| Wed 9 May 2001, 0:00 | | Moneyweb, Sa's Internet Success Story Continues |
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MONEYWEB HOLDINGS LIMITED
* EBITDA rises 107%,
* Organic revenue + 97%
* Headline eps up 41%, positive cash flows
* Strong balance sheet - positioned for more growth
General overview:
This has been another exceptional year for Moneyweb, reflecting its ability to
successfully exploit opportunities presented by convergence between New and Old
Media. The audited financial results for the 12 months to end March 2001 are
especially pleasing because of the way they help differentiate Moneyweb's
profit-first approach from the land-grab attitude employed by many
Internet-based businesses.
The core of the business is flourishing. By the end of the financial year, more
than 45 000 people were accessing the company's network of websites every
month. In terms of audited page impressions, which measure usage of websites,
Moneyweb is officially the fastest growing Internet operation in South Africa.
Advertising revenues have flowed as a direct result of this success.
Progress has been made on a number of other fronts. Among the most important of
these was the securing of a distribution platform for Moneyweb's radio
programming on Classic FM. The decision to switch the company's award winning
business programme to its new broadcast partner also paid off handsomely.
Revenues from this source trebled in the year under review and the number of
listeners reached has risen significantly.
The globalisation strategy was also accelerated. TheMiningweb.com, the
company's international on-line venture, has established itself as one of the
leading mining websites in the world. Such has been the development of this
side of the business that theMiningweb.com's future no longer requires the
introduction of a joint venture partner, as had previously been mooted.
During the year, the company also established a physical presence in both New
York and London. The greenfields development of MoneywebUSA.com was abandoned
in favour of a more focused global effort. This followed a deal in January
which secured management and editorial control of one of Britain's longest
established personal finance websites, the seven-year-old Moneyweb.co.uk.
Locally, the high quality of the content produced by Moneyweb's editorial team
was acknowledged in its awarding the premier content partner contract for the
Liberty Group/Standard Bank on-line venture Mylife@bluebean.com
Late in the financial year, a joint venture was launched with the Mail &
Guardian newspaper to introduce the weekly investment insert, Rands & Sense. In
the on-line arena, joint ventures were secured with South Africa's leading
marketing journalists to launch Marketingweb.co.za; and with the country's best
investigative financial journalist to create DeonBasson.co.za.
There were two significant disappointments during the year. Primary one was the
failure of the contractors to install the new Customer Relationship Management
system within deadline. The delay forced a six-month postponement of the plan
to launch a marketing campaign on the revamped financial newsletters acquired
with the Prescon deal in March 2000. This affected the contribution from the
newsletter side of the business.
Also, no revenue was generated from the syndication of Moneyweb's radio
programme to the Western Cape and KwaZulu-Natal. This was a result of an
inability of the partner stations' in-house sales teams to sell sufficient
advertising in the allotted time slot.
Financial results:
Organic growth in the business, reflected through revenues generated by the
core Internet and Broadcasting activities, rose 97%. With the newsletter
business now contributing for a full 12 months, total revenue was 169% higher
at almost R11 million. Internet advertising accounted for 46% of the total
revenue; newsletter subscriptions 33%; and income from broadcasting 13%. The
balance was split between income from on-line content licences; the
independently managed list broking operation; and e-commerce.
The best indication of the part year's performance is reflected in growth at
the EBITDA line which more than doubled, with the operating profit margin
holding comfortably above 30%. In last year's annual report, shareholders were
cautioned about the impact of the company's prudent accounting approach of
writing off development costs in new ventures over just two years. This
resulted in the depreciation charge more than trebling during the 12 months
under review.
In spite of the obvious impact of the rapid write-offs of investment in new
projects, Moneyweb's headline earnings per share rose by a pleasing 41%,
helping to emphasise the difference between Moneyweb and the mass of "dot-com"
failures.
The company's cash position of R9,1m remains healthy with the past year's
positive operating cash flow of R3,2 million funding investments of a similar
quantum.
Future:
The Internet remains the cornerstone upon which Moneyweb is built. Growth
opportunities in this arena far exceed those available from mature Media
channels. A balance to the company's earnings, however, is provided by
contributions from more traditional print and broadcasting activities. In the
past financial year, revenues were split almost exactly between New and Old
Media. It is likely that the balance will sway towards New Media in future.
The well-publicised shakeout among Internet ventures appears to have worked to
the advantage of market leaders. All of the websites in the Moneyweb network
are projecting healthy improvements once more in the financial year to March
2002, with Moneyweb.co.za anticipating another year of strong revenue growth.
