Cabletalk positive despite $11m loss after writedown

By PETER GRIFFIN

A hefty goodwill writedown pushed telecoms contractor Cabletalk Group to a loss of $11.7 million for the year to March 31.

But the company, which derives 80 per cent of its revenue from six "patch" network maintenance contracts with Telecom, is talking up its underlying health, pointing out that a profit of $250,000 was achieved, ugly writedown aside.

Cabletalk generated revenue of $41.7 million for the year, down from nearly $46 million. Last year the company posted a $1.6 million net loss.

Second half highlights included a 6 per cent reduction in operating expenses, and an increase to $1.28 million in earnings before interest, taxation, depreciation and amortisation from breakeven in the first half of the year.

Chief executive Peter Wilson said the fact revenue went backwards was not a concern as sales going forward would be more stable.

"That was really a result of one-off contracts that were for major projects. We've been able to get additional revenue on a sustainable basis rather than from one-off projects."

He said the goodwill writedown of Cabletalk Astute Network Services was related to deteriorating market conditions and a dispute with shareholders that resulted in their surrendering their shares in the company.

"We've had this dispute which resulted in getting back shares that account for 12.5 per cent of the total capital," said Wilson.

As a result, Cabletalk had dropped a substantial "breach of warranty" claim against the shareholders.

Cabletalk purchased CAN as part of its key transaction when it was listed on the New Capital Market. It graduated to the main board when its revenue passed $10 million.

Cabletalk faces main board rival GDC Communications, another technology company heavily reliant on Telecom contracting revenue but looking to expand its business in converged IT and telecoms services.

Wilson said impressive efficiency gains were made in the last six months of the year. The benefit of those would be even more obvious in the current period.

"The improvement ... reflects the hard work that has been put in to make Cabletalk a more focused and efficient business."