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Kordia's NZ business ready for analogue TV switch-off

30 Aug 2013
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Kordia Group has boosted after-tax profit 46 per cent to $10.7m ($7.3m in FY12) for continued operations in the 12 months to 30 June 2013.

In addition, the SOE has reduced Net debt to $52.8m, its lowest level in eight years, down from a peak of $121m.

Total revenue for the year was $309.1m for continued operations, with Group EBITDA $44.7m. The Board of the telecommunications and broadcast SOE has declared a final dividend of $4m, for a total FY13 dividend of $5m.

‘Continued operations’ exclude Orcon, divested at 31 March 2013.

Kordia Group Chairman David Clarke says the business is well placed to mitigate the revenue loss associated with the closure of the analogue TV network, which releases the 4G spectrum and enables the Crown to proceed with its planned auction later this year.

“Over the last several years, Kordia Group has improved its core profitability, increased its dividend, reduced its gearing and is ready for the analogue switch off," Clarke says.

"Gearing reduced to 36 per cent at 30 June 2013, from 46 per cent at the half year.

“The diversification strategy continues to deliver strong earnings growth with the focus on alternative industry verticals in the Australian market and on business critical networks in New Zealand.

“With net debt at its lowest level for eight years there continues to be plenty of headroom under our bank facilities and covenants to fund continued growth in the business.

"The performance of the on-going business in FY13 together with the divestment of Orcon has strengthened the balance sheet."

Kordia New Zealand

There continued to be strong demand in New Zealand for digital television transmission services, and the telecommunications sector had shown good growth, Clarke says.

In addition, the Kordia Solutions New Zealand business had made progress identifying new opportunities both nationally and in the Pacific region.

Growth in New Zealand would however be offset in FY14 by the analogue switch off with significant impact on the division’s pre-tax earnings.

Mr Clarke says Kordia saw solid growth in revenues from its telecommunications products, including OnKor (Managed WAN), the core offering to corporate customers. From that foundation capability, Kordia New Zealand would increase the range of products and services it offers its customers.

Kordia Solutions Australia

Kordia Solutions Australia had performed well relative to its key competitors and consolidated its record growth in FY12 with another year of record revenues, Clarke says.

“Australia has executed on its diversification strategy by driving further into new market segments and expanding its service offering into its growing customer base.

“The transformation of the business has continued from providing specialist services to becoming a true end-to-end services provider across the entire network deployment value chain.

"This capability enables Kordia Solutions Australia to work with its customers seamlessly, enhancing value and reducing cost.”

Clarke adds Australia maintained and consolidated its customer footprint, growing and developing new segments with around 40 per cent of its FY13 revenues coming from services that did not exist three years ago.

“This growth was underpinned by the progress of work for APLNG in the energy and natural resources market, civil infrastructure design and construction works for mobile operators, and design work for the Australian National Broadband Network (NBN).

“Kordia Solutions Australia continues to pursue this diversification strategy, both directly and through strategic partnerships.

"Having made significant investments in new capability and service offerings, the business is well positioned for further growth."

Dividend

Consistent with the forecast in the statement of corporate intent for 2013, the Kordia Group board has declared a final dividend of $4m for the year ended 30 June.

“Kordia is well placed to cope with the loss of revenue from the analogue switch off and our diversification strategy is bearing fruit," Clarke concludes.

"This, together with the on-going debt reduction, has strengthened the Group, which is well positioned for the future."