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Value created for shareholders 

ZAR5.7bn free cash flow
ZAR2.5bndividend declared
40% return on capital employed

Delivering value to shareholders

We continue to boast a diverse shareholder base of international and 
South African investors, many of whom are value investors.

We maintain open, constructive communication with our shareholders and welcome their input in enhancing long-term value. Our objective is to generate returns that exceed our cost of capital, as this is the only way a business creates sustainable value for its shareholders over time. We believe that our investment thesis is sound. We are pursuing a dual approach to subscriber growth, as we still see significant opportunity in our traditional linear broadcasting business and realise the growing OTT opportunity.

We also have a sizeable and highly engaged subscriber base on our platform. This represents an opportunity for us to offer new products and services as we continue evolving and expanding the business, and diversifying our revenue streams. We have a strong balance sheet that provides financial flexibility to pursue growth opportunities and allows for optimal capital allocation for shareholders. We believe we are well positioned to deliver value to our shareholders, and that each of our three operating segments plays a unique and important role in doing so.

Efficient capital allocation is important for long-term shareholder value creation. Our first priority in this regard is to manage the business responsibly in terms of its cash flow needs. This takes into account the requirement to fund the Rest of Africa while it returns to profitability, as well as a need to manage illiquid cash scenarios that can develop in some of our markets from time to time, as is the case in Nigeria at the moment. We also aim to retain a degree of flexibility on our balance sheet to pursue growth opportunities that support the business's long-term sustainability and prosperity, such as the initial BetKing investment concluded this year, which is the first material investment that MultiChoice has made in several years.

Given our strategy to expand our ecosystem, we intend to carefully evaluate potential acquisition opportunities where strategically relevant and value accretive to shareholders.

We have a principled approach of returning excess cash to shareholders in the most optimal way. This was demonstrated when we delivered on our commitment to pay a dividend of ZAR 2.5bn to shareholders in September 2020, despite the ongoing uncertainty surrounding the impact of COVID-19 on our business, and the fact that several South African corporates elected to adjust their dividends during the year (i.e. did not pay dividends, paid a reduced dividend or postponed the payment of their dividend). Our dividend payment was in addition to ZAR1.7bn in share buy-backs executed during FY20.

Subject to MCSA shareholders approving its dividend in August 2021, we will return another ZAR2.5bn in dividends to MultiChoice Group shareholders in September 2021. This is in addition to the ZAR1.5bn we will pay to Phuthuma Nathi shareholders (FY20: ZAR1.5bn).

We discuss the business’s financial performance and position in FY21 in the CFO’s performance review

We focus on critical shareholder issues such as generating acceptable returns, driving growth and implementing cost management. We believe our process served shareholders well, as evidenced by an increase in core headline earnings of 32% YoY and a return on capital employed of 40% despite a challenging operating environment.

We typically aim to fund our business through operating cash generation, lease financing and debt capital. In FY21, we concluded a three-year amortising loan of ZAR1.5bn to assist with funding our working capital requirements.

Equity funding is expensive (unless our share price is significantly overvalued) and will typically be a last resort. Nonetheless, opportunities and/or circumstances may warrant this in future. We seek to be responsible custodians of our owners' financial capital and sustain their trust and confidence in us.

Our shareholders are increasingly focusing on environmental, social and governance (ESG) (including executive remuneration) issues. We are committed to driving ongoing improvements in our ESG efforts and welcome engagement with shareholders on these matters.

We actively engaged with shareholders on remuneration in the past year, as detailed on page 101 of the remuneration report. We specifically deal with governance matters in our governance report and with environmental and social issues.

We aim to make decisions that we believe will support our market valuation over time. However, we do not obsess over short-term movements in our share price, particularly during a volatile year in the markets, as FY21 reflected. Our average share price for FY21 was ZAR113.01, reaching a high of ZAR139.87 and a low of ZAR83.08.

Critical issues for our shareholders

How we address them

How these were addressed


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.

