Multichoice Group Limited

Good day, ladies and gentlemen, and welcome to the Multi-Choice FY23 Results Conference. All participants are currently in listen-only mode and there will be an opportunity for you to ask questions later during the call. If you should need assistance during the conference, please signal an operator by pressing star and then zero. Please note that this event is also being recorded. I will now hand the conference over to Molloy Horne. Please go ahead.

Thank you, Chris. Hello, everyone, and thank you for joining us today. We released our results for the year ended 31 March 2023 yesterday. And for those of you registered on our database, you would have received an email with all the information. And if you're not on our list, we have uploaded the slides and the latest results in the investor section of our website. As usual, our presenters today, our CEO, Kalba Mwele, who will focus on our operations. and our CFO, Tim Jacobs, who will discuss the financials. After the presentations, we'll be happy to answer some questions. So with that, let me hand you over to Calvo to start today's presentation.

Thank you, Miloy, and good day to everyone. Let's turn to slide four to discuss the highlights of this year's results. We have grown our subscriber base by 8% or 1.7 million customers. which means we now serve 23.5 million households across the continent. The rest of Africa had a particularly strong year, adding 1.4 million subscribers to reach 14.2 million households, or 60% of the group's total base. As a result of revenue growth and cost control, the business reported a trading profit of 900 million rands, which is a 2.8 billion rent improvement from the previous year on an organic basis. Connected video users on the DSCV app and Showmax continue to grow, with paying Showmax subscribers increasing a healthy 26% year-on-year. The business is set for exponential growth as we look to relaunch it later this year in partnership with Comcast and by leveraging its world-class pick-up platform. Group revenue. increased 7% to 59.1 billion rands, underpinned by the strong rest of Africa performance, but offset somewhat by pressures in the South African business, caused by high levels of low trading, which hit subscriber activity in the final quarter of the year. The 17% trading margin was impacted by the lower earnings in South Africa, and an adverse 900 million rands foreign exchange impact mainly due to the weaker rent. Pre-cash flow was affected by lower profits in South Africa and some prepayments. The board took a prudent approach given the uncertain current environment and decided not to declare a dividend for FY23, and Tim will discuss this in more detail later. The past year saw us maintain our ongoing investment in local content and we delivered a record production of live sports events, which we'll discuss in more detail in the operations section. We were able to report positive organic operating leverage as cost increases were kept below that of our revenue growth. We banked 1.3 billion rands in cost savings, well ahead of our 800 million rand target. We used some of this savings to fund other aspects of the business, such as pricing offers, more local content, and new services. Kingmakers, our 49% owned sporting business, delivered strong growth with revenues up 51% to $198 million, or 3.4 billion rands. We've also had a busy year expanding our consumer services ecosystem. Let's turn to page five for more details. As we explained at our recent Capital Markets Day, we are focused on creating a world of more. We keep increasing the value that we offer our customers to drive additional revenue streams and to create long-term value for our shareholders. Aggregating content is a critical underpin to our video entertainment strategy. In the past year, we have added Disney Plus to our Explorer Ultra environment. We have offered customers cost-saving bundles to add to the convenience of accessing all their content in one place. We have enhanced our catch-up service with the addition of Universal Plus, and we have launched a dedicated linear channel for the extremely popular Super Sports Schools app. To ensure that our viewers can access our content in a way that best meets their needs, we have launched the streamer and plan to launch GSC with Lars in partnership with Sky in 18 to 24 months. When it comes to other affiliated services, we have extended our home security offering by buying the Namula app. We have strengthened our connectivity offering by expanding the DSPB internet service. We have expanded our FinTech activities by investing in Moment, a partnership with Rapid and General Catalyst. And where we joined forces with Comcast to drive Showmax to become the leading streaming platform on the continent. Last, but certainly not least, We have secured a license and are looking forward to the imminent launch of SuperSpotBed in South Africa. On the operations front, we have had a good year in terms of execution, and our teams did well in navigating the various macroeconomic challenges. Starting on slide seven, we share some of the highlights. As demand for local content continues to exceed supply, We sustained our investment in local content by producing over 6,500 hours this year. As a result, our local content library now exceeds 76,000 hours. Our target was to spend 50% of our general budget on local content by FY24. But we have raised this target in FY23, which is a year early. We have also launched five more local channels in South Africa, Uganda, Ethiopia, and Ghana. Our co-production slate continues to expand. We released four co-productions during the year and have another six co-productions in the pipeline for the year ahead. We have spent some time optimizing our third-party content channel slate, for example, replacing low-performing channels and enhancing the GE offering with more movies and lifestyle content. We keep refreshing our content slate and added a mix of the best of local shows, some blockbuster international content, and several pop-up channels. Finally, multi-choice studios continues to grow, selling 151 series and movies in FY23, and growing its revenue contribution 1.4 times. Moving to Super Sport on slide eight. As one of the best sports broadcasters globally, We bring our viewers the best events from around the world and the most popular sporting action on the continent. We are also spending more on local sports. The Super Sport Team had a bumper year and increased live broadcasts to almost 25,000 events, an all-time record and a 69% increase year-on-year. Our live broadcasting of all 64 FIFA World Cup matches included local language commentary in 11 languages across eight markets. We have also enjoyed great success in complementing our live broadcasting with local sport documentaries, including RISE and RASI for rugby fans, and Powers of a Nation for the local football lovers out there. During the year, we secured multi-year extensions for important sporting rights, such as the English Premier League and Formula One. We also increased our focus on women's sport and are very excited about the all-female broadcasting crew, which will be bringing you the Women's Netball World Cup from Cape Town at the end of July. The year ahead promises to be another great one for our sporting fans, with a total of not one, but four World Cups to look forward to. On slide nine, we look at our new investment to