INTERIM REPORT TEAMTALK 2019

Transcription

1 INTERIM REPORT TEAMTALK 2019

2 CONTENTS 1 FROM THE CHAIRMAN & CHIEF EXECUTIVE 4 FINANCIAL STATEMENTS 8 NOTES TO THE FINANCIAL STATEMENTS 17 CORPORATE DIRECTORY OUR CUSTOMER DECLARATION We re not textbook, but our team will do whatever it takes to deliver on our promises to you. We know that to improve means making sure we hear what you tell us. We re constantly looking for new technologies and better ways to do things, so that our services are what you want. We re on a journey to earn your trust by being accurate, helpful, and dependable. 2 TeamTalk Interim Report

3 FROM THE CHAIRMAN & CHIEF EXECUTIVE FINANCIALS When we issued our guidance for this current year to be broadly in line with last year s result of $4.4 million, we also highlighted that there would be an increase in operating costs associated with our investment in capability to complete the company s transformation and to position the business to grow in future years. Analysis of our half year results reflects exactly this. Our revenue has remained flat at $17.28m compared to $17.43m for the same period last year. Our increase in costs has impacted our half year net profit after tax which is $1.915m compared to $2.147m for the same period last year. Capital Expenditure of $3.6m for the six months is mainly a reflection of our investment into our Digital Radio Network. We are excited to start this half year report with the announcement that we have recently been awarded a five-year contract to manage Powerco s private communications network. This is a deal we have won following an intensive eighteen-month bidding process against a number of other major IT and communications provider. This is an endorsement of our capabilities by New Zealand s second largest electricity utility and gas distribution utility with around 1.1m customers connected to its networks. For TeamTalk this is a demonstration of our capabilities in being able to manage private networks we have not built and further enhances our multi-vendor and multi-solution strengths in delivering vital communications. In parallel with this we have completed the transformation of our Network Operations Centre (NOC) with investments made in people capabilities, new tools and processes based on the ITIL standard. These improvements will enable us to offer a full managed service to both existing and new customers, something we are seeing increasing enquiries for, especially as we commence our discussions regarding the important Health and Safety features that are available with our new digital radio network. These investments will assist in producing greater shareholder returns in the medium to long term. There has also been an increase in our inventory. This is combination of stock held for capital project rollouts and digital radio terminals required to migrate our customers to our new Digital network. Net debt has continued to reduce and at 31 December 2018 sits at $11.4m, the lowest it has been in over ten years. OUTLOOK We are pleased to say that our results are in line with our plan and we confirm our guidance for this current year is to be broadly in line with last year s result of $4.4 million. We confirm that we will be returning to dividend at the end of this financial year. We maintain our dividend policy of 50-70% distribution of net profit after tax following completion of our major capital projects. The company is well placed for success and the investments we are undertaking will produce greater shareholder returns in the medium to long term

4 CAPITAL RAISE Clearly part of the reduction in debt was due to the successful capital raise which raised $8.2m and the rights issue was taken up by 81% of the shareholders. This is an incredible result and we thank you for your support and endorsement of our strategy. In line with what we said at the time of the capital raise we are not only reinvesting into our existing infrastructure but we are also accelerating the introduction of new services and we will have a further update on this within the next quarter. PROFIT FOR 6 MONTHS ENDED DECEMBER DIGITAL RADIO ROLLOUT We are progressing to plan on the rollout with 50% completed as the 31 December 2018 and we are on track to complete phase 1 by 30 June We still have much work to do before we are fully operational but we are beginning to get traction in the conversation with our customers regarding migration. For some of our largest customers this requires the upgrade to hundreds of vehicles along with careful planning around time slots and financial planning. This was always expected, but we are beginning to book some of our largest customers for transformation to the new network within the next eighteen months. NZ$m Net Debt FIBRE TRANSFORMATION This too is progressing to plan. We have just finalised our choice of contractors to assist us with the civils and the hauling of the cables. The feedback from our partners and our teams is that we will have the undergrounding of our fibre network within Wellington CBD completed by June In recent conversations with shareholders there is the desire to have more detail regarding the value of the deal we managed to put in place with Powerco regarding the old gas ducts in Wellington. NZ$m NSAT NET DEBT AS AT DECEMBER We therefore provide some more clarity. Back in 2016 before our 5-year plan had been created there was a huge risk to our fibre network in Wellington. This was due to the need to get it underground off the trolleybus infrastructure within potentially the next eighteen months, this time limit was also compounded by our lack of cash. 2 TeamTalk Interim Report

