iiNet revises EBITDA to $24.6m from $40.1m

Stuart Corner
Sunday, 28 May 2006 17:52

IT Industry - Strategy

See also:
iiNet fesses up to poor forecasting and flawed book-keeping

iiNet has announced revised EBITDA guidance for the year ending 30 June 2006 of $24.6 million, before abnormals, down from the previous guidance of $40.1 million. Revenues are forecast to be approximately $250 million. The company said it expects to report a net loss for the year after amortisation and depreciation. The company has been suspended from trading for the past month since telling the ASX that over-optimistic forecasts and clerical errors meant that its previous EBITDA guidance was no longer valid.

Despite the downgrade, CEO, Michael Malone said: "the company remains in a good position, with over 600,000 services and Australia's largest ADSL2+ network." Chairman Peter Harley, who recently took on an executive role, said that the issues with iiNet's financial position had not been identified early enough. "iiNet has been through a period of rapid growth in the last few years, including the acquisitions of iHug in New Zealand and OzEmail in Australia, resulting in iiNet now being the third largest internet service provider in Australia and New Zealand.

"In every other six month period since 2001, there has been either a large acquisition or a major integration...[The lack of same in the previous six months] has allowed iiNet to fully review its systems, its financial results and forecasts to ensure that there is no repeat of this situation."

The company says it is not in breach of its banking covenants and expects to meet future covenant requirements. It is planning to complete the strategic review of the business by the end of June 2006 and says it will provide updated guidance on the 2007 financial year at the conclusion of that process.