Prosus N : supplementary presentation, Mar20 (1.7 MB)

Detailed Financials

For the year ended 31 March 2020

Important information

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 the negative thereof, or other variations thereon or comparable terminology, or by discussions of strategy that involve risks and uncertainties.

These forward-looking statements and other statements contained in this report regarding 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 facing us and our subsidiaries. Such risks and uncertainties could cause actual results to vary materially from the future results indicated, expressed or implied in such forward-looking statements.

There are a number of factors that 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; (f) labour disruptions and industrial action; and (g) the effects of both current and future litigation.

The forward-looking statements contained in the report speak 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 statements will prove correct and investors are cautioned not to place undue reliance on any forward-looking statements.

1

Operations

Core Classifieds: Creating a profitable, sustainable portfolio of assets

OLX is the largest classifieds player globally

Core classifieds operations in 22 markets1 globally

309m3 monthly users

OLX Group: Average revenue/internet user (ARPIU)2,3 monetisation countries (US$)

4%FY19

FY20

Average monthly paying listers ('000)3

22%

3.44

2.83

FY19

FY20

Core classifieds:

• • OLX continues to create a profitable, sustainable portfolio of businesses.

  1.70

  1.77

• • OLX's portfolio contains leading businesses at varying stages of maturity. Earlier stage markets will enable the business to deliver future growth.

• • OLX's platforms are underpinned by ML driven shared services which drive scale and efficiency globally.

• • Monetisation is illustrated through continued growth in number of paying listers. OLX's monetising markets delivered healthy profit margins of 47%.

• • OLX drove in-market consolidation deals that will accelerate user growth, optimise new product investment and marketing, and create longer-term value.

• • In March and April, OLX saw 30%+ declines in traffic, as key markets went into lockdown. User KPIs have since stabilized and, in many countries, are back to or above pre Covid-19 levels.

• 1 Number of markets and map illustrates controlled Core Classifieds markets (including OLX Brazil). The geographic representation has been revised as the Group split Core Classifieds and Transactions markets. Countries with lower than 1 000 daily unique listers excluded from active country list.

• 2 OLX Group data excludes letgo. FY20 is fx neutral based on FY19 (Nominal ARPIU is US$1.74).

• 3 Data reflects full-year averages at 100% of controlled entities and proportionate share of equity-accounted investments. Numbers have been adjusted to reflect like-for-like due to changes in the markets within our portfolio.

3

Core Classifieds: Our key markets delivered attractive economics

1 OLX Brazil is a 50:50 joint venture with Adevinta. The financial information for OLX Brazil refers to our economic interest.

Avito:

• • Avito grew strongly and delivered a 51% trading profit margin. Avito continues toinvest in new products to further deepen its ecosystem and improve user experience eg. Avito Pay & Ship.

• • Avito expanded and deepened its presence in key verticals, with autos and real estate continuing their strong growth trajectories.

OLX Poland:

• • OLX Poland showed sustained platform growth enabling a 58% trading profit margin in FY20.

• • OLX Poland is integrating with FCG in Poland to increase the optionality for its auto consumers.

OLX Brazil:

• • Top-line growth is fueling operational leverage. Autos and real estate drove the growth and, pre-pandemic, the business saw a recovery in advertising. Trading profit was impacted by one-off costs such as SBC. Excluding these charges, margin improved YoY to 18% (FY19: 15%).

4

Classifieds: Creating value by moving deeper into the transaction

Operations in 10 high growth markets

>500 inspections centers (+78% YoY)

Transactions now 31% of revenue

• 1 Based on 100% of FCG and CashMyCar.

• 2 Financial information for Transactions (Tx). Numbers in brackets represent year-on-year growth in local currency excluding M&A.

Transactions (Tx):

• • The model enhances the user experience and has been particularly successful in autos. Vehicle inspection and immediate sale provide increased convenience and peace of mind for both sellers and buyers.

• • The segment expanded its transaction capability by acquiring a controlling stake in Frontier Car Group (FCG) in December 2019.

• • Tx is growing fast and accounted for 31% of our total classifieds revenues in FY20, from just 12% in the prior year.

• • Investment in network expansion ensures a springboard for future growth, with inspection centers and active dealers growing 78% YoY and 171% YoY, respectively.

• • The business has been significantly affected by the Covid-19 crisis. In 8 of our markets all our inspections centers were temporarily closed due to the respective governments implementing lockdown measures.

5

Sustained leadership in Food Delivery

-35%

Leadership positions in 38 of our markets

• 1 Orders & GMV are 100% for all companies. Investee companies' KPIs are aligned with 3month reporting lag period (Jan19 - Dec19). GMV is calculated in US$ using average exchange rates for respective years. GMV is calculated in US$ using average exchange rates for respective periods. Orders and GMV are 100% of iFood, Swiggy and Delivery Hero.

