Ann: HALFYR: TTK: TTK FY14 Interim Result

• Release Date: 26/02/14 17:17
• Summary: HALFYR: TTK: TTK FY14 Interim Result
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					TTK
26/02/2014 15:17
HALFYR

REL: 1517 HRS TeamTalk Limited

HALFYR: TTK: TTK FY14 Interim Result

Name of Listed Issuer: TeamTalk Limited

RESULTS FOR ANNOUNCEMENT TO THE MARKET

Reporting period: 6 months to 31 December 2013
Previous corresponding period: 6 months to 31 December 2012

This report has been prepared in a manner which complies with generally
accepted accounting practice in New Zealand (NZ GAAP) and gives a true and
fair view of the matters to which it relates and is based on unaudited
financial statements.

CONSOLIDATED OPERATING STATEMENT
Current Half Year NZ$'000; Up/Down %; Previous Corresponding Half Year
NZ$'000

OPERATING REVENUE:
Total Operating Revenue:

29,475; Up 76.6%; 16,686

OPERATING SURPLUS BEFORE UNUSUAL ITEMS AND TAX:

2,777; Up 8.0%; 2,572

Unusual items for separate disclosure:
0; 0%; 0

OPERATING SURPLUS BEFORE TAX:
2,777, Up 8.0%; 2,572

Less tax on operating profit:
616; Down 29.4%; 872

NET SURPLUS AFTER TAX AND EXTRAORDINARY ITEMS:
2,161; Up 27.1%; 1,700

NET SURPLUS (DEFICIT) ATTRIBUTABLE TO MINORITY INTERESTS:
0; Down 100%, (4)

NET SURPLUS ATTRIBUTABLE TO MEMBERS OF THE LISTED ISSUER:
2,161, Up 26.8%; 1,704

Basic earnings per share:
7.6 cps; Up 5.6%; 7.2 cps

Diluted earnings per share:
7.6 cps; Up 5.6%; 7.2 cps

Net Tangible Assets per share
12.1 cps; Down 43.2%; 21.3 cps

Interim Dividend:

10.0 cps, 0%, 10.0 cps

Record Date: 4 April 2014
Payable Date: 11 April 2014

Imputation tax credit on latest dividend: 3.8889 cps

A supplementary dividend of 1.7647 cps will be payable on 11 April 2014 to
shareholders who are not resident in New Zealand.

The company's Dividend Reinvestment Plan (DRP) has been suspended so will not
be in operation in respect of the interim dividend.

Control of Entities Gained or Lost During the Period

In September 2013 TeamTalk purchased the remaining 4% of Araneo Limited that
it didn't already own making it a wholly owned subsidiary of the group.  The
transaction had no material impact on the group's financial results for the
period.

FROM THE DIRECTORS

Our Strategy

We're locked and loaded.  Our mission and strategy are set and right now
we're all about making it real.

TeamTalk is a niche telecommunications network operator, we specialise in
doing the stuff that's too small or too difficult for the big guys.  We win
because we're small, we're nimble and we stay very, very close to our
customers.

Operations

Our immediate priority is rural New Zealand, we want to give the people who
live and work in hard to get to places great telecommunications services.  To
help make this happen we acquired Farmside.  At last year's Annual Meeting we
outlined that while that acquisition had not met our short term expectations
we remained firmly of the view that it was an important strategic addition to
the group.  We also outlined what we planned to do about realizing that
potential.  While we're not out of the woods yet that internal work is now
largely complete - a new management team is up and running, customer service
is now second to none and we've expanded our product line.  We now have more
technologies at our fingertips than any of our competitors.  Overall the
business is steadily improving a good example being that, from a standing
start a little over six months ago, we have now become the largest reseller
of the Government funded RBI broadband service.  Our next step is to tell
rural New Zealand all about our great products and service and get growth
back into our customer base.

