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MNY
MNY
MNY - Moneyweb - Unaudited Condensed Financial Results For The Six Months
Ended 30 September 2008
Moneyweb Holdings Limited
(Incorporated in the Republic of
South Africa)
(Registration No: 1998/025067/06)
(JSE code: MNY ISIN code:
ZAE000025409)
("Moneyweb" or "the company" or
"the group")
Salient features
UK law suit settled, but costs lead to
headline loss for period
Strong growth in core online audiences
to over 175 000
Sale of Moneyweb UK website at top of
the market
Cost cutting completed; running expenses
reduced by 17,5%
Radio headline sponsorship secured from
October 2008
UNAUDITED CONDENSED FINANCIAL RESULTS FOR THE SIX MONTHS
ENDED 30 SEPTEMBER 2008
Condensed Group Income Statement
Unaudited Unaudited Audited
6 months 6 months 12 months
30-Sep-08 30-Sep-07 31-Mar-08
R`000 R`000 R`000
Revenue 9 846 12 355 23 915
Advertising 9 255 11,792 22 917
Newsletters 591 563 998
(Loss) / Profit before investment (1 197) 1 614 2 267
income, fair value adjustment,
depreciation, amortisation and
impairments
Depreciation and amortisation (431) (376) (627)
Investment income 213 23 111
Fair value adjustment of (6) - (6)
investment
Profit on disposal of intangible 1 860 - -
asset
Net profit before taxation 439 1 261 1 745
Taxation (44) (387) (366)
Net profit for the period 395 874 1 379
Reconciliation of headline
earnings
Net profit for the period 395 874 1,379
Fair value adjustment on 6 - 6
investments
Profit on disposal of intangible (1 860) - -
asset
Profit on disposal of tangible - - (7)
assets
Headline earnings (1 459) 874 1 392
Earnings per share (cents) 0.52 1.32 1.98
Fully diluted earnings per share 0.52 1.32 1.98
(cents)
Headline (loss) / earnings per share (1.91) 1.32 2.00
(cents)
Fully diluted headline (loss) / earnings (1.91) 1.32 2.00
per share (cents)
Number of shares (000`s)
- Issued closing (net of 76 189 66 060 76 189
treasury)
- weighted average 76 189 66 127 69 453
- fully diluted weighted average 76 255 66 193 69 594
Condensed Group Balance Sheet
Unaudited Unaudited Audited
30-Sept- 30-Sept- 31-Mar-08
08 07
ASSETS R`000 R`000 R`000
Non-current assets
Tangible assets 907 979 1,036
Intangible assets 2 420 1 299 2 169
Other investment 11 23 18
Deferred taxation 225 250 225
3 563 2 552 3 448
Current assets
Trade and other receivables 8 652 5 294 6 640
Cash and cash equivalents 5 695 3 603 7 372
14 347 8 897 14 012
Total assets 17 910 11 448 17 460
EQUITY AND LIABILITIES
Capital and reserves
Share capital and premium 11 932 4 938 11 933
Retained earnings 2 328 2 099 2 698
Ordinary shareholders` interest 14 260 7 037 14 631
Non-current liabilities
Current liabilities
Trade and other payables 2,656 3,564 2,300
Deferred revenue 718 600 304
Income tax payable 276 247 225
3,650 4,411 2,829
Total equity and liabilities 17,910 11,448 17,460
Net asset value per share (cents) 18.7 10.7 19.2
Net tangible asset value per 15.5 8.7 16.3
share (cents)
Condensed Group Statement of Changes in
Equity
Share Share Retained Total
capital premium earnings
R`000 R`000 R`000 R`000
Balance at 1 April 2007 67 5 102 1 980 7 149
Net profit for the year ended 31 1 379 1 379
March 2008
Ordinary dividend paid (660) (660)
New issue 9 6 981 6 990
Treasury shares purchased (227) (227)
Balance at 1 April 2008 76 11 856 2 699 14
631
Net profit for the six months ended 30 395 395
September 2008
Ordinary dividend paid (766) (766)
Balance at 30 September 2008 76 11 856 2 328 14
260
Condensed Group Cash Flow
Statement
Unaudited Unaudited Audited
6 months 6 months 12 months
30-Sep-08 30-Sep-07 31-Mar-08
R`000 R`000 R`000
Cash flows from operating
activities
Cash generated by operations (783) 1 880 2 229
Movements in working capital (1 657) 1 254 (1 358)
Cash generated by operating (2 440) 3 134 871
activities
Investment income 213 23 104
Taxation paid 7 (358) (332)
Dividend paid (766) (754) (660)
Net cash flows from operating (2,986) 2,045 (17)
activities
Cash flows from investing
activities
Acquisition of intangible assets (447) (499) (1 704)
Acquisition of tangible assets (105) (632) (632)
Proceeds on disposal of 1 860 - -
intangible assets
Proceeds on disposal of tangible - - 20
assets
Net cash flows from investing 1,308 (1,131) (2,316)
activities
Cash flows from financing
activities
Shares issued - - 6 319
Sale of treasury shares - - 693
Acquisition of treasury - (231) (227)
shares/shares cancelled
Net cash flows from financing - (231) 6 785
activities
Net movement in cash and cash (1 678) 683 4 52
equivalents for the period
Cash and cash equivalents at 7 372 2 920 2,920
beginning
Cash and cash equivalents at end 5 695 3 603 7 372
of period
Financial results
The directors of Moneyweb present the unaudited financial results for the
six months ended 30 September 2008 ("the interim period") which were
disappointing due to once-off events.
