Big swings at MultiChoice

MultiChoice has notified shareholders that it expects to report substantially higher earnings per share and a much-improved headline loss per share for the year ended 31 March 2025.

The JSE’s listing requirements stipulate that companies must publish a trading statement as soon as they are reasonably certain that their forthcoming financial results will differ by at least 20% from the previous corresponding period.

The DStv owner expects to report a 128% to 132% swing from a loss per share of R9.35 to earnings between R2.62 and R2.99 per share.

MultiChoice reported that its headline loss per share will narrow by 62% to 66% from R7.15 to between R2.43 and R2.72.

The significant changes in earnings per share were mainly driven by the sale of a 60% shareholding in NMS Insurance Services to Sanlam. Headline earnings per share exclude the profit on this sale.

MultiChoice said headline earnings improved because management acted decisively to mitigate the effects of macroeconomic headwinds by focusing on key areas within its control.

These included maintaining inflationary pricing discipline, growing new revenue streams and driving further efficiencies to manage costs and cash flows.

“The current period has seen the continuation of unprecedented financial disruption for economies, corporates and consumers across sub-Saharan Africa due to several macro-economic factors,” MultiChoice said.

“These include weaker average exchange rates, elevated inflation and interest rates, and power supply challenges.”

These factors, combined with the impact of structural industry changes in video entertainment and the cost of investing in Showmax, materially affected the performance of the MultiChoice Group.

Examples of structural industry changes included the rise of piracy, streaming services, and social media.

Trading profit update

In addition to reporting earnings and headline earnings per share per the Companies Regulations, MultiChoice also provided an update on trading profit.

It said that its reported trading profit is expected to decline by between 47% and 51% from R7.9 billion to between R3.88 and R4.2 billion.

However, MultiChoice also provided a measure for organic trading profit, excluding the impact of foreign exchange translation effects and group composition changes.

This shows trading profit declining by 7%–11%, to between R7.02 billion and R7.35 billion.

“The ongoing investment in the Showmax streaming business, which remains at an early stage of development and has yet to scale into its cost base, is expected to result in the group reporting a lower trading profit,” MultiChoice explained.

“On an organic basis, excluding the effects of foreign currency and group composition changes, the decline in trading profit is expected to be much smaller.”

MultiChoice also provided an update on its expected adjusted core headline earnings, which it said, along with trading profit, were appropriate indicators of the group’s operating performance.

The company explained that these measures adjust for non-recurring and non-operational items.

Adjusted core headline earnings are calculated by adjusting headline earnings for various factors, including unrealised and non-recurring foreign currency gains or losses, and non-recurring empowerment transactions.

It also adjusts for equity-settled share-based payment compensation, certain fair-value adjustments under IFRS, and acquisition-related costs and once-off contractual settlements.

MultiChoice expects adjusted core headline earnings per share to broadly follow the trends noted in trading profit.

This was partially offset by lower cash extraction losses due to a narrower gap between the official and parallel exchange rates in Nigeria.

The table below summarises MultiChoice’s trading update ahead of its annual results, which the company said it expects to publish on 11 June 2025.