MultiChoice expects huge loss in its financial results

Multimedia group MultiChoice has notified shareholders to expect a significant loss when it presents its financial results for the year ended 31 March 2023. In a trading statement, the group said it expects its headline earnings per share to be between 671 cents and 690 cents lower (>100%) than the reported Headline Earnings per share of 381 cents in FY22.

This would translate to a headline loss of between 290 cents and 309 cents per share. Moreover, the group added that it expects its earnings per share for FY23 to be between 1,126  cents and 1,142 cents lower (>100%) than the FY22 reported earnings per share of 318 cents.

The group said that the reduction in earnings and headline earnings per share is partly due to the higher unrealized foreign exchange losses on the transition of the group’s US dollar liabilities, stemming from the rand’s weakness. Moreover, the increase in foreign exchange losses associated with the repatriation of cash from Nigeria at the parallel rate is hurting its results.

It added that the loss in earnings per share is also attributable by the impairment of the KingMakers Group, which is valued at R8.9 billion at 100%, caused by an increase in discount rates in the gaming technology sector and Nigeria – with the Nigerian Naira outlook mostly negative.

The group said that its trading profit for the year is expected to be flat, between 0% and 5% (R0.5 billion) lower than the ZAR10.3 billion recorded in FY22. The drop in operating profit is associated with the Comcast partnership that was announced near the end of FY23.

On an organic basis, which reflects a constant currency basis and excludes mergers and acquisitions, trading profit is expected to be between 3% (R0.3 billion) and 8% (R0.8 billion) higher than the R10.2 billion in FY22 reported ZAR10.3bn. Core headline earnings per share – excluding the impairments and currency costs – are expected to be between 0% and 4% (33 cents) higher than the 814 cents from FY22.

The group noted that it has seen strong subscriber growth, the Rest of Africa returned to profitability, and its cost savings exceeded targets. However, the difficult economic environment in South Africa, increased investment in recorded subsidiaries and marketing for the 2022 World Cup weighed heavily on the group.

Full details will be provided today in the group’s consolidated annual financial results statement.