Multichoice Group Limited

Good afternoon, everyone, and welcome to our result presentation. Let's start by turning to slide two for some upfront comments. As we look back on FY25, it has clearly been a challenging year. Our business has been tested in ways we could not have predicted, but we remain resolute in confronting obstacles head on. We entered the year with a business plan that factored in several critical risks, including a stressed consumer environment across the continent, a materially weakened era, and a peak investment cycle for Showmax. The ongoing cost of living crisis has meant that households are struggling to make ends meet, and many had no choice but to give up their GSTV subscriptions for the time being. Combined with the impact of power issues in large markets like Nigeria and Zambia, we saw our linear customer base declined by 8% year-on-year to 14.5 million active subscribers. Although this trend is an improvement on FY24, it indicates ongoing and broad-based pressure across our customer base. As we had to absorb another 5.2 billion rand currency knock to our top line, mainly caused by a weaker Naira, we've had to act decisively to ensure that the business could withstand the headwinds. We implemented further cost efficiencies and delivered 3.7 billion rand in cost savings for the year, well ahead of the 2.5 billion rand revised target set at the interim stage, and almost double the 1.9 billion rand saved last year. The ongoing evolution of the global video entertainment industry has presented us with opportunities to grow new revenue lines. During the past year, DSTV Internet, DSTV Stream, Kingmakers, and Showmax have all shown encouraging growth momentum, and some are already making meaningful contributions. This is a quick snapshot of our performance, but we'd like to update you in more detail. In the rest of today's presentation, I would like to provide you with a strategic overview and operational update, while the team will discuss our financial performance and outlook for FY26. Sub-Saharan Africa remains a compelling long-term opportunity despite the near-term challenges. Growth in the working-age population, rapid urbanization, rising electrification and increased connectivity are all factors that will support a growing middle-class and addressable market over time. Our strategy is shaped by industry developments and changes in technology, which are driving shifts in consumer behavior. We are responding to this proactively to ensure the long-term sustainability of our business. Slide five highlights some of the strengths. Streaming has transformed the way we consume video entertainment, shifting from traditional TV to on-demand digital platforms. Offering convenience and personalization, streamers like Netflix, Hulu and Amazon Prime have revolutionized access to movies and TV shows. As MultiChoice, we have responded by relaunching ShowMakes in February 2024 leveraging the world-class Peacock platform with its sports streaming capabilities, and we have increased our focus on our DSTV stream service, leading to great results. Aggregation has become more commonplace through hard bundles and connected devices. Examples are Sky, which now offer Netflix or Paramount Plus subscriptions, while Canal Plus has aggregation deals with Netflix, Apple TV, Paramount, and Max. In our case, multi-choice customers have the option of adding Showmax, Netflix, Disney+, or the Amazon Prime video streaming service to their subscription. Global streamers are also increasingly pursuing sports rights to boost their offerings. As an example, Netflix secured rights to wrestling flagship show Raw and has been broadcasting events such as the Tyson-Paul fight and the NFL on Christmas Day. Amazon has launched Prime Video Sports, offering access to several sporting codes including Thursday Night Football, NASCAR, and the NBA. On the multi-choice side, we have launched our ShowMaker service with a standalone mobile Premier League offering and have since added the PSL as well. Consolidation has also become a major industry theme, with several global media players combining to drive scale and operating leverage. There have been many of these measures over the past year or so, including Skydance acquiring Paramount in the US, the Disney Reliance major in India, and the DAZN group acquiring Foxtel in Australia. The proposed acquisition of multi-trades by Econoplus is another example of this global consolidation trend. Let's turn to slide six for more details. A combined group will provide benefits to us as well as Canal+, for the following reasons. The combination will provide the scale necessary to invest more in offering subscribers best-in-class customer experience across all technical platforms. With increased resources, The combined group will be well-positioned to benefit from the long-term growth potential of the African continent and compete more effectively against global media players. The two groups have a complementary and much larger African footprint over which to amortize costs such as tech, IT, SG&A, as well as international content costs. The combined group will have an enhanced risk profile and be better positioned to face headwinds given its broader geographical spread across multiple markets with different macroeconomics and currencies