support local sports. with both supersport schools and the annual SA20 cricket league off to a great start. Bringing school sport closer to its supporters and communities, supersport schools now covers 37 sporting codes and has its own TSTV channel. This platform has allowed us to stream almost 34,000 hours of sports this year, an increase of more than five-fold. Due to its exponential growth, Super Sports Schools is gaining significant interest from advertisers and is expected to break even in FY24. And to complement the live action, we recently introduced a new short film initiative with the first story, Vlado, featuring St. John's popular water polo coach. To reignite interest in local cricket, we successfully launched the SA20 Cricket League in January this year. This venture in which we own 30% stake, was already free cash flow positive in its first year. Heading to slide 10, we look at the South African business, which added 300,000 customers in an exceptionally challenging environment. As the market is maturing, we have significantly stepped up our retention initiatives. This included more price lock offers, internet bundles for extra savings, and doubling the number of participants on the DSCV rewards program to 1.3 million. We have also expanded our compact offering by adding ESPN2, which showcases the NBA and NFL, and we have deepened our aggregation offering with the introduction of Disney Plus and Universal Plus. DSCV via streaming, or DVS, is showing promising traction and increased its customer base by more than two times year-on-year, while the DSCV Internet Active User Base has increased five-fold since last year. We are also very pleased with the continued momentum of our DSCV insurance business, which now has 2.8 million policyholders and increased its revenue contribution by 22%. Moving from the good work we are doing as a business to the key challenge we are facing as a business, which is load sharing. Many of you on the call today are living this reality and have seen the recent comments from the likes of Pepco, Tiger Brands, SPA, and Astral Foods, all calling for attention to this crisis. The graph on the left-hand side of slide 11 shows the significant ramp-up in load shedding activity from 40 days in FY22 to 211 days in FY23. It also shows the increase in the intensity of load shedding with the number of days where we had stages four to six load shedding, increasing from five to 104 days. In early March, we flagged that the unprecedented high levels of load shedding experienced in the fourth quarter of our financial year were having a significant impact on the activity levels of our South African customer base, and therefore also on revenue and profitability. Load shedding has resulted in a disconnect between our 90-day active subscribers which is up 2% as people still want our product, and our current active subscriber number, which is 2% down as people struggle to afford or connect to our product consistently every month. The chart in the middle of the page shows the average daily load-sharing level increased month on month during this period and the correlating pressure on our active customer base. It also shows how less load-sharing in March translated into an immediate uptick to our customer numbers, which bodes well for the future once the problem is fixed. The impact of load shedding on viewership is material, as ETV also flagged in their recent results. During Stage 6, industry viewership typically declines by 31%. We are somewhat insulated with a 12% deadline, but that's a material impact nonetheless. But we did not merely accept the situation. We have taken some extra steps to mitigate the impact of load sharing on the business, from equipping our installers with inverters and adding pop-up channels for our customers to catch up on their favorite shows if they have missed the show because of load sharing. On slide 12, we reflect on the key performance measures for the SA business. We deliver 3% aggregate growth with 10% growth in the mass market of certain pressures elsewhere. Negative premium segment growth was again largely a function of pressure in the Compact Plus package. The deadline in active days by 12 days is mainly due to the impact of load shedding and the current macro environment as already explained. Our pricing for the year has been known for some time and reflects price increases at or around inflation. The output deadline on a segmental basis is largely a reflection of the drop in activity levels, while on a blended basis, the ongoing change in mix also came into effect. On slide 13, we provide an operational update on the rest of Africa segment, where we now serve more than 14 million customers. We're able to increase prices on average by 11% in our core markets this year, in line with our objective of passing through inflation-linked pricing. Buoyed by the FIFA World Cup and a strong local content lineup, advertising revenues grew a healthy 44%. We continue to expand our distribution footprint, increasing our direct sales force to 10,000, our points of sales to 25,000, and our payment partners, 271. We broadened our product offering by launching TSTV via streaming in Angola, Kenya, and Zimbabwe, and we have plans to launch in other markets, too. To address issues around affordability of our satellite service, we launched service offerings in Ghana and Kenya at below $5 per price point. And following the success of the FIFA World Cup campaign, we're able to maintain momentum through to the new calendar year on the back of targeted First East campaigns and the Nigerian elections. Turning to slide 14, we provide more detailed commentary on some of the largest markets in the rest of Africa portfolio. Firstly, our Nigerian business continues to perform well with subscriber growth at 15% year-on-year. Both the DTH and DGT segments of the business are now profitable. High inflation and energy prices are affecting consumers, and liquidity remains a challenge. But we are heartened by comments from the new president and his plans to address these issues. Our Kenyan business turned profitable this year with price increases and cost management offsetting currency and growth pressures. The Zambian business saw its in-country profit double as it benefited from price increases and a stronger currency. The Angolan market also benefited from a stronger currency and a drop in inflation, and losses narrowed materially as the base continues to grow. On slide 15, we provide a summary of the key KPIs for the rest of Africa. The business delivered a healthy 11 percent subscriber growth with strong momentum in the median mass market. Premium growth was accepted by normalization and upgrade campaigns. Active days were seven days lower, reflecting challenges in markets like Zambia, which was affected by power outages, and Nigeria, where consumers are battling inflationary pressures. Blended ARPU was fled year-on-year in dollar terms on the back of inflation-linked pricing, offset by the low activity level. Turning to slide 16, where we unpack the impact of one of our flagship events, the FIFA World Cup. From a super sport and customer perspective, the event went exceptionally well. Our team successfully delivered their boldest and biggest World Cup to date. From a management perspective, we also evaluate the economics of the event. Everything considered, this World Cup delivered broadly in line with expectations and