| Thu 23 Aug 2001, 0:00 | | Metropolis - Audited Results |
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Metropolis Transactive Holdings Limited
Registration Number: 1998/020783/06
*Metropolis Transactive Holdings Limited
ISIN: ZAE000016796
Audited group results FOR THE year ended 30 June 2001
Group income statement
Year ended Year ended
30 June 30 June
2001 2000
Notes R'000 R'000
Revenue 13 996 48 975
- Continuing operations 1 13 996 13 570
- Discontinued operations - 35 405
Cost of sales (5 366) (28 301)
Gross profit 8 630 20 674
Depreciation and amortisation (1 232) (8 701)
Employment costs (10 345) (26 273)
Other operating expenses (8 236) (33 737)
Loss before interest (11 183) (48 037)
Net interest received 557 4 387
Loss from operations (10 626) (43 650)
Exceptional items 2 15 266 (34 330)
Profit / (loss) before taxation 4 640 (77 980)
Taxation - (1 020)
Profit / (loss) after taxation 4 640 (79 000)
Profit / (loss) per share (cents) 4.2 (72.5)
Diluted profit / (loss)
per share (cents) 4.2 (66.3)
Headline loss per share (cents) (14.6) (45.5)
Diluted headline loss
per share (cents) (14.6) (41.6)
Calculation of headline loss
Profit / (loss) after taxation
as reported 4 640 (79 000)
Exceptional items:
- Profit on disposal of
businesses (15 650) (5 547)
- Profit on disposal of
Datatec shares - (457)
- Capital items (5 517) 35 434
- Delisting costs 400 -
Headline loss (16 127) (49 570)
Weighted number of
shares in issue 110 673 647 108 949 485
Fully diluted shares in issue 110 673 647 119 242 221
NOTES
R'000 R'000
1) Revenue - continuing operations
Includes compensation for
lost revenue of: 3 216 5 534
2) Exceptional items
Profit on disposal of Datatec shares - 457
Net profit on disposal of
discontinued operations 15 650 5 547
Profit / (loss) on discontinued
operations 16 (40 334)
Delisting costs (400) -
15 266 (34 330)
3) Interest bearing borrowings
This balance represents funding advanced by Primedia Limited who have agreed
to continue funding iafrica.com to an amount not exceeding R25 million.
4) Deferred taxation
The deferred taxation asset arising on the estimated assessed loss has not
been raised as it is currently unlikely that this will be utilised in the
foreseeable future.
5) Future lease commitments
The minimum lease payments/receipts under non-cancellable operating leases
are as follows:
Within one year 1 329 426
Thereafter 1 946 1 225
Amounts receivable under
sublease agreements:
Within one year (838) -
Thereafter (1 712) -
725 1 651
6) Capital commitments
Authorised but not contracted for 1 078 4 200
GROUP BALANCE SHEET
30 June 30 June
2001 2000
Note R'000 R'000
ASSETS
NON-CURRENT ASSETS 2 647 8 550
Property, plant and equipment 2 647 8 024
Intangible assets -
capitalised costs - 526
CURRENT ASSETS 3 399 33 058
Inventories - 82
Trade and other receivables 2 881 16 265
Cash and cash equivalents 518 16 711
TOTAL ASSETS 6 046 41 608
EQUITY AND LIABILITIES
CAPITAL AND RESERVES
Shareholders' deficit (781) (6 102)
Share capital and premium 47 629 47 629
Non distributable reserve 31 502 30 821
Accumulated loss (79 912) (84 552)
NON-CURRENT LIABILITY
Interest bearing borrowings 3 1 182 -
CURRENT LIABILITIES 5 645 47 710
Accounts payable and provisions 4 625 33 628
Taxation due 1 020 1 020
Vendor loans - 3 500
Deferred income - 9 562
TOTAL EQUITY AND LIABILITIES 6 046 41 608
Net deficit value per weighted
average share (cents) (0.7) (5.6)
Statement of changes in equity
For the year ended 30 June 2001
Non
distri- Accumu-
Share Share butable lated
R'000 capital premium reserve*** loss Total
Balance at
30 June 2000 1 107 46 522 30 821 (84 552) (6 102)
Profit for
the period - - - 4 640 4 640
Adjustment to
purchase price - - 681 - 681
Balance at
30 June 2001 1 107 46 522 31 502 (79 912) (781)
STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2000
Non
distri- Accumu-
Share Share butable lated
R'000 capital premium reserve*** loss Total
Balance at
30 June 1999 1 083 41 411 - (5 552) 36 942
Loss for
the period - - - (79 000) (79 000)
Adjustment to
purchase price - - 30 821 - 30 821
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)
***The non distributable reserve arose as a result of the write-back of
goodwill relating to the acquistion 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
Year ended Year ended
30 June 30 June
2001 2000
Notes R'000 R'000
CASH FLOWS FROM
OPERATING ACTIVITIES
Cash utilised in operations A (13 167) (35 682)
Net interest received 557 4 387
(Applied to) / derived
from working capital B (1 213) 1 256
CASH USED IN OPERATING
ACTIVITIES (13 823) (30 039)
CASH FLOWS FROM
INVESTING ACTIVITIES
Expenditure to maintain
operating activities
Proceeds on disposal of property,
plant and equipment - 435
Proceeds on disposal of
discontinued operations 22 163 517
Expenditure on discontinued
operations (22 615) -
Expenditure to expand
operating activities
Property, plant and
equipment acquired (281) (8 465)
Intangible assets acquired - (9 459)
Repayment of vendor loans (2 819) (1 076)
NET CASH USED IN
INVESTING ACTIVITIES (3 552) (18 048)
CASH FLOWS FROM
FINANCING ACTIVITIES
Issue of ordinary shares for cash - 135
Increase in / (repayment of)
borrowings 1 182 (90)
NET CASH GENERATED FROM
FINANCING ACTIVITIES 1 182 45
Decrease in cash and
cash equivalents (16 193) (48 042)
Cash and cash equivalents at
beginning of year 16 711 64 753
CASH AND CASH EQUIVALENTS
AT END OF YEAR 518 16 711
Notes to the cash flow statement
A. CASH UTILISED IN OPERATIONS
Profit / (loss) before taxation 4 640 (77 980)
Adjusted for:
Depreciation and amortisation 1 232 8 701
Investment income (773) (4 421)
Finance costs 216 34
Cash flow on sale of Datatec shares - 9 207
Compensation for lost revenue (3 216) (5 534)
