Chairman’s Address, AGM, 2001
2000/2001 has been a difficult year for the country, for our industry, and for InfoChoice.
Over the past twelve months what was seen as a market correction in tech stocks developed into the “tech wreck” and many of the companies that listed in this sector have exhausted the capital that they raised or have even disappeared altogether. In our case, we have not survived unscathed but we have faced the challenge and have made the changes that we thought necessary to ensure the survival of the business and the protection of our shareholders interests.
This said, there is no question but that our original Infomediary model, despite its acceptance and support from clients and the market, has been slow to generate the financial returns that we all expected and hoped for. As a result, prior to exhausting our cash reserves, we reviewed our core business and in the short term, cut costs wherever possible or practical.
We remain firmly committed to the core concept of information distribution, as we believe that the distribution of information in its many forms will play an increasingly important role in the lives of both business and individuals in the future, but we felt it necessary to reorganise both the products and the people within our business to align what we are doing with the realities of the environment in which we now operate. The overall objective is to at least ensure that our core activity is not a significant on-going drain on our resources whilst at the same time, we seek opportunities for acquisitions or mergers which fit within our overall strategic direction.
We have resisted the temptation to chase short-term solutions and opportunities, however, irrespective of how attractive they may have potentially seemed at the time. In my address to the AGM last year I referred to the fact that we had reviewed nearly thirty corporate opportunities and had at that time not found one that was achievable or sustainable.
At that time we had also resisted one takeover attempt (from Telco Australia) and were in the process of responding to another from ISIS Communications. In the final analysis neither appeared acceptable, and in hindsight neither were. The time and resources taken in these matters was, however, unacceptably high.
Post balance date and the end of the financial year, however, we announced two moves which we believed would significantly change the business and accelerate our advance towards creating the critical mass that we need in the current environment.
The first was the acquisition of BecomeMedia Pty Ltd, a young business that focuses on supplying information and syndicated news content for websites. This is an ideal fit not only for our business but also for our clients, many of which are already shared. The transaction also involved a placement of 18.75 million shares for $1.5 million to the owners of the business, including Macquarie Bank and Associated Media Investments. This transaction was concluded successfully and as you can see, representatives of this company have now joined our board.
This move was rapidly followed by the announcement to acquire various assets of the My Money Group Ltd. We believed this would also have been an ideal fit with our core direction and we had originally intended to put this matter to a vote today and then conclude the transaction shortly thereafter. As you will be aware, however, since our announcement My Money has received an alternative offer that the company’s directors consider superior to our own, and this transaction is now unlikely to proceed. We will address this matter in more detail during the meeting.
This setback is a disappointment but does not divert us from our objective of trying to build a spread of interests in the information distribution sector and we will continue to seek further corporate opportunities of a similar nature. To this end, we currently have two good opportunities that we are studying and which, if attractive strategically and financially, could be completed within a few months at most. If successful with this strategy, we believe that we will be well positioned to be one of the survivors in this sector as the new winners emerge, as emerge they undoubtedly will.
We are all too aware of the disappointment that our shareholders will have with the development of the company and its share price. Most of your directors are shareholders themselves so share this disappointment in a concrete and tangible way. We are participating in the birth of a new industry, however, and while many entrants will fail, as with any new industry over the ages, some companies will emerge as the new pillars of an industry which will grow to dominate almost every aspect of our daily lives. We are working, as directors and managers of this company, to ensure that we are as well positioned as possible to become one of these successes of the future.