to holders of ordinary shares N who elect to receive a dividend and who hold their listed ordinary shares N through the listing of the company on the JSE will, in addition to the 15% Dutch dividend withholding tax, be subject to South African dividend tax at a rate of up to 20%. The amount of additional South African dividend tax will be calculated by deducting from the 20%, a rebate equal to the Dutch dividend tax paid in respect of the dividend (without right of recovery). Shareholders holding their listed ordinary shares N through the listing of the company on the JSE, unless exempt from paying South African dividend tax or entitled to a reduced withholding tax rate in terms of an applicable tax treaty, will be subject to a maximum of 20% South African dividend tax.

INDEPENDENT AUDIT

The summary consolidated financial statements have been derived from the consolidated financial statements included in our 2023 annual report. In accordance with article 393 of book 2 of the Dutch Civil Code, PricewaterhouseCoopers Accountants N.V. has issued an unqualified auditor's opinion on those financial statements. The summary consolidated financial statements should be read in conjunction with the consolidated financial statements in the 2023 annual report dated 26 June 2023 and published on 27 June 2023.

On behalf of the board

Koos Bekker                          Bob van Dijk

Chair                                          Chief executive

Amsterdam

26 June 2023