TeamTalk (NZX: TTK) — which last month rejected a $22.7m takeover bid from Spark — has made a return to profitability for the six months ended 31 December 2016, after reporting a loss of $1.3m for the year to 30 June 2016, in what it said had been a difficult year.
Profit after tax was $1.349m, up from $1.148m for the same six month period last year. TeamTalk chairman Roger Sowry said the return to profitability was a direct result of the focus and determination of the board, the new chief executive and senior management to turnaround the company and its financial performance.
“These results demonstrate that TeamTalk’s executive team is successfully delivering on our new strategic business plan to increase revenue, reduce costs and capital expenditure, refocus the company and realise TeamTalk’s inherent potential,” he said.
“There are further material initiatives underway, that will continue to deliver sustainable growth and increase profitability, which are expected to yield even better results over the next 6-18 months and beyond.”
Net cash flow from the group’s operations increased 27.7 percent to $5.36m from $4.20m for the same period last year. Net debt for the group was reduced to $33.89m from $35.47m. CityLink broadband revenue increased seven percent to $7.38m from $6.89m. EBIT was up 14.5 percent to $2.87m. Mobile radio network operator TeamTalk Wireless increased revenue by four percent to $10.6m from $10.2m.
TeamTalk is providing guidance for the 12 months to 30 June 2017 for EBIT between $4.7m and $5.2m and after tax profit between $2.0m and $2.4m.
CEO Andrew Miller said the company was aiming for better results the following year. “We are targeting EBIT for the 12 months to 30 June 2018 to be in the region of $8.0m to $9.5m and profit after tax to be in the region of $4.1m to $5.6m. Cost reduction will be a key part of this, with $2.1m of cost savings anticipated at Farmside alone.”
Spark announced its hostile takeover bid on 7 February 2017 and prior to that had made an offer of 60 cents per share, later raised to 80 cents per share, both of which had been unanimously rejected by the TeamTalk board.
Sowry said the latest offer was very opportunistic. “It is evident that Spark is attempting to capture the upside benefits of the new TeamTalk business plan for Spark’s shareholders, ahead of it being fully implemented and reflected into TeamTalk’s share price.”
Read more: Spark offer ‘woefully inadequate’ says TeamTalk