on three continents. This widespread of operation will also allow for better sharing of resources and know-how. Finally, a combined group will be well positioned to better leverage adjacent businesses across a much larger customer base. Turning to slide seven, Garnet Plus' ambition is to build a global entertainment leader with Africa at its heart. Multi-choice is a key element of this plan, which is why Garnet Plus is offering 125 friends per share for the multi-choice shares it does not already own. To allow sufficient time for regulatory processes to be completed, the long-stop date for the mandatory offer has been extended to 8 October 2025. The teams on both sides have been hard at work to move the proposed transaction ahead, and we have reached several important milestones along the way. Perhaps the most important development to date has been the positive recommendation issued by the South African Competition Commission to approve the transaction, subject to a package of public interest commitments that we agreed with the Commission. These commitments include a moratorium on retrenchment for a period of three years and support for participation of SMMEs and firms controlled by historically disadvantaged persons in South Africa's audiovisual industry. It also includes a commitment to maintain funding for South African general entertainment and sport content, providing local content creators with a strong foundation for future success. In addition, GANARplus has undertaken that multi-choice will remain incorporated and headquartered in South Africa. It will pursue a secondary inward listing on the JSE within nine months of the latter of the implementation date and the date on which MCG ceases to be listed. The proposed transaction will now be considered by the South African Competition Tribunal. This approval, together with the fulfillment of the remaining conditions, are required for the offer to become unconditional. We are continuing to cooperate with all regulatory authorities to move things Not only for the benefit of shareholders, but also for our customers and the multiple industries that depend on multi-choice. On slide 9, I would like to remind you of our strategy, building Africa's entertainment platform of choice. As the continent's most loved storyteller, we keep enriching the lives of millions of people through entertainment and technology, catering for their entertainment needs in their homes and on the move. We continue to innovate, partner and invest as we grow from our core linear video entertainment business by developing and scaling adjacent streaming and interactive entertainment services. Our aim is to entice customers to stay within our platform, providing solutions beyond just video entertainment, from technologies required to access our content, financial services that allow them to pay for their entertainment or ensure their equipment, to interactive gaming that adds to their fun. Turning to slide 10, catering to diverse local languages and cultural needs, we create stories in more than 45 languages across the continent. Our investment in local content is a key differentiator in our content strategy, and we remain the largest producer of original content in Africa. As we have produced more than 5,000 hours of local content this year, our local content library has now expanded to over 91,000 hours. A technical rebalance of our spend in a cost-conscious environment has resulted in local content costs reducing 9% year-on-year, but it still accounted for just over 50% of the year's general entertainment spend. Some of the year's local content highlights include Dibrech, Umkoka, and Queen Mdjaji in South Africa, while Omera, Zari, and Shanga were popular in the rest of Africa. show make viewers love to youngings, adulting, the real housewife, and the Stay in Heist documentary. sport on slide 11 is another critical element of our content strategy we reinforce our reputation as a global leader in sport broadcasting with super sports extensive coverage of the paris 2024 olympic games euro 2024 football three major icc cricket tournaments our own sa20 season 3 and several springboard rugby tests In addition, the United Rugby Championship and Curry Cup delivered strong growth, with viewership up 23% and 29%, respectively, from the previous season. It records Duplessis' second UFC world title fight against Sam Trickland set a new viewership record on Supersport. Over the past year, Supersport broadcast over 47,000 hours of live coverage, up 7% from last year, and were responsible for the production of more than 1,000 live events. We also renewed popular sport broadcasting rights such as care football, Wimbledon, Masters Golf, World Athletics, and the Varsity Cup. Super Sports Schools continues to redefine the landscape of school sports broadcasting. The platform increased its app user base by 46% to 1.2 million registered users, reached almost 11 million unique viewers on the app, and through Channel 216 on DSTV, and delivered over 50,000 hours of new content. This year also saw the Super Sports Schools channel being made available on SABC+, while the school's SA20 cricket competition was launched in partnership with Cricket South Africa and SA20. Moving to slide 12, the third leg of our content strategy involves international general