• 2 Online food total addressable market 2022E per Euromonitor International Limited, Consumer Foodservice 2019.

• • Prosus has invested ~US$3bn into food delivery. The current analyst consensus valuation implies an attractive IRR.

• • Covid-19 is accelerating structural changes in food and further increasing online penetration. The importance of own-delivery, increased convenience, optionality and decreased wastage opens a US$330bn addressable market by 20222.

• • A logistics network (1P) allows the extension into other verticals providing platform scale and limits idle time for drivers. Efficiency through technological advancement (ML, mapping, mobile penetration) ensures strong long-term profitable unit economics.

• • The effects of the Covid-19 pandemic on the food delivery industry vary significantly by country, largely due to differences in governments' responses to the crisis.

6

iFood retaining and attracting new customers

A leader in Brazil

Operating in Colombia and Mexico

160k restaurant partnersOver 900 cities, and in every state, in Brazil

30m+ orders in Brazil in March 2020

170k+ delivery partners in Brazil as of March 2020

1 GMV is calculated in US$ using average exchange rates for respective years. Orders for the year ended March 2020.

• • iFood continues its rapid expansion, growing orders +100%, underlining the ability to both retain existing consumers and attract new consumers.

• • iFood has more than doubled its restaurant coverage to over 160k. iFood increased food optionality further through investment into own delivery. 1P orders now account for more than 30% of total orders.

• • 2H20 saw more rational spending in Brazil, contributing to decreased cost per order, while maintaining high levels of order growth.

• • iFood's GMV grew 81% while iFood delivered a robust annual revenue growth rate of 113%, to US$315m, illustrating a growing blended take rate.

• • In Brazil, where food delivery is deemed essential services, order volumes held up well during the Covid-19 crisis.

• • In April 2020 the Group announced iFood would join forces with Delivery Hero in Colombia.

7

Food Delivery associates: Positive momentum in unit economics

• 1 Investee companies KPIs are aligned with 3month reporting lag period (January 2019 - December 2019)

• 2 Own delivery order penetration for Delivery Hero's January 2020 to March 2020 period

• 3 Swiggy growth 182% in local currency and 221% nominal growth.

• • Delivery Hero (DH) continues it strong growth trajectory, as it invests in expansion into other geographies, own-delivery, customer acquisition and new verticals such as convenience.

• • DH has entered into an agreement to acquire ~88% of South Korean Woowa Brothers Corp.

• • Swiggy delivered strong growth in the year, with our share of revenue growing 182% in local currency to US$132m3.

• • India's food delivery market saw increased rationalisation during 2H20, resulting in positive momentum in Swiggy's unit economics.

• • The impact of Covid-19 on our Food Delivery associates will be reported by the Group in FY21 due to a 3month lag reporting period. DH reported robust Q120 results with a substantial expansion of new customers. By contrast, in India local government restrictions constrained supply of restaurants and drivers, significantly impacting the business.

8

Payments & Fintech: Strong growth in core Payments

20 High growth markets

300+ Payment options

• 1 Represents year-on-year growth, excluding Wibmo.

• 2 Numbers in brackets represent year-on-year growth, excluding fx and M&A.

• 3 Issuance volume includes PayU's own product volumes, and 100% of PaySense and ZestMoney volumes.

• • India is PayU's largest market accounting

  for 51% of TPV. PayU is well placed to

  benefit from the migration of consumer

  activity online and the shift from cash to

  digital payments as our payment

  solutions connect customers, merchants

  and banks.

• • India's TPV and number of transactions grew 32% and 26% YoY, slightly down from 1H20 rates of 35% and 39% as some large merchants came on board in 2H FY19. In addition, our Indian business was impacted in March by the Covid-19 pandemic particularly in segments like travel.

• • GPO (LatAm and Europe) grew TPV by 26% YoY and transactions by 30%. The GPO business has so far proved to be very resilient during the crisis as consumers shift payments online.

• • PayU acquired PaySense, deepening its positioning in the Indian digital consumer lending market. FY20 YTD issuance3 volumes exceeded US$110m.

9

Etail: eMAG continued solid top-line growth with margin improvement

#1 ecommerce retailer in Romania,

Hungary and Bulgaria

Largest structured 3P marketplace in CEE

#1 ecommerce brand in Romania, Hungary and Bulgaria

Best-in-class NPS scores

First class logistic infrastructure and customer service

GMV (US$m)1

12% (18%)

1 420

FY19

Trading loss margin (%)

-3%

-1%

FY19

1 GMV reflecting 100% of underlying businesses for the review period. Numbers in brackets represent year-on-year growth in local currency.

1 587

FY20

FY20

• • eMAG accelerated revenue growth to 16% YoY. The business also reduced trading losses by half. Gross margins increased through leveraging fixed costs and other actions.

