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Chairman’s Address For RMG Annual General Meeting

RMG can now proudly claim to be one of the largest receivables management groups in the southern hemisphere. The company possesses core competencies in outsourcing, receivables management and collections, a sound resource base in the information sector and a large default database delivering growth and relationship opportunities.

Frontier Petroleum settled the acquisition of Receivables Management Ltd on June 20, 2000 for $80 million. The transaction was settled by the issue of 296 million Frontier ordinary shares at a price of A 0.20c each and the payment of $20 million in cash.

The balance sheet should become more flexible in the 2002 financial year with the sale of non-core assets combined with refinancing opportunities.

In addition I am able to announce today that negotiations with vendors are well advanced to provide for the extension of the escrow period on the majority of the vendor shares for a further 12 months to the 30th June 2002.

EBITDA margins of 20 per cent or more are achievable in the receivables management industry. RMG sees significant opportunity for margin improvement through further cost reductions by rationalising and centralising business functions.

Sales revenue of $43 million, of which $30 million was generated in the six months to December 2000, in line with the prospectus forecast, was very encouraging. The company reported a net loss after tax of $5.4 million, with a positive trading result for the full financial year to December 2000 of $600,000.

An integration of this scale and complexity has posed problems unforeseen when the prospectus was issued last year and it has proved far more difficult and costly than previously envisaged.

We have failed to meet prospectus profit forecasts for the year to 31 December, 2000 due to costs of integration being far larger than expected. However, I can confirm that since January 2001 RMG has been trading profitably and the company reported a record result for the March quarter of $15.5 million in revenues with an unaudited EBITDA of $1.3 million.

Our out-going chief executive Paul Cooney should be commended for his vision for RMG and we would like to thank him for his success in bringing the company to this point.

RMG now has a new and focused senior management team and more than 700 highly skilled employees to realise the vision for the company.

A major step forward taken by your Board was the appointment of Jim Boult as the company’s new chief executive and deputy chairman. Mr Boult was a former executive chairman, then chairman of Baycorp Holdings. He headed up this company from 1989 to 1998 and achieved a remarkable turn around in the company’s fortunes in that period taking it to the best performing stock on the New Zealand Stock Exchange.

There are four new senior faces in the organisation. Paul Wilkinson as Chief Financial Officer and Ian Rodgers as Chief Technology Officer were appointed in early December 2000.

Mike Blonk has been appointed State Manager in New South Wales and Sally Georgas as HR Manager in Victoria.

We are committed to a strategy that will deliver long term profit growth from a position of market leadership.

Growth in the second half will come from new contracts won in the telecommunications, utilities, and banking and finance sectors.
In early May we reported that the positive impact of the rationalisation process had already become apparent.

We believe the company’s IT integration project, which for the region will be completed in the September quarter, will deliver productivity and functionality benefits that will assist the company to maintain its leadership in the sector.

The full benefit of the acquisitions during the last half of 2000 will be evident in the 2001 accounts following the integration of these businesses which was completed in December 2000.

On the international front RMG entered into a strategic and exclusive alliance with the world’s largest receivables management company, NCO Group, of Pennsylvania USA. This company with more than 10,000 staff in a network of 94 offices, has built a global presence with RMG delivering its facilities throughout Australasia. This alliance is delivering a flow of work to RMG offices across the region and management is working on processes to deliver a seamless exchange of data across the two networks.

Exclusive agreements have also been entered into with Korea’s largest receivables management company for Australia and New Zealand, with RMG managing the relationship for referrals to other regions.

Your Board believes that the company is well on its way and has an exciting future. In asking our new chief executive and deputy chairman Jim Boult to speak further to the business and give his view going forward, I wish to particularly pay tribute to all the staff of RMG – they have performed superbly during the difficult period of integration. Mr Jim Boult.

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