Media Release
Market Information And Guidance
12th April 2007
RECORD THREE QUARTERS PROFITS TO 31 MARCH 2007…UP 53%
CAPITAL MANAGEMENT…DIVIDENDS…BUYBACKS…CAPITAL CONSOLIDATION
MANAGEMENT STRENGTHENED FOR CONTINUED GROWTH
Webjet today advises several announcements and information updates.
Commenting, Webjet managing director, David Clarke said:
“Webjet is pleased to inform and update the market under the following four main headings:
1. Record profits and sales for the first nine months including the March Quarter 2006/2007
The above table clearly shows that turnover growth is not at the expense of profits. The total model of the financial elements is being tightly managed and is delivering a profit growth percentage which is greater than turnover growth.
Cash flow remains very strong with $27.6 million on hand as at 31 March 2007 compared with $7.3 million as at 31 March 2006, an increase of $20.2 million year-over-year.
As previously indicated, these quarterly results, which are unaudited, are the last quarterly results which Webjet will release. Starting with the 2006/2007 Full Year results, due in August, the company will adopt the ASX standard six monthly interim and final reporting formats.
While no forecasts are made at this time, Webjet offers the following broad indications, based on recent years' experience, of the historical relationship between the first nine months' results and the fiscal full year for TTV, Webjet income and net profit after tax.
2. Capital management
Webjet makes the following announcements relating to intended dividends, share buybacks and capital consolidation.
i. 2006/2007 maiden dividend of 0.5 cents per share unfranked
Webjet reiterates its commitment as advised to the ASX on 2 November 2006 and subject to no adverse operating conditions, to a maiden dividend in respect of the 2006/2007 year. Dates for record and payment will be announced at the time of the Full Year release expected in August.
ii. Future years’ dividend policy and intentions
Webjet intends to pay dividends in future years, again subject to no adverse operating conditions or alternative strategic requirements, commencing in 2007/2008, in the range of 60% to 70% of net profits after tax. It is expected that these future years’ dividends will be fully franked.
iii. Selective buy back
As previously announced and subject to the outcomes of an independent expert’s report and a special resolution by Webjet’s shareholders, Webjet has entered into an agreement to selectively buy-back 27,299,446 shares, representing approximately 8.4% of the issued capital, currently held by GIW Holdings CV (GIW).
Based on the price of the company’s ordinary shares on ASX on, for example, 10 April of 32 cents, the selective buy-back of GIW's 27,299,446 million ordinary shares will cost the company approximately $7.9 million.
iv. On-market buy back
Consistent with the above, the directors have also approved Webjet commencing an on-market buy back of up to 14,853,171 ordinary shares in Webjet representing up to 5% of the Webjet's issued shares (calculated on the basis of current issued capital less 27,299,446 GIW shares).
It is intended that the on-market buy back will be structured such that Webjet will be able to buy back its shares on-market at any time on and after 12 June 2007 (so as to coincide with completion of the proposed selective buy-back described above).
It will continue for 12 months (subject to any earlier fulfillment of the 5% buy-back limit). Based on today’s share price, this would represent a buy back cost of approximately $4.5 million to the company.
v. Impact of the proposed buy backs
The company currently has 324,362,858 ordinary shares on issue. On successful completion of the on-market and selective buy-backs described below, the total issued capital will be reduced to 282,210,241 shares.
The directors do not believe that the proposed buy-backs will have any material adverse effects on the prospects of the company. As at 31 March 2007 Webjet had cash reserves of $27.6 million and with Webjet forecasting that, if it was not to proceed with the selective and on-market buy-backs, its cash reserves at the end of the current financial year would be likely to exceed $29 million, it has more than adequate resources to undertake the two buy-backs which may account for expenditure of about $14 million in total.
vi. 4 for 1 capital consolidation
Webjet’s board of directors has resolved to recommend that shareholders consider a 4 for 1 consolidation of ordinary capital, to become effective following the completion of the proposed share buybacks. Webjet’s existing capital of approximately 324 million shares has developed over the period since the acquisition of the Webjet business in 2000. The large number of shares is an historical product of the company’s origins and also the post 2000 years when the prevailing share price reflected the company’s then embryonic profit potential.
As a result, directors consider it appropriate, at this time, to recommend a meaningful capital consolidation to reflect easier comparisons with like type entities.
In line with the company’s requirements which will result from continuing strong growth and significant strategic new product developments, Webjet announces the promotion of Richard Noon to the new position of Chief Executive Officer reporting directly to the Managing Director, David Clarke. Richard has been Webjet’s Chief Operating Officer since 2006. In his new role, he will assume specific responsibility for the implementation and operation of Webjet’s annual business plan.
Webjet’s board of directors remains unchanged following the appointment of Chris Newman in December 2006. The board members are Allan Nahum, Ben Lochtenberg, David Clarke, John Lemish, Steven Scheuer, John Guscic and Chris Newman.
Also in line with the company’s continued strong growth, Webjet announces the promotion of Alex Orlov to the position of Chief Technology Officer. Alex, who has been with Webjet for two years, will lead Webjet’s in-house technology group and external technology resources.
In order to assist the company’s operational management concentrate on its business development tasks, David Turner has recently been appointed Investor Relations Manager. David has had a long association with Webjet and was involved in the initial listing of Webjet and subsequently worked with the company on a number of capital market advisory matters in our formative years. David brings extensive experience as a senior stockbroking analyst and corporate advisor with a number of firms including BBY, McIntosh and Capstan.
David’s appointment will greatly facilitate access to appropriate investor information.
Webjet will shortly release the beta version of PLANITONEARTH.
PLANITONEARTH is designed to transform Webjet’s relationships with its customers through the provision of a sophisticated planning, budget control and mapping environment with the associated capability of creating a community of friends. It is a uniquely integrated planning tool which will enhance Webjet’s market leadership and differentiation.
In conclusion, we consider that these results and associated matters well position Webjet for the continued development of shareholder value in an environment where we believe further strategic opportunities are likely to emerge. The company continues to carefully and exhaustively examine opportunities consistent with its development plan.”