v2 Report
CTG Cabletalk Group Limited

Commentary: Cabletalk group is a diversified telecommunications and IT support company; “The Group was now operating within three distinct business groupings, Astute Limited which provides telecommunications network maintenance and installation services; Code Blue SME IT support, and Security Services via the Fort Lock Security Group.” (Full year announcement 31 march 2007).

The company has been struggling financially as plainly noted in the full year announcement to the exchange, and the address to the shareholders at the AGM. Of some interest is the following statement from the FY announcement: “As previously indicated, the Board is well advanced with proposals to lift shareholder value and profitability of the Group. What had begun as a discussion around strengthening the Group's balance sheet and capability, now included considering outright sales of parts of the business as well as merging specific activities, or both. Bancorp New Zealand has been mandated to advise the Company on these matters.” (full year announcement 31 march 2007)

The company has not given any updates on that statement.

In terms of financial performance in the most recent year the company made a loss of 492,000 compared with a profit in the previous year of 1.2m. Clearly this is a danger sign. What has lead to this decline in profits? One key contributor was this: “Significant one-off costs of over $800,000 were incurred and expensed, and the opportunity was taken to review provisions and to write off residual costs of earlier investment in systems and equipment.” –which is not completely clear; however the statement of cash flows shows an operating cash loss also, so nitpicking about accounting treatment is no solution.

The loss has thrown off most of the analytics, however looking at some of the balance sheet oriented ratios such as liquidity and capital structure, the company has a negative interest coverage ratio, negative working capital, and low liquidity ratios. Also it has increased its short term borrowings relative to long-term. By any measure the financial performance in the current year is dismal in contrast to the previous years.

Essentially what it comes down to then is reading into the statements made by management at the AGM and in the full year results announcement to see if there is any glimmer of future profitability, there are a number of statements regarding investment and flow through… shareholder value etc. Perhaps CTG will return to profitability by next FY, they do claim a shortage of workers so business is in demand, and they do have a number of key contracts in place e.g. Telstra, et al; and if the 800k “one-off” didn’t occur the company would have made a small profit. So as always DYOR (Do Your Own Research), and form your own opinion.

