| Thu 22 Nov 2001, 0:00 | | M-net - Interim Report |
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ELECTRONIC MEDIA NETWORK LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1985/002853/06)
Share code: MNS ISIN: ZAE000014304
(M-Net or the company)
INTERIM REPORT
Group unaudited results for the six-month period ended 30 September 2001
were as follows:
ABRIDGED INCOME STATEMENTs
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2001 2000 2001
(unaudited) (unaudited) (audited)
R'million R'million R'million
Revenues 620,4 589,2 1 205,4
Cost of sales, provision of services
and operating costs 547,6 528,4 1 075,9
Operating profit 72,8 60,8 129,5
Net finance income/(cost) 0,6 (0,6) 1,7
Profit before taxation 73,4 60,2 131,2
Taxation 22,8 18,7 49,4
Profit attributable to shareholders 50,6 41,5 81,8
Dividend - - 50,9
Retained profit for the period 50,6 41,5 30,9
Earnings and headline earnings
per share (cents) 17,9 14,7 28,9
ABRIDGED BALANCE SHEETS
30 September 30 September 31 March
2001 2000 2001
(unaudited) (unaudited) (audited)
R'million R'million R'million
ASSETS
Non-current assets
Property, plant and equipment 125,2 115,8 135,6
Investments and loans 46,5 53,1 46,5
Current assets 774,6 736,8 725,8
Total assets 946,3 905,7 907,9
EQUITY AND LIABILITIES
Capital and reserves 219,8 179,8 169,1
Non-current liabilities
Deferred taxation 155,6 145,1 155,6
Current liabilities 565,8 529,9 555,8
Interest-bearing debt 5,1 50,9 27,4
Total equity and liabilities 946,3 905,7 907,9
ABRIDGED CASH FLOW STATEMENTS
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2001 2000 2001
(unaudited) (unaudited) (audited)
R'million R'million R'million
Operating profit 72,8 60,8 129,4
Depreciation and other non-cash items 13,4 10,9 22,1
Working capital* (53,2) (55,8) (30,7)
Cash generated from operating
activities 33,0 15,9 120,8
Net finance income/(costs) 0,6 (0,6) 1,7
Taxation paid (8,2) (7,2) (15,7)
Dividend paid - - (50,9)
Cash flow from operations 25,4 8,1 55,9
Utilised for:
Fixed assets (3,1) (6,0) (36,9)
Investments and loans - (3,7) 2,9
Net cash flow 22,3 (1,6) 21,9
Interest-bearing debt at beginning
of period (27,4) (49,3) (49,3)
Interest-bearing debt at end of period (5,1) (50,9) (27,4)
NOTE:
*More favourable arrangements for programming were negotiated. The effect of
these negotiations has been to accelerate cash payments. The effect on
earnings is neutral.
SUPPLEMENTARY INFORMATION
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2001 2000 2001
(unaudited) (unaudited) (audited)
R'million R'million R'million
Included in operating profit:
Depreciation 13,4 10,9 22,2
Net finance income/(cost): 0,6 (0,6) 1,7
- Interest received 3,8 2,5 9,2
- Interest paid (3,2) (3,1) (7,5)
Investments and loans:
Loans to employee share incentive
schemes 46,5 52,0 46,5
Capital expenditure 3,1 6,0 37,1
Capital expenditure committed
or authorised 7,6 30,7 10,7
Programme and film rights
commitments 410,9 851,1 651,0
Dividend paid per share (cents) - - 18
Number of and weighted average
number of ordinary shares
in issue (million) 283,0 283,0 283,0
Net asset value per share (cents) 77,7 63,5 59,8
Rand/Nigerian naira exchange rate: R1 = N10,4044 N14,9547 N15,31279
NOTES
These consolidated condensed interim financial statements for M-Net for
the six months ended 30 September 2001 are prepared in accordance with AC127
Interim Financial Reporting. The accounting policies used in the preparation
of the interim financial statements are consistent with those used in the
annual financial statements for the year ended 31 March 2001.
No condensed statement of changes in equity has been presented for the
period and its comparative periods, as there have been no capital
transactions during any of the periods. The only movement in equity relates
to net income for those periods.
M-Net is involved in the acquisition, packaging, scheduling and
broadcasting of programming and related advertising activities, and has
interests in various operations. The company has no separable operations
and, from a geographical standpoint, although it broadcasts outside South
Africa, its operations are conducted from South Africa.
INTRODUCTION
M-Net shares are linked to those of SuperSport International Holdings
Limited (SuperSport) and trade as indivisible units on the JSE Securities
Exchange South Africa (JSE) and the Nigerian Stock Exchange.
