TeamTalk revises 1H profit expectations down on poor trading

TeamTalk revises first half profit expectations down after poor trading; shares drop

By Fiona Rotherham

Jan. 23 (BusinessDesk) - TeamTalk, the listed telecommunications firm, has revised down its profit expectations for the first half of the financial year to about $2 million less than what it achieved at the same time last year, forcing an early refinancing of its debt facility. The shares dropped.

Earnings before interest, tax, depreciation and amortisation for the half-year is expected to be about $6 million compared to $7.7 million in the same period in 2013 while net profit will be only marginally positive compared to $2.2 million in the previous period, Wellington-based TeamTalk said in a statement to the NZX. The board has also reduced the six-monthly dividend to 4 cents per share compared to 7.5 cps in the previous six months.

TeamTalk shares sank 12 percent to $1.50 having dropped 29 percent in the past year.

Managing director David Ware said it was always thought likely to be a difficult period because of the transition the industry is undergoing and that has proven to be the case.

“We have not achieved some of the growth that we expected while a number of one-off items popped up and bit us on the arse,” Ware said.

Cash generation over the period was also weak and debt correspondingly higher than expected.

TeamTalk said it had discussed the issue with its lender, Westpac Banking Corp, and given the company’s existing debt facility expires in December, it will refinance early for a new term before the end of June.

"Given TeamTalk's overall performance, we have instituted tighter controls on discretionary spending, reviewed our capex programme and will look to gain further efficiency from moving a number of functions across the group onto shared platforms,” Ware said.

He said the company understands what has gone wrong and has a solid strategy of dealing with it.

“Nevertheless this is a very disappointing episode for a company with a proud history and an exciting future,” he said.

In November the company announced it had signed a partnership agreement with Kordia to provide services and day to day management for its KorKor digital mobile radio network.

The company’s interim results are due out on Feb. 25.

(BusinessDesk)

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