Two Degrees reports $33.1M full-year loss   1 Jun 2016

Article - BusinessDesk

Wednesday 01 June 2016 12:00 PM

Two Degrees reports $33.1M full-year loss on 43% revenue growth

By Pattrick Smellie

June 1 (BusinessDesk) - 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 percent 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 percent to $323.7 million, while increased equipment and finance costs and foreign exchange losses contributed to total expenses rising 18 percent 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 yar'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.

As CEO, his job was to formulate plans and seek board approval for them, while funding them was a board decision. So far, 2Degrees had raised capital from high net worth personal investors, a Maori incorporation, vendor finance and more recently from a $200 million bank facility for which Bank of New Zealand was the lead manager.

"They raise the money," said Sherriff of the board, while his job was to "spend it."

"In this industry, you can always use more capital," he said, but at present, operating cash flow was capable of funding network capability and current plans were "fully funded", despite the $200 million debt facility being close to fully drawn down.

"These are very sophisticated investors," he said of the original US backers, who were willing to continue funding strong revenue growth in pursuit of eventual profitability.

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 percent 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.

In slides accompanying today's briefing, 2Degrees highlighted the growth in its monthly paid mobile subscriptions, now standing at 56 percent 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.

(BusinessDesk)

ends

Add a comment

News

Hilary Timmins' Award-Winning UK Documentary Series To Inspire NZ Students

29 Jun 2020 Education
Dream Catchers, produced and directed by Hilary Timmins, celebrates the success stories of more than thirty inspirational New... more

New Zealand reaffirms support for Flight MH17 judicial process

7 Mar 2020 News By Rt HON WINSTON PETERS
Ahead of the start of the criminal trial in the Netherlands on 9 March, Foreign Minister Winston Peters has reaffirmed the need to... more

Business

NZ Government's Economic package to fight COVID-19

17 Mar 2020 Business News By RT HON JACINDA ARDERN
The Coalition Government has launched the most significant peace-time economic plan in modern New Zealand history to cushion the... more

NZ Government announces aviation relief package

19 Mar 2020 Business News By Hon Phil Twyford
Transport Minister Phil Twyford today outlined the first tranche of the $600 million aviation sector relief package announced earlier... more

Living

Diversity was Key at New Zealand Trade Tasting in London

6 Jun 2022 Food & Wine
New Zealand Winegrowers Annual Trade Tasting was recently held in London, on Wednesday 4 May, in Lindley Hall. It was the first... more

Kiwi author stuns Behind the Butterfly Gate

12 Jan 2022 Arts By Charlotte Everett
Hidden behind the Butterfly Gate is where the secret has been kept for 76 years...  New Zealand writer Merryn Corcoran’s... more

Property

Fairer rules for tenants and landlords

17 Nov 2019 Property By Minister Kris Faafoi
17 NOVEMBER 2019 The Government has delivered on its promise to the over one million New Zealanders who now rent to make it fairer... more

New Zealand Government will not implement a Capital Gains Tax

17 Apr 2019 Property By RT HON JACINDA ARDERN
The Coalition Government will not proceed with the Tax Working Group’s recommendation for a capital gains tax, Jacinda Ardern... more

Migration

Boosting border security with electronic travel authority – now over 500,000 issued

19 Nov 2019 Migration By Hon Iain Lees-Galloway
19 NOVEMBER 2019 We’ve improved border security with the NZeTA, New Zealand Electronic Travel Authority, which helps us to... more

Christchurch reinstated as refugee settlement location

18 Aug 2018 Migration
18 AUGUST 2018 HON IAIN LEES-GALLOWAY The announcement that Christchurch can once again be a settlement location for refugees... more

Travel

Gallipoli Anzac Day services cancelled

19 Mar 2020 Travel & Tourism By RT HON JACINDA ARDERN
The New Zealand and Australian Governments have announced this year’s joint Anzac Day services at Gallipoli will be cancelled... more

New Zealanders advised not to travel overseas

19 Mar 2020 Travel & Tourism
New Zealanders advised not to travel overseas more

Sport

The Skipper's Diary: Sir Richard Hadlee honouring his father and NZ's Forty-Niners

27 Oct 2019 Cricket By Charlotte Everett
NZNewsUK London Editor Charlotte Everett spoke to Sir Richard Hadlee about why he’s chosen to publish his father’s... more

PREVIEW: All Blacks v England semi-final

26 Oct 2019 Rugby
The two most convincing quarterfinals winners are set to square off in a semifinal showdown for the ages when the All Blacks meet old... more

Columns

Gordon Campbell on the Gareth Morgan crusade

11 Nov 2016 Opinion
Gordon Campbell on the Gareth Morgan crusade First published on Werewolf The ghastly likes of Marine Le Pen in France and Geert ... more

Gordon Campbell on the US election outcome

10 Nov 2016 Opinion
Column - Gordon Campbell   Gordon Campbell on the US election outcome Well um.. on the bright side, there (probably)... more

Kiwi Success

Congratulations to Loder Cup winner

26 Sep 2018 People By Hon Eugenie Sage
25 SEPTEMBER 2018 The Loder Cup, one of New Zealand’s oldest conservation awards, has been awarded to Robert McGowan for 2018... more

Appointments to New Zealand National Commission for UNESCO

16 Aug 2018 Appointments
16 AUGUST 2018Appointments to New Zealand National Commission for UNESCO HON JENNY SALESA Associate Education Minister Jenny Salesa is... more

Recruitment

Historic pay equity settlement for education support workers

14 Aug 2018 Recruitment By RT HON JACINDA ARDERN
14 AUGUST 2018Historic pay equity settlement for education support workers RT HON JACINDA ARDERN HON CHRIS HIPKINS Prime Minister The... more

Historic pay equity settlement for education support workers

22 Aug 2018 Recruitment By RT HON JACINDA ARDERN
14 AUGUST 2018Historic pay equity settlement for education support workers RT HON JACINDA ARDERN HON CHRIS HIPKINS Prime Minister The... more