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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
CONDENSED CONSOLIDATED INTERIM FINANCIAL RESULTS FOR THE PERIOD ENDED 30 SEPTEMBER 2022
EXECUTIVE REVIEW OF OUR PERFORMANCE
STEADY EARNINGS GROWTH TEMPERED BY FIFA WORLD CUP INVESTMENT.
MultiChoice Group (MCG or the group) grew its user base by 5% during the period ended 30 September 2022 (1H FY23).
An ongoing focus on leveraging the group's local capabilities added 1.0m 90-day active subscribers to close the
period on 22.1m subscribers, with the subscriber base split between 13.0m households (59%) in the Rest of Africa
and 9.1m (41%) in South Africa. The Rest of Africa maintained its growth trajectory on the back of successful local
content productions. In South Africa, growth rates recovered during the second half of the reporting period despite
evidence of rising consumer pressure.
Revenue increased 7% (2% organic) to ZAR28.6bn, with the weaker South African rand (ZAR) increasing the revenue
contribution on translation of the Rest of Africa and Technology segments, which have a USD reporting currency.
Subscription revenues amounted to ZAR23.8bn, up 8% year on year (YoY) (3% organic), driven mainly by the Rest of Africa
that delivered a 27% increase (12% organic). Advertising revenues were up a solid 5% (2% organic) as growth trends
normalised in a post-COVID-19 environment. Irdeto's revenues were negatively affected by global supply constraints
and declined 13%. This was more than offset by 19% growth in insurance premiums and higher "Other revenues", which
included increased revenues from sub-licencing content.
The group's earnings and cash flows for the interim period were adversely impacted by an outsized investment in
decoders ahead of the upcoming 2022 FIFA World Cup (FWC). This investment supports the anticipated subscriber growth
opportunity around the FWC while at the same time mitigating the growing risk of supply chain disruptions from global
silicon chip shortages. SuperSport will be the only platform where customers across the group's 50 markets can watch
all 64 matches live and in a suitable time zone for African viewers. This working capital investment increased decoder
subsidies and reduced group trading profit by ZAR0.7bn and free cash flow by ZAR0.8bn, primarily in the Rest of Africa.
Overall, group trading profit increased 2% to ZAR6.1bn (6% organic), benefitting from a further ZAR0.3bn reduction
in organic losses in Rest of Africa (or a ZAR1.0bn improvement if the FWC decoder investment is excluded).
The decoder investment shaved 3pp (percentage points) off the group's trading margin but is expected to unwind
in the second half of the year. The group's established cost optimisation programme delivered a further ZAR0.6bn
in cost savings and should exceed the full year target of R0.8bn. Operating leverage was positive (+1pp) on an
organic basis and would have been +4pp better if normalised for the FWC investment.
Core headline earnings, the board's measure of sustainable business performance, increased 2% YoY to ZAR2.0bn.
This was mainly attributable to the reduction in losses in the Rest of Africa and positive foreign exchange movements.
Consolidated free cash flow of ZAR1.8bn was down 44% compared to the prior period, adversely affected by the increased
investment in working capital (decoders). Free cash flow also included ZAR0.3bn (1H FY22: ZAR0.4bn) in tax deposits
in relation to the ongoing Nigerian tax audit.
