| Tue 25 Jun 2002, 0:00 | | Mih Holdings Limited: Preliminary Report |
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MIH HOLDINGS LIMITED: PRELIMINARY REPORT
MIH HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1993/005613/06)
JSE Share code: MHH
ISIN code : ZAE000018941
("MIHH" or "the group")
PRELIMINARY REPORT
The audited results for the group for the year ended 31 March 2002
were as follows:
FINANCIAL AND OPERATIONAL HIGHLIGHTS
* The group recorded a consolidated EBITDA of R419 million
(2001: EBITDA R107 million) for the year.
* The digital-television subscriber base continued to grow,
reaching 1,15 million households representing 57%
of the total subscriber base.
* The group sold its equity stake in OpenTV in May 2002
CONDENSED CONSOLIDATED INCOME STATEMENTS
for the year ended 31 March
2002 2001
(audited) (audited)
R`m R`m
Net revenues 6 221 5 012
Earnings before interest, tax,
depreciation and amortisation 419 107
Depreciation (430) (277)
Operating loss before amortisation (11) (170)
Amortisation (309) (32)
Operating loss (320) (202)
Financial results, net (189) (164)
Equity results in joint ventures and
associates (48) (236)
Exceptional items 8 841
(Loss)/profit before tax (549) 239
Tax (46) (103)
(Loss)/profit after tax (595) 136
Minority interest 268 207
(Loss)/profit from
continuing operations (327) 343
Results from discontinuing operations (777) 1 137
Loss arising on discontinuing
operations (1 132) -
Net (loss)/profit (2 236) 1 480
Per share amounts:
(Loss)/profit from
continuing operations (cents)
Basic (130,05) 136,51
Diluted (130,05) 133,42
(Loss)/earnings per share (cents)
Basic (888,34) 588,54
Diluted (888,34) 575,22
Headline loss per share (cents)
Basic and diluted (198,71) (175,84)
Shares used to compute earnings and
headline loss per share
Basic 251 698 469 251 475 569
Diluted 251 698 469 257 301 537
Closing 264 682 294 264 682 294
CONDENSED CONSOLIDATED BALANCE SHEETS
as at 31 March
2002 2001
(audited) (audited)
R`m R`m
ASSETS
Non-current assets
Property and equipment, net 3 255 2 136
Intangible assets, net 3 447 6 720
Long-term investments 1 129 768
Programme and film rights 509 361
Total non-current assets 8 340 9 985
Current assets 5 126 4 503
Total assets 13 466 14 488
EQUITY AND LIABILITIES
Capital and reserves 1 005 2 525
Minority interest 4 082 6 934
Non-current liabilities
Transponder and other leases 2 909 1 680
Long-term debt 748 161
Programme and film rights 302 299
Deferred tax 4 1
Total non-current liabilities 3 963 2 141
Current liabilities 4 416 2 888
Total liabilities 8 379 5 029
Total equity and liabilities 13 466 14 488
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Foreign
currency
Share Share translation Retained
capital premium adjustments earnings Total
R`m R`m R`m R`m R`m
At 31 March 2000 5 745 138 76 964
Adjustment for
accounting policy change - (230) (8) (138) (376)
Translation adjustment - - 437 - 437
Treasury shares - 8 - - 8
Net profit - - - 1 480 1 480
Capital injection
by minorities - - - 12 12
At 31 March 2001 5 523 567 1 430 2 525
Translation adjustment - - 714 - 714
Treasury shares - 2 - - 2
Net loss - - - (2 236) (2 236)
At 31 March 2002 5 525 1 281 (806) 1 005
CONDENSED CONSOLIDATED CASH FLOW STATEMENTS
for the year ended 31 March
2002 2001
(audited) (audited)
R`m R`m
Net cash used in operating activities (55) (597)
Net cash (used in)/from investing activities (845) 275
Net cash from financing activities 276 1 349
Net (decrease)/increase in cash and cash equivalents (624) 1 027
Cash and cash equivalents at beginning of year 2 638 1 186
Translation adjustments on cash and cash equivalents 767 425
Cash and cash equivalents at end of year 2 781 2 638
CONDENSED SEGMENTAL INFORMATION
for the year ended 31 March
Revenue EBITDA Operating loss
2002 2001 2002 2001 2002 2001
R`m R`m R`m R`m R`m R`m
Subscriber Platforms 5 746 4 628 417 81 (272) (226)
Television 5 591 4 565 581 381 206 126
Internet 155 63 (164) (300) (478) (352)
Irdeto Access 617 449 128 143 79 127
Central costs and inter-
segment eliminations (142) (65) (126) (117) (127) (103)
MIHH group 6 221 5 012 419 107 (320) (202)
Discontinuing operations 925 676 (742) (464) (2 677) (1 417)
OpenTV 840 553 (386) (240) (2 267) (1 166)
Mindport 85 123 (356) (224) (410) (251)
Non-consolidated
subscriber platforms 1 830 1 332 32 (157) (289) (517)
Television 1 338 900 146 75 (101) (216)
Internet 492 432 (114) (232) (188) (301)
Notes:
Except as described below, the same accounting policies and the methods of
computation have been followed in this preliminary report as in the annual
financial statements for the year ended 31 March 2001. These preliminary
financial statements should be read in conjunction with the annual financial
statements for the year ended 31 March 2001. With effect of 1 April 2001 the
group changed its accounting policy pertaining to the share trust
transactions and has accounted for the share trust as treasury shares. The
effect of adopting this change is summarised in the condensed consolidated
statement of changes in shareholders` equity.
