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Strong Second Half Sees Cabletalk Lift Performance

FOR IMMEDIATE RELEASE

Media Release

Strong Second Half Sees Cabletalk Lift Performance

Cabletalk Group Limited (NZSE: CTG) today announced that it has achieved a $1.041m turnaround in operating performance in the second half of the 31 March 2003 financial year. For the six months to 31 March the company recorded a net surplus before amortisation of $646,000, ahead of the $400,000 to $500,000 estimate that was communicated to shareholders in March. This compares with the loss of ($395,000) for the six months to September 2002.

For the twelve months to 31 March 2003 Cabletalk also reported a net surplus of $251,000 before goodwill amortisation, an improvement of $1.20 million over the ($947,000) loss recorded in the previous year.

“The improvement in financial performance evidenced in this result reflects the hard work that has been put in to make Cabletalk a more focussed and efficient business,” says Managing Director, Peter Wilson. “By concentrating on achieving high quality sustainable revenues, rather than looking to short-term, low-margin projects, we have been able to hold down costs and improve overall profitability.”

Other second half highlights included:
- Operating expenses reduced 6%
- EBITDA increased to $1.28m, from breakeven in the first half of the year

When annualised, key performance comparisons included:
- Operating costs down by 12% as aggressive cost reductions were achieved
- EBITDA increased to $1.28m, from previous deficit of ($201,000) for the previous year
- Net cash flow from operating activities recorded a $3.20m improvement to $1.64 million, from a previous year deficit of ($1.56m)
As a result of the Company’s focus on quality earnings, rather than the “turnover for growth” projects - which were a feature of previous financial year’s performance revenues – total revenues were down 9% year on year. However, the Directors consider that this represents a more realistic base. They regard the Company’s current momentum as sustainable and expect that it will be reflected more fully in its performance for the twelve months to 31 March 2004.

As already communicated to shareholders, the directors consider that the Company’s investment in Cabletalk Astute Network Services Limited (CANS) was impaired and made a decision to write off the remaining $11.379m of goodwill associated with acquisition of CANS.

“The removal of this intangible asset will enable better reporting of the true operating performance of the Group as we move forward,” said Chairman, Ross Keenan. “Directors are satisfied that the focus on quality revenue, from a significantly reduced cost base, is now delivering sustainable profit growth and that the current year will provide continuing improvement in performance. Financial and operating systems are robust and well tested; the quality and commitment of staff is proven and therefore improved returns to shareholders will be achieved.”

ENDS

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