| Mon 25 Jun 2001, 0:00 | | Mih Holdings Limited - Preliminary Report |
|
MIH Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1993/005613/06)
("MIHH" or "the group")
PRELIMINARY REPORT
FINANCIAL AND OPERATIONAL HIGHLIGHTS
* The digital television subscriber base grew by 30% to 1,1 million
households. The digital base now exceeds 50% of the total base.
* Revenues from Subscriber Platforms for the year increased by 18,5% to R4,6
billion (2000: R3,9 billion).
* Revenues of Software Solutions increased by 76% to R1,1 billion (2000:
R635 million), with OpenTV reflecting growth of 187%. OpenTV's interactive
television software is now deployed in over 16 million decoders worldwide,
in systems controlled by 41 network operators.
* The group continued to grow its Software Solutions businesses as well as
its leading internet subscriber businesses. This resulted in an EBITDA loss
of R356 million.
* MIH Limited raised R1,2 billion (US$180 million), before expenses, through
a follow-on public offering of 4 511 000 Class A ordinary shares.
CONDENSED CONSOLIDATED INCOME STATEMENTS
for the year ended 31 March 31 March
2001 2000
R'm R'm
Net revenues 5 685 4 476
(Loss)/earnings before interest,
taxation, depreciation and amortisation (356) 10
Depreciation and amortisation (1 263) (225)
Operating loss (1 619) (215)
Financing results, net (64) (93)
Equity results in joint ventures
and associates (242) (117)
Exceptional items 3 366 1 996
Profit before tax 1 441 1 571
Tax (53) (5)
Profit after tax 1 388 1 566
Minority interest 3 (188)
Profit from continuing operations 1 391 1 378
Loss from discontinuing operations - (31)
Net profit for the year 1 391 1 347
Earnings per share (cents)
- basic 553,29 537,35
- diluted 540,76 523,05
Headline loss per share (cents) - basic (188,31) (95,97)
Number of shares in issue ('000):
Weighted average 251 476 250 708
Diluted 257 302 257 563
At year-end 264 682 264 682
CONDENSED CONSOLIDATED BALANCE SHEETS
for the year ended 31 March 31 March
2001 2000
R'm R'm
ASSETS
Non-current assets 10 807 2 775
Property and equipment, net 2 136 1 399
Intangible assets, net 6 724 -
Long-term investments 1 586 1 056
Programme and film rights 361 320
Current assets 4 527 2 825
Total assets 15 334 5 600
EQUITY AND LIABILITIES
Shareholders' equity 2 854 964
Minority interest 7 435 1 058
Non-current liabilities 2 141 1 478
Transponder and other leases 1 680 1 082
Long-term debt 161 135
Programme and film rights 299 259
Deferred tax 1 2
Current liabilities 2 904 2 100
Total equity and liabilities 15 334 5 600
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Foreign
currency
Share translation Retained
capital adjustment earnings Total
R'm R'm R'm R'm
At 1 April 1999 749 119 (1 026) (158)
Translation adjustment - 19 - 19
Net profit - - 1 347 1 347
Goodwill written off - - (244) (244)
At 31 March 2000 749 138 77 964
Translation adjustment - 488 - 488
Net profit - - 1 391 1 391
Capital injection by minorities 11 11
Balance at 31 March 2001 749 626 1 479 2 854
CONDENSED CONSOLIDATED CASH FLOW
for the year ended 31March 31 March
2001 2000
R'm R'm
Cash flows (used in)/from operating
activities (597) 83
Cash flows from/(used in)
investing activities 275 (1 218)
Cash flows from financing activities 1 349 1 978
Net increase in cash and
cash equivalents 1 027 843
Cash and cash equivalents at
beginning of year 1 185 348
Translation adjustments on cash and
cash equivalents 426 (6)
Cash and cash equivalents at
end of year 2 638 1 185
SUPPLEMENTARY INFORMATION
for the year ended 31 March 31 March
2001 2000
R'm R'm
Depreciation and amortisation (1 263) (225)
Depreciation (327) (225)
Amortisation (936) -
Finance results, net: (64) (93)
Interest received 223 87
Interest paid (220) (167)
Dividend received 13 13
Net foreign exchange losses (80) (26)
The headline loss is reconciled as
follows:
Net profit for the year 1 391 1 347
Adjusted for:
Net gains on disposal(net of
minority interestsof R1,514 million) (2 187) (1 583)
Loss on discontinuing operations - 18
Amortisation of goodwill 240 -
Impairment of equity results 8 -
Loss/(profit) on marketable securities 74 (23)
Headline loss (474) (241)
Investments and loans: 2 061 1 740
Marketable debt and equity securities 832 776
Associates 105 91
Joint ventures 82 215
Long-term private equity investments 234 85