the previous iteration. As we show in the graph at the top right of the page, the event delivered a clear step up in net subscriber ads in the second half, over and above the strong seasonality we see every year, similar to the 2018 event. Although we opted to bid for exclusive rides for the 2022 event, the anticipated uplift in our customer mix was somewhat less than expected. a strong increase in advertising revenue offset over two-thirds of the increase in the rights costs. To help drive growth, we invested around 700 million rands in set-top-up subsidies ahead of the event. Given the current subscriber environment, we expect the payback period on this investment to be a month or two longer than before. Turning now to our connected video business on slide 17, The team delivered 12% year-on-year growth in total monthly active users across the combined Showmax and TSV app customer bases. Showmax paying subscribers increased 26% year-on-year, while the Showmax Pro user base grew 1.6 times. The Showmax team is leveraging our deep understanding of local content, which is resonating very well with our viewers. In the past year, Showmax added 31 new originals, such as Fine House, The Wife, and The Real Housewives. The team has been recognized by the industry for producing excellent content, winning 17 sub-towers. Showmax is also the top streaming app in the South African app store. Our technical team has worked hard to keep reducing the cost of streaming. We now offer the lowest data streaming option on the continent at just 50 megabytes per hour. We are also very proud of showcasing all 64 FIFA World Cup games in 4K and of handling almost half a million simultaneous views during the tournament without any hedges. Showmax's successes to date set us well for the next stage of its journey, as I'll explain on slide 18. In March this year, we announced our streaming partnership with Comcast's NBC Universal and Sky to relaunch Showmax. Powered by Peacock's leading globally-scaled technology, the new Showmax Group will be 70% owned by MultiChoice and 30% by NBC Universal. The new partnership will bring some of the world's best content to streaming customers in MultiChoice's 50-market footprint across sub-Saharan Africa. This includes our own local content, international content from Comcast Group, the second-largest content producer globally, the English Premier League, and great third-party content. We'll disclose more details about our offerings and pricing closer to the launch later this year, but we believe our strategy will result in far higher customer traction than what we previously envisaged, as we show in the graph on the bottom left of the page. The partnership with Comcast will also allow us to ramp up our production of Showmax Original quite significantly, as we show in the next graph. We have set ourselves a target of generating $1 billion in revenue after five years, and of reaching trading profit break-even in the next three to four years. At scale, we would expect the business to generate healthy EBITDA and cash flow margins. Going forward, we will be disclosing Showmax as a separate segment in our financials. On slide 19, we provide an update on the data, our technology business. Customer service by data face ongoing strategies in silicon supply and disruptions in global supply chains. The war in Ukraine also led to a group decision to exit the Russian market, which impacted both revenue and margins. In the meantime, the team remained focused on execution. They gained further market share in media security and won 17 new connected services customers. The new services segment now accounts for almost a third of external revenues. eData secured more than 61 billion streams during the past year, which is more than a 50% increase from the year before. They were recognized for their efforts and were named the best cybersecurity company at the recent industry event. In FY23, eData's gaming cybersecurity arm, DeNovo, unveiled new technology that can identify bots in real time with close to 100% accuracy. The business rolled out data control for multi-digital rise management, launched its cross-charge solution for electric vehicles, and took additional steps in connected health. Let's turn to slide 20 for an update on Kingmakers, our sports betting investment. The business reported strong growth momentum for the year, with active users increasing 20% while active agents were up 99% year-on-year. Stakes increased to $1.8 billion, which supported a 51% increase in revenues to $198 million, or 3.4 billion rands. The J curve remains shallow, and the business reported a $28 million loss after investing in operating capacity and absorbing some cash extraction losses from Nigeria. At its year end, the business had $166 million in cash, mainly held in the UK, which will be utilized to fund its expansion plans. The past year saw a change in management with new CEO Kim Reid, previously from Takealot, leading a group of experienced executives with deep industry expertise. The team decided to reprioritize its activities and focus on large, must-win markets like Nigeria and South Africa first, resulting in an exit from Kenya and Ethiopia. SupersportBed obtained a license in South Africa and will be launching soon. Turning to slide 21 to discuss the impairment of our investments, the kingmaker's business has grown exponentially over the past few years. Since our investment in 2020, They have delivered in line with the original U.S. dollar business plan investment. As the business is performing well, the impairment did not relate to operational performance. A roughly 7% increase in the U.S. dollar discount rate for the Nigerian market, driven by a macro shift globally, higher risk premium, and a material change in currencies resulted in us incurring an impairment charge of 112 million dollars. And while this represents a download adjustment of around 40 percent, it is in line with the average deadline in value of the peer group over the past two years. We know that the valuation reflects things at a point in time and could well increase again going forward. We remain convinced about the future upside of this business. Finally, we turn to slide 22 to briefly revisit our investment in moment. a FinTech startup which we announced at our Capital Markets Day. Moment, which represents a significant opportunity for the partners in the venture, is set to transition consumers and SMEs across Africa from cash to digital solutions. FinTech is a highly competitive and fast-moving space, but Moment will enjoy significant competitive advantages at launch. It will look to leverage multi-choice, 200-plus payment partner integrations, and our existing base loads of $3.5 billion in annual customer payments across 50 markets. It will also benefit from the proven technology and expertise of the rapid team and the resources and networks of the founding venture capital partners. Our initial capital investment was around $3 million, and the venture is unlikely to require further funding in the next 18 months. It is early days. but we believe that moment has a role to play in shaping the payment landscape in Africa for the better. We have received a lot of interest from the market about moment and how it will work. We look forward to unpacking more detail with you in future. This concludes my operational update. Let me now hand over to Tim to discuss our financial performance.

