Asiaone 1-42

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