| Mon 23 Jun 2003, 14:56 | | Moneyweb - Audited Group Results For The Year Ende |
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Moneyweb - Audited Group Results For The Year Ended 31 March 2003
MONEYWEB HOLDINGS LIMITED
("Moneyweb")
(Registration No:1998/025067/06)
Share code:MNY ISIN:ZAE000025409
SUMMARY OF AUDITED GROUP RESULTS FOR THE YEAR ENDED 31 MARCH 2003
The annual report in respect of the year ended March 2003, containing an
unqualified audit report from our auditors, KPMG, and prepared in accordance
with South African statements of Generally Accepted Accounting Practice on a
basis consistent with that of the prior year, has been completed and will be
mailed to shareholders today. The audit opinion is available for inspection at
the Company"s registered office.
* Media focus - Electronic and Print
* Revenue grows 12%
* Headline earnings up by 23%
* Positive cash flows from operating activities
* Strong balance sheet - positioned for more growth
Moneyweb Holdings Limited
Consolidated Income Statement
Audited Audited
31 March 2003 31 March 2002 % Change
R"000 R"000
REVENUE 15,500 13,806 12%
EBITDA 1,941 3,021 -36%
Depreciation -499 -475 -5%
Amortisation of development costs -914 -1,453 37%
PROFIT FROM OPERATIONS 528 1,093 -52%
Net investment income 526 597 -12%
Income from associate
(net of taxation) 1,033 175 490%
Exceptional items -126 -118 -7%
PROFIT BEFORE GOODWILL
AMORTISATION 1,961 1,747 12%
Goodwill amortisation* -15,081 -13,559 -11%
NET LOSS BEFORE TAXATION -13,120 -11,812 -11%
Income tax expense -461 -547 16%
NET LOSS FOR THE YEAR -13,581 -12,359 -10%
LOSS PER SHARE (cents) -16,0 -14,5 -10%
HEADLINE EARNINGS PER SHARE (cents) 1,9 1,6 19%
DIVIDENDS PER ORDINARY SHARE (cents) 1,0 -
Reconciliation of headline earnings:
Net loss for the year -13,581 -12,359
Goodwill amortisation* 15,081 13,559
Other items of a capital nature 126 118
Headline earnings 1,626 1,318 23%
*This is a non-operating item. It relates to goodwill arising on acquisitions,
primarily at the time of the listing of the company. The goodwill is written
off over 5 years.
Note: All per share calculations have been based on 85,000,000 shares in issue
in respect of 31 March 2003 and 31 March 2002.
Moneyweb Holdings Limited
Consolidated Balance Sheet
Audited as at Audited as at
31 March 2003 31 March 2002
R"000 R"000
ASSETS
Non-current assets
Furniture and equipment 1,001 807
Intangible assets 929 1,258
Investment in associates 1,208 175
Other investment 10 -
3,148 2,240
Current assets
Trade and other receivables 3,098 2,646
Income tax prepaid 49 -
Cash and cash equivalents 6,523 6,761
9,670 9,407
Total assets 12,818 11,647
EQUITY AND LIABILITIES
Capital and reserves
Share capital and premium 12,817 12,817
Accumulated profit 30,063 44,494
Goodwill -33,573 -48,654
9,307 8,657
Non-current liabilities
Deferred taxation 168 323
323
Current liabilities
Trade and other payables 2,473 1,658
Deferred revenue 595 316
Income tax payable 273 693
Shareholders for dividend 2 -
3,343 2,667
Total equity and liabilities 12,818 11,647
Net asset value per share (cps) 10,9 10,2
Moneyweb Holdings Limited
Statement of changes in shareholders" equity
Balance as at beginning of period 57,311 64,606
Net loss for the year -13,581 -12,359
Issue of share capital - 5
Share premium - 4,995
Foreign currency translation
reserve - 64
Ordinary dividends paid -850 -
42,880 57,311
Moneyweb Holdings Limited
Consolidated Cash Flow Statement
Audited Audited
31 March 2003 31 March 2002
R"000 R"000
Cash flows from operating activities
Cash generated by operations 2,217 2,955
Movements in working capital 363 -876
Cash generated by operating activities 2,580 2,079
Net investment income 526 597
Normal taxation paid -979 -747
STC paid -106 -
Dividend paid -848 -
Net cash inflows from operating
activities 1,173 1,929
Cash flows from investing activities
Acquisition of furniture and equipment -855 -316
Additions to intangible assets -585 -763
Acquisition of subsidiary - -1,224
Acquisition of associate * -2,095
Disposal of investment - 882
Proceeds on disposal of furniture
and equipment 29 -
Net cash outflows from operating
activities -1,411 -3,516
Cash flows from financing activities
Amount paid in respect of deferred
payment for subsidiary - -779
Net cash outflows from financing
activities - -779
Net movement in cash and cash
equivalents for the year -238 -2,366
Cash and cash equivalents at
beginning of the year 6,761 9,127
