TIDMAN.
RNS Number : 0172P
Alternative Networks plc
03 June 2015
3(rd) June 2015
Alternative Networks plc
Interim Results for the six months ended 31 March 2015
Alternative Networks plc, ('the Company' or 'the Group'), a
leading provider of IT managed services and independent
business-to-business communications, reports its Interim Results
for the six months ended 31 March 2015.
HIGHLIGHTS
-- Robust trading performance, with year on year growth in
reported and proforma^ revenue, gross profit and adjusted
EBITDA,
-- Strong cash performance, with cash conversion of adjusted EBITDA at 93% (2014:86%),
-- Market share gains notably in Advanced Solutions with
significant increases in revenue, gross profit and signed
backlog,
-- Integration of ControlCircle and Intercept IT well advanced,
with cross sell pipeline at all-time high and office moves
complete,
-- Progressive dividend policy reiterated:
o Interim dividend of 5.5p payable on 15 July 2015, up 12% year
on year,
o Full year dividend to grow by no less than 10% year on year
with a longer term target of 15% growth
-- On track to meet our full year expectations with positive outlook for second half
KEY FINANCIAL INFORMATION
Unaudited results for the 6 months 2015 2014 Change
ended 31 March
GBP'000 GBP'000 %
Revenue 73,965 62,991 17%
Adjusted Operating profit* 9,037 7,476 21%
Adjusted EBITDA* ** 10,270 8,260 24%
Adjusted Profit before taxation* 8,338 7,178 16%
Adjusted Earnings per share***
- basic 13.0 12.2p 7%
- diluted 12.7 12.0p 6%
Interim dividend per share 5.5p 4.9p 12%
Operating profit 6,301 4,888 29%
EBITDA ** 9,635 6,873 40%
Profit before tax 5,601 4,590 22%
Earnings per share - basic 9.4p 7.5p 25%
- diluted 9.3p 7.4p 26%
* Adjusted profits are stated before intangible asset
amortisation excluding software, exceptional items and share based
payments.
** Earnings before interest, taxation, depreciation and
amortisation.
*** Adjusted earnings per share are based on profits as set out
in Note 5.
^ Proforma statements are based on the Group being in its
current structure from 1 October 2013
Edward Spurrier, Chief Executive Officer of Alternative
Networks, commented:
"Alternative Networks has delivered another strong performance.
The comprehensive service offering which we are now able to offer
to customers is proving compelling. We have been able to increase
the number of services we provide them, and are also better placed
to attract new customers across a broader cross-section of the
market, covering the entire communications and IT spectrum.
"At the same time, we have upgraded our physical and technical
infrastructure, a seamless and controlled process which is
enhancing all functions of our business, both internal and
customer-facing. This was an important development and the fact
that it was conducted so professionally reflects well on our entire
organisation.
"We have never been better placed to exploit the market as it
continues to evolve. It has always been our strategy to understand
the dynamics of the market, anticipate its direction and be ready
to meet the requirements of customers and that strategy is now
delivering significant benefits. Our long term growth prospects are
therefore very favourable."
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
Pelham Bell Pottinger 07802 442486
Archie Berens
CHAIRMANS STATEMENT
Introduction
Alternative Networks has continued to perform strongly and has
again demonstrated our ability to integrate value adding
acquisitions to create a stronger and more diversified offering.
The first half of the year has also seen a significant
reconfiguration of the Group's physical infrastructure, creating a
more streamlined organisation, better suited to the needs of both
customers and staff.
Results
A robust trading performance for the six months ended 31 March
2015 has delivered growth at all levels: reported and proforma
revenue, gross profit and adjusted EBITDA have all increased. Total
group revenues were up 17% to GBP74.0m (2014: GBP63.0m), with
organic revenues excluding the contributions of the businesses
acquired in 2014 up 7%. Mobile and Advanced Solutions grew revenues
respectively by 9% underlying and by 52% on a reported basis (9%
and 13% on an underlying or proforma basis respectively). The
businesses acquired in January 2014, Intercept IT and
ControlCircle, have been fully integrated into the Group. They made
a full contribution in the first half of the current financial year
but only a two month contribution to the comparative period, which
explains the difference between reported and pro forma revenues.
Adjusted operating profits were GBP9.0m, up 21% compared with the
first six months of the previous year (2014: GBP7.5m).
Cash and Dividends
Net debt as at 31 March 2015 was GBP30.1m, (GBP29.3m at 30
September 2014), in line with the Board's expectations, and down
from the peak of GBP40.8m in January 2014.
The net debt figure is after one-off capital expenditure of
GBP2.4m on the Group's new London office space and IT
infrastructure and payment of the FY14 final dividend of GBP4.6m.
Since the end of the half year, proceeds of GBP3.8m from the sale
of our former London office have been received. The Group remains
strongly cash generative and the Board is targeting a reduction in
net debt to below GBP20m by the end of the current financial
year.
The Board has declared to pay an interim dividend of 5.5 pence
per share which will be paid on 15 July 2015 which is a 12%
increase on the interim dividend of 4.9 pence per share paid in
2014, and in line with the Company's progressive dividend policy.
The Board has confirmed its intention to pay a total dividend for
the year at least 10% ahead of the prior year. Going forward, the
Group intends to progress the annual dividend growth towards
15%.
Trading Performance
A key factor underpinning the Group performance has been the
successful integration of the acquisitions made last year.
ControlCircle and Intercept IT have enabled the Group to provide a
broader range of services, making the total proposition more
attractive to newer and larger customers, and presenting greater
opportunities for cross-selling products to our existing customer
base. This can be seen in two important metrics: the average
monthly spend of large customers in the first half of the year
increased by 12% and the proportion of customers taking 5 or more
products has increased from 16% to 18%, demonstrating the Group's
increasing ability to cross-sell.
Advanced Solutions includes the two businesses acquired in 2014.
The momentum in this area is at record levels, with several large
contracts secured during the period and a strong backlog of orders.
Revenue growth was achieved from all core products, and new orders
have been received across a broad range of industry verticals.
Margins were also higher, with growth of higher margin products
such as professional services and managed hosting.
Mobile has again performed strongly, with further market share
gains evidenced by an increase of 11% in subscriptions. Churn has
remained low, helped by high quality service levels supported by
the Synapse portal, and average data per user has increased
dramatically, a trend we expect to continue as customers
increasingly use mobile devices to consume more and more data.
Mobile now accounts for 30% of total revenues
Our revenues in Fixed Voice has, as expected, continued to
decline, with revenues 10% lower than the comparative period. This
is in line with the dynamics of the market, as the increasing use
of email and mobile as the primary forms of communication reduce
the use of fixed line telephony, and regulatory price reductions
and lower call volumes to mobiles also impact on revenues.
Growth Strategy
We continue to pursue a twin track growth strategy, combining
organic growth with strategic acquisitions. Our track record of
making value-adding acquisitions has been further enhanced by the
successful ongoing integration into the business of Intercept IT
and ControlCircle. Both businesses have filled gaps that had
previously existed in our product portfolio and now enable us to
cover all of a customer's communications and connectivity
requirements from individual devices through networks to data
centres. This is proving highly compelling, and the cross-selling
of this entire collection of services is a key feature of our
organic growth strategy. In the last year alone, there has been a
significant uplift in the number of cross-selling opportunities
that have been generated and developed. Several significant
contracts with larger organisations have been won or are in the
process of being finalised. This shows the scale of the opportunity
in front of us.