entertainment content from world-class studios. In the past year, we secured popular content like House of Dragons, The Penguin, and White Lotus, while launching hits like Day of the Jackal and a much-anticipated spin-off series, Suits L.A. We renewed important channel agreements such as Paramount and Zee, secured a strong Indian channel lineup, and ensured rights to popular market-specific channels such as Moja Love and Panda Kids. In addition, we completed two co-productions, The Fix and Original Scene, with international studio partners. The South African economy saw some signs of potential improvement in the current year as inflation eased and the Reserve Bank started lowering interest rate. However, High unemployment, low economic growth and the ongoing effect of load reductions have meant that the South African consumer remains under significant financial pressure, which is negatively affecting businesses such as multi-choice that provide discretionary products and services. On slide 13, the chart on the top left of this page shows the clear correlation between deteriorating consumer spending over time and the related negative trajectory of our customer base. Against this background, the past year saw an 8% year-on-year decline in active subscribers to 7 million. This negative trend was evident across all three tiers, suggesting that economic hardships and affordability remain a challenge across the board. On the positive side, inflation lean price increases of 6%, a fairly stable subscriber mix, and active days being only marginally down resulted in blended ARPU increasing 4% year-on-year. We are also encouraged by the strong growth of new business lines, including DSCV Internet, which grew customers by 45% and revenues 85%, while DSCV Stream delivered 48% top-line growth. As a mature business, Multi-choice South Africa is focused on subscriber retention and win-backs, identifying remaining growth opportunities, as well as optimizing processes and systems to improve our customer experience and operational efficiency. Slide 14 reflects several enhancements implemented by the Multijoy South Africa team to improve its customer value proposition and expand its market presence. Our value proposition was improved by tearing down certain channels, reintroducing the second concurrent stream at no extra cost, and pricing down our DSTV Edmovies package from R79 to R49. We also entered new strategic partnerships with Capitec, MTN and PEP to expand our market presence and bundle our products to offer superior home entertainment solutions at affordable prices. DSTV Rewards continues to grow and drive customer loyalty, especially through our innovative customer experiences, such as early ticket windows to Springbok test matches, tickets to Chris Brown Live in SA, and the DSTV Delicious Festival. This show has been voted the best loyalty program in SA in the entertainment and leisure category. We continue to bundle DSTV Internet with our streaming product, DSTV Stream and Showmax, at competitive prices to drive better customer retention. We provided better decoder pricing to retail partners, resulting in the business surpassing its annual decoder sales target. And we introduced the Customer First, Every Time initiative to drive customer satisfaction. On slide 15, we reflect on the trends impacting our business in the rest of Africa. This segment has been impacted by material foreign currency movements in key markets, the ongoing cost of living crisis across the continent, power disruptions, as well as civil unrest in Nigeria and Mozambique. Foreign currency depreciation across several markets, most notably Nigeria, where the Naira depreciated by another 44% against the dollar, Angola, Ghana and Malawi caused a 26% loss in revenue on a reported basis. To reduce the negative impact of persistent challenges across our markets, we processed through inflationary pricing of 31% on average across the markets, and we launched a pilot project in Uganda post-year end, introducing weekly subscriptions to better align subscription periods with customers' cash flows. If this works, the plan is to roll it out elsewhere. The rest of Africa business reduces costs further by cutting subsidies, lowering marketing spend and increasing focus on digital marketing. We also reduce content spend and lower transmission spend through ongoing initiative to optimize satellite capacity and costs. Slide 16 shows the rest of Africa's operating performance. which has been hampered by ongoing challenges mainly in Nigeria, which accounted for the bulk of subscriber losses, and Zambia, where disrupted power supply has been a major issue. We are pleased to report that the pressure on the customer base is in the second half of the year, as the graph on the bottom left indicates. The rest of Africa ended FY25 with 7.5 million subscribers, the same as at the interim stage. A combination of a marginally weaker customer mix, low activity levels due to power outages in Nigeria, Zambia, and Zimbabwe, and severe currency weaknesses across many markets, partially offset by price increases to absorb higher inflation, has resulted in the blended output dropping from $9 to $8. Moving to slide 17. We remain convinced that streaming represents the future of video entertainment. It has just been over a year