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Revised accounts etc

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    Credit refunds slash profit of AdultShop

    By Fran Spencer

    ONLINE porn broker has been forced to slash its reported June 30 profit by nearly a third and revise its December cash forecast downwards by $2 million after underestimating the cost of problems with credit-card transactions.

    The revised figures, issued after the market closed yesterday evening, came almost three weeks and several missed deadlines after the company first suspended its shares on October 11.

    Yesterday's statement contained no information on when AdultShop shares would recommence trading.

    AdultShop said the $3.9 million allowed to cover refunds for rejected credit-card transactions for the 2001-02 financial year had fallen short of the mark by $2.275 million.

    The company said the original amount was based on information from "a third party credit-card processor" and the company's own previous experience and judgment.

    AdultShop said "around October 10" the undisclosed credit-card processor had provided it with new information on the amount of refunds issued.

    The refunds were processed between August and early October and related to revenue recorded in its online erotic entertainment division for the year to June 30.

    "Consequently, and in view of the monetary size of the liability understatement, the directors have resolved to amend and reissue the financial report for the year ended 30 June, 2002," it said.

    AdultShop revised its reported pre-tax profit from $7.3 million to $5.1 million, taking the net result from $5.7 million to $4.1 million. Earnings per share were cut from 1.9¢ to 1.4¢.

    The changes also bit into the December financial forecasts, with the company now tipping cash reserves to sit in the range of $8 million to $10 million at December 31 instead of the previously expected $10 million to $12 million.

    However, no change was made to the forecast earnings before interest, tax, depreciation and amortisation figure of $1 million to $2 million.

    AdultShop said it would revise the conditions for payment for the direction of traffic to its websites, which it said was its "largest cost item".

    The company also revealed it had chewed through a total of $6.6 million in the September quarter, despite pulling in revenue of $28 million.

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