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How our activities enriched our stakeholders


The MultiChoice Group enjoyed a somewhat atypical route to market. Having developed within the Naspers Group stable over the course of three decades, we unbundled from the Naspers Group and separately listed in February 2019. This process did not involve a capital raise, but we benefited from retaining many shareholders with whom we enjoyed a historic relationship as part of a larger entity.

Our objective is to generate returns that exceed our cost of capital, as this is the only way in which a business creates sustainable value for its shareholders over time.

Although we cannot control our short-term share price, we believe we can drive long-term value creation for our shareholders by successfully executing our strategy and by maintaining a sensible approach to capital allocation.

We discuss the financial performance and position of the business in FY20 in the chief financial officer's (CFO) performance review, where we also contextualise our first full year as a standalone operation. We focus on critical shareholder issues such as generating acceptable returns, driving growth, implementing cost management and efficient capital allocation. We believe our process served shareholders well, as evidenced by an increase in free cash flow generation of 59% year on year (YoY) and a return on capital employed of 30% despite a challenging operating environment.

Subject to MultiChoice South Africa shareholders approving the MultiChoice South Africa dividend in August 2020, we will return ZAR2.5bn in dividends to MultiChoice Group shareholders in September 2020. This is in addition to the ZAR1.4bn we will pay to Phuthuma Nathi shareholders at the same time (FY19: ZAR1.5bn). During the year, our share price did not reflect its intrinsic value due to market weakness; however, this presented the group with the opportunity to buy back shares. As a result, we spent ZAR977m on general share repurchases, and ZAR706m on acquiring shares in the open market to offset future dilution from our employee incentive share scheme.

We typically aim to fund our business through operating cash generation, lease financing and potentially debt capital if and when necessary. Equity funding is expensive (unless our share price is significantly overvalued) and will typically be a last resort. Nonetheless, opportunities and/or circumstance may warrant it in future. We seek to be responsible custodians of our owners' financial capital and sustain the trust and confidence they have given us.

Our shareholders are increasingly focusing on environmental, social and governance (including executive remuneration) (ESG) issues.

We specifically deal with governance matters in our governance report in Our approach to governance and with environmental and social issues in Value created for society.

We aim to make decisions we believe will support our market valuation over time. However, we do not obsess over short-term movements in our share price, particularly during market dislocations as recently witnessed. Our average share price for FY20 was ZAR119.74, reaching a high of ZAR137.65 and a low of ZAR75.07.

Critical topics




The prospects for our Rest of Africa business

For many investors, returning our Rest of Africa segment to profitability (and the time horizon to achieve this objective) represents a critical aspect of our investment case.


The Rest of Africa represents a sizeable market with an estimated addressable market of more than 29m subscribers. It represents a complex sociopolitical environment which experiences intermittent volatility on the back of exogenous or endogenous shocks (commodity prices, currencies, droughts, etc). These challenges, combined with the fact that we mostly charge in local currencies but have a substantial portion of input costs denominated in hard currency, require agility and flexibility on our side to succeed.

In 2016, we implemented a value strategy to better adapt our operating model to the underlying realities of our market by repositioning the business to focus on the mid and mass market as opposed to the Premium segment. In addition to maintaining tight cost controls, the objective is to achieve scale, a critical element of our turnaround strategy. We believe a greater-scale business with lower price points should be more resilient, and implemented additional steps to improve our positioning through increased investment in local content, expanding our distribution and payment networks through regionalisation and implementing hedging policies in viable markets.

As a result, we were able to consistently narrow the trading losses in our Rest of Africa business over the past few years and remain on track to return the business to profitability over the medium term.


Sustainability of margins in our South African business

Investors are typically focused on how effectively we can manage the South African margin and cash flow profile over time. This is because the South African business is important to the group's funding and capital allocation requirements.


We remain committed to delivering broadly stable margins and cash flows in our South African business over time. However, we need to acknowledge the challenges brought about by COVID-19, ongoing economic pressures and increasing saturation in this market.

From time to time we may also need to incur costs to update our internal operating systems and invest in new products or services, while our ongoing investment in our connected video services could also impact profitability.


Clarity on the group's dividend policy

Although shareholders have varying perspectives and mandates, dividends are often an important cornerstone of an investment case.


Given the extraordinary circumstances as a result of COVID-19, we do not believe it is prudent to make specific commitments for FY21.

We will always look to return excess cash to shareholders in the most optimal way. Consequently, we believe a flexible approach to capital allocation, including dividends and share buy-backs, is warranted and preferable.