5 If the company had to progress a programme which included digging up the streets of Wellington CBD to install ducts and then install fibre all within a timeframe that was virtually impossible then we would have had to spend tens of millions to achieve a successful outcome. Time was mitigated by obtaining an extension to stay on the trolleybus infrastructure until January Exclusive access to Powerco s old gas ducts in Wellington allows us to go underground quickly with virtually no digging (there will be some minor civils to get out of the ducts into buildings) ensuring we are underground by June Most importantly though these two deals have saved us millions and ensured that we can transform our network where required within the Wellington CBD both quickly and cost effectively. PEOPLE We have spoken before about the importance of our people and the skills and commitment they bring to the team. We are pleased to inform you that a recent staff survey we conducted achieved an engagement level of 74% and whilst there are areas highlighted for improvement the overall message is that people are passionate about what they do. We thank you for your loyal support. Yours sincerely ROGER SOWRY Chairman ANDREW MILLER Chief Executive

6 CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Group NOTE SIX MONTHS ENDED YEAR ENDED 31 DECEMBER 30 JUNE (Unaudited) (Unaudited) (Audited) $000 s $000 s $000 s CONTINUING OPERATIONS Revenue 8 17,034 17,088 34,225 Operating costs (7,881) (7,368) (15,534) Gross profit 9,153 9,720 18,691 Other income ,027 Administrative expenses (6,135) (5,908) (11,924) Results from operating activities 3,266 4,156 7,794 Finance income Finance expenses 10 (662) (873) (1,837) Net finance costs (606) (753) (1,537) - Profit/(Loss) before income tax 2,660 3,403 6,257 Income tax (expense) (745) (959) (1,745) Profit from Continuing Operations 1,915 2,444 4,512 DISCONTINUED OPERATIONS Profit/(Loss) from discontinued operations, net of tax - - (506) Gain on Sale of Discontinued Operations - (297) 433 Profit/(Loss) 1,915 2,147 4,439 Attributable to: Equity holders of the Company 1,915 2,147 4,439 Earnings per share Basic earnings per share 11 $0.061 $0.076 $0.156 Diluted earnings per share 11 $0.061 $0.076 $ TeamTalk Interim Report

7 CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Group NOTE SHARE RETAINED TOTAL CAPITAL EARNINGS EQUITY $000 s $000 s $000 s Balance at 1 July ,266 (34,939) 25,327 Profit for the period - 2,147 2,147 Total recognised income and expense for the period - 2,147 2,147 Dividends to equity holders Total transactions with owners Balance at 31 December 2017 (Unaudited) 60,266 (32,792) 27,474 Balance at 1 July ,266 (34,939) 25,327 Profit for the period - 4,439 4,439 Total recognised income and expense for the period - 4,439 4,439 Dividends to equity holders Total transactions with owners Balance at 30 June 2018 (Audited) 60,266 (30,500) 29,766 Balance at 1 July ,266 (30,500) 29,766 Adjustment on initial application of IFRS 15 4 (193) (193) Adjusted Balance 1 July ,266 (30,693) 29,573 Profit for the period - 1,915 1,915 Total recognised income and expense for the period - 1,915 1,915 Dividends to equity holders Issue of Ordinary Shares 8,219-8,219 Total transactions with owners 8,219-8,219 Balance at 31 December 2018 (Unaudited) 68,485 (28,778) 39,

8 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS Group NOTE SIX MONTHS ENDED YEAR ENDED 31 DECEMBER 30 JUNE (Unaudited) (Unaudited) (Audited) $000 s $000 s $000 s Cash flows from operating activities Cash provided from: Receipts from customers 17,709 18,055 35,190 Net GST receipts/(payments) (29) 302 (98) 17,680 18,356 35,092 Cash applied to: Payments to suppliers and employees (13,599) (12,934) (24,778) Interest expense paid (net of realised FX (gain)/loss) (579) (679) (1,948) Income tax paid (1,579) (495) (685) (15,757) (14,108) (27,411) Net cash flows from operating activities 13 1,923 4,248 7,680 Cash flows from investing activities Cash provided from: Interest income received Finance lease interest income received Repayment of finance lease receivables Cash applied to: Acquisition of property, plant and equipment (3,623) (2,398) (6,602) Acquisition of goods provided on finance leases as lessor (366) (337) (240) (3,989) (2,735) (6,842) Net cash flows from investing activities (3,798) (2,543) (6,843) Cash flows from financing activities Cash provided from: Proceeds from sale of subsidiary - - 3,000 Proceeds from issues of share capital 8, Proceeds from borrowings ,219-3,000 Cash applied to: Repayment of borrowings (8,750) - (2,000) Dividends paid (8,750) - (2,000) Net cash flows from financing activities (531) - 1,000 Net increase/(decrease) in cash and cash equivalents (2,406) 1,705 2,197 Cash and cash equivalents at beginning of period 4,269 2,071 2,071 Cash and cash equivalents at end of period 1,863 3,776 4,269 6 TeamTalk Interim Report

