MultiChoice Group on Thursday issued a warning about escalating full-year losses, citing an increasingly challenging trading environment.
The company in a trading statement highlighted the intensifying difficulties it faces as it navigates these tough economic conditions.
Although the group’s full year 2024 financial performance has been negatively impacted by an adverse and volatile economic environment, management has responded with tactical interventions by focusing on cost optimisation and cash management, including reduced decoder subsidies, which continued to yield positive economic outcomes, the company said.
MultiChoice announced that trading profit is expected to decline by 19% to 23% compared to the 2023 financial year, with the headline loss per share more than doubling.
MultiChoice anticipates increased losses and headline losses per share due to several factors, including a weak macroeconomic and consumer environment, heightened investment in Showmax, and significant foreign exchange losses resulting from the sharp depreciation of the Nigerian naira (NGN) against the US dollar (USD).
The company said these foreign exchange losses, linked to inter-group loans with MultiChoice Nigeria, amount to R3.6 billion (net of tax and non-controlling interest).
Additionally, a once-off impairment of IT systems, valued at R1 billion (net of tax and non-controlling interest), has further impacted the expected loss per share due to a reassessment of business needs amid a challenging operating environment.
Despite the adverse conditions and an additional R1.4 billion year-on-year increase in Showmax trading losses, the group projects an increase in organic trading profit due to inflation-led pricing and successful cost optimisation across most of its markets. However, after accounting for a R4.5 billion foreign exchange impact from weaker currencies against the USD, reported trading profit is expected to be lower than the previous year.
Given the pressure on reported trading profit and despite some offset from realized foreign exchange gains, the group expects core headline earnings per share for full year 2024 to decline compared to the previous year. Adjusted core headline earnings per share, which includes R900 million in losses on cash remittances from Nigeria (net of tax and non-controlling interest), is anticipated to decrease to a lesser extent than core headline earnings per share, as the gap between the official and parallel NGN narrowed during full year 2024.
The board considers trading profit and core headline earnings per share to be key indicators of the group’s operating performance, as they exclude non-recurring and non-operational items.
In FY24, the board introduced a new adjusted core headline earnings per share metric to reflect losses incurred on cash remittances from Rest of Africa markets (mainly Nigeria), net of tax and non-controlling interest, on core headline earnings per share.
The 2024 results will be published on 12 June.
Also read: MultiChoice Independent Board Backs Canal+ Takeover Despite Regulatory Hurdles
The independent board of JSE-listed MultiChoice has advised shareholders to consider accepting a takeover bid from Canal+, a French media conglomerate. Despite this endorsement, both entities face substantial regulatory obstacles before the deal can be finalised.
Canal+ and MultiChoice issued today a Combined Circular to MultiChoice Shareholders regarding the mandatory offer by Canal+ to acquire the MultiChoice shares it does not own for a consideration of R125.00 per share.
MultiChoice Chief Executive Officer Calvo Mawela and Chief Financial Officer Tim Jacobs will be entitled to receive a cash retention bonus upon the successful implementation of the Canal+ mandatory offer to buy Africa’s largest pay-TV operator.
In the Combined Circular published by Canal+ and MultiChoice, it was disclosed that there are no material provisions of an abnormal nature in respect of directors’ service contracts which require disclosure.
Furthermore, there are no service contracts in respect of MultiChoice directors that have been concluded or amended during the six-month period prior to the date of the Joint Announcement.
“In order to support MultiChoice’s ability to retain certain key employees with critical skills and knowledge and to recognise the additional responsibilities that certain key employees are undertaking, the remuneration committee of the MultiChoice Board has decided to make provision for a cash retention bonus for a limited number of key employees, including a total of approximately R15 million to two executive directors, Calvo Mawela and Tim Jacobs,” reads the Combined Circular.
