SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of August 1999
MIH LIMITED
(Translation of registrant's name into English)
Abbot Building
Mount Street
Tortola
Road Town
BRITISH VIRGIN ISLANDS
(Address of principal executive offices)
(Indicate by check mark whether the registrant files or will file
annual reports under cover of Form 20-F or Form 40-F.)
Form 20-F |X| Form 40-F |_|
(Indicate by check mark whether the registrant by furnishing the
information contained in this form is also thereby furnishing the information to
the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.)
Yes |_| No |X|
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EXHIBIT LIST
Sequential
Exhibit Description Page Number
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99.1 1999 Annual Report of MIH Limited
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
MIH LIMITED
Date: August 6, 1999 By /s/ L. R. Penfold
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Name: L. R. Penfold
Title: Director
MIH LIMITED
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1999 Annual Report including a Notice of Annual General Meeting.
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CONTENTS
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CHAIRMAN'S REVIEW o 2
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REVIEW OF OPERATIONS o 6
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INDEX TO FINANCIAL STATEMENTS o 18
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DIRECTORATE AND ADMINISTRATION o 58
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NOTICE OF ANNUAL GENERAL MEETING o 59
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MISSION
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To own and manage electronic platforms
that bring entertainment and services
into the home
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CHAIRMAN'S REVIEW
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MIH Limited (MIHL) concluded an eventful year, culminating in a successful
listing on the Nasdaq National Market (Nasdaq) in New York and the Amsterdam
Stock Exchange (AEX) in April 1999. MIHL raised $187.8 million (before expenses)
from the listing. The listing gives the group access to international capital
markets and enables it to become a world-class provider of media technologies
and services over a wide variety of electronic platforms, including the Internet
and interactive television.
RESULTS
Net revenues of the MIHL group amounted to $610 million, which represents an
increase of 21.8% on the previous year. This results from organic growth in
subscriber numbers and the consolidation of the Mindport technology division for
the full year. An operating loss of $44 million was reported, compared with $43
million the previous year. MIHL's interest in United Broadcasting Corporation
Public Company Limited (UBC) of Thailand was equity accounted for the first time
during the current year. Goodwill arising on the acquisition of the interests in
UBC and OpenTV Inc. (OpenTV) during the year amounted to $72 million and will be
written off over a period of five years.
Provisions of $31.1 million created at the time of the NetHold/Canal Plus
transaction regarding subscriber guarantees, decoder technology and programming
warranties, which are now no longer required, were reversed during the year.
During the year MIHL increased its shareholding in UBC from 17.3% to 27.8%
for a consideration of $67 million, and now equity accounts this investment. The
company intends to exercise an option to purchase an additional 3.3% of UBC for
$9 million in cash, taking its interest to 31.1%.
In March 1999 MIHL purchased Thomson Consumer Electronics Inc.'s entire
interest in OpenTV effectively in exchange for MIHL Class A Ordinary shares
issued simultaneously with its listing on Nasdaq and AEX. MIHL sold a portion of
this OpenTV interest to Sun Microsystems for approximately $9 million in cash.
After giving effect to the sale, the company owns 80.1% of OpenTV.
On April 4, 1998 the MIHL indirect subsidiary company MultiChoice Africa
(Proprietary) Limited (MCA) transferred 28 million of its shares in Electronic
Media Network Limited/SuperSport
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International Holdings Limited (M-Net/SuperSport) to the Phuthuma Futhi (which
means "hurry up again") share scheme to promote black empowerment, for a
consideration of $22 million. Under certain conditions, MCA may be required to
assume the Phuthuma Futhi Trust's financing obligations at maturity on April 14,
2001, and re-acquire ownership of the M-Net/SuperSport shares. The shares
transferred have been pledged as collateral for such obligations. MCA is
entitled to receive dividends until 2001 and MIHL accounts for a 19.8% equity
investment in M-Net/SuperSport.
MIHL acquired TV/Com International Inc. (TV/Com) during the current year
for a consideration of $14.5 million in order to increase the group's
conditional access intellectual property (IP) rights.
The activities of the group for the year under review are detailed in the
Review of Operations, commencing on page 6 of this report.
PROSPECTS AND DEVELOPMENTS
MIHL's businesses are focussed on two areas:
o Mindport, which provides technology solutions to media companies worldwide
for interactive television operating systems, subscriber management,
conditional access and other pay-media applications, and
o the operation of television platforms in Africa, the Mediterranean region
and Asia, through various direct and indirect subsidiary companies, joint
ventures and associated companies.
TECHNOLOGY-RELATED SERVICES
Mindport has completed its transition to a fully-fledged technology development
company. During the year Mindport acquired TV/Com and recently increased to
80.1% its stake in OpenTV, the developer of the world's leading interactive
television operating system.
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CHAIRMAN'S REVIEW
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(CONTINUED)
Mindport now owns powerful (IP) rights and intends to unlock further value
in this area by developing its portfolio.
Mindport and OpenTV are poised for increased growth as their clients roll
out their services during the next year.
Internationally television platforms continue to experience significant
changes. The partial integration of television platforms with the Internet,
through interactive television applications, will allow for the viewing
experience to be fundamentally enhanced, resulting in a need for increased
functionality and storage capacity of decoders.
TELEVISION PLATFORMS
The aggregate subscriber base serviced by the television platform operations of
the MIHL group increased to more than 1.9 million subscribing households.
The MIHL indirect subsidiary company MCA, with a subscriber base of nearly
1.3 million households in more than 40 countries across the African continent
and adjacent islands, continues to experience an increasing trend of analog
subscribers migrating to the digital platforms.
The analog operations in Greece and Cyprus enjoyed strong growth and
reached 350 000 subscribing households. Regulatory rigidities in Greece have
delayed the launch of a digital business. A license application for a digital
platform was lodged at the beginning of 1999 and the Radio and Television
Council in Greece has recommended to the Greek minister of press that the
digital license be awarded to MultiChoice Hellas. Accordingly, it is anticipated
that the launch of the digital NOVA bouquet will follow later this year.
After a year of restructuring following the creation of UBC through the
merger of International Broadcasting Corporation Public Company Limited (IBC)
and Cable Network Public Company (UTV), the subscriber base in Thailand grew to
approximately 300 000 households.
FUTURE STRATEGY
MIHL intends to concentrate on developing television platform and online
Internet service opportunities in Southeast Asia and China. It is evident that
the provision of interactive and content services on the Internet closely
mirrors the value chain of the group's television platforms and that interactive
television services will rely on both Internet and television operating
technologies to be successful.
REGULATORY
The year ahead presents considerable regulatory challenges for MIHL. New
broadcasting legislation in South Africa, in terms of which MCA must apply for a
broadcast license, will come into effect in the latter half of 1999.
In Greece, MultiChoice Hellas has submitted a digital license application
and is awaiting the final decision of the minister of press. The Radio and
Television Council has recommended to the minister that the license be issued to
MultiChoice Hellas.
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DIRECTORATE
In terms of the company's articles of association, the term of office of each
director expires at the forthcoming annual general meeting. However, all the
directors, being eligible, offer themselves for re-election.
PEOPLE
I would like to thank all our people for their commitment, resourcefulness,
energy and innovation. To my fellow board members I express my appreciation for
their support and contributions over the past year.
/s/ Ton Vosloo
Ton Vosloo
Chairman
MIH LIMITED ANNUAL REPORT 1999 5
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REVIEW OF OPERATIONS
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The operations of the MIH Limited (MIHL) group comprise:
o interests in television and interactive technology businesses, based in
the Netherlands, the USA and South Africa
o investments in television platforms in Africa, the Middle East, the
Mediterranean and Thailand through various indirect subsidiaries,
associates and affiliated companies, and
o a 19.8% investment in Electronic Media Network Limited /SuperSport
International Holdings Limited (M-Net/SuperSport).
MIHL is a multinational provider of television platform services and technology.
By leveraging its management and industry expertise, it plans to expand beyond
its current services to become a recognised worldwide provider of a full array
of pay-media content and services over a variety of electronic platforms,
including pay television, the Internet and interactive television.
From its significant experience in providing television platform services,
the group's management has developed a comprehensive understanding of pay-media
and other subscriber-based businesses, particularly in the areas of subscriber,
content and platform management. Through its strategic application of these core
competencies and its proven business model, the MIHL group has grown to become
the leading provider of television platform services in each of its markets.
By continuing to leverage these abilities, the group plans to expand its
television platform services into new regions and provide new services and
products, such as those relating to the Internet and interactive television
services.
The group's Mindport technology division provides pay-media companies
worldwide with proprietary software and hardware solutions for subscriber
management, conditional access and other pay-media-related solutions. The
Mindport division is also a leading provider of interactive television operating
systems through OpenTV Inc. (OpenTV).
From its origins as the leading provider of pay-television services in
South Africa, MIHL has grown, through its subsidiaries and joint ventures, to
provide terrestrial analog, digital satellite and other pay-television services
to over 1.9 million households in Africa, the Mediterranean and Asia.
[LOGO OF MINDPORT]
The technology operations of MIHL have been functioning as an integrated
business for the past financial year under the name Mindport. Mindport has
restructured itself into three main business areas - conditional access systems,
subscriber management systems and interactive decoder operating systems - to
offer a comprehensive package of technology products and support services to
pay-media operators worldwide.
Three additional businesses, Mindport STB, Mindport MCT and Mindport
Solutions, add to the range of support services and round off an integrated
media commerce approach by Mindport.
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Mindport is poised to capitalize on the growing market for interactive
platforms - with the convergence of television, the Internet and the synergy
that this evolution creates - in order to expand its client base.
[GRAPHIC OMITTED]
OpenTV offers operating systems, development tools, applications and
related technical services for interactive television. The OpenTV system carries
a small memory footprint, allowing it to be downloaded from a pay-television
provider's head-end directly into each viewer's decoder.
The product is known for its flexibility and configurability and works
with a wide range of decoder configurations and conditional access systems. To
date OpenTV has been used to generate electronic program guides (EPGs), simple
gaming concepts, home shopping and virtual weather channels, as well as a
variety of pull-down menus to enhance broadcasting programs.
OpenTV further entrenched itself as the worldwide leading provider of an
operating system for interactive television. It delivered its operating system
to BSkyB, which launched its service in the UK in October 1998 and continues to
grow its
[GRAPHIC OMITTED]
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(CONTINUED)
base strongly. OpenTV's operating system is already deployed in more than two
million decoders and the OpenTV operating system software is licensed to 22
manufacturers of digital receivers worldwide.
Towards the end of the financial year MIHL, through Mindport,
substantially increased its stake in OpenTV by acquiring the Thomson Consumer
Electronics Inc. (Thomson) shareholding in exchange for MIHL shares. MIHL now
owns 80.1% of OpenTV and Sun Microsystems owns the remaining 19.9%.
[LOGO OF IRDETO ACCESS]
Irdeto Access provides conditional access systems to both digital and
analog broadcasting platforms and to both large and small providers. Its
products have been installed in over 3.6 million decoders on more than two dozen
analog and digital broadcasting platforms. To date Irdeto Access clients have
been mostly television platform operators, but applications are currently being
developed for data broadcasters and other information providers. It recently
launched a new product, M-Crypt, intended for smaller pay-media operators.
During the past year Mindport also acquired TV/COM International Inc
(TV/COM), a US-based pay-technology company, for the dual purpose of securing
the intellectual property (IP) rights to the technology employed throughout the
MIHL group and to offer a springboard for Mindport to penetrate the US market
aggressively.
[LOGO OF MINDPORT IBS]
Mindport Integrated Business Systems (IBS) provides subscriber management
products that combine customer care, billing and logistics functionality in one
integrated system.
These products, marketed under the brand name Mindport IBS, have been
deployed worldwide for television platform, Internet and cable-television
providers. Mindport IBS will undergo further enhancements: a graphical user
interface for ease of use, continuing upgrades and new NT-based versions.
Mindport IBS is used not only by MultiChoice Africa (Proprietary) Limited
(MCA) and other companies in the MIHL stable, but also by several third-party
platforms.
It currently supports clients in 27 countries, managing more than three
million accounts.
[LOGO OF MINDPORT STB]
Mindport STB achieved early successes in consolidating technical
requirements and in managing to bring the price of digital and analog decoders
down substantially.
Mindport STB met the stringent requirements and tight deadlines of China
Broadcasting Film Satellite Company Limited (CBSat), managing to produce test
decoders prior to the launch of the Chinese trial direct-to-home (DTH) service
in January 1999 and meeting the required roll-outs.
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[GRAPHIC OMITTED]
[LOGO OF MINDPORT MCT]
Mindport Media Commerce Technologies (MCT) is the content management unit
of the business and produces a software system for all aspects of a platform
operator's programming and scheduling operations: program acquisition, tape
libraries and scheduling, as well as management of facilities, EPG and finances.
The product is modularised to allow each feature to be purchased separately.
[LOGO OF MINDPORT SOLUTIONS]
Mindport Solutions provides business consulting and systems integration to
pay-television providers. During the past year the unit concluded integration
deals with Optus in Australia, Stream in Italy and CBSat in China.
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AFRICA AND THE MIDDLE EAST
SUB-SAHARAN AFRICA
[LOGO OF MULTICHOICE]
MCA provides a range of subscriber management services to television households
in more than 40 countries on the African continent and adjacent islands. These
activities include call centers, monthly billing, cash collection,
over-the-counter customer care services and decoder sales and repairs.
MCA has direct investments or franchises for pay-television services in
Botswana, Ghana, Kenya, Lesotho, Malawi, Mauritius, Namibia, Nigeria, South
Africa, Tanzania, Uganda, Zambia and Zimbabwe.
The range of services managed by MCA spans both terrestrial analog and
digital satellite television platforms. The DStv (digital satellite television)
bouquet now comprises 42 video channels and 51 audio channels. Other digital
services are available via a separate subscription.
[GRAPHIC OMITTED]
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During the year MCA's aggregate number of subscribing households
approached 1.3 million subscribers across the African continent and adjacent
islands. Strong growth was experienced in digital operations. DStv subscriber
numbers across Africa have now passed the 350 000 mark. The cost of a digital
satellite decoder has continued to fall and, as a result, spurred growth. The
digital bouquet was significantly strengthened by the addition of several new
channels and an enhancement to the EPG. In addition, MCA has added the South
African Broadcasting Corporation (SABC) channels to its free bouquet and entered
into a long-term agreement with this broadcaster for the carriage of its two
pay-television channels into Africa.
[Bar chart omitted which indicates as follows the number of subscribers under
management for Africa/Middle East in March for the years 1995-1999. The chart
also shows the relative portion of analog and digital subscribers.]
Subscriber numbers
'000s of subscribers under management
Africa/Middle East
1995 1996 1997 1998 1999
---- ---- ---- ---- ----
957 1,025 1,140 1,208 1,305
The year ahead presents considerable regulatory challenges for MCA. New
broadcasting legislation in South Africa, in terms of which MCA must apply for a
broadcast license, will come into effect in the latter half of 1999.
The Vuka! Awards initiative, a competition for public service
announcements, is one of MultiChoice's social responsibility projects. It gives
free airtime to welfare, charity and community organisations, as well as to
non-governmental organisations which provide care, assistance and upliftment in
terms of social, economic, health and environmental needs. Furthermore, the
initiative is designed to contribute to the development of the local film,
television and broadcasting industry by rewarding the creative production of
commercials for worthy causes.
THE MIDDLE EAST AND EGYPT
MCA provides a range of subscriber management services for digital television
operators through MultiChoice Middle East (MCME), based in Dubai. Firstnet is an
Arabic bouquet and Showtime is an English-language bouquet. Both bouquets are
available on three separate satellite platforms that cover the Middle East and
North Africa.
