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Two Degrees reports $33.1m full-year loss

NZ NewswireNZ Newswire 1/06/2016 Pattrick Smellie
<span style="font-size:13px;">Two Degrees has cracked half a billion dollars of annual turnover, but higher costs and foreign exchange losses has led to a full-year loss of $33 million.</span> © File photo Two Degrees has cracked half a billion dollars of annual turnover, but higher costs and foreign exchange losses has led to a full-year loss of $33 million.

Two Degrees Mobile, New Zealand's third-largest telecommunications company, reported a net loss of $33.1 million for the year to Dec. 31 on 43 per cent revenue growth, cracking half a billion dollars of annual turnover for the first time after purchasing internet service provider Snap last year to expand to a full-service offering.

Revenue of $569 million compared to $397.6 million the previous year, but cost of sales rose 68 per cent to $323.7 million, while increased equipment and finance costs and foreign exchange losses contributed to total expenses rising 18 per cent to $279.6 million to produce a pretax loss of $35.6 million, compared with $33.8 million. A tax credit of $2.5 million helped narrow the net loss from the previous year's loss of $33.6 million.

At a briefing for journalists, chief executive Stewart Sherriff declined any comment on speculation about the potential for an ASX capital-raising of up to $150 million, widely reported and not denied by the company early last month.

Sherriff focused on the company's earnings before interest, tax, depreciation and amortisation measure, which showed an improvement from $58 million reported last year to $78.5 million this year, a 35 per cent improvement. The company didn't provide a breakdown of its ebitda calculation.

Net cash flow from operations remained positive at $36.3 million last year, compared to $40.2 million in 2014, while net negative cash flow from investing activities rose to $95.2 million from $55.1 million. The statutory accounts say that was mainly caused by a $23.6 million increase in fixed asset purchases and $9.9 million committed to the cash component of the shares and cash deal that saw 2Degrees pay $28.3 million for Snap in April 2015.

The company highlighted the growth in its monthly paid mobile subscriptions, now standing at 56 per cent of revenue, the second year that monthly paid has outstripped revenues from pre-paid, and the fact that in its fixed line, ISP business, its revenue is split evenly between enterprise and residential customers.

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