FIRST CUT: Spark profit dips 1.3% on tax expense, weaker revenue

Thursday 18th August 2016

Spark New Zealand posted a 1.3 percent drop in annual profit in the face of a bigger tax bill and weaker revenue, although the country's biggest telecommunications company promised to make another special dividend payment in 2017.

Net profit slipped to $370 million, or 20.2 cents per share, in the 12 months ended June 30, from $375 million, or 20 cents, a year earlier, the Auckland-based company said in a statement. That included a 33 percent jump in Spark's income tax expense to $147 million due to "higher current year earnings, prior year non-taxable gains on divestments, and prior year period adjustments," it said.

Earnings before interest, tax, depreciation and amortisation rose 2.5 percent to $986 million, within the company's guidance for ebtida growth of between zero and 3 percent growth, on a 1 percent decline in revenue to $3.5 billion.

"We are now well into the next phase of our ongoing business transformation, shifting focus from building the solid foundation of digital capabilities needed for future growth, to delivering on the opportunity provided by that foundation," chief executive Simon Moutter said. "The growing areas of our business, such as mobile and platform IT services, now outweigh the declining areas such as traditional fixed-line voice and legacy data service,s signalling a successful repositioning and a notable turning point."

The board confirmed a final dividend of 11 cents per share and special dividend of 1.5 cents, payable on Oct. 7 with a Sept. 23 record date, taking the total payment to 25 cents in the year. Chairman Mark Verbiest said the company plans to repeat that return of 22 cents in ordinary dividends and a 3 cent special dividend in 2017.

"The financial results for this past year support the board's view that a return to long-term sustainable growth is realistic and achievable," Verbiest said."

The shares last traded at $3.755 and have gained 14 percent so far this year.

(BusinessDesk)

BusinessDesk.co.nz

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