Integrated annual report to the shareholders of Phuthuma Nathi Investments (RF) Limited for the year ended 31 March 2022 MultiChoice South Africa Holdings Proprietary Limited
Contents Overview 2 MultiChoice SA performance highlights Introduction 4 About this report Understanding Phuthuma Nathi 8 Letter from the Phuthuma Nathi chair 11 Group structure 12 Snapshot of our history 14 Understanding your return on investment 15 Our Phuthuma Nathi board of directors 16 Phuthuma Nathi audit committee report 18 Report of the independent auditor 19 Summarised annual financial statements Understanding MultiChoice SA 32 Joint leadership review from the MultiChoice SA chair and chief executive officer 34 How we create value – our business model 35 What we deliver – our products and services 36 Value created for our stakeholders 38 Flagship corporate social investment 40 Socio-economic transformation initiatives 41 Our external environment 42 Our response to COVID-19 44 Opportunities and risks 49 Our strategic priorities MultiChoice SA performance 54 MultiChoice SA performance review 57 General Entertainment 62 SuperSport Financial review 68 Report of the independent auditor 69 Summarised annual financial statements Corporate governance review 84 Our board of directors 88 Summarised governance review 92 Entrenching an ethical culture 94 Delivering good performance 95 Maintaining our legitimacy 96 Ensuring effective control 98 Remuneration report Shareholder information MultiChoice SA 122 Notice of annual general meeting 127 Form of proxy 128 Notes to the form of proxy Phuthuma Nathi 130 Notice of annual general meeting 135 Form of proxy 136 Notes to the form of proxy 138 Live AGM broadcast application form 139 Administration and corporate information
Overview Understanding MultiChoice SA MultiChoice SA performance Corporate governance review Shareholder information Understanding Phuthuma Nathi Introduction Financial review Overview Phuthuma Nathi shareholders will receive a dividend of ZAR17.78 per share after dividend tax (FY21: ZAR17.78) Phuthuma Nathi shareholders own 25% (FY21: 25%) of MultiChoice SA through the Phuthuma Nathi entity The MultiChoice SA and Phuthuma Nathi AGMs will be held on 24 August 2022 at 11:00 Phuthuma Nathi will receive ZAR1.5bn of the ZAR6.0bn dividend declared by MultiChoice SA (FY21: ZAR1.5bn of the ZAR6.0bn) Phuthuma Nathi Investments (RF) Limited Integrated annual report 2022 / 1
Overview (1) 90-day active subscribers. (2) Excludes regulatory fees from FY22 onwards. (3) Includes non-cash advertising contributions of ZAR123m (FY21: ZAR260m). ZAR6.0bn declared in dividends to MultiChoice SA shareholders (FY21: ZAR6.0bn) 9.0m subscribers(1) (FY21: 8.9m) 3 620 permanent employees (FY21: 3 683) ZAR7.3bn core headline earnings (FY21: ZAR8.5bn) MultiChoice SA performance highlights 2 / Phuthuma Nathi Investments (RF) Limited Integrated annual report 2022
Overview Understanding MultiChoice SA MultiChoice SA performance Corporate governance review Shareholder information Understanding Phuthuma Nathi Introduction Financial review ZAR13.4bn preferential procurement spend (FY21: ZAR11.5bn) ZAR296m spent on CSI projects(3) (FY21: ZAR420m) Level 1 BBBEE status (FY21: Level 1) ZAR6.8bn total tax contribution(2) (FY21: ZAR7.1bn) Phuthuma Nathi Investments (RF) Limited Integrated annual report 2022 / 3
Introduction About this report Scope, boundary and audience This report discloses information about MultiChoice South Africa Holdings Proprietary Limited and its subsidiaries (MultiChoice SA), as well as Phuthuma Nathi Investments (RF) Limited (Phuthuma Nathi, MultiChoice SA’s broad-based black economic empowerment (BBBEE) share scheme). We present our integrated annual report for the financial year from 1 April 2021 to 31 March 2022 (referred to as FY22). The purpose of this report is to share with our Phuthuma Nathi shareholders how we create value over the short, medium and long term. Key terms Phuthuma Nathi Refers to Phuthuma Nathi Investments (RF) Limited (MultiChoice SA’s BBBEE share scheme). The only investments held by Phuthuma Nathi are the shares held in MultiChoice SA and its shares in Phuthuma Nathi 2 (Phuthuma Nathi Investments 2 (RF) Limited). MultiChoice SA, the company or the group Refers to MultiChoice South Africa Holdings Proprietary Limited and its subsidiaries. MultiChoice Group Refers to MultiChoice Group Limited, the holding company of MultiChoice SA. Broad-based black economic empowerment (BBBEE) BBBEE is a government policy designed to advance economic transformation and enhance the economic participation of black people (African, coloured and Indian South African citizens) in the South African economy. Shares and shareholders A share is a unit of ownership in a company and a shareholder is the owner of a share. Shareholders can earn income from their shares in the form of dividends. Dividends If a company is profitable, has positive reserves and sufficient cash, the directors of the company may choose to pay out a portion of the profit to shareholders in a payment called a dividend. This decision is subject to the circumstances and outlook a company faces at a point in time, and directors must satisfy certain rules before authorising a dividend. Financial year (FY) The 12-month period a company uses to calculate its profit and income tax. For MultiChoice SA and Phuthuma Nathi, the 2022 financial year is from 1 April 2021 to 31 March 2022 and is referred to as FY22. YoY A year-on-year movement, e.g. showing the growth rate from the prior year to the current year. Johannesburg Stock Exchange (JSE) The JSE is the oldest existing and largest stock exchange in Africa. For any company listed on the JSE, shares in the company can be bought by and sold to any person within the constraints of the law and the JSE Listings Requirements. Equity Express Securities Exchange (EESE) EESE is the first independent black-owned equity exchange in South Africa. The exchange was created to support BBBEE schemes and specifically caters for companies with restrictions on trading their shares. Unlike open stock exchanges, such as the JSE, the EESE has restrictions on who can participate to support companies’ transformation goals. * Copyright and trademarks are owned by the Institute of Directors in South Africa NPC and all of its rights are reserved. Basis of preparation The content of the integrated annual report was guided by the following frameworks: • International Integrated Reporting Council’s Integrated Reporting <IR> Framework • The King Report on Corporate Governance™ for South Africa, 2016 (King IV)* • The requirements of the Companies Act No 71 of 2008, as amended (Companies Act) 4 / Phuthuma Nathi Investments (RF) Limited Integrated annual report 2022
