Multichoice profits dive sharply lower

Multichoice (Cyprus) Public Co. (MCC) delivered a disappointing but widely expected deterioration in profitability, mostly on the back of the shift to a digital platform and one-off charges related to a dispute with Lefkoniko as well as the return of cash to shareholders, which forced interest income lower.

Total turnover rose by 7.1% year-on-year to CYP 13.1 mln on the back of the sale of digital decoders and the subscription of new digital subscribers. The total number of subscribers declined to 59,701 from 60.372 in March 2004, the first setback in recent years as the arrival of new competitors started to take its toll on subscriber growth figures.

Increased fixed costs associated with operating the digital platform NOVA Cyprus weighed on the Company’s cost base. Fixed costs were also burdened by the subsidisation cost of digital subscribers.

Earnings before interest, depreciation and tax (EBITDA) fell 37% y/y to CYP 1.7 mln with profitability margins deteriorating to 12.9% from 22% a year ago.

Net Finance Income stood at CYP 280.000 vs. CYP 487.000 in 2003/04, down by 42.4%, affected by the total capital return of 12 cent per share (7 cent in January 2005 and 5 cent in September 2004).

Net profit posted a 93.7% y/y decrease to CYP 171.000 compared to CYP 2.7 mln a year ago, burdened by lower net finance income of CYP 280.000 and the one off provision of CYP 1.64 mln relating to the claim against the Investment Group of Cooperative Companies Lefkoniko Ltd with respect to a guaranteed (capital plus interest) fund management

agreement, which Lefkoniko is not in a position to refund.

MCC has announced that it has initiated a legal case against Lefkoniko, claiming its money back.