I hope this is okay to paste in a very good question and answer...

I hope this is okay to paste in a very good question and answer on the swiftel forum. Someone let me know if it isnt but think this post is worthwhile for holders of PEO shares.

The post is a number of questions by a shareholder and the answers....



"I have viewed the presentation and are impressed with the forecast earnings of $100m and projected margins in the three areas (corporate 57.60%, SME 24.42% and consumer 20.48%).

1. Overall are you saying that PEO average earnings compared to the two mergered companies will be alot higher than the previous year??


These forecast earnings to me reflect a similar situation to a company called Iinet (IIN) during the 2004 financial year.

IIN had sales of $95m during that year, with a profit of just under $4m after goodwill, depreciation, interest and amortisation. Their average margin during that year was 23.9%.

2. Will PEO be releasing a report to the market in regards to a profit forecast for the 2005 year?? Or, are you waiting on the results from the presentation for the broking analyst to complete their profit forecast for the company??


I just don't really understand the market at the moment, how IIN can have a market capitalisation of approxiamtely $221 (79m x $2.80) and PEO with about $52m (305m x $0.17).

The only real difference I can see is that IIN maybe 12 months in front of PEO, have actually obatined these figures and PEO are hoping to obtain the figures in the 2005 year. I would of thought that the market capitalisation for PEO would be a lot closer to IIN.

3. Do you have a date that the pre-merger PEO will release their profit figure results to the market, if at all??


Regards


PS: Can you make my PEO shares go up.




Answer from PEO Management.

Answers in order , and the opions expressed are those based on information released by the company, this is simply a condiut for those reply's and not my personal opinions unless stated otherwise (See first post of this thread)

1.Correct, iinet is probably a good example ( I have great respect for Mike Malone and what he has achieved) IInet is very mature in its data offering but is just moving into voice , voice has far more customers service issues and is much harder to bill so their move will be interesting to watch.
PEO is exactly the opposite very experienced in voice and billing , but with the SWT aquisition now has a balanced exposure to the growing data market.

2. a) Due to many requests from analyst we may put out a quarterly report (the company currently reports half yearly) this will be decided by the board.

2. b) Observation is correct ,IInet do have a "public " track record of meeting forecasts and (to me anyway) are very well run. The difference in Market Capitalisation is something that only the market can address and this will be based on PEO meeting is targets and meeting them reliably.

3.I'll get back on that.

4. As a large shareholder and speaking for the Staff,management and board who combibned own nearly 70% of the free stock, I am sure we are all aiming for the same target.

Thanks for your contribution.