earnings upgrade

BlueFreeway (ASX: BLU) Announcement
BlueFreeway advises forecast second-half earnings up by 25 per cent versus prospectus Earnings upgrade of 96 per cent versus prior year
Sydney, Australia ¡V Tuesday 22nd May 2007: BlueFreeway Limited, a leading global provider of digital and interactive marketing services, advised today that it anticipates forecast earnings for the period ending June 30th 2007 to exceed its prospectus statutory forecast by 25% from $3.6M to $4.5M. The revised earnings forecast is subject to May and June trading conditions remaining favourable and no unforeseen adverse circumstances arising during this period. The company¡¦s revised forecast anticipates revenues will increase from $17.1m to $19.4m for the 2007 second-half period. The earnings upgrade has been driven by organic growth in the initial ten companies which made up BlueFreeway at the time of the IPO in December 2006, reinforcing the many benefits of the model. The four acquisitions made in April 2007 will have minimal impact on the 2007 fiscal year results but are expected to contribute significantly to the 2008 fiscal year results.
Statutory Forecast ¡V Second Half (unaudited statutory and proforma accounts)
2007 2H
2007 2H
Variance to
2006 2H
Variance to
A$'M
Forecast
Prospectus
Prospectus
Actual
2006
Revenue
$19.4
$17.1
13.5%
$10.6
83.0%
EBIT (excluding OEI)
$4.5
$3.6
25.0%
$2.3
95.7%
Richard Webb, Chief Executive Officer BlueFreeway, said: ¡§BlueFreeway has been born at a time of an unprecedented shift away from traditional media, and as such has realised growth via its one-stop-shop offering through its corporate sales team.¡¨ ¡§While the company has made, and will continue to make, accretive acquisitions, this result demonstrates that our foundation companies continue to grow and become more efficient and are well placed to benefit from unprecedented growth in online marketing and advertising spending.¡¨ ¡§We anticipate that further acquisitions will be made in the short to medium term, but only where a clear strategic and financial case can be made. We will continue to apply strict investment criteria to acquisitions to ensure they grow shareholder returns.¡¨

Factors that have contributed to the company¡¦s positive variance to its pre-listing forecast include:
„h Restructure of the Forty Two International UK reseller framework based on a license fee rather than a revenue sharing model. The restructure removes a barrier to growth for the existing distributor in the UK and allows BlueFreeway to realise its investment in Forty Two International. Under the pre existing arrangement the distributor shared revenue with Forty Two International. This restricted its ability to grow and at the same time BlueFreeway Limited was unable to sell ¡§Campaign Master¡¨ directly into the territory. The restructuring of the United Kingdom has resulted in incremental revenue of $2.4m. It is likely that this transaction model will be replicable in other geographic regions where Forty Two International does not establish a direct presence.
„h Accelerated sales from the Australian BlueFreeway corporate sales division which were not projected to contribute to the company¡¦s performance until the 2008 financial year.
„h Positive performance against budget by several of the Portfolio Companies within the group as a result of an overall review of business operations and better utilisation of resources.
„h Strong revenue performance has been offset by the acceleration of initiatives designed to generate returns in the 2008 fiscal year. These initiatives include:
o Expansion of the geographic sales force in the United Kingdom and Australia
o Expansion of the BlueCentral hosting infrastructure in Los Angeles, London, and Singapore
o Establishment of a 24X7 centralised service and support centre in Sydney
o Establishment of back office shared services for the group
Mr Webb said: ¡§I am particularly pleased that the increase to forecast earnings has occurred and has allowed us to bring forward investments to expand our offering and global footprint ahead of the schedule outlined in our prospectus.¡¨
Importantly, on a like-for-like (pro forma) basis, the first ten companies that made up BlueFreeway on listing have increased their revenue and EBIT (excluding outside equity interest) by 66.7% and 97.6% respectively, over the same period last year. A summary of the full year proforma analysis is provided for reference below.
Full Year Pro Forma (unaudited proforma accounts)
2007
2007
Variance to
2006
Variance to
A$'000
Forecast
Prospectus
Prospectus
Actual
2006
Revenue
$34.5
$32.6
5.8%
$20.7
66.7%
EBIT (excluding OEI)
$8.1
$7.2
12.5%
$4.1
97.6%

About Blue Freeway www.bluefreeway.com BlueFreeway (ASX: BLU) is an Australian-based global digital and interactive marketing communications company with stakes in a growing portfolio of digital and interactive marketing specialists, as well as BlueCentral, a leading hosting and business infrastructure company. The company has offices in Australia, the United States, the United Kingdom, France, and India. BlueFreeway offers a suite of end-to-end, internet and mobile marketing solutions, to major corporate and government advertisers. The Portfolio Companies in the BlueFreeway group include: Agency Fusion, BlueCentral, Cogentis, Communicator Interactive, Deepend Sydney, Digicon, eHound, Forty Two International, IBC, IXION, JSA Interactive, MassMedia Studios, SageMetrics, Spin Communications, and Tentacle. For BlueFreeway inquiries please contact Ken McDonnell Chief Finance Officer Phone: +61 (2) 8211 0684 Mobile: +61 (41) 75 75 677
[email protected]