Overview Understanding MultiChoice SA MultiChoice SA performance Corporate governance review Shareholder information Understanding Phuthuma Nathi Introduction Financial review Assurance The financial and non-financial information in this report was reviewed by the audit committee and approved by the board. Financial information Summarised financial information for MultiChoice SA and Phuthuma Nathi, extracted from MultiChoice SA’s audited consolidated annual financial statements for the year ended 31 March 2022 and the Phuthuma Nathi consolidated and company annual financial statements for the year ended 31 March 2022, are reflected accurately. The respective full annual financial statements are available on Phuthuma Nathi and MultiChoice SA’s websites (www.phuthumanathi.co.za and www.multichoice.com/multichoice-south-africa/ ) and at our registered office on arrangement with the company secretary. Refer to page 68 for the auditor’s report on MultiChoice South Africa’s summarised consolidated annual financial statements, and to page 18 for the report on the summarised consolidated and company annual financial statements of Phuthuma Nathi. Non-financial information EmpowerLogic verified all BBBEE information in this report. Statement of directors’ responsibility The Phuthuma Nathi and MultiChoice SA boards acknowledge their responsibility to ensure the integrity and completeness of this integrated annual report. The integrated annual report was approved by the Phuthuma Nathi board on 8 June 2022 and by the MultiChoice SA board on 9 June 2022. Each board collectively assessed and unanimously approved the content of this report and believes it provides a true account of MultiChoice SA’s performance because it addresses all material matters relating to MultiChoice SA’s ability to create and sustain value in the short, medium and long term. On behalf of the boards Mandla Langa Imtiaz Patel Chair: Chair: Phuthuma Nathi MultiChoice SA Our reporting suite The Phuthuma Nathi integrated annual report includes the annual general meeting (AGM) notice and is the key report to stakeholders, providing a holistic view of MultiChoice SA’s business, strategy, performance and value creation for its stakeholders. This report should be read in conjunction with Phuthuma Nathi’s full consolidated and company annual financial statements, which provide a more detailed understanding of the business’s financial performance. Further, we endeavour to engage with our stakeholders through regular reports, including the annual social report and biannual results announcements. This information can be accessed at www.phuthumanathi.co.za and www.multichoice.com/ multichoice-south-africa/. Our reporting suite includes MultiChoice SA’s results announcement and full consolidated annual financial statements. Navigation and feedback For ease of reference, we included key terms used in this report on page 4. We welcome our stakeholders to connect with us on We encourage and value feedback on this report. Feedback can be sent to cosec@multichoice.com How to navigate our report Throughout our integrated annual report, we use the following icons to show the connectivity between sections: Phuthuma Nathi Investments (RF) Limited Integrated annual report 2022 / 5
This section is focused on shareholders’ direct investment in Phuthuma Nathi. Understanding Phuthuma Nathi 6 / Phuthuma Nathi Investments (RF) Limited Integrated annual report 2022
Overview Understanding MultiChoice SA MultiChoice SA performance Corporate governance review Shareholder information Introduction Financial review 8 Letter from the Phuthuma Nathi chair 11 Group structure 12 Snapshot of our history 14 Understanding your return on investment 15 Our Phuthuma Nathi board of directors 16 Phuthuma Nathi audit committee report 18 Report of the independent auditor 19 Summarised annual financial statements Understanding MultiChoice SA ultiChoice SA performance Corporate governance review Shareholder information Introduction Financial review Overview Understanding Phuthuma Nathi Phuthuma Nathi Investments (RF) Limited Integrated annual report 2022 / 7
Understanding Phuthuma Nathi Letter from the Phuthuma Nathi chair Dear shareholder On behalf of the Phuthuma Nathi board, it is my pleasure to present our integrated annual report for FY22 to you, the shareholders of the Phuthuma Nathi share scheme. As you will know, Phuthuma Nathi owns a 25% direct investment in MultiChoice SA, which means that Phuthuma Nathi shareholders have an indirect interest in MultiChoice SA through the Phuthuma Nathi share scheme. Phuthuma Nathi is proud to have 78 515 black shareholders as at year-end (FY21: 80 229), comprising individuals, stokvels and black-owned companies, all of whom benefit from an efficient holding structure with a robust underlying investment. On page 14, we provide a summary to help you understand how to think about your return on your investment in Phuthuma Nathi. In short though, the scheme has continued to deliver value to our shareholders in the year gone by. We paid out ZAR1.5bn in dividends to shareholders in FY22, bringing the historic tally of dividends paid to Phuthuma Nathi by MultiChoice SA since inception to ZAR14.9bn. More on the current year’s dividends can be found further below. We would like to remind our shareholders that some of their annual Phuthuma Nathi dividends, which have been declared since the share scheme started in 2006, remain unclaimed. A media campaign was launched in FY21 to find these shareholders to pay them the money that is rightfully theirs. To date, more than ZAR79m of unclaimed dividends have been paid but there is still ZAR183m remaining to be claimed. We sincerely hope to pay at least the bulk of this outstanding balance to its rightful owners in due course. The year in review MultiChoice SA serves customers and employs people from all walks of South African life and are thus acutely attuned to the many challenges that our country faces on an ongoing basis and has faced in the past year. COVID-19 and its associated lockdowns, and last year’s riots in KwaZulu-Natal and parts of Gauteng, negatively impacted an already weak economy. As we started our new financial year 2023, the KwaZulu-Natal region was impacted by severe flooding which damaged critical infrastructure and hampered “We feel fortunate that MultiChoice SA’s resilient performance enables Phuthuma Nathi to continue to support its shareholders and positively impact their lives.” Mandla Langa Chair: Phuthuma Nathi 8 / Phuthuma Nathi Investments (RF) Limited Integrated annual report 2022