9 CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2018 Group NOTE AS AT AS AT 31 DECEMBER 30 JUNE (Unaudited) (Unaudited) (Audited) $000 s $000 s $000 s Non-current assets Property, plant and equipment 36,956 33,449 35,220 Goodwill 17,038 17,038 17,038 Finance lease receivable Prepayments Derivatives Equity Accounted Investees - 2,255 - Total non-current assets 54,571 53,949 52,746 Current assets Trade and other receivables 4,242 4,406 4,520 Finance lease receivable Prepayments 1,290 1, Inventory 2,749 1,718 1,438 Cash and cash equivalents 1,863 3,776 4,269 Total current assets 10,363 11,287 11,389 Total assets 64,934 65,236 64,135 Equity Ordinary share capital 68,485 60,266 60,266 Retained earnings (28,778) (32,792) (30,500) Total equity 39,707 27,474 29,766 Non-current liabilities Loans and borrowings 13,250 19,500 21,000 Deferred income Deferred tax liabilities 1,766 1,943 1,904 Total non-current liabilities 15,211 21,629 22,904 Current liabilities Loans and borrowings - 4,500 1,000 Trade and other payables 5,554 6,845 6,071 Current Tax Payable ,110 Deferred income 3,973 4,120 3,213 Derivatives Total current liabilities 10,015 16,133 11,465 Total equity and liabilities 64,934 65,236 64,135 On behalf of the Board of Directors Director Director 21 February February

10 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS 1 Reporting entity TeamTalk Limited ( the Company ) is a company domiciled in New Zealand, registered under the Companies Act 1993 and listed on the New Zealand Stock Exchange ( NZX ). The Company is a FMC Reporting Entity in terms of Part 7 of the Financial Markets Conduct Act The condensed consolidated interim financial statements of the Company as at, and for the six months ended, 31 December 2018 are unaudited and comprise the Company and its subsidiaries (together referred to as the Group ). The Group is a profit oriented entity primarily involved in the provision of mobile radio networks and high speed broadband services in New Zealand. 2 Statement of compliance and basis of preparation These condensed consolidated interim financial statements have been prepared in accordance with NZ IAS 34 Interim Financial Reporting. They do not include all of the information required for full financial statements and should be read in conjunction with the consolidated financial statements of the Group as at, and for the year ended, 30 June These condensed consolidated interim financial statements of the Group have been prepared in accordance with the New Zealand Companies Act 1993 and the Financial Markets Conduct Act These condensed consolidated interim financial statements were approved by the Board of Directors on 21 February The condensed consolidated interim financial statements are presented in New Zealand dollars (NZD), which is the Group s functional currency and are rounded to the nearest thousand. 3 Significant accounting policies Except as described below, the accounting policies applied by the Group in these condensed consolidated interim financial statements are the same as those applied by the Group in its annual financial statements as at, and for the year ended, 30 June Changes in Significant Accounting Policies The Group has adopted IFRS 15 Revenue from Contracts with Customers from 1 July IFRS 15 establishes a framework for determining when and how much revenue is recognised. The group has adopted IFRS 15 using the cumulative effect method with the effect of initially applying this standard recognised at the date of initial application (i.e. 1 July 2018). Accordingly the information presented in for 2018 has not been restated and is presented, as previously reported, under IAS 18, IAS 11 and related interpretations. The following table summarises the impact, net of tax, of the transition to IFRS 15 on retained earnings as 1 July 2018 Impact of adopting IFRS15 at 1 July 2018 Retained Earnings Wired Networks 4 Wireless Networks 265 Related Tax (75) Impact at 1 July The following tables summarise the impacts of adopting IFRS 15 on the Group s interim statement of financial position as at 31 December 2018 and it s interim statement of Comprehensive Income for the six months ended 31 December There was no material impact on the Group s statement of cash flows for the six months ended 31 December TeamTalk Interim Report