• • eMAG continued to outpace the market with gross merchandise value (GMV) growing 18% YoY.

• • eMAG's main market of operation, Romania, entered a lockdown in response to Covid-19 on 26 March 2020. Trading has so far held up well through the crisis as consumers sourced more goods online.

• • In October eMAG Hungary merged with Extreme Digital. eMAG Hungary GMV grew 25% YoY, driven by the 3P business.

Ventures: We invest to learn and then we grow

• • The Group invests in sectors of the economy where disruptive technology can lead to meaningful change in consumer behavior and economics.

• • The Group has invested ~US$850m in total in education, health, mobility & logistics, social commerce and blockchain.

• • EdTech is by far the largest area of investment for Ventures. During the Covid-19 crisis, the Group has supported efforts to utilize educational technologies to provide remote learning opportunities for students while schools are closed. The Group also provided out-of-office training for businesses necessitated by the pandemic.

M&A

M&A focused on core segments

Investment to scale our core segments in FY20

• • Prosus invested US$1,339m in FY20. Significant investments included:

  • ⁻ Frontier Car Group (US$320m)

  • ⁻ Iyzico (US$199m)

  • ⁻ PaySense (US$163m)

  • ⁻ Swiggy (US$100m)

  • ⁻ Meesho (US$81m)

  • ⁻ Wibmo (US$66m)

  • ⁻ Reddot (US$45m)

  • ⁻ Elastic Run (US$30m)

  • ⁻ Brainly (US$25m)

Investment to strengthen our leadership positions

InIvnevsetsmtmenetntos oscvaelretohuerlcaosrtethseregemyeenatsrs

Leaders in local market consolidation

Acquisitions/Investments (US$m)1

1 339

FY18

FY19

FY20

Financials

Summary financials1

Revenue (US$bn)2,3

Trading profit (US$bn)2,3

Core headline earnings (US$bn)3

Free cash flow (US$m)

9% (13%)

3.1

3.4

( 102)

( 338)

FY19

• 1 Summary financials from continuing operations.

  FY20

• 2 Results reported on an economic-interest basis, i.e. equity-accounted investments are proportionately consolidated.

• 3 Numbers in brackets represent year-on-year growth in local currency, excluding M&A.

FY19

FY20

Strong revenue growth with acceleration in 2H

Ecommerce revenue growth by core segments (%)1

1 Results reported on an economic-interest basis, i.e. equity-accounted investments are proportionately consolidated. Year-on-year growth shown in local currency, excluding M&A.

• • Ecommerce revenue increased 33% YoY, representing a 7-percentage point acceleration compared to last year.

• • Growth was driven by meaningful contributions across the portfolio totaling US$4.3bn.

• • The second half of the year was a strong six months despite some Covid-19 related set-backs in the latter part of March 2020. Ecommerce growth accelerated by 8 percentage points ahead of H1.

• • Combined growth from our three core segments Classifieds, Payments & Fintech and Food Delivery was 49%.

Core Classifieds driving profitability while investing in Transactions

Revenue (US$'m)1

Trading profit/(loss) (US$'m)1

Investment in Transactions49% (37%)

1,281

614

• • Core classifieds continued trend of healthy growth with improved profitability. Transactions contributed 31% of revenues, up from 12% in FY19.

• • Continued investment into Transactions2 to deepen customer centric eco-system and deliver incremental benefits over the long-term.

FY18

FY19

FY20

FY18

FY19

FY20

• 1 Results reported on an economic-interest basis, i.e. equity-accounted investments are proportionately consolidated. Numbers in brackets represent year-on-year growth shown in local currency, excluding M&A. FY18 results are based on the Combined Carve-out Financial Statements included in the Listing Prospectus of Prosus.

• 2 FCG revenue and trading loss reported at it's proportional ownership during FY19 and the first 9 months of FY20 while it was an associate. 100% inclusion of revenue and trading loss for the last 3 months of FY20, as we obtained a controlling stake in December 2019, and now report the business as a subsidiary.

Food Delivery: Strong growth, positive customer acquisition trends and investment in 1P drive margin improvement in 2H

Revenue (US$m)1

Trading loss (US$m)1

99% (105%)

751

377

166

• • Investing to transform all aspects of the supply chain from how food is sourced, to how it is prepared and ultimately consumed.

• • Expanding food supply and adding new categories such as groceries.

• • GP margin improved in 2H20 due to rationalisation in customer acquisition costs and a reduction in delivery costs.

(171)

(624)

FY18

FY19

FY20

FY18

FY19

FY20

1 Results reported on an economic-interest basis, i.e. equity-accounted investments are proportionately consolidated. Numbers in brackets represent year-on-year growth shown in local currency, excluding M&A. FY18 results are based on the Combined Carve-out Financial Statements included in the Listing Prospectus of Prosus.

