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Alternative Networks leaves on a low

The managed IT services group, set to delist its shares this month, posted lower sales and profits
Alternative Networks leaves on a low

Referendum-related uncertainty and cuts to mobile roaming tariffs weighed on sales at Alternative Networks (AN.) in the reported period, sending adjusted operating profits down 22 per cent to £15m. Shareholders won't lose any sleep; the managed IT services group is expected to approve peer Daisy's takeover offer and delist its shares before the new year.

IC TIP: Hold at 333p

Strong demand from medium-sized businesses for online desktop, connectivity and billing services pushed recurring sales of advanced solutions up 2 per cent to nearly £46m. However, fewer contracts for project work eroded the division's non-recurring revenues by 17 per cent. The group grew its mobile subscriber base by 6 per cent to over 105,000, but fierce competition and lower roaming sales drove mobile turnover down 8 per cent. And sales slumped 11 per cent in the smaller landline segment as customers switched to email and mobile communications. Alternative's focus on selling more products to larger customers pushed average spend per client up 2.7 per cent. It also signed major contracts with Channel 4 and an NHS Trust.

Broker FinnCap has withdrawn its forecasts; it previously expected adjusted pre-tax profits of £16m this financial year, giving EPS of 27p, up from an estimated £14.5m and 24.4p in FY2016.

 

ALTERNATIVE NETWORKS (AN.)
ORD PRICE:333pMARKET VALUE:£166m
TOUCH:332.8-333.5p12-MONTH HIGH:513pLOW: 247p
DIVIDEND YIELD:1.9%PE RATIO:21
NET ASSET VALUE:85p*NET DEBT:45%

Year to 30 SepTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201211512.722.111.5
201311412.521.213.0**
201413410.416.914.5
201514713.823.816.4
20161369.315.86.2^
% change-8-33-34-62

*Includes intangible assets of £70.2m, or 141p a share

**Excludes special dividend of 4p a share

^No final dividend payment