In addition, MultiChoice Egypt services the Egyptian digital subscriber
base for the above bouquets and a digital bouquet provided on NileSat by the
television service Nile Communication Network Limited (NCN). It also services a
terrestrial bouquet comprising five channels, including customised SuperSport
and M-Net channels. Approximately 90 000 subscribers have been attracted to the
various bouquets.
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INTERNATIONAL GAMING NETWORKS (IGN)
IGN gained valuable experience during the first year of its operation as a
gaming division of MCA.
A successful launch of spread and sports betting suggests that a viable
opportunity exists in South Africa. Progress has been made in defining the
technology needed to support an interactive service.
[LOGO OF IGN]
IGN Sportsbook has penetrated the relatively new sports betting market in
South Africa with SuperSpreads and SuperBet. It is now poised for growth.
The South African gaming market is currently undergoing major
restructuring, providing some opportunities for IGN. The industry is, however,
highly regulated. Through SuperTrack, IGN has established itself in South
African racing. Opportunities continue to be developed to share in profitable
ventures in racing.
THE MEDITERRANEAN
[LOGO OF NETMED]
The Mediterranean region of Greece and Cyprus added a further 60 000 subscribers
to end the financial year with a base of 350000 households.
The acquisition of exclusive Greek basket-ball rights by the SuperSport
channel played a major role in the growth of subscriber numbers. Finalisation of
two more studio deals for the supply of movies to FilmNet ensured that FilmNet
has contracts with the eight major Hollywood studios.
The launch of the MultiChoice Hellas digital satellite service, NOVA, was
delayed due to changes in the pay-television regulatory framework. This had a
negative impact on the Mediterranean region's financial results which, primarily
due to long-term
[GRAPHIC OMITTED]
A wide variety of programming highlights in Greece
12 MIH LIMITED ANNUAL REPORT 1999
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[Bar chart omitted which indicates as follows the number of subscribers under
management for Greece/Cyprus in March for the years 1995-1999.]
Subscriber numbers
'000s of subscribers under management
Greece/Cyprus
1995 1996 1997 1998 1999
---- ---- ---- ---- ----
21 112 230 285 350
transponder leases and associated costs incurred for the digital launch, were
not matched by digital revenue for the past financial year.
As part of K-TV's social responsibility focus on the environment, it
organised a re-afforestation event to mark National Forest Day on March 21. This
was particularly pertinent, given the serious fires which ravaged large parts of
the forests around Athens and Thessalonika in the summer of 1998. In addition,
K-TV, working closely with the World Wildlife Fund (WWF), sponsored bears in a
bear park in northern Greece to assist with the breeding program of these
animals.
On the sports front SuperSport has sponsored the improvement of rural
soccer stadiums around Greece which are in need of upgrading. The total value of
this project is $3 million.
ASIA
MIH ASIA
As a consequence of the Asian economic crisis many countries have opened up
their economies, allowing foreign companies to take equity investments in
industries in which this was not allowed previously. Many governments are
liberalising their media and telecommunications sectors. Whilst this process may
take some time, it is creating opportunities for investment.
More than half of the world's population resides in Asia, with China,
India and Indonesia having the largest Asian populations at 1.2 billion, 0.9
billion and 0.2 billion respectively. There are more than 500 million television
households in the region, with the largest number being in China (310 million).
The MIH Asia office in Hong Kong oversees all investments in Southeast
Asian markets. MIHL has made a substantial investment in United Broad-casting
Corporation Public Company Limited (UBC) - the new business following the merger
of International Broadcasting Corporation Public Company Limited (IBC) and UTV
Cable Network Public Company (UTV) in Thailand - and has sold pay-television
technology to CBSat, which is owned by China Central Television (CCTV) in the
People's Republic of China.
UNITED BROADCASTING CORPORATION PUBLIC COMPANY LIMITED (UBC)
[LOGO OF UBC]
Following the above-mentioned merger of IBC and UTV in February 1998, the group
raised $160 million during the year to meet its commitments and to allow it to
fund expansion which will bring it closer to cash flow
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break-even. As part of the capital-raising exercise MIHL increased its stake in
UBC from 17.3% to 26.1% during the year.
In the year after the merger the business strategy was changed from
aggressive growth of subscriber numbers to consolidation of activities, and the
sales strategy from rental to distribution. Other post-merger changes included
the streamlining of staff, cost cutting and the renegotiation of channel costs,
as well as the closing down of the multipoint microwave distribution system
(MMDS) network.
UBC re-packaged its products and services, combining the best product of
IBC and UTV. The package was launched under the UBC brand and improved the
quality and range of programming available to subscribers. Subscribers receiving
these services via the UBC Cable hybrid co-axial network (CAtv) and those
receiving services via the UBC digital satellite television platform are now
able to receive the same product and services. The new brand has achieved rapid
recognition in the market.
In February 1999 MIHL acquired a further 1.7% interest in UBC and secured
an option to acquire an additional 3.3%, increasing its interest to 31.1%.
Thailand presents an excellent opportunity for growth in subscriber numbers over
the next few years, as the current penetration is only approximately 2% of
television households.
[Bar chart omitted which indicates as follows the number of subscribers under
managment for Thailand in March for the years 1995-1999. The chart also shows
the relative proportion of digital, cable and MMDS subscribers.]
Subscriber numbers
'000s of subscribers under management
Thailand
1995 1996 1997 1998 1999
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131 130 254 313 300
Marketing poster for UBC in Thailand
[GRAPHIC OMITTED]
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CHINA
The broadcasting industry in the People's Republic of China is rapidly changing,
with significant rationalisation and re-organisation in the broadcasting and
information industries.
The state broadcaster, CCTV, is the dominant player in the industry and is
able to attract some 400 million viewers at peak time. In order to distribute
its eight channels to the rural areas, CCTV formed the company CBSat, which will
use satellite technology to deliver its channels to 30% of the total population
currently not receiving any broadcast signals. Mindport technology was chosen
for the trial DTH system, which was successfully launched in January 1999.
The trial DTH system may be expanded to accommodate some of the provincial
and regional broadcast channels and additional integrated receiver decoders
(IRDs) may be ordered to extend the coverage.
[GRAPHIC OMITTED]
Decoder packaging in China
Inside of a digital decoder
[GRAPHIC OMITTED]
ASIA INTERNET
Internet usage is increasing rapidly in this region with many Asian companies,
in an attempt to cut costs and become more efficient, using the Internet as a
tool to keep abreast of developments. Governments are also making the changes
needed to allow companies to thrive in the new era and are realising the
commercial potential of the Internet. MIH Asia is investigating opportunities to
invest in Internet businesses in some Asian countries.
[GRAPHIC OMITTED]
Signing of the contract for the direct-to-home trial system in China in October
1998
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ELECTRONIC MEDIA NETWORK LIMITED (M-NET)
[GRAPHIC OMITTED]
The primary source of revenue for Electronic Media Network Limited (M-Net),
namely the subscriber base, now exceeds 1.2 million subscribers in more than 40
countries across Africa and adjacent islands.
The range of channels produced by M-Net for terrestrial broadcast and DStv
(the MultiChoice digital satellite television bouquet) includes the M-Net
channel, M-Net Africa East, M-Net Africa West, M-Net Egypt, Community Services
Network (CSN), The Movie Magic Channel (TMMC - domestic), The Movie Magic
Channel (Africa), The Movie Magic Channel 2, K-TV (children's channel), The Soap
Channel, The Series Channel and Channel O (music channel).
[GRAPHIC OMITTED]
Abdoulaye Ascofare, director of Faraw! Une Mere des Sables, the film from Mali
which won the Grand Prize for 1998
Firmly entrenching M-Net's ability to show the biggest blockbuster movies
on television across Africa, the company has secured significant long-term movie
output deals with the world's major studios - Warner Brothers International,
Fox, Columbia/Sony, MGM, MCA/Universal, Paramount, Dreamworks and Disney/Buena
Vista. The latter also gives M-Net access to movies and series from Walt Disney
Studios' Touchstone Pictures, Hollywood Pictures and Miramax Films.
M-Net's continental strategy for the African film and television industry
is supported by the New Directions initiative (developing previously
unrecognised scriptwriters and directors), the M-Net All Africa Film Awards
(recognising professional excellence in the industry) and MagicWorks (aiming to
be the African leader of quality pay-television productions for M-Net and global
markets).
Inserts are produced for the often controversial magazine program Carte
Blanche, which celebrated 10 years on air in August 1998, and the weekly
entertainment magazine program Front Row, which broadcasts live to the M-Net
territories across Africa on Thursday evenings and to Egypt on Saturdays.
Special programming for several of South Africa's diverse communities was
well catered for throughout the year on the Community Services Network: EastNet
(Indian), Canale Italia, Canal Portugues, Shalom TV (Jewish), Rhema TV
(Christian) and Christian Television.
Corporate social investment is a priority for M-Net, with the changing
needs of the African continent being addressed through a range of activities at
regional, national and continental
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level. The M-Net Face of Africa competition, a continental project to find new
supermodels from Africa, proved particularly successful. M-Net was also a
founder member of the South African branch of Variety Club International, a
charity for children in need, backed by the entertainment industry.
The M-Net Book Prize, South Africa's most prestigious literary award,
which recognises works in all 11 official languages, makes a vital contribution
to the celebration of South Africa's rich cultural diversity.
SUPERSPORT INTERNATIONAL
HOLDINGS LIMITED
[LOGO OF SUPERSPORT]
SuperSport's mission is to be the best and most successful provider of premium
pay-television sports coverage across the continent of Africa.
The satisfaction of subscribers is paramount to SuperSport, while
subscriber growth is an important objective. The subscriber base has reached the
1.2 million mark in some 40 countries across the African continent and adjacent
islands.
Sponsorship of events and programs on SuperSport, as well as other revenue
earners in the SuperSport Enterprises operation, are important sources of
income.
With the separate listing of the SuperSport operation on the Johannesburg
Stock Exchange early in 1998, the company now provides packages of sports
programming for the main M-Net channel and the CSN channel, which it also
administers on M-Net's behalf, as well as for a number of dedicated sports
channels on the DStv bouquet. It offers a wide range of major sports events from
around the world, complemented by packaged programming, to its pan-African
subscriber base.
Other operations, which continue to be an important part of the business
and extend the SuperSport brand to many fields, include merchandising and
franchising, travel package tours, sports competitions and shares in
professional sports teams.
The SuperSport Star of Africa award, which recognises outstanding
achievements by African sportsmen and women, was the first award of its kind in
Africa.
The year under review also saw the advent of an international sports news
service, SuperSport News. Live sport, however, still takes precedence on the
channel.
In keeping up with technology outside the broadcast field, SuperSport
re-launched its Internet web site. The SuperSport Zone, in partnership with
M-Web South Africa's leading Internet service provider - hosts a range of
important sports sites, incorporating information about SuperSport, its
operations and programming.
[GRAPHIC OMITTED]
MIH LIMITED ANNUAL REPORT 1999 17
<PAGE>
MIH
- -------
LIMITED
- --------------------------------------------------------------------------------
INDEX TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
CORPORATE GOVERNANCE o 19
DIRECTORS' RESPONSIBILITY STATEMENT o 22
REPORT OF THE INDEPENDENT ACCOUNTANTS o 23
CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 1999 AND 1998 o 24
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED MARCH 31, 1999, 1998 AND 1997 o 25
CONSOLIDATED STATEMENTS OF CASH FLOW
FOR THE YEARS ENDED MARCH 31, 1999, 1998 AND 1997 o 26
CONSOLIDATED STATEMENT OF
CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED MARCH 31, 1999, 1998 AND 1997 o 27
NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS o 28
18 MIH LIMITED ANNUAL REPORT 1999
<PAGE>
MIH
-------
LIMITED
- --------------------------------------------------------------------------------
CORPORATE GOVERNANCE
- --------------------------------------------------------------------------------
MIH Limited is committed to the principles of openness, integrity and
accountability. The directors recognize the need to conduct the business of the
enterprise with integrity and in accordance with generally accepted corporate
practices.
Directorate
MIH Limited has a unitary board structure mainly comprising executive directors.
The board meets regularly and monitors management.
The position of chairperson is a non-executive appointment and is separate
from that of the chief executive. The chairperson and chief executive provide
leadership and guidance. The directors bring together a wealth of experience
from their own fields of business and ensure that debate on matters of strategy,
policy, progress and performance is robust, informed and constructive.
The directors have access to the advice and services of the company
secretary who is responsible to the board for ensuring that board procedures are
followed. All directors are entitled to seek independent professional advice
about the affairs of the company at the company's expense.
Compensation committee
The compensation committee comprises the chairman and one non-executive
director. It establishes salaries, incentives and other forms of compensation
for executive officers and administers incentive compensation and benefit plans
provided for employees.
Audit committee
The audit committee comprises three non-executive directors (one of which is the
chairperson of the committee). The chief financial officer and external auditors
have unrestricted access to the audit committee and attend the meetings.
Meetings are planned to be held three times per year. The audit committee
is charged with the responsibility of monitoring the group's financial controls,
accounting policies and financial reporting. It provides a forum through which
the independent internal and external auditors report to the board of directors.
Internal control
The group maintains systems of internal control over financial reporting and
safeguarding of assets against unauthorized use, acquisition and disposal. The
systems of internal control incorporate suitable segregation of conflicting
duties wherever possible and the delegation of authority to suitably appointed
and trained personnel. The internal audit function of the African operations has
been outsourced to a specialist internal audit division of
PricewaterhouseCoopers Inc., whilst the internal audit function of the
Mediterranean operations is performed in-house.
There are inherent limitations in the effectiveness of any system of
internal control, including the possibility of human error and the circumvention
or overriding of controls. Accordingly, even an effective internal control
system can provide only a limited amount of assurance with respect to financial
statement preparation and the safeguarding of assets. Furthermore, the
effectiveness of an internal control system can change with circumstances.
Corrective action is taken as and when control deficiencies or
opportunities for improvement in the systems are identified. Nothing has come to
the attention of the board (through the audit committee) to indicate that any
material breach of those controls has occurred during the year under review.
MIH LIMITED ANNUAL REPORT 1999 19
<PAGE>
MIH
- -------
LIMITED
- --------------------------------------------------------------------------------
CORPORATE GOVERNANCE
- --------------------------------------------------------------------------------
(CONTINUED)
Staff participation and development
The group employs a variety of participating structures on issues which affect
employees directly and materially, and which are designed to achieve good
employer/employee relations through effective sharing of relevant information,
consultation and the identification and resolution of conflicts. These
structures embrace goals relating to productivity, career security, legitimacy
and identification with the group.
Code of ethics
The group Code of Ethics commits the group to the highest standards of
integrity, behaviour and ethics dealing with all its stakeholders, including its
directors, managers, employees, customers, suppliers, competitors, investors,
shareholders and society at large. Directors and staff are expected to observe
their ethical obligations in such a way as to carry on business only through
fair commercial competitive practices.
Year 2000
The MIH group has implemented a Year 2000 project (the project), which will be
modified as events warrant, to minimize the impact of the Year 2000 issue on the
group.
The project is managed by the group's Year 2000 project office which
provides leadership and direction to the Year 2000 efforts of the group's
operations in Africa, the Middle East, the Mediterranean and Thailand as well as
Mindport BV (Mindport), but not OpenTV. Each of the operations is ultimately
responsible for its own Year 2000 activities, but the project office has set out
a uniform phased approach which includes the activities set out below.
