| Tue 19 Feb 2002, 0:00 | | Moneyweb Holdings Limited - Trading Update |
|
MONEYWEB HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 98/25067/06)
(Share code: MNY ISIN code: ZAE 0000 25409)
("MoneyWeb" or "the company")
Over the past few months, the local and international media sector has
experienced its most difficult period in recent memory. This is a direct
result of the sharp decline in advertising expenditure stemming from the
drop in business confidence after the September 11 terrorist attack in New
York. The timing of the attack was particularly unfortunate with many
advertisers adopting a "wait and see" approach on bookings until the New
Year.
Although Moneyweb was aided by strong growth from international activities
and steady income from newsletter publishing which dominate their niches,
the core local businesses were hurt by the broader developments in December
and especially January. In addition, the company has experienced its first
bad debts due to the failure of an advertising agency and one direct client.
Fortunately this appears to have been a temporary aberration as advertising
revenues recovered strongly in February and bookings are healthy for coming
months. A policy directive has been implemented to ensure that future
bookings will only be accepted from fully accredited advertising agencies.
On a broader scale, the directors have been actively seeking ways to more
efficiently utilise the company's share capital, particularly its R7 million
cash holding. To this end, a decision has been made to establish Miningweb
in Australia's mining capital, Perth, to complement its existing physical
presence in Johannesburg, New York and London. The Business Plan requires an
investment of R1,2 million in the Australian operation until self funding
status is achieved by end 2003. A bid has also been made to acquire an
international mining magazine. If successful, this would require an
investment of a further R1,6 million.
While Moneyweb intends participating in consolidation which is sure to
follow, owing to the difficulties currently being experienced by media
companies, with more than R4 million in cash not earmarked for investment,
the directors believe the company has the resources to declare a maiden
dividend at the end of the current financial year. This and future dividends
will be covered three times by cash earnings.
As a result of these developments, and the impact this has on projections
communicated in the interim results, Moneyweb's board of directors would
like to inform shareholders that:
EBITDA and cash earnings for the year ending March 2002 are likely to be
around 15% below those reported in the year ended March 2001.
Cash earnings for the year will be at least 3,5c a share from which a maiden
dividend of at least 1c a share will be paid.
Shareholders are reminded that the non-cash writeback of investments made in
establishing the company's on-line brands will peak in the current financial
year. There is no change to the aggressive approach towards writing back
(amortising) the prior year development costs over two years, which means
that in the current financial year almost R1,5 million will be offset
against pre-tax profit.
This doubling in the non-cash amortisation charge and the impact of lower
advertising in December and January will result in the published headline
earnings per share figure falling to approximately 1,5c for the year ending
March 2002 (2001: 3,1c).
After this year's write-off of previous development costs, the balance on
this account to be offset in the following two years totals R1,38 million.
The decline in this non-cash item together with a recovery of advertising
revenues in February positions the company well for a resumption of strong
headline earnings per share growth in the coming financial year.
Market acceptance of the company's core on-line products is pleasing. In
January, the Moneyweb network recorded audited page impressions of 1,3
million from 121 000 unique visitors, both figures surpassing the previous
highest for a month set last November (1,27 million and 91 000). The
momentum has continued during February suggesting that new records will
again be achieved this month.
AB Hogg
Chief Executive
Johannesburg
20 February 2002
