Alternative Networks (AN.) has raced to offset fixed-line declines with mobile and data services. These two divisions of the IT managed services company contributed nearly four-fifths of total sales, resulting in a 23 per cent increase in adjusted full-year cash profit to £19.6m.
The sharp decline in statutory earnings (see table) reflects acquisition costs: Alternative Networks bought hosting provider ControlCircle and virtual desktop specialist Intercept IT in January. They drove a two-thirds rise in sales at the company's solutions division, which provides routers, security and wireless services. Not to be outdone, Alternative Networks' mobile division posted an 18 per cent increase in gross profit, and increased its subscriber count by 12 per cent to about 91,400.
The acquisitions have already led to 25 cross-selling contracts, including one with existing customer Lark Insurance for Intercept's services and ControlCircle's hosting. Overall, a broader range of services drove a 5 per cent increase in the average monthly spend of its largest customers, to about £5,660.
Improved cash generation allowed Alternative Networks to slash its net debt by 28 per cent in the space of nine months. Broker finnCap forecasts pre-tax profit of £20.6m this financial year, giving EPS of 34.5p, up from £16.4m and 27.5p.
| ALTERNATIVE NETWORKS (AN.) | ||||
|---|---|---|---|---|
| ORD PRICE: | 450p | MARKET VALUE: | £218m | |
| TOUCH: | 440-453p | 12-MONTH HIGH: | 600p | LOW: 392p |
| DIVIDEND YIELD: | 3.2% | PE RATIO: | 27 | |
| NET ASSET VALUE: | 77p* | NET DEBT: | 79% | |
| Year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 96.2 | 9.24 | 15.7 | 6.1 |
| 2011 | 117 | 9.36 | 15.0 | 10.0 |
| 2012 | 115 | 12.7 | 22.1 | 11.5 |
| 2013 | 114 | 12.5 | 21.2 | 13.0** |
| 2014 | 138 | 10.4 | 16.9 | 14.5 |
| % change | +20 | -17 | -20 | +12 |
Ex-div: 29 Dec Payment: 30 Jan *Includes intangible assets of £76.7m, or 159p a share **Excludes special dividend of 4p | ||||