Inventory The first phase is the compilation of an inventory of all of the
group's computer hardware and software systems and embedded chips and software
(including the compilation of an inventory of all Mindport's products). The
group has completed this phase.
Impact Assessment The second phase is an assessment of the effects of Year
2000 problems on the group's systems and products. This phase includes the
identification of business critical systems and products. The group has
completed this phase.
Supplier Compliance All suppliers and vendors of products and services
have been or will be approached to ascertain whether such suppliers and vendors
have determined whether or not their products and services are Year 2000
compliant and, if not, what efforts they are making in this regard. The group
will continue working on this phase through the rest of 1999.
Testing, Corrections and Upgrades The fourth phase involves the testing of
all products and business-critical systems to determine the correct remedial
action which is required to address any Year 2000 problems which are diagnosed.
This phase further includes the verification and testing of those systems to
which remediation efforts have been applied (whether by way of corrections or
upgrade). The African operations and Mindport have completed diagnostic testing
and expect to complete the implementation of corrections and upgrades by July
31, 1999 and September 30, 1999 respectively. The Mediterranean operations have
completed diagnostic testing and the implementation of corrections and upgrades.
The Thai and Middle Eastern operations have completed diagnostic testing and
expect to have completed the implementation of corrections and upgrades by the
end of June 1999.
Contingency Planning The final phase involves the preparation of
contingency plans to attempt to ameliorate those aspects of the Year 2000
20 MIH LIMITED ANNUAL REPORT 1999
<PAGE>
MIH
-------
LIMITED
problem that cannot practically be remediated. The group has commenced this
phase.
Outside Systems and Entities The group recognizes that the computer,
telecommunications and other systems (outside systems) of outside entities
(outside entities) play a major role in the group's operations. The group does
not have control of these outside entities or outside systems. The group has,
however, implemented an ongoing process of contacting outside entities whose
systems have, or may have, a substantial effect on the group's ability to
continue to conduct business without disruption from Year 2000 problems. The
group is attempting to assess the extent to which these outside systems may not
be Year 2000 compliant. The group will attempt to coordinate with these outside
entities in an ongoing effort to obtain assurance that these outside systems
will be Year 2000 compliant before January 1, 2000.
OpenTV OpenTV has implemented its own Year 2000 activities. OpenTV has
undertaken to notify customers of any and all date-related bugs, errors or
deficiencies in its software. OpenTV believes that it has adequately anticipated
Year 2000 issues.
Year 2000 Costs The total remaining cost of the project is estimated at
$5,0 million. Approximately $2,2 million is for new software and hardware
purchases and will be capitalized. The remaining $2,8 million will be expensed
as incurred over the next nine-month period. To date, the group has incurred and
expensed approximately $1,4 million, related to the phases of the project which
have been implemented. The costs of the project and the dates on which the group
plans to complete the project are based on management's best estimates, which
were derived utilizing numerous assumptions of future events, including the
continued availability of certain resources, the readiness of outside systems
and other factors. Until the group has completed further analysis of the impact
of Year 2000 on its operations and contingency planning, it will be unable to
estimate the additional costs, if any, that it may incur as a result of its
efforts. For these reasons, and for the reasons stated in the next paragraph,
there can be no assurance that the actual costs of implementing the project will
not differ materially from the estimated costs.
Potential Risks With respect to its internal operations (those over which
the group has direct control), the group believes that the most significant
potential risks concern the group's ability to use electronic devices to
distribute its services, the group's ability to render timely bills to its
subscribers, the ability of the group's subscribers to receive its services, the
uninterrupted use of Mindport's products by its customers and the group's
ability to maintain continuous operation of its computer systems. The project
addresses each of these risks. The group relies, however, on outside systems,
and there can be no assurance, for example, that all outside systems will be
adequately remediated so that they are Year 2000 compliant by December 31, 1999,
or by some earlier date, so as not to create a material disruption to the
group's business. In addition, there can be no assurance that the group's
products and systems will be Year 2000 compliant. If, despite the group's
efforts in terms of the project, there are Year 2000-related failures that
create substantial material disruptions to the group's operations, the adverse
impact on the group's business could be material. Moreover, the estimated costs
of implementing the project do not take into account the costs, if any, that may
be incurred as a result of Year 2000-related failures that occur despite the
group's implementation of the project including, for example, claims from
subscribers or customers related to business interruption.
MIH LIMITED ANNUAL REPORT 1999 21
<PAGE>
MIH
- -------
LIMITED
- --------------------------------------------------------------------------------
STATEMENT OF RESPONSIBILITY
- --------------------------------------------------------------------------------
BY THE BOARD OF DIRECTORS
The directors are responsible for the preparation, integrity and fair
presentation of the financial statements of MIH Limited and its subsidiary
companies. The financial statements, presented on pages 24 to 57, have been
prepared in accordance with generally accepted accounting practice, and include
amounts based on judgements and estimates made by management. The directors also
prepared the other information included in the annual report and are responsible
for both its accuracy and its consistency with the financial statements.
The going concern basis has been adopted in preparing the financial
statements. The directors have no reason to believe that the company or the
group will not be going concerns in the foreseeable future, based on forecasts
and available cash resources. The viability of the company and the group are
supported by the financial statements.
The financial statements have been audited by the independent accounting
firm PricewaterhouseCoopers Inc., which was given unrestricted access to all
financial records and related data, including minutes of all meetings of
shareholders, the board of directors and committees of the board. The directors
believe that all representations made to the independent accountants during
their audit were valid and appropriate. PricewaterhouseCoopers Inc.'s audit
report is presented on page 23.
The financial statements were approved by the board of directors on June
17, 1999 and are signed on its behalf by:
/s/ T Vosloo
T Vosloo
Chairman
/s/ J D T Stofberg
J D T Stofberg
Managing director
22 MIH LIMITED ANNUAL REPORT 1999
<PAGE>
MIH
-------
LIMITED
- --------------------------------------------------------------------------------
REPORT OF THE
- --------------------------------------------------------------------------------
INDEPENDENT ACCOUNTANTS
TO THE DIRECTORS AND SHAREHOLDERS OF MIH LIMITED
We have audited the accompanying consolidated balance sheets of MIH Limited and
subsidiaries as of March 31, 1999 and 1998, and the related consolidated
statements of operations, cash flow and changes in shareholders' equity for each
of the three years in the period ended March 31, 1999. These consolidated
financial statements are the responsibility of MIH Limited's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards in the Republic of South Africa, which are substantially the same as
those followed in the United States of America. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of MIH Limited and
subsidiaries as of March 31, 1999 and 1998, and the consolidated results of
their operations, cash flow and changes in shareholders' equity for each of the
three years in the period ended March 31, 1999, in conformity with International
Accounting Standards.
International Accounting Standards vary in certain significant respects
from accounting principles generally accepted in the United States of America.
The application of the latter would have affected the determination of
consolidated results for each of the three years in the period ended March 31,
1999 and shareholders' equity as of March 1999 and 1998 to the extent summarized
in Note 29 to the consolidated financial statements.
/s/ PricewaterhouseCoopers Inc.
PricewaterhouseCoopers Inc.
Chartered Accountants (SA)
Registered Accountants and Auditors
Johannesburg
Republic of South Africa
June 17, 1999
MIH LIMITED ANNUAL REPORT 1999 23
<PAGE>
MIH
- -------
LIMITED
- --------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------
MARCH 31, 1999 AND 1998
(in thousands of US dollars) Notes 1999 1998
ASSETS
Current assets
Cash and cash equivalents $ 56,099 $ 153,412
Accounts receivable, net 4 50,557 36,999
Other receivables 5 28,229 29,444
Program and film rights 11 38,935 22,543
Amounts owing by related parties 20 14,221 14,784
Inventories. net 6 21,368 18,283
--------- ---------
Total current assets 209,409 275,465
--------- ---------
Non-current assets
Tangible fixed assets, net 8 237,104 114,248
Intangible assets, net 9 207,201 163,611
Long-term investments 10 70,114 77,020
Program and film rights 11 52,399 15,711
--------- ---------
Total non-current assets 566,818 370,590
--------- ---------
TOTAL ASSETS $ 776,227 $ 646,055
========= =========
LIABILITIES
Current liabilities
Bank overdrafts and short-term loans $ 64,117 $ 16,399
Current portion of long-term debt 14 15,572 36,369
Current portion of program and film rights 14 37,857 6,431
Accounts payable 43,164 52,344
Accrued expenses and other current liabilities 12 161,472 115,446
Amounts owing to related parties 20 16,298 25,804
Provisions 13 11,933 57,019
--------- ---------
Total current liabilities 350,353 309,812
--------- ---------
Non-current liabilities
Long-term debt 14 204,770 54,787
Program and film rights 14 43,777 24,608
Deferred taxation 15 120 3,275
--------- ---------
Total non-current liabilities 248,667 82,670
--------- ---------
TOTAL LIABILITIES 599,020 392,482
--------- ---------
Minority interest 524 --
Commitments and contingencies 22 -- --
SHAREHOLDERS' EQUITY
Share capital
Class A Ordinary Shares no par value:
Authorized: 1999 and 1998: 103,468,878
Issued: 1999 and 1998: 7,447,681 113,986 113,986
Class B Ordinary Shares no par value:
Authorized: 1999 and 1998: 55,920,509
Issued: 1999 and 1998: 30,787,319 475,566 475,566
Accumulated loss (382,386) (313,547)
Foreign currency translation adjustment (30,483) (22,432)
--------- ---------
TOTAL SHAREHOLDERS' EQUITY 176,683 253,573
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 776,227 $ 646,055
========= =========
The accompanying notes are an integral part of these consolidated financial
statements.
24 MIH LIMITED ANNUAL REPORT 1999
<PAGE>
MIH
-------
LIMITED
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS
- --------------------------------------------------------------------------------
OF OPERATIONS
FOR THE YEARS ENDED MARCH 31, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
(in thousands of US dollars,
except per share and share amounts) Notes 1999 1998 1997
<S> <C> <C> <C> <C>
Net revenues 16 $ 610,099 $ 501,492 $ --
Operating expenses:
Cost of providing services (392,116) (308,996) --
Selling, general and administrative (210,408) (177,213) (899)
Depreciation and amortization (51,390) (58,010) --
----------- ----------- -----------
Total operating expenses (653,914) (544,219) (899)
----------- ----------- -----------
Operating loss (43,815) (42,727) (899)
Financial results, net 17 (9,078) (5,488) (107)
Equity results in joint ventures (41,219) (5,091) (129,858)
Equity results in associates (2,053) (2,783) --
Profit on sale of joint venture 31,093 -- 540,028
----------- ----------- -----------
(Loss)/profit before taxation (65,072) (56,089) 409,164
Income taxation 18 (309) (7,570) --
----------- ----------- -----------
(Loss)/profit after taxation (65,381) (63,659) 406,164
Minority interest 371 3,793 --
----------- ----------- -----------
(Loss)/profit from continuing operations (65,010) (59,866) 409,164
Loss from discontinued operations 19 (3,829) (3,936) --
----------- ----------- -----------
Net (loss)/profit $ (68,839) $ (63,802) $ 409,164
=========== =========== ===========
Per share amounts:
(Loss)/profit from continuing operations
Basic and diluted $ (1.70) $ (1.57) $ 10.70
Net (loss)/profit
Basic and diluted $ (1.80) $ (1.67) $ 10.70
Shares used to compute (loss)/profit per share 38,235,000 38,235,000 38,235,000
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
MIH LIMITED ANNUAL REPORT 1999 25
<PAGE>
MIH
- -------
LIMITED
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS
- --------------------------------------------------------------------------------
OF CASH FLOW
FOR THE YEARS ENDED MARCH 31, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
(in thousands of US dollars) Note 1999 1998 1997
<S> <C> <C> <C> <C>
Cash flows from operating activities
Operating loss $(43,815) $(42,727) $ (899)
Adjustments for:
Depreciation and amortization 51,390 58,010 --
Amortization of program and film rights 32,237 32,599 --
Taxation (paid)/ refunded (5,755) 2,849 --
(Profit)/loss on sale of tangible fixed assets (371) 1,653 --
(Increase)/ decrease in receivables (3,454) (9,553) 12,072
Payments for program and film rights (84,034) (26,048) --
Net decrease/(increase) in amounts
owing to/(owing by) related parties 12,191 (18,790) --
Increase in inventories (1,997) (6,783) --
Decrease/(increase) in payables 28,263 17,941 (5,194)
Utilised in discontinued operations (3,829) (3,936) --
-------- -------- --------
Net cash (used in)/from operating activities (19,174) 5,215 5,979
-------- -------- --------
Cash flows from investing activities
Purchase of tangible fixed assets (11,352) (31,664) --
Proceeds on sale of tangible fixed assets 7,389 5,276 --
Dividends received from associates 2,573 1,539 --
Proceeds on disposal of Internet businesses -- 21,546 --
Proceeds on disposal of Canal Plus shares -- 261,536 --
Acquisition of subsidiaries, net of cash acquired 27 (13,245) (33,911) 54,045
Investment in OpenTV (9,513) (9,100) --
Investment in UBC (66,701) (45,797) (10,348)
Net (increase)/decrease in other investments (4,704) 1,052 --
-------- -------- --------
Net cash (used in)/from investing activities (95,553) 170,477 43,697
-------- -------- --------
Cash flows from financing activities
Finance costs (11,651) (11,312) (107)
Funds raised from outside shareholders -- 3,793 --
Net repayment of long-term debt (29,070) (20,556) --
Capital leases repaid (10,995) (4,550) --
Proceeds on transfer of M-Net/SuperSport shares 22,243 -- --
Dividends paid -- (51,817) --
Bank overdrafts raised 47,581 7,479 9,913
-------- -------- --------
Net cash from/(used in) financing activities 18,108 (76,963) 9,806
-------- -------- --------
Net (decrease)/increase in cash and cash equivalents (96,619) 98,729 59,482
Cash and cash equivalents at beginning of year 153,412 60,773 1,466
Translation adjustment on cash and cash equivalents (694) (6,090) (175)
-------- -------- --------
Cash and cash equivalents at end of year $ 56,099 $153,412 $ 60,773
======== ======== ========
</TABLE>
Non-cash transactions
The principal non-cash transactions are the acquisition of OpenTV Inc. and the
acquisition of property, plant and equipment using capital leases.
The accompanying notes are an integral part of these consolidated financial
statements.
26 MIH LIMITED ANNUAL REPORT 1999
<PAGE>
MIH
-------
LIMITED
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CHANGES IN
- --------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED MARCH 31, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
Foreign
Share capital currency
------------------------ Accumulated translation
(in thousands of US dollars) Class A Class B loss adjustments Total
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
At March 31, 1996 $ 113,986 $ 471,198 $(607,092) $ (7,929) $ (29,837)
Net profit -- -- 409,164 -- 409,164
Translation adjustment -- -- -- 17,958 17,958
--------- --------- --------- --------- ---------
At March 31, 1997 113,986 471,198 (197,928) 10,029 397,285
Capital contribution (note 19) -- 4,368 -- -- 4,368
Net loss -- -- (63,802) -- (63,802)
Dividend paid -- -- (51,817) -- (51,817)
Translation adjustment -- -- -- (32,461) (32,461)
--------- --------- --------- --------- ---------
At March 31, 1998 113,986 475,566 (313,547) (22,432) 253,573
Net loss -- -- (68,839) -- (68,839)
Translation adjustment -- -- -- (8,051) (8,051)
--------- --------- --------- --------- ---------
At March 31, 1999 $ 113,986 $ 475,566 $(382,386) $ (30,483) $ 176,683
========= ========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
MIH LIMITED ANNUAL REPORT 1999 27
<PAGE>
MIH
- -------
LIMITED
- --------------------------------------------------------------------------------
NOTES TO THE CONSOLIDATED
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
1. Nature of operations
MIH Limited (MIH) was incorporated on July 26, 1991 under the laws of the
British Virgin Islands. The principal activities of MIH and its operating
subsidiaries (collectively the company) are the provision of
pay-television and subscriber management services (pay-television
services) and the development and sale of pay-television technology. These
activities are conducted through subsidiaries, joint ventures and
investments primarily in Africa, Greece, Cyprus, the Middle East, the
Netherlands, Thailand and the United States of America.
