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TeamTalk lifts first half profit 18pc

NZN 28/02/2017 Sophie Boot

Network provider TeamTalk, which is under a $22.7 million hostile takeover offer from Spark NZ, lifted first-half profit 18 per cent, forecast annual profit and will consider resuming dividends next year.

Net profit rose to $1.3 million in the six months ended December 31, from $1.1m a year earlier, the Wellington-based company said in a statement.

Revenue dipped 0.5 per cent to $28.5m while operating costs dropped 2.4 per cent to $17.1m and finance costs halved to $488,000.

In 2016, it posted a $1.3m loss. In 2018, it's targeting net profit between $4.1mn and $5.6m, ebit between $8m and $9.5m, and will consider resuming dividends that year.

Chairman Roger Sowry said the board and management had made strong progress in turning the company around, with a new strategic business plan after the company struggled to integrate the rural ISP Farmside business, acquired in late 2012 for $42m, which left it with higher debt and flat earnings.

Chief executive Andrew Miller said it expects to cut second-half costs by 22 per cent after restructuring Farmside late last year.

"This result, with the turnaround plan starting to deliver results with profit after tax up 18 per cent, confirms the board's view that Spark's opportunistic, hostile and highly conditional proposal at $0.80c per share undervalues the company and does not represent fair value to our shareholders," Mr Sowry said.

Spark made two approaches to the board at 60c per share and 80c per share before announcing its planned takeover in February, Mr Sowry said, with both offers unanimously rejected by the directors.

The board reaffirmed its recommendation for shareholders not to sell.

Spark has said it wants to integrate TeamTalk's services into the larger group, cut costs by stripping out any duplication and review the business to see what parts of the Wellington-based network it can grow and whether any units should be divested.

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