Pre Close Trading Update

30 March 2012

Alternative Networks plc

Pre Close Trading Update

Alternative Networks plc ('the Group') the UK business communications service provider, today announces a pre close trading update for the six months period ended 31 March 2012.

Trading for the year has been robust, with continued high levels of cash generation and strengthening gross margins across the group.

Trading performance

Mobile network services growth has been encouraging with an overall approximate 5% comparative increase in gross profits achieved in the first 5 months of the financial year. The Group has continued to make good progress in winning market share and the total number of mobile subscribers has grown organically by approximately 8% year on year, with more than 70,000 subscribers at the end of March 2012. In line with trends reported by the major mobile network operators, since late December 2011, the average spend of customers ('ARPU') has remained under pressure, with lower volumes from roaming and on-network data usage. More positively, recent months have shown some signs of recovery towards previous levels.

Fixed line network services trading has been stable and broadly in line with expectations. The transition to SIP, resulting in reduced line rental revenues, and the impact of lower mobile termination rates have each continued to impact opportunities for growth. Nonetheless, in the first 5 months of the financial year, gross profits were consistent with last year's performance.

Advanced Solutions started the year well, although in a challenging economic environment, the placing of certain orders has taken slightly longer than in the previous year. The Group still expects to see revenue and profits growth from Advanced Solutions in the current year.

Portal and billing services

AKJ continues to trade well and recently contracted with one of its major customers to host managed billing and provisioning services in a new datacentre, worth £0.5m over three years.

Investment in the Portal and progress in its development is in line with the Board's expectations. In December, the Mobile management release was deployed and significant progress has been made on the advanced reporting and online ordering modules. Major customer wins on the back of recent development of the Portal include the mobile fleet of Persimmon.

Cash Flow

Cash flow remains strong. Net cash balances at 31 March 2012 are expected to be approximately £13m, up from £10.9m at 30 September 2011. This is after paying out £3.2m final dividend. The Scalable earn out will be paid in the second half of the year.

 Dividend

The Board remain committed to its progressive dividend policy and intend to propose a full year net dividend of 11 pence for the full year ending 30 September 2012 (2011: 10p).

Going forward, the Board intend to increase the total annual dividend by not less than 10% in each of the years in 2013 and 2014, thereby extending our previous guidance by a further year.

The results for the half year ended 31 March 2012 are expected to be released on 12 June 2012.

Enquiries: