iiNet Ltd has announced a $60 million net loss for the 2005-06 financial year, down from the previous period's $10.4 million profit, in what was a difficult year for the company.
Perth-based national ISP iiNet Ltd has announced a $60 million net loss for the 2005-06 financial year, down from the previous period's $10.4 million profit, in what was a difficult year for the company.
The loss, due largely to costs and write-downs associated with impaired internal reporting procedures, came despite stronger revnue which was up 58 per cent to $248.5 million.
The news was greeted with little reaction from the markets. iiNet closed at 62.5 cents a share, more than a $1 a share below the April close when the shares were suspended for five weeks amid a flurry of bad news.
"It is obvious that the integration of the OzEmail business and changes to the wholesale market put strain on the business," said iiNet CEO Michael Malone in a statement.
"However, we have emerged from that period with a strong platform to support future growth.
The full text of a company announcement is pasted below
iiNet Ltd today announced Earnings before Interest, Tax, Depreciation and Amortisation of $24.6 million for the year ended 30 June 2006, in line with market guidance.
Revenue for the year was $248.5 million, up 58% on FY05 revenue of $157.2 million.
The Company produced positive operating cashflow of $20.8 million for the full financial year.
"Our recent financial performance indicates we are tracking towards an annualized EBITDA run rate for FY07 greater than the $25 million reported to the market in May this year," said iiNet Executive Chairman Mr Peter Harley. "We now have a strong financial basis from which to implement our Australian growth strategy. "
Behind the improved trading performance are extensive cost savings, continued transition of broadband customers onto our own network and major improvements in customer service and operations," said Mr Harley.
The Company also announced a $65 million write down of intangible assets, driven by the prescriptive impairment criteria laid down in the AIFRS accounting standards and structural changes in the telecommunications industry. This has resulted in a net loss after tax of $60 million. The Company made a net profit after tax before impairment and amortisation of $2.6 million.
iiNet Chief Executive Officer Michael Malone said the operating environment for the Company had shown dramatic improvement in the past 6 months, including:
- Rationalisation of customer support through consolidation of call centres in three locations
- Over 110,000 customers now on the iiNet ADSL2+ network, with a lower and more predictable cost base
- A complete overhaul of the Company's product lines
- More clarity on major regulatory uncertainties
"It is obvious that the integration of the OzEmail business and changes to the wholesale market put strain on the business," said Mr Malone. "However, we have emerged from that period with a strong platform to support future growth.
"Our focus in the current year is firmly on our core activities - delivering high speed broadband with excellent customer service and innovative products.
"After considerable recent investment, our network now has coverage in all metropolitan areas, and the PowerTel Alliance extends this to several major regional centres," said Mr Malone.
"We will concentrate on getting more customers onto our network directly and through the PowerTel wholesale channel.
"The objective is to leverage our investment with only incremental capital expenditure."
Mr Malone said that consistent government support for the regulatory environment had created a more stable and certain marketplace for organisations such as iiNet.
"We are very confident the lower cost base and more favourable regulatory climate will drive improved profitability in 2006-07."
In July, the Company announced that it was selling iiNet's New Zealand subsidiary. Mr Harley said that the sale of iHug remained on track with completion scheduled by the end of the calendar year. A portion of the proceeds from the sale of iHug will be applied to reduce group debt.
