The sharp reduction in roaming tariff charges certainly left its mark on half-year numbers at managed IT and telecoms service provider Alternative Networks (AN.). The group's mobile business was heavily impacted, with the division's revenue and gross profit down 7 and 18 per cent respectively. But chief executive Mark Quartermaine said measures had been taken "to mitigate the financial impact of changes to roaming tariffs", such as negotiating with carriers, and so expected an improved second half.
The company's largest division, advanced solutions, also struggled with revenue flat at £37m. That said, the only real hiccup was a delay in the delivery (and therefore payment) of a £2m one-off project that offset the 5 per cent increase in recurring revenue. As a result the backlog of signed projects in the non-recurring division has now risen to £7.7m, and management anticipates recognising the majority of this in the second half.
Although investors are unlikely to be cock-a-hoop at the outturn, the reported numbers actually obscure some underlying positives. Continued strong cash generation has given management the confidence to increase the dividend, with the full-year payout expected to be at least a 10 per cent in advance of the previous year. Product development is also progressing well, with new launches expected to generate sales growth in the second half.
Broker Investec has downgraded 2016 full-year estimates and now expects pre-tax profit of £15.1m and EPS of 24.6p, down from £16.6m and 27.8p last year.
ALTERNATIVE NETWORKS (AN.) | ||||
|---|---|---|---|---|
| ORD PRICE: | 294p | MARKET VALUE: | £143m | |
| TOUCH: | 294-299p | 12-MONTH HIGH: | 533p | LOW: 282p |
| DIVIDEND YIELD: | 5.8% | PE RATIO: | 15 | |
| NET ASSET VALUE: | 83p* | NET DEBT: | 47% | |
| Half-year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 72.0 | 5.6 | 9.4 | 5.5 |
| 2016 | 69.3 | 3.1 | 5.3 | 6.2 |
| % change | -4 | -44 | -44 | +13 |
Ex-div: 16 Jun Payment: 8 Jul *Includes intangible assets of £71.6m, or 147p a share | ||||