Until March 31, 1997 the Company's main activity was its 50% share in
Network Holdings S.A. (NetHold), a joint venture. The principal activities
of NetHold included pay-television operations in Africa, Greece, Cyprus,
the Middle East, the Benelux and Scandinavian countries and Italy (Note
3).
2. Principal accounting policies and reporting currency
The consolidated financial statements of the Company have been prepared in
accordance with International Accounting Standards (IAS) issued by the
International Accounting Standards Committee. The financial statements
have been prepared on the historical cost basis.
The Company has adopted the US dollar as its reporting currency.
Notwithstanding the US dollar reporting currency, the Company measures
separately the transactions of each of its material operations using the
particular currency of the primary economic environment in which the
operation conducts its business (its functional currency).
The financial statements have been translated from functional currencies
to the reporting currency by translating assets and liabilities, both
monetary and non-monetary, and including goodwill and other intangible
assets which arise as a result of equity investments in entities, at the
closing rate at each balance sheet date. Income and expense items are
translated at exchange rates at the dates of the transactions or at
average rates. All resulting exchange differences are included in equity.
Preparation of the consolidated financial statements in conformity with
generally accepted accounting principles (GAAP) requires management to
make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
(a) Basis of consolidation
The consolidated financial statements include the financial
statements of MIH and all majority owned (directly and indirectly)
and controlled subsidiaries. A company in which MIH holds directly
or indirectly more than 50% of the ordinary share capital and voting
rights is classified as a subsidiary. Newly acquired companies are
consolidated from the effective date of acquisition. Similarly, the
result of a subsidiary divested during an accounting period is
included in the Company accounts only to the date of disposal.
All inter-company transactions are eliminated as part of the
consolidation process and the interests of the minority shareholders
in the consolidated equity and in the consolidated results of the
Company are shown separately in the Consolidated Balance Sheet and
Consolidated Statement of Operations. Where the losses applicable to
the minority shareholder in a consolidated subsidiary exceed the
minority interest in the subsidiary, the excess, and any further
losses applicable to the minority, are charged against the majority
interest except to the extent that the minority has a binding
obligation to, and is able to, make good the losses. If the
subsidiary subsequently reports profits, the majority's interest is
allocated all such profits until the minority's share of losses
previously absorbed by the majority has been recovered.
Acquisitions of companies are accounted for using the purchase
method. The excess of the purchase price over the fair value of
assets acquired less the liabilities assumed of the acquired
company, is allocated to identifiable tangible and intangible assets
and goodwill and amortized over future periods.
Companies in which the Company has joint control are accounted for
using the equity method with the Company's share of profits and
losses included in the Consolidated Statement of Operations. The
Company's share of post-acquisition retained profits/losses is added
to/deducted from the cost of the joint venture investments in the
Consolidated Balance Sheet.
28 MIH LIMITED ANNUAL REPORT 1999
<PAGE>
MIH
-------
LIMITED
2. Principal accounting policies and reporting currency (continued)
(a) Basis of consolidation (continued)
Associated companies, over which the Company has significant
influence, are accounted for using the equity method with the
Company's share of profits and losses included in the Consolidated
Statement of Operations. The Company's share of post-acquisition
retained profits/losses is added to/deducted from the cost of the
associated company investments in the Consolidated Balance Sheet.
Other investments are stated at cost. When necessary a provision is
made on the basis of an evaluation of each individual investment for
any diminution in value which is considered to be of a permanent
nature.
(b) Foreign currencies
Individual companies' transactions in currencies other than their
functional currency are recorded at the rate of exchange at the date
of the transaction or, if hedged forward, at the rate of exchange
under the related forward exchange contract. Assets and liabilities
in currencies other than their functional currency are translated at
year-end rates. Any resulting exchange differences are reflected in
the Statement of Operations.
On consolidation, assets and liabilities of subsidiaries denominated
in foreign currencies are translated at year-end rates. Income and
expense items are translated using the annual weighted average rates
of exchange or, where known or determinable, at the rate on the date
of the transaction for significant items.
Adjustments from translation have been recorded in shareholders'
equity and are reflected in the Consolidated Statement of Operations
only upon sale or liquidation of the underlying investments.
(c) Cash and cash equivalents
Cash and cash equivalents represent cash and short-term highly
liquid investments with original maturities of three months or less.
(d) Trade accounts receivable
Trade accounts receivable are stated at estimated realizable values
and an allowance for doubtful accounts is provided for an amount
considered by management to be sufficient to meet probable future
losses related to uncollectable amounts.
(e) Inventories
Inventories, consisting primarily of decoders and associated
components, are stated at the lower of cost or net realizable value.
Cost is generally determined on the first-in first-out basis. Where
necessary, provision is made for obsolete, slow moving or defective
inventories.
(f) Tangible fixed assets
Tangible fixed assets are stated at historical cost less accumulated
depreciation. Depreciation is charged on a straight-line basis over
the estimated useful lives of the respective assets, based on the
following useful lives:
Years
Buildings 50
Machinery, furniture and equipment 4 - 10
Transponders and transmitters 10 - 12
Decoders 2
Land is not depreciated. Improvements to leasehold properties are
amortized over the period of the respective leases.
Fully depreciated assets are retained in tangible fixed assets and
depreciation accounts until they are removed from service. In the
case of disposals, assets and related depreciation are removed from
the accounts and the net amount, less proceeds from disposal, is
charged or credited to the Statement of Operations.
(g) Intangible assets
Intangible assets are stated at historical cost less accumulated
amortization. Amortization of intangible assets relating to the
subscriber base and intellectual property rights is charged on a
straight-line basis over the period of expected benefit, which is
five years. Goodwill is amortized on a straight-line basis over five
years.
MIH LIMITED ANNUAL REPORT 1999 29
<PAGE>
MIH
- -------
LIMITED
- --------------------------------------------------------------------------------
NOTES TO THE CONSOLIDATED
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
(CONTINUED)
2. Principal accounting policies and reporting currency (continued)
(h) Leases
Assets held under capital lease agreements are treated as tangible
fixed assets and the present value of the related lease payments is
recorded as a liability. Costs for operating leases are charged to
the Statement of Operations in the year that they are incurred.
(i) Long-lived assets
The Company periodically evaluates the carrying value of long-lived
assets to be held and used, including goodwill and other intangible
assets, when events and circumstances warrant such a review. The
carrying value of a long-lived asset is considered impaired when the
anticipated undiscounted cash flow from such an asset is separately
identifiable and is less than its carrying value. In that event, a
loss is recognized based on the amount by which the carrying value
exceeds the fair market value of the long-lived asset. Fair market
value is determined primarily using anticipated cash flows
discounted at a rate commensurate with the risk involved. Long-lived
assets to be disposed of are recorded at fair market value, reduced
by the estimated costs to dispose of the asset.
(j) Program and film rights
Film rights are stated at acquisition cost less accumulated
amortization. Sports rights are written off upon showing the event
and general entertainment and films are amortized on a straight-line
basis over the period of the license or based on showings where the
number of showings is limited. Amortization of program and film
rights is included in the cost of providing services.
(k) Taxation
Provision is made for all taxes payable in respect of taxable
profits earned in the year. The Company also provides at current
rates for taxation on all timing differences between income for
financial reporting and fiscal purposes under the liability method.
No deferred taxation is provided for in respect of timing
differences that are anticipated to reverse within the carry-forward
period of tax losses.
(l) Minority interest
The interest of third parties in subsidiaries is accounted for on
the basis of their share in the underlying equity of the
subsidiaries.
(m) Revenue recognition
The Company generates revenue from subscription fees, decoder sales
and rentals, technology licensing, advertising and the performance
of other services, net of sales taxes and discounts. Subscription
fees are earned over the period of providing services. Decoder
sales, technology licensing and other services are recorded upon
delivery of products and customer acceptance, if any, or performance
of services. Advertising revenues are recognized upon showing over
the period of the advertising contract.
(n) Pensions and other post-retirement benefits
The Company has various post-retirement and pension plans in
accordance with local conditions and practices in the countries in
which it operates. The plans are predominately defined contribution
plans. Current contributions to the pension funds operated for
employees are charged to the Statement of Operations as incurred.
(o) Research and development costs
Research and development costs are expensed in the financial period
during which they are incurred.
(p) Discontinued operations
A discontinued operation results from the sale or abandonment of an
operation that represents a separate, major line of business of an
enterprise and of which the assets, net profits or losses and
activities can be distinguished physically, operationally and for
functional reporting purposes. The results of discontinued
operations, net of tax, are separately disclosed.
30 MIH LIMITED ANNUAL REPORT 1999
<PAGE>
MIH
-------
LIMITED
2. Principal accounting policies and reporting currency (continued)
(q) Dividends
Dividends proposed are payable when declared by the board of
directors. Dividends declared by MIH are payable in United States
dollars. Dividends declared and received by MIH from its
subsidiaries are primarily in South African rand, Greek drachmae and
Netherlands guilder.
(r) Financial instruments
The Company enters into foreign currency exchange contracts in order
to reduce the impact of certain foreign currency exchange rate
fluctuations. Firmly committed transactions and the related
receivable and payable may be hedged with forward exchange
contracts. Any gains/losses are included in accrued liabilities and
are recognized in results when the transaction being hedged is
recognized.
(s) (Loss)/profit per share
Net (loss)/profit per share and (loss)/profit per share from
continuing operations is based on net (loss)/profit and the
(loss)/profit from continuing operations divided by the weighted
average number of shares outstanding during each period.
(t) Segment reporting
The segmental reporting has been prepared based on the Company's
method of internal reporting, which disaggregates its business by
service or product and by geography.
3. Significant acquisitions and divestitures
Until March 31, 1997 the Company's main activity was its 50% share in
NetHold, a joint venture. The principal activities of NetHold included
pay-television operations in Africa, Greece, Cyprus, the Middle East, the
Benelux, Scandinavian countries and Italy. Additionally, NetHold held 100%
of the shares in Irdeto BV (Irdeto), a pay-television technology company.
Effective March 31, 1997, the Company sold its interest in NetHold to
Canal Plus in exchange for a 5% share in Canal Plus and all of NetHold's
pay-television businesses in Africa, Greece, Cyprus and the Middle East.
The transaction was accounted for as a sale of the 50% interest in NetHold
and a purchase of the pay-television businesses transferred to the
Company. Thereafter, the Company acquired a 49% share in Irdeto for a
consideration of $17.7 million paid for in cash.
The Company recognized a gain of $540 million on the sale of its interest
in NetHold. The gain is equal to the excess of the fair value of
consideration received ($475 million) over the book value of the Company's
interest in the NetHold businesses sold ($159 million deficit) less
deferral of a portion of the gain related to warranties provided and
direct costs of $94 million. The fair value of the consideration received
consisted of the Canal Plus shares ($273 million) and 50% of the NetHold
businesses in Africa, Greece, Cyprus and the Middle East ($202 million).
As a result of the transaction the Company recorded intangible assets of
$193 million, which has been allocated to subscriber base ($55 million)
and goodwill ($138 million).
During the 1998 financial year the Company sold its shares in Canal Plus
for a total consideration of approximately $262 million, resulting in a
gain of $3 million.
In January 1998 the Company acquired the remaining 51% of the outstanding
share capital of Irdeto for an aggregate cash consideration of
approximately $11 million. For financial statement purposes the
acquisition was accounted for as a purchase, and accordingly, the related
business's results are included in the consolidated financial statements
since the date of acquisition.
MIH LIMITED ANNUAL REPORT 1999 31
<PAGE>
MIH
- -------
LIMITED
- --------------------------------------------------------------------------------
NOTES TO THE CONSOLIDATED
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
(CONTINUED)
3. Significant acquisitions and divestitures (continued)
During the 1998 fiscal year the Company acquired the entire issued share
capital of a number of Internet-related businesses in South Africa. For
financial statement purposes the acquisitions were accounted for as
purchases and, accordingly, the Internet-related businesses' results are
included in the consolidated financial statements since the date of
acquisition. The aggregate purchase price was approximately $21.5 million,
which was financed through internal resources. The excess of the purchase
price over the net liabilities acquired (goodwill) approximated $17
million. With effect from October 1, 1997 the Company sold its
Internet-related businesses to M-Web Holdings Limited, a related party,
for $20.5 million, which was settled in cash and resulted in a surplus of
$4.4 million. The Company accounted for the operating losses of the
Internet-related businesses as discontinued operations for the period from
May 1, 1997 to September 30, 1997. The $4.4 million surplus on this
translation was accounted for as a capital contribution.
The Company also acquired a 44.5% interest in OpenTV Inc. (OpenTV) for
$15.5 million with effect from January 26, 1998 of which $6.4 million was
due in the 1999 financial year. On March 18, 1999 the company increased
its interest in OpenTV to 80.1%, through the acquisition of a 44.5% share
from Thomson Consumer Electronics Inc. (Thomson) and agreement to dispose
of a portion of that interest representing 8.9% of OpenTV to a subsidiary
of Sun Microsystems. The purchase from Thomson was in exchange for a $46.2
million note bearing interest at 7% annually. The note was converted on
April 13, 1999 into 2,581,775 Class A Ordinary Shares at $18.00 per Class
A Ordinary Share. The disposal to the subsidiary of Sun Microsystems was
for approximately $9.2 million in cash. The excess purchase price over the
net liabilities acquired of approximately $36.7 million has been allocated
to goodwill and is amortized over five years.
The Company invested an additional $17.7 million in United Broadcasting
Corporation Public Company Limited (UBC), a company listed on the Stock
Exchange of Thailand, during the 1998 financial year. As a result of the
Company's additional investment in UBC and following a merger between UBC
and UTV Cable Network Public Company, the Company's interest in the new
merged entity increased to 17.3%. In June 1998, the Company increased its
shareholding in UBC from 17.3% to 26.1% for a purchase consideration of
$62.1 million, paid in cash. In February 1999 the company acquired an
additional 1.7% interest for $4.5 million in cash. The Company intends to
exercise an option to purchase an additional 3.3% of UBC for $8.8 million
in cash, taking its interest to 31.1%. The excess of the consideration of
the Company's share of the fair value of the net assets acquired,
amounting to $59.5 million, was allocated to goodwill, and is amortized
over its estimated useful life of five years. Since the increase of its
shareholding, the Company has joint control over UBC and therefore
accounts for its investment in UBC using the equity method of accounting.
On April 4, 1998 the Company transferred 28 million of its shares in
Electronic Media Network Holdings Limited/ SuperSport International
Holdings Limited (M-Net/SuperSport) into a trust (the Trust), with the
objective to increase share ownership in M-Net/SuperSport amongst certain
South Africans, for consideration of $22.2 million. The Trust financed 90%
of the consideration through bank borrowings. Under certain circumstances,
the Company may be required to assume the obligation for the bank
borrowings at maturity on April 1, 2001 and re-acquire ownership of the
M-Net/ SuperSport shares. The shares of M-Net/SuperSport transferred have
been pledged as collateral for such obligations. Under the terms of the
sale agreement the purchasers are entitled to vote the shares and the
Company is entitled to receive any dividend until 2001. The Company
recorded a liability of approximately $20 million related to the bank
borrowings. The cash consideration for the share transfer which has not
been financed by bank borrowings is accounted for as an option premium.