Cash and cash equivalents at
end of the year 6,523 6,761
*Less than R1,000
Moneyweb Holdings Limited
Notes to the Cash Flow Statement
Audited Audited
31 March 2003 31 March 2002
R"000 R"000
Cash generated by operations
Operating profit from operations
before depreciation and
amortisation 1,941 3,021
Adjustments:
Re-instatement cost included in
capital losses -3 -
Movement in foreign currency
translation reserve - 64
Movement in deferred revenue 279 -130
2,217 2,955
Movements in working capital
Increase in trade and other
receivables -452 -438
Increase/(decrease) in trade and
other payables 815 -438
-876
Taxation paid
Amounts owing at the beginning
of the year -693 -720
Amounts charged per the Income
Statement -355 -547
Movement in deferred taxation -155 -173
Net amounts owing at the end
of the year 224 693
Amounts paid -979 -747
Dividend paid
Amounts owing at the beginning
of the year - -
Income Statement charge-ordinary -850 -
Amount outstanding at the end
of the year 2 -
-848 -
CHAIRMAN"S STATEMENT
Fellow shareholders,
Looking back over the 12 months to end March leaves little doubt this has been
another year of great progress. It has also been something of a watershed, a
year of "growing up". The Company"s operations were transformed from those
typical of a start-up to a point where foundations are now in place to support
the development of a substantial business.
During the early part of the financial year, Moneyweb faced difficult external
conditions, described by some as the worst seen by the media sector in living
memory. The aftermath of the September 11 atrocities affected this industry for
longer than anticipated, taking some nine months to work out of the system.
Moneyweb"s monthly results slumped into losses for the first time.
A highlight of the past year was the way the Group was able to recover from this
setback while resisting the temptation to press a panic button. Everyone at
Moneyweb deserves credit for working through this trying period without harming
the structure of our people-intensive business.
While most other media houses were retrenching and abandoning growth projects,
Moneyweb held its course. The experience will prove priceless in the years
ahead. It also positioned the Company to reap the full benefits when more
normal conditions returned during the second half of the financial year.
The Company"s maturing process is also reflected in its governance. The Board of
directors was restructured to meet the investment community"s demand for higher
levels of Corporate Governance. After being heavily weighted towards full-timers
at the start of the year, the directorate is now equally balanced between
executive and non-executive directors.
Perhaps the most important change of all was enacted in January 2003 when Edwin
Jay joined Moneyweb full time to take over from me as the Company"s chief
executive. His brief is to run and develop the operational side of the business.
My focus is on content and strategy. Having served as a non-executive director
for two years, Edwin hit the ground at pace. His first few months leave no doubt
that he was an excellent choice. Under his steady hand, Moneyweb is now
positioned to realize its true potential.
Although the Company faced numerous challenges during the 12 months under
review, it was also a year which can be looked back upon with satisfaction.
Moneyweb had developed far beyond its early promise as an Internet-only
business. From a standing start six years ago, it is today the leading
independent provider of business and investment content into the South African
media market. It is also the dominant online supplier of mining information
globally.
Your Company"s reach is unparalleled in a South African context with its content
reaching millions of viewers, readers and listeners through partnerships in
television, radio and the printed media. Through our own brands the company
dominates attractive niches, serving South African investors via Moneyweb.co.za
and the global resources community through Mineweb.com.
-Looking back
As a Company with deep roots in the Internet, Moneyweb"s management are
naturally keen observers of the ongoing debate between free and paid-for online
content. Once again the idea of charging for online content enjoyed support from
credible quarters during the past year. However, until there is concrete proof
to the contrary, Moneyweb remains committed to its existing free-to-air model.