Thank you, Kelber. Our operational teams have worked hard to navigate challenging macro conditions, and we unpacked this on slide 24. Across sub-Saharan Africa, GDP growth has been problematic and is forecast to slow further into calendar year 2023. Regional economies face a range of challenges that include a strong dollar environment, elevated inflation, higher interest rates, and a challenging geopolitical climate. In South Africa, GDP growth is forecast to slow significantly to 0.1% given the load shedding crisis and the tough macro environment. Recent research suggests that middle class South Africans are now spending 70% of their monthly income on servicing debt installments. As we show on the bottom left of the slide, local currencies have generally weakened against the dollar. Zambia and Angola bucked this trend as government reforms led to stronger currencies, and we hope to see similar improvements in other markets like Nigeria with incoming government. The strong dollar environment and rising inflation has translated into elevated levels of food and energy prices across our markets. Nigeria inflation is experiencing 17-year highs of 22%, while rates in South Africa and Kenya also remain elevated. The combination of rate hikes by leading central banks in conjunction with local inflation has seen African central banks entering a hiking cycle as well. High interest rates are putting further strain on local businesses, consumers, and economic activity. The impact of these dynamics is that discretionary consumer spending is being squeezed, placing pressure on the activity levels of our customer base. With that backdrop, we turn to slide 25 for our key financial highlights for the period. Bearing in mind that macro conditions in our largest markets deteriorated into the second half, we believe we've delivered a reasonable performance as a group. We delivered 4% organic top line growth, driven by our strong performance in rest of Africa, with a weaker rand against the US dollar accounting for the 7% reported revenue growth. Our trading profits were up 5% organically, following the return to profitability in the rest of Africa, but we're down 3% on a reported basis, following an adverse 900 million rand foreign exchange impact on our US dollar businesses. Core headline earnings were up 2% on a reported basis, which excludes the impact of the Nigerian cash extraction losses as we regard them to be of a temporary nature. Our lower free cash flows reflect the impact of weaker South African operating performance, prepayments made during the period, an increase in content spend, as well as the timing of payments brought forward due to a financial system upgrade. On slide 26, we look at the subscriber numbers and subscription revenue, the largest contributor to our top line. The chart on the left shows our 90-day active subscriber base, which was up 8% driven by 11% growth in the rest of Africa and a 3% increase in South Africa. Subscription revenues on the right were up 7% or 4% on an organic basis. In the rest of Africa, we benefited from an average 11% price increase strong subscriber growth through the FIFA World Cup and festive season, and a reasonably stable subscriber mix to deliver 16% organic growth. Growth on a nominal basis was positively impacted by the translation of the rest of Africa dollar revenues into rands at an average rate of 17.14 compared to 14 rand 93 to the dollar in the previous year. In South Africa, subscription revenues were 3% lower as the benefit of price increases was offset by the decline in activity rates on the back of a tight macro environment, as well as the ongoing shift in mix towards the mass market. Turning to slide 27, we unpack our revenue performance by type. Outside of subscription revenues, our DSTV media sales team delivered 7% growth in advertising, despite an exceptionally strong prior year performance due to a post-pandemic rebound. This outcome was driven by the FIFA World Cup and the team's continued focus on new digital advertising initiatives and local content properties. Our technology business, Adeto, experienced ongoing global supply constraints and the decision to exit all Russian-based operations impacted negatively on performance, resulting in external revenue declining 4% year-on-year. Given the rapid growth of our insurance business, We are disclosing this revenue separately for the first time this year. It generated 717 million rands, an increase of 22% year on year. The 8% growth in other revenues mainly relates to Dakota sales in Africa, as could be expected in a FIFA World Cup year, as well as sub-licensing revenues. Slide 28 provides an update of our segmental trading margins. The South African trading margin came in at 24.2%. At the start of FY23, we guided the market to a target range of 28 to 30%, which was 200 basis points lower to account for what we saw as a deteriorating macro and consumer picture. While we were directionally correct, unfortunately, we weren't able to anticipate the extent to which the environment worsened through the course of the year. We discussed the SM margin in more detail in the next slide. The rest of Africa business performed exceptionally well and has reached profitability for the first time since listing with a trading margin of 4%. This represents an improvement in reported trading profit of 2.1 billion rands. The debtor's margins at 41% were higher than normal due to the impact of the FIFA World Cup decoder sales, which are excluded from consolidated revenues but included in trading profit. Aside from this, the team's tight cost controls helps offset external top-line pressures. Slide 29 provides more detail on the South African margin and the outlook for the near term. Over the past seven years, the segment had consistently delivered margins between 30% and 32%, despite a shifting subscriber mix, pressure on the premium and mid-market segments, and lower top-end pricing in recent years. As mentioned, growing concerns about the macro environment led us to lowering our initial guidance for financial year 23. Through the course of the fourth quarter, we realized that rapidly declining trading conditions, mainly due to low chaining, meant that we were likely to miss the revised range, and we informed the market of a revised margin range of 23 to 28%. To the right of the slide, we show a recon of the year-on-year movement in margins to arrive at the 24% outcome for financial year 2023. The key items impacting the margin include increased business-as-usual losses in Showmax, despite higher revenues, as we improved the user interface, user experience, and back-end technology, and increased our Showmax Originals content slate. Approximately 100 million rands in operating costs related to the Comcast deal, Negative operating leverage from lower revenues, which came as a result of a weak consumer environment and extensive load shedding towards the latter part of the year. As we have a largely fixed cost base, this left insufficient time for us to adjust and absorb all of the additional pressure in financial year 2023. And lastly, a broad increase in content costs, which includes local content, the FIFA World Cup, SA20 cricket, and various rugby leagues, as well as increased sales and marketing to support these events. Looking to financial year 2024, and despite many uncertainties, the benefit of stripping out the showmax losses from the South African segment results should outweigh the additional negative impact of persistent load shedding and macro weakness, enabling us