SUPPLEMENTARY INFORMATION
for the year ended 31 March
2002 2001
(audited) (audited)
R`m R`m
Finance results, net (189) (164)
Interest received 76 122
Interest paid (314) (213)
Dividend income 22 13
foreign exchange gains/(losses) 27 (86)
The headline loss is reconciled as follows:
Net (loss)/profit for the year (2 236) 1 480
Adjusted for:
Net loss/(gains) on disposal/dilutions 108 (2 159)
Restructuring provision 13 -
Loss on discontinuing operations 1 132 -
Amortisation of goodwill 483 236
Headline loss (500) (443)
Investments and loans 1 129 768
Marketable debt and equity securities 780 357
Associates 106 95
Joint ventures 74 82
Long-term private equity investments 169 234
Market value of listed investments 1 237 787
Directors` valuation of listed investments 237 316
Commitments and capital expenditure 1 675 1 849
Capital expenditure 76 26
Operating lease rentals 688 633
Programme and film rights 881 834
Decoder purchases 30 356
Net asset value per share (cents) 379,67 953,63
SUBSCRIBER PLATFORMS
Africa
MultiChoice Africa (Pty) Limited`s aggregate subscriber base ended at
1,28 million households. The digital base for Africa grew by 140 000
subscribers to 793 000 for the year, and now accounts for 62% of the total
number of subscribers, establishing a platform for the roll-out of
interactive television (iTV) services. The market in South Africa is now
mature, and growth in revenues from digital subscribers was in part offset
by the the churn in analogue subscribers.
EBITDA increased by 63% from R404 million to R658 million.
Subsequent to the year end, the group`s interest in the subscriber
management operation in the Middle East was disposed of and the group`s
interest in the Egyptian operation consolidated. MIH now owns 16,5% of the
Egyptian pay-television platform, the only such operation in Egypt.
M-Web Holdings Limited (M-Web Africa) was delisted from the JSE Securities
Exchange South Africa in July 2001. It developed a leading position in the
South African market, ending the year with 247 000 dial-up subscribers and 2
600 hosted clients. The company continued with its `M-Web Anywhere` strategy
to provide access to content and
e-commerce services from virtually any communications device and multiple
locations. Management`s focus at M-Web Africa is on scaling costs, reducing
losses, growing revenues and driving the business to profitability. During
the year the group continued to increase its interest in M-Web Africa, by
funding the business through convertible preference shares, increasing its
stake from 22,3% to 41%.
Mediterranean
The number of pay-television households for NetMed at the end of the year
totalled 317 000. The launch of a high-cost competing platform in Greece
resulted in a decline in the analogue base in Greece to 165 000 households.
However, the digital television service, NOVA, maintained its leading
position in the region by adding 31 000 subscribers to end the year on 100
000. The Cyprus operation ended the year with 52 000 subscribers.
The launch of the competing pay-television service caused turbulence and
confusion in the market. This has resulted in less-than-expected growth in
revenue from the previous year`s R1,1 billion to R1,3 billion for the
current year, as well as a delay in achieving profitability in the short
term. EBITDA losses increased from R24 million to R77 million.
In October 2001 Antenna TV, Greece`s leading free-television operator,
joined forces with NetMed by acquiring a minority equity stake. As part of
the strategic alliance Antenna TV will provide NetMed with attractive local
thematic programming from its extensive libraries.
Thailand and Indonesia
During the year United Broadcasting Corporation Public Company Limited
(UBC) acquired 30 000 new subscribers (mostly digital) and ended the year
with 413 000.
An 18% subscription-price increase on the full bouquet was implemented
during the year. UBC has secured the exclusive carriage of Thailand`s
favourite sport, English Premier League soccer, for another three years.
The business achieved a positive EBITDA of R146 million, with management
focused on generating positive cash-flow.
M-Web Thailand, the MIH internet platform, is the premier local-content
service provider in that country and consists of nine consumer-focused web
sites. MIH has a majority interest in KSC Commercial Internet Company Ltd
(KSC), one of Thailand`s largest internet service providers. KSC has 286 000
users accessing the internet on a prepaid basis, 17 000 accessing on a
postpaid billing basis, and some 750 corporate clients.