Profit on sale of Datatec shares - (457)
(Profit) / loss on discontinued
operations (15 666) 34 787
Delisting costs 400 -
Profit on disposal of property,
plant and equipment - (19)
(13 167) (35 682)
B. (APPLIED TO) / DERIVED FROM
WORKING CAPITAL
Decrease in inventories - 118
Decrease in accounts receivable 707 1 543
Decrease in accounts payable
and provisions (1 900) (830)
(Decrease) / increase in
deferred income (20) 425
(1 213) 1 256
Group segmental Report
2001 2000
R'000 R'000
Revenue
B2B - 8 827
B2C 10 780 8 036
Info management - 26 578
Compensation for lost revenue 3 216 5 534
13 996 48 975
Loss before interest
B2B - (15 899)
B2C (14 399) (10 128)
Info management - 1 299
Compensation for lost revenue 3 216 5 534
Central - (28 843)
(11 183) (48 037)
Comments
Introduction
The operations of Metropolis* comprise iafrica.com, South Africa's leading
consumer internet portal.
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 a average month to an estimated market of 300 000
unique consumers.
Metropolis* is listed in the "Development Stage" sector of the JSE
Securities Exchange ("JSE").
Operational review
Metropolis* consolidated its operational focus after disposing of its
original Information Management Businesses, the transfer of the Business-to-
Business ("B2B") communities to VerticalNet and the closure of 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 2001 fiscal year. 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.
Results
Revenue from continuing operations (excluding the deferred revenue mentioned
below) grew 34,1% year on year from R8,0 million in 2000 to R10,8 million in
2001. The diluted headline loss per share of 14,6 cents includes 10,1 cents
relating to the loss from continuing operations. Comparable numbers for
losses before interest are not available as iafrica.com formed part of a
bigger corporate structure and the allocation of these shared costs cannot
be accurately determined retrospectively. There is no significant seasonal
impact on the operations of iafrica.com.
Due to the termination of the iafrica.com default home page setting on the
dial-up internet service provided by UU-Net SA, Datatec Limited ("Datatec")
compensated Metropolis* with R8,75 million to offset any potential loss of
revenue incurred during 2000 and 2001. R3,2 million was recognized during
the 2001 financial year (2000 : R5,5 million ).
Continued enhancements of systems have resulted in a substantial reduction
in operating costs which has facilitated a better-than-budget reduction in
headline losses for the year and the positive trend is expected to continue
into the coming financial year.
In addition to the loss before interest of R11,2 million, various
exceptional profits and losses were incurred during the period under review,
mainly consisting of the profit on the disposal of discontinued operations
of R15,6 million relating to the sale of the group's interest in Mead &
McGrouther as announced in September 2000.
Provision for the closure of the B2B operations was made in the prior
financial year disclosed as an exceptional item in the income statement. All
the actual expenses to date relating to this closure have been offset
against this provision. Marginal additional costs and possible recoveries
could still impact on this amount in the coming fiscal year, but these are
not expected to be material.
Accounting policies
The group complies with South African 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
A segmental report is presented for comparative purposes, as the business
now only comprises iafrica.com and its activities. No meaningful
geographical segments have been identified at this stage.
A breakdown of segmental assets and liabilities has not been presented as
these are common to all segments.
Dividends
In accordance with the group's policy, no dividends have been declared.
Prospects
The rate of growth in advertising revenues going forward remains uncertain
as advertisers continue to embrace this medium. iafrica.com is however
expected to decrease the operating loss even further in the coming year by
continually focusing on alternative revenue opportunities and strict cost
control initiatives.
Delisting
At present, Primedia Limited ("Primedia") and Datatec are the major
shareholders of Metropolis*, holding 49,18% and 19,70% of Metropolis*'s
shares, respectively.
Given the limited interest in small capitalisation companies on the JSE, the
lack of liquidity in the shares of Metropolis* and the costs associated with
maintaining a listing, there appears to be little justification for the
continued listing of Metropolis*. The directors of Primedia, Datatec and
Metropolis* are of the opinion that Metropolis* should be delisted and that
the minority shareholders should be given an opportunity to dispose of their
shares at an appropriate price.
It was therefore announced on SENS and in the press on 31 July 2001, that
Primedia and Datatec intend to propose a scheme of arrangement, in terms of
Section 311 of the Companies, Act, 1973, between Metropolis* and its
shareholders (other than Primedia and Datatec), to acquire those shares in
Metropolis* not owned by Primedia and Datatec in the same ratio in which
Primedia and Datatec hold their Metropolis* shares. Successful
implementation of the scheme will result in Primedia and Datatec becoming
the sole shareholders and funders of Metropolis*. In addition Metropolis*
will be delisted from the JSE.
Going concern
As the facilities committed by Primedia and Datatec are adequate to fund
iafrica.com to break even, the directors are satisfied that it is
appropriate to prepare these results on a going concern basis.
On behalf of the board
Sean Hirschowitz
Chief Executive Officer
23 August 2001
