| Mon 19 Feb 2001, 0:00 | | Metropolis* Interim Results |
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*Metropolis Transactive Holdings Limited
Registration Number: 1998/020783/06
interim results FOR THE SIX MONTHS ended 31 DECEMBER 2000
Group income statement
Six months Six months Year
ended ended ended
31 Dec. 31 Dec. 30 June
2000 1999 2000
(unaudited) (unaudited) (audited)
Notes R'000 R'000 R'000
Revenue 7 732 22 405 48 975
- Continuing operations 1 7 732 4 931 13 570
- Discontinued operations - 17 474 35 405
Cost of sales (1 153) (13 912) (28 301)
Gross profit 6 579 8 493 20 674
Operating expenses (12 899) (28 455) (60 010)
Depreciation and
amortisation (674) (3 531) (8 701)
Loss before interest (6 994) (23 493) (48 037)
Net interest received 16 2 835 4 387
Loss from operations (6 978) (20 658) (43 650)
Exceptional items 2 15 959 457 (34 330)
Profit / (loss) before
taxation 8 981 (20 201) (77 980)
Taxation - - (1 020)
Profit / (loss) after
taxation 8 981 (20 201) (79 000)
Earnings/(loss)
per share (cents) 8.1 (18.7) (72.5)
Diluted earnings/(loss)
per share (cents) 8.1 (15.5) (66.3)
Headline loss per
share (cents) (11.5) (19.1) (45.5)
Diluted headline loss
per share (cents) (11.5) (15.9) (41.6)
Calculation of headline loss
Profit/(loss) after taxation
as reported 8 981 (20 201) (79 000)
Exceptional items:
- Profit on disposal of
businesses (16 300) - (5 547)
- Profit on disposal of
Datatec shares - (457) (457)
Capital items (5 402) - 35 434
Headline loss (12 721) (20 658) (49 570)
Weighted number of
shares in issue 110 673 647 108 305 577 108 949 485
Fully diluted shares
in issue 110 673 647 130 305 827 119 242 221
NOTES
1) Revenue
Includes revenue
compensation of: 2 353 1 737 5 534
2) Exceptional items
Profit on disposal of
Datatec shares - 457 457
Net profit on disposal of
discontinued operations 16 300 - 5 547
Loss on discontinued
operation - B2B (341) - (40 334)
15 959 457 (34 330)
3) Deferred taxation
The deferred taxation asset arising
on the estimated assessed loss
has not been raised as it is unlikely that
this will be utilised in the foreseeable future.
4) Future lease commitments
The minimum lease payments under
non-cancellable operating
leases are as follows:
Within one year 877 2 202 426
Thereafter 2 046 4 179 1 225
2 923 6 381 1 651
5) Capital commitments
Authorised but not
contracted for 943 12 772 4 200
GROUP BALANCE SHEET
31 Dec. 31 Dec. 30 June
2000 1999 2000
(unaudited) (unaudited) (audited)
R'000 R'000 R'000
ASSETS
NON-CURRENT ASSETS 3 244 25 137 8 550
Property, plant and
equipment 3 244 12 326 8 024
Intangible assets
- capitalised costs - 12 811 526
CURRENT ASSETS 10 778 56 908 33 058
Inventories - 52 82
Trade and other receivables 6 592 12 656 16 265
Cash resources 4 186 44 200 16 711
TOTAL ASSETS 14 022 82 045 41 608
EQUITY AND LIABILITIES
CAPITAL AND RESERVES
Shareholders' funds /
(deficit) 3 560 51 955 (6 102)
Share capital and premium 47 629 42 494 47 629
Non distributable reserve 31 502 35 404 30 821
Accumulated loss (75 571) (25 753) (84 552)
Shareholder loans - (190) -
NON-CURRENT LIABILITIES
Non-interest bearing borrowings - 5 000 -
Interest bearing borrowings - 52 -
CURRENT LIABILITIES 10 462 25 038 47 710
Accounts payable and
provisions 8 579 12 136 37 128
Taxation due 1 020 212 1 020
Deferred income 863 12 690 9 562
TOTAL EQUITY AND
LIABILITIES 14 022 82 045 41 608
Net asset value / (deficit) per
weighted average share (cents) 3.2 48.0 (5.6)
