KEY POINTS:
New Zealand operations were a drag during the second half of 2006 on Australasian credit rating company Baycorp Advantage Ltd, soon to change its name to Veda.
The Sydney-based company today announced a 9 per cent increase in net profit to A$17.2 million ($19.7 million) for the six months to December.
Managing director Andrew Want said the result reflected a mix of strong revenue growth in Australia and a successful cost reduction programme following the sale of the company's collections business.
But the New Zealand market had provided particular challenges.
"The overall state of the New Zealand economy has been more challenging than our projections last year indicated," he said.
"When combined with the fall in the exchange rate and the regulatory impacts of changes to the NZ privacy legislation which came into force in April 2006, there has been a significant impact on revenues generated in New Zealand."
Profit for the half year was underpinned by an overall increase of 9 per cent in revenue from the Australian operations to A$62.5m, offset by a weak result from New Zealand which fell 6 per cent to A$14.5m on the back of a 9 per cent fall in the New Zealand dollar.
A rebuild of the company's New Zealand bureau, involving the complete replacement of the existing New Zealand credit bureau platform, started in 2006.
Delivery of the project was now expected in the second half of 2007, from the original target delivery date in March, with additional costs to completion of the project of about A$2 million a month.
"This is a significant, complex and technically challenging project," Mr Want said.
"It will allow the deployment of a significantly larger suite of value added products in the New Zealand market, will provide greater data accuracy and data matching capabilities and in time will support the release of a consistent product suite in the New Zealand and Australian markets."
For the full year to the end of June, growth in commercial business, particularly in Australia, was expected to continue, he said.
"While economic conditions in New Zealand remain more subdued than originally anticipated, there are early signs of improving business and consumer sentiment.
"This suggests potential for recovery in credit growth which would position the group for a sound recovery in New Zealand revenues in FY08," Mr Want said.
Based on the first half results, the group was on track for a 15 to 20 per cent increase in earnings before interest and tax (ebit) from continuing operations for the year ended June. It tightened its ebit guidance range to A$55m to A$58m.
In the six months to December, Baycorp lifted revenue from ordinary activities 6 per cent to A$77.07m,
Earnings before interest and tax for the half-year increased 24 per cent to A$26 million, while adjusted earnings per share increased by 20 per cent to A7.7 cents.
An interim dividend of A6 cents per share was declared, fully franked for Australian shareholders and 25 per cent imputed for New Zealand shareholders.
On February 26 the company is to cease trading under the name, Baycorp Advantage, to formally become Veda Advantage, the name approved by shareholders at the 2006 AGM.
- NZPA
