Cabletalk Group Reports Half Year Result

Media Release

Cabletalk Group Reports Half Year Result

Cabletalk Group Limited (NZSE CTG) today announced its operating result for the six months ended 30 September 2002, achieving a positive EBITDA, in line with forecast on revenues of $20.8 million.

For the six months Cabletalk obtained higher margin business, and while revenues tracked slightly below last year ($22.8 million), overall margins steadily increased, meaning the Company’s revenues now carry a much higher level of profitability.

“The period was one of consolidation as the Company reshaped the business to take advantage of growing demand for IT&T services,” says Mr Peter Wilson, Managing Director for Cabletalk Group.

Cabletalk also reduced operating costs during the period. This is evidenced by a 50% improvement in gross margin for the current period over last year, positive cashflows from operating activities of $764,000 (compared to a deficit of $1,706,000 from operating activities last year) and an increase in after-tax profits, over the last two months of the period and continued with the October result.

The operating result was, however, impacted by expenditure of over $210,000, associated with quantifying and preparing an action to recover loss value from Astute Limited. This issue has now been resolved with the Company reaching a settlement with Astute. This includes the surrender of in excess of 4.55m Cabletalk Group Ltd shares, issued as part of that key transaction, plus a reduction in cash consideration. Because this agreement was reached post-period, it has not impacted the current result.

The result was also affected by accounting for approximately $200,000 of costs associated with the write down of work in progress and incurring additional one-off restructuring costs to reduce the over-all cost structure. This ongoing cost reduction programme has seen the Company achieve overall costs reductions of between $3.7m and $4m per annum.

To capitalise on future growth potential, the Company has identified the $600 million per annum IT services market for SMEs, as a major growth opportunity.

“The convergence of the telecommunications and information technologies sectors are also presenting a number of immediate and long term opportunities for our Company,” adds Mr Wilson.
“In order to further improve the business and its competitive position, we have continued to make investments in new technology driven processes suitable to the Company’s size and needs.”

Based on its cost reduction and margin improvement programmes the Company expects to achieve net profit after tax for the second half of the year.

“Cabletalk has shown satisfactory profitability levels for the last three months, and we expect this to be sustained,” says Mr Wilson.

ENDS

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