The $20 million liability accretes interest until the redemption date
(April 14, 2001) at an interest rate of 12.55%. The option premium is
amortized to income over three years and the Company continues to account
for a 19.8% equity method investment in M-Net/SuperSport.
During November 1998, the Company acquired a 100% interest in TV/Com
International Inc. for $14.5 million, paid in cash. The excess of the
consideration over the fair value of the net assets amounting to $12.3
million, was allocated to intellectual property rights.
32 MIH LIMITED ANNUAL REPORT 1999
<PAGE>
MIH
-------
LIMITED
March 31,
---------------------------
1999 1998
(thousands) (thousands)
---------- ----------
4. Accounts receivable
Trade accounts receivable $ 70,937 $ 47,148
Less: provision for doubtful accounts (20,380) (10,149)
---------- ----------
$ 50,557 $ 36,999
========== ==========
Included in accounts receivable are $27.5 million and $14.3 million at
March 31, 1999 and March 31, 1998, respectively, pre-billed to customers
and credit balances which have been recorded as deferred income (Note 12).
5. Other receivables
Payments and accrued income $ 8,490 $ 14,272
Other receivables 19,739 15,172
---------- ----------
$ 28,229 $ 29,444
========== ==========
6. Inventories
Decoders and associated components $ 31,828 $ 28,689
Less: provision for slow-moving and
obsolete inventories (10,460) (10,406)
---------- ----------
$ 21,368 $ 18,283
========== ==========
MIH LIMITED ANNUAL REPORT 1999 33
<PAGE>
MIH
- -------
LIMITED
- --------------------------------------------------------------------------------
NOTES TO THE CONSOLIDATED
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
(CONTINUED)
7. Valuation and qualifying accounts
<TABLE>
<CAPTION>
1999 Arising on Credited/
acquisition (Charged)
At March Translation of to cost and At March
31, 1998 adjustment subsidiary Deductions expenses 31, 1999
----------- ----------- ----------- ----------- ----------- -----------
(thousands) (thousands) (thousands) (thousands) (thousands) (thousands)
<S> <C> <C> <C> <C> <C> <C>
Provision for:
Doubtful accounts - Note 4 $(10,149) $ 904 $ (1,323) $ -- $ (9,812) $(20,380)
Slow-moving and obsolete
inventories - Note 6 (10,406) (139) -- -- 85 (10,460)
Program and film rights (1,872) (25) -- -- 1,897 --
Decoder technology (22,734) 524 -- -- 22,210 --
Post-retirement benefits (3,766) 700 -- -- 399 (2,667)
Programming costs (9,093) (210) -- -- 9,303 --
Write down of carrying
values of assets in certain
African countries (4,341) 807 -- -- 227 (3,307)
Development costs/losses
in joint ventures (10,629) (108) -- 10,737 -- --
Warranties (4,960) (65) -- -- (435) (5,460)
Intellectual property
infringement (1,496) (20) -- -- 1,017 (499)
-------- -------- -------- -------- -------- --------
$(79,446) $ 2,368 $ (1,323) $ 10,737 $ 24,891 $(42,773)
======== ======== ======== ======== ======== ========
</TABLE>
34 MIH LIMITED ANNUAL REPORT 1999
<PAGE>
MIH
-------
LIMITED
7. Valuation and qualifying accounts (continued)
<TABLE>
<CAPTION>
1998 Arising on Credited/
acquisition (Charged)
At March Translation of to cost and At March
31, 1997 adjustment subsidiary Deductions expenses 31, 1998
----------- ----------- ----------- ----------- ----------- -----------
(thousands) (thousands) (thousands) (thousands) (thousands) (thousands)
<S> <C> <C> <C> <C> <C> <C>
Provision for:
Doubtful accounts - Note 4 $ (7,067) $ 708 $ (6,251) $ -- $ 2,461 $ (10,149)
Slow-moving and obsolete
inventories - Note 6 (6,466) 648 (4,135) -- (453) (10,406)
Program and film rights (476) 48 -- -- (1,444) (1,872)
Decoder technology (29,358) 2,942 -- 3,682 -- (22,734)
Post-retirement benefits (4,678) 469 -- -- 443 (3,766)
Subscriber guarantees (42,203) 4,229 -- 37,974 -- --
Programming costs (9,125) 914 -- -- (882) (9,093)
Write down of carrying
values of assets in certain
African countries (7,963) 798 -- -- 2,824 (4,341)
Development costs/losses
in joint ventures -- -- (3,398) -- (7,231) (10,629)
Warranties (3,857) 349 -- -- (1,452) (4,960)
Intellectual property
infringement -- -- -- -- (1,496) (1,496)
--------- --------- --------- --------- --------- ---------
$(111,193) $ 11,105 $ (13,784) $ 41,656 $ (7,230) $ (79,446)
========= ========= ========= ========= ========= =========
</TABLE>
At March 31, 1997 the Company deferred recognition of approximately $73.3
million of the gain arising on the sale of NetHold to Canal Plus,
representing the estimated probable liability for warranties of decoder
technology ($22.7 million) and guarantees of the number of subscribers
($42.2 million) and the potential reimbursement of programming costs ($9.1
million). During the year ended March 31, 1998 the Company paid
approximately $38.0 million for guarantees of number of subscribers. As no
further claims under the warranties were made prior to June 30, 1998, the
deadline for such claims, the Company reversed the remaining provisions to
profit on sale of joint venture during the current financial year.
The provision for the write down of the carrying value of assets in
certain African countries relates to managements' estimates regarding the
recoverability of such assets, given the current economic and political
environment in certain African countries.
Following the termination of an agreement with a joint venture partner the
provision for development costs/losses in joint ventures has been deducted
from the long-term loan and the net amount disclosed as a short-term
receivable.
The warranty provision has been raised to cover smartcards and conditional
access modules supplied to customers.
The intellectual property infringement provision relates to the expected
settlement amount in respect of a patent used in the conditional access
system.
MIH LIMITED ANNUAL REPORT 1999 35
<PAGE>
MIH
- -------
LIMITED
- --------------------------------------------------------------------------------
NOTES TO THE CONSOLIDATED
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
(CONTINUED)
8. Tangible fixed assets (in thousands)
<TABLE>
<CAPTION>
Land, buildings
and leasehold Machinery, furniture Transponders
improvements and equipment and transmitters
---------------------- ---------------------- ----------------------
Purchased Leased Purchased Leased Purchased Leased
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Cost
At April 1, 1998 $ 3,939 $ 10,311 $ 68,726 $ 6,644 $ 8,438 $ 45,822
Translation adjustment (809) (1,901) (10,777) (1,227) 261 (1,423)
Additions 1,619 -- 7,072 166 6,122 138,212
Disposals -- -- (6,790) (2,783) (16) (9)
--------- --------- --------- --------- --------- ---------
At March 31, 1999 4,749 8,410 58,231 2,800 14,805 182,602
--------- --------- --------- --------- --------- ---------
Accumulated depreciation
At April 1, 1998 (563) (282) (24,548) (1,954) (1,329) (3,223)
Translation adjustment 29 59 3,077 380 (620) 234
Reclassifications (812) 66 5 572 43 (766) (140)
Charge for the year (893) (178) (8 624) (414) (2 133) (7 178)
Disposals -- -- 1,973 -- 16 --
--------- --------- --------- --------- --------- ---------
At March 31, 1999 (2,239) (335) (22,550) (1,945) (4,832) (10,307)
--------- --------- --------- --------- --------- ---------
Net book value
At March 31, 1999 $ 2,510 $ 8,075 $ 35,681 $ 855 $ 9,973 $ 172,295
========= ========= ========= ========= ========= =========
At March 31, 1998 $ 3,376 $ 10,029 $ 44,178 $ 4,690 $ 7,109 $ 42,599
========= ========= ========= ========= ========= =========
<CAPTION>
Decoders
----------------------
Purchased Leased Total
--------- --------- ---------
<S> <C> <C> <C>
Cost
At April 1, 1998 $ -- $ 7,840 $ 151,720
Translation adjustment -- 2,816 (13,060)
Additions 3,633 8,782 165,606
Disposals -- -- (9,598)
--------- --------- ---------
At March 31, 1999 3,633 19,438 294,668
--------- --------- ---------
Accumulated depreciation
At April 1, 1998 -- (5,573) (37,472)
Translation adjustment (84) (2,289) 786
Reclassifications (2 204) (1 759) --
Charge for the year (217) (3 230) (22,867)
Disposals -- -- 1,989
--------- --------- ---------
At March 31, 1999 (2,505) (12,851) (57,564)
--------- --------- ---------
Net book value
At March 31, 1999 $ 1,128 $ 6,587 $ 237,104
========= ========= =========
At March 31, 1998 $ -- $ 2,267 $ 114,248
========= ========= =========
</TABLE>
The Company leases certain land and buildings, machinery, furniture and
equipment, and transponders and transmitters. Commitments for minimum
rentals under non-cancellable leases as at March 31, 1999 are as follows:
Capital Operating
leases leases
----------- -----------
For the years ended March 31: (thousands) (thousands)
----------- -----------
2000 $ 32,836 $ 15,103
2001 30,528 16,688
2002 28,179 11,648
2003 26,041 11,155
2004 and after 190,280 33,575
----------- -----------
Total minimum lease repayments 307,864 $ 88,169
===========
Less: amount representing interest (110,254)
-----------
$ 197,610
===========
Operating rental expenses for the year ended March 31, 1999 amounted to
approximately $37 million (1998:$33 million). Capital leases bear interest
ranging from 6% - 21% as of March 31, 1999. The weighted average interest
rate was 9.68%.
36 MIH LIMITED ANNUAL REPORT 1999
<PAGE>
MIH
-------
LIMITED
<TABLE>
<CAPTION>
Intellectual
property Subscriber
rights base Goodwill Total
---------- ---------- ----------- -----------
(thousands) (thousands) (thousands) (thousands)
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
9. Intangible assets
1999
Cost
At April 1, 1998 $ -- $ 48,250 $ 151,531 $ 199,781
Translation difference -- (8,946) (5,193) (14,139)
Additions 12,372 -- 84,986 97,358
---------- ---------- ----------- -----------
At March 31, 1999 12,372 39,304 231,324 283,000
---------- ---------- ----------- -----------
Accumulated amortization
At April 1, 1998 -- (9,650) (26,520) (36,170)
Amortization for the year (825) (8,293) (34,684) (43,802)
Translation difference -- 2,248 1,925 4,173
---------- ---------- ----------- -----------
At March 31, 1999 (825) (15,695) (59,279) (75,799)
---------- ---------- ----------- -----------
Net book value $ 11,547 $ 23,609 $ 172,045 $ 207,201
========== ========== =========== ===========
1998
Cost
At April 1, 1997 $ -- $ 55,000 $ 152,870 $ 207,870
Translation difference -- (6,750) (20,268) (27,018)
Additions -- -- 36,490 36,490
Disposal -- -- (17,561) (17,561)
---------- ---------- ----------- -----------
At March 31, 1998 -- 48,250 151,531 199,781
---------- ---------- ----------- -----------
Accumulated amortization
At April 1, 1997 -- -- -- --
Amortization for the year -- (10,311) (28,689) (38,999)
Translation difference -- 661 2,169 2,829
---------- ---------- ----------- -----------
At March 31, 1998 -- (9,650) (26,520) (36,170)
---------- ---------- ----------- -----------
Net book value $ -- $ 38,600 $ 125,011 $ 163,611
========== ========== =========== ===========
</TABLE>
MIH LIMITED ANNUAL REPORT 1999 37
<PAGE>
MIH
- -------
LIMITED
- --------------------------------------------------------------------------------
NOTES TO THE CONSOLIDATED
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
(CONTINUED)
March 31,
------------------------
1999 1998
(thousands) (thousands)
----------- -----------
10. Long-term investments
Marketable securities (a) $ 1,190 $ 56,924
Associates (b) 14,000 12,992
Joint ventures (c) 54,924 7,104
----------- -----------
$ 70,114 $ 77,020
=========== ===========
(a) Marketable securities at cost
Listed shares
UBC (1999: joint venture) $ -- $ 52,840
Unlisted shares
Cable News Egypt S.A.E. (CNE) 1,190 2,985
Croco Beteiligungs Gesellschaft GmbH -- 1,004
LTH AE -- 95
----------- -----------
$ 1,190 $ 56,924
=========== ===========
(b) Associates
M-Net/SuperSport $ 8,394 $ 10,312
Orbicom (Proprietary) Limited (Orbicom) -- --
Share of post-acquisition retained profits 5,606 2,680
----------- -----------
$ 14,000 $ 12,992
=========== ===========
(c) Joint ventures
Digco BV (Digco) $ -- $ 7,762
MultiChoice Supplies (Proprietary) Limited
(MultiChoice Supplies) 2,447 3,686
MultiChoice Middle East 7,055 --
UBC (1998: marketable security) 73,550 --
Share of post-acquisition retained profits
less losses (28,128) (4,344)
----------- -----------
$ 54,924 $ 7,104
=========== ===========
Listed shares at market value
UBC $ 91,774 $ 104,817
M-Net/SuperSport 30,375 54,483
----------- -----------
$ 122,149 $ 159,300
=========== ===========
38 MIH LIMITED ANNUAL REPORT 1999
<PAGE>
MIH
-------
LIMITED
10. Long-term investments (continued)
The following information relates to the Company's significant
investments:
<TABLE>
<CAPTION>
March 31,
1999 1998
Type of investment % % Nature of business Country
<S> <C> <C> <C> <C>
Marketable securities at cost
UBC (1999: joint venture) -- 17.3 Management of Thailand
television platforms
CNE 10.0 10.0 Television Egypt
Associates
M-Net/SuperSport 19.8(1) 20.0 Premium television
channel provider South Africa
Orbicom 20.0 20.0 Signal distribution South Africa
Joint ventures
Digco 50.0 50.0 Decoder technology The Netherlands
UBC (1998: marketable security) 31.1 -- Management of Thailand
(including option) television platforms
MultiChoice Supplies 50.0 50.0 Decoder rentals South Africa
OpenTV (1999: subsidiary) -- 44.5 Technology development USA
MultiChoice Middle East 45.0 45.0 Management of Middle East
television platforms
Subsidiaries
Myriad Africa BV 100.0 100.0 Investment holding The Netherlands
MultiChoice Africa (Proprietary) 100.0 100.0 Management of South Africa
Limited (MultiChoice Africa) television platforms
MultiChoice Africa Limited 100.0 100.0 Investment holding British Virgin Islands
NetMed BV 100.0 100.0 Investment holding The Netherlands
NetMed Hellas SA 52.0 52.0 Management of Greece
television platforms
MultiChoice Hellas SA 52.0 52.0 Management of Greece
television platforms
Irdeto 100.0 100.0 Technology development The Netherlands
TV/Com 100.0 -- Technology development USA
OpenTV (1998: joint venture) 80.1 -- Technology development USA
</TABLE>
(1) The Company accounts for its investment in M-Net/SuperSport using
the equity method of accounting because of the significant influence
the Company exercises over M-Net/SuperSport as a result of common
ownership, the Company's management and directors' representation on
the board of directors of M-Net/SuperSport and the fact that
substantially all of M-Net/SuperSport's revenues are derived from
the Company.