Core Payments profitable as the business continues to scale

Revenue (US$m)1

Trading profit/(loss) (US$m)1

19% (21%)

428

• • Solid 21% YoY top-line growth driven by increased growth in transactions volume and value.

• • Profitability in core PSP improved in a competitive market also impacted by negative fx effects.

• • Investing in credit and expansion in SE Asia and Turkey.

Core Payments TP Margin -22%Core Payments

New initiatives & central costsCore Payments TP Margin 4%

Core Payments TP

Margin 4%

(67)

FY18

FY19

FY20

FY18

FY19

FY20

1 Results reported on an economic-interest basis, i.e. equity-accounted investments are proportionately consolidated. Year-on-year growth shown in local currency, excluding M&A. FY18 results are based on the Combined Carve-out Financial

Statements included in the Listing Prospectus of Prosus. New initiatives include Red Dot, Iyzico and Wibmo.

Etail: Strong organic growth and improved profitability

Revenue (US$m)1

Trading loss (US$m)1

M&A / Divestitures

1 838

FY20

-11% (16%)

1 363

• • Revenue adjusted for the disposal of Flipkart in August 2018 continues to grow healthily. Trading loss reduced as eMAG leverages additional scale to generate efficiencies, supported by improved cost control.

(223)

(20)

80% (48%)

FY18

FY19

FY18

FY19

FY20

1 Results reported on an economic-interest basis, i.e. equity-accounted investments are proportionately consolidated. Numbers in brackets represent year-on-year growth shown in local currency, excluding M&A. FY18 results are based on the Combined

Carve-out Financial Statements included in the Listing Prospectus of Prosus. M&A in FY18 and FY19 included Flipkart, Souq, Markafoni and Konga.

Ecommerce "Other"

Revenue (US$m)1

24% (23%)

Trading loss (US$m)1

Ecommerce "Other" includes:

•	Prosus Ventures	• The Group views corporate costs as
•	Movile (excl. Food Delivery)	primarily relating to the support of the
•	Corporate costs	ecommerce business.

(154)

(217)

(219)

-1% (-2%)

FY18

FY19

FY20

FY18

FY19

FY20

Other

1 Results reported on an economic-interest basis, i.e. equity-accounted investments are proportionately consolidated. Numbers in brackets represent year-on-year growth shown in local currency, excluding M&A. FY18 results are based on the Combined Carve-out Financial Statements included in the Listing Prospectus of Prosus.

Prosus Ventures:

• • Many of the Group's early stage

  businesses are already monetising.

  Revenue from Prosus Ventures

  increased 161% YoY (44% YoY in local

  currency excluding M&A).

Corporate costs

• • Corporate overhead services relate to costs to support the international ecommerce and internet business and are based on specific identification or have been allocated based on the proportional time spent on the businesses.

• • Based on this extensive cost allocation exercise it was determined that costs of executive directors will be split 90:10, between Prosus and Naspers. Non-executive directors' fees will be split 70:30 between Prosus and Naspers.

Social & internet platforms continue to outperform

Tencent revenue (RMBm)1

21%

2017

2018

2019

Tencent operating profit (RMBm)1

24%

2017

2018

2019

1 Reflects 100% of Jan-Dec 2019 (FY19), detailed results available atwww.tencent.com. Operating profit reported on non-GAAP basis, which reflects Tencent's core earnings.

Mail.ru revenue (RUBm)2

23%

2017

2018

2019

Mail.ru EBITDA (RUBm)2

8%

2017

2018

2019

2 Reflects 100% of Jan-Dec 2019 (FY19) results on a non-GAAP basis; detailed results available atwww.corp.mail.ru. 2018 results have been retrospectively adjusted by Mail.ru for comparative purposes.

Note: Financial information as per financial years ending December, which differs from the Prosus reporting period. Equity-accounted investments are included on a 3-month lag basis in Prosus' results.

Tencent

• • Tencent grew revenue 21% YoY for their year ended 2019 driven by growth in payments, social & other advertising and digital content sales.

• • On a non-GAAP basis, operating profit1 grew by 24% YoY for the year ended 2019 and operating profit margins improved YoY.

• • Tencent reported a strong and solid set of 1Q20 results against the backdrop of Covid-19 pandemic, proving the resilient and cashflow-generative nature of its business.

Mail.ru

• • 2019 has been a pivotal year for Mail.ru in their strategic goal of transitioning into an internet ecosystem, formed on the basis of a strong and well-diversified product portfolio as well as complementary and well-funded partnerships.

• • Mail.ru reported their Q120 and are well-positioned given their scale and diversified revenue streams to overcome the impacts of the Covid-19 crisis.

