take over ann, page-9

annual report good report, ahead of my expectations although about market consensus l think.
did not expect to see a div however, so that is nice.

no market reaction, volume very small in spite of t/o offer.

no mention of lewis bid, no doubt looking for alternative buyers. l think this report shows some strength and outlook is reasonable, so company is saleable.

article;

"Orion Telecommunications Limited (OTL) today reported results for the twelve months ended 30 June, a year which executive chairman Amanda Lacaze described as “turbulent” and a period when the company saw some significant changes in strategy and senior personnel. However, she said the telco could look forward to a more successful year in 2007.



The company today announced a profit after tax, pre-amortization of initial acquired intangibles and before a write-down of the carrying value of goodwill, of $1.8 million.

When amortization of initial acquired intangibles of $1.8 million and a $2.5 million write-down in the carrying value of goodwill is included, Orion recorded a net loss of $2.490 million.

Orion said it had a cash balance of $5.8 million, which it said was slightly ahead of previous guidance and reflected strong cash flow in the second six months of the year.

The company has declared a final dividend of $0.012, franked to $0.01, which it said reflecting its underlying performance.

The business said it passed through three distinct phases during the year. In the early part of the year the business said it pursued a strategy of aggressive customer growth in each of its key markets, being Australia, Ireland and Spain.

This period was marked by high costs including payments to external sales agents in Australia and Ireland, and investment in internal sales capability in Spain, the telcoms company said in a press statement.

This came to an abrupt halt in late 2005 and early 2006 when Telstra Limited (TLS) launched litigation in Australia and Orion was advised of a formal investigation by the Office of the Data Protection Commissioner in Ireland.

Both matters related to complaints regarding Orion’s sales practices.

From November 2005 to March 2006, the business said its focus shifted to dealing with litigation and compliance issues in Australia and Ireland.

During this time, Orion said it incurred high legal costs, a sharp reduction in customer acquisition rates and increasing customer losses.

In the final part of the year, the company said its strategy focused on creating a platform from which the business could deliver sustainable and profitable growth.

Initially this required a reduction in customer loss rates, which Orion said are now running at less than half the rates of earlier in the year.

“Next steps include improving our share of our customers’ telecommunication spend via the introduction of single bill capability and cross sell campaigns and the implementation of targeted marketing programs to attract high value customers,” Ms Lacaze said.

“To support these initiatives we are improving internal capability by developing stronger internal sales capability and by extending our product range both in Australia and Ireland.”

The firm said customer acquisition activity would be complemented by selected acquisition of businesses or customer bases as they come available. Orion said it completed a transaction of this type on 30 June 2006 with the purchase of a customer base of 3,500 low churn mobile customers.

The company added that it is currently in active final negotiations with interested parties regarding the sale of its Spanish operations.

Going forward, Orion said the key focus of the business would be to execute strategies that would ensure that shareholders realize maximum return from these assets.

“We are a niche player with attractive customer bases which are returning good cash flow to the company,” Ms Lcaze said.

“We expect this to continue providing a strong platform for continued growth in shareholder value.

“In our key markets, Australia and Ireland, we expect there will be further consolidation of smaller providers and believe that our strong balance sheet and core assets position us well to participate actively in any such consolidation,” she concluded.