<TABLE>
<CAPTION>
March 31,
------------------------------------------
1999 1998 1997
(thousands) (thousands) (thousands)
----------- ----------- -----------
<S> <C> <C> <C>
Significant joint venture information
Net loss $ (34,401) $ (5,091) $ --
Current assets 38,091 11,110 --
Long-term assets 304,184 5,320 --
Current liabilities (32,619) (26,173) --
Long-term liabilities (36,773) (25,388) --
</TABLE>
MIH LIMITED ANNUAL REPORT 1999 39
<PAGE>
MIH
- -------
LIMITED
- --------------------------------------------------------------------------------
NOTES TO THE CONSOLIDATED
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
(CONTINUED)
<TABLE>
<CAPTION>
March 31,
---------------------------
1999 1998
(thousands) (thousands)
----------- -----------
<S> <C> <C>
11. Program and film rights
The following table sets forth the components of program and film rights,
on a gross and net basis:
Cost
Program rights $ 112,319 $ 60,893
Film rights 8,832 13,554
----------- -----------
121,151 74,447
----------- -----------
Accumulated amortization
Program rights 27,366 26,266
Film rights 2,451 9,927
----------- -----------
29,817 36,193
----------- -----------
Net book value
Program rights 84,953 34,627
Film rights 6,381 3,627
----------- -----------
$ 91,334 $ 38,254
=========== ===========
Classified on the balance sheets as follows:
Current assets $ 38,935 $ 22,543
Non-current assets 52,399 15,711
----------- -----------
$ 91,334 $ 38,254
=========== ===========
12. Accrued expenses and other current liabilities
Deferred income $ 27,508 $ 14,344
Accrued expenses 50,226 35,517
Taxes and social securities 10,341 12,630
Amounts owing in respect of investments acquired 46,287 6,400
Other current liabilities 27,110 46,555
----------- -----------
$ 161,472 $ 115,446
=========== ===========
13. Provisions
Decoder technology $ -- $ 22,734
Post-retirement benefit (Note 26) 2,667 3,766
Write down of carrying values of assets in certain African countries 3,307 4,341
Programming costs -- 9,093
Provision for development costs/losses in joint ventures -- 10,629
Warranties 5,460 4,960
Intellectual property infringement 499 1,496
----------- -----------
$ 11,933 $ 57,019
=========== ===========
</TABLE>
40 MIH LIMITED ANNUAL REPORT 1999
<PAGE>
MIH
-------
LIMITED
<TABLE>
<CAPTION>
March 31,
---------------------------
1999 1998
(thousands) (thousands)
----------- -----------
<S> <C> <C>
14. Long-term debt and program and film rights
Long-term debt comprises:
Capital leases - Note 8 $ 197,610 $ 67,172
NetHold Finance VOF -- 23,984
Other long-term debt 22,672 --
----------- -----------
220,282 91,156
Less: short-term portion included in current liabilities (15,512) (36,369)
----------- -----------
$ 204,770 $ 54,787
=========== ===========
</TABLE>
Program and film rights payable are non-interest-bearing and amounts due
in future fiscal years are $37.9 million in 2000, $28.3 million in 2001
and $15.5 million thereafter.
The loan from NetHold Finance VOF bore interest at 2% above the Amsterdam
Inter-bank Benchmark Rate and was settled on October 5, 1998.
The currency mix of the long-term debt as at March 31, 1999 and 1998 is:
<TABLE>
<CAPTION>
% %
----------- -----------
<S> <C> <C>
European currency unit 17.5 39.0
Greek drachmae 18.5 29.0
Netherlands guilders 0.8 19.0
South African rand 12.8 11.0
US dollars 50.4 2.0
----------- -----------
100.0 100.0
=========== ===========
</TABLE>
MIH LIMITED ANNUAL REPORT 1999 41
<PAGE>
MIH
- -------
LIMITED
- --------------------------------------------------------------------------------
NOTES TO THE CONSOLIDATED
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
(CONTINUED)
March 31,
------------------------
1999 1998
(thousands) (thousands)
----------- -----------
15. Deferred taxation
The deferred taxation relates to the temporary differences between the
book values and the tax bases of assets and liabilities. Significant
components of the Company's deferred taxation liabilities and assets are
summarized below:
Deferred taxation liabilities
Leased tangible assets $ -- $ 1,097
Purchased intangible fixed assets 3 3,275
Prepayments -- 1,995
Subscriber base 7,082 13,472
Intellectual property rights 3,464 --
---------- ----------
Gross deferred taxation liabilities 10,549 19,839
---------- ----------
Deferred taxation assets
Purchased intangible fixed assets -- 2,062
Purchased tangible fixed assets 302 350
Accounts receivable and other assets 4,992 1,387
Accrued expenses and other current liabilities 7,050 23,791
Program and film rights 72 3,113
Leased tangible fixed assets 2,939 2,881
Deferred income 4,594 4,929
Tax loss carry forwards 33,033 36,156
---------- ----------
Gross deferred taxation assets 52,982 74,669
---------- ----------
Net deferred taxation assets 42,433 54,830
Less: valuation allowance (42,553) (58,105)
---------- ----------
Net deferred tax liabilities $ (120) $ (3,275)
========== ==========
The Company has raised a valuation allowance against the net deferred
taxation asset as in management's estimate it is more likely than not that
the deferred taxation asset will not be realized, due to the historical
operating losses incurred by the Company's operations and the timing
limits on the tax loss carry-forwards that arose on these losses.
42 MIH LIMITED ANNUAL REPORT 1999
<PAGE>
MIH
-------
LIMITED
<TABLE>
<CAPTION>
Year ended March 31,
-----------------------------------------
1999 1998 1997
(thousands) (thousands) (thousands)
----------- ----------- -----------
<S> <C> <C> <C>
16. Net revenues
Subscription revenues $ 442,734 $ 404,479 $ --
Decoder sales and repairs 71,998 63,082 --
Technology 63,911 12,781 --
Other 31,456 21,150 --
---------- ---------- ----------
$ 610,099 $ 501,492 $ --
========== ========== ==========
17. Financial results, net
Dividend income $ 2,573 $ 3,177 $ --
Gain on disposal of investments -- 2,647 --
Interest income 10,328 7,898 --
Exchange losses (556) (6,049) --
Interest expense (21,423) (13,161) (107)
---------- ---------- ----------
$ (9,078) $ (5,488) $ (107)
========== ========== ==========
18. Income taxation
Taxation
Current $ (3,464) $ (5,964) $ --
Deferred 3,155 (1,606) --
---------- ---------- ----------
Charged against income $ (309) $ (7,570) $ --
========== ========== ==========
The difference between income taxation expense computed at
statutory rates of the respective companies (35% average) and
income taxation expense provided on results are as follows:
Income taxation benefit at statutory rates $ 3,615 $ 19,631 $ --
Unprovided timing differences (11,798) (22,080) --
Permanent differences
Exempt income 16,248 -- --
Profit on sale of investments -- 1,692 --
Profit on dilution of interest in associates -- 315 --
Non-deductible charges (6,876) (13,961) --
(Expenditure)/income of a capital nature (658) 156 --
Other taxes (1,430) (3,064) --
Change in taxation rates 590 9,741 --
---------- ---------- ----------
Income taxation expense $ (309) $ (7,570) $ --
========== ========== ==========
</TABLE>
MIH LIMITED ANNUAL REPORT 1999 43
<PAGE>
MIH
- -------
LIMITED
- --------------------------------------------------------------------------------
NOTES TO THE CONSOLIDATED
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
(CONTINUED)
18. Income taxation (continued)
The Company has tax loss carry-forwards of approximately $110.1 million. A
summary of the tax loss carry-forwards at March 31, 1999 (in thousands) by
tax jurisdiction, and the expiry dates is set out below:
Africa Mediterranean Total
---------- ----------- -----------
1999 $ 2,300 $ 6,000 $ 8,300
2000 2,300 22,500 24,800
2001 3,000 6,800 9,800
2002 1,400 14,200 15,600
2003 8,000 15,700 23,700
Indefinite 27,910 -- 27,910
---------- ----------- -----------
$ 44,910 $ 65,200 $ 110,110
========== =========== ===========
Tax loss carry-forwards of $17 million are only available for offset
against future taxable income from the same category of income which
created the loss.
The ultimate outcome of additional taxation assessments may vary from the
amounts accrued, however management of the Company believe that any
additional taxation liability over and above the amount accrued would not
have a material adverse impact on the Company's results of operations or
financial position.
Unprovided timing differences are timing differences that are expected to
reverse within the carry-forward period of tax losses (note 3(k)) and are,
therefore, effectively a valuation allowance.
19. Discontinued operations
1999
With effect from November 24, 1998 the group discontinued the operations
of TV/Com. The costs incurred relate to the termination of the operations.
1998
With effect from October 1, 1997 the Company sold its Internet-related
businesses to M-Web, a related party, for $20.5 million, which was settled
in cash and resulted in a surplus of $4.4 million. The Company accounted
for the operating losses of the Internet-related business as discontinued
operations for the period from May 1, 1997 to September 30, 1997. The $4.4
million surplus on this transaction was accounted for as a capital
contribution.
44 MIH LIMITED ANNUAL REPORT 1999
<PAGE>
MIH
-------
LIMITED
Year ended March 31,
--------------------------------------
1999 1998 1997
(thousands) (thousands) (thousands)
----------- ----------- -----------
20. Related party transactions
The Company entered into transactions and has balances with a number of
affiliated companies, including equity investees, shareholders and
entities under common control. The transactions with affiliated companies
are summarized in the following table:
Income
Transmission costs (a) $ 1,656 $ 1,308 $ --
Management fee (b) 340 -- --
Dividend (c) 2,573 1,448 --
Licensing and consulting fees (d) 2,270 956 --
Interest income (e) -- -- 11,916
---------- ----------- -----------
$ 6,839 $ 3,712 $ 11,916
========== =========== ===========
Costs
Channel of programming costs (f) $ 136,000 $ 133,047 $ --
Transmission costs (g) 28,784 23,854 --
Licensing fees (h) -- 2,671 --
Directors' emoluments (i) 1,716 -- --
---------- ----------- -----------
$ 166,500 $ 159,572 $ --
========== =========== ===========
(a) Certain costs related to the lease and maintenance of signal
distribution are charged on by the Company to one of its affiliated
companies.
(b) Management fee charged by the company to UBC.
(c) Dividends received from M-Net/SuperSport.
(d) Licensing and consulting fees charged to affiliated companies.
(e) Interest income relates to a loan from the Company to one of the
subsidiaries of NetHold. Interest income on the loan has been
included in equity results in joint ventures.
(f) The Company purchases the right to transmit certain channels and
programs from affiliated companies.
(g) The Company is charged by an affiliate for services relating to the
lease and maintenance of signal distribution equipment.
(h) Licensing fees are charged by an affiliated company for the use of
certain subscriber technology and software.
(i) Total remuneration of the directors. A listing of the members of the
board of directors is shown on page 58 of this annual report.
MIH LIMITED ANNUAL REPORT 1999 45
<PAGE>
MIH
- -------
LIMITED
- --------------------------------------------------------------------------------
NOTES TO THE CONSOLIDATED
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
(CONTINUED)
March 31,
---------------------------
1999 1998
(thousands) (thousands)
----------- -----------
20. Related party transactions (continued)
The balances of advances, deposits, receivables and payables between the
Company and affiliates are:
Receivables
MIH Holdings Limited $ 6,993 $ 8,657
OpenTV (1999: subsidiary) -- 323
Computicket -- 434
UBC (1999: joint venture) -- 3,872
Myriad International Holdings BV -- 1,498
M-Web Holdings Limited 1,786 --
Orbicom (Proprietary) Limited 5,442 --
----------- -----------
$ 14,221 $ 14,784
=========== ===========
Payables
M-Web Holdings Limited $ -- $ 2,223
M-Cell Limited -- 237
M-Net/SuperSport 16,298 23,128
Orbicom (Proprietary)Limited -- 216
----------- -----------
$ 16,298 $ 25,804
=========== ===========
46 MIH LIMITED ANNUAL REPORT 1999
<PAGE>
MIH
-------
LIMITED
21. Segment and geographic information
The Company has determined that its reportable segments are those that are
based on the Company's method of internal reporting, which disaggregates
its businesses by service/product and by geography. The Company's
reportable business segments are management of television platforms and
technology. The business segment relating to the management of television
platforms is conducted in Africa and the Middle East, the Mediterranean
and Thailand. The technology business segment consists of Irdeto, based in
the Netherlands, and the Company's joint venture interest in OpenTV
(subsidiary March 31, 1999) and TV/Com, based in the United States of
America (United States). The Company's interests in OpenTV and the Middle
East are accounted for by the equity method and are, therefore, included
in equity results in joint ventures below.
The accounting policies of the segments are identical to the accounting
policies described in "Summary of Significant Accounting Policies".
<TABLE>
<CAPTION>
1999 Management of
television platforms Technology
------------------------------------ ----------
Africa Consoli-
and the Mediter- Segmental Reconciling dated
Middle East ranean Thailand total Corporate items total
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
(thousands) (thousands) (thousands) (thousands) (thousands) (thousands) (thousands) (thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SALES
External sales $ 409,203 $ 136,985 $ -- $ 63,911 $ 610,099 $ -- $ -- $ 610,099
Inter-segment sales -- 551 -- 9,355 9,906 -- (9,906) --
-----------------------------------------------------------------------------------------------------
Total revenue $ 409,203 $ 137,536 $ -- $ 73,266 $ 620,005 $ (1,196) $ (9,906) $ 610,099
=====================================================================================================
RESULTS
Operating loss $ (7,661) $ (19,290) $ -- $ (4,947) $ (31,898) $ (11,917) $ -- $ (43,815)
Depreciation and
amortization(c) (28,808) (18,667) -- (3,690) (51,166) (224) -- (51,390)
Amortization of program
and film rights -- (32,237) -- -- (32,237) -- -- (32,237)
Operating loss is stated
before the following items:
Exchange gains/(losses) 1,339 3,359 -- (1,516) 3,182 (3,738) -- (556)
Dividend income 2,573 -- -- -- 2,573 -- -- 2,573
Interest expense (40,333) (15,070) -- (3,064) (58,467) (15,501) 52,545(a) (21,423)
Interest income 4,129 832 -- 4,181 9,141 53,732 (52,545)(a) 10,328
Equity results in associates (2,053) -- -- -- (2,053) -- -- (2,053)
Equity results in
joint ventures (1,885) -- (32,694) (6,640) (41,219) -- -- (41,219)
Income taxation/(benefit) 520 1,694 -- (2,155) 59 250 -- 309
OTHER INFORMATION
Segment assets 362,843 213,288 107,616 137,376 821,123 712,663 (757,559)(b) 776,227
Investments in equity
companies 18,218 -- 50,706 -- 68,924 -- -- 68,924
Other investments at cost 1,190 -- -- -- 1,190 -- -- 1,190
Segment liabilities 529,697 324,936 -- 71,240 925,873 430,706 (757,559)(b) 599,020
Capital expenditure 5,091 4,495 -- 1,766 11,352 -- -- 11,352
</TABLE>
(a) Represents interest income and expenses on loans between group
companies in different segments and corporate that eliminate on
consolidation.
(b) Represents adjustments to the assets and liabilities for the
segments relating to inter-group loans which eliminate on
consolidation.
(c) Excludes amortization of program and film rights included in cost of
providing services and amortization of goodwill on equity method
investments included in equity results in joint ventures and equity
results in associates.