By Callum Thomas
1-September-2007

Website:  http://www.cabletalk.co.nz/

Recent announcements: click here

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Financials 
 

Statement of Financial Performance
	2007	2006	2005	2004
Revenue
Sales	40,071,000	36,197,000	41,148,000	54,621,000
Interest received	12,000	158,000	-	-
Other	4,000	24,000	-	-
Total Revenue	40,087,000	36,379,000	41,148,000	54,621,000
Expenses
Cost of sales	32,272,000	27,990,000	37,010,000	51,807,000
Other expenses	7,235,000	5,735,000	-	-
EBITDA	580,000	2,654,000	4,138,000	2,814,000
Depreciation	791,000	568,000	618,000	822,000
Amortisation	80,000	66,000	-	-
EBIT	(291,000)	2,020,000	3,520,000	1,992,000
Interest expense	431,000	207,000	125,000	308,000
Taxation	(230,000)	612,000	1,136,000	(202,000)
NPAT	(492,000)	1,201,000	2,259,000	1,886,000
Statement of Financial Position
	2007	2006	2005	2004
Assets
Current Assets
Bank and cash	-	2,342,000	4,821,000	3,374,000
Receivables	5,573,000	4,404,000	3,132,000	7,302,000
Inventory	2,651,000	2,016,000	1,675,000	3,498,000
Other	519,000	290,000	-	-
Total Current Assets	8,743,000	9,052,000	9,628,000	14,174,000
Non Current Assets
Property Plant & Equipment	3,176,000	2,292,000	2,076,000	2,999,000
Investments	-	-	120,000	-
Goodwill & Intangibles	4,110,000	4,173,000	-	-
Other	31,000	72,000	-	357,000
Total Non Current Assets	7,317,000	6,537,000	2,196,000	3,356,000
Total Assets	16,060,000	15,589,000	11,824,000	17,530,000
Liabilities
Current Liabilities
Payables	4,232,000	4,206,000	3,483,000	7,526,000
Short term borrowings	3,915,000	749,000	-	-
Other	1,124,000	790,000	1,266,000	2,079,000
Total Current Liabilities	9,271,000	5,745,000	4,749,000	9,605,000
Non Current Liabilities
Long-term Borrowings	472,000	2,296,000	2,000	3,111,000
Other	175,000	278,000	-	-
Total Non Current Liabilities	647,000	2,574,000	2,000	3,111,000
Total Liabilities	9,918,000	8,319,000	4,751,000	12,716,000
Net Assets	6,142,000	7,270,000	7,073,000	4,814,000
Statement of Cashflows
	2007	2006	2005	2004
Cash flows from operating activities
Operating revenues	38,928,000	35,782,000	45,400,000	52,667,000
Operating expenses	40,328,000	34,676,000	41,128,000	48,151,000
	(1,400,000)	1,106,000	4,272,000	4,516,000
Cash flows from investing activities
Inflows	60,000	177,000	1,200,000	20,000
Outflows	1,708,000	5,904,000	900,000	923,000
	(1,648,000)	(5,727,000)	300,000	(903,000)
Cash flows from financing activities
Inflows	1,218,000	3,627,000	-	-
Outflows	1,943,000	1,485,000	3,125,000	-
	(725,000)	2,142,000	(3,125,000)	-
Net Increase (decrease)	(3,773,000)	(2,479,000)	1,447,000	3,613,000
Opening cash	2,342,000	4,821,000	3,374,000	(239,000)
Closing cash	(1,431,000)	2,342,000	4,821,000	3,374,000
	Analysis
Per share figures
Dividend/shares	0.02	0.03	-	-
NPAT/shares (EPS)	(0.02)	0.04	0.07	0.12
EBITDA/shares	0.02	0.08	0.13	0.17
Net Assets/shares	0.19	0.23	0.22	0.30
Profitability
ROA	-3.06%	7.70%	19.11%	10.76%
Equity multiplier	2.6	2.1	1.7	3.6
ROE	-8.01%	16.52%	31.94%	39.18%
ROavgE	-7.34%	16.75%	38.01%	-
Net profit margin	-1.23%	3.30%	5.49%	3.45%
Liquidity
Net working capital	(528,000)	3,307,000	4,879,000	4,569,000
Current ratio	0.94	1.58	2.03	1.48
Quick ratio	0.66	1.22	1.67	1.11
Working capital ratio	-0.03	0.21	0.41	0.26
Capital structure
Debt to equity	1.61	1.14	0.67	2.64
Interest coverage	-0.68	9.76	28.16	6.47
Shares	31,792,000	31,792,000	31,792,000	16,283,000
Dividends paid	636,000	954,000	-	-
Dividend payout ratio	-129%	79%	0%	0%
Growth rates
Revenue	10.19%	-11.59%	-24.67%
EBITDA	-78.15%	-35.86%	47.05%
NPAT	-140.97%	-46.83%	19.78%
Total assets	3.02%	31.84%	-32.55%
Net assets	-15.52%	2.79%	46.93%
g = (ROE*(1-DPR))	-18.37%	3.40%	31.94%	39.18%
Other
Share price (17-August-07)	$             0.30	Avg 4 yr growth rate (NPAT)		-56.01%
Market cap	$     9,537,600	Cmpdg 4 yr growth rate (NPAT)		n/a
Enterprise value (EV)	$   19,455,600	Avg 4 yr growth rate (NA)		11.40%
EV/EBITDA	33.54	Cmpdg 4 yr growth rate (NA)		6.28%
P/E Ratio	-19.39
P/NA ratio	1.55
Dividend yield	6.67%
Earnings yield (E/P)	-5%

Trading over the last year

Other

Last updated: 14-11-2007

Company balance date: 31 March

Supplementary Information

This company has not supplied any content, and has not chosen to provide sponsorship.

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