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Summary consolidated financial results and cash dividend declaration for the year ended 31 March 2021
MULTICHOICE GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 2018/473845/06)
JSE Share Code: MCG
ISIN: ZAE000265971
(MultiChoice or the Company or MCG)
Summary consolidated financial results and cash dividend declaration for the year ended 31 March 2021
Executive review of our performance
Strong results underpinned by operational excellence.
In a year that required careful navigation of COVID-19 challenges, the group added 1.4m 90-day active subscribers to
close the year ended 31 March 2021 (FY21) on 20.9m subscribers. This represents a 2% acceleration in year on year (YoY)
growth to 7%, as heightened consumer demand for video entertainment services, continued penetration of the mass market
and an easing of electricity shortages in southern Africa improved growth rates. The 90-day subscriber base is split
between 11.9m subscribers (57%) in the Rest of Africa (RoA) and 8.9m (43%) in South Africa.
Revenue increased 4% (4% organic) to ZAR53.4bn, with subscription revenues accounting for ZAR44.7bn, a solid 5% (5%
organic) increase YoY. Both advertising and commercial subscription revenues were significantly impacted by COVID-19.
Advertising revenues were down 34% YoY (ZAR0.6bn) at the interim stage, but with less lockdown intensity in the second
half and the return of live sport, it recovered well, ending 11% down YoY at ZAR2.8bn. Similarly, commercial subscription
revenues started to recover in the latter part of the financial year. At the interim stage it was down 46% but finished
the year 35% lower than the prior year. The hospitality industry remains intermittent in its recovery due to lockdowns
and is expected to take some time to normalise.
Group trading profit rose 28% to ZAR10.3bn (44% organic), benefiting from a ZAR1.5bn (ZAR2.7bn organic) reduction in
losses in the Rest of Africa and 9% growth in South Africa. This strong trading profit performance was due to resilient
revenue growth, strong cost control and the impact of embracing new ways of working as a consequence of COVID-19 that
reduced operating costs. It was further supported by a delay of ZAR1.1bn in sports events' costs, which will be
incurred in FY22.
An ongoing focus on cost reduction allowed for a further ZAR1.5bn in costs being eliminated from the base during the
year. Overall costs decreased 1% YoY (-3% organic) and resulted in the group accelerating operating leverage from
5% in the prior year to 7% in FY21. Major contributors to these savings were renegotiated sports rights, lower decoder
unit costs, sourcing and procurement savings and the benefits of ongoing digital adoption throughout the organisation.
Core headline earnings, the board's measure of sustainable business performance, was up 32% on the prior year at
ZAR3.3bn. The strong earnings growth was attributable to the improvement in trading profit and realised foreign
exchange movements.
Consolidated free cash flow of ZAR5.7bn was up 10% compared to the prior year. This was underpinned by strong earnings
growth for the year but dampened somewhat by the end of a contractual agreement on the southern Africa transponder
lease, whereby an upfront payment led to reduced lease payments for the first 36 months of the lease term
(ZAR0.4bn negative impact versus FY20). An increase in capital expenditure (ZAR0.7bn), primarily related to a multi-year
investment programme to upgrade the group's customer service, billing and data capabilities, reduced cash flows further.
