Forum Archive Index - November 2002

["G Stolwyk" <stolwyk@wave.co.nz>]

BCA at present $NZ 1.89 (- $1.36)

 

Statement from BCA:

 

BCA
12/11/2002
GEN

REL: 0804 HRS Baycorp Advantage Limited

GEN: BCA: Earnings Guidance For Half Year And Year Ending 30/06/2003

SYDNEY, 11 November 2002, Baycorp Advantage ("BCA") today announced an
update on the company's expectations for the interim and full year result
and the treatment of the Killorgan litigation settlement.

Revenues
Half-year revenues for the group, are forecast to be in the range of 12% to
15% above last year on a proforma basis.  Full year revenues for the group
as a whole, assuming similar operating conditions to the first four months,
are forecast to be approximately 15% to 20% above last year on a proforma
basis.

Operating Cash Flows
Operating cash flows continue to be strong and in line with expectations
but are impacted by the one off Killorgan litigation settlement and related
legal expenses.

The major driver of the group's operating cash flows is EBITDA performance.
In the group's FY02 year end announcement the company indicated "two
months into the FY03 financial year the company is on target to perform in
line with expectations to achieve the expected 20% EBITDA (BAU) year on
year growth plus synergy benefits."

EBITDA (BAU) for the half-year on a proforma basis is expected to be in the
range of flat to 6% higher than last year.  This is primarily due to higher
operating costs in the first half of the year as detailed below.  EBITDA
(BAU) for the full year on a proforma basis is expected to grow in a range
of 23% to 28% over last year, including synergy benefits.

EBIT
Group EBIT for the year is forecast to increase by 7% to 12% over last
year.  The half-year forecast is circa 80% to 90% of last year's proforma
EBIT.  This primarily results from a higher than forecast amortisation
charge on factored debt ledgers due to commencing the amortisation of the
acquired Telstra debt portfolio three months earlier than forecast.  This
was as a result of recoveries commencing earlier than anticipated.

Earnings Per Share
In the interests of full transparency and to reflect the company's post
merger focus on Net Profit after Tax and Earnings Per Share (EPS), the
company has elected to provide greater clarity and to more closely align
market expectations at the EPS level to the company's forecasts.  EPS
before significant items (litigation settlement and associated legal costs)
and goodwill amortisation for the year ended June 2003 is expected to show
little growth over last year with the real benefits expected to flow into
FY04 and FY05.  However, cash earnings per share on a proforma basis
(before interest, income tax and litigation costs) is projected to grow
between 40% to 45% over last year, reflecting the continued strong
performance in operating cash flows as detailed above.

Operating Costs
Operating costs are tracking above budget.  These cost overruns relate
primarily to delays in reducing the overhead costs post the merger.
Measures are already under way to reduce the operating costs over the
remainder of the year.  The promised integration benefits of A$15M annually
within three years of the merger remain on track.

Litigation
The company recently announced the settlement of the long-standing legal
proceedings that had been issued by Killorgan Investments and associates
against Data Advantage (and other subsidiaries) and certain directors and
officers of the company at that time.  The settlement sum of A$10M paid by
the company on behalf of all the defendants was in line with the estimate
previously advised.

The company is in negotiation with its insurer, Royal & Sun Alliance (RSA),
seeking recovery for both legal fees incurred in defending the proceedings
and for the settlement sum.  The company will consider pursuing its legal
remedies if it does not achieve a satisfactory outcome with RSA.

Notwithstanding the insurance position, now that the settlement sum has
been paid, the company has adopted a conservative accounting treatment and
will expense the settlement sum in the first half of the year.  As advised
in previous announcements, the company is also expensing the legal costs
associated with the litigation.  In anticipation of recovery from the
insurers, the company will record a contingent asset in its half-year
accounts for the A$10M settlement sum and the legal costs incurred.  In the
event the insurance position is not resolved during this financial year,
expensing the settlement sum will have an impact on the company's profit
for the year and will affect the quantum of any dividend declared by the
company during this financial year.
End CA:00083796 For:BCA    Type:GEN        Time:2002-11-12:08:05:30