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RMG soothes market

By Phil Boeyen, ShareChat Business News Editor

Thursday 29th March 2001

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Credit and receivables group RMG (NZSE: RMG) has moved to reassure the market following a disappointing half-year result.

Earlier this month the company reported that it had made a loss of more than A$4 million in the six months ended December despite meeting revenue targets.

RMG says it is expecting revenue of more than A$60 million in the current calendar year, and believes it can reach an earnings margin before interest, tax, depreciation and amortisation of 20%.

CEO Paul Cooney says the company is enjoying a good quality client base and sees significant revenue growth potential in outsourcing and ledger management.

He also says the company sees significant opportunity for margin improvement through further cost reductions by rationalising and centralising business functions.

"The company is enjoying the benefits of a strong business model, which provides for prompt conversion of revenue into cash receipts with no need to hold inventory."

"Since 31 December 2000, the company has traded profitably and is focused on delivering results consistent with its budget in both revenue and profit .The outlook for the company remains very positive."

Mr Cooney says the company's balance sheet and projected operational cashflow will strengthen over the next six months with the sale of non-core assets, combined with refinancing opportunities, providing a more flexible balance sheet.

RMG shares have been knocked since the half-year announcement, losing around a quarter of their value. The shares closed today at just under 18 cents.

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