Ann: FLLYR: TTK: TeamTalk FY15 Result

• Release Date: 26/08/15 13:58
• Summary: FLLYR: TTK: TeamTalk FY15 Result
• Price Sensitive: No
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					TTK
26/08/2015 13:58
FLLYR
PRICE SENSITIVE
REL: 1358 HRS TeamTalk Limited

FLLYR: TTK: TeamTalk FY15 Result

Name of Listed Issuer: TeamTalk Limited

RESULTS FOR ANNOUNCEMENT TO THE MARKET

Reporting period: 12 months to 30 June 2015
Previous corresponding period: 12 months to 30 June 2014

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 audited
financial statements.

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

OPERATING REVENUE:
Total Operating Revenue:

58,405; Down 4.3%; 61,009

OPERATING SURPLUS BEFORE UNUSUAL ITEMS AND TAX:

1,777; Up 123.5%; (7,557)

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

OPERATING SURPLUS BEFORE TAX:
1,777, Up 123.5%; (7,557)

Less tax on operating profit:
433; Down 45.3%; 791

NET SURPLUS AFTER TAX AND EXTRAORDINARY ITEMS:
1,344; Up 116.1%; (8,348)

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

NET SURPLUS ATTRIBUTABLE TO MEMBERS OF THE LISTED ISSUER:
1,344, Up 116.1%; (8,348)

Basic earnings per share:
4.74 cps; Up 116.1%; (29.48) cps

Diluted earnings per share:
4.74 cps; Up 116.1%; (29.48) cps

Net Tangible Assets per share
0.3 cps; Down 95.1%; 6.1 cps

Final Dividend:

4.0 cps, Down 46.7%, 7.5 cps

Record Date: 9 October 2015
Payable Date: 16 October 2015

Imputation tax credit on latest dividend: 1.5556 cps

A supplementary dividend of 0.7059 cps will be payable on 16 October 2015 to
shareholders who are not resident in New Zealand.

The company's Dividend Reinvestment Plan (DRP) remains suspended and will not
be in operation in respect of the final dividend.

Control of Entities Gained or Lost During the Period

On 30 June 2015 TeamTalk Limited amalgamated with its 100% owned subsidiary
company Araneo with TeamTalk Limited being the name of the amalgamated
company and Araneo Limited being removed from the register of companies.  The
amalgamation had no effect on the Group's financial performance.

FROM THE CHAIRMAN AND MANAGING DIRECTOR

Getting our ducks in a row.  2015 has been a tough year and one of two halves
as we ended the year in a much better position than we reported at the
interim result with earnings in the second half well up on the first six
months.
Counting up internal operational reorganisation, the introduction of new
products, better targeted sales activities and the refinancing of our banking
facility we enter the new financial year in a positive frame of mind with an
eye on future growth opportunities.

Group Structure
We've reorganised our group to better align with our customers' needs. This
involved rationalising a number of group-wide functions and, thanks to the
patience, experience and co-operation of our valued staff, this has already
achieved some immediate benefits for our customers including improved
customer service and a single point of contact for sales.
On a purely technical reporting level, we have moved to two distinct business
units:
o Business: which is basically the old TeamTalk mobile radio business and the
CityLink broadband business; and
o Consumer: primarily comprised of our rural focused ISP Farmside.
Going forward we will report our results on that basis, however as we are
just going through that change our commentary for these results is based on
the three 'old' business units that shareholders will be familiar with.

The Result
The following table summarises TeamTalk Group's 2015 full-year result:
$'000 Mobile Radio Broadband ISP Group
Revenue & Other Income 17,526 15,959 24,920 58,405
Total Costs excl. Depreciation (15,225) (7,560) (22,441) (45,226)
EBITDA 2,301 8,399 2,479 13,179
Depreciation, Amortisation & Impairment (1,568) (2,641) (4,511) (8,720)
EBIT 733 5,758 (2,032) 4,459
Net finance costs (incl. mark to market of hedging derivatives)    (2,682)
Profit before  income tax    1,777
Tax    (433)
Group Profit for Period    1,344

Broadband
The Broadband division performed well with revenue up over 5% compared to the
previous year. Cost pressures however, half of which related to an
unexpected legacy issue, meant that EBITDA was only marginally up.
Nevertheless this growth saw the Broadband division contribute almost 2/3rds
of Group EBITDA.
CityLink's New Zealand Internet Exchange (NZIX) expanded into its sixth
centre (Dunedin) and gained a number of new subscribers throughout the
country including the Government's Network 4 Learning which provides a safe,
high quality managed internet network for the school sector.
CityLink's cbdfree wireless service continually sets new traffic and user
records and we are always exploring ways to convert those eyeballs into
revenue.  While progress on this score is modest we continue with a number of
inline advertising and other marketing initiatives.
Our home base is Wellington but in the coming year we see good potential for
this business unit in the Auckland market as we better target business
opportunities, particularly in the CBD where most of our fibre network is.

