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Summary consolidated financial results for the year ended 31 March 2023
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")
SUMMARY CONSOLIDATED FINANCIAL RESULTS FOR THE YEAR ENDED 31 MARCH 2023
EXECUTIVE REVIEW OF OUR PERFORMANCE
REST OF AFRICA RETURNS TO PROFITABILITY AS GROUP CONTINUES TO EXPAND
MultiChoice Group (MCG or the group) continued to scale its overall subscriber base, primarily through a strong performance in
the Rest of Africa. The group added 1.7m 90-day active subscribers, representing 8% year-on-year (YoY) growth, to close the year
on 23.5m subscribers. The 90-day subscriber base comprised 14.2m households (60%) in the Rest of Africa and 9.3m households (40%)
in South Africa.
Group revenue increased 7% (4% organic) to ZAR59.1bn, with the weaker South African rand (ZAR) increasing the revenue contribution
on translation of the Rest of Africa and Technology segments, that have a USD reporting currency. Subscription revenues amounted
to ZAR48.6bn, up 7% YoY (4% organic), driven by the Rest of Africa that delivered a 25% YoY increase (16% organic). Advertising
revenues were up a solid 7% (6% organic) supported by the FIFA World Cup and local content properties. Irdeto's revenues declined
4% (17% organic) as ongoing global supply constraints and the decision to exit all Russian based operations impacted negatively on
performance. Insurance premiums grew a strong 22% YoY, with new products such as funeral cover gaining traction.
Group trading profit decreased 3% to ZAR10.0bn (up 5% organic) due to an adverse ZAR0.9bn foreign exchange impact and weaker SA earnings.
This resulted in group trading profit margins decreasing from 19% to 17%. The Rest of Africa business returned to profitability and
delivered trading profit of ZAR0.9bn, which is a ZAR2.8bn organic improvement from the prior year. The impact of South African macro
challenges, together with the group's increased investment in Showmax, caused SA margins to contract to 24% from 31% in the prior year.
Core headline earnings, the board's measure of sustainable business performance, increased 2% YoY to ZAR3.5bn. This was mainly
attributable to the improved contribution from the Rest of Africa and positive realised foreign exchange movements, tempered by
the lower profits in SA.
Consolidated free cash flow of ZAR2.9bn was down 48% YoY. This was mainly due to working capital investment, especially around
prepayments for sports rights renewals and the timing of payments brought forward due to a major financial system upgrade which
went live on 1 April 2023.
SALIENT FEATURES
2023 2022 YoY
Year ended 31 March ZAR'm ZAR'm % change
Revenue 59 141 55 240 7
Operating profit 10 157 10 296 (1)
Trading profit 9 991 10 334 (3)
Free cash flow 2 861 5 549 (48)
Core headline earnings per ordinary share (SA cents) 828 814 2
Earnings per ordinary share (SA cents) (815) 318 greater than (100)
Headline earnings per ordinary share (SA cents) (301) 381 greater than (100)
Net asset value per ordinary share (SA cents) 1 249 1 896 (34)
Dividend per ordinary share (SA cents) - 565 greater than (100)
KEY PERFORMANCE INDICATORS
2023 2023
2022 Currency Organic 2023 YoY YoY organic
As at 31 March Reported impact growth Reported % change % change
90-day-active subscribers ('000) 21 804 n/a 1 704 23 508 8 8
South Africa 9 011 n/a 294 9 305 3 3
Rest of Africa 12 793 n/a 1 410 14 203 11 11
90-day-active ARPU (ZAR)
Blended 177 6 (4) 179 1 (2)
South Africa 269 - (13) 256 (5) (5)
Rest of Africa 110 10 6 126 15 5
Subscribers ('000) 16 640 n/a 666 17 306 4 4
South Africa 8 160 n/a (144) 8 016 (2) (2)
Rest of Africa 8 480 n/a 810 9 290 10 10
ARPU (ZAR)
Blended 229 8 2 239 4 1
South Africa 295 - (5) 290 (2) (2)
Rest of Africa 163 15 14 192 18 9
GROUP FINANCIALS
2023 2023
2022 Currency Organic 2023
IFRS impact growth IFRS YoY YoY organic
Year ended 31 March ZAR'm ZAR'm ZAR'm ZAR'm % change % change
Segmental results
Revenue1 55 077 2 005 1 983 59 065 7 4
South Africa 35 615 - (631) 34 984 (2) (2)
Rest of Africa1 17 918 1 808 2 878 22 604 26 16
Technology 1 544 197 (264) 1 477 (4) (17)
Trading profit 10 334 (887) 544 9 991 (3) 5
South Africa 11 032 - (2 549) 8 483 (23) (23)
Rest of Africa (1 213) (725) 2 836 898 174 234
Technology 515 (162) 257 610 18 50
1 Total group revenue and Rest of Africa revenue presented above includes losses of ZAR76m (FY22: losses of ZAR163m) related to fair-value movements on Nigeria
futures contracts.