Overview Understanding MultiChoice SA MultiChoice SA performance Corporate governance review Shareholder information Introduction Financial review Understanding Phuthuma Nathi In FY20, a decline in the Phuthuma Nathi share price reflected the challenging operating environment and pressure on equity markets from the COVID-19 pandemic and associated lockdowns. In FY21, our share price recovered along with global equity markets. In FY22, the share price increased from ZAR133 per share at 31 March 2021 to ZAR141 per share at 31 March 2022. A 6% share price increase YoY was lower than the broader South African stock market price return of 14%, but Phuthuma Nathi paid a higher dividend as a percentage of its share price than the broader market did on average (with price and dividend comparisons based on the JSE All Share Index over the same period as the Phuthuma Nathi financial year 2022).(1) The Phuthuma Nathi share price will not necessarily track broader equity market trends or MultiChoice SA’s underlying performance exactly, as the share price is ultimately influenced by demand from those wishing to buy shares and supply from those wishing to sell shares, which incorporate factors like growth and dividend prospects. Dividend The MultiChoice SA board has recommended a dividend of ZAR6.0bn to its shareholders. The Phuthuma Nathi board intends to distribute the full value received and declare a dividend of ZAR1.5bn (FY21: ZAR1.5bn). This amounts to ZAR22.22 per Phuthuma Nathi ordinary share to be paid to shareholders (FY21: ZAR22.22). The declaration of the ZAR1.5bn Phuthuma Nathi dividend is subject to the approval of the MultiChoice SA ZAR6.0bn dividend, which will be confirmed at the MultiChoice SA AGM on 24 August 2022. On approval, the Phuthuma Nathi dividend will be payable to shareholders recorded in the share register on 24 August 2022 and paid on or about 5 September 2022. After the 20% dividend tax (amounting to ZAR4.44 per share) is deducted, Phuthuma Nathi shareholders will receive a net dividend of ZAR17.78 per share (FY21: ZAR17.78). economic activity and tourism over the Easter period. Unemployment reached a record 35.3% in the fourth quarter of 2021, before declining only marginally into the first quarter of 2022, and many families are struggling with growing indebtedness and the rising cost of living. As such, we feel fortunate that MultiChoice SA’s resilient performance enables Phuthuma Nathi to continue to support its shareholders and positively impact their lives. Despite the challenges in our economy and pressures on consumer discretionary income, MultiChoice SA was able to sustain its subscriber numbers and subscription revenue base in FY22, with both up 1% YoY. A strong recovery in advertising meant that overall revenues grew by 6% YoY, while ongoing cost controls partially offset the normalisation of content and sales and marketing costs in the current year, and enabled MultiChoice SA to maintain its dividend. Please refer to the performance section on page 54 for more information about how the MultiChoice SA management team delivered operationally in FY22 and the financial review section on page 66 for additional context on their financial delivery. If you previously exchanged a portion of your Phuthuma Nathi shares for MultiChoice Group shares, or have bought MultiChoice Group shares directly and would like to know more about the broader group’s performance, I recommend visiting the MultiChoice Group website www.investors. multichoice.com/reporting-and-results-overview, for their full integrated annual report and other financial reporting information. Share price With regard to the Phuthuma Nathi share price, it is important to remember that directly or indirectly investing in a company represents a share of ownership in that company, and as owners of that company, you participate in the good and bad times. Company share prices fluctuate over time, and it is important to contextualise these fluctuations by assessing the company’s underlying performance and prospects in the context of current and expected market conditions. (1) The FTSE/JSE All Share Index represents 99% of the full market capital value of the ordinary securities listed on the main board of the JSE and is a commonly referenced benchmark that represents the broad equity price and dividend returns for the South African market. Phuthuma Nathi Investments (RF) Limited Integrated annual report 2022 / 9
Understanding Phuthuma Nathi Letter from the Phuthuma Nathi chair continued Directors and company secretary During FY22, the Phuthuma Nathi board consisted of four directors: Calvo Mawela, Clarissa Mack, Mandla Langa and Herman Wessels. Carmen Miller is the company secretary. The profiles of the current directors are on page 15. Closing The MultiChoice SA and Phuthuma Nathi AGMs will be held on Wednesday, 24 August 2022 at 11:00. The AGM will be held at MultiChoice City 144 Bram Fischer Drive, Ferndale, Randburg. The company reserves the right to amend the means by and manner in which the AGM is convened, as well as any details regarding the process for registration and submission of forms of proxy, by notifying shareholders by no later than seven days prior to the date of the AGM through the issue of an announcement on the EESE website and/or publishing a notice on the company’s corporate website and/or publishing a notice in widely circulated print media and/or any other means that the board of the company may determine appropriate for such notification to shareholders. The AGM will be broadcast live on DStv channel 196. To watch the live broadcast, shareholders must submit the form on page 138 to phuthumanathi@singularservices.co.za by 10:45 SAST on Friday, 19 August 2022 to enable processing. From myself and my colleagues on the board, thank you for your continued support. I look forward to engaging with you at our AGM. As always, we welcome your feedback and input on our integrated annual report and on how we can continue improving our reporting in the future. Please share your feedback with us by emailing cosec@multichoice.com. Mandla Langa Chair: Phuthuma Nathi “A strong recovery in advertising this year meant that overall revenues grew by 6% YoY, while ongoing cost controls partially offset the normalisation in content, sales and marketing costs in the current year and enabled MultiChoice SA to maintain its dividend.” 10 / Phuthuma Nathi Investments (RF) Limited Integrated annual report 2022
