Wrap Text
Consolidated interim financial results for the period ended 30 September 2024
MultiChoice Group Limited
(Incorporated in the Republic of South Africa)
(Registration number: 2018/473845/06)
JSE share code: MCG
ISIN: ZAE000265971
("MCG" or "the company")
Reviewed interim results announcement
Consolidated interim financial results for the period ended 30 September 2024
Strategy playing out against tougher than expected macro backdrop
Results highlights
Despite unprecedented external headwinds, most notably currency depreciation which has reduced trading
profit by close to ZAR7bn over the last 18 months, MultiChoice delivered various positive operational outcomes
through active interventions for the six-month period ended 30 September 2024 (1H FY25 or the half):
- A lower subscriber attrition rate in the linear pay-TV subscriber base versus the six-month period ended
31 March 2024 (2H FY24) in both South Africa and Rest of Africa.
- Showmax paying subscriber base increased 50% YoY, excluding discontinued services.
- SA trading profit margin was maintained in the low 30s in the seasonally stronger first half (31%).
- Cost optimisation efforts delivered ZAR1.3bn in savings, with full year stretch target increased to
ZAR2.5bn from the ZAR2.0bn set at the beginning of the financial year.
- In addition to the group's cost savings programme, decoder subsidies were reduced by a further
ZAR0.4bn across South Africa and Rest of Africa.
- Free cash flow and adjusted core headline earnings both positive despite external macro and currency
headwinds, as well as the Showmax investment cycle.
- Positive momentum maintained in DStv Stream and Extra Stream, DStv Internet, DStv Insurance, and
the group's sports betting and fintech investee businesses.
- Liquidity position remains strong with ZAR10.1bn in total available funds.
- Transformative insurance deal with Sanlam Life Insurance Limited (Sanlam) nearing completion in the
post balance sheet period - the group will recognise an accounting gain in the range of ZAR2.6bn to ZAR3.3bn.
- Meaningful progress made on the Canal+ transaction with the merger control filing submitted to the South African
Competition Commission on 30 September 2024, and engagements with other regulatory authorities underway.
- Taking all developments and initiatives into account, the group anticipates resolving the negative equity
position by the end of November this year.
Headline results
The group's linear subscriber base declined by 11% or 1.8m subscribers YoY to 14.9m active subscribers at
30 September 2024. While this is indicative of the extremely hostile operating environment that the group
has encountered over the past 12 months, subscriber trends on a sequential basis have improved, with
1H FY25 reflecting a 5% decline in the base (0.8m) vs. the 6% decline reported (1.0m) in 2H FY24. The loss
in subscribers was skewed towards the Rest of Africa, which lost 15% of its base YoY vs. 5% in South
Africa. The loss in the Rest of Africa has been primarily due to the significant consumer pressure in Nigeria,
where inflation has remained above 30% for the majority of the last 12 months and, more recently, due to
extreme power disruptions in Zambia. The group's subscription video on demand business, Showmax,
delivered a strong 30% YoY increase in paying subscribers, or 50% YoY excluding discontinued services
(namely the Showmax Pro and the Showmax diaspora offerings).
Group revenues were down 10% on a reported basis due to subscriber weakness, the foreign exchange (FX)
rate pressures impacting the Rest of Africa business and the translation effects of a stronger rand against
the US dollar. However, revenues were up 4% on an organic basis (i.e. excluding FX and M&A) as a result of
the group's inflationary pricing discipline, revenue growth of new products (notably insurance and internet)
and Irdeto's external business.
Group trading profit declined by 46% on the back of the FX headwinds in the Rest of Africa business
(ZAR2.3bn) and the incremental investment in Showmax (ZAR1.6bn), but a step-up in cost optimisation
across the group supported a marginal 1% decline in trading profit on an organic basis. Stripping out
Showmax, the group would have seen reported trading profit increase by 28% on an organic basis.
Adjusted core headline earnings, the board's measure of the underlying performance of the business,
declined from ZAR1.5bn in the prior period to ZAR7m in the current period. In addition to the foreign exchange
losses in Rest of Africa and the investment in Showmax which negatively impacted trading profit, the group
generated realised foreign exchange losses in the South African business in the current period compared
with profits in the prior year, offsetting the benefit of lower cash extraction losses from Nigeria YoY.
Group free cash flows remained positive at ZAR0.6bn, with ZAR3.3bn in free cash generated by the South Africa
and Irdeto businesses, largely offset by a ZAR1.8bn free cash outflow on investment into Showmax and a
ZAR0.9bn free cash outflow in Rest of Africa due to the impact of currencies on its trading performance.
