Asiaone 1-42
Asiaone 1-42
Asiaone 1-42
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ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS<br />
We are a part of the larger SPH Group. We have benefited significantly from our close working<br />
relationship with our parent company, which has provided us with the content and resources to<br />
commence our business. SPH provides us with substantial news and related information as well as<br />
its large advertisement client base for which we tap on to commence our business. In addition, we<br />
also receive continued support from its newsrooms for timely updates. Details on our dealings with<br />
SPH are set out in the “Interested Person Transactions” section of this Prospectus. We also received<br />
financial support from SPH prior to the Invitation, which has provided us with the necessary capital<br />
to commence and continue our business. The financial support from SPH in the past has been in<br />
the form of equity injection and inter-company loans, which were interest free and had no fixed term<br />
of repayment. As discussed in the “Risk Factors” section of this Prospectus, we may no longer be<br />
able to rely on the operating and financial resources provided by the SPH Group after the Invitation.<br />
However, we expect the net proceeds from the Invitation to provide the capital resources we are<br />
likely to require in FY2000 and the near future.<br />
REVIEW OF OPERATIONS<br />
Six Months Ended 28 February 1999 Compared with Six Months Ended 29 February 2000<br />
Revenue. Revenue increased by 64.0% from $1.70 million in the six months ended 28 February<br />
1999 to $2.79 million in the six months ended 29 February 2000. This increase was attributed<br />
mainly to the substantial increase in revenue from our content and other services (archive database<br />
sales and e-commerce inclusive) as well as audiotex services. Revenue from content and other<br />
services increased by 74.3% from $0.58 million in the six months ended 28 February 1999 to $1.02<br />
million in the six months ended 29 February 2000. The increase was primarily attributable to higher<br />
archive database sales and e-commerce revenues. Archive database sales rose due to the increase<br />
in usage by the customers of three of our key co-sellers. E-commerce revenues increased mainly<br />
due to the addition of approximately 50 more online stores at Shop@AsiaOne between 28 February<br />
1999 and 29 February 2000. Revenues from audiotex services improved by 96.9% from $0.56 million<br />
in the six months ended 28 February 1999 to $1.10 million in the six months ended 29 February<br />
2000 mainly due to higher usage of our 1-800 Bizfone service consequent to the addition of 5 more<br />
1-800 Bizfone customers from 28 February 1999 to 29 February 2000 as well as the increase in<br />
usage by some of our existing customers.<br />
Cost of Revenue. Cost of revenue increased by 74.3% from $1.35 million in the six months ended<br />
28 February 1999 to $2.36 million in the six months ended 29 February 2000. This is primarily due<br />
to the higher staff cost and depreciation expenses. Staff cost increased from $1.27 million in the six<br />
months ended 28 February 1999 to $1.94 million in the six months ended 29 February 2000 as our<br />
staff strength more than doubled. Depreciation expenses increased principally as a result of the<br />
assets transferred from SPH’s Multimedia division to us in November 1999 under the Business<br />
Transfer Agreement described in the “General Information on Our Group – History” section of this<br />
Prospectus. For the six months ended 29 February 2000, we did not receive any grant from any<br />
government bodies or agencies to subsidise our cost of revenue, while we received $0.10 million in<br />
grant from the National Computer Board for the six months ended 28 February 1999.<br />
Operating Expenses. Operating expenses increased 147.8% from $1.05 million, or 61.5% of revenues,<br />
in the six months ended 28 February 1999 to $2.59 million, or 92.9% of revenues, in the six months<br />
ended 29 February 2000. This increase was due to the substantial increase in expenses pertaining<br />
to advertising and promotion, communication lines, legal costs, software and hardware maintenance<br />
and management fees paid to our parent company. Advertising and promotion, communication and<br />
legal expenses increased, in conjunction with our re-positioning and re-launch at the start of the new<br />
millennium, and as we intensify our marketing and branding efforts. Software and hardware<br />
maintenance costs increased as we upgraded our technological infrastructure.<br />
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