We will continue to develop our product set, ensuring that
customer service remains at the highest possible standards. Our
Synapse portal remains the leading customer service tool of its
type in the market, setting an industry benchmark. We recognise,
though, that it needs to be continually maintained and enhanced in
order to retain its competitive advantage.
With regards to future acquisitions, our strategy remains
unchanged, although the immediate focus is ensuring that, having
fully integrated Intercept IT and ControlCircle, we maintain the
momentum that the addition of these businesses has created.
Nevertheless, the Board will always consider other strategic
acquisitions which complement the existing business, or, where
appropriate, bolt-ons. The strict criteria of fit, value-add and
price, that has served us so well thus far, will continue to be
applied.
Board Changes
We have announced separately today that Edward Spurrier, Chief
Executive Officer ("CEO") of Alternative Networks, is to step down
as both CEO and as a director of the Company on 30 September 2015,
being the end of the Company's financial year. Edward has
previously notified the Board of his intention to retire at a point
when an appropriate successor was appointed.
Edward has been a driving force behind the development, growth
and success of Alternative Networks. As a director, he has led our
strategy of organic and acquisitive expansion, which has
transformed the business from a telecommunications reseller, into a
thriving technology managed service provider. He has helped build a
strong business with a great future and we are incredibly grateful
for the contribution he has made.
After a careful selection process, the Board has now decided to
appoint Mark Quartermaine as CEO from 1 October 2015. Mark
Quartermaine is currently Chief Operating Officer of Alternative
Networks, a position he has held for over 12 months, having
previously been a non-executive director of the Company. I am
pleased that the Board has been able to appoint an internal
candidate of Mark's calibre and given his intimate knowledge of
both the company and the industry, I am confident of a seamless
transition.
Outlook
The first half of the year was a period of great change, as we
moved from our old offices to new premises more centrally located
in London. We also took the opportunity to upgrade our own IT
infrastructure, and made several changes in senior management.
Against this backdrop the Group was also able to deliver increased
revenues and profits and this is testament not only to the strength
of the business model, but also to the quality of our staff and I
would like to thank them for their support during this time.
Having taken the opportunity to effect these changes, we are now
better placed than ever to maintain our growth trajectory and even
accelerate it. With new premises and a business structure aligned
to the needs of our target market, we now have an outstanding
opportunity to sell our full portfolio of products and services
across a broader customer base. The second half of the year is
expected to be stronger than the first, with a similar weighting as
in 2014. Our confidence is supported by high levels of backlog, a
strong pipeline and with a number of new clients signed up in new
verticals offering considerable additional opportunities.
James Murray
Executive Chairman
Business & Strategic Overview
The Group's strategy remains unchanged, to become the leading IT
managed services provider for UK businesses via organic and
acquisitive growth.
Business performance
The Group has performed well in the first six months of the
financial year, building on a successful prior year. The two
businesses acquired in 2014, Intercept IT and ControlCircle, are
now fully integrated into the Group, including all sales,
operations and back office functions. The individual brands of the
acquisitions ceased to operate in April 2015 and all sales
activities are now managed under the Alternative brand. The Group
is seeing clear benefits of the enlarged group including opening
new market verticals and a broadening of the cross sales pipeline.
This is evidenced by increases in reported revenues, gross profit
and adjusted EBITDA compared with the prior period and on a
proforma basis. Orders signed in the period were also up 18% across
the Group. Cash generation was once again strong.
The 2014 acquisitions are included in Advanced Solutions which
now represents 50% of the Group's revenue. Advanced Solutions
revenue was 13% ahead of the prior year on a proforma basis.
Momentum remains strong with proforma orders 17% higher than the
prior year, continuing the progress seen in 2014. Stripping out the
acquired businesses, revenue at GBP23.6m was up 31% and orders
signed 39% above the level in the equivalent prior year period.
This has resulted in a high level of backlog at the end of the half
which gives confidence for the full year. In the current period the
acquisitions good gross profit growth on a proforma basis, up 17%,
with strong improvements in gross margin, +990bps ahead. This is as
a result of improved product mix and represents an improvement in
quality of earnings. ControlCircle has reported reduced revenues
versus the prior year equivalent period. However, there were two
specific reasons for this: deliberate reduced focus on low margin
hardware sales and a strategic review by two of its largest
customers who temporarily ceased new project implementations but
have since resumed orders in the second half. Intercept IT has
delivered proforma revenue growth of 7% in the period, which was
also impacted by the deliberate reduction in low margin hardware
and software revenue. Overall hosted solutions across the
acquisitions are expected to make good progress in the second half
of the year and the cross selling pipeline continues to grow.
The margin in Advanced Solutions is ahead of the prior year at
39% (2014: 37%) as a result of growth in higher margin services
such as professional services and managed hosting.
The Mobile business has once again delivered a strong
performance in the period, gaining market share with an 11%
increase in connections year on year, and underlying revenues
(which exclude the effect of revised commercial arrangements with
suppliers) growing 9% to GBP22.4m. Mobile revenue now represents
30% of the Group's overall revenue.
Fixed Voice revenues were 10% below the prior year, in line with
the market and the Board's expectations. Gross profit was more
resilient at 5% behind the prior year due to the positive impact of
new commercial agreements signed in the period. The key focus
remains the migration of the fixed line base to SIP channels which
have grown notably and nearly doubled year on year. Overall the
Fixed Voice business now represents only 20% of the Group's revenue
down from 26% in the equivalent prior period.
Platform for growth
The first half of 2015 has been a significant period of
organisational and operational change in the Group's history. Major
changes revolve largely around the Group's office space portfolio
and IT infrastructure. The latter has focussed on migrating our
infrastructure and applications to our datacentre facilities and
therefore improving resilience.
The Group has transformed it's London office space, with the
exit of 4 leases and the sale of one property for GBP3.8m shortly
after the period end. This will lead to a net cash contribution of
GBP3.0m to be recognised in the year. London operations are now
concentrated in the Group's new headquarters in Southwark which
showcases the Group's ability to create a fully modern connected
environment.
These combined investments will not only improve our service
offerings to customers, but will also increase productivity and
collaboration amongst our people and allow easier integration of
future acquisitions.
The Board is intent on building a broader and stronger platform
for growth. We have set out our vision to be the leading IT managed
services provider of choice to UK businesses. We are spending
GBP0.75m developing the new infrastructure required to provide the
services which customers need to bridge private and public cloud
services. The technical strategy is focussed on three elements:
-- Significantly enhanced Synapse customer portal to include IT
services and extend to public cloud services in due course;
-- On demand services - to be accessed through the portal and
consumed per user per month (e.g. Email or Unified Communications
("UC")) or per unit of compute (e.g. storage); and
-- Infrastructure services - we will develop our ability to support on site services
The ControlCircle infrastructure and hosting services are
critical to the delivery of this strategy and we are launching a
hosted UC "as a Service" as well as a significantly enhanced
"Desktop as a Service" later this year.