Our view is rather simple. By ensuring the least possible obstacles to access,
our content is able to attract the widest possible online audience. Provided
this content is superior, the community will continue expanding. This offers an
irresistible opportunity for advertisers wanting to reach high income earners.
As advertising is the major revenue source, Moneyweb"s challenge is to somehow
convert into money that time spent with us by big spending community members.
This exposes the Company to the vagaries of the advertising market. In this
regard, the slow uptake of Internet advertising in South Africa is pertinent.
Although some progress was evident last year, Internet"s share of the national
media cake is a mere 0.4%, compared with between 5% and 8% in most developed
societies. This offers obvious upside. But it also needs the benefits of online
advertising to be better appreciated.
In this regard, Moneyweb is proud to be a founder member of South Africa"s
Online Publisher"s Association (OPA), formed in late 2002. The OPA"s primary
purpose is to educate advertisers and their agencies about unique advantages
offered through Internet advertising. This is an extremely positive step in the
development of an industry whose success will have obvious benefits for
Moneyweb.
Although the South African online advertising market is taking time to build
momentum, there was no such obstacle for the Company"s global offering
Mineweb.com whose audience is now almost 90% from outside of South Africa.
Mineweb taps into an international audience appreciative of the benefits of
online advertising. Last year"s financial and operational performance by the
Company"s offshore play exceeded expectations. Mineweb made a meaningful
contribution to profits during a period when it was only expected to break even.
The picture was not as rosy for Moneyweb.co.za, however, which relies
exclusively on South Africa. During the first four months of the financial year
(April to July) the advertising market as a whole and online in particular came
under extreme pressure. This was directly responsible for the Company recording
monthly losses for the first time in its history.
The decision to grit our collective teeth and work through the slump proved to
be the right one. The business came through strongly in the second half to not
only recoup the early losses, but end the year with cash earnings of a
creditable 2,4c a share, not too far off the previous year"s 3,5c.
After considerable debate, notwithstanding the Company"s sound capital position,
the Board decided not to maintain last year"s 1c a share dividend.
There were two main reasons for this decision being reached. The Company has a
stated policy that dividends must be covered at least three times by cash
earnings. This would have limited the maximum payout for the 2003 financial year
to 0,8c a share. The directors felt any dividend under 1c a share would be
regarded as a meaningless token by the broad body of shareholders, many of whom
own 1000 shares or less.
A second reason for not paying a dividend for the 2003 financial year is that
funds distributed in this way would at this point be better employed through
buying back Moneyweb equity in the open market. In buying back Moneyweb shares,
the Company returns value to shareholders through increasing their proportionate
shareholdings in the business.
The decision three years ago to acquire 19.6% of then heavy loss-maker Classic
FM for R2.1m cash and 5m Moneyweb shares, has proved inspired. During the 2003
financial year, Classic FM achieved a meaningful return on investment for the
first time. The impact of this associated company helped lift Moneyweb as a
whole to an improvement in real (inflation adjusted) terms of its headline
earnings per share. Classic FM is budgeting for another strong showing in the
2004 financial year.
As part of the Classic FM relationship, from May 2002 Moneyweb dipped a toe into
the non-financial information field by agreeing to deliver on-the-hour news
bulletins to its radio partner. Top quality staff were hired and given the
directive to use the Classic FM base to secure other clients, in this way
building a new core competency for the Company.
The venture proved unsuccessful. On the content side, the quality of the news
bulletins on Classic FM was considerably improved, helping the overall sound of
the station. But although Classic FM was able to achieve strong growth in
overall advertising revenues, management at the station were unable to identify
a correlation with the improved news content.
Unfortunately, the financial objective was never fulfilled. The news service ran
at a loss for Moneyweb. The service ceased at the end of May. Classic FM has
been able to secure a news service from an alternative source.
For Moneyweb, this was an expensive exercise. But it has reaffirmed that the
Company"s future is best served (at this stage anyway) by remaining focused on
delivering business and financial news rather than attempting to compete in the
broader news arena.
Moneyweb"s core Internet operation also received considerable attention in the
past financial year. The balance of resources continues to be addressed, with
the online sales effort strengthened through the appointment of new team
members. The remuneration structure of the sales team has also been changed from
high salaries and no bonuses to an incentive-based offering.
