MutliChoice final results March 2019

The group generated revenue of R50.1bn, up 6% on last year (6% organic). Subscription revenue amounted to R41.2bn, up 7% on last year (8% organic). This represents an acceleration in growth from previous years driven by the continued success of our value strategy in the RoA and a healthy contribution from South Africa.

Group trading profit rose 11% to R7bn (27% organic) benefiting from a R0.9bn reduction in losses in RoA. As part of the group's cost optimisation programme, a further R1.3bn in costs were removed from the base during the year. This resulted in overall costs being contained to an increase of 5% (2% organic) and achieved the group target of keeping the rate of growth in costs below the rate of growth in revenue.

The group continued its investment in local content adding a further 4 600 hours to take the local content library to nearly 50 000 hours. The spend on local general entertainment content as a percentage of total general entertainment content increased from 38% to 40%, in line with the strategy to reach a target of 45%. Core headline earnings, the board's measure of sustainable business performance, was up 10% on last year at R1.8bn.

Consolidated free cash flow of R3.3bn was up 96% compared to the prior year. This was achieved after an improvement in the trading result from the RoA, the non-recurrence of once-off content prepayments in the prior year and remittances of cash from Angola. Capital expenditure of R1bn was slightly up YoY due to additional investments in information technology infrastructure to improve customer experience as well as the renewal of our digital terrestrial television (DTT) licence in Nigeria. The cash conversion ratio (EBITDA-Capex/EBITDA) remains positive at 90%.

As one of the largest taxpayers in Africa, MCG paid direct cash taxes of R3.7bn, in line with the previous year. Net interest paid amounted to R305m, an increase of R152m from the previous year. This was due to an increase in the interest-bearing loan funding received from Naspers in the RoA segment which was capitalised as part of the unbundling. The group balance sheet is strong with R9.8bn in net assets, including R6.7bn of cash and cash equivalents and R3.5bn in undrawn facilities providing R10.2bn in financial flexibility to fund our business plan.

As set out in the pre-listing statement no dividend is being declared for FY2019. The group remains on track to declare a dividend of R2.5bn, or 569 SA cents per share, for FY2020.

In the year ahead, the group will continue scaling its video-entertainment services across the continent, mainly in the middle and mass markets. Top-line volume growth combined with inflationary price increases and a focus on cost containment is expected to deliver a continued reduction in trading losses in the RoA and stable margins in South Africa and the Technology segment. Innovation is core to our future, and we will continue to drive the adoption of online products (particularly in South Africa).

2019-06-18 15:52:03