Ann: HALFYR: TTK: TeamTalk Interim Result for six months to Dec 2015

• Release Date: 17/02/16 13:29
• Summary: HALFYR: TTK: TeamTalk Interim Result for six months to Dec 2015
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					TTK
17/02/2016 13:29
HALFYR
PRICE SENSITIVE
REL: 1329 HRS TeamTalk Limited

HALFYR: TTK: TeamTalk Interim Result for six months to Dec 2015

Name of Listed Issuer: TeamTalk Limited

RESULTS FOR ANNOUNCEMENT TO THE MARKET

Reporting period: 6 months to 31 December 2015
Previous corresponding period: 6 months to 31 December 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 unaudited
financial statements.

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

OPERATING REVENUE:
Total Operating Revenue:

28,693; Down 0.4%; 28,794

OPERATING SURPLUS BEFORE UNUSUAL ITEMS AND TAX:

1,608; Up 6,085%; 26

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

OPERATING SURPLUS BEFORE TAX:
1,608, Up 6,085%; 26

Less tax on operating profit:
460; Up 1,900%; 23

NET SURPLUS AFTER TAX AND EXTRAORDINARY ITEMS:
1,148; Up 38,167%; 3

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

NET SURPLUS ATTRIBUTABLE TO MEMBERS OF THE LISTED ISSUER:
1,148, Up 38,167%; 3

Basic earnings per share:
0.04 cps; Up 38,167%; 0.0 cps

Diluted earnings per share:
0.04 cps; Up 38,167%; 0.0 cps

Net Tangible Assets per share
1.2 cps; Up 196%; (1.3) cps

Interim Dividend:

4.0 cps, 0%, 4.0 cps

Record Date: 8 April 2016
Payable Date: 15 April 2016

Imputation tax credit on latest dividend: 1.5556 cps

A supplementary dividend of 0.7059 cps will be payable on 15 April 2016 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

Nil

FROM THE DIRECTORS

Key Achievements over the last six months Why is this important?
CityLink wins Government internet exchange business. This is a classic one
for us - a niche infrastructure build that's a 'nice little earner' which
position us well for future government opportunities.
Farmside remains market leader in reselling RBI services (the government
funded residential rural broadband infrastructure). Farmside is continually
looking for additional network products to ensure we can give our customers
the best and most competitively priced services that we can.  RBI is a key
product and Farmside continues to have good success selling it.
Third generation digital mobile radio network launched in Auckland. This is a
network product that can deliver the advanced services customers want at a
price they're willing to pay.
Net debt reduced by $0.6 million. Reducing debt gives our business strength
and flexibility.  Look for debt to reduce a bit more each period.
Dividend maintained at 4 cents per share. The cash that TeamTalk generates is
used to reinvest in the business, repay the bank and pay dividends to
shareholders.  We like to do all three and we think that the balance is about
right for now.

Our Strategy
In the past six months we have continued to rationalise our group activities
by bringing together the expertise previously spread across our subsidiary
companies.  Historically this has all been back-office functions like Finance
and some core network management functions but in a sign of the way that the
market is heading we're integrating closer and closer to the customer - so we
now have a number of front-line Sales staff selling the whole suite of
services that the group offers.
We continue to do this to be in a position to do the jobs that the big guys
can't (or won't) do - which in many cases is expanding networks and services
into places previously under-served by the larger Telcos.
The volumes of data getting moved around the country are continually growing,
seemingly at an increasing rate, and this plays into our hands as new,
faster, wireless technologies offers significant opportunities while a lot of
the data also goes through our state-of-the-art internet exchanges.
Our overall priority remains rural and regional New Zealand where we see
significant opportunities - particularly as new technologies will allow us to
provide more innovative solutions in areas where until now satellite has been
the only option.  While we would like to be able to report more progress on
this score the industry as a whole continues to wait for the next round of
the Government's RBI initiative meaning plans are on hold and uncertainty
remains high.

Operations
Like most in the telecommunications industry trading conditions continue to
be tight.  Margins are under pressure as customers continue to demand more
services at a lower cost - but unfortunately a lot of our costs don't follow
the same path. On top of all of that Government regulations and pricing
edicts continue to choke our profitability.
Nevertheless, despite experiencing a half year that never quite hit the high
notes we are pleased to report that our results, in being ahead of the same
period last year, stayed largely in line with our forecasts.