SALIENT FEATURES
2021 2020 YoY
Year ended 31 March ZAR'm ZAR'm % change
Revenue 53 338 51 387 4
Operating profit 10 458 8 267 27
Trading profit 10 290 8 028 28
Free cash flow 5 721 5 184 10
Core headline earnings per ordinary share (SA cents) 767 569 35
Earnings per ordinary share (SA cents) 506 117 greater than 100
Headline earnings per ordinary share (SA cents) 496 128 greater than 100
Net asset value per ordinary share (SA cents) 2 228 2 296 (3)
Dividend per ordinary share (SA cents) 565 565 0
KEY PERFORMANCE INDICATORS
2021 2021
2020 Currency Organic 2021 YoY YoY organic
Year ended 31 March Reported impact growth Reported % change % change
90-day-active subscribers ('000) 19 499 n/a 1 363 20 862 7 7
South Africa 8 416 n/a 515 8 931 6 6
Rest of Africa 11 083 n/a 848 11 931 8 8
90-day-active ARPU (ZAR)
Blended 187 (2) - 185 (1) -
South Africa 290 - (13) 277 (4) (4)
Rest of Africa 110 (3) 8 115 5 7
Subscribers ('000) 15 743 n/a 613 16 356 4 4
South Africa 7 888 n/a 289 8 177 4 4
Rest of Africa 7 855 n/a 324 8 179 4 4
ARPU (ZAR)
Blended 231 (2) 3 232 - 1
South Africa 309 - (10) 299 (3) (3)
Rest of Africa 154 (4) 15 165 7 10
GROUP FINANCIALS
2021 2021 2021 versus 2021 versus
2020 Currency Organic 2021 2020 2020
IFRS impact growth IFRS IFRS Organic
Year ended 31 March ZAR'm ZAR'm ZAR'm ZAR'm % %
Segmental results
Revenue1 51 387 (270) 2 293 53 410 4 4
South Africa 34 154 - 173 34 327 1 1
Rest of Africa1 15 476 (383) 2 141 17 234 11 14
Technology 1 757 113 (21) 1 849 5 (1)
Trading profit 8 028 (1 240) 3 502 10 290 28 44
South Africa 10 259 - 873 11 132 9 9
Rest of Africa (2 921) (1 155) 2 668 (1 408) 52 91
Technology 690 (85) (39) 566 (18) (6)
1 Total group revenue and Rest of Africa revenue in 2021 presented above includes ZAR72m gains related to
fair value movements on Nigeria futures contracts.
Revenue and costs by nature
Revenue1 51 387 (270) 2 293 53 410 4 4
Subscription fees1 42 752 (403) 2 334 44 683 5 5
Advertising 3 213 (11) (354) 2 848 (11) (11)
Set-top boxes 1 429 29 331 1 789 25 23
Technology contracts and licensing 1 757 113 (21) 1 849 5 (1)
Other revenue 2 236 2 3 2 241 - -
Operating expenses 43 359 970 (1 209) 43 120 (1) (3)
Content 18 764 409 (1 222) 17 951 (4) (7)
Set-top box purchases 4 855 158 152 5 165 6 3
Staff costs 5 912 72 (73) 5 911 - (1)
Sales and marketing 2 410 (13) (46) 2 351 (2) (2)
Transponder costs 2 649 80 (106) 2 623 (1) (4)
Other 8 769 264 86 9 119 4 1
1 Total group revenue and subscription fees in 2021 presented above includes ZAR72m gains related to fair
value movements on Nigeria futures contracts.
The group continued its strategy of differentiation through local content and stepped up its investment by producing
4 567 additional hours (19% YoY growth), despite disruptions caused by strict early COVID-19 lockdown measures.
As a result, the total local content library now exceeds 62 000 hours. During FY21, the group launched 11 new local
language/content channels across sub-Saharan Africa. In Nigeria, the fifth season of Big Brother, produced as a
lockdown edition, achieved a record three million viewers. In South Africa, the group screened several new local
productions such as Inconceivable, Lioness, Gomora and Legacy. It also renegotiated two major international content
agreements in South African rand (ZAR) and completed five new co-productions (Reyka, Rogue, Crime and Justice,
Blood Psalms and Endangered Species) with global content producers.
As one of the largest taxpayers in Africa, the group paid direct cash taxes of ZAR4.1bn, slightly more than the prior
year due to higher profitability.
On 10 June 2021, the board approved the formal offer for MCG to increase its equity investment in Blue Lake Ventures
Limited (BetKing) from 20% to 49% for a consideration of USD281.5m (approximately ZAR4.0bn), subject to the substantive
conditions being met and the transaction becoming effective. The equity investment will also result in payment of the
contingent consideration of USD31m (ZAR0.5bn) relating to the acquisition of the first 20% in BetKing. Further details
are available on SENS and at www.multichoice.com.
