eVentures reports loss, pitches new strategy

Internet investment company eVentures New Zealand has announced a consolidated operating loss of $4.56 million in its first full year results - and admitted things haven't gone quite to plan.

Internet investment company eVentures New Zealand has announced a consolidated operating loss of $4.56 million in its first full year results.

The loss was declared after taking into account "minority and tax interests" for the period ending 31 December 2000.

The company now has $55.05 million in equity, after raising $59 million in a public offering last May. The company was founded in late 1999 by former Sky TV chairman Craig Heatley, and is a joint venture between Softbank, Rupert Murdoch's ePartners and local interests.

Roderick Deane, who was appointed eVentures chairman after the abrupt departure of Heatley last month, described the result as "encouraging, particularly given the difficult operating climate for e-commerce businesses."

A statement from the company said that "given the current level of investments the monthly trend is now cash flow breakeven," and that the loss is less than originally budgeted.

But eVentures has also been considerably less busy than it originally intended. When it raised the money last May it was proposing to launch 50 leading internet brands here in the next three years. In addition, CEO Cindy Mitchener said in September that the company was considering a short list of three or four local ventures, from more than 100 that responded to its call for ideas.

Its two investments so far have been the online loan comparison service E-Loan and the e-mail marketing company MessageMedia.

Of the two, MessageMedia has fared the better, with New Zealand Post taking a 20% stake. It was cashflow positive in January, "and the directors are very confident of the on-going growth and prospects of this company," according to the statement.

"eVentures NZ has also recognised the significant cost advantage New Zealand has in the area of software development. Discussions are presently underway with MessageMedia for international software development to be provided through its New Zealand business," the statement said.

In November E-Loan was split into what eVentures described as consumer and business-to-business units, with the former, representing E-Loan's original business in the home mortgage market, to be absorbed into The Warehouse's budding financial services arm.

The Warehouse and eVentures are majority shareholders in the consumer company, with E-Loan Inc retaining a minority stake. The Warehouse is a minority shareholder in eVentures and its founder Stephen Tindall is on the eVentures board.

Mitchener said the partnership with The Warehouse had contributed to a considerable lowering of costs and a significant increase in potential customer contact. Both The Warehouse and eVentures NZ will review the arrangement at the end of 2001.

The B2B unit is focused solely on distribution of the E-Loan "comparative engine" technology in the Asian market. eVentures has an exclusive arrangement with IT Capital, whose Singapore office is "currently reviewing the market opportunities."

The statement say eVentures "has fine-tuned its core strategic focus from six key sectors to three - online communications and new media, supply chain and mobile internet."

The first sector is covered by MessageMedia and the second is a direction to be pursued through "strategic investment … eVentures' supply chain portfolio is developing a solution based around common architecture software to achieve collaboration and optimization," according to the statement.

The third sector - mobile internet - is the subject of new a two-man team within the company. Andrew McPherson and Mark Rushworth have joined as mobile telecommunications specialists.

"Whilst it was our original intention to make a greater number of investments during this period, progress to date reflects the changes in the online environment, our targeted strategic direction, and our disciplined approach to investment. We are now very well positioned to pursue opportunities in a market that has much more realistic valuations," said Mitchener.

"eVentures remains confident that the initiatives which have been undertaken will maximise the value and return to shareholders over the coming years."

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