ferret's stock to watch: salmat limited

Ferret's Stock to Watch: SALMAT LIMITED
07:45, Tuesday, 7 December 2004


Sydney - Tuesday - December 7: (RWE)
************************************

THE MOST SIGNIFICANT ACQUISITION IN THE COMPANY'S HISTORY


OVERVIEW
*********

Spending $64 million for expansion is no small beer.

Salmat Ltd did this yesterday when the company announced it would
acquire SalesForce Australia Pty Ltd.

Salmat describes SalesForce as one of Australia's most successful
and dynamic call centres and direct sales organisations.

SalesForce posted sales revenues of $92 million for the year
ended June 30 with EBITDA (earnings before interest, depreciation,
amortisation and tax) of $9.5 million.

The price represents an EBITDA multiple of 6.7 times for the
year to June 30.

The purchase is expected to be earnings accretive to Salmat
immediately (without any synergies).

Existing cash and debt facilities will be used to finance the
acquisition.

Salmat's funding capacity will remain strong with net debt to
equity increasing to around 65 per cent and net debt to EBITDA projected
to be about 0.8 times.

SalesForce is being acquired from DDB Worldwide and the founder,
Mr Kevin Panozza, who has run the business since its incorporation in
1994 and who will continue to be managing director under Salmat's
ownership.

Joint managing director of Salmat Mr Peter Mattick said,
"This is the most significant acquisition in Salmat's 25 years of
business, both in terms of size and strategic fit.

"The new operation will strengthen our existing call centre
business and take our total number of call centre seats to over 2300.

"Most importantly, the acquisition makes us the leading force in
one of the fastest-growing service sectors in the Asia-Pacific region."

Fellow Salmat joint managing director Mr Philip Salter added,
"SalesForce has operations in Sydney, Melbourne and Auckland, with the
majority of its seats in Melbourne.

"It has a blue-chip customer base customers including Foxtel,
Medibank Private, Flybuys, Transurban and Jetstar.

"This acquisition provides Salmat with a wider customer base
across diverse industries including telecommunications, financial
services and retail, and enables us to provide a wider range of services
to existing and potential customers of both businesses," Mr Phillip
Salter declared.

SHARE PRICE MOVEMENTS
*********************

Shares of Salmat edged 1c to $4.83 yesterday. Rolling year high
for the year has been $5.02 and low $3.10. Dividend is 12c and yield is
2.48 per cent.

Last month Salmat directors emphasised that the company delivered
on the commitments they made to shareholders for the 2004 results.

"On the revenue line, we forecast double digit growth and
delivered over 14 per cent.

"On the net profit line we forecast growth of between 20 per
cent and 25 per cent and we delivered 27 per cent.

"We forecast a turnaround in our call centre business and
delivered an early EBITDA positive result for the year.

In the year to June 2004 Salmat reported a profit after tax of
$21 million, a 27 per cent increase on the prior year's result.

This was on the back of a 14.5 per cent increase in revenues to
$327 million, sourced largely organically and not from acquisitions.

Return on capital employed of 47 per cent - a strong return by
any standard - confirmed that the company continued to use financial
discipline on capital utilisation.

"At Salmat we take our commitments seriously and this year is no
exception, directors declared.

Shareholders have enjoyed a year of strong growth in the share
company's price.

At last year's AGM, the share price was $3.25 and and now the
shares are around $4.83

This represents a capital and dividend return of 37 per cent in
the last year a wonderful return for investors and well in
excess of the returns delivered by the ASX 200 of 22.8 per cent.

Shareholders have also enjoyed increased dividends this year –
the final fully franked dividend, which was paid on September 30, 2004,
of 7 cents per share was up 27 per cent on last year, and took total
dividends for the year to 12 cents, up from 8.5 cents last year.

The increase reflects the company's commitment to rewarding
shareholders with robust dividends whilst maintaining sufficient cash
reserves to facilitate the growth of the company.

Long term success attributed to relationships
-----------------------------------------------

Long term success is all about relationships with customers,
employees, the community in which it operates, and of course,
shareholders.

