TIDMAN.
RNS Number : 9995U
Alternative Networks plc
13 April 2016
Alternative Networks plc
('the Group' or 'Alternative')
Trading update
Alternative Networks plc, the UK business IT and communications
service provider, today issues the following trading update for the
half year ended 31 March 2016. The highlights were:
-- Advanced Solutions delivered growth in recurring revenues and
has ended the half year with strong backlog levels in non-recurring
business
-- Challenging market conditions in Mobile as announced in
February with the impact of new tariffs on roaming rates offsetting
further gains in market share with a 9% increase in the subscriber
base year on year
-- Continued strong operating cash conversion, with closing net
debt of GBP19.0m (FY2015: GBP18.7m)
-- Board remains committed to its progressive dividend policy of
no less than 10% growth in the dividend year on year, progressing
towards its longer term target of 15% annual growth in due
course
Trading performance
Group
The Board's expectations for the period ending 31 March 2016
remain unchanged from those detailed in the recent trading update
dated 24 February 2016.
The Group ended the half year with a number of positive
indicators including a high level of Advanced Solutions order
backlog, rising Fixed Voice margins, new wins in Online Desktop, a
healthy pipeline of new business opportunities over the portfolio
and a number of new products and offerings that are expected to be
launched in the second half of the financial year.
Advanced Solutions
The performance seen over recent periods has continued.
Recurring revenue is expected to be approximately 5% ahead of the
prior year period, while non-recurring revenue is expected to be
approximately 8% below the prior year period due to the phasing of
project completions into the second half of the financial year, the
Group ended the half year with a good level of non-recurring signed
order backlog of circa GBP8m, up 40% on 30 September 2015. This
growth is due to new orders from both new and existing customers
and is expected to result in a higher weighting of revenue and
profits to the second half than in previous years.
Hosted Managed Services and On Demand Services continue to
perform in line with expectations. In particular the hosted desktop
market continues to grow and the Group has seen circa 10% revenue
growth with our Online Desktop product.
New orders have been generated across the portfolio, with
notable new clients in core verticals for Alternative. In the
Healthcare vertical, Alternative was chosen by North Lincolnshire
& Goole Healthcare Trust to replace the telephony estate with
an IP solution covering 3,500 users and to provide a 5 year support
contract. In addition the Group has won a number of new Online
Desktop and Unified Communications solution customers demonstrating
the Group's credentials in this space.
Mobile
The Group added approximately 4,100 net additional connections
in the period, representing a 9% increase year on year, bringing
total subscribers to over 103,000 at 31 March 2016 with a further
2,000 signed to be connected in the coming months. However as
previously announced, trading has been impacted by new carrier
roaming tariffs that have compounded a reduction in roaming usage
and impacted revenue and profitability. ARPU performance has been
impacted and is expected to be around GBP30, down GBP5 on the prior
year equivalent period. As a result, mobile revenue and gross
profit in the first half are expected to be below the level
reported in the prior year.
Fixed Voice
The overall performance of Fixed Voice was in line with market
performance and our expectations, with margin improvements arising
from updated commercial agreements. Line rental revenues continue
to decrease in line with recent trends. The transition to SIP
continues, with circa 2,500 additional channels (representing a 23%
increase) added in the first half.
New developments
Following on from a year of significant change for the Group,
the focus of 2016 involves ensuring that the investments made in
the Group deliver the associated planned growth. In line with this,
the first half of 2016 has seen a number of major initiatives
initiated and completed:
-- Alternative Platform as a Service, APaaS, has been
successfully launched with 7 customers signed on to the platform
and a growing pipeline
-- In order to further develop the Group's cloud offering,
during the second half of the financial year Alternative expects to
launch OnlineCompute, a platform designed to provide Infrastructure
as a Service (IaaS) for enterprise workloads, complementing
existing Hosted Managed Services
-- Improvements and consolidation of our Portal functionality,
Synapse, continues, with a focus on customer control, automation
and management information across all products and services
Cashflow
Cash generation remains strong across the Group, with good
operating cash conversion. The Group's net debt position at 31
March 2016 was GBP19.0m and includes the payment of the FY15 final
dividend of GBP5.3m and is in line with the closing 2015 figure of
GBP18.7m and the Board's expectations.
Interim Results
The results for the half year ended 31 March 2016 are expected
to be announced on Wednesday 8 June 2016.
Enquiries:
Alternative
Mark Quartermaine, Chief Executive Officer
Gavin Griggs, Chief Financial Officer 0870 190 7444
Investec Bank PLC - Nominated Adviser
and Joint Broker Patrick Robb / Carlton
Nelson / Andrew Pinder 020 7597 5970
finnCap Limited - Joint Broker
Stuart Andrews 020 7220 0565
Bell Pottinger
Elly Williamson / Anna Legge 020 3772 2500
Notes to Editors
Alternative provides IT and telecommunications solutions to
businesses, covering the full spectrum of products and services
from device to datacentre. Alternative's products and services
include: cloud computing, virtualisation, managed hosting, fixed
line voice, mobile, systems, IP networks and complex billing
software solutions.
The Group possesses close working relationships with most of the
world's leading product and service vendors, providing customers
with access to the latest technologies and the commercial
advantages of choice.
Alternative is aligned to the business outcomes customers'
desire. Each solution is designed with the customer, with full
visibility and control at all times and underpinned by end to end
accountability. The Group supports a wide variety of customers,
from legal, professional and financial services, healthcare, higher
education and multi-national operations, to mission public
services, all of which rely on effective and dependable
technology.
www.alternativenetworks.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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