Partnerships which would bolster the flagship website's data and
transaction-based offerings are close to being finalised.
Sustained growth of the South African operations has provided a solid platform
from which to pursue the strategy of moving into the international arena. In
light of the Group's international focus, careful consideration is being given
whether to exercise the option to pay GBP 130 000 in January 2002 to effect the
proposed acquisition of Moneyweb.co.uk.
Further revenue generating opportunities are being explored to expand the
relationship with Classic FM. This partnership has benefited both parties, with
Classic FM budgeting a modest profit for the current financial year after
losing money since its start-up in 1997. Further to the announcement published
in the press on 6 June 2000, Moneyweb shareholders are advised that approval by
the Independent Broadcasting Authority for the acquisition by Moneyweb of a
strategic interest in Classic FM (Proprietary) Limited was received during
April 2001. All the conditions precedent to this acquisition have been
fulfilled. The 5 000 000 consideration shares issued to Liberty Group Limited
as consideration for the acquisition were listed on the JSE Securities Exchange
South Africa on 12 April 2001.
Moneyweb's 19.6% share of Classic FM will be equity accounted into its 2002
financial results. There have also been promising developments on the
syndication front following the appointment by the Western Cape and KZN
broadcasting partners of a new sales house.
Although the birth pains have been intense, the introduction of the new
Customer Relationship Management system is expected to make a significant
contribution in the current year. Apart from facilitating more efficient
interaction with the Moneyweb Community, it will also enable the company to
launch a marketing campaign for of its much-improved financial newsletters.
From the longer-term perspective, the new listings requirements of the JSE
Securities Exchange of SA requires that to retain a main board listing,
companies will need to post R8 million in pre-tax profit by 2004.
After taking into account the impact of depreciation (which will rise
significantly again this year before dropping dramatically in 2003), Moneyweb's
management is confident that as it is currently structured, organic growth will
exceed the average of 35% a year needed to meet this requirement. It remains
the desired objective of the team, however, to accelerate the company's growth
by securing assets at the right price. Opportunities are likely to flow from
the current consolidation of South Africa's media industry.
Directorate:
It was with great regret that we bade farewell to Moneyweb's non-executive
chairman Andrew Smith who resigned after accepting a position with Arthur
Andersen, which does not permit its partners to be directors of other
companies. Independent lawyer Edwin Jay, senior partner of Johannesburg-based
legal firm Jay Incorporated, has been appointed to the Moneyweb board of
directors.
Accounting Policy:
These consolidated audited financial statements are prepared in accordance with
Statement AC 127 Financial Reporting. The accounting policies used in the
preparation of the financial statements are consistent with those used in the
annual financial statements for the year ended 31 March 2000 save for the
write-off of goodwill.
Dividend:
In line with the company's rapid growth strategy, no dividend has been declared
and it is unlikely that one will be forthcoming in the current financial year
to end March 2002. In spite of healthy cash flows, Moneyweb Holdings is still
at the early stage of its development. The directors are, however, mindful of
the desire by shareholders to receive cash dividends so, in the absence of a
major acquisition, are targeting to declare a maiden dividend in the financial
year to end 2003.