Segmental detail1

FY19
Ecommerce	3 596	4	266
- Classifieds	857	1	281
- Payments & Fintech	360	428
- Food delivery	377	751
- Etail	1 529	1	363
- Travel3	234	146
- Other	239	297
Social and internet platforms	14 744	17	189
- Tencent	14 457	16	779
- Mail.ru	287	410
Corporate	-	-
Economic interest	18 340	21	455
Less: Equity-accounted investments	(15 685)	(18	125)
Consolidated from continuing operations	2 655

Revenue
FY20	FY19	FY20	FY19	FY20
(519)	(789)	(575)	(918)
10	82	(6)	34
(39)	(60)	(43)	(67)
(162)	(596)	(171)	(624)
(87)	8	(101)	(20)
(36)	(19)	(37)	(22)
(205)	(204)	(217)	(219)
4 369	5 455	3 952	4 699
4 324	5 328	3 929	4 601
45	127	23	98
-	(4)	-	(4)
3 850	4 662	3 377	3 777
(4 115)	(4 986)	(3 683)	(4 198)
(265)	(324)	(306)	(421)

• 1 Prosus has the same board and management oversight as Naspers. The manner in which the CODM assesses segmental performance of Prosus will be the driven by the manner in which segments are reported by Naspers Limited. The Group proportionately consolidates its share of the results of its associated companies and joint ventures in its reportable segments.

• 2 The Group has applied IFRS 16 Leases on a prospective basis with the effect 1 April 2019.

• 3 In August 2019 the Group concluded the exchange of its interest in MakeMyTrip for an interest in Trip.com. The Group included 8 months of MakeMyTrip results in its segmental results, representing its share of the earnings for the period up to disposal and a catch-up for the lag period applied in reporting results. After the Trip.com transaction, our Travel segment will cease to exist and will not be reported on after this financial year.

Development spend increased due to investment in Food Delivery

Incremental economic interest development spend by segment, YoY (US$m)1

30

(55)

• • The Group ramped up development spend in Food Delivery in FY20.

• • Consolidated development spend of US$566m increased 37% due to increased spend in iFood and to a lesser extent in Classifieds Transactions, partially offset by reduced spend at letgo.

• • Prosus' proportionate share of development spend of associates and joint ventures increased to US$499m, driven by investment by Swiggy and Delivery Hero.

  (1)

• • Excluding investment into Food Delivery and new investments, development spend decreased 10% YoY on an economic interest basis.

  373

  1 065

• • Prosus' share of losses for associates does not impact cash flow as they are funded by the capital already raised.

  718

• • New investments include, amongst others, Classifieds Transactions, credit and new Prosus Ventures associates.

FY19

Existing investmentsNew investmentsFood Delivery

Forex and M&A

FY20

1 Development spend represents trading losses of developing businesses yet to reach scale. Numbers in brackets represent year-on-year growth in local currency, excluding M&A.

Profitable businesses contributed significantly to central cash flows

Consolidated trading profit from profitable ecommerce businesses (US$m)1,2

10% (16%)

404

367

Sources of free cash inflow (US$m)2,3

11%FY19

FY20

FY19

• 1 Numbers in brackets represent year-on-year growth in local currency, excluding M&A.

  740

  Other

  Payments & Fintech

  Classifieds

  Tencent dividend 4

  FY20

• 2 The Group has restructured the Payments & Fintech segment into GPO (Global Payment Organisation) and India. The Group now considers the full GPO portfolio as a profitable business rather than the separate markets therein.

• 3 FCF (Free cash flow) defined as EBITDA less adjustments for non-cash items, working capital, taxation, capital expenditure, capital leases repaid and investment income.

• 4 US$342m dividend from Tencent in the prior year, which included a special dividend of US$10m related to the Tencent Music Entertainment IPO.

• • Improved Ecommerce profitability, across the Classifieds, Payments & Fintech and Etail resulted in greater contributions to overall central cash flows.

• • Ecommerce generated 12% more free cash inflows compared to last year.

• • Tencent is also a large contributor to cash flows. Although Tencent does not have a formal dividend policy, its strong operating performance and balance sheet are supportive of sustained dividend payments.

• • Dividend income from Tencent has consistently increased every year from US$61m in 2013 to US$377m in 2019. In May 2020, Tencent paid the Group a dividend of ~US$450m representing a 21% YoY increase.

FCF reflects increased Food Delivery investment and transactions costs

US$m	FY19	FY20
EBITDA	(265)	(324)
Non-cash items	119	106
Working capital (including merchant cash, excluding share purchases)	31	-
Shares purchased for share based compensation (working capital)	(115)	(172)
Transaction cost	(20)	(85)
Cash generated from continuing operations	(250)	(475)
Capital expenditure and capital leases repaid	(101)	(135)
Taxation	(94)	(110)
Investment income	343	382
Free cash flow (FCF)1	(102)	(338)

• 1 FCF defined as EBITDA less adjustments for non-cash items, working capital, taxation, capital expenditure, capital leases repaid and investment income.