since the group relaunched Showmax in sub-Saharan Africa, with the ambition of becoming the leading streaming platform on the continent. As a startup business, Showmax focuses on enhancing its content lineup, building down distribution partnerships, expanding payment channel integration, and refining its go-to-market strategy. Although the segment has lagged its initial growth targets, it has still delivered healthy 44% growth in active paying subscribers and gained market share. After focusing on key market launches in South Africa and Nigeria in FY24, Showmax expanded its local focus to Kenya and Tanzania through data partnerships with leading local telco partners, as well as Ghana, Uganda, and Zambia through payment partnerships with leading local payment platforms. To drive uptake, Showmax released 82 Showmax originals this year. This was complemented by a rich international content slate, while the Premier League football offering was expanded to include the South African Premier Soccer League and some elements of the Euros 2024 and Olympics. Showmax also leveraged its live streaming capability to become the first African streaming service to live stream a music concert by homegrown talent Tyler. Given the slower than expected initial demand and ongoing macro constraints, we are critically reviewing the ShowMakes business plan. ...capital loss for the group as a whole. The business is sufficiently capitalized to find its growth ambition and held cash balances of $97 million at end of December. Bedkin Nigeria maintains strong momentum. It is acquiring better quality first-time bettors as evidenced by high average wage per user and is enjoying significant growth in its higher margin online business. SupersportBet, the South African business that launched in 2024, is showing early signs of success and reported a material increase in monthly net gaming revenue over the year. As a new startup, the business has been focusing on refining its business model, ensuring platform and operational stability, and on working with the Western Cape Gambling and Racing Board to launch Aviator and other casino offerings to fully round out the platform's iGaming portfolio offering. Moment, which is now live in 44 African countries, continued to grow rapidly, with total payment volumes reaching $635 million, up sevenfold from FY24. At the end of March, Moment reported an annualized run rate exceeding $1 billion. Its momentum was supported by a rapid acceleration of payment volume migration for DSTV, GoTV, and Showmax onto the Moment payment infrastructure, which processed 56% of the group's payment volumes compared to 20% a year ago. Moment launched voucher management to unlock strategic distribution channels for Showmax. As a service provider to DSTV, it improved install payment collections during power outages, launched pay on TV by QR code, which improves subscriber activity by 1.5 active days, and reduced cost of payment by 5% for DSTV payment channels that have gone live. Along with other backers, we contributed $8 million to Moment's seed extension fundraise in May 2024. We hold a 28.5% stake in Moment. That concludes the operational overview. While our performance does not reflect the growth ambitions we set for ourselves at the start of the year, it tells a story of perseverance and an organization determined to succeed. I'm incredibly proud of the dedication shown by our teams across the business. They did an excellent job if you consider the magnitude of external challenges that we had to face. Not only did they navigate and manage the things under their control, but they reduced costs, delivered for our customers, and made sure that we grew our new initiatives. To tell you more, I would like to invite Tim, our CFO, to take you through our financials.

Thank you, Kelvin. As we outlined in our trading statement, and as mentioned by Calver earlier, our results were hard hit by weak subscriber growth due to poor macro dynamics and the sustained pressure on consumers, as well as lapping the full impact of the Naira's depreciation from financial year 24 and the cost of investing in Showmax, which we expensed through the income statement. This relentless environment required us to do substantial ramp up of cost savings efforts to offset the top line pressure and position the group in the best manner to weather the storm. This is exactly what we've done over the past year. So let's turn to page 22 for an overview of how this played out in our financials. Last year we generated 7.9 billion rands in trading profit. This year we delivered a 1.6 billion rand improvement in the core business through inflationary pricing and the step up in cost saving initiatives. Consequently, trading profit before investments and foreign exchange was up 20% year on year. This created some headroom for our Showmax investment, which was ramped up by 2.3 billion rands to create capacity for future growth. The result was an organic trading profit of 7.2 billion rands. Although profit decreased 9% year on year, we remind ourselves of the conscious decision to adapt to industry changes and the necessity to invest in the future of the group through our OTT business. While the timing has not been perfect, we believe that a significant opportunity exists for growth. Unfortunately, we have had