MIH LIMITED ANNUAL REPORT 1999 47
<PAGE>
MIH
- -------
LIMITED
- --------------------------------------------------------------------------------
NOTES TO THE CONSOLIDATED
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
(CONTINUED)
21. Segment and geographic information (continued)
<TABLE>
<CAPTION>
1998 Management of
television platforms Technology
----------------------- ----------
Africa Consoli-
and the Mediter- Segmental Reconciling dated
Middle East ranean total Corporate items total
----------- ----------- ----------- ----------- ----------- ----------- -----------
(thousands) (thousands) (thousands) (thousands) (thousands) (thousands) (thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
SALES
External sales $ 382,308 $ 106,403 $ 12,781 $ 501,492 $ -- $ -- $ 501,492
Inter-segment sales -- -- 4,719 4,719 -- (4,719) --
------------------------------------------------------------------------------------------
Total revenue $ 382,308 $ 106,403 $ 17,500 $ 506,211 $ -- $ (4,719) $ 501,492
==========================================================================================
RESULTS
Operating loss $ (4,901) $ (26,626) $ (3,035) $ (34,562) $ (8,165) $ -- $ (42,727)
Depreciation and amortization (c) (36,994) (18,243) (2,711) (57,948) (62) -- (58,010)
Amortization of program and
film rights -- (32,599) -- (32,599) -- -- (32,599)
Operating loss is stated before the
following items:
Exchange (losses)/gains (1,464) (8,042) 672 (8,834) 2,785 -- (6,049)
Dividend income -- -- -- -- 3,177 -- 3,177
Interest expense (46,890) (10,814) (555) (58,259) (1,825) 46,923(a) (13,161)
Gain on disposal of investments -- -- -- -- 2,647 -- 2,647
Interest income 3,078 474 1,647 5,199 49,001 (46,302)(a) 7,898
Equity results in associates (2,783) -- -- (2,783) -- -- (2,783)
Equity results in joint ventures (556) -- (4,535) (5,091) -- -- (5,091)
Income taxation -- (1,658) (2,777) (4,435) (3,135) -- (7,570)
OTHER INFORMATION
Segment assets 290,671 164,561 101,806 557,038 539,631 (450,614)(b) 646,055
Investments in equity companies 13,857 -- 6,239 20,096 -- -- 20,096
Other investments at cost 3,080 -- 1,004 4,084 52,840 -- 56,924
Segment liabilities 426,907 228,322 52,478 707,707 135,389 (450,614)(b) 392,482
Capital expenditure 23,356 7,085 1,223 31,664 -- -- 31,664
</TABLE>
(a) Represents interest income and expenses on loans between group
companies in different segments and corporate that eliminate on
consolidation.
(b) Represents adjustments to the assets and liabilities for the
segments relating to intergroup loans which eliminate on
consolidation.
(c) Excludes amortization of program and film rights included in cost of
providing services and amortization of goodwill on equity method
investments included in equity results in joint ventures.
22. Commitments and contingencies
(a) Loans
MultiChoice Africa is required to lend a joint venture an amount not
exceeding $1.5 million which represents 20% of a banking facility
available to fund the acquisition of decoders.
(b) Program and film rights and decoders
At March 31, 1999, the Company had entered into contracts for the
purchase of program, film and related rights and decoders. The
Company's commitments in respect of these contracts amount to $34.4
million (1998: $16.3 million) and $20 million (1998: $12.6 million),
respectively.
48 MIH LIMITED ANNUAL REPORT 1999
<PAGE>
MIH
-------
LIMITED
22. Commitments and contingencies (continued)
(c) Capital expenditure
The Company had capital expenditure commitments as at March 31, 1999
and 1998 of $3.3 million and $17.5 million, respectively.
(d) Lines of credit
At March 31, 1999 the Company had overdraft borrowing facilities of
$56 million and guarantee line facilities of $17.5 million in an
aggregate with various financial institutions.
(e) Loss insurance
The Company does not generally carry risk of loss insurance for
injury to others, damage to the property of others, or interruption
of its business operations.
(f) Guarantees
At March 31, 1999 the Company had guarantees of $10.3 million in
respect of office and line rental contracts. No losses are expected
to arise from these arrangements.
At March 31, 1999 the Company had various performance guarantees
issued on behalf of its affiliates. These guarantees relate to
obligations arising out of license agreements, the settlement of
which there is currently no limit, is determined at the time of
non-performance.
(g) Pledges and restrictions
At March 31, 1999 the Company pledged tangible fixed assets of $0.2
million, receivables of $5.4 million and cash and cash equivalents
of $3.8 million as security for certain lines of credit referred to
in (d) above.
23. Foreign currency management
The currencies of the countries in which the Company operates are also the
functional currencies. For these operations, all gains and losses from
foreign currency transactions are included in current results. The
cumulative translation effects for operations using functional currencies
other than the US dollar are included in the foreign currency translation
adjustment in shareholders' equity.
The Company uses foreign currency forward exchange contracts, which
typically expire within one year, to hedge payments of foreign currencies
related to the purchase of goods and services in currencies other than the
functional currency. Realized gains and losses on these contracts are
recognized in the same period as the hedged transactions. The Company had
foreign exchange forward contracts on hand at March 31, 1999 hedging South
African rand and Greek drachmae against the US dollar. The Company does
not currently hold or issue derivative financial instruments for trading
purposes.
The contractual amounts, exchange rates and settlement dates of the
outstanding contracts at March 31, 1999 are set out below:
<TABLE>
<CAPTION>
Contractual Average
amounts exchange
(thousands) rates Settlement dates
----------- -------- ------------------------------
<S> <C> <C> <C>
Greek drachmae/US dollar $ 2,000 320.34 April 26, 1999 to May 25, 1999
South African rand/US dollar 67,385 6.31 April 6, 1999 to June 1, 2000
</TABLE>
MIH LIMITED ANNUAL REPORT 1999 49
<PAGE>
MIH
- -------
LIMITED
- --------------------------------------------------------------------------------
NOTES TO THE CONSOLIDATED
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
(CONTINUED)
24. Fair value of financial instruments
The carrying amount of cash and cash equivalents approximates fair value
due to the short maturities of these instruments. The value of long-term
debt is estimated using discounted cash flows based on the Company's
incremental borrowing rates for similar types of borrowings. The value of
forward exchange contracts is based on quoted market prices. A comparison
of the carrying value and fair value of these instruments is as follows:
<TABLE>
<CAPTION>
March 31, 1999 March 31, 1998
-------------------------- ---------------------------
Carrying Carrying
value Fair value value Fair value
(thousands) (thousands) (thousands) (thousands)
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Assets:
Cash and cash equivalents $ 56,099 $ 56,099 $ 153,412 $ 153,412
Receivables 93,007 93,007 81,227 81,227
Marketable securities 1,190 1,190 56,924 104,817
Liabilities:
Payables and provisions 232,867 232,867 250,613 250,613
Short-term borrowings 117,486 117,486 59,199 59,199
Long-term debt 248,547 248,547 248,547 79,395
Off-balance-sheet instruments
Forward exchange contracts 70,885 67,457 47,576 45,999
</TABLE>
25. Pension funds
The Company has defined contribution plans covering employees of most of
its subsidiaries. The Company's contributions under these plans are based
primarily on the performance of the business units and employee
compensation. Total expense amounted to $3.7 million for 1999 (1998: $2.4
million).
26. Post-retirement benefits
MultiChoice Africa provides post-retirement benefits by way of medical aid
contributions. At March 31, 1999 and 1998 the provision for benefits is
$2.7 million and $3.8 million, respectively. During the year ended March
31, 1998 an agreement was reached with employees of MultiChoice Africa to
terminate the post-retirement medical aid benefits plan in exchange for an
increase of MultiChoice Africa's annual contributions to the retirement
benefit fund. The provision is released to operating results to match the
additional contributions to the retirement benefit plan.
50 MIH LIMITED ANNUAL REPORT 1999
<PAGE>
MIH
-------
LIMITED
March 31,
------------------------
1999 1998
(thousands) (thousands)
----------- -----------
27. Acquisition of subsidiaries, net of cash acquired
Fair value of tangible assets:
Fixed assets $ (7,094) $ (23,451)
Investments and loans -- (19,638)
Current assets (13,912) (25,127)
Current liabilities 16,752 40,865
Long-term liabilities -- 16,928
Minority interest 175 --
---------- ----------
(4,079) (10,423)
Carrying value of equity investment 107 --
Goodwill (47,810) (31,223)
---------- ----------
Consideration (51,782) (41,646)
Amounts owing in respect of investments acquired 37,282 --
Cash acquired 1,255 7,735
---------- ----------
Net cash paid for acquisitions $ (13,245) $ (33,911)
========== ==========
28. Share capital
On March 23, 1999 in anticipation of a public offering of securities by
the Company, shareholders authorized an amendment to the Company's
Articles of Association, whereby the Company's 22,789 ordinary shares with
a par value of $1 each converted into 7,447,681 Class A Ordinary Shares
with no par value and 30,787,319 Class B Ordinary Shares with no par
value. The two classes of shares generally have the same rights, except
that holders of Class B Ordinary Shares are entitled to three votes per
share and holders of Class A Ordinary Shares are entitled to one vote per
share. The conversion was accounted for as a stock split, therefore, all
shareholders' equity and share data in these financial statements have
been retroactively restated to reflect the conversion. Shareholders
authorized a total of 167,778,303 Ordinary Shares divided into 103,468,878
Class A Ordinary Shares, 55,920,509 Class B Ordinary Shares and 8,388,916
Preference Shares with no par value.
During April 1999, the Company issued 10,435,000 Class A Ordinary Shares
in an initial public offering for net proceeds of $174.7 million.
Simultaneously with the completion of the public offering the $46.2
million note payable to Thomson converted into 2,581,775 Class A Ordinary
Shares.
29. Differences between IAS and United States Generally Accepted Accounting
Principles
The Company's consolidated financial statements are prepared in accordance
with IAS, which differ in certain respects from accounting principles
generally accepted in the United States (US GAAP).
The only significant difference which affects the Company's results and
shareholders' equity relates to the accounting for its investment in UBC.
Under IAS the investment in UBC is carried at cost through June 30, 1998.
In June 1998 the Company increased its shareholding in UBC to
approximately 26.1% and, as a result, exercises significant influence in
UBC. Under IAS the Company thereafter applies the equity method of
accounting for UBC. US GAAP requires a retroactive adjustment of financial
statements for an investee that was previously accounted for on a basis
other than the equity method when that investee becomes qualified for use
of the equity method. The adjustment therefore reflects the effect of
applying the equity method to the investment in UBC determined under US
GAAP. The initial investment in UBC occurred in March 1997 and the effect
on the year ended March 31, 1997 is not material.
MIH LIMITED ANNUAL REPORT 1999 51
<PAGE>
MIH
- -------
LIMITED
- --------------------------------------------------------------------------------
NOTES TO THE CONSOLIDATED
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
(CONTINUED)
Year ended March 31,
----------------------------
1999 1998
----------- ------------
I Reconciliation of net loss and shareholders' equity
(in thousands, except per share data):
Net loss under IAS $ (68,839) $ (63,802)
US GAAP adjustment:
Equity accounting for UBC (5,193) (15,482)
----------- -----------
Net loss under US GAAP $ (74,032) $ (79,284)
=========== ===========
Weighted average common shares outstanding 38,235,000 38,235,000
=========== ===========
Net loss per share under US GAAP $ (1.94) $ (2.07)
=========== ===========
Net loss under US GAAP consists of:
Loss from continuing operations $ (70,203) $ (75,348)
Discontinued operations (3,829) (3,936)
----------- -----------
Net loss $ (74,032) $ (79,284)
=========== ===========
Per share amounts:
Continuing operations $ (1.84) $ (1.97)
Discontinued operations (0.10) (0.10)
----------- -----------
Net loss per share under USGAAP $ (1.94) $ (2.07)
=========== ===========
Reconciliation of shareholders' equity:
Total shareholders' equity under IAS $ 176,683 $ 253,573
US GAAP adjustment:
Equity accounting for UBC (29,930) (24,883)
----------- -----------
Total shareholders' equity under US GAAP $ 146,753 $ 228,690
=========== ===========
II Additional disclosure requirements
(a) Certain risks and concentrations
The Company is exposed to certain concentrations of credit risk
relating to its cash and current investments. The Company places its
cash and current investments with high-quality institutions. The
Company's policy is designed to limit exposure with any one
institution and to invest its excess cash in low-risk investment
accounts. The Company has not experienced any losses on such
accounts. As of March 31, 1999 cash and current investments were
held with numerous financial institutions.
The Company's digital programming is or will be transmitted to
customers through different satellites around the world, and in
certain regions its terrestrial analog signal is also transmitted to
regional broadcast points through satellites. In addition, the
Company receives a significant amount of its programming through
satellites. Satellites are subject to significant risks that may
prevent or impair commercial operations.
Although the Company has not experienced any significant disruption
of its transmissions, the operation of satellites is beyond the
control of the Company. Disruption of the transmissions of
satellites could have a material adverse effect on the Company.
52 MIH LIMITED ANNUAL REPORT 1999
<PAGE>
MIH
-------
LIMITED
II Additional disclosure requirements (continued)
(b) Stock-based compensation
Through March 31, 1999 MIH management and employees participate in
the Stock Option Plan (the Plan) of the Company's parent MIH
Holdings Limited (MIHH). Under the Plan, MIHH may grant options to
its employees for up to 26.4 million shares of MIHH's common stock.
Stock options may be granted with an exercise price not less than
100% of the market value of the options at the time of the grant.
One third of the options generally vest at the anniversary of each
of the third, fourth and fifth year after the grant date of the
stock options and expire after ten years. Unvested shares are
subject to cancellation upon expiration or termination of
employment.
<TABLE>
<CAPTION>
1999 1998
------------------------------- --------------------------------
Weighted Weighted
average average
exercise price exercise price
Shares (Rand) Shares (Rand)
--------- -------------- --------- --------------
<S> <C> <C> <C> <C>
Outstanding at April 1, 1998 and 1997 3,514,976 14.95 734,749 10.40
Granted 2,467,690 11.96 3,082,000 15.79
Exercised (393,523) 13.56 (150,856) 10.39
Forfeited (156,973) 16.15 (150,917) 14.47
--------- -------------- --------- --------------
Outstanding at March 31,1999 and 1998 5,432,170 14.01 3,514,976 14.95
========= ============== ========= ==============
</TABLE>
The following table summarizes information about the stock options
outstanding at March 31, 1999:
<TABLE>
<CAPTION>
Range of Outstanding Weighted Exercisable Weighted
exercise as of Remaining average as of average
price March 31, contractual life exercise price March 31, exercise price
(Rand) 1999 (years) (Rand) 1999 (Rand)
- ------------- ----------- ---------------- -------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
5.60 - 10.00 500,526 7.93 8.58 146,106 6.63
10.01 - 15.00 2,990,265 9.02 12.37 255,671 12.50
15.01 - 22.50 1,991,379 8.29 16.39
</TABLE>
For purposes of US GAAP, the Company applies Accounting Principles
Board (APB) Opinion 25, "Accounting for Stock Issued to Employees,"
and related interpretations in accounting for its plans.