STATEMENT OF CHANGES IN EQUITY
Non Accumu-
Share Share distributable lated Shareholder
capital premium reserve** loss loans Total
R'000 R'000 R'000 R'000 R'000 R'000
Balance at
31 December 1999 1 083 41 411 35 404 (25 753) (190) 51 955
Net loss for
the period - - - (58 799) - (58 799)
Adjustment to
purchase price - - (4 583) - - (4 583)
Expense
re-imbursements - - - - 190 190
Share issue expenses - (19) - - - (19)
Issue of share
capital 24 5 130 - - - 5 154
Balance at
30 June 2000 1 107 46 522 30 821 (84 552) - (6 102)
Net profit for
the period - - - 8 981 - 8 981
Adjustment to
purchase price - - 681 - - 681
Balance at
31 December 2000 1 107 46 522 31 502 (75 571) - 3 560
**The non distributable reserve arose as a result of the write-back of goodwill
relating to the acquisition of Gibson Dax. This was due to the changes in the
purchase price of the business, as a result of vendors not achieving warranted
profits.
GROUP CASH FLOW STATEMENT
Six months Six months Year
ended ended ended
31 Dec. 31 Dec. 30 June
2000 1999 2000
(unaudited) (unaudited) (audited)
Notes R'000 R'000 R'000
CASH FLOWS FROM
OPERATING ACTIVITIES
Cash utilised in operations A (8 673) (12 492) (35 682)
Net interest received 16 2 835 4 387
(Utilised in) / derived from
working capital B (102) (3 435) 1 256
CASH USED IN
OPERATING ACTIVITIES (8 759) (13 092) (30 039)
CASH FLOWS FROM
INVESTING ACTIVITIES
Expenditure to maintain
operating activity
Proceeds on disposal of
property, plant and equipment - - 435
Proceeds on disposal of businesses 22 345 - 517
Expenditure on discontinued
operation - B2B (23 011) - -
Expenditure to expand operating activity
Property, plant and equipment
acquired (281) (5 421) (8 465)
Intangible assets acquired - (1 850) (9 459)
Repayment of vendor loans (2 819) - (1 076)
NET CASH USED IN
INVESTING ACTIVITIES (3 766) (7 271) (18 048)
CASH FLOWS FROM
FINANCING ACTIVITIES
Issue of ordinary shares for cash - - 135
Repayment of borrowings - (190) (90)
NET CASH (UTILISED IN) /
GENERATED FROM
FINANCING ACTIVITIES - (190) 45
Decrease in cash and cash
equivalents (12 525) (20 553) (48 042)
Cash and cash
equivalents at beginning of year 16 711 64 753 64 753
CASH AND CASH
EQUIVALENTS AT END OF YEAR 4 186 44 200 16 711
NOTES TO THE CASH FLOW STATEMENT
A. CASH UTILISED IN OPERATIONS
Profit / (loss) before taxation 8 981 (20 201) (77 980)
Adjusted for:
Depreciation and amortisation 674 3 531 8 701
Investment income (95) (2 837) (4 421)
Finance costs 79 2 34
Net compensation for lost revenue (2 353) 7 013 3 216
Net (profit) / loss on disposal of
discontinued operations (15 959) - 34 787
Profit on disposal of
property, plant and equipment - - (19)
(8 673) (12 492) (35 682)
B. (UTILISED IN) / DERIVED
FROM WORKING CAPITAL
(Increase) / decrease in
inventories & other current assets - (859) 118
(Increase) / decrease in accounts
receivable (2 028) 721 1 543
Increase / (decrease) in accounts
payable and provisions 1 946 (3 053) (830)
(Decrease) / increase in deferred
income (20) (244) 425
(102) (3 435) 1 256
comments
Profile
The operations of Metropolis* comprise iafrica.com, South Africa's leading
consumer internet portal, and a recently launched application service provider
(ASP) division.
iafrica.com delivers a mix of quality content and service, community and
commerce, to high end LSM 7&8 users. Over 18 million pages of internet content
are delivered in an average month to an estimated market of more than 300 000
consumers.
