CallPlus $253 mln price tag largely goodwill, M2 accounts show

Monday 24th August 2015

ASX listed telecommunications firm M2 Group attributed just a fifth of the A$253 million it paid for local fixed line and broadband services provider CallPlus to identifiable net assets, with the bulk going towards goodwill.

The Melbourne based company completed the acquisition, including the Slingshot, Orcon, Flip and 2Talk brands, on June 30, assigning A$200.2 million to goodwill which it said would arise from "expected synergies". CallPlus's identifiable net assets included cash of A$9.9 million and receivables of almost A$17 million, a customer base valued at A$44.5 million, brands valued at A$27.8 million and other intangible assets totalling A$6 million, according to M2's annual financial statements published on the ASX today. M2 also took on a deferred tax liability of A$8.5 million and trade payables totalling A$61.8 million.

Had the acquisition occurred at the start of the year, CallPlus would have contributed annual revenue of A$236.7 million and pre-tax profit of A$11.3 million, M2 said. Transaction costs associated with the CallPlus acquisition were A$10.2 million.

M2 reported a 10 percent gain in net profit to A$73.7 million on a 9 percent gain in revenue to A$1.12 billion. The board declared a final dividend of 17 Australian cents per share, payable on Oct. 29 with an Oct. 7 record date. That takes the annual payout to 32 cents.

The Australian company announced the acquisition in April, saying CallPlus would add NZ$250 million in sales and NZ$45 million in earnings before interest, tax, depreciation and amortisation in 2016.

M2 today said the integration of CallPlus was well underway, with a restructure of the New Zealand business to align it with the Australian parent's consumer, business and wholesale segments, the establishment of a trans-Tasman network to allow information sharing, and refinancing debt facilities.

The company's shares fell 3.7 percent to A$9.57, caught up in a 3.7 percent drop on the S&P/ASX 200 index. The stock is up 22 percent this year.

BusinessDesk.co.nz

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