SALIENT FEATURES
2022 2021 YoY
Period ended 30 September ZAR'm ZAR'm % change
Revenue 28 654 26 871 7
Operating profit 6 218 5 854 6
Trading profit 6 130 6 011 2
Free cash flow 1 789 3 173 (44)
Core headline earnings per ordinary share (SA cents) 474 462 3
(Loss)/earnings per ordinary share (SA cents) (60) 317 greater than (100)
Headline (loss)/earnings per ordinary share (SA cents) (58) 356 greater than (100)
Net asset value per ordinary share (SA cents) 1 762 1 967 (10)
KEY PERFORMANCE INDICATORS
2022 2022
2021 Currency Organic 2022 YoY YoY organic
Period ended 30 September Reported impact growth Reported % change % change
90-day active subscribers ('000) 21 054 n/a 1 025 22 079 5 5
South Africa 8 864 n/a 251 9 115 3 3
Rest of Africa 12 190 n/a 774 12 964 6 6
90-day active ARPU (ZAR)
Blended 176 8 (4) 180 2 (2)
South Africa 273 - (12) 261 (4) (4)
Rest of Africa 104 14 5 123 18 5
Subscribers ('000) 16 623 n/a 487 17 110 3 3
South Africa 8 193 n/a 11 8 204 - -
Rest of Africa 8 430 n/a 476 8 906 6 6
ARPU (ZAR)
Blended 223 11 1 235 5 -
South Africa 297 - (7) 290 (2) (2)
Rest of Africa 151 21 11 183 21 7
GROUP FINANCIALS
2022 2022
2021 Currency Organic 2022
IFRS impact growth IFRS YoY YoY organic
Period ended 30 September ZAR'm ZAR'm ZAR'm ZAR'm % change % change
SEGMENTAL RESULTS
Revenue1 26 761 1 307 542 28 610 7 2
South Africa 17 774 - (342) 17 432 (2) (2)
Rest of Africa1 8 232 1 220 1 069 10 521 28 13
Technology 755 87 (185) 657 (13) (25)
Trading profit 6 011 (252) 371 6 130 2 6
South Africa 6 159 - (144) 6 015 (2) (2)
Rest of Africa (425) (165) 336 (254) 40 79
Technology 277 (87) 179 369 33 65
1 Total group revenue and Rest of Africa revenue presented above includes losses of ZAR44m
(1H FY22: losses of ZAR110m) related to fair-value movements on Nigeria futures contracts.
REVENUE AND COSTS BY NATURE
Revenue 26 761 1 307 542 28 610 7 2
Subscription fees1 22 087 1 115 554 23 756 8 3
Advertising 1 914 49 38 2 001 5 2
Decoders 879 44 26 949 8 3
Technology contracts and licensing 755 87 (185) 657 (13) (25)
Insurance premiums 284 - 54 338 19 19
Other revenue 842 12 55 909 8 7
Operating expenses 20 750 1 559 171 22 480 8 1
Content 8 915 530 (482) 8 963 1 (5)
Decoder purchases 2 590 231 558 3 379 30 22
Staff costs 2 772 214 (51) 2 935 6 (2)
Sales and marketing 1 162 55 195 1 412 22 17
Transponder costs 1 196 77 (49) 1 224 2 (4)
Other 4 115 452 - 4 567 11 -
1 Subscription fees presented above include losses of ZAR44m (1H FY22: losses of ZAR110m) related
to fair-value movements on Nigeria futures contracts.
EXECUTIVE REVIEW CONTINUED
The group continued its strategy of differentiation through local content. It launched two more local channels
in sub Saharan Africa and produced 3 084 hours of local content, an increase of 15% YoY. This ongoing investment
in local content accounted for 48% of total general entertainment spend and brought the total content library
to more than 73 000 hours.
As one of the largest taxpayers in Africa, the group paid direct cash taxes of ZAR1.9bn, marginally down from
the prior period due to lower taxable profits reported in South Africa.
The balance sheet remains strong with ZAR7.5bn in net assets. This includes ZAR7.0bn in cash and cash equivalents
and when combined with ZAR1.3bn in available facilities, provide ZAR8.3bn in financial flexibility to fund the
group's operations. This financial position is after ZAR4.0bn was utilised to settle the MCG and Phuthuma Nathi
dividends in September and incorporates the increased working capital investment in 1H FY23 ahead of the FWC.
Leverage remains low with a net debt: EBITDA ratio of 1.08:1 at the end of September.
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
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 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 interim period.
DIVIDEND
No dividend has been declared based on the interim results.
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 November 2022.
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
in the full condensed consolidated interim financial statements. The full condensed consolidated interim financial
statements were released on SENS on 10 November 2022 and can be found on the company's website at
https://investors.multichoice.com/interim-results. Copies of the full condensed consolidated interim financial
statements may also be requested from the company's registered office, at no charge, during office hours.
Any investment decision should be based on the full condensed consolidated interim financial statements
at https://senspdf.jse.co.za/documents/2022/JSE/ISSE/MCGE/10Nov22HY1.pdf published on SENS and on the company's
website. The information in this announcement has been extracted from the reviewed interim financial statements
on our website, but the announcement itself was not reviewed.
On behalf of the board
Imtiaz Patel Calvo Mawela
Chair Group CEO
Johannesburg
10 November 2022
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