11 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS IMPACT ON THE CONDENSED INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION AMOUNTS WITHOUT ADOPTION OF AS REPORTED ADJUSTMENTS IFRS 15 Non-current assets Property, plant and equipment 36, ,565 Intangible assets and goodwill 17,038-17,038 Finance lease receivable Term Prepayments Total non-current assets 54, ,180 Total current assets 10,363-10,363 Total assets 64, ,543 Equity Ordinary share capital 68,485-68,485 Retained earnings and other reserves (28,778) (192) (28,585) Total equity 39, ,900 Non-current liabilities Loans and borrowings 13,250-13,250 Deferred income Deferred tax liabilities 1,766-1,766 Total non-current liabilities 15, ,016 Current liabilities Trade and other payables 5,554-5,554 Current tax payable 336 (61) 397 Deferred income 3, ,523 Derivatives Total current liabilities 10, ,627 Total equity and liabilities 64, ,543 IMPACT ON THE CONDENSED INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION AMOUNTS WITHOUT ADOPTION OF AS REPORTED ADJUSTMENTS IFRS 15 Revenue 17,282 (14) 17,296 Cost of Sales (14,016) 15 (14,031) Results from operating activities 3, ,264 Net Finance Costs (606) 0 (606) Profit before Tax 2, ,658 Income Tax expense (745) (0) (745) Profit from Continuing Operations 1, ,

12 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS 5 Segment reporting An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group s other components, and for which discrete financial information is available. All operating segments operating results are reviewed regularly by the Group s Chief Executive Officer to make decisions about resources to be allocated to the segment and assess its performance. 6 Estimates The preparation of condensed consolidated interim financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. In preparing these condensed consolidated interim financial statements, the significant judgements made by management in applying the Group s accounting policies and the key sources of estimation uncertainty were the same as those applied to the annual financial statements as at, and for the year ended, 30 June Operating Segments Group for the six months ended 31 December 2018 WIRELESS WIRED ISP UNALLOCATED TOTAL NETWORKS NETWORKS (DISCONTINUED OPERATION) $000 S $000 S $000 S $000 S $000 S Operating revenue & other income - Sales to customers outside the Group 10,328 6, ,282 Total revenue 10,328 6, ,282 Costs - Costs paid to suppliers outside the Group (8,780) (2,924) - - (11,704) Total costs (8,780) (2,924) - - (11,704) EBITDA 1,548 4, ,578 Depreciation and amortisation (1,428) (883) - - (2,312) EBIT 120 3, ,266 Share of Profit/(Loss) of equity accounted investees, net of tax - - Finance income 56 Finance expense (662) Net interest (606) Profit before income tax 2,660 Income tax expense (745) Profit from Operations 1,915 Profit/(Loss) from discontinued operations, net of tax - - Profit/(Loss) 1,915 Capital expenditure 2, ,686 Total assets 28,493 36, ,934 Total liabilities 7,172 4,804-13,250 25, TeamTalk Interim Report

13 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS 7 Operating Segments (continued) Group for the six months ended 31 December 2017 WIRELESS WIRED ISP UNALLOCATED TOTAL NETWORKS NETWORKS (DISCONTINUED OPERATION) $000 S $000 S $000 S $000 S $000 S Operating revenue & other income - Sales to customers outside the Group 10,248 7, ,432 Total revenue 10,248 7, ,432 Costs - Costs paid to suppliers outside the Group (8,150) (2,922) - - (11,072) Total costs (8,150) (2,922) - - (11,072) EBITDA 2,098 4, ,360 Depreciation and amortisation (1,257) ( 947) - - (2,204) EBIT 841 3, ,156 Share of Profit/(Loss) of equity accounted investees, net of tax (297) (297) Finance income 120 Finance expense (873) Net interest (753) Profit before income tax 3,106 Income tax expense (959) Profit from Operations 2,147 Profit/(Loss) from discontinued operations, net of tax - - Profit/(Loss) 2,147 Capital expenditure 1, ,169 Total assets 25,152 37,829-2,255 65,236 Total liabilities 8,582 5,180-24,000 37,

