Mergers, Acquisitions and Financial Results

According to the preliminary results announced last week:"Prior to exceptionals the Group operating loss is £5.4 million (2001: £3 million), the £2.4 million difference being primarily due to the £1 million lower gross profit and a £0.9 million increase in goodwill amortisation. Group net operating expenses are higher at £13.2 million (2001:£11.8 million) because they include a full year for Africa Online and Menanet." The latter means that the cuts made in the autumn were made after the end of the company’s financial year 30 September 2002.

The group will be relying on the disposal of its non-tech assets to stay afloat:"In the current investment and banking climate the Group has had to rely primarily on its own cash generation both from operations and from asset disposals to fund its working capital needs and its capital expenditure and restructuring costs. The Group’s target is to be cash positive at the Group level within the first half of the non-core businesses to fund itself. The fact that the expected IFC investment did not materialise means that the Group is completing the disposal of its non-core assets as well as exploring other funding routes in order to have sufficient working capital to meet its needs."

The results cast an interesting sidelight on the failed IFC deal:"Entry into both the South African and Nigerian markets were a part of our IFC/AAIF planning and in the absence of the intended funding this has had to be postponed."

African Lakes internet businesses would represent an interesting opportunity for someone with pan-continental ambitions. Possible contenders? Naspers-owned Mweb who have begun to resume their expansion plans after a pause while they saw off ABSA’s "free" internet service. Econet maybe. It probably has the funds and is represented in one of the major African markets, Nigeria.