CityLink - a niche business broadband service provider - continues to make
gains with a result well up on a year ago.
For a company that turned 20 years old at the end of 2015, CityLink has
matured a lot since it started hanging fibre cables from overhead electric
trolley bus lines and providing free wi-fi to caf?s in the Wellington CBD and
while not having an impact on these financial results two recent wins give a
pointer as to how we're trying to position this business going forward:
- As noted above CityLink is busy deploying its internet exchange
infrastructure (NZIX) to accommodate its win for the Government agency
business; and
- CityLink recently won the contract (ahead of the incumbent) to provide
pre-pay wireless broadband to a Wellington student hostel.  Making money out
of wi-fi is no mean feat but CityLink's two decades worth of expertise made
their proposition attractive for us and the customer.

Farmside - providing class leading broadband services to rural New Zealand -
posted a poor result with EBITDA  lower than a year ago.  In the latest
period the lower kiwi dollar had a material effect on earnings as all of
Farmside's satellite bandwidth needs are purchased in US dollars.  Farmside
also continues to work through the migration of customers from high
revenue/high gross margin satellite services to other forms of broadband
services.  Not only does this reduce EBITDA but it also results in a non-cash
impairment expense as we have to write off the value of the satellite
equipment at the customers' premises.  One point of note is that this charge
is progressively coming down as the number of affected customers reduces.
Accordingly, while still a small loss, Farmside's EBIT is substantially
better than a year ago.
Farmside has made significant operational strides:
- It continues to develop innovative rural partnerships so as to offer more
services with greater reach to more customers;
- The addition of voice to its suite of products (without recourse to the
copper line) generated positive sales numbers and feedback; and
- Promotions such as the recent partnership with streaming video service
Quickflix keeps Farmside relevant in the rural marketplace.

TeamTalk Wireless - mobile radio and wireless broadband across the country -
was a little ahead of the same period last year.  The business continues to
see ongoing, albeit small, gains in the reach of wireless broadband while
there also appears to be increasing demand for its mobile radio services from
organisations seeking to insulate themselves from upcoming health and safety
rule changes.
A good example of this was a recent purchase by the University of Auckland of
radios and network infrastructure as it looks to provide extra safeguards for
its onsite security force.
We have written previously about TeamTalk's move into the area of
'enterprise' sales or solution selling and the appointment during the period
of Daniel Cummins as a new General Manager for the business is another sign
of us gearing up for this changed market dynamic.  Another important element
of this strategy is relationships with hardware vendors so we continue to
work closely with Motorola who are the world's leading mobile radio
manufacturer.

For a more detailed breakdown of the individual business units' results see
the Segment Reporting note within the financial statements.

Governance
Good corporate governance is a vital part of the foundations for any company
and we continue to work on improving our structures so in January we were
delighted to welcome Nathan York to the board of directors.

Dividend
The Directors have declared a fully imputed dividend of 4.0 cents per share
payable on Friday 15th April.  The record date for entitlement to the interim
dividend is 5pm on Friday 8th April. A supplementary dividend of 0.7059 cents
will be payable to shareholders who are not resident in NZ.  The Dividend
Reinvestment Plan remains suspended so will not be in operation for the
interim dividend.
It is the board's intention that the final dividend for the 2016 financial
year will also be 4.0 cents per share bringing the total for the year to 8.0
cents.

Outlook
The long-term view has not changed while our tactics continue to reflect the
'getting our ducks in a row' theme that we outlined in last year's annual
report.
While not expecting any spectacular or miraculous improvement in profits in
the second half of this year we believe the group is building on its robust
platform, as it looks to more effectively utilise its shared infrastructure
and expertise so we expect the second half to be better than the first with
an overall result for the year broadly in line with that of last year.
We look forward to reporting back to you on our progress at year end.

Roger Sowry (Chairman)   David Ware (Managing Director)
End CA:00277811 For:TTK    Type:HALFYR     Time:2016-02-17 13:29:26