M-Net should not hide its real results behind its=20 restructuring, argues Jacques Magliolo
ELECTRONIC Media Networks (M-Net) produced poor results=20 for the third year running, and directors are hiding=20 behind the incomparability of financial statements.=20
The company’s preliminary report states: “Results for=20 the year ended March 31 1994 include businesses now=20 housed in MultiChoice and are thus not comparable to=20 those reported for the year ended 31 March 1995.”
Under universal trends of greater disclosure, this is=20 simply not good enough. Financial results are=20 computerised and management can easily release=20 additional information to the public. M-Net should have=20 issued a press release stating what this year’s results=20 would have been had the restructuring not taken place.
Industrial giant Barlow did that with its 1995 results.=20 Last year’s unbundling of major assets Reunert and C G=20 Smith left the group significantly different. However,=20 management was able to include with their preliminary=20 statement a press release explaining to shareholders=20 how the group would have done had the unbundling not=20 taken place.
If a group with a market capitalisation (issued shares=20 multiplied by share price) of R7,7-billion can provide=20 this greater disclosure, then M-Net and MultiChoice=20 with a combined value of R2,6-billion must be able to=20 do the same.
M-Net’s turnover fell by 15,6 percent to R523-million,=20 operating profit reduced by 39 percent to R50-million=20 and attributable profit declined by 59 percent. This=20 translates into a dividend payment of six cents a share=20 compared to last year’s nine cents. The company has=20 dipped into reserves to offer shareholders a bonus=20 dividend of three cents.
Maybe it is unfair to criticise M-Net and investors=20 should look at the pay television company’s results=20 together with those of MultiChoice? After all, if the=20 shares were linked then the combined payout to=20 shareholders in the form of dividends would make up for=20 M-Net failing the comparability test.
No luck there either. MultiChoice’s 1995 results shows=20 that, despite turnover growth to R1,1-billion (1994:=20 R375-million), it still made an operating loss of=20 R131,8-million (loss of R36,8-million). An=20 extraordinary item of R705,6-million failed to lift=20 bottom-line results out of the red. Per share=20 MultiChoice displayed a loss of 53,7 cents (loss of 9,6=20 cents). Obviously, no dividend has been declared.
The question is, how long will shareholders stay=20 faithful without comparable results upon which to base=20 their investment decisions?