Baycorp posts 19 per cent profit increase

Australasian debt management firm Baycorp Advantage today posted a 19 per cent increase in full year profit and announced an A$150 million ($163.95 million) capital return.

The firm reported a net profit after tax (npat) before goodwill and significant items of A$34.8 million for the year ended June 30.

Earnings before interest, tax and amortisation (ebita) increased by 6 per cent to A$50 million.

Baycorp also announced a A$150 million capital return to shareholders. The proposed return will consist of a 50 cent per share pro-rata return of capital to all shareholders and an on-market share buy-back of up to 5 per cent of issued share capital.

Shares in the dual listed firm traded down 5c at $4.01 on the local market immediately after the announcement.

Baycorp managing director Andrew Want said the capital return was recommended after a 12 month financial and operational review of the company.

The firm has struggled since the merger of New Zealand's Baycorp Holdings Ltd and Australia's Data Advantage in December 2001.

It is currently the subject of a takeover bid by Australian private equity fund Allco.

Last month, Allco spent A$136 million grabbing a 17 per cent stake in Baycorp and offered A$3.50 a share off-market for half of the remaining shares, which would take it to about 58 per cent.

Earlier this week, Allco said if it is successful it will restructure the company, offer better management and return A$1.18 ($1.29) cash per share in capital to investors.

Allco is also looking at a number of initiatives, including restructuring the underperforming collection services with a view to a potential merger or sale, pursuing strategic options for the loss making international businesses and implementing an active capital management plan.

In the Allco initiatives no further dividends or distributions would be paid out in the 2006 financial year, after the A$1.18 payout.

Baycorp Advantage said its capital management plan would allow the group to maintain its high dividend payout ratio.

The firm will pay a final dividend of A8 cents per share on September 26, bringing total dividends for the year to 14cps.

Baycorp Advantage announced today it will separate its Collections Services division to allow better access to capital and investment through a full sale or potential joint venture partner.

The division has been the thorn in Baycorp's side, with revenues declining 8 per cent to $58.9 million in the full year period.

Revenue for its Business Information Services division rose 6 per cent to A$121.5 million in the June year, while Baycorp Advantage Solutions Group (BSG) revenues increased 34 per cent to A$15.8 million.

Mr Want said today's result was driven by a solid second half, with strong activity in trans-Tasman credit markets .

"We've now positioned the business for major change and accelerated growth."

Mr Want said the proposed capital return would be funded by raising A$150 million in debt, and had the support of the group's existing financiers.

"A prudent level of debt is sensible and provides headroom to fund our future growth plans," he said.

Looking ahead, Mr Want expects growth in adjusted earnings per share in the region of 15 per cent in the year to June 30, 2006.

- NZPA