Through arrangements with mobile operators, and by utilising its content,
M-Web Indonesia delivers some 300 000 news and smart-message downloads every
week.
Management focuses on developing the businesses while curtailing operational
cash burn.
China
The group`s principal activity in China is an instant-messaging platform,
QQ, in which it acquired a 46,5% interest during the year. Instant messaging
has become an important communications service and community-building tool
worldwide. QQ processes around 500 million messages per day and has 1,5
million paying mobile subscribers across China. This business achieved
positive EBITDA of R33 million during the period under review.
IRDETO ACCESS
Irdeto Access has been selected as the conditional access (CA) vendor by
some 76 operators in more than 40 countries worldwide. Some seven million
Irdeto Access smartcards have been issued.
In the People`s Republic of China, Irdeto Access recently acquired eight new
clients, bringing its total number of Chinese clients to 17. It also gained
official State Administration of Radio Film and Television (SARFT) approval
as one of two foreign vendors allowed to supply CA systems to the Chinese
market.
During the year most Irdeto clients changed to new-generation CA systems and
smartcards to upgrade security. Some 1,3 million smartcards were swopped
with minimal operator interruption. Client operators experienced some
additional growth, thanks to former pirate viewers acquiring proper paid-up
subscriptions.
These operations had a positive EBITDA of R128 million.
OPENTV
OpenTV provides a comprehensive suite of iTV solutions, including
operating middleware, web-browser software, content and applications,
content-creating tools, and professional services. OpenTV`s runtime software
now powers more than 25 million digital decoders worldwide.
The group first invested in OpenTV in 1998. Since then it has developed it
into the leading worldwide provider of iTV solutions.
OpenTV`s business has historically been closely aligned to MIH`s core
subscription platform businesses. More recently it has diversified into new
business activities, such as the development of an interactive software-
application suite and games channels. This new growth phase started to steer
it on a course away from MIH`s core business activities.
Against this background we decided to monetise our investment in OpenTV.
Subsequent to year-end the group`s equity interest in OpenTV, which in
aggregate cost the group approximately US$80 million to develop over time,
was sold for a gross consideration of US$185 million (R1,9 billion) to
Liberty Media Corporation. Supply contracts between OpenTV and the group`s
pay-television platforms will continue as before.
Mindport
Mindport has been discontinued and we expect the costs to closure to be
minimal going forward.
GROUP RESULTS
Group consolidated revenues continued to grow and increased by 24% to
R6,2 billion (2001: R5 billion).
The group recorded an EBITDA profit of R419 million (2001: R107 million) for
the year, mainly due to a 54% growth in EBITDA from the television
subscriber platforms and a 45% reduction of the EBITDA losses from the
internet operations. This was achieved largely as a result of management`s
objective to relentlessly drive the business towards profitability through
aggressive cost cutting, discontinuing certain operations and scaling of
operational expenditure in line with revenues in business units.
The operating loss before amortisation decreased from R170 million to R11
million as a result of the improvement in EBITDA, offset by an increased
depreciation charge. Depreciation includes additional charges as a result of
the capitalisation of a new transponder lease in Africa.
The amortisation charge includes a once-off impairment charge of R114,1
million.
The results from discontinuing operations include the operating results and
closure costs of the Mindport business as well as the operating results of
OpenTV as a consequence of the disposal of our interest in this business.
The loss on discontinuing operations relates mainly to the goodwill owned by
OpenTV which arose on its non-cash merger with Spyglass, Inc. in July 2000.
Prior-year figures have been restated for comparable purposes.
Net group cash and liquid assets at the end of the year amounted to R4
billion (2001: R3,4 billion).
OUTLOOK
The group aims to maintain its leadership position in the markets where
it operates, and to leverage its core competencies in subscriber platform
management. In the year ahead we will focus on building shareholder value,
scaling our businesses to deliver operational efficiencies through rigorous
attention to cost cutting, and growing recurring subscription revenues and
profitability across our core subscription businesses.
On behalf of the board
T Vosloo S F Ward
Chairman Financial director
25 June 2002
Directors Transfer secretaries
T Vosloo (chairman) Computershare Investor Services Limited
J P Bekker 11 Diagonal Street
J S Craib Johannesburg 2001
S J Z Pacak (PO Box 1053, Johannesburg 2000)
K B Sibiya
C J Sidego
S F Ward (British)
Company secretary Registered office
G Kisbey-Green 251 Oak Avenue
Randburg 2194
(PO Box 1502, Randburg 2125)
www.mihholdings.co.za
Date: 25/06/2002 12:30:00 PM Produced by the SENS Department
