PWR---29/4/2002--announcement CLA/est 30/4/2002

POWERLAN LIMITED 2002-04-29 ASX-SIGNAL-G HOMEX -Sydney +++++++++++++++++++++++++
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The Board of Directors of Powerlan Limited ("Powerlan" or the
"Company") would like to provide shareholders with an update on the
current business strategy and financial position of the Company.
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SUMMARY
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Over the last ten years, by embracing change, Powerlan has been
consistently delivering profits, despiteadverse market conditions,
and is in a strong financial position.
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The Company is well positioned to reap significant benefits from its
strategic business initiatives undertaken during FY2002 and the range
of IT proprietary products and services it now delivers to global
markets.
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BACKGROUND
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Powerlan was founded in 1992, primarily as a Systems Integrator (i.e.
reseller of personal computers, networking products and provider of
general IT services to corporate and governmentorganizations). As
the industry evolved rapidly in the 1990's, Powerlan was able to
enjoy high growth rates with commensurate profitability.
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By the late 1990's, Systems integration became a commoditised
business as a large number of suppliers entered the market and
hardware vendors commenced dealing directly with customers. The
result was a large shrinkage in margins.
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Recognising this shift, Powerlan listed in 1999 and with the funds
raised, diversified into related IT sectors such as recruitment,
training, project management, software products and e-business
provision. However, the signs were clear at the end of 2001 that not
only was the commoditisation process proceeding further than expected
but many of the other IT related sectors that Powerlan was involved
in were likely to suffer a similar fate.
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Powerlan recognised that its future success needed to be based on
products and services that enjoy high sustainable margins over which
it had control. To achieve this goal, Powerlan determined that it
must own the Intellectual Property (IP) for its products and services
and therefore retain full control of the pricing and into which
markets such products were to be sold. Powerlan also recognised that
to maintain sustainable growth and profitability it had to expand
from its local markets into broader regional and global activity.
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BUSINESS STRATEGY
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Powerlan's strategy is to profitably grow the business in a
sustainable manner by:
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* marketing globally its niche products and services;
* adding new products and services either through internal product
development or by acquisition;
* focusing on quality earnings (transactional and recurring income)
to ensure long term steady income; and
* divesting or closing non-core businesses in a commercially
responsible manner; and
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Rather than focusing on a single product or a single market area,
Powerlan's strategy is to have a small number of sector focussed
products. Through prudent fiscal management and carefully considered
and administered cross product technology and resource sharing, this
multi-product strategy offers advantages by cushioning the variations
in market conditions that impose cash flow strains on specific
product divisions at different times, and through sharing technical
resources at times of peak demands that generally do not coincide in
all divisions at once.
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Powerlan's strategic direction is now being focused on products and
services that meet the following criteria:
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a) Owning the IP of software products and services supplied to ensure
maximum profitability where;
b) The product / service is or has the potential of becoming, a
leader in its area;
c) It has a global market appeal; and
d) Lends itself to a recurring or transactional income model.
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Powerlan's current products that meet the criteria are clustered into
the following areas:
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* BANKING AND FINANCE
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-Portfolio Manager has approximately 25% of the Australian market as
well as sales in NZ and Hong Kong; and
- The IMX suite of products which are sold globally to the largest
financial institutions including American Express.
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* OPERATIONS SUPPORT SYSTEMS (OSS)
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- Clarity is a global leader in OSS. The Clarity OSS suite of
products significantly improves the operational efficiency of
telecommunication and other utility organisations.
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* KNOWLEDGE MANAGEMENT
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- Rapid Web Publisher, the Igneous suite of products, and Nocode are
well positioned to collectively capitalise on the current rapid
growth in global business transition from using the Internet as a
basic communications presence into a tool for information storage,
dissemination and exchange with business partners and clients as well
to transact commerce.
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* MANAGED SERVICES PROVISION (MSP)
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- Zento is the Australian market leader in MSP. Zento provides
security and antivirus managed services for large corporate
organisation throughput Australia.
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ACTION TAKEN
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In February 2002, the Company announced that it had made a Takeover
Offer for Clarity International Ltd, a developer of software for the
telecommunications and utilities industries. Clarity's products are
world class having been successfully sold into a number of countries
including the USA, Australia, Taiwan, Philippines, and India.
Powerlan already owns approximately 38% of Clarity and full ownership
will result in an ability to better leverage the Company's regional
presence, administrative, management and technical resources.
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As part of Powerlan's transition to owning the IP of software
products and services Powerlan has also completed the following:
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- Disposed of 65% of Integrated Asset Management Pty Ltd, an IT
finance and leasing business;
- Merged the Remedy business unit into CMS I.T. Business Solutions
with Powerlan continuing to enjoy a share of profits with no funding
or management responsibilities;
- Disposed of CountryTECH, the Hong Kong based IT recruitment
business, to Manpower Services;
- Unprofitable Melbourne and Sydney operations of the Australian IT
Careers Institute and IT&T Education have been closed and sold; and
- Unprofitable ACT operation is in the process of being closed.
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ONGOING ACTION
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RATIONALISATION OF EXISTING BUSINESSES
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There are a number of tasks that still need to be completed before
the strategic transformation is complete, in preparation for the
start of FY03. Some relate to further divestments of non-core
businesses. Others relate, to ongoing general business review,
refocus, and appropriate infrastructure and supporting financial and
administration changes. These initiatives may result in Powerlan
incurring write-downs in intangible non-current asset values by
year-end, which will be of a non-cash nature.
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SHARPENING THE FOCUS
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Resources will be dedicated to our strategic products and services to
extract the maximum returns from these. In addition, we will continue
to review activity and performance of products and services to ensure
that only those, which continue to be successful, are retained in the
portfolio.
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SYSTEMS INTEGRATION BUSINESS
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Whilst this business contributes strongly to Powerlan revenues (about
half of the first half FY02 revenues), its bottom line contribution
is minimal in the context of Powerlan's overall earnings performance.
The rapid commoditization and continuous reduction in margins of this
business dictates that now is the best time to divest it. We are
currently working on a number of opportunities in this regard.
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For further information please contact:
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Theo Baker
MANAGING DIRECTOR
Powerlan Limited
Phone: +612 9925 4600

e-mail: [email protected]
www.powerlan.com.au