8th Apr 2010 07:00
8 April 2010
Alternative Networks plc
Group trading update for 6 months ended 31 March 2010
1st Half ahead of management expectations
Summary
·; Revenues, margins and profits for first 6 months running ahead of management expectations
·; Cash conversion of EBITDA continues to be strong, over 100%
·; Costs remain under control following cuts in 2009
·; AKJ acquisition proving a success with net client gains
The Board is pleased to report that the group has performed strongly in the first half of the year.
Revenues for the six months to March 2010 have run ahead of expectations. This is due to continued market share gains in the core product sets, and a stronger than expected performance in terms of lower customer attrition coupled with higher ARPU than forecast amongst the existing customer base.
Gross margins have performed well, with successful commercial negotiations early in the year resulting in a sound performance ahead of expectations, and delivering a reversal of the declining trends of recent years. Costs have been maintained below prior year levels, successfully preventing erosion of the annualised £2.4m cost reductions effected in 2009.
The Group has increased its net cash position since 30 September 2009, even allowing for the acquisition of AKJ in the period, and cash generation remains very strong. The Board declared and paid on 1 April 2010 an early interim dividend of 5 pence per share, which was made up of a 2 pence ordinary interim (up 25% on 2009), and a 3 pence additional interim dividend, which was special in nature. The Board expects to propose a final dividend of no less than 3.5p.
AKJ, the billing software company acquired at the end of October 2009, has performed strongly since acquisition and has introduced a number of new revenue opportunities to the Group. In the 5 month period, AKJ won seven new customers adding annualised revenues of £0.2m, bolstering its strong market position in the reseller billing services market. AKJ lost just one client during the period due to consolidation by a competitor. In addition, AKJ has already renewed existing contracts with annualised revenues of £0.7m in the first 5 months. The company is currently working on several development streams to enhance other Group products, and has made good progress on billing platform improvements to date.
The economic environment remains tough in what is already a competitive industry. However, the Board believes the strong performance of the business to date will continue to help it outperform and it remains confident in the Group's prospects for the year.
The Group has considerable net cash resources and continues to engage keenly in a number of acquisition opportunities, where there is a strong strategic potential.
The Group will announce its interim results on 8 June 2010.
ENQUIRIES:
Alternative Networks plc |
020 7801 7156 |
James Murray, Chief Executive Officer |
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Edward Spurrier, Chief Financial Officer |
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Investec |
020 7597 5970 |
Martin Smith |
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Patrick Robb |
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Pelham Public Relations |
020 7337 1509 / 07802 442 486 |
Archie Berens |
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Francesca Tuckett |
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