Chairman's letter

  • Our executive team has continued to deliver in a tough operating environment. Even before the outbreak of COVID-19 and the concomitant oil price weakness, many of our markets were suffering from macroeconomic pressures or specific headwinds such as severe drought. We discuss these matters in detail later in our integrated report, but suffice to say that our teams have executed exceptionally well in delivering the solid operating and financial results that we have presented for FY20. 

  • Imtiaz Patel
    Chair and executive director

    To succeed in this evolving world, we plan to further increase our investment in local content as a key aspect of our differentiated content strategy

    A pioneering spirit
    has always been a part
    of our DNA

"THE GROUP HAS DONE AN INCREDIBLE JOB, NOT ONLY IN delivering on our FY20 commitments TO SHAREHOLDERS, BUT ALSO IN POSITIONING THE BUSINESS TO BETTER WITHSTAND THE UNCERTAIN FUTURE IMPLICATIONS OF THE COVID-19 PANDEMIC"

FY20 will long be remembered by our group as a year of remarkable change and disruption. We began the year fresh off our unbundling and listing from Naspers, our parent of 34 years. I believe that our board, our management team and our corporate structures have served our group and our investors well as we navigated our way through a number of firsts as a public company. These include holding our first AGM and concluding the share exchange offer to the loyal Phuthuma Nathi shareholders in MultiChoice South Africa. The group has done an incredible job, not only in delivering on our FY20 commitments to shareholders, but also in positioning the business to better withstand the uncertain future implications of the COVID-19 pandemic.

We are fortunate to have a board that is balanced and works constructively with our executive management teams. A pioneering spirit has always been a part of our DNA and the board supports the need to invest and innovate in areas like our connected video division and the cybersecurity services of our technology business.

At the same time, the board recognises the need to take a prudent approach to risk in a volatile operating environment. Our strong balance sheet, which reflected a net cash position at year-end with no financial gearing, is welcome in this current time of uncertainty and enabled us to honour our commitment made to shareholders at the time of listing by declaring a maiden dividend of R2.5bn. We are also very proud to be able to maintain the dividend of R1.5bn declared to our BBBEE (Phuthuma Nathi) shareholders in the South Africa business. Many of these shareholders come from the most disadvantaged of circumstances and we know how much they rely on this dividend as a source of income.

We have announced several important changes to the board since our AGM in August 2019. Our lead independent director and audit committee chair, Steve Pacak, stepped down from these roles in April 2020 and will retire from the board in 2021. Further, Don Eriksson retired from the board in June 2020. The experience and insights that these gentlemen have shared with us, not only during our years under the Naspers umbrella, but critically during our transition to a standalone listed entity, have been invaluable. We wish them both well in all future endeavours.

Jabu Mabuza, who joined the board in July 2019, took over Steve’s role as lead independent director and Louisa Stephens took over as chair of the audit committee. We also welcomed Christine Sabwa (May 2019) and Dr Fatai Sanusi (July 2019) to our board. They bring valuable insights for our key Rest of Africa markets such as East Africa and Nigeria.

On the governance front, the year was marked by material changes to our remuneration policy, through constructive engagement with our shareholders. Among the key changes were the implementation of a malus and clawback clause, lowering the share scheme cap from 10% to 5%, increasing the minimum shareholding requirements for the executive team, increasing disclosure on performance hurdles for the long-term incentive (LTI) schemes, as well as extending their vesting periods and increasing the weighting for performance share units.

Our executive team has continued to deliver in a tough operating environment. Even before the outbreak of COVID-19 and the concomitant oil price weakness, many of our markets were suffering from macroeconomic pressures or specific headwinds such as severe drought.

We discuss these matters in detail later in our integrated report, but suffice to say that our teams have executed exceptionally well in delivering the solid operating and financial results that we have presented for FY20.

Like many other industries, the world of video entertainment continues to evolve. We have evolved with it – from the early days of a single M-Net analogue channel, to investing in satellite technology ahead of most of the world, and becoming a content aggregator with a multichannel service offering. The growing adoption of broadband internet in developed markets gave rise to streaming services, and we launched Showmax as a result. Nowadays OTT players are producing their own content and reaching out to consumers directly, but the multitude of offerings are leaving customers overwhelmed with a ‘paradox of choice’ and a need for greater simplicity. This is where we see the opportunity to continue our aggregator journey: we broadcast and stream our own compelling local, international and sport content while also making third-party streaming services available through our platform. This will provide our customers with great convenience and a single platform for their entertainment needs. We recently concluded distribution agreements with two international subscription video on demand (SVOD) providers. These partnerships with global brands not only benefit our customers through increased access to content, but are a testament to our reach, our technical capabilities and our operational expertise.

While OTT services are growing globally, satellite remains the cheapest and most efficient way of distributing long-form video content to the mass market across the African continent and will remain so for some time. Our linear pay-TV business therefore continues to present a good long-term opportunity for us. We are also looking to accelerate the uptake of our OTT products by differentiating and strengthening our content line-up and product offering.

To succeed in this evolving world, we plan to further increase our investment in local content as a key aspect of our differentiated content strategy. On the sport front, we remain committed to exciting customers with the best local and international sport. We will keep exploring new opportunities to further expand our existing ecosystem, offering new products to enhance customer experiences and to support our growth. Our ambition is to drive further subscriber growth, scale Irdeto to a leading media and cybersecurity business globally and continue building a sustainable business that delivers value for our stakeholders. In the current environment, we remain focused on maintaining operational excellence and sustaining cost reduction.

We also continue to invest in the development of our people as well as social initiatives that have a meaningful impact on the communities we operate in. Our internal, unique Chairman’s Top Leaders Programme is bearing fruit with a pipeline of strong talent emerging for key senior leadership roles in the future. Our investment in youth is something we are very proud of and we recently announced a partnership with YES, creating 500 job opportunities specifically for the youth. The Innovation Fund (powered by our MultiChoice Enterprise and Development Trust) has seen enormous success, with many small, medium and microenterprises (SMMEs) successfully incubated and launched.

The events of the past few months are unprecedented in our lifetime. In my 30 years in the industry and 20 years with the MultiChoice Group, I have lived and worked through a number of crises, but none that carried the same weight as the COVID-19 pandemic and its dual impact on lives and economies. While we have seen some victories in combating the disease, the full extent of the damage remains unknown at this stage. We have reacted swiftly to the pandemic in implementing our business continuity plans well ahead of the forced lockdowns imposed by governments. As an essential service provider, we were able to deliver uninterrupted services to our customers. We also took great care in ensuring the protection, safety and wellbeing of our staff, in supporting local production value chains and other service providers where possible, and in making contributions to public health efforts.

I would like to extend my sincere gratitude to the board, management team and all of our staff for demonstrating exceptional grit and determination. Your resilience and dedication have surpassed expectations and will serve our group well in navigating the future. We believe the group is well positioned to face the somewhat uncertain times ahead – our product is geared toward people spending more time at home. We have a robust business model, our large-scale and diversified footprint brings substantial benefits, and our strong balance sheet provides financial flexibility. Looking forward, the board remains confident in our executive leadership team’s ability to deliver shareholder value in what will no doubt be a challenging environment.

Imtiaz Patel

Chair and executive director