With sales revenue of A$109.2 million, up 149% on the previous year, driven by growth in all business units, M2 has secured the position as Australia's largest network reseller (noninfrastructure owning) telco and as Australia's largest network independent telecommunications wholesaler.
The chart below illustrates M2's performance in each key financial measure for the year to June 30 2008 (shaded column) and the percentage change in each as compared with the preceding year (2006/7);
--------------------------------------- M2 Group (MTU) 2007 2008 Change Revenue (A$m) 43.8 109.2 Up 149% EBITDA (A$m) 3.8 9.1 Up 137% EBIT (A$m) 3.2 7.9 Up 145% NPAT (A$m) 2.4 5.2 Up 114% EPS (cents) 4.0 6.5 Up 63% Dividend (cents, FF) 3.0 5.0 Up 67% ---------------------------------------The above EBITDA, EBIT, NPAT and EPS results were each impacted by a non-recurring, noncash cost associated with the introduction of M2's Employee Share Plan and Executive Share Option Plan during the period. With this abnormal charge removed, the "normalised" performance for the year further improves, with normalised EBITDA of A$9.7m (up 152% year-on-year), normalised EBIT of A$8.5m (up 163%), normalised NPAT of A$5.7m (up 139%) and normalised EPS of 7.3c (up 83%).
M2's Group Managing Director / CEO, Vaughan Bowen said: "We're delighted to announce this result, which comes after a year of step change within the business in terms of our scale and position within the sector. Having successfully integrated two major acquisitions during the year and added considerably to our existing operations though strong organic growth, the result is testament to the hard-work of every member of our now significantly enlarged team."
Acquisitions during 2007/8
During the year M2 completed two strategic acquisitions, the first occurring in October 2007, when M2 acquired ASX listed Orion Telecommunications Ltd (ASX:OTL), delivering a mature back office operation and adding further scale to M2's established, profitable retail business (M2 Telecom). The Orion acquisition fuelled growth in M2's retail business contributing to a 56% increase in yearon- year revenues, to A$51.9million. In February 2008 M2 acquired Unitel Australia Pty Ltd, the network services arm of Commander Communications Australia. Unitel completed M2's suite of wholesale products, adding local access and fixed line services to its existing mobile voice and data and terrestrial broadband products. M2 Wholesale saw revenues jump a remarkable 440% to A$56.8 million during the period, with Unitel contributing for four months of the period and the remainder of the growth being generated organically.
Strong Cash Flows
For the 7th consecutive year M2's operating cash-flow increased, jumping 102% to A$6.9m for the year to June 30 2008. This continued strong cash generation is testament to M2's commitment to the quality of its customer revenues and stringent credit control.
The Board has declared a fully franked final dividend of 3 cents per share, taking the full year dividend to a total of 5 cents, an increase of 66% from 2007. This latest dividend is M2's 8th consecutive fully franked dividend, further illustrating M2's consistent ability to generate cash and low capital expenditure demands.
The final dividend will be payable on 31 Oct 2008 based on a record date of 15 Oct 2008. Forecast Continued Earnings Growth in 2008/9 With the rounding out of M2 Wholesale's product suite together with the bolstering of capacity and scale of M2's retail business, the Group is positioned extremely well for further strong growth in 2009 and beyond.
The Directors have issued earnings and revenue guidance for 2008/9 financial year (contained within "MTU Financial Year 2007/8 Results Presentation", released today), forecasting growth of more than 40% at both the top and bottom line.
CEO Vaughan Bowen said of M2's growth prospects: "We continue to win significant new business in both our existing retail business as well as the wholesale market. We have made excellent progress in the implementation of our growth strategy over the last 12 months and have bolstered our management and team to ready us for the next phase of growth. With these solid foundations in place, I am confident of our ability to deliver continuing value for our shareholders in both the short and longer term."
About M2 Group Ltd
Established in 1999, M2 Telecommunications Group Limited (ASX:MTU) is Australia's largest network independent provider of fixed-line, mobile and data telecommunications services. M2 is head-quartered in Melbourne and employs approximately 160 people nationwide. M2 also provides fixed-line and 3G mobile services in New Zealand.
Within its "M2 Telecom" business division, M2 offers a suite of unique bundled telecommunications services and value added offerings targeted principally at the small enterprise market, distributed through an exclusive trans-Tasman network of sales dealerships, agencies and through targeted on-line marketing ventures (www.simplymobiles.com.au and www.greenmobiles.com.au). M2 Telecom also incorporates Southern Cross Telco, an established retail and small enterprise targeted telco, acquired by M2 in October 2007.
"M2 Wholesale" is the other core business division of M2, in which wholesale telecommunications services are supplied to small and medium sized telecommunications service providers and Internet Service Providers (ISP's). M2 Wholesale was launched in mid 2006 following M2's appointment by Optus as its exclusively endorsed aggregator/enabler of Optus mobile services. As a further boost to its wholesale operations, in May 2007 M2 completed the purchase of Australia's largest independent data wholesaling business, Wholesale Communications Group Pty Ltd (WCG), followed by the acquisition of Commander Communication's established wholesale network services company, Unitel Australia Pty Ltd in February 2008.
M2's consolidated revenues now exceed A$160 million (annualised), approximately evenly shared between M2 Telecom and M2 Wholesale. On the basis of the successful completion of M2's acquisition of People Telecom Limited (ASX:PEO) in mid April 2009, annualised group revenues are expected to surpass A$250 million.
M2 has a proven track-record of
M2 Group Ltd