Alternative Networks plc Interim results for the six months to 31 March 2011

Transcription

1 Alternative Networks plc Interim results for the six months to 31 March James Murray, Chief Executive Officer Edward Spurrier, Chief Financial Officer

2 Highlights 6 months to 31 March 2011 Strong underlying results Underlying profit before tax up 23% to 7.1m Excellent cash conversion of adjusted EBITDA 97% (2010: 127%) Organic revenue growth underlying sales growth of 5% Successful right fit acquisitions Scalable growing rapidly in the data centre switch market AKJ on target with Portal and making a difference Continued growth in market share Mobile base increase of 2,868 subscribers in 6 months (5% growth) Fixed line/channel base up 17% year on year Advanced solutions sales up 20% (before including Scalable) 2 Dividend confidence Underlying interim proposed up 50% Full year guidance a minimum 9p, equals 48% increase over 6.1p (excluding 3p special) in 2010 At least 10% growth in 2012 and 2013

3 Organic growth strategy - Key differentiators Large, experienced, direct sales force Proprietary customer management software superior customer service on one platform Customer portal CRM Bespoke billing solutions Robust and scalable Truly converged product offering Specialist skill set across all products 100+ in-house engineers and software developers Leading accreditation from best of breed vendors Proven management track record 3

4 4 Customer proposition

5 Results highlights 6 months to 31 March 2011 Financial / Operational Corporate Underlying organic growth of 5% in revenues, GP and operating profits Adjusted group EBITDA increased 25% to 7.5m ( m) Gross margin strength Mobile MVNO commercials from Jan 11 Fixed line MTRs, and higher margins on SIP Scalable core margins higher than AN in spite of larger deal size Scalable stellar performance Strong organic growth Revenues 10.1m in H1 compared to 12.5m for 12 months in 2009 Adjusted EBITDA 1.3m in H1 compared to 0.9m EBITDA for 12 months in 2009 Scalable cash conversion over 100% Scalable acquisition update Earn out agreed at 1.5m for year ended 31 Dec Maximum was 2.25m. Expected Max EV now 10.75m Banking facilities renewed at 6m term loan 3 year revolver. Unused to date. Mobile Service provider agreements recently renewed and now extended Vodafone now March 2014 for SP and Sept 2013 for managed services O2 to July Dividend pay out increased Full year expected at least 9p Minimum 10% CAGR 2011 to

6 Profit and loss - 6 months to 31 March 2011 SCALABLE AN & AKJ Group Group Group Six months to Six months to Six months to Six months to Change Year ended 31 March March March March 2010 % 30-Sep Turnover 10,154 48,886 59,040 47,114 25% 93,119 Gross profit 3,657 18,076 21,733 17,039 28% 32,721 Margin 36.0% 37.0% 36.8% 36.2% 35.1% Operating profit* 1,162 5,909 7,071 5,685 24% 11,111 Margin 11.4% 12.1% 12.0% 12.1% 11.9% Profit before taxation* 1,179 5,897 7,076 5,730 23% 11,598 Earnings per share* Basic Adjusted 11.8p 8.6p 32% 18.0p Diluted 10.7p 8.1p 37% 16.7p Statutory reported Earnings per share # Basic 6.7p 8.0p -16% 15.7p Diluted 6.1p 7.5p -19% 14.5p 6 Adjustments 2011, ,000 Amortisation on acquired intangibles 1, Deferred Consideration 1,350 - Share Options Exceptional acquisition costs 73 - Total Adjustments 2,875 1,149 * Underlying performance before intangible assets amortisation excluding software, IFRS write off of deferred consideration, share based payments, and exceptional costs of Scalable acquisition. # The impact of the new accounting standard (IFRS3R) write off of 1.35m to the P&L (in respect of deferred consideration on the Scalable acquisition) amounts to a 3.1 pence reduction in statutory earnings per share. Otherwise basic earnings per share would have increased 23% to 9.8p.

7 Cash flow 6 months to 31 March 2011 Six months to Six months to Year ended 31 March March 2010 Change 30 Sept Operating cash inflow 5,992 5, ,849 Exceptional working capital inflow - deferred income 1,350-1,350 - Adjusted operating cash inflow 7,342 5,838 1,504 11,849 Working capital inflow/(outflow) -99 1,772-1,871 1,770 Cash generated from operations 7,243 7, ,619 Tax paid -1,274-1, ,614 Net cash from operating activities 5,969 6, ,005 Capex Interest (net) Free Cash Flow 5,403 6, ,879 Sale of property - Burr Road (Echo surplus property) Dividends -1,875-1, ,771 Share capital - options excercised/(net share buy backs) Acquisitions -7,232-3,701-3,531-4,333 Loan repayments (Decrease)/Increase in cash and cash equivalents -3,320 1,309-4,629 3,033 Cash and cash equivalents at start of period 12,048 9,015 3,033 9,015 Cash and cash equivalents at end of period 8,728 10,324-1,596 12,048 Bank loans - Mortgage on HQ Net cash funds 7,856 9,373-1,517 11,137 7