Once again I"m thrilled to report that our online community once more provided a
strong vote of confidence in the improving editorial offering. In January 2003,
unique visitors to the Moneyweb network exceeded 200 000 for the first time
(audited by PWC). This new benchmark was maintained at the year end, translating
into year-on-year growth of 47% compared with the 136 000 unique users reported
for March 2002.
Anyone still doubting how the Internet has mushroomed as a source of financial
news should consider that Moneyweb"s current users are more than three times
those of two years ago and some ten times the 20 000 users of just four years
back. In an industry where the Internet"s competitors are thankful for
maintaining existing audiences and trumpet single digit growth, the core of
Moneyweb"s operation is in the right place.
As with virtually all revolutionary inventions - from the telephone and railways
to radio and television - it often takes the newcomer a while to fulfill its
potential. We have no doubt it is a matter of when not if for advertisers to
click to the advantages of the Internet.
While our vision of a bright future for Internet publishing remains steadfast,
timing remains the key variable. To avoid any stagnation while waiting for logic
to prevail, considerable attention has been devoted to leveraging editorial
content. Two major breakthroughs involving many months of discussions were
achieved near the end of the past financial year.
First of these was the partnership with e.TV, South Africa"s independent free-to
air television broadcaster whose audience exceeds seven million. An initial two
year contract has been concluded. In terms of this, Moneyweb produces business
news for the broadcaster with me serving as e.TV"s Business Editor. Apart from a
monthly fee, Moneyweb also receives a share of advertising revenues on business
programming once pre-determined hurdles have been exceeded.
Close behind the e.TV deal came a similar content supply contract with The
Citizen, one of South Africa"s leading daily newspapers with per-issue
readership exceeding 600 000. A revenue sharing partnership, Moneyweb"s
editorial team has become the newspaper"s de facto business news staff. As with
e.TV, this relationship offers significant upside into the future.
The other major deal secured in the past financial year was the acquisition of a
25% stake in the start-up securities business Vestact. The decision to become
involved with Vestact was based primarily on discussions with its founder, Paul
Theron, who pioneered online trading in South Africa. We are excited about the
potential for the partnership between Moneyweb and its vast community of
investors, and Theron"s reputable and service-driven JSE-focused operation.
Progress during the first few months suggests this confidence is well placed.
-Looking ahead
There should be plenty of excitement during the 12 months to March 2004. The
Company now possesses platforms from which to substantially lift revenues
without much impact on costs. Provided there is no repeat of a September 11-type
event, the new financial year should be the best in Moneyweb"s history.
Revenue generated through the two new platforms - e.TV and The Citizen - should
help provide the resource to continue adding talent to the editorial team. This
will support the virtuous circle of better content producing higher readership
(or viewers or listeners); increased advertising revenues and, as a result, the
necessary funds to further expand the editorial team.
Online - International
An especially strong 12 months is expected for Mineweb.com, which last year
added an office in Vancouver, Canada to its existing bases in Johannesburg, New
York, London, and Perth (Australia). Moneyweb"s customized MIPS Publishing
System enables Mineweb to be updated by staffers around the clock, further
adding to the appeal for its 100 000 plus community of global mining executives,
investors and those in businesses which serve the resources sector.
Various options are being considered for Moneyweb.co.uk, the established
personal finance website serving the British market. It continues to generate
positive cash flow through the support of Independent Financial Advisors who
have a presence on Moneyweb.co.uk and are entitled to use various investment
tools offered by the site.
Online - Southern Africa
Moneyweb.co.za is set fair for a strong year. With heavy emphasis maintained on
editorial quality, readership is expected to continue growing. More effort on
the advertising staff front should translate into higher revenues. The site is
expected to consolidate the dominance of its chosen niche.
One of the major thrusts of the new financial year is to expand the franchise
into neighbouring countries, with Zimbabwe, Botswana and Namibia targeted. The
strategy relies upon establishing partnerships with competent and highly
credible financial journalists already operating in those countries. Moneyweb
provides technological, administrative and financial support from Johannesburg;
the partners supply the content. Net revenue is equally split.
Progress will depend entirely on the Company"s ability to source the right
partners, but by March 2004 it is expected that at least one of these regional
sub-sites will have been launched. The goal is to eventually have Moneyweb
franchises in every African economy where investment opportunities exist.
Specialist website Marketingweb.co.za is expected to build on its strong
position serving the South African media and marketing community. Discussions
are at an early stage with a prospective partner for the entrepreneurial site
Myownbusiness.co.za.