Strategically, we are positioning ourselves to continue to
support our customers to consume business critical applications via
a variety of communication methods, and this will support our
growth aspirations going forward.
Organic growth
The Group continues to build successfully on the following four
key areas of focus to deliver continued organic growth:
-- Winning larger customers in the SME space and targeting Enterprise customers;
-- Using improved customer service and Synapse, combined with
the acquired portals to drive improved customer retention across
the wider product set;
-- Cross and up selling of products across our customer base; and
-- Product development and innovation to increase value to our customer base.
Our target customers are in the mid Enterprise market,
particularly those customers with multi-sites and with 80 to 1000
employees. With a broadened product base, there are multiple entry
points to these customers and an increased ability to sell the
original Alternative Networks portfolio.
We continue to focus on winning larger customers (a 'large'
customer being defined as having a monthly spend in excess of
GBP1,000). At the period end the Group had 1,189 large customers,
(31 March 2014: 1,228) and the average monthly spend of large
customers increased 12% to GBP7,118 (2014: GBP6,383) reflecting a
significant increase in the size of new customers to the Group.
The number of customers taking more than one product year on
year has been maintained at 46% and the proportion taking 5 or more
products has increased from 16% to 18%, demonstrating the success
of the cross sell and upsell strategy. This is in line with the
Group's stated strategy of growing the average size of the
customers, via higher enterprise sales and cross sales. Whilst we
experience a continued low level of overall churn of the customer
base, this is higher amongst our small customers.
A key part of our organic growth strategy is to exploit cross
selling opportunities within the Group, to improve product
penetration and sell more high value products to new and existing
customers. Since the acquisitions of ControlCircle and Intercept IT
we have generated almost 300 cross sell opportunities, of which we
have won 54, and are further developing 156 more. Included in these
opportunities are two large deals close to completion which involve
selling both Intercept and ControlCircle's products to existing
Alternative Networks customers.
Portal development
The Group's portal Synapse, offers customers significant service
and flexibility benefits. During the period, the Group has
continued with the planned development of Synapse and the wider
Group portal systems covering the Group's device to datacentre
portfolio.
These developments have included both additional functionality
and enhancing stability and reliability. Functional improvement has
principally involved the addition of bolt-on management across the
Mobile portfolio, allowing customers to control their tariff and
estates fully, remotely and independently, thereby delivering user
efficiencies. New users can now also benefit from enhanced
assistance via the use of a new wizard, and more seamless control
over initial set up and option setting.
As part of the wider transformation of our office and
infrastructure estate the Group portal systems have been moved into
a fully virtualised environment, alongside our other internal IT
application suite, in order to ensure maximum viability and
Mobility.
Product development
We have always aligned our technical strategy with our
customers' needs and have now successfully transitioned the Group
into IT managed services. We are now looking at new products to
further support customers and align their IT with the needs of the
end user, and to deliver bespoke IT solutions for our customers
from the device to the datacentre. As a result we are well
positioned to take increasing amounts of market share with new
services, most importantly PaaS (Platform as a Service) and DaaS
(Desktop as a Service) in which our products are innovative and
market leading.
Growth by acquisition
The main focus remains on strategic acquisitions that complement
the existing product set and can be seamlessly integrated, although
the Group also considers bolt on acquisitions. Whilst the Group is
currently focused on completing the integration of the 2014
acquisitions, maximising the cross sell opportunities and reducing
debt levels, it will continue to be opportunistic in regards to
acquisitions. We remain well placed to take advantage of any
opportunities as they arise applying our usual strict selection
criteria.
Results & Trading Overview
The Group has traded well, with strong continued growth in
Advanced Solutions and Mobile telephony products and services,
which together now account for 80% of Group revenues (75% H1 2014),
and further reduced dependency on Fixed Voice services, which is in
managed decline.
Advanced Solutions Mobile Fixed Voice
Proforma Acquired
Six Six
months months Six months Six months
to Change to Change to Change to Change
31 March 31 March 31 March 31 March
2015 % 2015 % 2015 % 2015 %
GBPm GBPm GBPm GBPm
Revenue 37.2 +13% 13.6 -8% 22.4 0% 14.4 -10%
- Recurring 21.9 +5% 10.4 -2%
-
Non-recurring 15.3 +21% 3.3 -21%
Gross profit 14.4 +21% 6.4 +17% 9.9 +8% 6.6 -5%
Margin 38.9% +260bps 47.2% +990bps 44.2% +320bps 45.6% +250bps
Total reported revenue increased 17% to GBP74.0m (2014:
GBP63.0m). Advanced Solutions business was significantly up, by 51%
(GBP12.6m). Reported revenue in Mobile was in line with the prior
year, underlying revenue (revenue earned directly from network
providers based on sales volumes, which ceased during the prior
year following the redrafting of relevant commercials), in Mobile
grew 9% (GBP1.7m). Growth was partially offset by the managed
decline in the Fixed Voice business, which was down 10% (GBP1.7m).
On a proforma basis the Group would have grown 4% on the equivalent
period in the prior year and 6% on an organic basis.
The businesses acquired in 2014 have been integrated into the
broader Group. Intercept IT has seen good revenue growth of 7% on a
pro-forma basis, whilst ControlCircle was 13% below as two key
customers of undertook strategic reviews in the period placing new
business orders on hold. This has now abated and growth for the
second half is promising. Both acquisitions have delivered strong
improvements in profitability with double digit gross profit growth
reflecting the improved quality of revenue.
Reported gross profit increased by 23% (GBP5.8m), from GBP25.1m
to GBP30.9m, with GBP3.6m (representing 10% growth) of the
increased profit being derived from the acquired companies and with
a further GBP2.2m from the organic business. Gross profit was 9% up
on the prior year on an organic basis and 10% up on a pro-forma
basis. Gross Margin increased by 200 basis points from 39.8% to
41.8% due to improved margins in Fixed Voice and the acquisitions.
Further analysis is detailed below by product.
Adjusted EBITDA at GBP10.3m was up GBP2.0m (24%) on a reported
basis and GBP0.6m (8%) ahead on an organic basis. During the period
the Group has introduced a group-wide sales commission scheme
encouraging higher margin and longer term sales growth, which has
had a one off impact, increasing commission costs by GBP0.3m that
will not recur.
Adjusted EBITDA is stated before non-cash intangible asset
amortisation of GBP2.0m (H1 2014: GBP1.2m), IFRS2 share option
costs of GBP0.7m (H1 2014: GBP0.1m), non-recurring charges relating
to the acquisitions of GBP1.2m and non-recurring income relating to
the property moves of GBP1.2m. Property charges comprised rent
during fit out periods and income comprised lease exit incentives
and non-refundable completion deposits on the property that was
sold in early April 2015.
The Group's reported cash conversion was 93% (2014: 82%) of
adjusted EBITDA, with all parts of the Group contributing
positively, and improving the Group debtor days to below 30 days,
following successful integration of the acquisitions.