to target a trading margin in the mid-20s. Moving to slide 30, we analyze our operating leverage and look at our cost savings for the year. As you know, our target is to generate positive operating leverage by keeping the organic growth in revenue ahead of organic growth in operating expenditure. Despite the challenges, we've managed to achieve that this year. We delivered 1.3 billion rands in savings, with major contributions this year coming from renegotiated contracts for international general entertainment content and sports rights, as well as targeted savings around discretionary spend in non-critical promotions and travel. As we mentioned previously, we expect these savings to become lumpier in the future and have set a target savings of R800 million for financial year 2024. On slide 31, we provide our standard trading profit bridge for the rest of Africa for the last time. The business enjoyed a material benefit from our inflationary price increases across the majority of our core markets, demonstrating the benefits of a more sustainable pricing policy on a scaled customer base. We also saw strong growth in subscriber volumes during the FIFA World Cup, which boosted advertising revenues in conjunction with our local content slate. Finally, the segment benefited from tight cost management as we pushed the team to ensure that we met our medium-term break-even targets. This exceptional performance resulted in a trading profit improvement of 2.8 billion rands on an organic basis. Currency headwinds, however, still amounted to considerable 700 million rands, after major FX declines in markets like Ghana, Nigeria, and Kenya, which were more than outweighed by improvements in Zambia and Angola. The net result was reported trading profit of 900 million rands, and we have now set our sights on our next target, which is free cash flow breakeven in financial year 2024. Just to note, during the period, we incurred a loss of 2.4 billion rand, in extracting cash from Nigeria, which is reflected below the trading profit line. On slide 32, we show our core headline earnings, which reflects modest growth of 2% year on year. The key driver of this performance was the sharp improvement in profitability in the rest of Africa segment, largely offset by the lower net contribution from South Africa, which includes higher interest charges on increased loan balances. At the bottom left of the slide, We also show adjusted core headline earnings that includes the impact of the Nigerian cash extraction losses, net of taxes and minorities. As mentioned earlier, we have historically excluded these losses from our core metrics as we consider them temporary in nature. Given comments from the incoming Nigerian president and recent market activity, they're encouraging indications that reforms could lead to the elimination of the parallel market driving these losses. Slide 33 provides an update on our free cash flow, which was down 48% year-on-year. The waterfall graph flags the key movements, which we unpacked starting from the left. In the comparative period, we generated 5.5 billion rands in free cash flow. EBITDA was 300 million lower year-on-year, as the weaker South African performance was mostly offset by the stronger improvement in the rest of Africa. We incurred 1.2 billion in prepayments, mainly relating to the renewal of certain content rights, and for operational expenses such as software licenses. CAPEX work in progress mostly relates to a super sport OB van, which we only took delivery subsequent to year end. Cash taxes of 3.4 billion rands, transponder lease repayments of 2.5 billion, CAPEX of 1.2 billion, and 600 million rands in Nigerian tax audit deposits were broadly in line with the prior year. This leaves other working capital movements of R800 million, which includes R400 million in early credit payments as a consequence of our finance system upgrade going live on the 1st of April, while the balance is the portion of the FIFA World Cup investment not yet recouped at year end. We are targeting free cash flow break even for the rest of Africa in financial year 2024, while group free cash flow will be impacted by the operating environment in South Africa, and the planned investment spend for Showmax. Moving from cash flow to cash balances, we provide an update on our balance sheet on slide 34. Our reported cash holdings have improved year on year from 6.2 billion rands in the prior year to 7.5 billion rands at year end. However, as we noted in our capital markets day, we typically aim to retain meaningful cash balance in the underlying business segments for ongoing operating requirements and financial flexibility. Undrawn facilities have increased to 9 billion rands, of which 5 billion rands in general banking facilities remain similar to last year. We've entered into a new 12 billion rand term loan facility, 8 billion of which was drawn down at year end to cover our short-term working capital needs, and 4 billion rand remains available to support ongoing business requirements. Looking at our cash of 7.5 billion rands, not all of it is available for deployment. Around 1.2 billion is subject to liquidity , while the net outflow dividends will amount to 1.3 billion. 400 million rands of loans and 2.4 billion in these liabilities are due and payable within the next 12 months. This leaves 2.4 billion of cash flexibility as you weather the uncertain current economic environment and start funding the Showmax opportunity. Our debt position at the year end increased to 8.4 billion rands as a result of the term loan facility drawdown. This is after 3.6 billion rands in loan repayments, mainly in relation to our previous working capital and Kingmaker acquisition loans. Our leverage ratio at 1.08 times remains well within prudential limits. Before Calder wraps up with the outlook, I'd like to touch base on capital allocation on slide 35. We unpacked our thought process in detail at the Capital Markets Day, but as a reminder, we have a disciplined approach to managing this area, which is critical for our business, for our board, and for our shareholders. We continue to optimize our group's core free cash flows by moving rest of Africa back to free cash flow break-even and helping the South African and technology businesses navigate a challenging local and global macro environment, respectively. While we focus on execution in our established verticals, we're also investing in long-term growth in our new verticals. Although the Kingmaker business plan is fully funded and moment is unlikely to require capital for the foreseeable future, our Showmax streaming venture with Comcast will require a capital investment in the short to medium term to secure the opportunity we see ahead. When it comes to dividends, our policy remains to return excess cash to shareholders and to do so in the most optimal way. Given the significant pressures in the South African business, we slightly reduced the multi-choice South Africa dividend, which is streamed up to the group, with Petuminati shareholders also receiving a dividend in the process. However, given deteriorating macro conditions in key markets, our focus on returning rest of Africa to funding breakeven and the near-term investment priorities to support our long-term growth ambitions We believe it is prudent not to declare a multi-choice group dividend for financial year 23. The board hopes to reinstate the dividend as we move through our short investment cycle and macro conditions improve. With that, I'd like to hand back to Calvo to conclude.

