Alternative Networks plc Trading Statement (4861E)
April 10 2014 - 2:01AM
UK Regulatory
TIDMAN.
RNS Number : 4861E
Alternative Networks plc
10 April 2014
Alternative Networks plc
Trading Statement
Alternative Networks plc ("the Group"), the UK business IT and
communications service provider, today issues the following trading
update for the half year ended 31 March 2014.
Trading in the first half of the year gives the Board confidence
that its full year expectations for the Group will be met.
Highlights of the first half of the financial year are:
-- Continued growth in market share - good performance across the Group
-- Strong continued gains in market share in mobile - subscriber
base increased 11% year on year, and 5% since September 2013
-- Good progress on integration of ControlCircle and Intercept IT acquisitions
-- Continuing strong cash generation resulting in net debt of
GBP35.7m, with a target of below GBP30.0m set for 30 September
2014
Trading performance - legacy Alternative business
In Advanced Solutions, orders signed in the first 6 months are
25% higher than last year on a like for like basis, thereby
continuing the progress seen in the second half of 2013. New orders
have been generated across the portfolio but there has been
particular success in Higher Education with new contracts signed
with four Universities, new to the Group, and a further three in
the public and private health sector. In addition, the Group has
recently signed a three year agreement with Menzies Distribution
for LAN, WAN, mobile and voice and unified communication services,
of which the LAN, WAN and mobile are new services being provided by
Alternative. A number of the larger new contracts were signed in
the second quarter and are expected to convert to revenues
commencing in the second half of the current financial year.
Furthermore a number of installations are planned for the summer
period (e.g. to accommodate University holidays), resulting in an
increase of systems backlog by more than GBP1.0m from September
2013. This phasing will mean a higher weighting of revenue and
profits to the second half than previously experienced.
Market share in Mobile Network Services increased in the six
month period, with 4,300 net additional connections bringing total
mobile subscribers to over 85,700 at 31 March 2014. This represents
growth of 11% on a 12 month basis due to both lower subscriber
churn and customer wins in the period. In addition, there were more
than 1,500 subscribers awaiting connection as at 31 March 2014 that
had been won in the second quarter. Mobile revenues in the first
half are expected to be up approximately 7% on the prior year
comparative period. The success of mobile has enabled the group to
renew its agreements with the key suppliers in the period,
extending the contract lengths to 2018, and further guidance on the
impact of improved commercial terms will be provided with the
interim results.
Within Fixed Line Network Services the transition to SIP
continues with a 25% increase in the number of channels, resulting
in reduced line rental revenues, but overall fixed line revenues
are in line with expectations and encouragingly, the trend has not
deteriorated from the prior year.
Trading performance - ControlCircle and Intercept IT
Trading from the recent acquisitions, ControlCircle and
Intercept IT, has been in line with management expectations. The
integration of both businesses is progressing well with the first
stage completed across the back office.
The Group has already signed 4 cross-sell contracts with
customers, and encouragingly the cross-sell pipeline continues to
grow; currently there are more than 100 opportunities being
evaluated.
Each company has landed significant "new logo" contracts in the
weeks since acquisition: In Control Circle's case a global
insurance business, and in Intercept IT, a global law firm. There
are signs of positive sales momentum building and similar to the
rest of the Group, the financial performance of these businesses
will be weighted to the second half of the financial year.
Cash flow
Cash generation remains strong across the Group. In connection
with the acquisitions, the Group took on bank facilities of
GBP43.0m. The net debt position at 31 March 2014 was approximately
GBP35.7m (30 September 2013: Net cash GBP17.2m), down from a peak
of GBP40.8m. This is after the GBP54.0m gross expenses of the two
acquisitions and paying the final dividend of GBP4.2m for the prior
financial year.
The Board has targeted a maximum net debt of GBP30.0m by 30
September 2014.
Dividends
The Board remains committed to its progressive dividend policy
and intends to propose a dividend at least 10% above the level of
the ordinary dividend paid in 2013; and then going forward in 2015
to progress towards a 15% annual growth target.
Interim Results
The results for the half year ended 31 March 2014 are expected
to be released on 4June 2014.
Enquiries:
Alternative Networks 0870 190 7444
Edward Spurrier, Chief Executive Officer
Gavin Griggs, Chief Financial Officer
Investec Bank PLC - Nominated Adviser and Joint Broker 020 7597 5970
Patrick Robb / Carlton Nelson / Andrew Pinder
finnCap Limited - Joint Broker 020 7220 0565
Stuart Andrews / Charlotte Stranner
Pelham Bell Pottinger 07802 442486
Archie Berens
This information is provided by RNS
The company news service from the London Stock Exchange
END
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