Advanced Solutions*
12 months
6 months to 6 months to to
31 March 2015 31 March 2014 30 September
2014
Revenue
Reported Organic Reported Organic Reported
Non-Recurring
Hardware / Software 12.1 10.7 8.2 6.6 21.1
Professional Services 3.3 1.3 1.8 1.1 5.9
Subtotal 15.4 12.0 10.1 7.7 27.0
Recurring
Maintenance 5.6 5.6 5.4 5.4 10.7
Connectivity/WAN 3.9 3.9 2.9 2.9 6.3
Colocation 0.8 - 0.4 - 1.6
Managed Hosting 9.5 - 3.8 - 13.1
Billing 2.0 2.0 2.0 2.0 4.0
Subtotal 21.8 11.5 14.5 10.3 35.7
Total 37.2 23.5 24.6 18.0 62.7
Gross Margins
Hardware / Software 25% 26% 23% 27% 23%
Professional Services 53% 78% 54% 73% 59%
Recurring 44% 36% 42% 37% 45%
Advanced Solutions 39% 34% 36% 36% 39%
* In order to facilitate understanding of business performance,
the Group splits out its operating KPIs, both financial and
non-financial into three distinct revenue groupings. These are
Advanced Solutions, Mobile and Fixed Voice. These enable the
Group's performance to be benchmarked against competitors and allow
the Board to control more clearly the underlying drivers to the
Group's business. The acquisitions of ControlCircle and Intercept
IT are reported in Advanced Solutions and have no impact on Mobile
or Fixed Voice. For avoidance of doubt, the business does not
operate separate trading divisions but sells a converged product
offering, with teams of sales and service organised according to
customer size. Going forward as both ControlCircle and Intercept IT
are fully integrated into the Group there results will not be split
out.
Advanced Solutions revenues increased by 52% to GBP37.2m on a
reported basis and 13% to GBP37.2m over the previous period on a
proforma basis. Furthermore the organic business revenue growth was
12% up on the second half of 2014, which had already experienced
record growth over H1 2014 of 17%.
This momentum continues with signed orders at record levels, 17%
ahead of the equivalent prior period on a pro-forma basis. This has
resulted in a high level of backlog at 31 March 2015 which gives
confidence in the continuing momentum in the second half.
Revenue and sales growth arose from all product types, and new
orders have been generated across all industry verticals. Notable
contract wins with larger customers included a wide scale
networking contract for the London Internet Exchange and Homeserve
for wide scale WAN and hosted voice migration.
The margin in Advanced Solutions is higher than prior year at
39% (2014: 37%) as a result of growth in higher margin services
including professional services and managed hosting.
Hardware & Software
Hardware and Software revenues comprise all individual
non-recurring direct sales, and increased 46% on a reported basis.
Sales increased 62% on an organic basis, as ControlCircle and
Intercept IT experienced lower non-recurring sales as they
integrate within the group and shift strategically towards higher
margin business. Organic sales growth reflects large new deals
signed in the latter parts of 2014.
Professional Services
Professional services revenue, which is heavily orientated
towards IT solution design, increased from GBP1.8m to GBP3.3m.
Organic sales grew by 18% as a result of recent large project wins,
generating a margin of 78%, and reflecting the high quality of
service offered by the Group's technical experts. ControlCircle and
Intercept IT contributed GBP1.9m of sales (2014: GBP0.7m)
justifying the strategic focus on this high margin business. The
full group margin has stabilised, following an initial fall
resulting from duplication with the acquisitions and there is now a
combined professional services function.
Maintenance
Maintenance revenues were broadly in line year on year as the
Group continues to offer this service as an ongoing component of
longer term contracts. Margins are also consistent year on year as
the group has been able to renew contracts at historical pricing
levels due to the service quality available to clients, and
proactively churn any that involve lower pricing.
Connectivity/WAN
Connectivity revenues increased 35% to GBP3.9m in the period.
This growth is generated from data connectivity sales and from SIP
solutions for both existing and new customers. Sales growth has
arisen from a number of key wins, including the UK-wide contract
with Menzies Distribution signed in 2014. Margins have risen
slightly year on year.
Colocation
Colocation revenue arises from recurring provision of datacentre
hosting services to customers wishing to outsource and create a
more flexible cost base. This revenue stream is a customer entry
point to our data centre services and the focus is on then
migrating that revenue to more added value managed hosting
services.
Managed Hosting
Managed hosting encompasses the Group's managed services
offerings in all hosting, cloud and utility services. Growth in
this area is a key focus with both existing and new customers. High
margins in this area represent the added value nature of the
services provided.
Billing
Billing Services revenues and margins are in line with the prior
year. The sales pipeline as at March 2015 is at record levels and
has the potential to secure some larger customer wins in H2
2015.
Telephony Services - Mobile
6 months 12 months to
to 30 September
6 months to 31 March 2014
Mobile 31 March 2015 2014
Revenue (GBPm) 22.4 22.4 43.8
Mobile Bonus revenue 0.6 2.3 2.8
Gross Profit (GBPm) 9.9 9.2 19.0
Gross Margin % 44.2% 40.9% 43.3%
Subscribers 95,260 85,701 91,391
Gross new connections 13,899 12,252 25,089
Recurring revenue 84% 87% 89%
Mobile KPIs
Monthly ARPU (GBP) 39 39 39
Monthly ADPU (Mb) 143 84 99
Monthly average contract
length 24m 24m 24m
Network churn 14% 13% 14%
Customer churn by
value 10% 10% 11%
% Subscribers in-contract 73% 75% 73%
Underlying Mobile revenues grew 9% year on year in the period
(excluding the effect of bonus reductions), and furthermore
reported and underlying revenues grew 5% over the second half of
2014. Mobile gross margins have increased to 44% from 41% (43% for
the full year to 30 September 2014), with the key factor
underpinning the improvement being the benefits of the commercial
arrangements signed in 2014. Significant trends in the period were
as follows:
-- The subscriber base has grown 4% organically to 95,260 since
30 September 2014, and 11% organically since 31 March 2014.
-- ARPU on the entire contracted base is in line with prior
periods at GBP39 (periods ending March and September 2014: GBP39).
The drivers of this include increased data usage with the ongoing
shift from voice to data, in particular across Rest of World
territories, tempered by the trend toward bundled data
revenues.
-- The growth in data continues, and ADPU is up 70% to 143MB per
month year on year. With the predominance of smart phones and the
expansion of 4G networks we expect this will continue to grow
rapidly.
-- Mobile churn remains at low levels, reflecting our ongoing
focus on service and the quality of the Synapse portal. Network
churn levels have increased slightly in the period resulting from
churn of smaller billing customers, as evidenced by the relatively
low churn by value of 10% (30 September 2014: 11%). Customer
re-sign levels, especially in higher billing customers, have
remained high and the number of subscribers in contract remains
good at 73% (30 September 2014: 73%) reflecting value seen in the
Groups service offering.
