BEE deal, forex losses push MultiChoice into the red

MultiChoice will report a full-year headline loss per share of as much as R8, from earnings of R4.10 a year ago, as the result of foreign exchange losses and a decision to give additional equity to black investors at no cost.

The maiden full-year results for the DStv parent as a JSE-listed company will show a headline loss per share of between R7.24 an R8, the broadcaster said on Monday.

MultiChoice has blamed the loss on the impact of the allocation, at zero cost, of an additional 5% stake in MultiChoice South Africa Holdings to empowerment schemes Phuthuma Nathi Investment 1 and 2. This formed part of its unbundling from former controlling shareholder Naspers.

“Loss per share and headline loss per share were impacted significantly by the once-off equity-settled share-based compensation charge recognised on what was an effective disposal of 5% of the group´s interest in MultiChoice South Africa Holdings,” it said. “While the impact of this transaction is removed from core headline earnings per share and trading profit, it is included in both loss per share and headline loss per share and is expected to reduce earnings per share and headline earnings per share by R4.38.”

The headline numbers were also affected by the depreciation of the rand against the dollar, which led to an increase in unrealised foreign exchange losses on translation of the group’s US dollar-denominated transponder lease liabilities. This is expected to reduce earnings per share and headline earnings per share by R2.63 for the full year.

‘Solid subscriber growth’

Operationally, and excluding these costs, however, MultiChoice had a good year, with core headline earnings per share to rise by between 8% and 18%. Trading profit is expected to be between 9% and 13% higher than the prior year’s reported R6.3-billion. And on an “organic” basis (reflecting results on a constant currency basis, excluding mergers and acquisitions), trading profit is expected to be between 24% and 30% higher, it said.

“The improved financial performance … is mainly driven by solid subscriber growth and a reduction in losses in the ‘Rest of Africa’ segment,” MultiChoice said in a statement to shareholders shortly before the market closed in Johannesburg.

The shares ended the session down 0.5% at R124.40, giving it a market capitalisation of R54.9-billion. They had been trading more than 2% higher before the group published the trading statement.  — © 2019 NewsCentral Media