• 2 Transaction costs consist primarily of cost related to the listing of Prosus on the Amsterdam Euronext.

• • Working capital was impacted by: ⁻ Negative timing effects related to merchant cash movements from the

  Food Delivery businesses.

  ⁻ Increased outflows related to shares purchased for share based compensation schemes.

• • Excluding once-off transactions costs of US$85m, outflows due to shares purchased for share based compensation schemes, and investment in Food Delivery the Group delivered a free cash inflow of US$179m (FY19: US$114m), reflecting improved profitability converting into cash generation by Classifieds, Payments and Fintech, Etail and theincreased dividend from Tencent.

Prosus company sources of cash and commitments

US$m	FY19	FY20
Cash remitted to/generated at Holdco level:
Tencent dividend1	342	377
Classifieds portfolio	235	305
Interest income earned on central cash	249	183
Total inflows	826	865
Commitments:
Holdco - operating costs2	(112)	(118)
Available for interest/dividends	714	747
Holdco interest cost (12 months)	173	200
Interest cover	4.1	3.7
Loan to value (Debt: marketable securities)	2%	2%

• 1 US$342m dividend from Tencent in the prior year, which included a special dividend of US$10m related to the Tencent Music Entertainment IPO.

• 2 The Holdco cost for FY20 excludes the once-off transaction costs associated with Prosus N.V's listing on Euronext.

• • Dividends and cash extractions from our associates and subsidiaries increased by 18%.

• • Classifieds is profitable and paid a dividend to the HoldCo of US$305m in FY20, this is a 30% improvement YoY.

• • Interest income on our cash and short-term investments balances is lower, as interest rates declined and cash balances reduced due to M&A activity.

• • The loan to value ratio was stable at 2%.

• • The interest cost of for FY20 includes a US$16m make-whole premium paid in relation to the early redemption of our July 2020 bond.

Significant financial flexibility to fund our growth strategy

Debt maturity profile (US$bn)

Group RCF US$2.5bn

CY25

Bond US$1.2bn	Bond US$1.25bn
Bond US$1bn

CY25

CY26

CY27

CY28

CY29

CY30

1 Cash incuded short-term cash investments of US$3.9bn

Revolving credit facility (RCF)

• • The US$2.5bn RCF facility was undrawn at 31 March 2020. The Group exercised its option to extend the maturity date to 2025. All lenders in the facility agreed to extend their commitments.

Debt

• • US$1.2bn 10yr bond issued July 2015 (5.5% coupon).

• • US$1bn 10yr bond issued July 2017 (4.85% coupon).

• • US$1,25bn 10yr bond issued January 2020 (3.68% coupon).

• • In line with its proactive debt management policy, in January 2020 the Group successfully priced US$1.25bn 3.68% notes due in 2030. The purpose of this offering was to raise proceeds to redeem the US$1.0bn 6.00%. Demand for the bonds was very high (five times oversubscribed). With these attractive terms, the Group chose to increase the size of the issuance by 25% to US$1.25bn.

Summarised income statement

US$m	FY19	FY20
Continuing operations:
Revenue1	18 340	21 455
Less: Equity-accounted investments	(15 685)	(18 125)
Consolidated revenue	2 655	3 330
Operating profit	(593)	(422)
Net finance income	126	39
Remeasurement of written put option liabilities	53	53
Share of equity-accounted results	3 409	3 930
Net gains on acquisitions and disposals Dilution losses on equity-accounted investments Impairment of equity-accounted investments Taxation	1 610 (182) (88) (258)	434 (52) (21) (75)
Profit from continuing operations	4 248	3 715
Core headline earnings from continuing operations per share (US cents)	190	207

1 On an economic-interest basis, i.e. equity-accounted investments are proportionately consolidated.

• • Operating losses increased mainly due to increased investment in Food Delivery.

• • Net finance costs and share of equity-accounted results (page 31 & 32)

• • US$434m net gains on acquisitions and disposals includes a gain of US$599m related to exchanging our interest in MakeMyTrip for a stake in Trip.com. FY19 included a gain of US$1.6bn on the disposal of Flipkart.

• • In FY19 Walmart withheld tax on the disposal of Flipkart (U$S177m). This was a one-off tax change and the Group still expects to recover this tax from the Indian tax authorities.

Finance costs

US$m

Interest income

Loans and bank accounts

Interest expense

Loans and overdrafts Other

Net foreign exchange differences and FV adjustments

61

61

Remeasurement of written put option liabilities

53

53

Total finance income - net

179

92

Interest paid and received:

• • Interest received decreased due to lower cash and short-term cash investment balances as the Group deployed capital to grow its core segments.

