| Thu 19 Jun 2003, 13:43 | | Preliminary Report |
|
ELECTRONIC MEDIA NETWORK LIMITED -
MNET
ELECTRONIC MEDIA NETWORK LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1985/002853/06)
Share code MNS ISIN ZAE000014304
("M-ET" or "the company" or "the group")
PRELIMINARY REPORT
Group audited results for the year ended 31 March 2003 were as follows:
ABRIDGED INCOME STATEMENT
Year ended Year ended
31 March 31 March
2003 2002
R"m R"m
Revenues 1 377 1 287
Cost of sales and provision of services (948) (936)
Gross profit 429 351
Operating costs (235) (198)
Operating profit 194 153
Net finance income - 5
Profit before taxation 194 158
Taxation (67) (59)
Net profit for year 127 99
Headline earnings and earnings per share (cents)
- basic 50,2 37,0
- diluted 50,0 36,9
Dividend per share (cents) 26,0 21,5
Number of shares used to compute earnings and headline
earnings per share (millions):
- basic 253 266
- diluted 255 268
ABRIDGED BALANCE SHEET
31 March 31 March
2003 2002
R"m R"m
ASSETS
Non-current assets
Property, plant and equipment 105 121
Current assets 990 915
Net cash 35 4
Total assets 1 130 1 040
EQUITY AND LIABILITIES
Capital and reserves 156 143
Non-current liabilities 207 198
Deferred taxation 191 185
Accounts payable 16 13
Current liabilities 767 699
Total equity and liabilities 1 130 1 040
ABRIDGED CASH FLOW STATEMENT
Year ended Year ended
31 March 31 March
2003 2002
R"m R"m
Cash generated from operating activities 183 146
Net finance income - 5
Taxation paid (28) (36)
Foreign currency translation reserve (13) 9
Cash flow from operations 142 124
Utilised for:
Property, plant and equipment (10) (12)
Share buy-back - (34)
Net cash distribution (35) -
Net dividend paid (66) (55)
Net cash flow 31 23
Net cash resources at beginning of year 4 (19)
Net cash at end of year 35 4
STATEMENT OF CHANGES IN EQUITY
Share Foreign
capital and currency
share Retained translation
premium earnings reserves Total
R"m R"m R"m R"m
Balance as at 1 April 2001 116 8 - 124
Share acquisition and
cancellation (33) - - (33)
Acquisition of shares held
as treasury shares (1) - - (1)
Foreign currency translation
reserve - - 9 9
Net profit for year - 99 - 99
Net dividend paid - (55) - (55)
Balance as at 31 March 2002 82 52 9 143
Reduction in share premium (35) - - (35)
Decrease in foreign currency
translation reserve - - (13) (13)
Net profit for year - 127 - 127
Net dividend paid - (66) - (66)
Balance as at 31 March 2003 47 113 (4) 156
SUPPLEMENTARY INFORMATION
Year ended Year ended
31 March 31 March
2003 2002
R"m R"m
Included in operating profit:
Depreciation for year 26 26
Net finance income: - 5
Interest received 8 11
Interest paid (8) (6)
Rental under operating leases 1 1
Capital expenditure for year 10 13
Capital expenditure committed or authorised 30 8
Programme and film rights commitments 710 575
Operating lease commitments 5 5
Number of ordinary shares in issue (million) 253 253
Net asset value per share (cents) 61,7 53,5
Rand/naira exchange rate at
31 March 2003: R1,00 = N16,161
Related-party transactions
The group entered into transactions and has
balances with a number of related parties.
The transactions with related parties are
summarised as follows:
Subscriber revenues received for year 889 815
Transmission costs paid for year 8 12
Marketing contributions paid for year 18 14
Fees paid for payroll services 1 1
Sales of services - broadcast services 140 129
The balances of advances, deposits, receivables and
payables between the group and related parties are:
Receivables
Affiliates 253 152
Joint venture 12 14
265 166
Payables
Affiliates 40 42
Joint venture 8 -
48 42
As part of our continuing foreign currency cover policy, M-Net ceded forward
exchange contracts totalling US$30,4 million to MultiChoice Africa (Pty) Limited
at 31 March 2003 for no consideration. No loss was recorded on this transaction.