Telephony Services - Fixed Voice
6 months 6 months 12 months
to to to
31 March 31 March 30 September
Fixed Voice 2015 2014 2014
GBPm GBPm GBPm
Revenue (GBPm) 14.4 16.1 31.3
Gross Profit (GBPm) 6.6 6.9 13.7
Gross Margin % 46% 43% 44%
Outbound Monthly ARPU
(GBP) 1,368 1,443 1,421
Number of lines/channels
(inc. SIP) 71,985 75,573 72,027
SIP lines 10,196 5,222 7,424
Average customer contract
length (months) 23m 25m 24m
Fixed Voice revenues declined 10% year on year in the period due
to a combination of customer churn and reduction in call volume to
mobiles, regulatory price reductions and the continuing move to
email and mobile. Gross profit decline has been more resilient in
the period compared to previous periods, at 5%, owing to the
signing of new Inbound commercial agreements. This has led to gross
margins rising to 46% from 43% in the prior year. Significant
trends in the period were as follows:
-- The Group continues to proactively migrate the Fixed Voice
base to SIP based telephony. The migration to SIP lines has
increased the number of SIP Channels by 37% in the period to over
10,000.
-- The gross margin on this product set has grown again in the
period, from 43% to 46% year on year, but with the revenue decline,
total gross profit has reduced 5% year on year. The growth in gross
margin is as a result of improved commercial arrangements from key
suppliers.
-- Outbound revenues have decreased by 13% to GBP10.8m. Outbound
call revenues were down 16% from GBP6.4m to GBP5.4m, due
principally to the mobile termination rates reductions being passed
onto customers and the ongoing migration to SIP with the equivalent
lower rental charges to customers. Inbound revenues decreased by 2%
from GBP4.0m in 2014 to GBP3.7m in the current period as a result
of the loss of one of the larger Inbound customers (GBP0.2m).
-- The average revenue per customer per month ('ARPU') has
fallen by 5% versus the prior year, as a result of a general
reduction in spend resulting from the shift to mobile and data
communications, tempered by an increase arising from the signing of
new, larger, customers and churn of smaller customers.
Changes to property portfolio
As part of the integration of the Group, during the period the
Group has rationalised its property portfolio and has reduced the
number of properties around London from five to two, significantly
enhancing the quality and increasing total space by 10% to
accommodate future expansion. The Group has moved to a fully leased
model, taking a 15 year lease on new headquarters in Southwark;
this reduces interest charge but increasing rental charge.
In doing this one property was sold for GBP3.85m, completing in
April 2015 and four leases were exited with no penalty and an exit
incentive paid to the Group on one property. The overall rental
charge increases by GBP0.5m in the current financial year and on a
full year ongoing basis by GBP0.8m. The net pre-tax cash benefit in
the current financial year will be around GBP3.0m with the majority
arising in the second half of the financial year.
Cash flow and net debt
The Group continues to benefit from access to a GBP38.5m
syndicated bank loan facility (a GBP43m facility reduced by GBP4.5m
of term loan repayments), of which the average margin payable
throughout the 2015 financial year is expected to be below 2.5%. In
the 2015 financial year there are two payments against the term
loan of GBP2.5m, one of which has been paid in January 2015 and the
next is due in July 2015.
The period end net debt balance was GBP30.1m, (GBP29.3m at 30
September 2014), in line with the Board's expectations, and
includes non-recurring capital expenditure of GBP2.4m on the
Group's new London office space and relocation of IT infrastructure
and payment of the FY14 final dividend of GBP4.6m. Post period end,
the Group has received net proceeds GBP3.2m of cash related to the
sale of a London property. The pre-tax net cash benefit of all of
the property moves will be GBP3.0m.
Capital expenditure
Capital expenditure in the period was GBP4.1m compared to
GBP0.7m in the six months to 31 March 2014, largely due to the
addition of non-recurring investment, including office fit out
costs of GBP2.0m, GBP0.4m of datacentre relocation costs in order
to standardise and improve back office functionality and GBP0.4m of
spares and tooling equipment as part of the signing of a large
hardware and maintenance deal. The remaining GBP1.3m was in line
with previous periods being further expenditure in respect of IT
development, including the Synapse Portal.
Earnings per share and taxation
Adjusted basic earnings per share was up 7% to 13.0 pence, from
12.2 pence in the first half of 2014. The adjustments to earnings
relate to non-recurring costs associated with property in the
period, amortisation of acquired intangibles and share based
payments which have been deducted in full from profits for these
earnings calculations.
Basic earnings per share was at 9.4p, up from 7.5p in 2014. The
weighted average shares in issue increased by 0.4m shares to 48.1m
over the comparative period.
The estimated effective tax rate, before adjusting items, used
for the period to 31 March 2015 is 18.9% as compared to 22.0% in
the prior period. The rate is lower than the prior year due to a
further reduction in the standard rate of corporation tax (from
22.0% to 20.5%) and the recognition of prior year R&D credits
that have been received in the current year.
Going concern
After considering the Group's financial projections, available
borrowing facilities, covenants on borrowing facilities and other
relevant financial matters, the Board is satisfied that on the date
of approving the financial statements, there is a reasonable
expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future. For this reason
the Directors continue to adopt the going concern basis in
preparing the financial statements.
Dividend
The Group's strong financial performance and cash generation has
enabled the Board to maintain its progressive dividend policy. The
Board has declared an interim dividend of 5.5 pence per share on 15
July 2015 which is a 12% increase on the interim dividend of 4.9
pence per share paid in 2014. The Board has confirmed its intention
to pay a total dividend for the year at least 10% ahead of the
prior year. The interim dividend will be paid on 15 July 2015 to
shareholders on the register at 19 June 2015. Going forward, the
Group intends to progress the dividend growth towards 15%.
