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I.T : Iinet lifts 8.5pc to record high
Posted by Insider on 2003/8/7 4:51:59 (582 reads)
I.T

IINET shares rocketed more than 8.5 per cent to an all time high yesterday after the Perth-based internet service provider unveiled a record annual profit and said it was negotiating a major acquisition, with plans to bed down a deal by the end of the month.





Speculation has been growing in the marketplace that iiNet, believed to be Australia's fifth biggest ISP, is preparing to make a move on one of its top 10 rivals in a deal that could see the Perth company double in size.



However, iiNet has remained coy on the issue and yesterday would acknowledge only that it was in discussions with a "significant ISP", with "the intention of moving to a sale and purchase agreement by the end of August".



"It is envisaged that the consideration for the business will comprise both cash and iiNet shares (and) is expected that iiNet would raise capital for the transaction," the company said.



IiNet completed the 2002-03 financial year with $8.5 million in the bank and has until now funded its aggressive acquisition plan from its cash flow.



The company spent a total of $7.3 million on acquiring the customer bases of seven regional ISPs during the 12 months to June 30.



IiNet managing director Michael Malone yesterday refused to comment further on the prospective deal, confirming only that the target was a serious one.



"It's not a smaller regional player, it's one of the larger ISPs," he said.



He would not comment on the size of the proposed capital raising but confirmed the deal, if completed, could not be funded from iiNet's sizable cash reserves.



WA's biggest ISP yesterday revealed it had racked up a net profit of $5.2 million for the year to June 30, an improvement of 20 per cent on the previous 12 month period. Revenue for the year swelled 51 per cent to $40 million, with earnings before interest, tax, depreciation and amortisation up 20 per cent to $11.6 million.



Shareholders were rewarded with a final fully franked dividend of 4¢.



The company's revenue growth is directly linked to its rapidly expanding subscriber base, which now sits at 132,000 active accounts across Australia. Almost half of those subscribers, about 46 per cent, are now based in the Eastern States.



IiNet shares took off after the announcements, touching an intraday high of $2.45 just before close of trade, before settling back to finish 19¢ higher at $2.42. The record close capped off a year of remarkable growth for iiNet shares, which have soared more than 214 per cent from levels of 77¢ in August 2002.



But with iiNet's tightly-held share register, many of those gains have remained in-house. The Perth company's top five shareholders account for almost 70 per cent of its issued shares between them.



Foremost among them is Perth Internet Pty Ltd, the family company of iiNet managing director Michael Malone.



According to the most recent notice to the exchange, Perth Internet holds 18.9 million of iiNet's 39.9 million shares, giving Mr Malone - the sole shareholder - a 47.8 per cent stake. Last year's total dividend of 6¢ a share will deliver Mr Malone a dividend cheque of $1.1 million.



Two of the remaining four top-five shareholders are also linked with iiNet. The No. 3 shareholder with a 7.4 per cent stake, Phase Three Pty Ltd, is owned by iiNet director Andrew Milner while Jamax Holdings, the private company of iiNet chief financial officer Clayton Hollingsworth, holds fifth position with a 3 per cent stake.

http://www.thewest.com.au/20030807/business/tw-business-home-sto107926.html

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katharin
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