iiNet has delivered a strong financial performance for the last financial year. The key metric of revenues was up 7% to $1.006 billion. What a difference that last $600,000 makes.
The numbers are good – see below – but CEO David Buckingham’s comments about the NBN’s rollout at his subsequent press conference were the most reported aspect of the announcement. iiNet is one of the largest retailers of the NBN’s network, with over 40,000 customers.
“I’m furious about it,” he said, referring to the NBN’s slow rollout. “NBN needs to get on with the rollout, we’re sick of waiting. Speed up the operational rollout, speed up negotiations, speed up everything. They really need to start unleashing the plan they keep putting in front of us.
"I looked at Telstra's results and I was pretty pessimistic for the rest of the day. When a company can make $7.5 billion in free cash more profit than the cashflow of the whole Vodafone Group last year and still get paid $640 million by the Government for the NBN, things are weird.
“NBN needs to get on with the roll out, we're sick of waiting.”
His comments underline those made by Vodafone Australia chief Iñaki Berroeta earlier this week, who criticised the Government for giving still more money to Telstra, which is more profitable than ever (CommsWire, 15 August 2014).
The NBN may be slow in coming, but iiNet’s numbers are good. Underlying net profit after tax for the twelve months ended 30 June 2014 was up 19% to $65.8 million, which CEO David Buckingham said was driven largely by net new broadband customer additions of more than 40,000 in the year.
The profit numbers were slightly under analysts’ estimates, and the company’s share price was unchanged on the day at $8.15.
“The strong results are a result of the company delivering on its strategy of growing market share and improving margins,” said Buckingham. “We have successfully acquired and integrated a number of complementary businesses over the past few years, and the company is now focused on growing organically and maximising its operational performance.
Buckingham said that iiNet had leveraged its core growth foundations to produce the returns seen over the period. “The most pleasing aspect of these results is our return to organic growth. This growth reflects three simple things done very well – customer service, product innovation, and effective brand marketing – which have worked together to lift iiNet brand awareness across all key states and delivered exceptional sales growth.
“Our proactive approach to the NBN roll out continues to pay dividends. We now have over 20% share of the NBN market with over 40,000 iiNet customers on the NBN and more than 50% of our NBN customers are new to iiNet.
“We continue to take full advantage of our capabilities across all access technologies and expect iiNet’s NBN subscriber base to continue to grow as the roll-out speeds up. iiNet’s business revenue has grown to $204 million of revenue, now comprising 20% of total group revenue.
“We will continue to expand our offering in this customer segment while delivering a great service experience. Our new hosted Microsoft Outlook services make it much simpler and more cost effective for small businesses to manage their IT requirements, and we will continue to expand our suite of these services in the next year.
“iiNet continued to deliver strong operating cash flow this year allowing for further investment in growth capital while paying down debt and increasing dividends. The company’s net bank debt was up only $5.3 million even after the acquisition of Adam Internet, clear evidence of the very strong cash flows being generated by the company.
“Reflecting iiNet’s strong earnings growth over FY14, cash flow generation, strong balance sheet and confidence in the company’s growth outlook, a fully franked final dividend of 13 cents per share has been declared, making the total dividend for the year of 22 cents per share, up 16% on the previous year,” said Buckingham..
The most notable events in iiNet’s year was the departure of former CEO Michael Malone, who founded the company 20 years ago in the proverbial garage in Perth. Malone went on a sabbatical late last year, from which he did not return. He said at the time that he had a revelation while climbing a mountain in the Andes that he needed to do something else with the rest of his life.
“We applaud Michael for the tireless leadership he provided and wish him well with his future endeavours since retiring from the business in March,” said Buckingham when announcing the results.
