Trading Statement

12 April 2013

Alternative Networks plc

Trading Statement

Alternative Networks plc, ("the Group") , the UK business communications service provider, today issues the following trading update, ahead of its interim results for the 6 month period to 31 March 2013, due to be announced on 5th June 2013:

Trading in the period has been steady, and results for the full year ending 30 September 2013 continue to track in line with management expectations. Cash flow remains strong and net cash balances were over £15m at 31 March 2013.

Trading performance 

In Advanced Solutions the order book is making good progress, with sales in the second quarter materially higher than sales in the first quarter ended 31 December 2012. This is expected to result in a greater weighting of revenues recorded in the second half of the year. The pipeline continues to grow and is at record levels, giving confidence in results for the full year. In the interim results, we will provide more detail around managed service wins and cross-selling success in the Enterprise customer market.

Network revenues remain subject to competitive pressures and regulatory impacts. Mobile subscribers at 31 March 2013 have increased by 10% over levels a year ago. There has been a slowing in growth in the last six months due to more competitive pressures in the market, and the delay in provision of a 4G mobile data offering from our network partners, which is due in the second calendar quarter of 2013. Nonetheless, Synapse continues to differentiate the Alternative service and there has been a net increase in subscribers, and a record number of customers renewed their contracts with Alternative in the six month period. Fixed line network services trading is stable and broadly in line with expectations.

Gross margin continues to show resilience, on the back of improved terms obtained from suppliers and the value added by the service offering through the group's "Synapse" service portal. For the full year, the Group gross margin is expected to show an increase over 2012.

Cash Flow and Dividends

Net cash balances were £15.3m at 31 March 2013.

In the six month period to 31 March 2013, the Group has returned £9.8m of its net cash reserves to shareholders by way of a £5m tender offer share buyback, £1.5m purchase of interest in shares in the EBT, and a £3.3m final dividend. The Group has also paid £0.5m final consideration to the shareholders of Scalable in the period.

The Group has previously announced its intention to pay a dividend of not less than12.65 pence per share for 2013 with growth of not less than 10% in 2014.

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