How these were addressed

The Rest of Africa represents a sizeable market with an estimated addressable market of more than 35m subscribers. It represents a complex socio-political environment that 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 our customers in local currencies but have a substantial portion of input costs denominated in hard currency, require agility and flexibility from us to succeed.

When we listed in 2019, we committed to returning Rest of Africa to profitability in the medium term, subject to normal currency depreciation. This turnaround strategy was underpinned by driving scale and maintaining tight cost controls.

Since then, the business has delivered a strong operational performance, and has consistently narrowed its YoY trading losses, despite having to absorb some exceptional currency weaknesses in the Angolan kwanza, the Zambian kwacha and the Nigerian naira. Had it not been for this significant currency weakness, the business would have likely reached breakeven already. Nonetheless, it remains broadly on track to reach our breakeven target timeline.

While liquidity challenges remain in some markets, notably Nigeria, we have a dedicated local team working with our group treasury, which is successfully driving cash extraction efforts. As a result, although additional capital is required to fund these markets, we do not see the current liquidity challenges as a significant impediment to reaching profitability.

How these were addressed


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, especially as the subscriber mix shifts to the mass market. This is because the South African business is important to the group’s funding and capital allocation requirements.

How these were addressed

We remain committed to delivering broadly stable margins and cash flows in our South African business over time, subject to the challenges brought about by COVID-19, ongoing economic pressures and increasing saturation in this market. Consumer challenges around the affordability of our Premium package contributed to the decline in our Premium subscriber base in recent years and was exacerbated by the current economic climate. To maintain a stable margin profile, declines in Premium subscribers need to be offset by subscriber growth in the mass market, price increases, additional revenue generated from new products and services and disciplined cost focus.

From time to time, we may 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.

How these were addressed


Clarity on the group's
dividend policy
Although shareholders have varying perspectives and mandates, dividends are often an important foundation for an investment case.

How these were addressed

Our basic philosophy to return excess cash to shareholders in the most optimal way remains unchanged. However, given that we are yet to see the full impact of the COVID-19 pandemic and associated lockdowns on our subscriber base and business, and considering that the Rest of Africa business segment is yet to return to profitability, we do not believe it is prudent to adopt a specific dividend pay-out ratio at this stage.

How these were addressed


Movements in the share register Canal+ purchased a 12% stake in the MultiChoice Group in FY21, which garnered the interest of our other investors, particularly regarding industry and potential market overlap, and its status as a foreign shareholder.

How these were addressed

While we do not comment on our shareholders or on our interactions with them, we remain committed to constructive dialogue, acting in the best interests of all our shareholders and creating sustainable long-term shareholder value. The Electronic Communications Act No 36 of 2005 (as amended) and our MOI cap foreign voting rights at 20%.

How these were addressed


The MultiChoice Group's investment in
sports betting business, BetKing
Given that the MultiChoice Group operations were previously owned by Naspers, investment activity outside of the core business focus was limited. Therefore, investors were interested in the rationale for our minority investment in BetKing, as well as the outlook for this asset and the implications in terms of further investment activity by the group.

How these were addressed

We selectively consider new business lines where they create a better customer experience, drive new revenues and/or leverage existing assets. The investment in BetKing is a consequence of this approach and our strategy to leverage our scale and invest in adjacencies to enhance our ecosystem. Sports betting in particular is an attractive market for us, given its natural fit with pay-TV. Research has shown that viewers are more likely to watch and engage with sport when they bet on a game, which should improve activity and retention of our pay-TV customers. Unlike many of its peers, BetKing is a unique platform business that owns and operates its proprietary technology and product portfolio. This scalable capability enables the business to take a customised approach to expanding its footprint, which we are assisting with given our established presence across Africa. BetKing only recently entered the African betting market and is already a major player in its original and largest market, Nigeria. We see a promising outlook for the sports betting industry as a whole and for BetKing and its entrepreneurial management team.