MultiChoice has reported an incredible R4.1 billion loss for the year ending March 31, 2024, as it has become technically insolvent.
The group reported a 30% drop in full-year operating profit. The company said it was hit by inflationary pricing across its markets, constrained consumer spending, and currency volatility.
“Group revenue increased by 3% on an organic basis. However, due to weaker local currencies and consumer pressure, reported group revenue declined by 5% to R56 billion,” MultiChoice said in its statement.
The company also noted a 21% decline in group trading profit to R7.9 billion.
The company declared that its operating profit, excluding interest income, fell to R7.1 billion from R10.2 billion rand for the year ending March 3, 2024.
Subscribers
Active subscribers declined by 9% to 15.68 million. The company said this was mainly due to a 13% decline in the rest of African businesses, with Nigeria, Angola and Zambia most affected.
MultiChoice said its South African business was more resilient, declining by only 5%.
"Subscriber growth is typically more muted in a year that follows the FIFA World Cup, but financial year 2024 came in below trend as the subscriber base declined year on year in the face of a deteriorating macro and consumer environment," the group said.
Insolvency
MultiChoice’s total assets have decreased from R47.6 billion to R43.9 billion and its liabilities have grown to around R45 billion.
The negative equity of R1.068 billion may force the company to sell some of its assets in order to settle its various debt obligations.
Essentially, MultiChoice may not be able to settle all its liabilities if all its assets are liquidated.
The share price was trading at around R109.20 on Wednesday at 5:30pm.
We are resilient
The group, despite these disastrous figures said that it’s operational performance as “resilient” and noted that it was on a turnaround.
“MultiChoice demonstrated resilient operational performance for the year ended March 2024, delivering a 26% trading profit margin in South Africa,” the company said.
The group said that it will now prioritise creating more cash and will push it’s cost-reduction program into overdrive.
“While we are not alone in feeling the challenges of a weak consumer environment, I am proud of the speed and effectiveness of the team in implementing strategic actions to retain customers, safeguard cash generation and drive costs savings which surpassed our targets,” Calvo Mawela, MultiChoice Group CEO said.
It is the strength of this team, the quality of the underlying business and the clarity of our strategy which underpins my confidence in delivering on our potential,” he added.
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