Overview Understanding MultiChoice SA MultiChoice SA performance Corporate governance review Shareholder information Introduction Financial review Understanding Phuthuma Nathi Group structure(1) Phuthuma Nathi (listed on the EESE) MultiChoice SA (unlisted entity) MultiChoice Group (listed on the JSE) The Phuthuma Nathi share scheme offers qualifying shareholders the opportunity to gain indirect exposure to MultiChoice SA by owning shares in Phuthuma Nathi. MultiChoice SA is the leading video entertainment service in South Africa, providing world-class local and international content to 9.0m subscribers. The MultiChoice Group is the parent company of MultiChoice SA, MultiChoice Africa Holdings, Showmax Africa and Irdeto. The MultiChoice Group has been listed on the JSE since 2019. (1) This graphic reflects the operational structure of the business and may differ from the legal structures. (2) MultiChoice Group holds 5.7% of Phuthuma Nathi due to the share swap transaction implemented in October 2019. (listed on the JSE) Holds 5.7%(2) of Phuthuma Nathi (listed on the EESE) 78 515 Phuthuma Nathi shareholders South Africa 25% 75% Content Connected Video Advertising Technology and distribution Phuthuma Nathi Investments (RF) Limited Integrated annual report 2022 / 11
Understanding Phuthuma Nathi Snapshot of our history 12 / Phuthuma Nathi Investments (RF) Limited Integrated annual report 2022 2011 Trading started The shares began trading publicly on 8 December 2011. 2006 to 2008 Phuthuma Nathi launched Phuthuma Nathi 1 was launched in 2006, and Phuthuma Nathi 2 (a smaller replica) was launched in 2007. As one of the largest BBBEE transactions in South Africa, the schemes acquired a combined 20% stake in MultiChoice SA. 2014 Debt paid off MultiChoice SA’s strong financial performance enabled substantial dividend payments to Phuthuma Nathi, thereby enabling Phuthuma Nathi to repay its vendor loan in 2014 – two years ahead of schedule – while maintaining dividend payments to Phuthuma Nathi shareholders. t i Investments (RF) Limited Integrated annual eport 2022
Overview Understanding MultiChoice SA MultiChoice SA performance Corporate governance review Shareholder information Introduction Financial review Understanding Phuthuma Nathi Phuthuma Nathi Investments (RF) Limited Integrated annual report 2022 / 13 2015 Full dividend paid Following the settlement of the outstanding vendor loan, Phuthuma Nathi shareholders received their first full dividend payment amounting to ZAR1.2bn. 2019 Phuthuma Nathi shareholding in MultiChoice SA increased to 25% To underpin the commitment by MultiChoice SA and Naspers to socio-economic transformation and BBBEE, Naspers and MultiChoice SA allocated an additional 5% stake in MultiChoice SA to Phuthuma Nathi for no consideration. Phuthuma Nathi 1 and Phuthuma Nathi 2 combined In FY19, shareholders voted to combine the two schemes into one scheme. The transaction resulted in a one-to-one swap of Phuthuma Nathi 2 for Phuthuma Nathi shares. As a result, Phuthuma Nathi 2 is owned by Phuthuma Nathi, and all shareholders hold shares in Phuthuma Nathi. Share swap completed Phuthuma Nathi shareholders were offered the option to exchange some of their shares in Phuthuma Nathi for shares in the MultiChoice Group. Following extensive engagements, shareholders representing a combined 5.7% shareholding in Phuthuma Nathi accepted this offer. 2021 Latest dividend paid Phuthuma Nathi shareholders continued to benefit from dividend payments, receiving ZAR1.5bn in September 2021 following approval at the 2021 AGM despite a challenging economic environment. This took the total amount in dividends paid out to Phuthuma Nathi shareholders since inception to ZAR14.9bn.
Understanding Phuthuma Nathi Understanding your return on investment ZAR14.9bn in dividends paid since inception (1) T his total return includes the value of capital held and dividends received but assumes that the dividends were not reinvested by shareholders into Phuthuma Nathi shares, and excludes the impact of exchanging a portion of the Phuthuma Nathi shares held for MultiChoice Group shares in FY20 for any shareholder who may have elected to do so. (2) Based on the last publicly traded value on EESE on 31 March 2022. (3) D ividends are declared and paid post the financial year-end, e.g. the FY22 dividend was declared in June 2022 and will be paid in September 2022, subject to approval of the MultiChoice SA dividend in August 2022. Dividend declared subject to dividend withholding tax, e.g. FY22 dividend declared of ZAR22.22 per share equates to a net dividend of ZAR17.78 per share after dividend withholding tax of 20%. Capital growth through share price increases Over time, the shares in a company may become increasingly valuable depending on how well the company performs and how much demand there is for ownership of its shares. This is referred to as capital growth. It is important to remember that the value of shares can also decline if a company is performing poorly or if the demand for ownership of its shares declines. For example, if you purchased a Phuthuma Nathi share at inception for ZAR10 per share, it would have been worth ZAR141 per share at 31 March 2022(2). This means an initial investment of ZAR10 has generated capital growth of roughly 19% per year. As a Phuthuma Nathi investor, it is important to understand how your shares can potentially create value over time. Through Phuthuma Nathi, MultiChoice SA has provided long-term, impactful benefits to its BBBEE shareholders, with an estimated total return on investment of approximately 30 times since inception(1). Cash flow returns through dividends The directors may choose to pay dividends to shareholders periodically. While dividends are never guaranteed as they depend on how well the company performs, among other considerations, they offer shareholders liquid cash distributions as and when declared. FY19 FY20 FY21 FY22 ZAR22.22 ZAR22.22 ZAR22.22 ZAR22.22 Dividend declared per Phuthuma Nathi share(3) 2006 2022 Capital growth through share price increase ZAR10 ZAR141 14 / Phuthuma Nathi Investments (RF) Limited Integrated annual report 2022
