Trouble for Multichoice
Media group Multichoice has warned shareholders to expect a headline loss when it publishes its interim results this week.
In a trading statement issued to shareholders ahead of its results being published on Thursday (10 November), the group noted that its earnings and headline earnings per share for the six months ended 30 September 2022 would be lower than the previous comparable period.
Compared to the prior period, the group expects earnings per share for the current period to be between 371 cents and 387 cents lower than the prior period’s reported earnings per share of 317 cents (loss per share of between 54 cents and 70 cents).
Headline earnings per share for the current period are expected to be between 406 cents and 420 cents lower than the prior period’s reported headline earnings per share of 356 cents (headline loss per share of between 50 cents and 64 cents).
Multichoice said that the losses are mainly attributable to higher unrealised foreign exchange losses on the translation of the group’s USD liabilities, stemming from the sharp depreciation in the rand against the US dollar towards the end of the current period.
“This is further impacted by an increase in foreign exchange losses associated with the repatriation of cash from Nigeria at the parallel rate,” it said.
The group stressed that these exchange losses are considered to be of a temporary nature and do not reflect the state of the core business.
“The board considers trading profit and core headline earnings per share as the two most appropriate indicators of the operating performance of the group, as they adjust for non-recurring and non-operational items,” it said.
In contrast to the headline losses, trading profit is expected to be between 0% and 5% (R300 million) higher than the R6.0 billion reported for the six months ended 30 September 2021, it said.
On an organic basis – i.e. reflecting results on a constant currency basis and excluding mergers and acquisitions – trading profit is expected to be between 2% (R100 million) and 7% (R400 million) higher than the prior period’s reported R6.0 billion, it said.
“The group expects core headline earnings per share for the current period to be between 1% (5 cents) and 5% (23 cents) higher than the prior period’s reported 462 cents. This number includes the impact of realised foreign exchange gains and losses,” Multichoice said.
Organic trading profit is calculated by excluding foreign currency movements and changes in the composition of the group.
Core headline earnings is calculated by adjusting headline earnings for the following items, net of tax and non-controlling interests:
- amortisation of intangible assets arising from business combinations;
- accounting adjustments stemming from IFRS 3: Business Combinations;
- equity-settled share-based payment compensation;
- unrealised and non-recurring foreign currency gains/losses;
- certain fair-value adjustments under IFRS;
- non-recurring current and deferred taxation impacts;
- non-recurring empowerment transactions and
- acquisition-related costs.
“The financial performance for the current period benefited from continued subscriber growth, an ongoing reduction in Rest of Africa trading losses and further savings generated from the group’s established cost optimisation programme. This was, however, tempered by a R700 million increase in decoder subsidies ahead of the upcoming 2022 FIFA World Cup,” it said.
The group plans to publish its interim results for the six months ended 30 September on 10 November 2022.
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