The average foreign exchange rate for the contracts ceded was R13,17.
NOTES:
1. Accounting policies
These consolidated condensed preliminary financial statements are prepared on
the historical cost basis and comply with South African Statements of Generally
Accepted Accounting Practice. The accounting policies used in the preparation of
the preliminary financial statements are consistent with those used in the
annual financial statements for the year ended 31 March 2002.
2. Segmental information
M-Net is involved in the acquisition, packaging, scheduling and broadcasting
of general entertainment-related programming and advertising activities. The
company has no separable operations from a geographical standpoint. Although it
broadcasts outside South Africa, its operations are conducted in South Africa.
M-Net shares are linked to those of SuperSport International Holdings Limited
and trade as indivisible units on the JSE Securities Exchange South Africa (JSE)
and on the Nigerian Stock Exchange, and will continue to do so for the
foreseeable future.
RESULTS
M-Net has posted satisfactory results in the year under review in a
challenging economic and media environment. This was achieved through a focus on
operational efficiencies and cost management, supported by improved advertising
revenues on the back of the M-Net programming line-up.
Total revenue for the year increased to R1,4 billion from R1,3 billion
achieved last year.
Profit before taxation for the year amounted to some R194 million - an
increase of 23% on the previous year.
Headline earnings amounted to R127 million equivalent to headline earnings
per share of 50,2 cents.
The overall number of subscribers in South Africa remained static, and this
market must now be regarded as mature. The subscriber base across the rest of
sub-Saharan Africa increased by 36 724 subscribers. Migration from the analogue
service to the digital bouquet continued and boosted revenue.
At 31 March 2003 the subscriber base in South Africa comprised 365 825
analogue and 678 966 digital subscribers. Subscribers across the rest of the
continent were spread as follows:
Country Number of subscribers
Angola 34 648
Botswana 18 443
Ghana 6 660
Kenya 16 202
Namibia 31 250
Nigeria 63 694
Tanzania 8 544
Uganda 6 929
Zambia 12 764
Zimbabwe 21 748
Other 039 521
In contrast to the mature domestic South African market, the company remains
optimistic in regard to the growth potential of its operations in the rest of
sub-Saharan Africa.
Advertising revenues improved, mainly as a result of the strong M-Net
schedule. Reality shows like Big Brother 2 and Idols contributed to the growth
through increased advertising opportunities.
TAX CONTRIBUTIONS
In terms of M-Net"s licence conditions the company pays the local fiscus a 2%
levy on South African subscriptions and advertising income. The levy amounted to
R9,3 million for the year. M-Net also contributed, directly and indirectly,
significant other amounts to the fiscus. The contribution in respect of the year
under review will be R206,5 million, comprising R67,1 million company taxes,
R137 million VAT and R2,4 million RSC levies.
DIVIDEND
It is M-Net"s policy to declare a single dividend in respect of each
financial year. In the year under review a dividend of 26 cents per share was
declared to shareholders registered as such on 28 March 2003, and paid on 31
March 2003.
CAPITAL REDUCTION
On 10 March 2003 some R37,5 million (13,955 cents per share) in cash was
distributed to shareholders by way of a reduction in the company"s share premium
account.
REGULATORY
During the year under review M-Net"s broadcast licence was renewed by the
Independent Communications Authority of South Africa (Icasa) for a period of
eight years. The renewal required an increase in local-content quotas with
effect from 22 August 2003. M-Net also participated fully in various other Icasa
processes and inquiries.
Across sub-Saharan Africa an increased level of regulatory intervention is
evident. M-Net has established sound regulatory relationships in all the
important territories and continues to engage with the various regulators on an
on-going basis.
EMPOWERMENT
-Net is committed to the goals of employment equity and is pleased to report
that employment equity targets for the year under review have been achieved. The
company invests heavily in training and skills development. Training programmes
- particularly those of the Broadcast Services division - supply a stream of
technical broadcasting skills into the industry and the country.
