Pan African entertainment group MultiChoice Group said its headline loss per share slid to 289 cents (-58 cents) in the six months to September 30 following R1.7 billion of foreign exchange headwinds, Showmax trading losses and a lower contribution from South Africa.
Weaker currencies were a significant impediment to profit improvement, with about five currencies in African countries that the group trades in falling sharply against the US dollar, chief financial officer Tim Jacobs said. The sharp fall of particularly the naira in Nigeria resulted in a large proportion of the previously recognised losses incurred on cash remittances, being recorded in trading profit.
Jacobs said in an interview it was difficult to predict the currency impact in the second half, but the group was working hard on improving things under their control, following a very strong operational performance in the first half.
CEO Calvo Mawela said the second half would be an important period in their journey to expand their ecosystem beyond Africa’s leading linear pay-TV operator into a broader ecosystem of interactive entertainment and consumer services.
The aim was to double the customer base to 50 million over the next five years.
“The relaunch of Showmax, combined with KingMakers’ entry into the South African market with SuperSportBet, and Moment’s platform launch are all important milestones as we accelerate growth and drive additional scale, creating a ‘world of more’ for customers and additional value for shareholders.” Mawela said.
Jacobs said cost optimisation was a focus of the past year and R500m of cost savings were delivered with the full year cost savings target of R800m lifted to R1bn.
“The focus remains on driving further efficiencies in operating expenditure, as well as working capital and capex decisions, to ensure consistent and optimal returns on all capital deployed,” the group said.
“We are positioned well for the second half,” said Jacobs.
Mawela said they would continue to seek ways to improve the economics of the business through pricing, optimising customer mix and content monetisation, as well as calibrating decoder subsidies according to the macroeconomic backdrop.
In the past six months, “the overall excitement around three world cups, culminating in the Springboks emerging victorious as back-to-back Rugby World Cup champions, supported subscriber activity,” said Mawela.
Jacobs said a highlight of the period was that the South African Premium customer base grew 5%, a positive trend for the first time in many years.
Coming off a high-growth period linked to the FIFA World Cup in the previous six months, the overall 90-day active subscriber base however contracted by 2% to 21.7 million.
The Rest of Africa base, accounting for 60% of customers, grew by 1% to 13m.
The South African business contended with the effects of load shedding - 43% of the days in the period were impacted by Stage 4 - 6 load shedding - as well as a decision to remove 311 000 non-revenue generating customers from the base.
Customer numbers in South Africa were 5% lower at 8.6m.
Group revenue was 1% lower at R28.3bn, reflecting the impact of weaker local currencies and consumer pressure, offset by translation benefits of a weaker rand on the group's US dollar reporting segments - Rest of Africa, Showmax and Irdeto - and inflationary-led price increases in the majority of the group's markets.
Group core headline earnings, the board's measure of the underlying performance of the business, declined by 5% to R1.9bn.
The balance sheet remained healthy. After paying the R1.4bn Phuthuma Nathi dividend in September, R5.6bn cash and its equivalents was retained at period-end, as well as access to R9bn in undrawn facilities.
Jacobs said no dividend was declared as the group policy was to declare dividends from excess cash, but the decision was taken to rather strengthen the balance sheet through the current investment cycle.
BUSINESS REPORT