14 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS 7 Operating Segments (continued) Group for the twelve months ended 30 June 2018 WIRELESS WIRED ISP UNALLOCATED TOTAL NETWORKS NETWORKS (DISCONTINUED OPERATION) $000 S $000 S $000 S $000 S $000 S Operating revenue & other income - Sales to customers outside the Group 20,906 14, ,252 Total revenue 20,906 14, ,252 Costs - Costs paid to suppliers outside the Group (16,690) (6,421) - - (23,111) Total costs (16,690) (6,421) - - (23,111) EBITDA 4,215 7, ,140 Depreciation and amortisation (2,479) (1,868) - - (4,347) EBIT 1,737 6, ,794 Share of Profit/(Loss) of equity accounted investees, net of tax (506) (506) Finance income Finance expense (1,837) (1,837) Net interest (1,536) Profit before income tax 5,751 Income tax expense (1,745) Profit from Operations 4,006 Profit/(Loss) from discontinued operations, net of tax Profit/(Loss) 4,439 Capital expenditure 4,126 1, ,546 Total assets 23,823 40, ,135 Total liabilities 6,987 5,382-22,000 34, TeamTalk Interim Report

15 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS 8 Revenue Revenue is measured based on the consideration specified in a contract with a customer. The Group recognises revenue when it satisfies it s performance obligations under that contract. In practice there is no significant change to the way the group recognises revenue on an annual basis as a result of the transition to IFRS 15. Group services provided to Customers Wireless Networks Wired Networks Installation Hardware/Software Nature, performance obligation and timing of revenue Providing access to the Group s wireless networks to enable Voice and Data traffic. The group recognises revenue as it provides this service to it s customers. Revenue from Installations required to enable this access is recognised over the term of the contract for service. Billing in respect of fixed monthly charges billed in advance is deferred until the service has been provided and is treated as deferred revenue until that time. Providing access to the Group s wire networks to data traffic. The group recognises revenue as it provides this service to it s customers. Revenue from Installations required to enable this access is recognised over the term ofthe contract for service. Billing in respect of fixed monthly charges billed in advance is deferred until the service has been provided and is treated as deferred revenue until that time. Providing services for the installation of hardware. This revenue is billed and recognised on a monthly basis except where this installation is required to enable services (as above). Providing hardware and software to customers. This is billed and recognised on delivery to the customer. DISAGGREGATION OF REVENUE In the following table, revenue is disaggregated by major product and service lines and timing of revenue recognition. There is no geographic market disaggregation as the group derives all revenue from product/services provided within New Zealand For the six months ended 31 December WIRELESS NETWORKS WIRED NETWORKS TOTAL Major Products/Service Lines Wireless Networks 10,116 9, ,116 9,842 Wired Networks - - 6,954 7,184 6,954 7,184 Hardware Sales ,328 10,248 6,954 7,184 17,282 17,432 Timing of Revenue Recognition Products transferred at a point in time 742 1, ,005 1,377 Products and Services transferred over time 9,586 9,243 6,691 6,812 16,276 16,055 10,328 10,248 6,954 7,184 17,282 17,

16 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS 9 Capital and reserves SHARE CAPITAL The Company has 41,380,880 fully paid no par value shares on issue at balance date (Interim Dec 2017: 28,368,994; Full Year Jun 2018: 28,368,994). All shares have equal rights and rank equally with regard to the Company s residual assets. DIVIDENDS The following dividends were declared and paid by the Group for the period ended 31 December 2018: Group SIX MONTHS ENDED YEAR ENDED 31 DECEMBER 30 JUNE $000 s $000 s $000 s Nil Interim Dividend For 2019 financial year. Final dividend for prior year Nil. Interim Dividend for 2018 financial year Nil Finance costs Group SIX MONTHS ENDED YEAR ENDED 31 DECEMBER 30 JUNE $000 s $000 s $000 s Interest expense on external borrowings (579) (873) (1,837) Interest income Net unrealised (loss)/gain on fair value of derivatives (83) Net finance costs (606) (753) (1,537) 14 TeamTalk Interim Report