As discussed in the CEO`s letter to shareholders in the 2008 annual
report, the company`s offshore operation Mineweb.com was the subject of a
legal action after it published a series of articles written in late 2007
by its Russian correspondent.
Legal fees incurred in defending and then settling the action are
responsible for the company reporting a headline loss of R1,459 million
(1,91 cents per share) for the interim period.
By order of the High Court of England and Wales, details of the
substantial settlement paid by the company are confidential. However,
there is no further liability for shareholders as the entire cost of the
settlement and legal fees of R1,3 million have been accounted for in
expenses in the interim period.
On a brighter note, in April 2008 the company sold its Moneyweb.co.uk web
address to a mortgage originator at the top of the market. The sale was
concluded ahead of the onset of the financial crisis. A capital profit of
R1,86 million was realised on the transaction.
The positive impact of the website address sale reduced losses incurred in
respect of the law suit. This resulted in the company reporting pre-tax
profit of R439 000 for the half year, down 65% from R1,26 million for the
comparative period. Net profit for the period was R395 000, down 55% from
the comparative period.
At end of September 2008, the company`s financial position was sound with
cash balances of R5,7 million, net current assets of R10,7 million and no
debt.
Operational activities
The internet operations continued to post strong audience growth.
According to Google Analytics, the core audience of www.moneyweb.co.za
exceeded 100 000 for the first time in September 2008, a year-on-year gain
of 69,5%. The company defines its core audiences as unique visitors to the
home page of the website - ie those individuals who type
www.moneyweb.co.za into their browsers. By eliminating casual visitors,
this measure is comparable to dedicated readers of a newspaper or
magazine.
Success of a strategy to create self-standing titles off the flagship
website is best reflected in Mineweb.com, whose core audience surpassed
55 000 in September 2008- a staggering 215% year-on-year growth in this
key matrix and a credit to London-based Lawrie Williams and his team. The
globalisation of the business is complete and today non-South Africans
account for 93% of Mineweb`s audience and more than two thirds of the
advertising revenues. Mineweb`s partnership with Canadian-based
Infomine.com, secured in January 2008, is providing benefits on the
audience and financial level for both parties.
Changes have been made to the structure and management of Mineweb to
ensure there is no repeat of the legal problems. Shortly after settlement
of the law suit, an approach by Russian parties to acquire Mineweb was
seriously considered but rejected as the site is now an integral part of
the company`s operations.
Of the new titles launched last year, Jackie Cameron`s Realestateweb has
been the top performer, having built a self-standing core audience of more
than 7 000. Both Politicsweb and Moneywebtax have now created sufficient
traction to suggest they, too, have bright futures. The niched
Marketingweb serves a discerning core audience of almost 9 000, and
continues to contribute positively to the company`s profits. Sportingweb
is being persevered with, even though finding the key to unlocking a
sizeable audience is proving elusive.
In September, the core audiences of the company`s seven websites hit a
record 179 180 according to Google Analytics, virtually double that of a
year ago. Perhaps the most pleasing aspect is that Moneyweb.co.za`s share
of the total is down to 56%, emphasising the success of a strategy to use
the flagship as a base from which to launch self-standing, sustainable
titles serving their own niche audiences.