Thank you, Tim. Let's turn to slide 37 for our outlook on the AI. In the coming months, we will be focused on stabilizing the South African business in the face of the ongoing loan sharing challenges. We have made some management changes, and the new team is keen to invigorate things. In the rest of Africa, the team will capitalize on our success so far and continue to drive growth through various initiatives. Once we have completed the transitioning to the pick-up platform and launched the new Showmax offering, we'll be looking to materially accelerate our streaming revenues. Our focus on delivering great content is unchanged. We are aiming to produce another 6,700 hours of local content, successfully deliver four World Cup events, and drive super sports schools to even greater heights. From a financial perspective and considering all the uncertainties, we are targeting a mid-20% trading profit margin for South Africa in the year ahead. In the rest of Africa, we will be looking to generate positive free cash flow. Our aim is to take another 800 million rands, of course, out of the system this year. We'll also be supporting the launch of Super Spotbed in South Africa, Moment's launch of their B2B platform, and driving more scale in our own value-added services. So these are our plans for the year ahead, but let me end with some context. We understand that things are not easy right now, and there are many short-term uncertainties. But we play a long-term game, and are putting the right building blocks in place now so that we can reap the benefits later. Looking around us, we are encouraged by how quickly things have improved in countries like Angola and Zambia, once their governments have taken the right steps to address the problems. We believe the same is possible in our key markets like South Africa and Nigeria. As a result, we remain positive about the future and the long-term prospect of our business. By making the most of the opportunities to expand our ecosystem, we are looking to transition from a great pay TV operator today into a leading, much larger consumer tech play. That concludes our presentation for today. Thank you, Chris. We are happy to now take some questions.

