June 2004 Preliminary Final Results

Aug 31, 2004

ASX RELEASE Tuesday 31 August 2004

Jumbo Corporation Limited (ASX:JUM), a leader in ecommerce and online retailing, today announced a profit increase for the second year in a row. Revenues increased 180% to $7.7 million and EBITDA increased 203% to $400,000 in the 12 months to June 30, 2004. The financial position has strengthened with cash levels at $1.9 million and net assets at $1.5 million (not including key intangible assets discussed below).

Jumbo is one of the few Internet companies that has consistently grown through the post-dotcom period and has become profitable. The company is now well positioned in the technology sector and is in an ideal position to take advantage of the rapidly growing $120 billion worldwide online shopping market.   “Our 2nd straight profit increase together with 5 financial periods of increasing revenues has established Jumbo as a leading ecommerce and online retailing company”, said Mr Mike Veverka, CEO of Jumbo. “Over the past year the company succeeded in making more sales and attracting more new customers than the previous 3 years combined”.  

Financial Performance 

  Financial year ending:   June 03   June 04   Growth
  Revenue   $2.75 million   $7.7 million  

180%

  EBITDA   $131,759   $400,033  

203%

  Net Profit   $101,677   $289,705  

185%

 

Financial Position

  Financial year ending:   June 03   June 04   Growth
  Cash at Bank   $865,000   $1.93 million  

123%

  Net Assets   $581,000   $1.49 million  

156%

  Net Tangible Assets   $231,000   $1.22 million  

428%

  Customer Database and Secure Ecommerce Software The customer database and secure ecommerce software combine to form a substantial asset used to drive the company’s growth. The database has grown to over 250,000 customers that have made an online purchase via the Jumbo secure ecommerce system. Once the first online purchase is made, customers gain confidence using the secure ecommerce system and are more likely to become repeat customers. The company continually markets its products to these customers and relies on repeat sales to drive growth. In the 1 year period to June 2004, the company acquired more new customers and made more sales than in the previous 3 years combined.
   

2003

 

2004

  Total
  Number of customers  

69,845

  127,205   250,889
  Number of purchases   156,472   297,406   555,415
  Average purchase price  

$141

 

$109

 

$112

    For these reasons, directors regard the customer database as a significant asset of the company. A value is difficult to accurately determine and is therefore not included on the company’s balance sheet.   “Our substantial customer database combined with our own ecommerce software forms a valuable asset not visible on the balance sheet. The Jumbo staff apply their Internet skills with the software to grow the database and drive future sales”, said Mr Veverka.
  Value of online sales per month $3,500,000
 
Number of online sales per month 35,000
 

Research and Development on the Jumbo Secure Ecommerce System 

Since 2000, the company  has spent  over $1  million on research and development  on the  Jumbo secure ecommerce software system. This software has substantial value to the company but is difficult to measure and therefore is not reported on the balance sheet.   The system is a key contributor to the success of the business to date and is essential for future growth. The software operates 24 hours a day, 365 days a year automatically handling orders, security and product logistics from the moment a customer first enters a web site to after deliveries are made. It provides a user-friendly interface for customers to place their orders online and ensures a very high standard of security is maintained throughout the process.   Online security is a cornerstone principle to the company and ensures customer satisfaction is maximized for repeat business. Considerable effort is made to ensure payments are secure and online fraud is kept to minimal levels to not only protect customer interests, but also the company’s interests from consumer fraud.   The company maintains an ongoing research and development program undertaken by 6 software engineers that continually update the software to keep ahead of competition. Enhancements are built as required while other web sites with “off-the-shelf” software systems must rely on the developer to deliver those enhancements.  

Growth in the Core Business 

Jumbo’s core business is providing secure ecommerce services and retailing goods online to customers worldwide. Removing income and expenses from non-core activities gives a more accurate representation of the growth in the company’s core business.  
  Financial year ending:   June 03   June 04   Growth
  Revenue   $2.75 million   $7.7 million   $5.45 million
  EBITDA   $131,759   $400,033   $268,274
  Non-core Income and Expenses (Income is positive, expenses negative)   $124,424   ($83,267)  
  EBITDA after non-core activities  

$7,335

  $483,300   $475,965

 

The 12 months to June 2003 include a one-off income due to the sale of a subsidiary (Kringle Pty Ltd) and the 12 months to June 2004 include one-off expenses relating to the various capital raisings during the year.   This table shows more clearly that the break-even point was reached in the 2003 year and the $5.45 million revenue growth in the 2004 year resulted in an increase in EBITDA of $476,000.   “Our focus continues to be our marketing techniques to grow revenues and locating quality suppliers with better margins to grow profits”, said Mr Mike Veverka. “A balance between revenue growth and margin size is sought to obtain optimum profitability”.   Investment in Global Approach Limited With a stronger balance sheet, Jumbo embarked on a project to diversify its online interests. In April 2003 an announcement was made to invest in Global Approach, a company with substantial interests in a licensed online casino. To date Jumbo has invested $705,549 in the company and this value is shown on Jumbo’s balance sheet at cost. The closing share price in GLO at 30 June 2004 was 8.5c giving a value of $776,000 to Jumbo’s shareholding.   GLO’s trading range for 2004 is from a low of 8c to a high of 18c. Directors remain optimistic that the performance of GLO will grow as the business matures.   Betting Exchange On July 20th 2004, Jumbo announced plans for a betting exchange called “Betexsports.com” aimed at accelerating the company’s growth via the emerging online betting exchange industry. These plans include providing betting exchange software and services to clients wishing to develop their own betting exchange. Jumbo intends to use its experience in online security, marketing and customer service as a competitive advantage.   "The past 2 years has seen a meteoric rise in betting exchange popularity worldwide giving rise to numerous opportunities in this sector", said Mr Mike Veverka, CEO of Jumbo Corp. "The online skills that Jumbo has accumulated over the past 9 years puts the company into an ideal position to develop a new betting exchange business in addition to the already profitable online retailing business."

 

Future  2005 will mark the company’s 10th year of operations and an important milestone for Jumbo. In an emerging industry such as ecommerce and online retailing, it is rare to find a successful company with a 10 year track record. Jumbo’s history is therefore unique and beneficial in gaining customer confidence. Plans are underway to run a year long 10th anniversary marketing campaign to not only gain new customers but also raise the profile of Jumbo as an online success story.     For further enquiries, please contact: Mike Veverka, CEO Ph:  (07) 3831 3705 Fx:  (07) 3831 9720 Email: mike@jumbocorporation.com Web: www.jumbocorporation.com


Media Assets
 31082004A.pdf