great growth potential

MYOB hints at shareholder return
December 12, 2007 - 1:36PM

shares in MYOB Ltd have risen by more than nine per cent after the business software company upgraded its annual guidance and flagged a capital return to shareholders.

Australia's biggest accountancy software provider also forecast a further improvement in the following year, as it seeks more acquisitions.

MYOB said earnings before interest, tax, depreciation and amortisation (EBITDA) would grow by 20 per cent to $77 million in calendar 2007.

"We expect further strong performance in 2008 with ongoing robust growth in our more established businesses supplemented by our portfolio of growth initiatives," chief executive Craig Winkler said.

The Melbourne-based company said the 2007 earnings improvement was being driven by its continued focus on cutting costs and margin improvement.

It still expects revenue to grow by between $204 million to $206 million, or 12 to 13 per cent over calender 2006.

Mr Winkler also hinted at a possible cash return to shareholders of between $60 million and $80 million.

"Over the past few months MYOB has undertaken a detailed review of its capital position," he said.

Mr Winkler said the company's high rate of recurring revenue and strong underlying cash flow shows its debt capacity continues to increases.

"This most recent review indicates a one-off return of capital to shareholders in the range of $60 million to $80 million may be appropriate," he added.

MYOB shares jumped 13 cents, or 9.29 per cent, to $1.53 by 1302 AEDT.

MYOB said it currently has about $30 million of cash on hand and a high proportion of earnings is being converted to cash.

At its interim results announcement in August, MYOB its first half performance had been stronger than expected.

That strong performance had continued into the second half, and the company expects good full year results from its accountants and business divisions.

But MYOB said a stronger Australian dollar had dampened the growth of the UK and New Zealand businesses, which meant its full year revenue forecast was unchanged.

MYOB said its China business is progressing slower than anticipated, delaying profitability.

But significant opportunities remain and that it will continue investing in that market.

Mr Winkler said acquisitions remain key for MYOB.

"Continued improvements in profitability and cash flow place us in an excellent position to both boost returns to our shareholders and continue our ongoing program of investments in Asia and new acquisitions," he said.

MYOB also said its underlying EBITDA margin will be around 40 per cent for 2007, excluding the impact of its ongoing investments in Asia and the accountants resourcing business.

Both of those business will move through to profitability in the coming years, it added.

In calendar 2006, MYOB generated revenue growth of 13 per cent to $182.3 million, operating EBITDA of $64.7 million and a net profit of $17.3 million.

MYOB will release its full year results on February 12.

© 2007 AAP
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