• • The adoption of IFRS16 Leases increased finance costs as the interest element of lease payments is charged to the income statement over the relevant lease term.

Remeasurement of written put option liabilities:

• • The gain for the period arises from foreign exchange impacts and changes in valuations.

• • A gain was recognised on the decrease of the letgo put option liability to its settlement value pursuant to the OfferUp/letgo merger. This was partially offset by a remeasurement loss related to the increase in valuations in eMAG and Movile (increased iFood valuation), that increased the put option liability.

Share of equity-accounted results

FY20 (US$m)	FY19	FY20
Tencent1	3 696	4 178
Mail.ru1	(35)	48
Delivery Hero1	(13)	76
MakeMyTrip	(73)	(27)
Other	(166)	(345)

3 409

Share of equity accounted investments

3 930

The Group's associates and JV's include:

1 Average FX conversion rates: Tencent - US$/RMB6.98 (6.73); Mail.ru - US$/RUB65.70 (65.30); Delivery Hero - US$/€0.90 (0.87).

• • An increase of US$521m representing 15% YoY increase in share of equity- accounted results relates mainly to:

  • − Increased Tencent profits,

  • − Increased profits from Mail.ru, which include a gain on joint venture formation,

  • − Increased profits from Delivery Hero, which include a gain on discontinued operations (Germany),

  • − Reduced losses from MakeMyTrip, as the Group no longer equity accounts this business, since merging with Trip.com,

  • − Offset by increased losses from Swiggy and other new associates.

• • The Group holds mostly minority positions in the Ventures portfolio. "We invest to learn and then we grow." Once

  the Group has sufficient proof-points

  and conviction there is potential for

  clusters of businesses to graduate to

  new core segments.

Core headline earnings drivers

Incremental core headline earnings drivers, YoY (US$m)1

9% (13%)

• • Core headline earnings (which excludes once-off and non-operating items such as amortisation of intangible assets recognised in business combinations, etc.), is not defined under IFRS, but is aimed at providing a useful measure of the Group's operating performance.

• • Core headline earnings per share increased 13% YoY, benefiting from:

  • − 11% increase in the contribution from equity-accounted investments

  • − 16% improvement in profitable businesses from Ecommerce

  • − Offset by an 37% increase in development spend mainly related to the investment to capture the food-delivery opportunity.

Core headline earnings reconciliation

US$m	FY19	FY20
Headline earnings from continuing operations	3 806	2 795
Equity-settled share-based payment expenses	514	608
Amortisation of other intangible assets	283	363
Transaction-related costs	21	93
Covid-19 donations	-	114
Retention option expense	10	56
Fair-value adjustments and currency translation differences	(1 544)	(672)
Core headline earnings from continuing operations	3 090	3 357

• • Fair-value adjustments and currency translation differences were impacted by (amongst other items) gains on financial instruments of US$439m recorded by Tencent, the re-measurement of written put options, gains on FEC's and the cross-currency interest rate swap and other foreign exchange gains and losses.

• • Transaction-related costs of US$93m are primarily for the listing of Prosus on the Amsterdam Euronext.

• • The diluted earnings, diluted headline earnings and diluted core headline earnings figures presented on the income statement include a decrease of US$65m relating to the future dilutive impact of potential ordinary shares issued by equity-accounted investees and subsidiaries.

Contribution by associates and joint ventures

FY20 (US$m)	Company results	PPA adjustments	IFRS results	Other adjustments	Core HE Contribution
Tencent1	4 178	-	4 178	(4)	4 174
Mail.ru1	49	(1)	48	22	70
MakeMyTrip	(26)	(1)	(27)	14	(13)
Delivery Hero1	81	(5)	76	(243)	(167)
Other	(341)	(4)	(345)	15	(330)
Total 3 941 (11)	3 930	(196)	3 734

1 Average FX conversion rates: Tencent - US$/RMB6.98 (6.73); Mail.ru - US$/RUB65.70 (65.30); Delivery Hero - US$/€0.90 (0.87). Once-off gains relate primarily to business combination-related gains/losses recognised by associates and joint ventures.

• • Equity-accounted results include the

  Group's share of the earnings of its

  associates and JV's.

• • In arriving at core headline earnings, adjustments are made to earnings of not only the consolidated businesses, but also the underlying earnings of associates and joint ventures, to the extent that the information is available.

• • Impairments of investments, amortisation of intangible assets, equity settled share schemes and foreign exchange and FV adjustments relate mainly to Tencent.

• • Gains on acquisitions and disposals are attributable to both Tencent and Delivery Hero in the current year.

