Page 22 - SCS May 2018 - Day 2 Tasks

CIMA MAY 2018 – STRATEGIC CASE STUDY

Reference Materials –article from Mayland Independent News.

More grief for the streaming sector

Coming on the back of last week’s publication of the disappointing results for MovieMaster,
yesterday’s announcement of HomeVideo’s results added to the worries of shareholders in the
internet broadcasting sector. Like MovieMaster, HomeVideo had issued a profit warning in
February but the final figures were considerably worse than the market was expecting.

A reasonable increase in revenue of 10% was more than offset by a massive 30% rise in operating
expenses resulting in the operating profit falling by just over 16%. This was further compounded
by a huge 77% increase in finance charges caused by the large debt issue earlier in the year
leading to a fall in profit after tax of almost 26% (M$138million).

The share price initially fell by 25% on the news, but later recovered slightly to close the day down
21%. This on top of the 15% fall when the profit warning was issued.

One analyst said “Coming after MovieMaster, this is pretty disastrous news for the internet
broadcasting industry. We await with interest the results from the biggest player, Couchweb, but
I’m sure we will see some consolidation in the sector on the back of this. It’s just a matter of
who’s going to bid for whom.”

36 KAPLAN PUBLISHING