TeamTalk profit down but better than forecast

11.25am

Mobile radio communications company TeamTalk Ltd said today its June year net profit fell 15.2 per cent to $2.6 million but bettered its forecast by 26 per cent.

Total operating revenue rose 2 per cent to $20.3m while the pre-tax operating profit was flat at $4.4m. Earnings per share fell to 13.11 cps from 15.46c.

The company will pay an imputed final dividend of 9cps. The full year dividend of 16.5c bettered the IPO forecast by 1.5c.

Despite the profit fall, TeamTalk called the year "significant and successful".

"TeamTalk has made a successful transition from private to public ownership with the listing on the NZX in May 2004."

"The result exceeded the IPO forecasts and there has been a strong share price performance since listing."

The profit reflected stronger than anticipated demand for services in the second half of the year, including TeamTalk's recently launched finance product, together with continued tight control of costs, the company said.

Over the year there was modest growth in both subscriber numbers and revenue per subscriber.

Earnings before interest, tax, depreciation and amortisation bettered the IPO foreast by $632,000 at $8.6m.

"The increase in the final dividend from the 7.5 cents outlined in the prospectus reflects the better than anticipated financial performance and the continued strong cash generation of the company," TeamTalk said.

A key strength was its ability to generate strong cash flow.

"Notwithstanding the fact that during the year the company became a full tax payer TeamTalk still generated $8.0 million cash from operations.

"Even with the increase in dividend the total dividend payments represented only just over half of the available free cash flow."

The company said that dividends in 2005 will at least equal the 2004 dividends.

Net debt during the year was cut from $18.3m to $10.3m.

TeamTalk said it was expanding its finance book.

"We expect equipment finance to make an increasingly significant contribution in the future."

The company said its development of a new remote alarm transport service was slower than anticipated but commercial deployment had now begun.

TeamTalk is considering buying a number of small businesses that are closely allied to TeamTalk's existing business activities.

"Beyond these small acquisitions the company is continuing to explore other acquisition opportunities that can leverage the company's core competencies and balance sheet.

However, it said it was taking a conservative approach to acquisitions.

TeamTalk shares, which were issued in May at $1.75 each, closed yesterday at $2.57.

- NZPA