Mobile Radio
The mobile radio business remains the dominant industry player in its space.
This year we experienced a challenging trading environment, revenue was down
on the previous year,, as we predicted, because we were unable to match the
prior period's success in selling a large mobile-radio-based solution to an
enterprise customer.  The flip side is that costs were generally
well-controlled meaning that the decline in earnings was less than the drop
in revenue.
The mobile radio business was not without success this year.  In February we
signed a new contract with St Johns, Wellington Free and NZ Ambulance that
extends our agreement with these important customers until at least 2020.
This involves significant network extensions that will improve coverage and
reach.
The mobile-radio division also secured a management agreement to deliver
services using Kordia's KorKor digital trunked mobile-radio network.  This
state-of-the-art Tetra technology has already proven to be a very useful
addition to our market offering.

ISP (Internet Service Provider)
Farmside continues to experience rapid change within its rural ISP market.
We are the leading re-seller of connections on to the Government funded RBI
network but unfortunately a lot of this continues to be at the expense of
satellite customers who logically accept a cheaper alternative when one is
offered.  Tellingly, Farmside typically retains a large proportion of
customers who move off satellite, suggesting our commitment to better
customer service through Kiwi-based call centres does pay a loyalty dividend.

In the second half of the year Farmside moved to add value through new
products and services, such as partnering with Vodafone to sell services
through our valued rural supply chain partners, and there has been strong
demand for Farmside's recently introduced voice-over-RBI broadband packages.
With the imminent introduction of new 4G networks into the rural market,
organisational changes introduced over the period and the looming roll-out of
further Government RBI funding we see room for Farmside to grow despite the
fierce competition in this area.

Rural Strategy - RBI 2.0
It is no secret that TeamTalk considers delivering reliable
telecommunications in hard-to-reach places one of its priorities from both a
strategic and financial perspective.
With our established backhaul infrastructure, experienced team, medium-sized
nationwide scale and ability to work with others in the industry we believe
we are ideally positioned to capitalise on initiatives aimed at improving
telco services into rural communities.
We have registered an interest in helping to provide services via the
Government's RBI 2.0 programme and have completed considerable research on
innovative cost-effective solutions.

Banking Facility
The 3-year funding facility that we negotiated in late 2012, for the
acquisition of Farmside, was due to expire in December of this year so it had
always been our plan to arrange a new facility prior to balance date.  While
we may have cut it a bit fine, finally signing the documentation on June 30,
we are delighted at the outcome.  With a maturity date of December 2018 and
good headroom against the current level of debt we believe the new facility
provides us with the financial flexibility that we need to run, and further
develop, the business. Overall we continue to enjoy a strong and supportive
relationship with our bankers, Westpac, who have been our sole bankers since
2001.

Dividend
The Directors have declared a fully imputed dividend of 4.0 cents per share
payable on 16 October bringing the total for the year to 8.0 cents.  The
record date for entitlement to the final dividend is 5pm on Friday 9 October.

Board & Governance
Shareholders may be aware that every year one-third of our directors have to
retire by rotation.  Those directors are free to seek re-election and, as
continuity is a valuable commodity, we welcome those directors signalling a
desire to continue.  By the same token it is often an appropriate juncture to
consider one's position and so it is with Russ Ballard.  After more than 10
years of sterling service on the board, including Chairing the Remuneration
Committee for many years, Russ has elected not to seek re-election.
Accordingly he will retire immediately after this year's Annual Meeting which
will be another forum to record our thanks for his many years of service.  In
anticipation of that move Reg Barrett joined the board in March and already
the company is benefiting from the experience he gained over many years in
his former position as a senior executive in a global telecommunications
company.

Outlook
Telecommunications remains a competitive sector with new entrants, changing
technologies and consumer preferences along with ongoing Government
interventions all making for 'never a dull moment'.
A focus of 2015 has been getting our 'ducks in a row' as we look to play a
larger part in the telco landscape.  This continues to be a work in progress
but we are heartened by the results to date.
Overall we expect that EBITDA for the year ahead will be a bit better than
the year just gone although, just as with 2015, we expect the second half to
be better than first.  As well as an improvement in earnings we also expect
debt to reduce over the year resulting in a much better overall financial
picture.

Roger Sowry    David Ware
Chairman    Managing Director
End CA:00269113 For:TTK    Type:FLLYR      Time:2015-08-26 13:58:58