Thank you very much, sir. Ladies and gentlemen, at this time, if you do wish to ask a question, please press star and then one on your touch-tone phone or on the keypad on your screen. You will hear a confirmation tone that you have joined the queue. If you wish to withdraw your question, please press star and then two to remove yourself from the list. Our first question is from Jared Hoover of RMB Morgan Stanley. Please go ahead.

Afternoon, Calvo and team. Thanks for the call. A few questions from my side, please. I thought I would start with Showmax. I think you've repeated some of the charts from your CMD in your full year presentation. But what I wanted to find out is specifically if you could talk to what the trading profit losses that specifically relates to Showmax are going to be in 2024 and 2025. Based on my estimates, it looks like it's going to be about 4 billion rands in 24 and about two and a half billion in 2025. And it also looks like you had about one billion in trading profit losses from the Showmax platform in 2023. So if you could give me some color around that piece, that would help as well as if you are able to share what your accumulated losses in the Showmax platform have been to date relative to some of the returns that you are targeting on that spend. That's my first question. My second question is around the load shedding impact. I think it was on slide 11, where you put up a slide showing that the moment the energy constraints seem to abate, you start to see your subscriber growth come back a bit. And I think you've mentioned that you've seen that type of activity in Africa as well. Are you able to share what some of that detail looks like in the current trading environment in March, April, and maybe I'm not sure if you've got the June data, but maybe in the March and April months. And my very last question is just around South Africa and some of the conservatism that you may be building into your numbers. Now, high level, I think you guys are guiding for call it a 25% margin in the South Africa business for 2024. And that excludes the Showmax business. If I compare that to 2023, you achieved a margin of about 24%. And if I add back what I think are your showmatch losses, it looks like the margin for South Africa would have been about 27%. So the only difference really between 2023's call it pro forma margin of 27% and 2024's guided margin of 25% to my mind would be around what you are expecting to lose on the revenue line item, which kind of backs out to losing about 200,000 to 250,000 subscribers in South Africa. Now that feels a bit high to me, so I just wanted to see if you have any comments around that. Potentially I'm missing something on the cost growth. I'll leave it there for now. Thanks.