Loans to employee share incentive
schemes 808 573
Market value of listed investments 787 1 991
Directors' valuation of unlisted
investment 317 153
Purchase of intangible and tangible
assets 390 166
Commitments and capital
expenditure: 1 849 1 468
Capital expenditure 26 20
Operating lease rentals 633 581
Programme and film rights 834 785
Decoders 356 82
Net asset value per share (cents) 1 078,3 364,2
Operating
(loss)/profit
Segmental information
for the year ended 31 March 2001 2000
(additional) R'm R'm
Subscriber Platforms (182) 38
- Television 132 98
- Internet (314) (60)
Software Solutions (1 284) (174)
- OpenTV (1 167) (101)
- Mindport (117) (73)
Central costs and
inter-segment eliminations (153) (79)
MIHH group (1 619) (215)
Non-consolidated
Subscriber Platform
results
- Television (216) (301)
- Internet (305) (187)
Accounting policies and subsequent events
The same accounting policies and methods of computation have been followed
in this preliminary report as in the annual financial statements for the
year ended 31 March 2000, except for the treatment of intangible assets,
goodwill, the related amortisation charge with effect from 1 April 2000, and
programme and film rights.
Previously intangible assets and goodwill were written off in full against
distributable reserves on acquisition. As from 1 April 2000 intangible
assets are stated at cost less accumulated amortisation.
The group modified its accounting for variable sports rights contracts and
no longer carries the asset and liability associated with such contracts,
but only bears the cost upon screening. This does not have an effect on
operating results or shareholders' equity.
Total assets and liabilities at 31 March 2000 relating to programme and film
rights each decreased by R525,4 million, comprising a decrease in current
assets of R11,8 million and non-current assets of R513,6 million, and
current liabilities of R8,8 million and non-current liabilities of R516,6
million.
The 46,5% stake in OICQ.com Limited (QQ) was acquired for a cash
consideration of US$32 million (R256 million) from IDG Technology Venture
Investment, Inc., IDG Technology Venture Investments LP, Millenium Vocal
Limited and several individual founder shareholders. Static 2358 Limited
(Static) was acquired by OpenTV for a net value of some US$59 million
(R473 million) to be settled by a cash consideration of approximately US$17
million and some 2,6 million OpenTV Class A ordinary shares from several
private shareholders.
These transactions have no material effect on the consolidated net asset
value per share or headline earnings per share of MIHH.
The audited results of the group for the year ended 31 March 2001 were as
follows:
INTRODUCTION
Over the past 15 years the group has provided compelling content and
efficient services to its subscriber platforms. Advances in television, the
internet and wireless technologies have created opportunities to build value
through the provision of online and interactive services delivered anywhere,
anytime. To capitalise on this and to reflect better the complementary
nature of our businesses, we have organised our operations into two
principal segments:
* Subscriber Platforms - comprising television and internet businesses
* Software Solutions - comprising OpenTV and Mindport (including Irdeto
Access)
Segmental results Net revenue EBITDA
2001 2000 2001 2000
R'm R'm R'm R'm
Subscriber Platforms 4 640 3 915 71 242
- Television 4 577 3 912 378 299
- Internet 63 3 (307) (57)
Software Solutions 1 117 635 (333) (155)
- OpenTV 553 193 (240) (94)
- Mindport 564 442 (93) (61)
Central costs and
inter-segment eliminations (72) (74) (94) (77)
MIHH group 5 685 4 476 (356) 10
Non-consolidated
Subscriber Platform results
- Television 900 742 75 (31)
- Internet 432 152 (232) (154)
Subscriber Platforms
Africa
The African and Middle Eastern television subscriber base ended the
financial year at 1,4 million. The digital base grew by 25% to 800 000
households, surpassing analogue for the first time, and now represents 57%
of the total base. This is a significant development, as the average revenue
from digital subscribers exceeds that of analogue. Growth in revenues from
new digital subscribers has been partially offset by the churn in analogue
subscribers.