Pressure on the group's trading performance in conjunction with ongoing non-cash foreign exchange
losses on the translation of non-quasi, inter-group loans of ZAR2.1bn have resulted in the group closing the
period with a negative equity position of ZAR2.7bn. Given the non-cash nature of the adjustments that have
resulted in negative equity, they have no impact on the liquidity or going concern of the group. There are a
number of developments and initiatives that will resolve the group's negative equity position by the end of
November this year.
The group operates in numerous markets across Africa and internationally, resulting in significant exposure
to foreign exchange volatility. This can have a notable impact on reported revenue and trading profit
metrics, particularly in the Rest of Africa where revenues are earned in local currencies while the cost base
is largely USD denominated. Where relevant in this announcement, amounts and percentages have been
adjusted for the effects of foreign currency, and exclude acquisitions and disposals, to better reflect
underlying trends and sustainable operational performance. These adjustments (non-International Financial
Reporting Standards (IFRS) performance measures) are referred to as "organic" when used. These
non-IFRS performance measures constitute pro forma financial information in terms of the JSE Limited
Listings Requirements.
The company's external auditor has not reviewed or reported on forecasts included in this announcement.
Salient features
2024 2023 YoY
Period ended 30 September ZAR'm ZAR'm % change
Revenue(1) 25 422 28 334 (10)
Operating profit 2 452 4 834 (49)
Trading profit 2 694 5 023 (46)
Free cash flow 560 1 071 (48)
Core headline earnings per ordinary share (SA cents) 7 452 (98)
Adjusted core headline earnings per ordinary share (SA cents) 2 356 (99)
Loss per ordinary share (SA cents) (421) (310) (36)
Headline loss per ordinary share (SA cents) (424) (289) (47)
Net asset value per ordinary share (SA cents) (634) 181 >(100)
(1) Revenue disclosed above includes IFRS 17 insurance revenue of ZAR578m (2023: ZAR442m).
Key performance indicators
2024 2024 2024
2023 Currency Organic YoY YoY organic
Period ended 30 September Reported impact growth Reported % change % change
Subscribers ('000) 16 703 n/a (1 768) 14 935 (11) (11)
South Africa 7 822 n/a (399) 7 423 (5) (5)
Rest of Africa 8 881 n/a (1 369) 7 512 (15) (15)
ARPU (ZAR)
Blended 229 (35) 27 221 (3) 12
South Africa 280 - 9 289 3 3
Rest of Africa 176 (68) 39 147 (16) 22
90-day active subscribers ('000) 21 663 n/a (2 368) 19 295 (11) (11)
South Africa 8 629 n/a (495) 8 134 (6) (6)
Rest of Africa 13 034 n/a (1 873) 11 161 (14) (14)
90-day active ARPU (ZAR)
Blended 172 (26) 22 168 (2) 13
South Africa 247 - 14 261 6 6
Rest of Africa 117 (45) 26 98 (16) 22
Group financials
2024 2024 2024 2024
2023 M&A Currency Organic
IFRS impact impact growth IFRS YoY YoY organic
Period ended 30 September ZAR'm ZAR'm ZAR'm ZAR'm ZAR'm % change % change
SEGMENTAL RESULTS
Revenue 28 334 (202) (3 714) 1 004 25 422 (10) 4
South Africa 16 539 - - 216 16 755 1 1
Rest of Africa 10 470 - (3 661) 689 7 498 (28) 7
Technology 770 - (28) 93 835 8 12
Showmax 555 (202) (25) 6 334 (40) 1
Trading profit 5 023 (47) (2 257) (25) 2 694 (46) (1)
South Africa 5 202 - - (4) 5 198 - -
Rest of Africa 330 - (2 329) 1 740 (259) >(100) >100
Technology 290 - 16 (127) 179 (38) (44)
Showmax (799) (47) 56 (1 634) (2 424) >(100) >(100)
REVENUE AND COSTS BY NATURE
Revenue 28 334 (202) (3 714) 1 004 25 422 (10) 4
Subscription fees 23 337 (202) (3 202) 337 20 270 (13) 1
Advertising 1 951 - (339) 248 1 860 (5) 13
Decoders 765 - (136) 231 860 12 30
Technology contracts and licensing 770 - (28) 93 835 8 12
Insurance premiums 442 - - 136 578 31 31
Other revenue 1 069 - (9) (41) 1 019 (5) (4)
Operating expenses 23 311 (155) (1 457) 1 029 22 728 (3) 4
Content 9 815 (77) (72) (51) 9 615 (2) (1)
Decoder purchases 2 284 - (36) (262) 1 986 (13) (11)
Staff costs 3 214 (15) (208) 21 3 012 (6) 1
Sales and marketing 1 472 (46) (122) (23) 1 281 (13) (2)
Transponder costs 1 183 - (36) (56) 1 091 (8) (5)
Other 5 343 (17) (983) 1 400 5 743 7 26
Directorate
As noted in the group's FY24 results, the outgoing non-executive chair, Imtiaz Patel, was due to step down
from his role at the end of FY24, but his tenure was briefly extended on 2 April 2024 in aid of supporting the
Canal+ transaction process. Having then made sufficient progress, with MCG and Canal+ entering into a
Cooperation Agreement and issuing a firm intention announcement, Mr Patel stepped down from the board on
23 April 2024. Mr Patel was succeeded by Elias Masilela, an independent non-executive member of the board.
Another long-serving member of the board, Jim Volkwyn, who served MultiChoice with distinction in a
number of roles for more than 33 years, did not stand for re-election at the AGM on 28 August 2024.
