11th Oct 2005 07:01
Alternative Networks11 October 2005 Alternative Networks plc Acquisition of Integrated Communications for Business (UK) Limited and tradingupdate Alternative Networks plc ("Alternative Networks", "the Company"), one of theUK's leading providers of fixed and mobile communications solutions to businesscustomers, has acquired Integrated Communications for Business (UK) Ltd ("ICB"),a mobile and fixed line telecoms service provider for an initial considerationof £6 million and a deferred consideration depending on the future profitabilityof ICB of up to a further £5 million. Alternative Networks also confirms that its profits for the year ended 30September 2005 are expected to be in line with market expectations. ICB Acquisition Consideration for the acquisition of ICB comprises an initial payment ofapproximately £6 million on completion and an earnout of up to an additional £5million. The initial payment comprises £5 million in cash funded from existing cashresources, and £1 million through the issue to the vendors of 871,538 ordinaryshares of 0.125 pence each in the Company ("Shares"). The initial cash paymentis subject to adjustment depending on ICB's net asset and cash position atcompletion. The deferred consideration is split £3 million in cash and up to £2million in Shares and is based on achieving performance targets measured overtwo periods ending on 31 December 2007. ICB was established in Reading in 1997 targeting SME business customers alongthe M4 corridor. The business operates as a mobile service provider for bothVodafone and O2 and also sells fixed line voice and data products. ICB reportedgross profits of £4.5 million in the year to 30 April 2005 on revenues of £14.8million. ICB pre tax profits in the same year were £0.5 million. The acquisition of ICB will enhance Alternative Networks' customer scale,turnover and profits. It follows Alternative Networks' stated strategy, toconsolidate opportunities in the business telecoms service provider sector withcomplementary businesses. At 30 April 2005 ICB had 14,180 mobile subscribers and 518 fixed line customers.In the year to 30 April 2005 monthly ARPU for ICB mobile subscribers was £52,compared with £73 for Alternative Networks in the six months to 31 March 2005.In the same year, fixed line average monthly revenue per contract was £700 forICB, compared with £1,153 for Alternative Networks in the six months to 31 March2005. ICB employs 58 staff, of which 20 are responsible for direct sales,telesales and client management. Two of the founder directors, Mike Nash andJeanetta Evans, will remain with the business following completion. On completion, ICB shareholders will be allotted 871,538 Shares credited asfully paid (representing 1.97% of the Company's current issued share capital)and which will rank pari passu with the existing ordinary shares. It is expectedthat admission of such shares will become effective on 13 October 2005. If allof the performance targets are met, ICB shareholders will have been allotted afurther 871,538 Shares or such smaller number of Shares that equate at the timeof their issue to £2 million. All such additional shares would be issued byearly 2008. The key ICB shareholders have agreed that they will not dispose ofany Shares in the Company for one year after their relevant issue date. Trading update Alternative Networks confirms that profits for the full year to 30 September areexpected to be in line with market expectations. The Company continues to investin its sales force, with the development of a strategic sales team focusing onselling multi products and successfully targeting larger customers. Recent winsinclude Young & Co Brewery PLC and Shepherd Neame, the south east brewing andpub group, adding outbound voice and wholesale line rental services to thesupplies of their existing IP telephone systems and maintenance.These winsdemonstrate that the Company is expanding its customer franchise into thecorporate segment where there are benefits for customers of working with anindependent, integrated, fixed and mobile provider with no legacy networkownership issues. Whilst the initial cash consideration for the acquisition is being funded fromexisting resources, the Company has recently negotiated an increase in itsbanking facilities to £6m in order to provide future flexibility and to be ableto take advantage of opportunities for the continued expansion of the business.Cash reserves at 30 September 2005 exceeded £6.0m. James Murray, Chief Executive Officer of Alternative Networks, said: "The combination of ICB's sales force and the strong direct ARPUs of both itsfixed and mobile customers, make this acquisition compelling, as well as beingearnings enhancing in the first year. We have known ICB as a regional competitorfor several years and believe the business will integrate well with AlternativeNetworks. We continue to seek further suitable acquisitions as we implement ourbalanced strategy of organic and acquisitive growth." 11 October 2005 Enquiries: Alternative Networks plcJames Murray, Chief Executive Officer 0870 190 7444Edward Spurrier, Chief Financial Officer College HillAdrian Duffield/Corinna Dorward 020 7457 2815/2803 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
AN..L