M-Net and SuperSport played a key role in growing the subscriber base
through premium content and innovative coverage of sport events.
The group began the process of aligning M-Web Africa's internet business
more closely with MultiChoice Africa's television-subscription platforms. M-
Web Africa increased its dial-up subscriber base to 255 000 and continued
with its 'M-Web Anywhere' strategy to provide users with access to content
from any device.
M-Web is currently being delisted from the JSE Securities Exchange South
Africa.
Mediterranean
The television platform in Greece and Cyprus increased to 385 000
households, driven mainly by growth in NOVA, the digital platform that ended
the year at 69 000 households. During the year under review NOVA launched a
variety of interactive-television services.
During the year strategic investors acquired a minority equity stake in
NetMed, placing an enterprise value of approximately R3,0 billion on the
business. MultiChoice Cyprus Limited was listed on the Cyprus stock exchange
in July 2000.
ASIA
Thailand
United Broadcasting Corporation Public Company Limited (UBC) grew its base
by 14,7% (49 000 new subscribers, mostly on the DStv base) to close with
over 382 000 households. Growth was aided by monthly churn of below 0,8% -
one of the lowest in Asia. Pay-television penetration of the total number of
Thai television households remains a modest 2,5%. UBC has shown good EBITDA
growth, primarily through higher revenues as a result of the increase in
subscribers and cost savings gained from operational efficiencies.
The group's internet platform, M-Web Thailand, is the premier local online
service provider and consists of 11 consumer-focused web sites. The group
also owns Sanook.com, the Thai-language search engine, and has a majority
interest in KSC Commercial Internet Company Limited, one of the country's
largest internet service providers. M-Web Thailand's portals attract more
than 3,5 million page views per day.
Indonesia
M-Web Indonesia was launched in May 2000. The portal now receives 1,5
million page views per day, representing around 60% of the market, and has
500 000
e-mail users.
China
During the year it became clear that the Chinese market was not yet ready
for online service provision by anyone but the existing state-controlled
telecommunications operators. The group consequently focused on its vertical
niche portals of SportsCN and eefoo (a personal finance portal).
SportsCN.com is the leading sports portal in China and attracts more than
two million page views and 650 000 unique visitors per day, while eefoo.com
is a personal finance portal that attracts more than 450 000 page views per
day.
Subsequent to year-end the group acquired a 46,5% stake in QQ. QQ is the
most pervasive instant-messaging platform in China. Instant-messaging has
become an important communications tool worldwide. QQ is currently the
leading instant-messaging service in China, with 18 million active customers
representing 95% of the market.
Software Solutions
OpenTV
By year-end OpenTV's software was installed worldwide in over 16 million
decoders, of which some two million were activated in the first quarter of
2001. OpenTV has 41 network operators in 50 countries using its software and
31 decoder manufacturers are licensed to distribute OpenTV software.
OpenTV concluded its merger with SpyGlass(R) Inc. in July 2000, resulting in
a dilution gain of R2,7 billion. The merger enhanced OpenTV's ability to
provide its clients with the necessary consulting services and solutions,
while also adding internet browsing capability to OpenTV's iTV software.
In response to client demand for a complete back-end solution that enables
network operators to manage their iTV service better, OpenTV introduced its
Service Platform Suite (SPS), an integrated turnkey software solution. It is
expected to simplify the business of iTV for network operators by enabling
them to launch and centrally manage commerce, ad serving, communication and
viewer-management capabilities across their entire portfolio of iTV
applications.
OpenTV showed growth in revenues of 187% to R553 million, derived mainly
from sales of its runtime software. EBITDA losses increased as a result of
investment in the development of iTV applications.