AB Hogg
Chief executive
9 May 2001
Consolidated Income Statement
Audited Audited
31-Mar-2001 31-Mar-2000 % Change
R 000's R 000's
Revenue 10 817 4 023 169%
EBITDA 3 454 1 665 107%
Depreciation 1 051 273 285%
Profit before interest
and tax 2 402 1 392 73%
Interest Received 831 754 10%
Profit before Tax 3 234 2 146 51%
Taxation 795 570 39%
Headline Earnings 2 439 1 576 55%
Headline EPS 3,1 2,2 41%
*Goodwill amortisation 13 193 -
*Profit after tax and goodwill
amortisation (10 755) 1 576
*EPS after Goodwill Amortisation (13,4)
* This is a non-operating item. It relates to Goodwill arising on acquisitions,
primarily at the listing of the company. The goodwill is written off over 5
years
CASH FLOW STATEMENT
Audited as at Audited as at
31 March 2001 31 March 2000
R 000's R 000's
Cash flows from operating
activities
Cash generated by operations 3 454 1 665
Movements in working capital (294) (433)
Cash generated by operating
Activities 3 160 1 232
Investment income 831 754
Deferred revenue (390) 113
Taxation Paid (104) (70)
-
Net cash flows from operating
Activities 3 497 2 029
Cash flows from investing activities
To expand operations
Acquisition of Fixed Assets (1 851) (2 155)
Acquisition of subsidiary &
equity investment (1 132) (6 111)
Net cash flows from investing
Activities (2 983) (8 266)
Cash flows from financing activities
Long term liability (150)
Amount paid in respect of
deferred payment for subsidiary (520) 12
Proceeds of share issue 14 985
Net cash flows from financing
activities (520) 14 847
Net movement in cash and
cash equivalents for the period (6) 8 610
Cash and cash equivalents at
Beginning 9 133 -
Cash acquired during the year - 523
Cash and cash equivalents
at end of period 9 127 9 133
NOTES TO THE CASH FLOW STATEMENT
31-Mar-2001 31-Mar-2000
R 000's R 000's
1 Cash generated by operations
Profit before taxation 3 234 2 146
Adjustments
Investment Income (831) 754
Depreciation and Amortisation 1 051 273
Movements in provisions -
3 454 3 173
2 Increase in working capital
Increase in trade and other
Receivables (1 004) (779)
Decrease in net amount by group
companies
Increase in trade and other
Payables 710 345
(294) (434)
3 Taxation Paid
Amounts owing at the beginning
of the year (59) (70)
Amounts charged per the
Income Statement (795) 104
Movement in Deferred Tax 30
Amounts owing at the end
of the year (795) (104)
Amounts paid (104) (70)
4 Purchase of Moneyweb uk
Moneyweb Holdings Limited
purchased 100% of the shares
in Moneyweb UK effective 1 January 2001
Fixed Asset 53
Cash and Bank (3)
Accounts Receivable
Accounts Payable (38)
Receiver of Revenue
Long Term Liability
Goodwill
12
Goodwill 513
Purchase Consideration 524
Less : Cash Acquired 3
521
Consolidated Balance Sheet
Audited as at Audited as at
31 March 2001 31 March 2000
ASSETS
Non-Current Assets
Fixed Assets 2 914 004 2 061 000
Investments 1 563 364 1 000 000
Current Assets
Trade and Other receivables 2 208 014 1 204 000
Cash 9 126 639 9 133 000
Receiver of Revenue - 45 000
11 334 653 10 382 000
Total Assets 15 812 021 13 443 000
EQUITY AND LIABILITIES
Capital and reserves
Share capital and premium 73 784 000 73 784 000
Goodwill (53 330 749) (65 967 000)
20 453 251 7 817 000
Accumulated profit (9 178 169) 1 576 000
Foreign currency translation
Reserve 596
Share Capital and Reserves 11 275 677 9 393 000
Non-current liabilities
Long term liabilities 0 625 000
Deferred taxation 496 245 466 000
496 245 1 091 000
Current Liabilities
Trade and other payables 2 095 788 1 345 000
Deferred revenue 445 928 836 000
Short term borrowing 778 782 674 000
Receiver of Revenue 719 601 104 000
4 040 099 2 959 000
Total equity and liabilities 15 812 021 13 443 000
Check 0 -
Moneyweb Holdings Limited
Consolidated Balance Sheet
Audited as at Audited as at
31 March 2001 31 March 2000
R 000's R 000's
ASSETS
Non-Current Assets
Fixed Assets 2 914 2 061
Investments 1 563 1 000
Current Assets
Trade and Other receivables 2 208 1 204
Cash 9 127 9 133
Receiver of Revenue - 45
11 335 10 382
Total Assets 15 812 13 443
EQUITY AND LIABILITIES
Capital and reserves
Share capital and premium 73 784 73 784
Goodwill (53 331) (65 967)
20 453 7 817
Accumulated profit (9 178) 1 576
Investments 1 563 1 000
Share capital and reserves 11 276 9 393
Non-current liabilities
Long term liabilities - 625
Deferred taxation 496 466
496 1 091
Current Liabilities
Trade and other payables 2 096 1 345
Deferred revenue 446 836
Short term liabilities 779 674
Receiver of Revenue 720 104
4 040 2 959
Total equity and liabilities 15 812 13 443
Statement of Changes in Shareholder's Equity
Year to 31 March 2001 Year to 31 March 2000
R 000's R 000's
Balance at beginning of
the period 9 393 -
Net profit for the period 2 439 1 576
Issue of ordinary shares - 80
Share premium 13 193 74 326
Goodwill arising (556) (65 967)
Goodwill write off (13 193) -
Share issue expenses - (622)
11 276
