27 September 2016
Alternative Networks plc
('the Group' or 'Alternative')
Alternative Networks plc ("the Group"), the UK business IT and communications service provider, today issues the following pre-close trading update for the year ending 30 September 2016. The highlights were:
· Advanced Solutions' new business performance was lower over the summer following the United Kingdom's European Union membership referendum. Reassuringly, new business performance recovered well in August and September and the Group has a robust pipeline for the coming financial year, but some project completions will be delayed beyond the year end;
· Mobile underlying performance has stabilised, and with the actions taken to offset the impact of new tariffs on roaming rates, a higher gross margin has been attained in the second half;
· Strong levels of operating cash conversion continued in the financial year; and
· As indicated with the interim results, the Board remains committed to paying a final dividend no less than 10% up year on year
The Board now expect an Adjusted EBITDA* for the year ending 30 September 2016 somewhat below management's previous expectations.
New recurring business has recovered to normal levels late in the half and the Group has signed some notable contracts with new and existing clients. As a result, the level of recurring revenue for the full year is expected to be in line with the prior year. The level of non-recurring new business has also recovered, but the delays we experienced have put pressure on project completions in the fourth quarter of the financial year, such that non-recurring revenue is expected to be below the levels reported in the prior financial year.
Performance has stabilised following the roaming tariff effects seen in the first half of the year. We expect revenue in the second half of the year to be broadly in line with the level seen in the first half but with improved gross margin levels as a consequence of actions taken including new carrier arrangements, resulting in improved gross profits and margins. ARPU performance is expected to be broadly in line with the first half.
The overall performance of Fixed Voice was in line with both the market and our expectations. Line rental revenues continue to decrease in line with recent trends and we have seen improved margins with new commercial agreements.
Trading in the financial year ending 30 September 2016 has been impacted by two unforeseen events, being the mobile roaming tariff reset and the uncertainty caused by the referendum. As the referendum is still relatively recent, the potential longer term impact on the Group's future trading performance is unclear. However, the Group remains in a strong financial position with recurring revenues comprising over 75% of sales, and continued robust cash generation which supports the progressive dividend policy.
Mark Quartermaine, CEO, said:
"We are disappointed to have seen business uncertainty over the summer in the wake of the EU referendum impact our Advanced Solutions business, but the pick-up in new business after the summer reassures us that our business remains well positioned to benefit from long term trends. We will update the market in more detail at the time of our full year results."
The results for the full year ending 30 September 2016 are expected to be announced on Thursday 8 December 2016.
*Adjusted EBITDA is stated before intangible asset amortisation excluding software, exceptional items and share based payments
0870 190 7444
Investec Bank PLC - Nominated Adviser and Joint Broker Patrick Robb / Carlton Nelson / Andrew Pinder
020 7597 5970
finnCap Limited - Joint Broker
020 7220 0565
Elly Williamson / Anna Legge
020 3772 2500
Notes to Editors
Alternative provides IT and telecommunications solutions to businesses, covering the full spectrum of products and services from device to datacentre. Alternative's products and services include: cloud computing, virtualisation, managed hosting, fixed line voice, mobile, systems, IP networks and complex billing software solutions.
The Group possesses close working relationships with most of the world's leading product and service vendors, providing customers with access to the latest technologies and the commercial advantages of choice.
Alternative is aligned to the business outcomes customers' desire. Each solution is designed with the customer, with full visibility and control at all times and underpinned by end to end accountability. The Group supports a wide variety of customers, from legal, professional and financial services, healthcare, higher education and multi-national operations, to mission public services, all of which rely on effective and dependable technology.
This information is provided by RNS