Edward Spurrier
Gavin Griggs
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 31 March 2015
Six months Six months Year ended
to to
31 March 31 March 30 September
2015 2014 2014
Note GBP'000 GBP'000 GBP'000
Revenue 10 73,965 62,991 137,767
Cost of sales (43,066) (37,878) (80,951)
----------------------------------- ----
Gross profit 30,899 25,113 56,816
Operating costs (24,598) (20,225) (45,276)
----------------------------------- ---- ---------- ---------- ------------
Operating profit 6,301 4,888 11,540
Operating profit - analysed:
Adjusted operating profit 5 9,037 7,476 17,593
Share based payments (663) (92) (510)
Amortisation of intangible assets
(excluding computer software) 7 (2,026) (1,201) (3,496)
Restructuring and other costs (1,217) (1,295) (2,047)
Income from property exit 1,170 - -
---------- ---------- ------------
Operating profit 6,301 4,888 11,540
----------------------------------- ---- ---------- ---------- ------------
Finance income 3 22 25
Finance costs (703) (320) (1,202)
----------------------------------- ----
Profit before taxation 5,601 4,590 10,363
Taxation 6 (1,059) (1,009) (2,285)
----------------------------------- ----
Profit and comprehensive income
for the year 4,542 3,581 8,078
----------------------------------- ---- ---------- ---------- ------------
Attributable to:
Owners of the company 4,542 3,581 8,078
4,542 3,581 8,078
----------------------------------- ---- ---------- ---------- ------------
Earnings per ordinary share:
Basic 4 9.4p 7.5p 16.9p
Diluted 4 9.3p 7.4p 16.6p
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
31 March 2015 31 March 2014 30 September
2014
Note GBP'000 GBP'000 GBP'000
ASSETS
Non-current assets
Intangible assets 7 74,715 79,130 76,745
Property, plant and
equipment 5,164 3,849 2,319
Deferred tax asset 1,230 2,195 1,446
Property deposits 281 153 154
81,390 85,327 80,664
----------------------------- ---- ----------------- ------------------------ ------------------------
Current assets
Asset held for sale 1,401 - 1,401
Inventories 266 245 327
Trade and other receivables 28,567 28,249 26,788
Cash and cash equivalents 9 4,568 4,616 3,793
34,802 33,110 32,309
----------------------------- ---- ----------------- ------------------------ ------------------------
Total assets 116,192 118,437 112,973
----------------------------- ---- ----------------- ------------------------ ------------------------
EQUITY AND LIABILITIES
Equity
Called up share capital 62 62 62
Share premium 6,593 6,563 6,563
Capital redemption
reserve 8 8 8
Merger reserve 2,749 2,749 2,749
Retained earnings 28,452 25,259 27,728
----------------------------- ----
Total equity 37,864 34,641 37,110
----------------------------- ---- ----------------- ------------------------ ------------------------
Current liabilities
Borrowings 9 6,640 3,867 5,111
Current tax liabilities 1,591 1,250 1,146
Trade and other payables 38,307 38,213 37,079
46,538 43,330 43,336
----------------------------- ---- ----------------- ------------------------ ------------------------
Non-current liabilities
Borrowings 9 28,010 35,455 27,970
Deferred tax liabilities 3,780 5,011 4,557
31,790 40,466 32,527
----------------------------- ---- ----------------- ------------------------ ------------------------
Total liabilities 78,328 83,796 75,863
----------------------------- ---- ----------------- ------------------------ ------------------------
Total equity and liabilities 116,192 118,437 112,973
----------------------------- ---- ----------------- ------------------------ ------------------------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Share premium Capital redemption Merger reserve Profit Total
capital reserve and loss Equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at
1 October 2013 62 6,534 8 2,749 25,783 35,136
Shares issued - 29 - - - 29
IFRS 2 share based payments - - - - 69 69
Deferred tax on share
options - - - - 20 20
Comprehensive income for
the period - - - - 3,581 3,581
Dividends paid (note 3) - - - - (4,194) (4,194)
---------------------------- ------------ ------------- ------------------ -------------- ------------ -------
Balance at
31 March 2014 62 6,563 8 2,749 25,259 34,641
IFRS 2 share based payments - - - - 350 350
Deferred tax on share
options - - - - (8) (8)
Comprehensive income for
the period - - - - 4,497 4,497
Dividends paid (note 3) - - - - (2,370) (2,370)
---------------------------- ------------ ------------- ------------------ -------------- ------------ -------
Balance at
30 September 2014 62 6,563 8 2,749 27,728 37,110
Shares issued - 30 - - - 30
Reissue of shares held
in trust - - - - 277 277
IFRS 2 share based payments - - - - 494 494
Deferred tax on share
options - - - - 55 55
Comprehensive income for
the period - - - - 4,542 4,542
Dividends paid (note 3) - - - - (4,644) (4,644)
Balance at
31 March 2015 62 6,593 8 2,750 28,452 37,864
============================ ============ ============= ================== ============== ============ =======
CONSOLIDATED statement OF Cash flowS
Six months to Six months to Year ended
Notes 31 March 2015 31 March 2014 30 September
2014
GBP'000 GBP'000 GBP'000
----------------------------------- ----- ----------------------------- ------------- ------------------------
Cash flows from operating
activities
Cash generated from operations 8 9,545 5,675 16,167
Income tax paid (923) (266) (1,376)
Net cash from operating activities 8,622 5,409 14,791
----------------------------------- ----- ----------------------------- ------------- ------------------------
Cash flows from investing
activities;-
Purchases of property, plant
and equipment (3,602) (196) (846)
Purchase of intangible assets
(software) (468) (542) (1,230)
Interest received 3 22 25
Purchase of subsidiary undertakings
(net of cash acquired) - (51,372) (50,880)
Net cash used in investing
activities (4,067) (52,088) (52,931)
----------------------------------- ----- ----------------------------- ------------- ------------------------
Cash flows from financing
activities;-
Interest paid (703) (320) (1,070)
Dividends paid 3 (4,644) (4,194) (6,564)
Proceeds from issue of share
capital - 30 29
Borrowings received/(repaid) 1,567 37,849 31,608
Net cash used in financing
activities (3,780) 33,365 24,003
----------------------------------- ----- ----------------------------- ------------- ------------------------
Increase / (decrease) in cash and
cash equivalents 775 (13,314) (14,137)
Cash and cash equivalents
at start of period 3,793 17,930 17,930
Cash and cash equivalents
at end of period 4,568 4,616 3,793
----------------------------------- ----- ----------------------------- ------------- ------------------------
NOTES TO THE FINANCIAL INFORMATION
1. Basis of preparation
The financial information contained in this interim statement
does not constitute financial statements as defined by section 434
of the Companies Act 2006. The interim report has been neither
audited nor reviewed by the Group's auditors. The financial
information for the year ended 30 September 2014 is derived from
the statutory accounts for that period that have been delivered to
the Registrar of Companies and included an audit report, which was
unqualified and did not contain any statement under section 498 of
the Companies Act 2006.
Alternative Networks plc's consolidated financial statements and
this interim financial information have been prepared in accordance
with IFRS and International Accounting Standards (IAS) as adopted
by the European Union (EU). The accounting policies applied are
consistent with those described in the Annual Report and Financial
Statements 2014 except as described below. The Interim Report has
been prepared in accordance with IAS 34 'Interim Financial
Reporting' and should be read in conjunction with the 2014 Annual
Report and Financial Statements.
New standards and interpretations not yet adopted and not
relevant to the Group's operations
A number of new standards and amendments to standards and
interpretations are effective for the annual periods beginning
after 1 October 2014, and have not been applied in preparing these
consolidated financial statements. None of these will materially
impact the consolidated financial statements of the Group.
IFRS 10, 'Consolidated Financial Statements'
IFRS 11, 'Joint Arrangements'
IFRS 12, 'Disclosure of Interests in Other Entities'
IAS 27, 'Separate Financial Statements' (revised 2011)
IAS 28, 'Investments in Associates and Joint Ventures' (revised
2011)
Amendment to IAS 32, 'Financial Instruments: Presentation, on
offsetting financial assets and financial liabilities'
Amendments to IFRS 10, 'Consolidated Financial Statements', IFRS
11 'Joint Arrangements' and IFRS 12 'Disclosure of Interests in
Other Entities'
Amendment to IFRS 10, 'Consolidated Financial Statements' and
IFRS 12 and IAS 27 for investment entities
Amendments to IAS 39, 'Financial Instruments: Recognition and
measurement'
The Group plans to adopt and implement IFRS 15 'Revenue from
Contracts with Customers' following endorsement by the EU.
There are no other IFRSs or IFRIC interpretations that are not
yet effective that would be expected to have a material impact on
the Group.
The interim results were approved by the Board on 2 June
2015.
