TeamTalk back in the red on asset writedowns, faster depreciation

Wednesday 24th August 2016

TeamTalk sank back into the red in the 2016 financial year as it wrote down the value of fixed assets and accelerated depreciation on some items as the telecommunications network company tries to get itself on a stronger footing in a tough trading environment.

The Wellington-based company reported a loss of $1.3 million, or 4.6 cents per share, in the 12 months ended June 30, compared to a profit of $1.3 million, or 4.7 cents a year earlier when it returned to profitability. Earnings before interest, tax, depreciation and amortisation fell to $12.6 million from $13.2 million a year earlier, with TeamTalk contending with tight margins as customers demanded more services at a cheaper price.

The company had already indicated it wouldn't pay a final dividend, retaining cash to keep its options open after investment bank Cameron Partners ran the rule over the business in a strategic review for incoming chief executive Andrew Miller.

"An important element of the strategic review is consideration of the group's cashflows, capex requirements and dividend policy," chairman Roger Sowry said in a statement. "The issue of our future dividend policy is an important element of the wider strategic review so we will look to provide updates to shareholders over coming months."

TeamTalk's shares plunged to a record low when it said it would can the payment in June and have been on a downward slide since the poorly executed acquisition of the Farmside rural internet service provider in early 2013. The stock was unchanged at 43 cents.

The company's long-serving managing director and founder David Ware announced his exit in April, saying that after two decades he'd stayed on too long and acknowledged some of his behaviour had been "sub-optimal" and attracted complaints. Today's accounts show Ware was paid $646,000 in the 2016 financial year compared to $445,000 in 2015.

TeamTalk's CityLink wired network business increased ebitda 11 percent to $7.2 million on a 3 percent increase in revenue to $13.8 million, while it's mobile radio and wireless broadband unit posted a 4.7 percent decline in earnings to $4 million on a 1.5 percent dip in sales to $19.8 million. The Farmside ISP business posted a 44 percent slide in earnings to $1.4 million on a 1.6 percent fall in sales to $24.5 million.

BusinessDesk.co.nz

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