We're also enhancing our remote mobile radio sites to help provide better
rural telco services.  In partnership with the Ministry of Business,
Innovation and Employment (MBIE) we're building the underlying
telecommunications infrastructure that will provide the people of Haast and
south Westland with cellular and ADSL broadband for the first time.  We hope
to be able to extend this partnership to provide services to other isolated
communities around the country.  We're also rolling out new wireless
technologies to some of our mobile radio sites off of our own bat which will
be exclusively for Farmside's use.  These sorts of strategies all present
very real and sustainable growth opportunities for the group.

Both CityLink (fibre based broadband) and our Mobile Radio operation are well
into the transitions that were outlined at the Annual Meeting. At CityLink
the impact of the Government's Ultrafast Broadband (UFB) has hit - we've
fronted up to the lower installation fees and lower monthly prices from our
competition and adjusted our prices accordingly.  We're also starting to see
the benefits of UFB flow through, for example, it's opening up new markets
that we couldn't previously reach from our own fibre.  This will also flow
through to lower capital expenditure because it's often more cost effective
to lease UFB fibre rather than build our own.

CityLink has launched some exciting new products this year - particularly in
the wi-fi area.  In addition our R&D foray into Software Defined Networks has
once again made us world leaders and we're showing the world how to build the
next generation of internet exchanges.

The Mobile Radio division's transition is driven by the industry moving from
simple analogue voice services to complex digital services that can involve
voice, GPS and several data applications.  We continue to lead the industry
by helping our customers get real business benefits from these new services
and our customers are responding - the majority of the digital networks
installed in New Zealand over the last 12 -18 months were provided by
TeamTalk.  We're expecting a steady improvement in revenue, largely as a
result of selling larger complex mobile radio solutions.

Both the CityLink and the Mobile Radio transformations have not been without
their own bumps.  Some of the bigger mobile radio projects are taking a lot
longer to deliver than we expected and it will also take a little longer to
build revenue momentum with our new CityLink products than previously
anticipated.

Our management restructuring is working well.  The Managing Director is no
longer involved in line management thus freeing him up to manage the
strategic direction of the group and to look for more acquisitions and
business development opportunities.  In addition to some of the internal
initiatives outlined there are also a couple of smaller external
opportunities that could complement and add value to our existing operations.

The Result

Overall our half year result is a little behind where we hoped it would be.
Why is it that these restructurings always take a bit longer and cost more
than planned?  Nonetheless it's great to see that all of our hard work in
restructuring the company and building new products and services is showing
the early signs of bearing fruit. Underlying performance of the Mobile Radio
and Broadband business showed the modest increase in revenue we expected
while Farmside was treading water for the reasons previously outlined. For a
more detailed breakdown of the business units' results see the Segment
Reporting note.

Outlook & Dividend Policy

Our future is all about building on our strong foundation and executing our
business model.  We are enthusiastic about the opportunities available to the
group and in particular we are keen to expand our presence in the rural
broadband market as both a network operator and as a retailer. The increased
capital expenditure that will be required for this has, in turn, led the
Board to review the company's dividend policy. Accordingly it is the Board's
intention to introduce a new dividend policy from October 2014.

The Directors have declared a fully imputed dividend of 10 cents per share
payable on Friday April 11th.  The record date for entitlement to the interim
dividend is 5pm on Friday 4 April 2014.  A supplementary dividend of 1.7646
cents will be payable to shareholders who are not resident in NZ.  At the
same time the Board, being conscious of the dilution from continued operation
of the Dividend Reinvestment Plan, have determined to suspend it meaning that
the DRP will not be in operation for the interim dividend.

From October 2014 the company will reduce its annual dividend to 15c per
share. This dividend will be paid in two 7.5c instalments to be paid, as
currently, in April and October each year.

We look forward to reporting back to you on our progress at year end.

Joe Pope     David Ware
Chairman     Managing Director
End CA:00247524 For:TTK    Type:HALFYR     Time:2014-02-26 15:17:57