Asiaone 1-42

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ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion of our business, financial condition and results of operations should be read in conjunction with our proforma financial statements and the related notes included elsewhere in this Prospectus. This discussion contains forward-looking statements that reflect our current views with respect to future events and financial performance. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, such as those set forth under “Risk Factors” and elsewhere in this Prospectus. Our proforma financial statements are reported in S$ and have been prepared in accordance with Singapore Statements of Accounting Standard. OVERVIEW Prior to the incorporation of our Company on 23 July 1999, we operated as the Multimedia division of SPH. As such, we have prepared our proforma financial statements to show our historical financial information which might have been, had our Company been in existence from the commencement of our activities. As it is a “might have been” situation, our proforma financial statements and the related effects may not be reflective of our operations or our financial position that would have been achieved if we had actually existed at the beginning of the period covered in this Prospectus. In preparing the proforma financial statements, we have included the results, assets and liabilities of the Multimedia division of SPH as if it had operated as a separate legal entity. As the financial information of the Multimedia division and the other divisions of SPH were prepared on an integrated basis, certain assumptions and estimations have been used in the segregation of the financial information and your attention is drawn on the bases and assumptions that have been applied in arriving at the proforma financial statements. We derive our revenues from several services we provide to our customers, which are principally content and other services (comprising subscriptions, archive database, e-commerce and auction), advertising services and classifieds, and audiotex services. The details on our revenue streams are set out in the “Business – Business Model” and the “Business – Core Business” sections of this Prospectus. Our main businesses are historically non-seasonal. However, as discussed in the “Risk Factors” section of this Prospectus, our e-commerce business (though was historically non-seasonal) may in the future be affected by the June and year-end vacation and festive periods. Revenue represents the invoiced value of services rendered, excluding goods and services tax but including trade discount and allowances. Revenues are recognised when it is probable that the economic benefits will flow to us and when such revenues can be measured reliably, provided that no significant obligations remain on our part. From 1997 to 1999, our revenue grew from approximately $3.26 million to approximately $4.12 million and were approximately $2.79 million for the six months ended 29 February 2000. Our revenue growth was primarily due to increased revenue from content and other services. Revenue from content and other services increased by approximately $0.91 million from FY1997 to FY1999, largely due to increased archive database sales. Archive database sales improved substantially mainly due to the increase in usage by the customers of a few of our key co-sellers. We launched our ecommerce platform in late 1997 and started generating revenue from e-commerce activities since then, which accounted largely for the balance of the increased revenue from content and other services in 1998 and 1999. We expect our revenue to continue to grow in FY2000. Expected sources of our revenue growth include content and other services and advertising services. The improvement in our e-commerce platform (as discussed in the “Business – Expansion Plans – E-Commerce” section of this Prospectus) helps us to sign on more new merchants to our online mall at faster speed and to provide greater convenience to our online shoppers in purchasing goods through our e-commerce platform, coupled with the initiatives by the Singapore government to promote e-commerce, our e-commerce revenue is likely to improve. Advertising revenue is likely to increase as we expand our product offerings and our pageviews grow. 37
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Our results of operations are generally affected by the content based nature of our business. Our main costs components are staff cost representing more than 75% of the total cost of revenue and depreciation expenses. Staff were identified on the basis of the personnel employed under the Multimedia division of SPH while depreciation expenses are allocated based on the fixed assets transferred to us under the Business Transfer Agreement which we entered into with SPH on 25 November 1999 and additions purchased for the six months ended 29 February 2000. From 1997 to 1999 we received approximately a total of $2.49 million in grants, through SPH, from the Economic Development Board of Singapore and the National Computer Board for the development of AsiaOne websites and SingaporeConnect respectively. These grants reduced our cost of revenue. The grant from the Economic Development Board of Singapore was for 50% of the actual cost incurred by us in the development of our AsiaOne website during the qualifying period from 1 April 1996 to 31 December 1997. The grant from the National Computer Board was for 50% of the actual cost incurred by us for the development of the SingaporeConnect during the qualifying period from 1 September 1996 to 30 March 1998. A detailed discussion on our annual cost of revenue from FY1997 to FY1999 is set out below under the “Analysis of Financial Condition and Results of Operations - Review of Operations”. We expect our cost of revenue for FY2000 to be substantially higher than FY1999 primarily due to higher staff costs and depreciation. Staff costs are likely to rise as we expect our average headcount to increase four folds from FY1999 to FY2000. Depreciation is expected to be higher in FY2000 as a result of the assets transferred from SPH’s Multimedia division to us in November 1999 under the Business Transfer Agreement described in the “General Information on Our Group – History” section of this Prospectus, and also because of the increase in our investment in portal infrastructure and technology. Our operating expenses consist largely of advertising and promotional expenses as well as facilities related expenses and management fees paid to our parent company. We have been investing in building up the AsiaOne.com and Zaobao.com brand names through advertisements and promotions. We intend to step up our branding activities to increase the public’s awareness of AsiaOne’s and Zaobao’s image and service offerings. Our marketing and branding strategy is detailed in the “Business – Marketing and Branding Strategy” section of this Prospectus. We rent a large part of the premises we are currently occupying from SPH. Details on the lease agreement we have with SPH are set out in the “Interested Person Transactions – Lease Agreement” section of this Prospectus. We also pay SPH management fees based on the estimated time spent by management and administrative resources of SPH on our affairs. A detailed discussion on our annual operating expenses from FY1997 to FY1999 is set out below under the “Analysis of Financial Condition and Results of Operations - Review of Operations”. Our operating expenses for FY2000 will be substantially higher than FY1999. Our operating expenses for the six months ended 29 February 2000 of $2.59 million was already significantly higher that our operating expenses for the 12 months ended 31 August 1999 of $1.90 million. In the second half of FY2000, we will continue to invest heavily in advertising and promotion in accordance with our marketing and branding strategy set out in the “Business – Marketing and Branding Strategy” section of this Prospectus. As discussed in the “Risk Factors” section of this Prospectus, we have a history of losses and anticipate to incur losses for the foreseeable future. 38
Page 1 and 2: PROSPECTUS DATED 23 MAY 2000 SPH AS
Page 3 and 4: — Customers And Suppliers .......