Revenue and costs by nature
Revenue 55 077 2 005 1 983 59 065 7 4
Subscription fees1 45 261 1 596 1 722 48 579 7 4
Advertising 3 909 64 229 4 202 7 6
Decoders 1 870 109 (80) 1 899 2 (4)
Technology contracts and licensing 1 544 197 (264) 1 477 (4) (17)
Insurance premiums 587 - 130 717 22 22
Other revenue 1 906 39 246 2 191 15 13
Operating expenses 44 743 2 892 1 439 49 074 10 3
Content 19 477 1 097 322 20 896 7 2
Decoder purchases 5 750 435 368 6 553 14 6
Staff costs 5 759 390 22 6 171 7 -
Sales and marketing 2 635 101 317 3 053 16 12
Transponder costs 2 396 144 (86) 2 454 2 (4)
Other 8 726 725 496 9 947 14 6
1 Subscription fees presented above includes losses of ZAR76m (FY22: losses of ZAR163m) related to fair-value movements on Nigeria futures contracts.
EXECUTIVE REVIEW CONTINUED
As one of the largest taxpayers in Africa, the group paid direct cash taxes of ZAR3.4bn, marginally down from the prior
year (FY22: ZAR3.6bn) primarily due to lower taxable profits generated in South Africa.
Given the notable changes in discount rates applicable to global gaming and technology companies and Nigeria in particular and
the sharp increase in parallel exchange rates in Nigeria, an impairment review was conducted on KingMakers as at 31 March 2023.
Although in local currency the business remains in line with original forecasts, the marked increase in discount rates for the
Nigerian operation, a weaker currency forecast, combined with the impact of exiting some markets, resulted in the recognition
of a ZAR2.0bn impairment loss. The group's 51.23% investment in this associate is now valued at ZAR4.6bn.
The strength of the balance sheet remains a core focus in supporting the group's future growth ambitions. ZAR7.5bn in
cash and cash equivalents combined with ZAR9.0bn in available facilities, provide ZAR16.5bn in financial flexibility to
fund the group's operations, including the drive to make Showmax the leading streaming platform on the African
continent. This strong financial position is after ZAR3.9bn was utilised to settle the MCG and Phuthuma Nathi (PN)
dividends in September and an early ZAR2.3bn settlement of the KingMakers term loan in March 2023, but includes ZAR5.1bn
in cash that is not readily accessible in the corporate cash pool. Leverage remains low with a net debt: EBITDA ratio
of 1.08x at the end of March (FY22: 0.77x).
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 short-form announcement, amounts and percentages have been adjusted for the effects of foreign currency, as well as
acquisitions and disposals to better reflect underlying trends. These adjustments (non-International Financial Reporting
Standards (IFRS) performance measures) are quoted in brackets as organic, after the equivalent metrics reported under IFRS.
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 short-form announcement.
DIRECTORATE
No changes have been made to the directorate of the group during the year.
DIVIDEND
In view of the challenging South African market, the uncertain currency outlook, the funding needs of the Rest of
Africa business and the investment required to drive Showmax to become the leading streaming platform on the continent,
no dividend has been declared for FY23.
PREPARATION OF THE SHORT-FORM ANNOUNCEMENT
The preparation of the short-form announcement was supervised by the group's chief financial officer, Tim Jacobs
CA(SA). These results were made public on 13 June 2023.
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 short-form 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 acquisitions, changes to domestic
and international business and market conditions such as exchange rate and interest rate movements; changes in the
domestic and international regulatory and legislative environments; changes to domestic and international operational,
social, economic and political conditions; 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 short-form 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 short-form announcement is the responsibility of the directors and is only a summary of the information contained in the
full summary consolidated annual financial statements. The full summary consolidated annual financial statements were released
on SENS on 13 June 2023 and can be viewed on the company's website www.investors.multichoice.com/annual-results. Copies of the
full summary consolidated annual financial statements may also be inspected at the company's registered office and at the offices
of the company's sponsor, at no charge, during office hours. Copies of the full summary consolidated annual financial statements
may be requested by contacting the company secretary at cosec@multichoice.co.za. Any investment decision should be based on the full
summary consolidated annual financial statements available at https://senspdf.jse.co.za/documents/2023/JSE/ISSE/MCGE/13Jun23FY.pdf
published on SENS and on the company's website. The information in this short-form announcement has been extracted from the audited
consolidated annual financial statements on our website, but the announcement itself has not been audited. The full audited
consolidated annual financial statements, including the audit opinion of the external auditor, PricewaterhouseCoopers Inc., which
sets out key audit matters and the basis for its unmodified opinion is available at: www.investors.multichoice.com/annual-results.
On behalf of the board
Imtiaz Patel Calvo Mawela
Chair Group CEO
Johannesburg
13 June 2023
Directorate
Independent non-executive directors
JJ Volkwyn (Lead independent director), JH du Preez, E Masilela, KD Moroka, CM Sabwa, FA Sanusi, L Stephens
Non-executive directors
MI Patel (Chair)
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)
www.multichoice.com
Date: 13-06-2023 01:00:00
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