The quality of these relationships underpinned a strong drive
for Salmat to continue its success over the years to come as a listed
company.

Salmat has consistently achieved above average growth.

Directors believe Salmat has strong prospects for organic growth
and from suitable acquisitions that will create value for shareholders.

And Salmat is also the only company in Australia to provide an
integrated platform of customer contact services.


BACKGROUND
**********

Salmat was established in 1979 by Philip Salter and Peter
Mattick, who saw the huge potential in Australia for direct marketing and
customer communications.

It listed on the Australian Stock Exchange on December, 2002

From small beginnings as a letterbox distribution network, the
company quickly expanded into a national operation and developed the
laser printing and direct mailing business.

Salmat continued to introduce new technologies and methods of
operation to Australia, and by the mid 1990s was market leader in the
disciplines of data management, document management, targeted
distribution and response management.

Salmat's next step was to enter the world of telecommunications,
setting up call centres for inbound and outbound teleservices.

In 1995, Salmat acquired Deltarg to offer letterbox delivery and
customer targeting services to the New Zealand market.

Salmat expanded into Asia in November 1996, establishing a joint
venture with Jardine Matheson, a Hong Kong listed conglomerate with
established relationships throughout the region.

The joint venture commenced operations in the Philippines, and
expanded to Taiwan in 1998 and Hong Kong in 2000.

Salmat acquired Jardine Matheson’s interest in the joint ventures
in August 2002.

In January 2001, Salmat, in a joint venture with ePLDT, opened a
new teleservices operation in the Philippines.

Leading US-based call centre operator, Service Zone, purchased
ePLDT’s 51 per cent holding in July 2003.

ServiceZone has since been acquired by ClientLogic Corporation, a
leading international business process customer in the call centre and
fulfilment industry. The joint venture, ClientLogic Philippines, provides
a comprehensive range of call centre services for businesses operating
anywhere in the world.

Today, Salmat is one of Australasia's leading direct customer
communications companies, employing more than 1,800 people, with
operations in 18 offices across Australia, and internationally in New
Zealand and Asia.

Salmat is the leader in customer communications in Australasia.

Communication is only partly to do with message content.

Most of the investment in marketing communications is in message
delivery.

How to seek out and identify a customer, how to reach them, how
they can reach you, how to make all the links and connections required
for communication to take place.

Salmat operates through two business divisions Business Process
Outsourcing and Customer Contact Solutions.

Business Process Outsourcing provides data management and
processing services.

This includes printing and mailing services, document design,
barcode addressing, data formatting, database development, data
management and segmentation, archival and retrieval, electronic bill
presentment and payment, and customer relationship management.

By outsourcing these functions, a company can focus on their core
skills and business, knowing that their customer communication is world’s
best practice.

Targeted at existing customers and new ones; all linked together
in a totally integrated manner to improve your business.

Internationally, the company has operations in New Zealand, the
Philippines, Taiwan and Hong Kong.

Salmat claims to have the people and systems to deliver the best
in local, national and international customer communication solutions.

Salmat's philosophy of continuous improvement is evident in its
approach to business partnerships.

Salmat has forged relationships with other industry leaders to
enhance its services, ensuring world's best practice in every market in
which it operates.

Salmat offers call centre solutions through ClientLogic
Philippines, a joint venture with ClientLogic, a leading international
business process customer in the call centre and fulfilment industry.

Located in Manila, ClientLogic Philippines provides a
comprehensive range of call centre services for businesses operating
anywhere in the world.

DISCLAIMER: The view expressed in (Stocks to Watch: RWE News
Service) are for information only. RWE is not in the business of
providing financial advice. Nothing in this material is to be construed
as financial advice. RWE ABN Pty Ltd and Ralph Wragg give no warranty,
guarantee or other representation as to the accuracy, completeness of the
material. RWE ABN Pty Ltd and Ralph Wragg disclaim any liability
for any loss or damage suffered in connection with the material.

ENDS


Copyright © 2004 RWE Australian Business News. All rights reserved.

>>>>>>>>>>>>>

I don't hold SLM