to absorb a further 3 billion rand in foreign currency pressure as the severe Naira weakness towards the end of financial year 24 rolled fully into this financial year. As a result, reported trading profit of 4 billion rands was materially down year on year. As exchange rates in Nigeria have stabilized, we would like to believe that the group has largely absorbed the full impact of the depreciation. Moving to slide 23, we look at subscriber numbers and subscription revenue. The chart on the left shows our active subscribers down 8% year on year due to ongoing consumer pressure in both South Africa and the rest of Africa, especially in key territories such as Nigeria and Zambia. One positive is that the rate of decline in subscribers on a sequential basis has improved materially, underpinned by the stabilisation of the rest of Africa's subscriber base at similar levels to that reported at interim. As a result of our annual price increases, averaging 5.7% in South Africa and 31% in the rest of Africa, the financial impact of these subscriber losses on subscription revenue was limited to an organic decline of only 1%. This was the net result of a 1% growth in the rest of Africa and a 27% growth reported by Showmax, offset by a 3% decline in subscription revenues in South Africa due to lower customer volumes. Again, the impact of weak local currencies in rest of Africa markets against the US dollar materially impacted reported results. A 23% decline in the contribution from the rest of Africa and lower revenues from Showmax due to the one-off impact of the discontinued Showmax Pro and Diaspora offerings in the second half of financial year 24 resulted in an 11% reduction in the Group's overall subscription revenues on a reported basis. Slide 24 shows our revenue growth, split by business segment and type. Group revenue of 50.8 billion rand represents an increase of 1% year-on-year on an organic basis. South Africa's revenue was marginally down 1% due to lower subscriber numbers, offset by improved advertising revenue on the back of a strong sports schedule, and a 17% rise in Dakota sales as a result of increased pricing to support a more economical subsidy strategy in a mature market. Revenue in rest of Africa was up 3% organically, underpinned by price increases which supported subscription revenues. Advertising revenues benefited from the growth of indigenous brands and the expansion of our digital offerings in Nigeria, which more than offset the impact of the exit of high-profile international consumer brands from that market. Dakota revenues improved 16% organically on the back of the higher retail pricing, which has aided the business in managing a lower subsidy investment. Edeta delivered an 8% organic increase in revenues due to the implementation of a major project to power Astra Malaysia's next-generation streaming platform, combined with 80% revenue growth in its connected transport segment. Following the deconsolidation of the Nemesis insurance business after selling 60% to Sunlum, the reported insurance revenue only reflects 8 months of revenue and was therefore 20% lower year-on-year in the reported revenue number. Other revenue reflects the growth in the DSTV internet base within the fixed wireless space as we bundled its services with our streaming products DVS-TV Stream and Showmax. Incorporating the impact of currency weakness, group revenue declined 9% year-on-year on a reported basis. Slide 25 provides a summary of our trading profit and margins. South Africa's trading profit of R9.4 billion improved by R647 million year-on-year. The benefit of the ramped-up cost savings offset the negative impact of lower subscription revenues and resulted in a trading profit margin of 28.6%. Organic trading profit in the rest of Africa almost doubled to 2.3 billion rands. However, significant foreign exchange losses wiped out this gain on a reported basis, resulting in a negative 5% trading margin, which I'll unpack in more detail on the next slide. The debtor's trading profit margin narrowed to 17%, following the lower margin mix arising from the decreased intergroup revenues. Trading losses in Showmax increased from 2.6 billion rands to 4.9 billion rands as financial year 25 was the segment's peak investment year. The major cost drivers were a step change in content costs and an increase in platform costs. On slide 26, we provide our trading profit bridge for the rest of Africa. Last year, this segment reported a 1.3 billion rand trading profit and a 6.7% trading margin. This year, it benefited from inflationary price increases averaging 31%, which more than offset the negative impact of subscriber losses. It was further supported by tight cost management, especially the reduction in content costs and decoder subsidies as we continue to right-size the business. Unfortunately, these gains were trimmed by the non-recurrence of tax accrual releases in the prior year, amounting to 500 million rands. Nonetheless, organic trading profits increased materially from 1.3 billion rands to 2.3 billion rands. Currency headwinds amounted to a considerable 3.1 billion rands and reversed all the gains made on an operational basis. This was caused by weaker currencies in Nigeria, Ghana, Zambia, and Angola, coupled with the negative impact of translating the segment's