From May 2008, the flagship radio programme has been broadcast on the
nation`s news and information leading radio station SAFM, the natural home
for Moneyweb`s content. Radio operations were further expanded through the
introduction of a 15 minute Market Update with Moneyweb programme on Lotus
FM, the third such partnership with a national FM station. The company
decided not to renew the annual contract with the satellite television
channel CNBC Africa when it expired at the end of May 2008.
Business combinations
During the interim period, the company finalised its R800 000 investment
to acquire a 50% stake in Editors Inc, publishers of SA At A Glance, a
highly regarded pocket-book of facts, data and information.
Prospects
Shareholders were advised in the annual report that as a result of the
impact of the law suit and investments committed to the continued
development of the Moneyweb Community, management would be aiming for a
break-even result at the headline earnings level for the full financial
year to end March 2009.
The improved financial prospects are the result of two focused actions.
Since June 2008, a thoroughgoing campaign has been engaged to re-assess
all expenses in the business. "Bezzle" equivalent to 17,5% of the monthly
costs have been identified and steadily eliminated from the business
without any impact on the quality of service delivered to the Moneyweb
Community. The programme is now complete. The lower cost base is
sustainable.
On the revenue side, from the beginning of October, Moneyweb secured a
headline sponsor of the company`s three radio programmes. This long-term
commitment brings back the kind of revenue stability which had been
missing from the business during the past year.
Moneyweb continues investing heavily in preparation for South Africa`s
entry into the Broadband world. Management is hard at work exploring
acquisition and growth opportunities to optimise the company`s
positioning.
The red letter day is 17 June 2009, when Seacom`s undersea cable opens for
business, increasing by 120 times the supply of broadband to South Africa.
Seacom`s price list promises to reduce the country`s expensive broadband
costs by 90%. This will have a huge impact on the Internet sector
generally, including Moneyweb`s core business of online publishing.
Changes to the board of directors
The board has accepted with regret the resignation of non executive
director Victor Nosi. Victor is a key member of the team at the SA
Football Association preparing for the country`s hosting of the 2010 World
Cup and because of the pressures involved in that role, has found it
impossible to dedicate the time required. His energy, enthusiasm and
counsel, so valued since he joined the board in March 2001, will be
missed.
Dividend policy
In line with group policy no dividend has been declared for the interim
period.
Post balance sheet events
There are no material events subsequent to the end of the interim period
that have not been reflected in the interim financial statements or that
require further disclosure.
Basis of preparation
Statement of compliance
The condensed financial statements comprise a consolidated balance sheet,
a consolidated income statement, consolidated statement of changes in
equity and consolidated cash flow statement for the six months ended 30
September 2008.
The condensed financial statements have been prepared in accordance with
the recognition and measurement criteria of International Financial
Reporting Standards (IFRS) and the presentation and disclosure
requirements of IAS 34, Interim Financial Reporting, JSE Listings
Requirements and South African Companies Act.
The same accounting policies and methods of computation are followed in
the interim financial statements as compared with the annual financial
statements for the year ended 31 March 2008.
Basis of measurement
The condensed financial statements have been prepared on the historical
cost basis with the exception of certain financial instruments that are
stated at fair value.
Going concern
The condensed financial statements have been prepared on the going-concern
basis since the directors have every reason to believe that the company
has adequate resources in place to continue in operation for the
foreseeable future.
Alec Hogg
CEO
17 November 2008
Corporate Information
Non executive directors: A Smith (Chairman); E A Jay; L Sipoyo
Executive directors: A B Hogg (CEO); L M Hogg
Registration number: 1998/025067/06
Registered address: First Floor, West Wing President Place, Corner Jan
Smuts Avenue and Bolton Road, Rosebank, 2196
Postal address: PO Box 102, Parklands, 2121
Company secretary: D G Wessels
Telephone: (011) 327 1277
Facsimile: (011) 327 1279
Transfer secretaries: Computershare Investor Services (Pty) Limited
Auditors: BDO Spencer Steward (Jhb) Inc
Designated Adviser: Vunani Corporate Finance
Date: 17/11/2008 14:58:01 Produced by the JSE SENS Department.
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