17 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS 11 Earnings per share BASIC AND DILUTED EARNINGS PER SHARE The calculation of basic earnings per share at 31 December 2018 was based on the profit attributable to ordinary shareholders of $1,915,000 and a weighted average number of ordinary shares outstanding of 31,165,400 calculated as follows: Group SIX MONTHS ENDED YEAR ENDED 31 DECEMBER 30 JUNE $000 s $000 s $000 s Profit attributable to ordinary shareholders 1,915 2,147 4, IN SHARES IN SHARES IN SHARES Weighted average number of ordinary shares Issued ordinary shares at start of period 28,368,994 28,368,994 28,368,994 Shares issued during the period 13,011, Issued ordinary shares at close of period 41,380,880 28,368,994 28,368,994 Weighted average number of ordinary shares for the period 31,165,400 28,368,994 28,368,994 Basic earnings per share ($) Diluted earnings per share ($) Commitments (a) Operating lease commitments Leases as lessee Commitments under non cancellable operating leases are: Group SIX MONTHS ENDED YEAR ENDED 31 DECEMBER 30 JUNE $000 s $000 s $000 s Less than one year 1, Between one to two years 1, Between two to five years 1, ,125 4,029 2,126 2,840 The Group leases a number of premises and vehicles under operating leases. Premises leases operate under various differing terms, but typically are based around an initial lease period, with 1 or 2 further right of renewal periods. Some premises are leased on an annual basis and others are subject to monthly terms (storage units). Premises leases typically include rent uprates every 2-3 years with such increases reflecting revised valuations of the premises and changes in market conditions. The vehicle leases typically run for a period of 3 years, with the vehicles returned to the lessor at the end of term. (b) Capital commitments At balance date the Group had capital commitments of $2,710,000 (Dec 2017: $1,304,000, Jun 2018: $3,516,000)

18 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS 13 Reconciliation of the profit for the period with the net cash flow from operating activities Group SIX MONTHS ENDED YEAR ENDED 31 DECEMBER 30 JUNE $000 s $000 s $000 s Profit for the period and total comprehensive income after tax (Continuing Operations) 1,915 2,444 4,512 Adjustments for: Depreciation, amortisation and impairment 2,327 2,201 4,346 (Decrease)/increase in bad debt provision (85) Loss/(Gain) on derivatives 83 (65) (195) Prepaid services utilisation/(additions) (228) 51 (302) Interest income received (56) (56) 105 Deferred income 286 (96) (847) Deferred tax movement (15) - (36) 2,479 2,110 2,986 Decrease/(increase) in prepayments 144 (471) 198 Decrease/(increase) in trade and other receivables (225) (Decrease)/increase in income tax payable (1,269) 464 `1,196 Decrease/(increase) in inventory (653) (143) 137 (Decrease)/ increase in trade and other payables (811) (909) (1,137) Decrease/(increase) in deferred expenses (prepaid IRU) (2,471) (306) 181 Net cash from operating activities 1,923 4,248 7, Related party transactions TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL Key management personnel compensation Key Group management personnel compensation comprised short-term employee benefits of $1,021,820 for the six months ended 31 December 2018 (Interim Dec 2017: $951,707; Full Year Jun 2018: $1,834,596). This excludes directors fees of $119,420 (Interim Dec 2017: $128,846; Full Year Jun 2018: $247,000). Other transactions with key management personnel Directors of Group Companies control 1.0% of the voting shares of the Company (Interim Dec 2017: 0.2%; Full Year Jun 2018: 0.6%). Transactions and balances with related parties The aggregate value of transactions relating to key management personnel and entities over which they have control or significant influence were as follows: Directors of the subsidiary companies received no directors fees during the period (Interim Dec 2017: nil; Full Year Jun 2018: nil) Elected directors conduct business with the Group in the normal course of their business activities. There are no outstanding balances with key management personnel at 31 December 2018 (Interim Dec 2017: nil; Full Year Jun 2018: nil). Group entities COUNTRY OF OWNERSHIP INTEREST (%) Significant subsidiaries INCORPORATION CityLink Limited New Zealand 100% 100% 15 Subsequent Event On Tuesday 19th February TeamTalk Limited announced that it has been selected as the preferred provider to manage Powerco s private telecommunications network. The deal is for an initial 5 year term with the provision for extension. 16 TeamTalk Interim Report

19 NOTES TEAMTALK TO THE LIMITED FINANCIAL CORPORATE STATEMENTS DIRECTORY REGISTERED OFFICE Level 6, Cambridge Terrace, Wellington, New Zealand HEAD OFFICE Level 6, Cambridge Terrace, Wellington, New Zealand Phone: (04) SUBSIDIARIES CITYLINK LIMITED Level 6, Cambridge Terrace, Wellington, New Zealand Phone: (04) AUDITORS KPMG 10 Customhouse Quay, Wellington, New Zealand SOLICITORS Crengle, Shreves & Ratner City Chambers Building, Johnston Street, Wellington, New Zealand BRANCHES AUCKLAND 2 Robert Street, Ellerslie, Auckland Phone: (09) CHRISTCHURCH Unit 2, 49 Sir William Pickering Drive, Burnside, Christchurch Phone: (03) BANKERS Bank of New Zealand Limited BNZ Partner Centre, Wellington, New Zealand REGISTRAR Link Market Services Limited 138 Tancred Street, Ashburton, New Zealand

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