Tencent's contribution to core headline earnings

FY19	FY20
Tencent: Dec 18 (RMBm)1	Prosus' share (US$m)	Tencent: Dec 19 (RMBm)1	Prosus' share (US$m)

Tencent profit attributable to equity holders	78 719	3 655	93 310	4 162
Adjustments to core:	(1 203)	(68)	1 041	12
- Impairment of investments	17 238	792	5 185	227
- Share-based payments	11 025	477	12 309	531
- Fair-value adjustments and gains and losses on acquisitions and disposals	(33 073)	(1 521)	(20 720)	(984)
- Amortisation charges	4 027	182	5 362	238
- Loss on disposal of non-current assets	47	2	-	-
- Income tax effects2	(467)	-	(1 095)	-
Tencent's contribution to Prosus core headline earnings	3 587
1 100% of Tencent Holdings Limited's results as reported in its annual reports.

2 Tencent changed their disclosure to show tax separately. The Group includes the tax effects in each line item and discloses a net number only. Note: 3-month lag adjustment for Tencent's are excluded from the above reconciliation as they do not impact core headline earnings.

4 174

Current assets and liabilities

Current assets (US$m)	FY19	FY20
Inventory	148	213
Trade receivables	135	111
Other receivables and loans	499	529
Cash/short-term cash investments	9 172	8 054
Assets held for sale	16	202
Total 9 970 9 109

Current liabilities (US$m)	FY19	FY20
Current portion of long-term debt	22	63
Trade payables	244	291
Accrued expenses & other current liabilities	1 299	1 735
Bank overdraft	8	32
Liabilities held for sale	2	26
Total 1 575 2 147

• • Total long-term and short-term written put option liabilities totaled US$896m (FY19: US$827m).

• • Outstanding put options relate to amongst others: eMAG, Movile, FCG and letgo.

• • Short-term written put option liabilities of US$709m are included in accrued expenses and other current liabilities.

Changes to SBC - FY21

Effective 1 April 2020, the Group will treat all SARs as cash settled

• • Two listed shares complicates the settlement process

• • For simplicity and transparency the Group has revisited the accounting for share appreciation rights (SAR) schemes

• • Going forward settlement of SARs to be directly in cash rather than using Naspers shares purchased for cash

• • This treatment aligns with the Group's commitment to not dilute shareholders

• • Misalignment came about by listing Prosus and basing SBC on Naspers shares rather than Prosus shares - this resulted in complex accounting and challenges to manage these different views of the same SAR schemes

Explanation for the different accounting treatment of SARs

Implication

Expenses differs between the two treatments Going forward: Some volatility on the I/S due to revaluation every reporting period

FY20 SBC (included in TP) under respective settlements (US$m)1

95

SARs equity settled

SARs cash settled

1 Reflects Naspers Group SBC charge included in trading profit. The change in settlement will have no impact on Prosus' consolidated accounts, however the change will impact the trading profit of Prosus in FY21.

164

Appendix

Group portfolio

100%1

99%

100%

99%

80%

24%

28%

42%

15%

100%3

72%

21%

21%

80%4

89%

40%

44%

84%

99%

11%

79%

16%

19%

12%

21%

21%

20%

Organogram depicts effective percentage holdings in major entities at 31 March 2020 for Prosus where applicable

• 1 OLX owns 50% of operations in Brazil and 66% of Indonesia

• 2 Movile holds 67% of iFood

• 3 The Dubizzle and EMPG merger completed in April 2020. Following the transaction the Group owed 39% of the merged entity.

• 4 The letgo US and OfferUp merger received regulatory approval and is expected to close on 1 July 2020. Following the transaction the Group will own 40% of the merged entity.

Glossary

•  AI:

  Artificial intelligence

  •  KPI:Key performance indicator

•  ARPIU:

•  CODM:Total revenue for OLX Core Classifieds monetisation countries, divided by the total number of internet users in those countries

  Chief operating decision maker (the CODM has been identified as the Group's executive directors, who make strategic decisions)

  •  M&A:

    Mergers and acquisitions

  •  ML:

    Machine learning

  •  PPA:

    Purchase price allocation

•  Core HE:Core headline earnings

  •  PSP:

    Payment service provider

•  EBITDA:

  Earnings before interest tax, depreciation & amortisation

  •  SAR:

    Share appreciation rights

     

    FCF:

    Free cash flow

    FCG:

    Frontier Car Group

•  GMV:

  Gross merchandise value

    

  Tx:

  Transactions

  TP:

  Trading profit/(loss)

  TPV:

  Total payment value

•  GPO:

  Global Payment Organisation

  •  US:

    United States

•  IFRS:

  International Financial Reporting Standards

  •  YoY:

  Year-on-year

•  JSE:

Johannesburg Stock Exchange

If you require any further information, please visit our websitewww.prosus.com or alternatively email Eoin Ryan (Head of Investor Relations) [e-mail]