Newcall buoyant on prospects after $2.6m loss

By ADAM GIFFORD

New-generation telecommunic-ations company Newcall Group says it is on target to be trading profitably by the end of this year, after declaring a consolidated loss of $2.665 million for the period October 1, 1998, to December 31, 1999.

There will be no dividend.

Managing director Norman Nicholls said the loss was on a gross turnover of $3.031 million, which all came in the final quarter of 1999 after Newcall Communications' reverse takeover of the cashed-up New Zealand Salmon to form Newcall Group.

"The loss is slightly greater than that projected in 1999. This is largely a result of reductions in the gross margin experienced throughout the telecommunications industry," Mr Nicholls said.

He said there were one-off transaction costs arising from a rights issue as well as amortisation of goodwill from the takeover.

Shareholder funds over the 15 months increased from $1.66 million to $12.67 million.

"This substantial increase is due to the acquisition of Newcall Communications and the successful completion of the rights issue, reflecting tremendous market confidence in our long-term direction."

Current assets are worth $4.6 million, of which $2.8 million are debtors, including $1.5 million of trade debtors. There are fixed assets of $2.5 million. Goodwill relating to the acquisition of Newcall Communications is valued at $8.8 million.

Liabilities total $3.1 million, of which $2.9 million are trade creditors.

Mr Nicholls said that when the company last reported a year ago as New Zealand Salmon, it "was not trading and the only asset was the $1.2 million cash arising from the sale of New Zealand Salmon interests in Chile."

"That money was repatriated in September and used to fund our operations."

The current market capitalisation of Newcall is about $55.4 million, a low ratio compared with other technology stocks. But chief financial officer Guy Pierce said he and Mr Nicholls were unconcerned.

"We like to be behind because it gives us the opportunity to substantiate that multiplier as we go into profit," said Mr Pierce.

"If the Nasdaq bubble burst tomorrow, we can point to products we are selling already."

Mr Pierce said Newcall required about 25,000 customers for its core business, selling national and international toll calls, to be profitable.

It now has about 20,000.

Newcall is in the advanced stages of negotiating to buy another company in the core telephony area.

Since the results Newcall has bought internet service provider Iprolink, 75 per cent of energy reseller Energy Options and the customer base of Telstra's Rocket toll service subsidiary.

It has also signed an agreement with Hong Kong company First E.com, which will allow Iprolink customers to develop websites which accept payments in multiple currencies.

Mr Nicholls said Newcall's majority shareholder, Asia Pacific Wire and Cable Corporation subsidiary CTW Beta Co, had indicated in the past that it wanted to use experience gained in New Zealand's deregulated telecommunications market as a basis for expansion into Asia.