The company also implements progressive procurement practices to encourage
potential suppliers to the business to acquire empowerment credentials.
Participants in the Phuthuma Futhi share scheme were granted additional rights
through an extension of the scheme. Tough media market conditions severely
impacted share prices globally. This would have resulted in the 32 000
shareholders who participate in the Phuthuma Futhi scheme losing their deposits
if the scheme closed in October 2002. The scheme was thus extended to October
2005 and repriced to the average market price. M-Net trusts that the revision of
the scheme will result in those shareholders realising gains in due course.
CORPORATE SOCIAL INVESTMENT
M-Net has a number of initiatives aimed at improving and developing our
communities. KTV"s Market Day encourages an entrepreneurial spirit among the
youth. M-Net Cares is a short-programme series that allows non-profit
organisations to communicate directly with the public.
The New Directions and Emerging Dynamics in Television (EDiT) initiatives are
developing new filmmaking and television skills in South Africa and beyond its
borders in Africa. These initiatives provide funding and training that
ultimately yield locally produced films and television products, which are then
showcased on M-Net channels.
The company"s corporate social investment programme finances and supports
various projects. Examples are Twilight Children, Cotlands Baby Sanctuary,
Disabled People of South Africa (DPSA), the SPCA, the Reach For A Dream
Foundation and the M-Net Book Prize, which rewards creative writing excellence
in the indigenous languages of South Africa.
PROSPECTS AND DEVELOPMENTS
M-Net packages a number of entertainment channels for distribution across the
continent. The company will focus on enhancing and, where appropriate,
localising these channels.
M-Net now reaches across sub-Saharan Africa and focuses especially on West
Africa for purposes of increased subscriber growth. In line with this policy,
the company is taking on a big challenge in producing Big Brother Africa, the
first continental version of the country-specific format.
Advertising revenues will remain under pressure in the year ahead as we
anticipate a continued decline in analogue subscribers. M-Net"s challenge will
be to increase the level of advertising revenues earned from its digital
channels.
M-Net constantly invests in the development of skills and training and
progressive employment practices in its endeavour to attract and retain the best
people in the industry. We are proud of the efforts made by our people right
across the continent who have contributed so much in the past year to achieve
the company"s goals.
If the company adopts new accounting standards relating to the accounting of
foreign currency transactions, it will lead to volatility in the future reported
earnings of M-Net.
CORPORATE GOVERNANCE
M-Net is committed to the principles advocated in the King Report on
Corporate Governance for South Africa 2002 (King II). The directors recognise
the need to conduct the business of the enterprise with integrity and in
accordance with generally accepted corporate practices. Accordingly the board
has reviewed King II and the requisite improvements to the company"s corporate
governance procedures and policies have either been made or are in the process
of being implemented. Further details will be provided in the annual report.
An unmodified audit report by PricewaterhouseCoopers Inc. on the 2003 annual
financial statements and summarised financial statements contained herein is
available for inspection at the company"s registered office.
CHANGES IN DIRECTORATE
With effect from 18 June 2003, Mr PC Desai was appointed as a director and Mr
JRD Modise resigned as a director and was appointed as an alternate director.
Furthermore, Mrs I Charnley resigned as an alternate director.
On behalf of the board
Khulu Sibiya Glen Marques
Chairman Chief executive
19 June 2003
Directors: KB Sibiya (chairman), DDB Band, JP Bekker, JS Craib,
S Dakile-Hlongwane, PC Desai, HR Enslin, PM Jenkins,
GP Marques (chief executive), ACG Molusi, VB Mona, KD Moroka,
SJZ Pacak, CJ Sidego, JJ Volkwyn, T Vosloo
Alternate directors:
JRD Modise, SF Ward (British)
Company secretary:
G Kisbey-Green
Transfer secretaries
Computershare Investor Services Limited
70 Marshall 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, South Africa Lagos, Nigeria)
www.mnet.co.za
Date: 19/06/2003 12:25:11 PM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