Overview Understanding MultiChoice SA MultiChoice SA performance Corporate governance review Shareholder information Introduction Financial review Understanding Phuthuma Nathi Calvo Mawela (46) Independent non-executive director BSc Eng (Electrical) Appointed 12 July 2019 South African Calvo is the chief executive officer (CEO) of the MultiChoice Group and MultiChoice SA after holding office as the group executive of policy and regulatory affairs for the MultiChoice Group. He previously held positions as a professional engineer at Sentech and a broadcasting spectrum manager at ICASA. He also served in several ministerial advisory task teams, including the Digital Migration Working Group, Digital Dzonga and the Information and Communications Technology (ICT) Policy Review Panel. He also served as a commissioner to the Presidential Commission on the Fourth Industrial Revolution. He holds a Bachelor of Science in Electrical Engineering from the University of KwaZulu-Natal, a Management Advancement Programme Postgraduate Diploma from Wits Business School, a Postgraduate Diploma in Economics for Competition Law from King’s College, London and Strategic IQ: Creating Smarter Corporations from Harvard Business School. Clarissa Mack (54) Independent non-executive director LLB and LLM Appointed 5 July 2007 South African Clarissa is the regulatory group executive for the MultiChoice Group. She graduated with an LLB from the University of Cape Town and soon after completed a Master’s in Law at Georgetown University in Washington DC. She also holds a Diploma in Economics for Competition Law from King’s College London. After serving her legal articles at Cheadle, Thompson & Haysom attorneys, she joined M-Net, and later MultiChoice SA and MIH. Clarissa was intimately involved in the launch of the current Phuthuma Nathi scheme. Mandla Langa (72) Chair and independent non-executive director BA (English and Philosophy) and MA (Creative Writing) Appointed 4 August 2006 South African Mandla was the chair of MultiChoice SA from 2007 to 2010 and chair of the Independent Communications Authority of South Africa (ICASA) from 1999 to 2005. He participated in various arts programmes and conferences throughout Africa. In 2007, he received South Africa’s National Order of Ikhamanga (Silver) for literary, journalistic and cultural achievements and in 2009, a Living Legends award from the eThekwini municipality. A number of his works have been published. He was editor-at-large of leadership, programme director for television (TV) at the South African Broadcasting Corporation and his fourth novel, The Lost Colours of the Chameleon, won the 2009 Commonwealth Writer’s Prize – Africa region. His directorships include Primedia, Phuthuma Nathi and South African Screenwriters’ Laboratory. Mandla is a recipient of honorary doctorates from the University of Fort Hare, the University of the Witwatersrand and the University of Pretoria. He received his Master of Arts in Creative Writing from the University of the Witwatersrand and was a fellow at Stellenbosch Institute of Advanced Studies. Herman Wessels (77) Independent non-executive director BCom, CTA and CA(SA) Appointed 12 May 2021 South African Herman is a chartered accountant (BCom, CTA and CA(SA)) and was a partner at PricewaterhouseCoopers Inc (PwC) from 1972 to 2005. He serves as a director of Keeromstraat 30 Beleggings and Naspers Beleggings, Swiss Re Life and Health Africa and Just Retirement South Africa. Our Phuthuma Nathi board of directors Phuthuma Nathi Investments (RF) Limited Integrated annual report 2022 / 15
Understanding Phuthuma Nathi Phuthuma Nathi audit committee report The audit committee has pleasure in submitting this report, as required by section 94 of the Companies Act. Responsibilities The committee has adopted formal terms of reference, delegated by the board of directors, as set out in its charter. The committee has discharged its responsibilities in terms of its charter and ascribed to it in terms of the Companies Act as follows: Financial controls • Review and approve for presentation to and approval by the board, the company’s integrated annual report and annual financial statements. These reviews included: – Taking appropriate steps to ensure the annual financial statements were prepared in accordance with International Financial Reporting Standards (IFRS) and in the manner required by the Companies Act – Considering and, when appropriate, making recommendations on internal financial controls – Reviewing key audit matters raised by the external auditor and management’s response thereto – Compiling a report to be inserted in the annual financial statements, describing how the audit committee carried out its functions – Disclose in the integrated annual report significant matters that the audit committee has considered in relation to the annual financial statements, and how these were addressed by management – Reviewed the ability of the company to continue as a going concern, including an analysis of the group’s liquidity and solvency and recommend it to the board for approval External auditor • Receive all audit reports directly from the external auditor • Annually review the external auditor’s performance and disclose the committee’s views on the quality of the external audit, with reference to audit quality indicators such as those that may be included in inspection reports issued by external audit regulators • Present the committee’s conclusions on the external auditor to the board, preceding the annual request to shareholders to approve the appointment of the external auditor • Approve the external auditor’s terms of engagement and remuneration • Evaluate and provide commentary on the external auditor’s audit plans, scope of findings, identified issues and reports • Develop a policy for the board to approve non-audit services performed by the external auditor • Approve non-audit services provided by the external auditor in accordance with this policy 16 / Phuthuma Nathi Investments (RF) Limited Integrated annual report 2022