US dollar revenues against a stronger rand. The net result was a trading loss of 800 million rands on a reported basis. Moving to slide 27, we analyze our operating leverage and cost savings. Total costs escalated by more than our revenues due to the strategic investment in Showmax. This resulted in a negative 1.6% operating leverage measured on an organic basis. Just to highlight the magnitude of the saving, if we had to exclude the increased Showmax investment, organic operating leverage would have been a positive 3.2%. A key underpin to these results was a material ramp-up in cost reductions, which delivered R3.7 billion in sustainable cost savings, representing 7.9% of the group's cost base. The most significant savings were extracted from content costs, as well as various SG&A expenses grouped together under other initiatives. We also reduced Dakota subsidies by another 400 million rands, in addition to the 2.2 billion rands in savings last year. Future savings are likely to be derived from renegotiated content agreements upon renewal of rights, ongoing general business efficiency drives, lower costs associated with capital projects, and reduced transponder costs. On slide 28, we reflect on adjusted core headline earnings, the board's measure of the underlying performance of the business. This metric shows a 2.1 billion decrease year on year to a loss of 800 million rands. Not only did the foreign exchange losses in the rest of Africa and the investment in Showmax impact negatively on trading profit, but the South African business incurred realized foreign exchange losses on its hedge book due to the strengthening of the spot rand as well as the higher average hedge rate, offsetting the benefit of lower cash extraction losses from Nigeria. Losses on cash remittances amounted to 93 million rands after minorities compared to 859 million rands the year before. Lower taxes arising from lower profitability and lower tax provisions across our rest of Africa markets resulted in a 1.5 billion rand benefit. Slide 29 provides an update on our free cash flow, which reduced by 1.1 billion rands year on year. The waterfall graph highlights the key movements this year. Starting from the left, we generated 600 million rand in free cash flow last year. This year's lower EBITDA resulted in a R2.3 billion outflow. Content payments came in at R1.2 billion lower due to negotiated cost savings, increased business efficiencies, and benefits from prior year prepayments. Lower inventory purchases due to higher opening stock levels and better inventory management resulted in a R1 billion free cash flow benefit. Finally, the timing of payments to our suppliers resulted in an additional outflow of 1 billion rands. This left the group with a net 516 million rands free cash outflow for the year. Moving to slide 30. We continue to exercise discipline in managing our liquidity position. Our cash balance at the year end reflects a healthy 5.1 billion rands. We retain access to R3 billion in undrawn group banking facilities, which, combined with the cash, represents more than R8 billion in total funding available. Existing short-term cash commitments and illiquid cash amounts to R2.7 billion. After taking into account the difficult trading environment, the Group's financial performance, and the need to invest in critical areas of the business, Multi-Choice South Africa has lowered its dividend to R1.65 billion. As a result, R389 million will leave the Group as payment to Petuminati shareholders. This leaves us with 2 billion rands in available cash before considering additional cash to be generated by operations and provide sufficient financial flexibility to fund our business plans. Our debt position reduced to 11.1 billion rands. Our leverage ratio of 2.2 times after including satellite leases remains within our debt covenants. This wraps up the overview of our financial performance. Let's turn to slide 32 for some comments on our outlook for the year ahead. Given the July hearing scheduled by South Africa's Competition Tribunal, we are forging ahead to ensure we meet all the required conditions of the proposed acquisition by Canal Plus in order for the transaction to be unconditionally approved before the long stop date. Operationally, our focus remains on creating long-term value for shareholders by taking bold and decisive action to future-proof the business. In this context, we remain focused on the following strategic priorities. Prioritizing profitability and cash flow by ensuring the South Africa business delivers trading margins in the mid-20s, by returning rest of Africa to profitability, and reducing trading losses in SHOMACs. Ensuring that the cost base is fit for purpose with a cost saving target of at least 2 billion rands for financial year 26. Managing our balance sheet, which includes improving our solvency and liquidity profiles to ensure that we are within our cash and facility limits and maintaining a positive equity position. and enhancing our customer value proposition by exploring and expanding partnerships across the value chain, executing on a range of targeted top line initiatives to reduce churn and drive growth in our auxiliary value added businesses. That concludes our presentation for today, and we're happy to now take some questions.

Thank you.