The board and executive management teams express their gratitude to both Mr Patel and Mr Volkwyn for
their invaluable contributions to the group over the years.
Dividend
No dividend has been declared based on the group's interim results, in line with the terms of the
Cooperation Agreement applicable during the Canal+ mandatory offer period.
Preparation of this announcement
The preparation of this announcement was supervised by the group's chief financial officer, Tim Jacobs CA(SA).
These results were made public on 12 November 2024.
ADR programme
Bank of New York Mellon maintains a Global BuyDIRECTSM plan for MultiChoice Group Limited.
For additional information, visit Bank of New York Mellon's website at www.globalbuydirect.com or call
Shareholder Relations at 1-888-BNY-ADRS or 1-800-345- 1612 or write to: Bank of New York Mellon,
Shareholder Relations Department - Global BuyDIRECT, 462 South 4th Street, Suite 1600, Louisville,
KY 40202, United States of America, (PO Box 505000, Louisville, KY 40233-5000).
Important information
This announcement contains forward-looking statements as defined in the United States Private Securities
Litigation Reform Act of 1995. Words such as "believe", "anticipate", "intend", "seek", "will", "plan", "could",
"may", "endeavour" and similar expressions are intended to identify such forward-looking statements, but are
not the exclusive means of identifying such statements. By their nature, forward-looking statements involve
risk and uncertainty because they relate to future events and circumstances and should be considered in light
of various important factors. While these forward-looking statements represent our judgements and future
expectations, a number of risks, uncertainties and other important factors could cause actual
developments and results to differ materially from our expectations.
The key factors that could cause our actual results performance, or achievements to differ materially from
those in the forward-looking statements include, among others, changes to IFRS and the interpretations,
applications and practices subject thereto as they apply to past, present and future periods; ongoing and
future mergers, acquisitions, or disposals; changes to domestic and international business and market
conditions such as exchange rate, interest rate and inflation rate movements; changes in the domestic and
international regulatory, legislative and tax environments; changes to domestic and international
operational, social, economic and political conditions (including power, water and transport infrastructure);
the occurrence of labour disruptions and industrial action; and the effects of both current and future
litigation. We are not under any obligation to (and expressly disclaim any such obligation to) revise or
update any forward-looking statements contained in this announcement, whether as a result of new
information, future events or otherwise. We cannot give any assurance that forward-looking statements will
prove to be correct, and investors are cautioned not to place undue reliance on any forward-looking
statements contained herein.
Further information
This announcement is the responsibility of the directors and is only a summary of the information in the full consolidated interim
financial statements. Consequently, it does not contain full or complete details. The full consolidated interim financial statements
have been reviewed by Ernst & Young Inc., who expressed an unmodified conclusion thereon. The reviewed interim results announcement
was released on SENS on 12 November 2024 and the full consolidated interim financial statements can be found on the company's
website at https://investors.multichoice.com/interim-results.
Any investment decisions made by investors and/or shareholders should be based on consideration of the financial results as a whole
and investors and/or shareholders are encouraged to review the full consolidated interim financial statements at
https://senspdf.jse.co.za/documents/2024/JSE/ISSE/MCGE/12Nov24HY.pdf published on the JSE cloud and on the company's website.
The information in this announcement has been extracted from the reviewed consolidated interim financial statements on our website,
but the announcement itself was not reviewed.
On behalf of the board
Elias Masilela Calvo Mawela
Chair Group CEO
Johannesburg
12 November 2024
Directorate
Independent non-executive directors
E Masilela (Chair), JH du Preez, D Klein, KD Moroka, CM Sabwa, FA Sanusi, L Stephens, A Zappia
Executive directors
CP Mawela (CEO), TN Jacobs (CFO)
Registered office
MultiChoice City, 144 Bram Fischer Drive
Randburg, 2194, South Africa
PO Box 1502, Randburg, 2125
Transfer secretaries
Singular Systems Proprietary Limited
Registration number 2002/001492/07
25 Scott Street, Waverley, 2090, South Africa
PO Box 1266, Bramley, 2018, South Africa.
Sponsor
Rand Merchant Bank (A division of FirstRand Bank Limited)
Date: 12-11-2024 01:00:00
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