Maybe let me start by addressing the question, and thanks for the questions, on the trading update with regards to load sharing. What we have seen is that, and we've addressed it in in some of the commentary is that when it gets to stage four to stage six, then we are seeing the middle and the mass market being impacted negatively because they don't have alternative source of energy to take up our product. However, as we have indicated out of the March numbers, we have seen that the 90-day active numbers, there is a big disconnect there, and it's just a result of low chaining that has happened, and as soon as low chaining subsides, you see people coming in, which indicates that our product is still a sought-after product. We have seen the same thing happening in Zambia, where when they face drought, you see a big churn in subscriber numbers, but immediately when the low chaining subsides to below eight hours a day, then you just see subscribers coming back immediately. And we expect the same thing to happen. As far as we have seen, remember April and May, we were consistently at stage six. So your assumption should be that it played out the same way when we experienced stage six. We have just seen just two weeks of some relief in road sharing. And we are monitoring it to see how much of the subscribers come back. But usually there is a timing where they watch as to whether this improvement is almost permanent, and then they come back in big numbers again. So we expect the same kind of situation to play out in South Africa as it has happened in many of the markets that we operate in. Tim?

Okay, let me touch on the Showmax losses. So we incurred a R1.2 billion loss in the year that's just passed, financial year 2023. We expect the investment to peak next financial year, 2024, and I'm going to give you a range. It's going to be somewhere between 3 and 4 billion rands. The investment that we're going to make in Showmax over the next couple of years is going to obviously be dependent on the launch date and making sure that we launch according to where we think the launch should happen. And also, it's going to be largely dependent on the two key factors that we see being enablers in this market. One is data connectivity, and the second one is data prices. We need to invest significantly ahead of the curve. You can't wait for those two trigger events to happen because the rate of adoption that has been seen in other emerging markets on a global scale means that the adoption happens too quickly. And so you have to be moving early and you have to be investing slightly ahead of the curve. So that's our anticipation. I think 2025 is a little bit too far out for me to be speculating on a number, but I think you guys can work out, you know, relatively, relative to the 24 number and the 24 range that I've just given you, roughly where 2025 will be. But we do think that this is a short J curve if we're able to scale the business the way that we were thinking. You asked another question about historical losses. We don't disclose those. We haven't to date and we don't intend to disclose those into the future either. So I'll just let you know that now. And then you asked something specifically about the margins. I mean, we can't speculate about your mathematical modeling, right? We're giving you a steer as to where we think the numbers will come out. We've also indicated that there's a 2% showmax impact on our margins. Those margin guidance exclude showmax. So we are anticipating some continued top line pressure. Remember that we're a largely recurring revenue business. So when we have weakness in the fourth quarter, as we've disclosed to the market, that weakness, I mean, we had continued load shedding moving into April and May, and so that would have carried forward into the current year. Now, we're obviously doing a lot, and the new team that's in place in the South African business is doing an exceptionally large amount of work to re-challenge everything in that business, trying to find ways to stimulate the top line as well as reducing costs in the business. But it's too early to understand from our perspective how long load shedding will endure and how extensive it will be. So the best that we can offer is a guidance that we think will come out in the kind of the mid-20s.

Okay. Thank you, Tim.

Thank you. The next question is from Jonathan Kennedy Good of JP Morgan. Please go ahead.

Good afternoon. Just a simple question from my side. On the free cash flow break-even target for the rest of Africa this year, presuming that we see the valuation of the Naira, let's say, towards the parallel rate, perhaps not as far, just struggling to understand how achievable that target is. assuming we do get towards the parallel right I'm guessing you may be baking in price increases at some point or because I would think there's leverage to foreign currency costs that would make that tough to achieve that break-even target okay I anticipate that this is a question directed at me so let me give it a good go

So look, when we put this deck together, we give these targets on the basis of current accounting, right? Which means that we are accounting for our core results and free cash flow at the official rate. I mean, as of about one hour ago, there seems to be a significant movement in the market rates of the Naira towards the unified rates. So we saw that the government in Nigeria came out, made an announcement, quoted $7.55 on Naira to the dollar. We've been watching the market movements through the course of this afternoon. It tracked back to $600, and I think we're currently sitting at about $630. So it looks like that unification rate is happening. In our guidance, what we had said was that we were going to try and get to free cash flow break even in 24 and full funding break even or self-sufficiency in the medium term. Now, what will end up happening is I suspect that if this moves as quickly as we see it moving, we might end up in a blended answer where some of those cash extraction losses effectively get hard baked into your core numbers because of the big depreciation in the currency. So we will certainly try to still achieve the free cash flow break even, but I think given the quickness of the movements in the market right now, it's something that we're going to need to let unfold, and we're busy modeling different outcomes as we speak to try and understand exactly how this is going to impact us. But certainly, I mean, as a management team, we're going to do everything we can to try and achieve that free cash flow break even. But I suspect our timing might be slightly out because we're going to be bringing some of those extraction losses into that number as well.

Great, thank you. And if I may follow up with one more. Do you have to get regulatory approval for price increases in Nigeria? And given what looks like a substantial depreciation, would you consider raising prices, or was that not conducive to building scale there?

No, we don't have regulation approval for pricing in open markets, so we can increase prices as we deem appropriate. We have just increased prices now from the 1st of May, and we'll make a determination as things go through the course of the year as to whether there is a need for interim price increases, but we have to consider the ability of our customers also to be able to afford such price increases.

Yeah, as a general rule, we don't follow currency movements for price increases because the market can't absorb them. So we try to follow inflationary type price increases. So we put a 17% price increase into Nigeria on the 1st of May. Thank you. Okay.

Thank you. Ladies and gentlemen, just a reminder, if you wish to ask a question, please press star and one. The next question is from Tino Constantinou of Investec. Please go ahead.

Hi, I'm sorry. I tried to explore my question because everything I was going to ask has already been asked. So I'm good.

Thank you. Thank you very much. Then, gentlemen, we have no further questions. We try to make some closing comments.

Ladies and gentlemen, we hope you found our feedback useful and would like to invite you to reach out to our IR team if you have more questions or need more information. Thank you for joining us today and goodbye.

Thank you. Ladies and gentlemen, that then concludes this event and you may now disconnect.