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CEO's Address At RMG AGM

Chief Executive Officer’s Address
Annual General Meeting

Ladies and Gentlemen – Fellow Shareholders,

My name is Jim Boult. I am RMG’s newly appointed Deputy Chairman and Chief Executive Officer.

I am delighted to have secured this position with a company which I believe has the potential to substantially outperform its competition and the Market’s expectation of its performance of the next three to five years. I will come back to this point shortly and explain why I consider this to be the case.

Firstly a couple of background issues.

As a newcomer to the RMG team, I believe I am able to look at the company and what has been achieved over the past 12 months with a fresh view. While there are aspects which have disappointed the board, and I am sure the shareholders, the task of rolling up 22 quite separate and disparate company’s and forming the RMG business unit from that process has been a significant task. This process has been managed admirably by Paul Cooney, my predecessor, and I can only have admiration for him in achieving this difficult and demanding goal.

Our company started with 6 software packages, a raft of hardware platforms, 22 different corporate cultures and within that some philosophical differences in the way business was transacted. Over the past 12 months that vaguely related grouping has been transformed into the RMG family, and now provides the basis upon which we will grow the company and achieve profitability.

I thought it would be useful for you to know my own background in view of the significance of the role I now hold with RMG. My qualifications for this task primarily relate to the position I held as Chairman of Baycorp Holdings Ltd from the latter part of 1989 until mid 1998. In that period, almost four years was spent as Executive Chairman of the company, at which time I was charged with the day to day control of Baycorp.

For anyone who isn’t aware, Baycorp is a competitor of RMG’s primarily in the New Zealand market but also in Australia through its shareholding in Alliance, one of our larger competitors. Across the Tasman, Baycorp largely dominates the Credit Information business and has a strong hold on the Receivables Management business.

At the time I took up my role with Baycorp that company was in dire financial straits indeed. It had a large debt which it could not service, a poor balance sheet and a range of investments and subsidiaries which not only were non core to its basic business but were also generally unprofitable. By taking Baycorp back to its core business, streamlining its processes and cutting its costs, the company became very profitable. By 1994 Baycorp had paid off its debt and become a strong, focused organisation with a well considered business strategy. Through the mid 1990’s until I resigned in 1998, Baycorp was consistently the New Zealand Stock Exchanges top performer.

Obviously that background is relevant to my position at RMG. However I also have an extensive background in general business through a number of other industries including tourism, hotels, and finance. I also have a strong interest in and understanding of marketing.

I mentioned earlier the opportunity I believe RMG now has to outperform the market generally in coming years. Let me tell you why this opportunity exists. Throughout the difficult period which the company has faced in rolling up the vendor companies which make up RMG, the most encouraging aspect of its business has been the retention of our customer base and the continued growth of the company’s revenues. This tells me two things about the company. Firstly, we are performing an excellent service for our customers which has enabled us to retain and grow our business in the face of strong competition. Secondly, it tells me our most important asset, the skills of our people, are second to none in the industry. And in this industry, believe me, if you have the right people, you will succeed.

From a revenue perspective, RMG has another important asset not shared by some of its competitors. Our customer base by virtue of the vendor companies has an extensive mix by industry, geographic, location and size. This places us in a strong position from the viewpoint of industry or regional fluctuations.

What hasn’t been achieved in RMG to date, is the operational efficiencies which should have flowed from the roll up and which were envisaged at the time of the float. My most important task over the next period therefore will be to drive those efficiencies within the company, to wring out a substantial increase in profitability. One of my goals will be to ensure that the measurement of our operating costs, as a percentage of our revenue, continually drops to demonstrate that we are continually working to become a more efficient business unit, providing greater value for its shareholders. I look forward to demonstrating this in coming years.

The debt collection industry has changed markedly over the last decade from what was virtually a cottage industry to now an industry dominated by major corporate players. The exciting aspect of this is that there are still a large number of major businesses in both Australia and New Zealand handling their debt collection in-house and who have yet to be exposed to the increased efficiencies and reduced costs RMG can bring their businesses. It will be our job to ensure that those efficiencies are demonstrated and that those potential customers provide the substantial growth in RMG’s revenues we will also seek.

There is also an acceptance by corporates, of the services an organisation such as RMG can provide outside of just debt collection. As we improve the efficiency of the company and strengthen our balance sheet, the ability to undertake some of these business opportunities will be open to us.

There will be numerous openings before RMG as we move forward. RMG will be selective in those it chooses to undertake. Our task is profitability, not size for the sake of size. One opportunity we will pursue is the acquisition of distressed debt ledgers. This profitable niche of the industry is well known to me and an area which will provide attractive returns in the future.

Finally I thank you for the opportunity to be part of RMG. I look forward to sharing an exciting and profitable future with you.

James Boult

15th June 2001

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