In preparing the interim financial statements the Directors have
considered the Group's financial projections, borrowing facilities
and other relevant financial matters, and the Board is satisfied
that there is a reasonable expectation that the Group has adequate
resources to continue in operational existence for the foreseeable
future. For this reason the Directors continue to adopt the going
concern basis in preparing the financial statements.
2. Accounting policies
The accounting policies applied are consistent with those of the
annual financial statements for the year ended 30 September 2014,
as described in those annual financial statements except as noted
above. Taxes on income in the interim periods are accrued using the
tax rate that would be applicable to expected total annual
earnings.
3. Dividends
The reported dividend in these statements represents the 2014
proposed final dividend of 9.60 pence per GBP0.00125p ordinary
share, which was paid on 30 January 2015 (2014: represents the 2014
proposed and paid final dividend of 8.60 pence per GBP0.00125p
ordinary share). The amount of dividend paid was GBP4,644,000
(2014: GBP4,194,000).
The directors propose an interim dividend of 5.5 pence per
GBP0.00125p ordinary share (2014: 4.9 pence), with a total payment
value of GBP2,660,000 (2014: GBP2,435,000). The proposed 2015
interim dividend was approved on 2 June 2015, and has not been
accrued in the financial statements. It will be paid on 15 July
2015 to shareholders on the register on 19 June 2015. The
ex-dividend date is 18 June 2015.
4. Earnings per share
The calculation of basic and fully diluted earnings per ordinary
share is based on the profit attributable to equity holders of the
Company divided by the weighted average number of ordinary shares
in issue during the year.
For diluted earnings per share, the weighted average number of
ordinary shares in issue is adjusted to assume conversion of all
potential dilutive ordinary shares. The Group has one category of
potential dilutive shares, being those share options granted to
employees where the exercise price is less than the average price
of the Company's ordinary share during the year.
The profit and weighted average number of shares used in the
calculations are set out below:
Basic and fully diluted earnings Profit attributable Weighted average Per share
per share to shareholders of GBP0.00125 amount
ordinary shares
GBP'000 Number Pence
--------------------------------- ------------------------- ---------------- ---------
For the 6 months to March 2015
Earnings per share - basic 4,542 48,071,601 9.4
Potentially dilutive shares - 860,202 (0.1)
Earnings per share - diluted 4,542 48,931,803 9.3
--------------------------------- ------------------------- ---------------- ---------
For the 6 months to March 2014
Earnings per share - basic 3,581 47,657,368 7.5
Potentially dilutive shares - 881,093 (0.1)
Earnings per share - diluted 3,581 48,538,461 7.4
--------------------------------- ------------------------- ---------------- ---------
For the year to September 2014
Earnings per share - basic 8,078 47,709,701 16.9
Potentially dilutive shares - 888,307 (0.3)
Earnings per share - diluted 8,078 48,598,008 16.6
--------------------------------- ------------------------- ---------------- ---------
The adjusted EPS is based on the adjusted profit after tax as
set out in note 5, and the weighted average number of shares as
described above.
Basic and fully diluted adjusted Profit attributable Weighted average Per share
earnings per share to shareholders of GBP0.00125 amount
ordinary shares
GBP'000 Number Pence
--------------------------------- ------------------------- ---------------- ---------
For the 6 months to March 2015
Earnings per share - basic 6,232 48,071,601 13.0
Potentially dilutive shares - 860,202 (0.3)
Earnings per share - diluted 6,232 48,931,803 12.7
--------------------------------- ------------------------- ---------------- ---------
For the 6 months to March 2014
Earnings per share - basic 5,813 47,657,368 12.2
Potentially dilutive shares - 881,093 (0.2)
Earnings per share - diluted 5,813 48,538,461 12.0
--------------------------------- ------------------------- ---------------- ---------
For the year to September 2014
Earnings per share - basic 12,852 47,709,701 26.9
Potentially dilutive shares - 888,307 (0.5)
Earnings per share - diluted 12,852 48,598,008 26.4
--------------------------------- ------------------------- ---------------- ---------
The calculation of the weighted average number of shares in
issue excludes 1,626,403 shares held by the Alternative Networks
Employee Benefit Trust (EBT) (2014: 3,034,090).
There were 49,714,010 shares in issue at 31 March 2015 (2014:
49,685,544 shares). The weighted average number of shares during
the 6 months to March 2015 was 48,071,601 (2014: 47,657,368).
5. Reconciliation to adjusted performance
Reconciliation of profit before tax to 31 March 31 March 30 September
adjusted EBITDA 2015 2014 2014
GBP'000 GBP'000 GBP'000
--------------------------------------------- --------------- -------- ------------
Profit before tax 5,601 4,590 10,363
Adjustments
Amortisation of purchased customer contracts
and other intangibles (excluding computer
software) 2,026 1,201 3,496
Share based payments 663 92 510
Income from property exit (1,170) - -
Restructuring and other costs 1,217 1,295 2,047
---------------------------------------------
Adjusted profit before tax 8,337 7,178 16,416
Finance income (3) (22) (25)
Finance costs 703 320 1,202
--------------------------------------------- --------------- -------- ------------
Adjusted operating profit 9,037 7,476 17,593
Add: Depreciation of property, plant
and equipment 763 431 1,208
Add: Amortisation of software (intangibles) 470 353 790
Adjusted EBITDA 10,270 8,260 19,591
--------------------------------------------- --------------- -------- ------------
Reconciliation of adjusted profits for 31 March 31 March 30 September
earnings per share 2015 2014 2014
GBP'000 GBP'000 GBP'000
--------------------------------------------- ------------- --------- -------------
Adjusted profit before tax (see above) 8,337 7,178 16,416
Less: Share based payments (663) (92) (510)
Less: Taxation per consolidated statement
of comprehensive income (1,059) (1,009) (2,285)
Less: Taxation on amortisation of purchased
customer contracts and other intangibles
(excluding computer software) (383) (264) (769)
Adjusted profit after tax 6,232 5,813 12,852
--------------------------------------------- ------------- --------- -------------
Adjusted EPS is calculated on adjusted earnings after deduction
of share option costs.
This analysis is provided as the Group considers it provides a
more appropriate reflection of the underlying performance of the
business.
6. Taxation on profit on ordinary activities
Income tax expense is recognised based on management's best
estimate of the weighted average annual income tax rate expected
for the full year. The effective tax rate for the period to 31
March 2015 is 18.9% (period ended 31 March 2014: 22%).
The effective tax rate used in the current period is lower than
the prior period due to a further reduction in the standard rate of
corporation tax for the year (from 22.0% to 20.5%) and the
recognition of prior year R&D credits that have been
successfully received in the current year.
The actual effective tax rate for the full year ending 30
September 2015 may be higher following the successful sale of
property in the second half of the year.
