Once-off boost for Multichoice

MultiChoice expects to see positive earnings for the 2025 financial year, boosted by the sale of its insurance business to Sanlam.

In a trading statement, the group said that the current period has seen unprecedented financial disruption for economies, corporates and consumers across sub-Saharan Africa.

This is due to weaker exchange rates, elevated inflation and interest rates, and power supply issues. 

The group is also battling with the impact of the structural industry changes in video entertainment, such as the rise of piracy, streaming services and social media.

Along with the cost of investing in Showmax, this has had a material impact on the performance of the MultiChoice Group. 

The group said it acted decisively to counter these headwinds by focusing on key areas within its control.

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

The group thus expects to report positive earnings per share, a significant improvement from the loss seen in the prior financial year. 

This was primarily driven by management’s actions and the recognition of a profit from the sale of a 60% shareholding in NMS Insurance Services (SA) to Sanlam, and a downward adjustment to the Showmax put option liability.

The group also expects the headline loss per share, which excludes the profit on the sale of NMSIS, to narrow year-on-year.

“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.”

On an organic basis, which excludes the effects of foreign currency and group composition changes, the decline in trading profit is expected to be far smaller. 

The group also expects adjusted core headline earnings per share to follow the trends seen in trading profit. 

However, the extraction losses will partially offset it due to a narrower gap between the official and parallel exchange rates in Nigeria during FY25.

The group’s board considers trading profit and adjusted core headline earnings per share to be the two appropriate indicators of the group’s operating performance, as they don’t account for non-recurring items.