Subsequent to year-end OpenTV acquired, for a consideration of $59 million,
all the outstanding shares of Static, a leading interactive television
software development and entertainment company and creator of Playjam, the
world's most successful iTV entertainment and games channel.
Mindport
During the year the Mindport group was repositioned to address the growing
demand for content management, encryption and billing solutions in the
internet protocol (IP) environment. At year-end Mindport had 18 major pay-
media clients and some 50 installations in 43 countries.
In November 2000 Mindport IBS, the customer care and billing business,
merged with Noochee Solutions Inc., an internet infrastructure and
application software company based in Colorado, USA. The merger strengthened
the IBS sales channels and product base and the merged entity is now
positioned to provide best-of-breed solutions to the emerging broadband
market.
Irdeto Access
Irdeto Access, which is part of the Mindport group, is the fourth largest
provider worldwide of content-protection solutions. Irdeto Access holds more
than 50 patents in the field of content protection and management, including
the patents to the key hierarchy technology widely used in the industry
today.
During the period under review Irdeto Access personalised over 1,24 million
digital smartcards, taking the total number installed to 5,75 million. It
now has 60 clients and over seven million users in 50 countries and
continues to be strongly cash positive.
In the aggregate Mindport's EBITDA, after a positive contribution from
Irdeto Access, decreased as a result of higher spending in the development
of new technologies.
GROUP RESULTS
Group consolidated revenues for the year increased by 27% to R5,7 billion
(2000: R4,5 billion), reflecting strong digital-television subscriber growth
and higher revenues from the Software Solutions segment.
The group recorded an EBITDA loss of R356 million for the year, after taking
into account:
* a positive contribution from television platforms of R378 million.
* EBITDA losses of R307 million, mainly as a result of expansion in the
Asian territories.
* EBITDA losses of R333 million, reflecting the increased spending on
developing technologies by OpenTV and Mindport as well as the merged costs
of Spyglass(R) Inc. and Noochee.
The group's continuing investment during the year is a direct result of its
strategy to grow organically and expand into new markets, technologies and
subscriber platforms. This growth results in the creation of valuable
subscribers and intellectual property rights.
The net profit for the year under review amounted to R1,4 billion, after
accounting for the following additional material items:
* a profit of R3,3 billion on disposal and dilution of subsidiaries and
joint ventures, such as the merger between OpenTV and Spyglass(R) Inc. and
the follow-on offering of MIH Limited.
* The amortisation and depreciation charge which increased to R1,3 billion,
and arose principally from goodwill on the merger between OpenTV and
Spyglass(R) Inc.
* Additional equity-accounted losses of joint ventures and associates of
R125 million, which mainly reflects our share of the losses of associated
Subscriber Platform companies.
Net group cash and liquid assets at the end of the year amounted to R3,5
billion (2000: R1,9 billion). Transponder leases increased as a result of
the finance leases for the new Eutelsat W4 and Hotbird 4 transponders.
Strate
MIHH has been scheduled to convert its share capital to Share Transactions
Totally Electronic (STRATE), an electronic settlement platform for share
transactions on the JSE Securities Exchange South Africa (JSE), in November
2001. The move to STRATE will ensure MIHH's participation in a sophisticated
settlement process in line with international best practice. Shareholders
will receive further communication in this regard in due course.
OUTLOOK
The group will continue to focus on building value by growing its digital
subscriber platforms, interactive and online services, and delivering best-
of-breed software solutions.
On behalf of the board
T Vosloo J D T Stofberg
Chairman Managing director
25 June 2001
Directors Transfer secretaries
T Vosloo (chairman) Mercantile Registrars Limited
J P Bekker 11 Diagonal Street
J S Craib JOHANNESBURG
S J Z Pacak 2001
A M Rosenzweig (PO Box 1053, Johannesburg 2000)
K B Sibiya
J D T Stofberg (managing)
S F Ward (British)
Alternate director Registered Office
C J Sidego 251 Oak Avenue
Randburg
2194
(PO Box 1502, Randburg 2125)
Company secretary
G Kisbey-Green
Additional information is available on http://www.mihholdings.co.za