Overview Understanding MultiChoice SA MultiChoice SA performance Corporate governance review Shareholder information Introduction Financial review Understanding Phuthuma Nathi Members of the audit committee The committee consists of independent non-executive directors and meets at least once per year and on an ad hoc basis as required which is in accordance with its charter. All members act independently, are financially literate, have sound business and financial acumen and comply with all other requirements of section 94 of the Companies Act. The committee has unrestricted access to company information falling within the committee’s mandate and liaises with management on the information it requires to carry out its responsibilities. The names of the members who were in office during 2022, and up to the date of this report, are reflected below. Name of committee member Qualification Calvo Mawela* BSc Eng (Electrical) Mandla Langa Diploma in Offset Litho Printing (London College of Printing) and Certificate in Periodical Journalism (University of London) Clarissa Mack LLB – University of Cape Town Herman Wessels** BCom, CTA and CA(SA) * Resigned effective 9 June 2021. ** Appointed 12 May 2021. The committee members as at the date hereof are recommended for election as committee members by shareholders at the AGM to be held on 24 August 2022. Attendance The external auditor, in their capacity as auditor to the company, attended and reported at the meeting of the audit committee. Relevant managers attended meetings by invitation. Mandatory audit firm rotation and external auditor for 2024 During 2021, the company commenced its process in line with the Independent Regulatory Board for Auditors’ mandatory audit firm rotation regulations, which requires the company to rotate auditors at the latest by 2024 (the period from 1 April 2023 to 31 March 2024). After a formal selection process concluded during 2022, the audit committee has selected EY as the recommended external auditors from 2024. Confidential meetings Audit committee agendas provide for confidential meetings between the committee members and the external auditor. Independence of external auditor During the year under review, the audit committee reviewed a representation by the external auditor and, after conducting its own review, confirmed the independence of the auditor. Expertise and experience of finance function The committee satisfied itself that the composition, experience and skills set of the finance function met the company’s requirements. Discharge of responsibilities The committee determined that during the financial year under review it had discharged its legal and other responsibilities as outlined in terms of the Companies Act. The board concurred with this assessment. Mandla Langa Chair: Audit committee 9 June 2022 Phuthuma Nathi Investments (RF) Limited Integrated annual report 2022 / 17
Understanding Phuthuma Nathi Independent auditor’s report on the summary consolidated and separate financial statements To the shareholders of Phuthuma Nathi Investments (RF) Limited Opinion The summary consolidated and separate financial statements of Phuthuma Nathi Investments (RF) Limited, set out on pages 19 to 29, which comprise the summary consolidated and separate statements of financial position as at 31 March 2022, the summary consolidated and separate statements of profit or loss, comprehensive income, changes in equity and cash flows for the year then ended, and related notes, are derived from the audited consolidated and separate financial statements of Phuthuma Nathi Investments (RF) Limited for the year ended 31 March 2022. In our opinion, the accompanying summary consolidated and separate financial statements are consistent, in all material respects, with the audited consolidated and separate financial statements, in accordance with IAS 34, Interim Financial Reporting, and the requirements of the Companies Act of South Africa as applicable to summary financial statements. Summary consolidated and separate financial statements The summary consolidated and separate financial statements do not contain all the disclosures required by International Financial Reporting Standards and the requirements of the Companies Act of South Africa as applicable to annual financial statements. Reading the summary consolidated and separate financial statements and the auditor’s report thereon, therefore, is not a substitute for reading the audited consolidated and separate financial statements and the auditor’s report thereon. The summary consolidated and separate financial statements and the audited consolidated and separate financial statements do not reflect the effects of events that occurred subsequent to the date of our report on the audited consolidated and separate financial statements. The audited consolidated and separate financial statements and our report thereon We expressed an unmodified audit opinion on the audited consolidated and separate financial statements in our report dated 9 June 2022. Director’s responsibility for the summary consolidated and separate financial statements The directors are responsible for the preparation of the summary consolidated and separate financial statements in accordance with IAS 34 Interim Financial Reporting and the requirements of the Companies Act of South Africa as applicable to summary financial statements1. Auditor’s responsibility Our responsibility is to express an opinion on whether the summary consolidated and separate financial statements are consistent, in all material respects, with the audited consolidated and separate financial statements based on our procedures, which were conducted in accordance with International Standard on Auditing (ISA) 810 (Revised), Engagements to Report on Summary Financial Statements. PricewaterhouseCoopers Inc. Director: A.M. Motaung Registered Auditor Johannesburg, South Africa 28 July 2022 1 The examination of controls over the maintenance and integrity of the Group’s website is beyond the scope of the audit of the financial statements. Accordingly, we accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website. 18 / Phuthuma Nathi Investments (RF) Limited Integrated annual report 2022