Page 5 and 6: CORPORATE INFORMATION Board of Dire
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Page 9 and 10: “Reserved Tranche” : The offer
Page 11 and 12: GLOSSARY OF TECHNICAL TERMS “onli
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Page 15 and 16: Allocation of New Shares under the
Page 17 and 18: RESULTS OF APPLICATION AND DISTRIBU
Page 19 and 20: SELLING RESTRICTIONS DETAILS OF OUR
Page 21 and 22: Our present business model is based
Page 23 and 24: THE INVITATION PROSPECTUS SUMMARY S
Page 25 and 26: An investment in our Shares involve
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Page 29 and 30: RISK FACTORS We depend on a reliabl
Page 31 and 32: E-commerce operations RISK FACTORS
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Page 43 and 44: ANALYSIS OF FINANCIAL CONDITION AND
Page 45 and 46: GROUP STRUCTURE Our group structure
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Page 51 and 52: SHAREHOLDERS GENERAL INFORMATION ON
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Page 55 and 56: BUSINESS The Singapore Information
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Page 65 and 66: BUSINESS The categories of products
Page 67 and 68: Auctions BUSINESS The Internet’s
Page 69 and 70: BUSINESS Designed for both consumer
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Page 73 and 74: BUSINESS While the Internet has sti
Page 75 and 76: Suppliers BUSINESS The suppliers wh
Page 77 and 78: BUSINESS In addition to the content
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Page 81 and 82: (ii) Message Boards BUSINESS We wil
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BOARD OF DIRECTORS DIRECTORS, SENIO
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DIRECTORS, SENIOR MANAGEMENT AND ST
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Yuan Zhou, aged 37, is the Vice Pre
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The Licence Agreement may be termin
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As at the date of this Prospectus,
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(viii) technical and research resou
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(ii) transactions in value equal to
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Entry into of forex, swap and optio
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• 312,500 preference shares of pa
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23 May 2000 The Shareholders SPH As
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FINANCIAL STATEMENTS Profit and Los
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FINANCIAL STATEMENTS Statement of C
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FINANCIAL STATEMENTS Statements of
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FINANCIAL STATEMENTS 2. Basis of pr
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3. Significant accounting policies
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3. Significant accounting policies
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5. Cost of revenue (cont’d) FINAN
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10. Net earnings (loss) per share (
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13. Fixed assets (cont’d) FINANCI
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14. Trade creditors FINANCIAL STATE
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FINANCIAL STATEMENTS 17. Significan
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21. Subsequent events (cont’d) (e
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GENERAL AND STATUTORY INFORMATION I
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GENERAL AND STATUTORY INFORMATION 1
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Article 66 GENERAL AND STATUTORY IN
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Article 76 GENERAL AND STATUTORY IN
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Article 102 GENERAL AND STATUTORY I
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GENERAL AND STATUTORY INFORMATION (
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CONSENTS GENERAL AND STATUTORY INFO
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APPENDIX A 4. A person who has agre
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APPENDIX A 15. Investors may subscr
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APPENDIX A ADDITIONAL TERMS AND CON
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APPENDIX A (3) tick the appropriate
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APPENDIX A An Applicant must ensure
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APPENDIX A 9. The Applicant must ha
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APPENDIX A (d) in respect of the Ne
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APPENDIX A (d) This application is
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APPENDIX B RULES OF THE ASIAONE PRE
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3. ELIGIBILITY OF PARTICIPANTS APPE
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7. RIGHTS TO EXERCISE OPTIONS APPEN
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7.6 In the event that:- APPENDIX B
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APPENDIX B 10. TAKE-OVER AND WINDIN
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APPENDIX B 10.6 If in connection wi
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APPENDIX B 18.2 Save for the taxes
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To: SPH AsiaOne Ltd, News Centre, 8
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APPENDIX B ASIAONE PRE-IPO SHARE OP
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APPENDIX C RULES OF THE ASIAONE (20
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APPENDIX C “Parent Group” The P
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APPENDIX C 4.2 The number of Shares
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APPENDIX C (c) any other event appr
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APPENDIX C 9.3 Shares which are all
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14. MODIFICATIONS TO THE SCHEME APP
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APPENDIX C (c) (i) the names of, an
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APPENDIX C Vesting Schedule Subject
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Please print in block letters Name
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Please print in block letters Name
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