Metropolis* is listed in the "Development Stage" sector of the JSE Securities
Exchange.
Operations review and results
Metropolis* consolidated its operational focus after disposing of its original
Information Management businesses, transferring its B2B communities to
VerticalNet and closing its B2B division. As announced in September 2000, all
activities relating to B2B operations were discontinued at 30 June 2000. As a
result, no contribution to operating loss was made by B2B during the six months
ended 31 December 2000. The management team focused on the growth of
iafrica.com. In addition, a number of new joint venture e-commerce agreements
were concluded and the "Private Label" ASP division launched. Turnover from
these initiatives will enhance iafrica.com's performance and improve the
diversification of revenue sources.
Enhanced systems have resulted in a substantial reduction in operating costs
which has facilitated a better than budget reduction in headline losses for the
period.
The loss from operations of R7,0 million was slightly better than budget and
the positive trend is expected to continue for the remaining six months of the
financial year.
Due to the termination of the iafrica.com default home page setting on the
dial-up internet service provided by UU-Net Internet Africa, Datatec has
compensated Metropolis* with R8,75 million to offset any potential loss of
revenue incurred during 2000 and 2001.
Revenue (excluding the deferred revenue mentioned above) grew 68% compared to
the same period last year. The diluted loss per share of 11,5 cents includes
6,3 cents relating to the loss from continuing operations. Comparable numbers
for losses from operations are not available as iafrica.com formed part of a
bigger corporate structure and the allocation of these shared costs cannot be
accurately determined. There is no significant seasonal impact on the
operations of iafrica.com.
In addition to the loss from operations of R7,0 million, various non-trading
profits and losses were incurred during the period under review mainly
consisting of the profit on the disposal of discontinued operations of R16,3
million relating to the sale of the group's interest in Mead & McGrouther as
announced in September 2000.
A provision for the closure of the B2B operations was made in the prior
financial year. All the actual expenses to date relating to this closure have
been offset against this provision resulting in a net shortfall of R0,3
million, which has been disclosed as an exceptional item. Only marginal
additional costs and possible recoveries could still impact on this amount in
the coming six months, but these are not expected to be material.
Shareholder support
Primedia Limited, the group's largest shareholder, has reconfirmed its
financial support for the company for a further 12 months. Consideration is
also being given to various alternatives for the funding of iafrica.com until
it reaches profitability.
Accounting Policies
The group complies with Statements of Generally Accepted Accounting Practice.
The accounting policies and methods of computation applied by the group are
consistent with those applied in the previous periods.
Segmental reporting
No segmental report is presented, as the business only comprises iafrica.com
and its activities. No meaningful business or geographical segments have been
identified at this stage.
Restatement of prior year revenue
In the previous financial period, gross revenue was recognised on the sale of
Dialog products. As the agreement with Dialog is in the form of an agency
agreement, this has been changed in the 2000 results and only the commission
earned on the sales has been included in revenue. As a result the comparative
figures have been restated as follows:
R'000
Six months ended 31 December 1999 as previously
disclosed 24 409
Restatement noted above (2 004)
1999 revenue now disclosed 22 405
Dividends
In accordance with the group's policy, no interim dividends have been declared.
Prospects
Metropolis* expects performance in the second half of the financial year to be
consistent with the progress made in the interim period.
Cautionary announcement
Shareholders are advised that negotiations are in progress which could result
in an offer to Metropolis* shareholders and the delisting of Metropolis*.
Shareholders are advised to exercise caution in trading in Metropolis* shares
until a further announcement is made.
On behalf of the Board
Mike Braby
Chief Executive Officer 19 February 2001