Broadcasting -
The building of a radio studio at Moneyweb"s own premises resulted in numerous
opportunities which are being explored at present. The eventual objective is
ownership of a free-to-air radio station serving the South African business
community. Because of more pressing matters which the regulator has to deal with
right now, this goal may only be achieved some years into the future. As a
result, innovative options are being explored.
In the coming year, the Company intends cementing its position as South Africa"s
leading independent business news broadcaster through the partnerships with
Classic FM and e.TV. On the television front in particular, significant
opportunities exist to expand programming through joint ventures.
Print -
The major challenge on this front is to attract advertising support for The
Citizen"s business pages which are now "powered by Moneyweb". Although the
editorial quality is already of a high standard, and readership in the "Super A"
income category comfortably exceeds those of the obvious competitor, advertisers
traditionally adopt a cautious approach towards new ventures like this one. We
are confident that significant progress will be achieved in the new financial
year.
Weekly newspaper Moneyweb Digest, a joint venture with printing group Ince, made
a meaningful contribution to the Company"s profits in 2003 and is expected to
improve on this in the new financial year. Both circulation growth and
advertising support at this young publication has been pleasing. More effort
will be afforded in the year ahead to growing the subscriber base of Moneyweb"s
newsletters Personal Finance, Tax Breaks and Money.
Prospects -
Provided no external event derails the global economy, Moneyweb shareholders can
look forward to a much improved showing from the business in the year to March
2004.
After five years of building a solid base of multi-media platforms, Moneyweb now
possesses the staff, products, partnerships and directorate to turn its
undeniable potential into significant profits. As a result, it is with
confidence that we anticipate real earnings growth in the 2004 financial year.
Directorate -
It"s my pleasure to welcome two new non executive directors to our Board, Victor
Nosi and Pierre Desmidt.
Victor Nosi is a former colleague of mine. We worked closely together at ABSA
Bank in the early 1990s, where he served as a Group Executive. Until recently,
Victor was the Executive Vice President of Marketing at South African Airways, a
position he filled with distinction. He has been appointed as the Chairman of
the Remuneration Committee and also serves on Moneyweb"s Audit Committee.
Pierre Desmidt is a private investor who owns over 4% of Moneyweb. He acquired
this stake through buying shares in the open market. We welcome him to the Board
as an obviously well qualified representative of independent shareholders.
Pierre serves as a member of both the Audit and Remuneration Committees.
It is also a great pleasure to welcome Dr Andrew Smith back onto our Board. My
predecessor as chairman, Andrew was forced to resign from our directorate two
years ago when he joined a leading business consultancy firm. He has since
accepted a post as Partner, Unisys Limited, with UK and European
responsibilities for their public Sector operations which, fortunately, have no
such restrictions on his participation at Moneyweb Board level. Although based
in London, Andrew has retained his links with South Africa and we are delighted
to bring him back onto the directorate.
Unfortunately, Dr Duarte da Silva, who played an important role in the early
days of Moneyweb, was forced to step down from the Board during the past year to
avoid a possible conflict of interest. This followed the acquisition by his
employer, Black Economic Empowerment group J&J, of a major securities company
based in Johannesburg. It was with great regret that Duarte"s resignation was
accepted. His counsel and support during those difficult early years was
invaluable. All at Moneyweb wish him every success in his future endeavors.
Two fellow executive directors, Timothy Wood and David McKay, also stepped down
from the Board in the past year. Their contribution at a board level has been
considerable. On behalf of all shareholders, please allow me to express our
sincere appreciation.
Appreciation -
During the past year, the Moneyweb team grew to over 40 people. Their homes
stretch not only across South Africa but, indeed, the globe. The Company"s
continued progress owes everything to their unstinting efforts and dedication
that seems to go with the territory in the media industry. It has been a
pleasure working with such talented individuals to create this truly special
business.
Thanks, too, to our advertisers without whom the dream would never have become a
reality; our shareholders for their continued support; and most of all to every
member of the greater Moneyweb community - our readers, listeners and viewers -
whom we live to serve.
A B Hogg E A Jay
Chairman Chief Executive Officer
Rosebank
23 June 2003
Sponsor
LPC Manhattan Sponsors
Date: 23/06/2003 02:18:11 PM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