Overview Understanding MultiChoice SA MultiChoice SA performance Corporate governance review Shareholder information Introduction Financial review Understanding Phuthuma Nathi Group Company Notes 2022 ZAR’000 2021 ZAR’000 2022 ZAR’000 2021 ZAR’000 Assets Non-current assets 6 684 423 6 638 918 6 684 423 6 638 918 Investment in associate 2 6 684 423 6 638 918 6 684 423 6 638 918 Current assets 195 898 178 044 195 898 178 044 Trade and other receivables 140 788 107 355 140 788 107 355 Cash and cash equivalents 55 110 70 689 55 110 70 689 Total assets 6 880 321 6 816 962 6 880 321 6 816 962 Equity and liabilities Equity reserves attributable to the company’s equity holders 6 681 961 6 637 032 6 681 961 6 637 032 Share capital and premium 2 814 075 2 814 075 2 814 075 2 814 075 Other reserves 347 681 406 673 347 681 406 673 Accumulated profit 3 520 205 3 416 284 3 520 205 3 416 284 Current liabilities 198 360 179 930 198 360 179 930 Other payables 198 360 179 930 198 360 179 930 Total equity and liabilities 6 880 321 6 816 962 6 880 321 6 816 962 The accompanying notes form an integral part of these summarised consolidated and company annual financial statements. Consolidated and company statements of financial position as at 31 March 2022 Summarised annual financial statements Phuthuma Nathi Investments (RF) Limited Integrated annual report 2022 / 19
Understanding Phuthuma Nathi Consolidated and company statements of profit or loss for the year ended 31 March 2022 Group Company 2022 ZAR’000 2021 ZAR’000 2022 ZAR’000 2021 ZAR’000 Operating expenses (576) (743) (576) (743) Operating loss (576) (743) (576) (743) Share of equity-accounted results of associate 1 604 497 1 975 090 1 604 497 1 975 090 Profit before taxation 1 603 921 1 974 347 1 603 921 1 974 347 Taxation – – – – Profit for the year 1 603 921 1 974 347 1 603 921 1 974 347 Earnings per share Earnings per share based on 67 500 000 (2021: 67 500 000) issued shares 23.76 29.25 23.76 29.25 The accompanying notes form an integral part of these summarised consolidated and company annual financial statements. Consolidated and company statements of comprehensive income for the year ended 31 March 2022 Group Company 2022 ZAR’000 2021 ZAR’000 2022 ZAR’000 2021 ZAR’000 Net profit for the year 1 603 921 1 974 347 1 603 921 1 974 347 Total other comprehensive income, net of tax, for the year: Items that may be reclassified subsequently to profit or loss Share of comprehensive income of equity-accounted investments (58 992) (889 516) (58 992) (889 516) Total comprehensive income 1 544 929 1 084 831 1 544 929 1 084 831 The accompanying notes are an integral part of the summary consolidated and company annual financial statements. Summarised annual financial statements continued 20 / Phuthuma Nathi Investments (RF) Limited Integrated annual report 2022
Overview Understanding MultiChoice SA MultiChoice SA performance Corporate governance review Shareholder information Introduction Financial review Understanding Phuthuma Nathi Consolidated and company statements of changes in equity for the year ended 31 March 2022 Group Share capital and share premium ZAR’000 Other reserves ZAR’000 Accumulated profit ZAR’000 Total equity ZAR’000 Balance at 1 April 2020 2 814 075 1 296 189 2 941 223 7 051 487 Profit for the year – – 1 974 347 1 974 347 Other comprehensive loss – (889 516) – (889 516) Liquidation distribution – – 714 714 Dividends declared – – (1 500 000) (1 500 000) Balance at 31 March 2021 2 814 075 406 673 3 416 284 6 637 032 Profit for the year – – 1 603 921 1 603 921 Other comprehensive loss – (58 992) – (58 992) Dividends declared – – (1 500 000) (1 500 000) Balance at 31 March 2022 2 814 075 347 681 3 520 205 6 681 961 Company Balance at 1 April 2020 2 814 075 1 296 189 2 941 325 7 051 589 Profit for the year – – 1 974 347 1 974 347 Other comprehensive loss – (889 516) – (889 516) Liquidation distribution – – 612 612 Dividends declared – – (1 500 000) (1 500 000) Balance at 31 March 2021 2 814 075 406 673 3 416 284 6 637 032 Profit for the year – – 1 603 921 1 603 921 Other comprehensive loss – (58 992) – (58 992) Dividends declared – – (1 500 000) (1 500 000) Balance at 31 March 2022 2 814 075 347 681 3 520 205 6 681 961 The accompanying notes form an integral part of these summarised consolidated and company annual financial statements. Phuthuma Nathi Investments (RF) Limited Integrated annual report 2022 / 21
Understanding Phuthuma Nathi Summarised annual financial statements continued Consolidated and company statements of cash flows for the year ended 31 March 2022 Group Company Notes 2022 ZAR’000 2021 ZAR’000 2022 ZAR’000 2021 ZAR’000 Cash flows from operating activities Cash outflow from operations (52 384) (52 988) (52 384) (52 612) Dividends received from associate 2 1 500 000 1 500 000 1 500 000 1 500 00 Net cash generated from operating activities 1 447 616 1 447 012 1 447 616 1 447 388 Cash flows from financing activities Dividends paid to ordinary shareholders (1 463 195) (1 471 026) (1 463 195) (1 471 026) Liquidation distribution – 714 – 612 Net cash utilised in financing activities (1 463 195) (1 470 312) (1 463 195) (1 470 414) Net movement in cash and cash equivalents (15 579) (23 300) (15 579) (23 026) Cash and cash equivalents at the beginning of the year 70 689 93 989 70 689 93 715 Cash and cash equivalents at the end of the year 55 110 70 689 55 110 70 689 The accompanying notes form an integral part of these summarised consolidated and company annual financial statements. 22 / Phuthuma Nathi Investments (RF) Limited Integrated annual report 2022
Overview Understanding MultiChoice SA MultiChoice SA performance Corporate governance review Shareholder information Introduction Financial review Understanding Phuthuma Nathi Notes to the annual financial statements for the year ended 31 March 2022 1. Basis of preparation The summarised consolidated and company financial statements are prepared in accordance with the requirements of the Companies Act applicable to summarised financial statements. The summarised financial statements were prepared in accordance with the framework concepts and the measurement and recognition requirements of IFRS and the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and the Financial Pronouncements as issued by the Financial Reporting Standards Council, and to also, as a minimum, contain the information required by IAS 34 Interim Financial Reporting. The accounting policies applied in the preparation of the consolidated and company annual financial statements from which the summary consolidated and company financial statements were derived are in terms of IFRS and are consistent with those accounting policies applied in the preparation of the previous annual financial statements. The Phuthuma Nathi Investments (RF) Limited group and company have adopted all new and amended accounting pronouncements as issued by the International Accounting Standards Board, which were effective for financial years commencing on 1 April 2021. A copy of the full audited consolidated and company annual financial statements is available for inspection from the company secretary at the registered office of the group or can be downloaded from the group’s website: www.phuthumanathi.co.za/information/financial-reporting/. Phuthuma Nathi Investments (RF) Limited Integrated annual report 2022 / 23
