Naspers subsidiary Prosus launches $5bn share buyback as revenues rise
Company will buy $1.37bn of its own shares and $3.63bn more of its parent
Naspers’s international investment vehicle, Prosus, has begun the biggest share buyback in JSE history — about R80bn — as the group reported increased revenues for the six months to September.
Prosus holds the group’s international investments on the Euronext Amsterdam exchange, in a move made in September 2019 to reduce its weighting on the JSE and open itself to larger pools of international capital.
Prosus — which has many worldwide internet platforms, dwarfed by its 31% stake in Tencent — will buy $1.37bn (R21.07bn) of its own shares and $3.63bn more of its parent, the group said. Prosus first announced the plan earlier in November.
The programme will commence on November 24 and end on November 26 2021.
This comes as the group reported that revenue, measured on an economic-interest basis, was up 27% to $13.0bn. Revenues were supported by e-commerce receipts, which grew 37% year-on-year, while Chinese internet giant Tencent grew its revenues by a 27%.
Group trading profit grew 38% to $2.6bn.
The group, headed by CEO Bob van Dijk, said core headline earnings — which adjusts for non-operational items — fell 6% to $1.6bn for the period.
Naspers said its group earnings, headline earnings and core headline earnings growth for the period ended September 30 were affected largely by reduced earnings contributions in the current year from Prosus. This was after its listing and the creation of the free-float that caused a significant non-controlling interest of the group. At end-September 2019, Naspers recognised 100% of the Prosus earnings compared with 72.66% in the current period.
For Prosus, which reported earnings on the same day, core headline earnings were $2.2bn, up 28%, driven by improved profitability from its e-commerce units and the growing contribution from Tencent.
Naspers had a net cash position of $4.6bn, comprising $10.3bn in cash and cash equivalents, net of $5.7bn in interest-bearing debt. The group also has an undrawn $2.5bn revolving credit facility.
Free cash inflow was $292m, up from $19m previously, driven by growth in e-commerce profitability, dividends received from Tencent of $458m and improved working capital management, the group said.
The group has warned, “a second Covid-19 wave is affecting some markets in which we operate, however, we remain confident that the plans we have put in place and our firm financial position will ensure that we manage the potential impacts going forward”.
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