The strength of the balance sheet remains critically important given the uncertain longer-term economic impact of
COVID-19 and funding requirements for RoA that includes liquidity constraints in Nigeria. Some ZAR9.5bn in net assets,
including ZAR8.5bn in cash and cash equivalents, combined with ZAR4.0bn in available facilities, provide ZAR12.5bn in
financial flexibility to fund the group's operations. This strong financial position is after ZAR4bn was utilised to
settle the MCG and Phuthuma Nathi (PN) dividends in September, and ZAR1.4bn was spent acquiring a 20% stake in BetKing.
We operate in 50 countries, resulting in significant exposure to foreign exchange volatility. This can have a notable
impact on reported revenue and trading profit metrics, particularly in the RoA where revenues are earned in local
currencies while the cost base is largely US dollar 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-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 Listings Requirements.
The company's external auditor has not reviewed or reported on forecasts included in this short-form announcement.
DIRECTORATE AND COMPANY SECRETARY
Mr JA Mabuza, an independent non-executive director, took over from Mr SJZ Pacak as the lead independent director, with
effect from 3 April 2020.
After a robust independence assessment by the board, Mr E Masilela was recategorised as an independent non-executive
director on 2 April 2020.
Mr DG Eriksson retired as an independent non-executive director with effect from 11 June 2020.
Mr MI Patel was reclassified as a non-executive director from October 2020 on expiry of his executive contract.
Mr SJZ Pacak retired as an independent non-executive director with effect from 1 April 2021.
Mr JH du Preez was appointed as an independent non-executive director with effect from 1 April 2021.
Mrs RJ Gabriels resigned as interim company secretary on 11 June 2020 with Ms CC Miller appointed as group company
secretary on the same date.
No other changes have been made to the directorate of the group.
DIVIDEND DECLARATION
The board declares a gross dividend of 565 SA cents per listed ordinary share (ZAR2.5bn). This dividend declaration is
subject to approval of the MultiChoice South Africa Holdings Proprietary Limited (MCSAH) dividend at its annual general
meeting on Wednesday 25 August 2021. The finalisation date for the dividend declaration by the company will be Thursday
26 August 2021. Subject to the aforementioned MCSAH approval, dividends will be payable to the company's shareholders
recorded in the register on the record date, being Friday 10 September 2021. The last date to trade cum dividend will
be on Tuesday 7 September 2021 (shares trade ex-dividend from Wednesday 8 September 2021). Share certificates may not
be dematerialised or rematerialised between Wednesday 8 September 2021 and Friday 10 September 2021, both dates
inclusive. The dividend payment date will be Monday 13 September 2021. The dividend will be declared from income.
It will be subject to the dividend tax rate of 20%, yielding a net dividend of 452 SA cents per listed ordinary share
to those shareholders not exempt from paying dividend tax. Dividend tax will be 113 SA cents per listed ordinary share.
The issued ordinary share capital as at 10 June 2021 was 442.5m ordinary shares (including 15.6m shares held in
treasury). The company's income tax reference number is 9485006192.
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 10 June 2021.
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 report 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 report, 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 10 June 2021 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/2021/JSE/ISSE/MCGE/10Jun21FY.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 Chief Executive Officer
Johannesburg
10 June 2021
Directorate
Independent non-executive directors Non-executive directors Executive directors
J A Mabuza (Lead independent director) M I Patel (Chair) C P Mawela (CEO)
J H du Preez F L N Letele T N Jacobs (CFO)
E Masilela J J Volkwyn
K D Moroka
C M Sabwa
F A Sanusi
L Stephens
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),
PO Box 785261, Sandton 2146, South Africa
Sponsor: Rand Merchant Bank (a division of FirstRand Bank Limited)
Date: 10-06-2021 01:30:00
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