| Tue 31 Jul 2001, 0:00 | | Netactive Limited - Audited Annual Results For The |
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Registration number 1998/006000/06
Incorporated in the Republic of South Africa
("Netactive")
Audited Annual Results for the year ended 30 April 2001
INCOME STATEMENTS
for the year ended 30 April 2001
Group Company
2001 2000 2001 2000
R'000 R'000 R'000 R'000
Continuing operations
(Loss)/profit (1855) (1130) -
Revenue 29012 14081 - -
Cost of sales (8506) (5478) - -
Gross profit 20506 8603 - -
Operating expenses (22361) (9733) - -
Discontinuing Operations
(Loss)/profit (7333) 35018 - -
Revenue 23939 28450 - -
Cost of sales (12470) (13279) - -
Gross profit 11469 15171 - -
Operating expenses (18362) (31432) -
Operating (loss)/profit (6893) (16261) - -
(Loss)/profit on discontinuance (440) 51279 - -
Sundry income 472 - - -
Continuing 352 - - -
Discontinuing 120 - - -
Net interest received 7333 4808
Continuing 7339 4819 - -
Discontinuing (6) (11) - -
Minority interest - (33) - -
(Loss)/profit for the year (1383) 38663 - -
Earnings/(loss) per share (cents) (0.94) 26.49
Fully diluted earnings/(loss)
per share (cents) (0.88) 24.82
Headline earnings/(loss)
per share (cents) 0.14 (8.47)
BALANCE SHEETS
as at 30 April 2001
Group Company
2001 2000 2001 2000
R'000 R'000 R'000 R'000
Assets
Non-current assets 4951 4283 46125 46125
Equipment 4631 3138 - -
Intangible assets 320 1145 - -
Subsidiaries - - 46125 46125
Current assets 81960 92163 19 19
Inventories 46 248 - -
Trade and other receivables 13043 4241 19 19
Cash and cash equivalents 68871 87674 - -
Total assets 86911 96446 46144 46144
Equity and liabilities
Capital and reserves 77044 78427 46144 46144
Issued share capital 312 312 312 312
Share premium 45832 45832 45832 45832
Accumulated profits 30900 32283 - -
Current liabilities
Trade and other payables 9867 18019 - -
Total equity and liabilities 86911 96446 46144 46144
Number of ordinary shares
in issue ('000) 146530 146530
Net asset value per ordinary
share (cents) 53 54
CASH FLOW STATEMENTS
for the year ended 30 April 2001
Group Company
2001 2000 2001 2000
R'000 R'000 R'000 R'000
Cash flows from operating
activities (15147) 1786 - -
Cash generated/(utilised) by
continuing operations (2605) (1306) - -
Cash received from customers 27308 13420 - -
Cash paid to suppliers
and employees (29913) (14726) - -
Cash generated/(utilised) by
discontinuing operations (19875) (1716) - -
Cash received from customers 16623 27450 - -
Cash paid to suppliers
and employees (36498) (29166) - -
Cash generated/(utilised)
by operations (22480) (3022) - -
Net interest received 7333 4808 - -
Cash flows from investing
activities (1989) 42282 - (647)
Additions to equipment (4365) (7419) - -
Additional investment in subsidiary - - - 647
Proceeds from sale of business 2376 56337 - -
Purchase of businesses (7000) - -
Proceeds from sale of equipment 364 - -
Cash flows from financing
activities (1667) 8724 - 647
Net proceeds from issue of shares 7211 - 647
Short term financing included
in creditors (1667) 1667 - -
Movement in minority interest - (154)
Net (decrease)/increase in cash
and cash equivalents (18803) 52792 - -
Cash and cash equivalents at
beginning of year 87674 34882 - -
Cash and cash equivalents
at end of year 68871 87674 - -
STATEMENTS OF CHANGES IN EQUITY
for the year ended 30 April 2001
Group Company
2001 2000 2001 2000
R'000 R'000 R'000 R'000
Changes in share capital
shares issued - 23 - 23
Changes in share premium
On shares issued - 13478 - 13478
Issue expenses - (790) - (790)
Goodwill and trademark written off - (12064) - (12064)
Changes in accumulated profits
Net (loss)/profit for the year (1383) 38663 - -
Net increase/(decrease) in equity (1383) 39310 - 647
Equity at the beginning of
the year 78427 39117 46144 45497
Equity at end of year 77044 78427 46144 46144
Nature of Business
NetActive has re-focused its business on providing innovative managed
Internet services to the mid-tier corporate market. This focus is in line
with global trends that recognise that superior returns can be generated in
the corporate, as opposed to consumer sector. This followed the sale of the
group's home user subscriber base to M-Web, and the subsequent exit
strategies from its consumer-focused interests.
NetActive's mission is to turn the Internet into a source of competitive
advantage for our customers by leveraging talent and technology. By
fostering intimate customer relationships, NetActive is able to understand
the intricacies of our customers' business and provide effective solutions.