Understanding Phuthuma Nathi Summarised annual financial statements continued Notes to the annual financial statements for the year ended 31 March 2022 2. Investments in associates The company’s total investment in MultiChoice SA is 25% (2021: 25%) as at the end of the financial period. The principal activity of MultiChoice SA is the operation of video entertainment services. This is an unlisted investment that is accounted for using the equity method of accounting. Group and Company 2022 ZAR’000 2021 ZAR’000 Movement in carrying amount At the beginning of the year 6 638 918 7 053 344 Share of net profit 1 604 497 1 975 090 Share of changes in other reserves (58 992) (889 516) Dividends received (1 500 000) (1 500 000) 6 684 423 6 638 918 Analysis of carrying amount Cost 2 250 000 2 250 000 Additional investment 2 364 075 2 364 075 Share of equity-accounted results of associate (1 149 728) (40 195) Share of changes in associate's other comprehensive income 2 369 069 1 214 031 Gain on empowerment transaction 851 007 851 007 At the end of the year 6 684 423 6 638 918 Reconciliation of carrying amount Share of net assets of associate 3 174 191 2 883 720 Notional goodwill on initial acquisition 1 910 000 1 910 000 Fair value uplift on net identifiable assets 1 512 262 1 757 228 Notional goodwill on additional investment 87 970 87 970 Carrying amount 6 684 423 6 638 918 There has been no objective evidence of impairment of the associate in the current or prior years. 24 / Phuthuma Nathi Investments (RF) Limited Integrated annual report 2022
Overview Understanding MultiChoice SA MultiChoice SA performance Corporate governance review Shareholder information Introduction Financial review Understanding Phuthuma Nathi Notes to the annual financial statements for the year ended 31 March 2022 2. Investments in associates continued Summarised financial information of unlisted associate as per its annual financial statements Group and Company 2022 ZAR’m 2021 ZAR’m Summarised statement of financial performance Revenue 43 350 41 034 Cost of providing services and sale of goods (23 218) (20 247) Gross profit 20 132 20 787 Other operating (losses)/gains (277) 41 Net impairment loss on trade receivables (88) (121) Selling, general and administration costs (9 116) (8 683) Operating profit 10 651 12 024 Interest income 393 330 Net foreign exchange translation (losses)/gains (275) 701 Reversal of impairment of equity-accounted investments 8 – Share of equity-accounted results 8 (18) Interest expense (603) (649) Profit before taxation 10 182 12 388 Taxation (2 930) (3 536) Profit after taxation 7 252 8 852 Other comprehensive loss (449) (2 734) Total comprehensive income 6 803 6 118 Phuthuma Nathi Investments (RF) Limited Integrated annual report 2022 / 25
Understanding Phuthuma Nathi Summarised annual financial statements continued Notes to the annual financial statements for the year ended 31 March 2022 2. Investments in associates continued Summarised consolidated statement of financial position Group and Company 2022 ZAR’m 2021 ZAR’m Assets Non-current 13 835 14 706 Current 18 573 17 688 Total assets 32 408 32 394 Liabilities Non-current 7 771 9 658 Current 11 940 11 197 Total liabilities 19 711 20 855 Total net assets Equity reserves attributable to the company’s equity holders 12 697 11 534 Non-controlling interests – 5 12 697 11 539 Reconciliation of equity reserves carrying amount Opening net assets 11 534 12 212 Profit for the period 7 272 8 847 Other comprehensive loss (449) (2 734) Share-based payment reserve (55) (37) Dividends declared (5 979) (5 979) Hedging reserve basis adjustment 402 (775) Transactions with non-controlling shareholders (28) – Closing net assets 12 697 11 534 Group and company share (%) 25 25 Group and company share (ZAR) 3 174 2 884 26 / Phuthuma Nathi Investments (RF) Limited Integrated annual report 2022
Overview Understanding MultiChoice SA MultiChoice SA performance Corporate governance review Shareholder information Introduction Financial review Understanding Phuthuma Nathi Notes to the annual financial statements for the year ended 31 March 2022 3. Related parties Associate – MultiChoice South Africa Holdings Proprietary Limited Subsidiary of associate – MultiChoice South Africa Proprietary Limited Group and Company Dividends received 2022 ZAR’000 2021 ZAR’000 MultiChoice South Africa Holdings Proprietary Limited 1 500 000 1 500 000 Amounts due to related parties MultiChoice South Africa Proprietary Limited 6 959 4 905 The above current balance, with MultiChoice South Africa Proprietary Limited, is unsecured, interest free and has no fixed terms of repayment. As per the memorandum of incorporation (MOI), Phuthuma Nathi Investments (RF) Limited shall not earn any revenue and/or incur any expenses related to the trading of Phuthuma Nathi Investments (RF) Limited shares. MultiChoice South Africa Proprietary Limited shall incur all expenses related to the trading of Phuthuma Nathi Investments (RF) Limited shares. MultiChoice South Africa Proprietary Limited has earned and incurred the following income and expenses related to the trading of Phuthuma Nathi shares for the year ended 31 March 2022 in terms of the MOI requirements: Group Company 2022 ZAR’000 2021 ZAR’000 2022 ZAR’000 2021 ZAR’000 Income 1 492 2 025 1 492 2 025 Expenses (14) (17) (14) (17) Other amounts received/(paid) 576 (5 206) 576 (5 104) 2 054 (3 198) 2 054 (3 096) Related party income relates to interest earned on unclaimed dividends and expenses relate to bank charges on bank accounts and audit fees paid by MultiChoice SA on behalf of the group. Other amounts received/(paid) relate to repayments of the outstanding balances during the year. Transactions with non-executive directors As per the MOI, directors of Phuthuma Nathi Investments (RF) Limited shall not earn directors’ fees from either the company or any related company as compensation for their duties as Phuthuma Nathi Investments (RF) Limited directors. Phuthuma Nathi Investments (RF) Limited Integrated annual report 2022 / 27
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