Accordingly, no compensation cost has been recognized for its stock
option plan. Had compensation cost for the Company's stock option
plan been determined based on the fair value at the grant dates for
awards under those plans consistent with the method of SFAS No. 123,
"Accounting for Stock-Based Compensation," the Company's net loss
and loss per share would have been increased to the pro forma
amounts indicated below:
<TABLE>
<CAPTION>
Year ended Year ended
March 31, 1999 March 31, 1998
-------------- --------------
(in thousands except for per share data)
<S> <C> <C> <C>
Net loss As reported $ (68,839) $ (63,802)
Pro forma (70,079) (64,678)
Net loss per share As reported (1.80) (1.67)
Pro forma (1,83) (1.69)
</TABLE>
The weighted average grant date fair value of options granted during
fiscal 1999 was R6.19. The fair value of each option grant is
estimated on the date of grant using the Black-Scholes
option-pricing model with the following weighted-average assumptions
used for grants during fiscal 1999, respectively: dividend yield of
0%; expected volatility of 30%; an expected risk-free interest rate
of 14.9% and 12.7%, for 1998 and 1999, respectively; and an expected
life of six years.
On March 25, 1999, the Company established the MIH Limited Share
Scheme under which it may award options for no more than 10% of the
total number of Ordinary Shares.
MIH LIMITED ANNUAL REPORT 1999 53
<PAGE>
MIH
- -------
LIMITED
- --------------------------------------------------------------------------------
NOTES TO THE CONSOLIDATED
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
(CONTINUED)
II Additional disclosure requirements (continued)
(c) Restricted net assets
The net assets of certain of MIH Limited's subsidiaries and
associates are subject to regulatory restrictions with regard to the
transfer of such assets to MIH Limited in the form of loans,
advances or cash dividends without the consent of regulatory
authorities. The restrictions primarily relate to foreign exchange
control regulations in South Africa, which prescribe that South
African residents and companies are not permitted to export capital
from South Africa or to hold foreign currency without the approval
of the South African Reserve Bank. These exchange control
regulations effectively prevent MIH Limited from receiving
distributions from its South African subsidiaries, without
regulatory approval. The total net assets of subsidiaries subject to
such restriction as of March 31, 1999, amounts to approximately
$70.3 million (1998: $120.5 million).
The following are the condensed balance sheets and statements of
operations and cash flow for MIH Limited as of March 31, 1999 and
1998 and the years then ended. Investments in subsidiaries,
associated and joint venture companies are accounted for using the
equity method of accounting.
Balance sheets
<TABLE>
<CAPTION>
March 31,
---------------------------
1999 1998
(thousands) (thousands)
----------- -----------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 5,669 $ 89,226
Other receivables 2,207 --
Net amounts owing by related parties 4,525 5,370
----------- -----------
12,401 94,596
Non-current assets
Long-term investments 299,801 225,400
----------- -----------
Total assets $ 312,202 $ 319,996
=========== ===========
LIABILITIES
Current liabilities
Current portion of long-term debt $ 33,012 $ 23,984
Accrued expenses and other current liabilities 46,880 10,568
Amounts owing to related parties 55,627 --
Provisions -- 31,871
----------- -----------
Total liabilities 135,519 66,423
----------- -----------
SHAREHOLDERS' EQUITY
Share capital 589,552 589,552
Accumulated loss (382,386) (313,547)
Foreign currency translation adjustment (30,483) (22,432)
----------- -----------
Total shareholders' equity 176,683 253,573
----------- -----------
Total liabilities and shareholders' equity $ 312,202 $ 319,996
=========== ===========
</TABLE>
54 MIH LIMITED ANNUAL REPORT 1999
<PAGE>
MIH
-------
LIMITED
<TABLE>
<CAPTION>
Year ended March 31,
---------------------------
1999 1998
(thousands) (thousands)
----------- -----------
<S> <C> <C>
II Additional disclosure requirements (continued)
Statements of operations
General and administrative expenses $ (2,850) $ (6,587)
Financial results, net (4,181) 8,311
Equity results in associates, joint ventures and subsidiaries (92,901) (59,812)
Profit on sale of joint venture 31,093 --
-- (5,714)
----------- -----------
Net loss for the year $ (68,839) $ (63,802)
=========== ===========
Statements of cash flow
Net cash used in operating activities $ (2,850) $ (20,528)
----------- -----------
Disposal of investments -- 269,222
Acquisition of associates and subsidiaries (76,214) (103,474)
----------- -----------
Net cash used in investing activities (76,214) (165,748)
----------- -----------
Finance (cost)/income (4,181) 2,488
Dividends paid -- (51,816)
Bank overdrafts repaid -- (12,720)
----------- -----------
Net cash used in financing activities (4,181) (62,048)
----------- -----------
Net (decrease)/increase in cash and cash equivalents (83,245) 83,172
Cash and cash equivalents at beginning of year 89,226 6,728
Translation adjustment on cash and cash equivalents (312) (674)
----------- -----------
Cash and cash equivalents at end of year $ 5,669 $ 89,226
=========== ===========
</TABLE>
MIH LIMITED ANNUAL REPORT 1999 55
<PAGE>
MIH
- -------
LIMITED
- --------------------------------------------------------------------------------
NOTES TO THE CONSOLIDATED
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
(CONTINUED)
II Additional disclosure requirements (continued)
(d) Significant associates: summarized financial information
The following are the summarized balance sheets and statements of
operations for M-Net/SuperSport, as derived from its audited
financial statements and converted to US dollars.
M-Net/SuperSport
---------------------------
March 31,
---------------------------
1999 1998
(thousands) (thousands)
----------- -----------
Current assets $ 55,419 $ 157,300
Non-current assets 70,815 74,325
----------- -----------
Total assets 126,233 231,625
----------- -----------
Current liabilities 43,339 137,107
Non-current liabilities 5,944 29,586
----------- -----------
Total liabilities 49,283 166,693
----------- -----------
Total shareholders' equity 76,951 64,932
----------- -----------
Total liabilities and shareholders' equity $ 126,233 $ 231,625
=========== ===========
Year ended March 31,
---------------------------
1999 1998
(thousands) (thousands)
----------- -----------
Net sales $ 231,060 $ 216,971
Operating profit 23,596 28,053
Net profit 11,946 10,446
(e) Comprehensive income
<TABLE>
<CAPTION>
Year ended March 31,
------------------------------------------
1999 1998 1997
<S> <C> <C> <C>
Net (loss)/profit $ (68,839) $ (63,802) $ 409,164
Foreign currency translation adjustment (8,051) (32,461) 17,958
---------- ----------- -----------
Comprehensive (loss)/profit $ (76,890) $ (96,263) $ 427,122
========== =========== ===========
</TABLE>
56 MIH LIMITED ANNUAL REPORT 1999
<PAGE>
MIH
-------
LIMITED
II Additional disclosure requirements (continued)
(f) Recently issued accounting standards
SFAS No.133, "Accounting for Derivative Instruments and Hedging
Activities" is effective for fiscal years beginning after June 15,
1999. It will be effective for the Company's financial statements
for the year ended March 31, 2001 unless the required implementation
date is postponed by the FSAB. This statement establishes accounting
and reporting standards for derivative instruments, including
certain derivative instruments embedded in other contracts
(collectively referred to as derivatives), and for hedging
activities. It requires that an entity recognize all derivatives as
either assets or liabilities in the statement of financial position
and measure those instruments at fair value. If certain conditions
are met, a derivative may be specifically designated as (a) a hedge
of the exposure to changes in the fair value of a recognized asset
or liability or an unrecognized firm commitment, (b) a hedge of the
exposure to variable cash flows of a forecasted transaction, or (c)
a hedge of the foreign currency exposure of a net investment in a
foreign operation, an unrecognized firm commitment, an
available-for-sale security, or a foreign-currency-denominated
forecasted transaction. Management is currently assessing the impact
of adopting this statement on its financial statements.
In July of 1997 the International Accounting Standards Committee
(IASC) issued International Accounting Standard (IAS) 1 (revised)
"Disclosure of Accounting Policies". IAS 1 will be effective for the
Company's financial statements for the year ending March 31, 2000.
IAS 1 defines overall considerations for financial statements and
prescribes the minimum structure and content of four basic financial
statements (Balance sheet, Income statement, Cash flow statement,
and Statement showing changes in equity), including certain
information required on the financial statements. IAS 1 also
addresses various issues in disclosures in financial statements. The
Company believes that it has complied with the main provisions of
this standard and does not believe that this standard will have a
significant influence on the Company's financial statements.
The IAS has issued IAS 17 (revised 1997), "Leases", which supersedes
IAS 17, "Accounting for Leases" and is operative for financial
statements covering periods beginning on or after January 1, 1999.
The changes from the original IAS 17 do not fundamentally alter the
accounting treatments. The Company does not expect a material impact
on its financial statements as a result of adopting IAS 17 (revised
1997).
In January 1998 the IASC issued IAS 19 (revised 1998) "Employee
Benefits", which supersedes IAS 19 "Retirement Benefit Costs". It
will be effective for the Company's financial statements for the
year ending March 31, 2000. The revised standard applies a uniform
accounting model to pension benefits and other short-term employee
benefits such as compensated absences, as well as other
post-employment benefits and termination benefits. It also requires
disclosure of equity compensation benefits. IAS 19 (revised 1998)
also changes certain key provisions with respect to defined benefit
plans. For example, all companies must use the projected unit credit
method to measure their pension expense and pension obligation. The
Company is currently assessing the impact that this standard may
have on the Company's financial statements.
In June of 1998 the IASC issued IAS 35 "Discontinuing Operations".
IAS 35 will be effective for the Company's financial statements for
the year ending March 31, 2000. IAS 35 is a presentation and
disclosure standard. It requires that enterprises follow the
recognition and measurement principles in other IAS standards. The
standard defines the situations in which disclosures must be made by
the enterprise for a discontinuing operation. Appendices to IAS 35
also provide (a) illustrative disclosure and (b) guidance on how
prior period information should be restated to conform to the
presentation requirement of IAS 35. The Company believes that it has
complied with the provisions of this standard and does not believe
that this standard will have a significant influence on the
Company's financial statements.
In June of 1998 the IASC issued IAS 36 "Impairment of Assets". IAS
36 will be effective for the Company's financial statements for the
year ending March 31, 2001. IAS 36 establishes the procedures that
an enterprise should apply to ensure that its assets are not
overstated in the financial statements. It also prescribes the
method an enterprise should use to assess the amount to be recovered
from an asset and the timing when an enterprise should account for
an impairment loss. Under IAS 36, an impairment loss should be
recognized whenever the recoverable amount of an asset is less than
its carrying amount. The Company is currently assessing the impact
that this standard may have on its financial statements.
MIH LIMITED ANNUAL REPORT 1999 57
<PAGE>
MIH
- -------
LIMITED
- --------------------------------------------------------------------------------
DIRECTORATE AND ADMINISTRATION
- --------------------------------------------------------------------------------
Directors
T Vosloo (chairman)
J P Bekker
V G Bray
A A Coetzee
J H W Hawinkels
S G Oldfield
S J Z Pacak
L R Penfold
W J Raduchel
A M Rosenzweig
J D T Stofberg (chief executive)
Audit Committee Registered office
J P Bekker Abbott Building
V G Bray Road Town
S J Z Pacak Tortola
British Virgin Islands
Compensation Committee Registration number
T Vosloo IBC 47572
J P Bekker
Secretary www.mih.com
H Schibli
c/o Benfid Verwaltungs AG
Baarerstrasse 19
CH-6304 Zug
Switzerland
Auditors
PricewaterhouseCoopers Inc.
Transfer agent and registrar Paying agent
First Chicago Trust Company of New York Meas Pierson N.V.
Mail Suite 4690 Rokin 55
PO Box 2532 PO Box 243
Jersey City 1 000 AE Amsterdam
New Jersey Netherlands
07303-2532
58 MIH LIMITED ANNUAL REPORT 1999
<PAGE>
MIH
-------
LIMITED
- --------------------------------------------------------------------------------
NOTICE OF ANNUAL GENERAL MEETING
- --------------------------------------------------------------------------------
NOTICE IS HEREBY GIVEN that the annual general meeting of members of the company
will be held in the Mindport building, 56 Jupiterstraat, 2132 HD Hoofddorp, the
Netherlands on Monday October 4, 1999 at 14:30, for the following purposes:
Resolutions
1. To receive and consider the annual financial statements for the year ended
March 31, 1999, including the directors' report and the report of the
auditors thereon.
2. To elect directors in the place of Messrs T Vosloo, J P Bekker, V G Bray,
A A Coetzee, J H W Hawinkels, S G Oldfield, S J Z Pacak, L R Penfold, W J
Raduchel, A M Rosenzweig and J D T Stofberg, who retire at the conclusion
of this annual general meeting and, being eligible, offer themselves for
re-election in terms of the company's Articles of Association for a term
ending at the annual general meeting to be held
o in the year 2000: Messrs J P Bekker, V G Bray, S G Oldfield and W J
Raduchel
o in the year 2001: Messrs A A Coetzee, S J Z Pacak, L R Penfold and A
M Rosenzweig
o in the year 2002: Messrs J H W Hawinkels, J D T Stofberg and T
Vosloo.
3. To appoint PricewaterhouseCoopers Inc. as auditors until the next annual
general meeting.
4. To place, according to the terms of the Articles of Association of the
company, the fixing of the emoluments of directors with respect to
services to be rendered in any capacity to the company, under the control
of the directors.
5. To place the unissued shares, for the time being, in the capital of the
company, but excluding any shares for the issue of which specific
authority has been granted to the directors, under the control of the
directors, who may without limiting or affecting any rights previously
conferred on the holders of any existing shares or class or series of
shares, offer, allot, grant options over or otherwise dispose of shares to
such persons, at such times and upon such terms and conditions as the
company may by resolution of directors determine, subject to the
provisions of the British Virgin Islands law, the Memorandum and Articles
of Association and the rules and requirements of the Securities and
Exchange Commission (SEC), the Nasdaq National Market ("Nasdaq") and the
Amsterdam Stock Exchange (AEX).
Other business
6. To transact such other business as may be transacted at an annual general
meeting.
The close of business on August 6, 1999 has been fixed as the record date for
the meeting. All shareholders of record at that time are entitled to notice of
and are entitled to vote in person or by proxy at the Annual Meeting of
Shareholders and any adjournment or postponement thereof.
Each shareholder of the company who, being an individual, is present in person
or, being a company, is present by a representative at the annual general
meeting, is entitled, on a show of hands, to one vote. On a poll, each "A"
ordinary shareholder of the company, whether present in
MIH LIMITED ANNUAL REPORT 1999 59
<PAGE>
MIH
- -------
LIMITED
- --------------------------------------------------------------------------------
NOTICE OF ANNUAL GENERAL MEETING
- --------------------------------------------------------------------------------
(CONTINUED)
person or by proxy, is entitled to one vote for each "A" ordinary share held or
represented, and each "B" ordinary shareholder of the company, whether present
in person or by proxy, is entitled to three votes for each "B" ordinary share
held or represented.
Each shareholder of the company entitled to attend and vote at the annual
general meeting may appoint one or more proxies (none of whom need be
shareholder/s of the Company) to attend, speak and, on a poll, to vote in such
shareholder's stead. The completion and lodging of a form of proxy will not
preclude a member from attending, speaking and voting at the meeting to the
exclusion of the proxy so appointed.
A form of proxy is enclosed with this notice.
The form of proxy should be completed and returned to the company's secretary
(Mr Hans Schibli, Benfid Verwaltungs AG, Baarerstrasse 19, Postfach 4146, CH6304
Zug, Switzerland) to be received by no later than 14:30 on Friday October 1,
1999 or, shall be produced at the place appointed for the meeting one hour
before the time for holding the meeting at which the person named on the form of
proxy proposes to vote.
By order of the board
H Schibli
Company secretary
5 August 1999
60 MIH LIMITED ANNUAL REPORT 1999
