Niche telecommunications company TeamTalk has again reported an annual profit that caught the eye of brokers.
Earnings before interest and tax rose 18% to $8.6 million in the year to June, revenue rose 2% to $32.4 million and reported profit was up nearly 16% to $5.4 million.
Debt was reduced by $2.3 million and a fully-imputed dividend of 20 cents per share was declared.
Managing director David Ware said the broadband segment was the star performer for the group, with operating earnings up 18.8% to more than $8 million from a total of $13.1 million.
The broadband segment comprised CityLink and Araneo, which both targeted business customers with high-end, specialised broadband services; both companies improved on the previous year. While there were many highlights for the year, the two that stood out were CityLink's successful launch of CBDfree wi-fi in Wellington and Araneo's successful tender in the Government's Remote Schools Broadband Initiative, he said.
"While neither had a material impact on the financial results for the year just gone, they are both good examples of initiative and enterprise as the group attempts to stay ahead of the pack by developing new market niches."
Mr Ware said every year he wrote about the strength of the company in generating cashflow and the 2012 financial year was no exception.
With the strong profit, the group was able to invest more than $4 million in capital expenditure for the future, pay $4.6 million in dividends and still reduce debt by $2.3 million in the period.
At balance date, debt stood at $16 million or only 1.2 times operating earnings compared with $18.3 million, or 1.5 times, a year ago.
"We're certainly not textbook. We simply do whatever it takes to deliver on our promises," he said.
Craigs Investment Partners broker Greg Easton described TeamTalk as a small company in a large, complicated market.
"It has found its niche and is providing services to customers that some of the other telecommunications companies don't want to be involved with. It is a small operating company making nice profits and providing a very reliable dividend."
TeamTalk saw a rise in its radio revenue during the year. Mr Easton said that during the earthquakes in Christchurch, mobile and landline networks went down but TeamTalk's radio network continued operating.
The radio network was a key asset that should provide value in coming years.