7. Intangible assets
Group Purchased Computer Customer Trade Technology Goodwill Total
customer software contracts names
contracts and relationships
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------- ---------- --------- ------------------ ------- ---------- -------- -------
Cost
At 1 October 2013 1,662 3,363 11,231 757 1,007 19,560 37,580
Additions - 1,230 - 1,230
Acquisitions - 461 21,203 - 890 32,345 54,899
------------------------- ---------- --------- ------------------ ------- ---------- -------- -------
At 1 October 2014 1,662 5,054 32,434 757 1,897 51,905 93,709
Additions - 468 - - - - 468
Acquisitions - - - - - - -
At 31 March 2015 1,662 5,522 32,434 757 1,897 51,905 94,177
------------------------- ---------- --------- ------------------ ------- ---------- -------- -------
Accumulated amortisation
At 1 October 2013 1,662 2,208 7,089 736 985 - 12,680
Charge for year - 790 3,286 21 189 - 4,286
------------------------- ---------- --------- ------------------ ------- ---------- -------- -------
At 1 October 2014 1,662 2,998 10,375 757 1,174 - 16,966
Charge for period - 470 1,915 - 111 - 2,496
At 31 March 2015 1,662 3,468 12,290 757 1,285 - 19,462
------------------------- ---------- --------- ------------------ ------- ---------- -------- -------
Net book amount
At 31 March 2015 - 2,055 20,144 - 612 51,905 74,715
------------------------- ---------- --------- ------------------ ------- ---------- -------- -------
At 30 September
2014 - 2,056 22,061 - 723 51,905 76,745
------------------------- ---------- --------- ------------------ ------- ---------- -------- -------
At 1 October 2013 - 1,155 4,142 21 22 19,560 24,900
------------------------- ---------- --------- ------------------ ------- ---------- -------- -------
Goodwill arising on the subsidiaries acquired in January 2014
has not been adjusted and the 12 month review period ended in the
current period.
8. Cash generated from operations
Six months Six months Year ended
to to
31 March 2015 31 March 2014 30 September
2014
GBP'000 GBP'000 GBP'000
----------------------------- ------------------------- ---------------------------- ---------------------------
Operating profit 6,301 4,888 11,540
Adjustments for
Depreciation of property,
plant
and equipment 763 431 1,208
Amortisation of intangible
fixed assets 2,495 1,554 4,286
Employee share scheme charges 663 69 419
Profit on sale of tangible
assets - - 2
Movements in working capital
Inventories 61 (62) (144)
Trade and other receivables 609 (1,261) 95
Trade and other payables (1,347) 56 (1,239)
Cash generated from operations 9,545 5,675 16,167
============================== ========================= ============================ ===========================
9. Analysis of movement in net debt
As at As at
1 October Cash flow 31 March 2015
2014
GBP'000 GBP'000 GBP'000
Net Cash:
Cash at bank and in hand 3,793 775 4,568
-------------------------- ------------------- --------- -------------
Debt
Debt due within one year (5,111) (1,529) (6,640)
Debt due after one year (27,970) (40) (28,010)
--------- -------------
Total debt (33,081) (1,569) (34,650)
-------------------------- ------------------- --------- -------------
Net debt (29,288) (794) (30,082)
-------------------------- ------------------- --------- -------------
10. Segmental information
Per IFRS 8, operating segments require identification on the
basis of internal reporting about components of the Group that are
regularly reviewed by the chief operating decision maker to
allocate resources to the segments and to assess their
performance.
The chief operating decision maker has been identified as the
Board. The Board review the Group's internal reporting in order to
assess performance and allocate resources. The operating segments
are Telephony Services and Advanced Solutions which are reported in
a manner consistent with the internal reporting to the Board. The
Board assesses the performance of the operating segments based on
revenue, gross profit, net profit and EBITDA.
Telephony Services consists of two revenue streams, fixed voice
and mobile. Advanced Solutions includes the installation and
maintenance of telephone systems, the integration of computer
networks, the provision of managed hosting solutions and the
provision of billing facilities.
For six months ended 31 March Telephony Advanced
2015 Services Solutions Total
GBP'000 GBP'000 GBP'000
----------- ----------- --------
Total segment revenue 36,777 37,317 74,094
Inter segment revenue - (129) (129)
Revenue from external customers 36,777 37,188 73,965
------------------------------------ ----------- ----------- --------
Gross Profit 16,476 14,423 30,899
------------------------------------ ----------- ----------- --------
Operating profit 5,706 595 6,301
Finance income 1 2 3
Finance costs (703) - (703)
Taxation (912) (147) (1,059)
Profit / (loss) after tax
for the year 4,092 450 4,542
----------- ----------- --------
EBITDA 6,216 3,344 9,560
------------------------------------ ----------- ----------- --------
Other information
Additions to non current assets
(other than financial instruments
and deferred tax assets) 2,838 1,232 4,070
Depreciation and amortisation 510 2,748 3,258
------------------------------------ ----------- ----------- --------
For six months ended 31 March Telephony Advanced Total
2014 Services Solutions
GBP'000 GBP'000 GBP'000
---------- ---------- -------
Total segment revenue 38,498 24,771 63,269
Inter segment revenue - (278) (278)
Revenue from external customers 38,498 24,493 62,991
----------------------------------- ---------- ---------- -------
Gross Profit 16,118 8,995 25,113
----------------------------------- ---------- ---------- -------
Operating profit 5,376 (488) 4,888
Finance income 11 11 22
Finance costs (313) (7) (320)
Taxation (1,132) 123 (1,009)
Profit after tax for the year 3,942 (361) 3,581
---------- ---------- -------
EBITDA 6,061 812 6,873
----------------------------------- ---------- ---------- -------
Other information
Additions to non current assets
(other than financial instruments
and deferred tax assets) 537 201 738
Depreciation and amortisation 685 1,300 1,985
----------------------------------- ---------- ---------- -------
For the year ended 30 September Telephony Advanced Total
2014 Services Solutions
GBP'000 GBP'000 GBP'000
---------- ---------- -------
Total segment revenue 75,114 63,215 138,329
Inter segment revenue - (562) (562)
Revenue from external customers 75,114 62,653 137,767
----------------------------------- ---------- ---------- -------
Gross Profit 32,603 24,213 56,816
----------------------------------- ---------- ---------- -------
Operating profit 11,384 156 11,540
Finance income 13 12 25
Finance costs (1,190) (12) (1,202)
Taxation (1,790) (495) (2,285)
Profit after tax for the year 8,417 (339) 8,078
---------- ---------- -------
EBITDA 12,669 4,365 17,034
----------------------------------- ---------- ---------- -------
Other information
Additions to non current assets
(other than financial instruments
and deferred tax assets) 1,282 794 2,076
Depreciation and amortisation 1,285 4,209 5,494
----------------------------------- ---------- ---------- -------
Assets and liabilities are not disclosed by segment as they are
not reported to the chief operating decision maker.
Transactions with the largest customer of the Company are less
than 10% of Group revenue and do not require disclosure for either
2014 or 2015.
All sales have taken place within the United Kingdom and those
between segments are all carried out on arm's length basis.
All non-current assets are located within the United
Kingdom.
11. Post balance sheet events
Subsequent to the year end the Group has exited two of its
London properties, with the sale of one property for a total
consideration of GBP3.8m.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR KLLFBEQFXBBV
Alternative Networks (LSE:AN.)
Historical Stock Chart
From Mar 2024 to Apr 2024
Alternative Networks (LSE:AN.)
Historical Stock Chart
From Apr 2023 to Apr 2024
