Wrap Text
Condensed consolidated interim financial results for the period ended 30 September 2019
MultiChoice Group Limited
(Registration number: 2018/473845/06)
JSE share code: MCG
ISIN: ZAE000265971
Reviewed interim results announcement
Condensed consolidated interim financial Results for the period ended 30 September 2019
Executive review of our performance
MultiChoice Group (MCG or the group) delivered solid results for the period ended 30 September 2019
The group added 1.2m 90-day active subscribers, representing 7% year-on-year (YoY) growth, taking the overall
90-day active subscriber base to 18.9m households at 30 September 2019 (HY20). In the absence of specific
one-off events in the prior year, subscriber growth rates reflected more normalised trends. The subscriber
base is split between 10.7m households in the Rest of Africa (RoA) and 8.2m in South Africa (SA).
Revenue was up 4% (3% organic) to R25.7bn and included subscription revenue of R21.2bn, which grew at similar
rates. Top line momentum was affected by the group's strategic decision not to increase Premium prices in SA.
Hardware sales and advertising revenues were lower due to the one-off prior year events, while macro-headwinds in
certain markets affected disposable income and thus consumer demand.
Group trading profit rose 22% to R4.8bn (33% organic) benefitting from a R0.7bn (R1.2bn organic) reduction in
losses in RoA. A further R0.7bn in costs were eliminated from the base during HY20 as part of the group's cost
optimisation programme. This resulted in overall costs being contained to a similar level as the prior period
(-3% organic) and achieved the group target of keeping the growth rate in costs below that of revenue growth.
Core headline earnings, the board's measure of sustainable business performance, was up 24% on the prior period
at R1.9bn, despite the impact of the additional 5% share in SA allocated to Phuthuma Nathi in March 2019. Excluding
this once-off change in the SA non-controlling interest, core headline earnings would have grown 37% YoY.
Consolidated free cash flow of R2.4bn was up 32% compared to the prior period. This was achieved after an
improvement in the trading result from the RoA and a lower investment in set-top boxes.
SALIENT FEATURES
2019 versus
2019 2018 2018
reviewed reviewed reviewed
Period ended 30 September R'm R'm %
Revenue 25 655 24 782 4
Operating profit 4 926 4 144 19
Trading profit 4 781 3 918 22
Free cash flow 2 360 1 789 32
Core headline earnings per ordinary share (SA cents) 437 352 24
Earnings per ordinary share (SA cents) 336 79 >100
Headline earnings per ordinary share (SA cents) 341 78 >100
Net asset value per ordinary share (SA cents) 2 291 1 372 67
KEY PERFORMANCE INDICATORS
2019 versus 2019 versus
2019 2019 2018 2018
2018 currency organic 2019 reported organic
As at 30 September reported impact growth reported % %
90-day active subscribers ('000s) 17 645 n/a 1 232 18 877 7 7
South Africa 7 597 n/a 566 8 163 7 7
Rest of Africa 10 048 n/a 666 10 714 7 7
90-day active ARPU (R)
Blended 200 1 (12) 189 (6) (6)
South Africa 308 - (16) 292 (5) (5)
Rest of Africa 115 2 (6) 111 (3) (5)
Subscribers ('000) 13 900 n/a 1 152 15 052 8 8
South Africa 7 206 n/a 469 7 675 7 7
Rest of Africa 6 694 n/a 683 7 377 10 10
ARPU (R)
Blended 249 1 (15) 235 (6) (6)
South Africa 326 - (15) 311 (5) (5)
Rest of Africa 166 3 (11) 158 (5) (7)
GROUP FINANCIALS
2019 2019 2019 versus 2019 versus
2018 currency organic 2019 2018 2018
IFRS impact growth IFRS IFRS organic
Period ended 30 September R'm R'm R'm R'm % %
Revenue 24 782 192 681 25 655 4 3
South Africa 16 686 - 266 16 952 2 2
Rest of Africa 7 411 132 253 7 796 5 3
Technology 685 60 162 907 32 24
Trading profit 3 918 (443) 1 306 4 781 22 33
South Africa 5 378 - (222) 5 156 (4) (4)
Rest of Africa (1 577) (405) 1 152 (830) 47 73
Technology 117 (38) 376 455 >100 >100
Revenue 24 782 192 681 25 655 4 3
Subscription fees 20 422 114 703 21 239 4 3
Advertising 1 673 20 (55) 1 638 (2) (3)
Set-top boxes 900 1 (53) 848 (6) (6)
Technology contracts and licensing 685 60 162 907 32 24
Other revenue 1 102 (3) (76) 1 023 (7) (7)
Operating expenses 20 864 635 (625) 20 874 - (3)
Content 8 223 263 463 8 949 9 6
Set-top box purchases 3 113 84 (667) 2 530 (19) (21)
Staff costs 2 792 64 222 3 078 10 8
Sales and marketing 1 094 11 (72) 1 033 (6) (7)
Transponder costs 1 288 41 (11) 1 318 2 (1)
Other 4 354 172 (560) 3 966 (9) (13)
The group remains fully committed to broad-based black economic empowerment and transformation. In line with
prior commitments, an offer was made to Phuthuma Nathi (PN) shareholders on 25 September 2019, to exchange up
to 20% of their PN shares for shares in MCG. The offer closed on 28 October 2019 and has resulted in 3.7m
shares being issued to PN shareholders, while MCG acquired 3.8m shares in PN in return. Following the conclusion
of this share swap, our overall interest in MultiChoice South Africa increased from 75.0% to 76.4%.
No interim dividend has been declared. The group remains on track to declare a dividend of R2.5bn for FY20.
The group continued its strategic focus on local content, increasing the number of hours produced by 12%.
As a result, the total local content hours in the library now exceeds 54 000 hours.
Capital expenditure (capex) of R0.3bn was in line with the prior period.
As one of the largest taxpayers in Africa, MCG paid direct cash taxes of R1.9bn. This was 9% higher than the
previous period mainly due to a higher final tax payment in SA.
Net interest paid amounted to R164m, slightly up on the prior period primarily due to the impact of
reclassifying operating leases as finance leases under IFRS 16. The group balance sheet remains strong with
R9.9bn in net assets, including R6.9bn of cash and cash equivalents. Combined with R3.5bn in undrawn facilities,
this provides R10.4bn in financial flexibility to fund our business plan. This strong financial position is after
providing R0.8bn for share buybacks (including R0.7bn to fund the MCG restricted share plan) and settling our
R1.5bn dividend to Phuthuma Nathi.
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 International Financial Reporting Standards (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
On 5 July 2019, Mr Jabulane (Jabu) Albert Mabuza and Dr Fatai Adegboyega Sanusi were appointed to the board
as independent non-executive directors.
Ms Donna Maree Dickson resigned as group company secretary on 30 September 2019. The group is currently in
the recruitment process to find a suitable replacement.
No other changes have been made to the directorate of the group.
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 11 November 2019.
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
in the full condensed consolidated interim financial statements. The full condensed consolidated interim
financial statements were released on SENS on 11 November 2019 and can be found on the company's website
www.multichoice.com. 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/2019/JSE/ISSE/MCGE/11Nov19.HY.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 Chief executive
Johannesburg
11 November 2019
DIRECTORATE
Independent Non-executive Executive
non-executive directors directors directors
S J Z Pacak (Lead independent director) F L N Letele M I Patel (Chair)
D G Eriksson E Masilela C P Mawela (CEO)
J A Mabuza J J Volkwyn T N Jacobs (CFO)
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)
www.multichoice.com
Date: 11/11/2019 04:00:00
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