RESULTS
M-Net's subscriber base grew marginally for the period. Growth in West-
Africa, and in particular Nigeria, continued to be positive after the
introduction of a KU-band footprint in August 2000. Total subscribers now
exceed 1,25 million households across 45 countries on the African continent
and adjacent islands.
Total revenue from subscriptions and advertising amounted to R620
million, an increase of 5% compared with the same period last year.
Revenue from subscription sources, which is the major contributor to
revenues, performed well during the period under review, whilst advertising
revenues were weak. Taxed profits of R50,6 million for the period,
equivalent to earnings per share of 17,9 cents, reflect an increase of 22%
compared with the same period last year. The growth in earnings per share
was achieved through a focus on operational efficiencies, including hedging
of dollar programming commitments.
In terms of M-Net's licence conditions the company pays the fiscus a 2%
levy on South African analogue subscription and advertising revenues, which
amounted to R7,7 million for the period.
DIVIDEND
It is M-Net's policy to pay a single dividend at the end of each
financial year.
STRATE
M-Net/SuperSport linked units are scheduled to be converted to Share
Transactions Totally Electronic (STRATE), an electronic settlement platform
for share transactions on the JSE, on 24 December 2001 (the
dematerialisation date). Trading for electronic settlement begins on 21
January 2002. Five business days later, i e on 28 January 2002, electronic
settlement of M-Net/SuperSport trades will take place for the first time.
DIRECTORATE CHANGES SINCE PUBLICATION OF THE ANNUAL REPORT
With effect from 21 August 2001 Mrs I Charnley and Mr P Edwards resigned
as directors and Messrs P M Jenkins and J R D Modise resigned as alternate
directors of the company. In addition, with effect from 22 August 2001
Messrs P M Jenkins, G P Marques and A C G Molusi were appointed as directors
and Mrs I Charnley and Messrs J R D Modise and S F Ward were appointed as
alternate directors of the company. On 20 November 2001 Mr T Vosloo retired
as chairman and Mr K B Sibiya was appointed as a director and elected
chairman. Mr Vosloo remains on the board as a director.
PROSPECTS AND DEVELOPMENTS
M-Net affirmed its position as Africa's premier entertainment pay-
television channel with its broadcast of leading series and first-time-on-
television movies.
Reality television arrived with the commissioning of Big Brother. It has
proved successful and is the country's first multimedia production,
straddling the television, internet and telephony platforms. The show is
increasing M-Net's audience ratings, has a favourable impact on subscriber
growth and is stimulating advertising revenue in a tough market.
M-Net has worked with the SA Advertising Research Foundation to establish
an augmented "peoplemeter" panel that will provide viewership data on
individual DStv channels. (Digital viewership of M-Net channels on DStv was
previously unmeasured.) The market for television advertising revenue is
under pressure internationally. However, the new measurement is expected to
enhance M-Net's audience ratings.
M-Net will focus its growth strategy on Nigeria and will produce the
entertainment show Gladiators in that country early next year. Steps have
also been taken to customise the West-African feed with a more appropriately
timed schedule.
Reports prepared by the monitoring and complaints unit of the Independent
Communications Authority of South Africa (ICASA) confirm that M-Net is
complying with its licence conditions and requirements. We believe continued
compliance will place M-Net in a favourable position during the licence
renewal process.
M-Net moves into the second half of the financial year with caution,
mindful of international market turbulence, the effect of the currency
devaluation and pressure on advertising revenues. Nevertheless, the company
remains optimistic that its innovative programming, talented and
enthusiastic people and commitment to the continent will bring "the magic"
to millions of viewers in Africa.
On behalf of the board
Khulu Sibiya Glen Marques
Chairman Chief executive
22 November 2001
Directors K B Sibiya (chairman), J P Bekker, D D B Band, J S Craib, P M
Jenkins, G P Marques, A C G Molusi, V B Mona, K D Moroka, S J Z Pacak, J J
Volkwyn, T Vosloo
Alternate directors
I Charnley, J R D Modise, S F Ward (British)
Company secretary
G Kisbey-Green
Transfer secretaries
Mercantile Registrars Limited
11 Diagonal Street
JOHANNESBURG 2001
(PO Box 1053,
Johannesburg 2000)
South Africa
Registered office
11 Grove Street
RANDBURG 2194
(PO Box 2963, Pinegowrie 2123)
South Africa
Registrars/transfer secretaries in Nigeria
City Securities Limited
5th Floor, Primrose Tower
17A Tinabu Street
LAGOS, Nigeria
(PO Box 9117, Lagos, Nigeria)
http://www.mnet.co.za