The value proposition delivered to our customers is based on superior
customer service, offering our clients excellent relationship management and
solution innovation all under the security of a trusted brand.
NetActive has combined a state-of-the-art call center, a fully equipped
controlled environment data center, a redundant International network,
national points-of-presence, and deep Internet skills, with partners who
share a similar commitment to customer satisfaction. These partners include
Cisco, Telkom, Microsoft, IBM and Canon.
Operational Review
Over the past year, NetActive has embarked on alternative exit strategies
for its consumer focused business units that do not form part of its core
strategy, leading to the disposal of NetParent, Teleflorist and the
discontinuation of the Virtual Internet services (VISP).
NetFlorist will continue to provide a multi-channel Internet-based retail
ordering and delivery mechanism for flowers and gifts both in South Africa
and abroad. NetActive intends to dispose of NetFlorist to an investor who
can develop the business further.
NetActive's core business of providing managed Internet services includes
the provision of:
Connectivity Solutions such as Virtual Private Network (VPN) services,
Dedicated Leased-Line connectivity, Shared Dial Access and Single Dial
Access; and
Hosting services through Dedicated Hosting, Co-Location Hosting, Shared
Hosting, Domain Name Registration and E- Commerce.
These services have achieved strong growth in the past financial year, with
annuity income increasing by more than 100%.
Business growth will be achieved at NetActive through a combination of
organic, partnership and acquisitive opportunities. The focus over the next
year will be on growing our share of customer, and share of market for
Managed Internet Services. In order to achieve this growth, the board has
approved the operating expenditure required in order to acquire new
customers, build the NetActive brand in the mid tier corporate market, as
well as further develop the competencies required to service this customer
base. The benefits of these investments will be realised over the medium
term.
This growth strategy will impact the short term profitability of the group,
but will be building the underlying value of the group by developing the
critical mass required to realise economies of scale.
Financial review
A net loss amounting to R1,383m was incurred for the financial year, after
recognising net interest income of R7,333m. A loss of R7,333m was incurred
from discontinuing operations. These discontinuing operations include
NetParent, NetFlorist, Teleflorist and Virtual Internet services (VISP).
Revenue from continuing operations for the year increased by 109% from
R13,9m to R29 million. These continuing operations include the managed
Internet services referred to above. A loss of R1,855m was incurred in
continuing operations, as a result of investments made into training,
systems development and the strengthening of the sales and marketing team.
These investments will enable NetActive to continue its growth strategy for
the year ahead.
The balance sheet is sound, with no interest bearing debt. Cash balances
reduced from R87,6m to R68,8m. This reduction arose largely from the
repayment of Vat liabilities owing from the sale of the home user subscriber
base to M-Web in the last financial year; the payment of the final
instalment of the purchase price owing to Ixchange for the acquisition of
Netchauffeur, an increase in trade receivables, of which a significant
portion has been collected subsequent to the year end, and capital
expenditure for the twelve months ended 30 April 2001.
Resolution of amounts due in terms of the agreement between M-Web and
NetActive has not been achieved. Discussions between the companies are
taking place in order to resolve this issue, which has not been quantified
at this stage.
In accordance with company policy, no dividend will be paid as surplus funds
will be reinvested to support ongoing growth.
Prospects
NetActive aspires to create a customer-centric, performance-based culture,
where people are encouraged to be innovative, build strong, personal
relationships and to `go the extra mile'.
The solid organic growth expected will provide a solid platform, which will
enable the group to leverage acquisitive opportunities in the future. Our
aim is to identify businesses that can add value to NetActive in terms of
growing our client base and add to our best-of-breed technologies.
The group has the necessary financial, entrepreneurial and intellectual
resources to achieve and execute this plan within an industry that is
revolutionising the global economy.
We would like to take this opportunity of thanking our customers, employees,
management team and business partners for their ongoing support and
commitment.
NetActive's strategy will allow the group to have greater focus, leverage
core competencies and deliver on its customer value proposition in order to
create lifetime connections with customers and sustain its competitive
advantage.
For and on behalf of the board
COLIN HALL LAWRENCE BRICK
Chairman Chief Executive Officer
30 July 2001
TRANSFER SECRETARIES Computershare Services (Pty) Ltd, 2nd Floor Edura
House, 41 Fox Street, Johannesburg 2001
REGISTERED OFFICE Block C, Sandhavon Office Park, 18 Pongola Crescent,
Sandton.
www.netactive.co.za email: investorrelations@na.co.za
DIRECTORS: C HALL (CHAIRMAN)*, L BRICK (CEO), PH BACHER (CFO), JA HACKNER, L
PASLOVSKY , JH STASKUN, S LEGGATT*, H ROSTOWSKY*, R VAN RENSBURG*, R
INSKIP*, I
STURROCK+, I DRY++, C LOUW+++, *NON-EXECUTIVE +ALTERNATE TO
C HALL ++ ALTERNATE TO R VAN RENSBURG, +++ALTERNATE TO R INSKIP
COMPANY SECRETARY: K JAMBELA
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