8 Advanced Solutions 6 months to 31 March 2011 Sales analysis 2011 Group 2010 Group 30 Sept 2010 Group M AN systems- pbx AN maintenance 3.5m 2.3m 2.8m 2.3m 6.2m 4.5m m AN Data Services 1.3m 1.0m 2.1m AKJ - Billing Subtotal 1.9m 9.0m 1.4m 7.5m 3.1m 15.9m m Scalable kit Scalable - support 7.3m 2.3m m Total Maintenance Stats Maintenance GP 18.6m 3.4m 7.5m 2.0m 15.9m 3.9m 5 3.5m 7.5m 3.6m 3.9m 9.0m Engineering Labour Costs Gross Margins ( 1.4m) ( 0.7m) ( 1.5m) AKJ Billing 54% 57% 56% Gross Profits Sales Scalable AN - PBX and data 40% 44% 42% Scalable 37% Gross Margins 40% 46% 45%

9 Mobile 6 months to 31 March 2011 KPIs 31 March March Sept 2010 m Subscribers at 31 March 65,004 63,543 62, AN contracted ISP AN contracted VSP Managed customers 54, ,307 54,952 1,350 7,241 54,461 1,138 6, m 20.3m Data connections (in above) 30,949 24,574 28, Data conx - % of total subs 48% 44% 46% Gross new connections 10,371 7,185 15,044 Gross Margins 35% 32% 32% AN contracted base only -KPIs m 7.0m ARPU Average new contract length 23m 22m 23m Network Churn AN contracts 19% 18% 19% Customer churn - value 14% 15% 18% % Subscribers in-contract 71% 80% 75% Gross Profits Sales 9

10 Fixed Line network services 6 months to 31 March 2011 KPIs 31 March March Sept 2010 Gross Margins 36% 37% 37% Outbound KPIs Monthly ARPU 1,316 1,193 1,220 Average contract length (months) WLR Rental Revenues (excl Scalable) WLR % total Outbound revenues Number of outbound lines/channels Inbound KPIs 22m 19m 20m 7.3m 6.4m 13.4m 47% 44% 46% 85,987 73,562 79,862 Inbound Revenues 4.1m 3.7m 7.6m Inbound margins 51% 52% 51% m m 18.1m 4.1m 6.6m 3.7m 14.4m 7.2m 16.0m 1.9m 2.0m 4.7m 5.2m Gross Profits Inbound Sales 10

11 Strategy Acquisitions update Right-fit acquisitions have transformed the business Strong acquisition and integration track record AKJ already proving its worth Best of class billing platform Winning new and bigger contracts Development of Portal Scalable key development of Group s data strategy Established IP network integrator Brings its own Network Operating Centre Formidable partner pedigree Juniper, Extreme, F5, Mitel Group brings significant sales opportunities Fast growth business in its own right, with 60% revenue growth Strong prospects for further acquisitions strict criteria 11

12 Portal - Development Timeline Original 18 month roadmap Oct 2010 Feb 2011 May 2011 July 2011 Sept 2011 Portal v 1.0 LAUNCHED Case Management v 2.0 LAUNCHED Portal v 2.0 Asset Management RELEASED Mobile Management Handset Ordering Portal Capabilities Client benefits Alternative benefits Billing and reporting Case management Ordering (services and equipment) Self service e.g. line barring/cancellations/ alerts Asset Management Direct access to Networks Targeted marketing tool Gather client insight Robust and scalable Development of a telecoms strategy Self-manage products and services Tailored and automated analysis of costs/usage to fit reporting needs Transparency over all services All queries and requests Non-Alternative services Savings both time and money Unique sales tool Improves retention Cross selling Up-sell based on client behaviour Efficiency savings 12

13 Summary 6 months to 31 March 2011 Excellent Interim Results continuing momentum of 2010 Business has been transformed by recent acquisitions Very strong financial position Unique set of key differentiators 13 Confident outlook in an overall flat market

14 Appendices Appendices 14 Balance Sheet 15 Profit and loss account 16 Ten Year track record 17 Other stats 14

15 Balance Sheet Unaudited Unaudited Audited Six months to Six months to Year to 31 March March September 2010 ASSETS: Non-current assets Intangible assets 28,919 21,985 21,180 Tangible assets 2,386 1,920 1,888 Deferred tax and other ,034 32,681 24,762 24,102 Current assets Inventories Receivables 22,474 14,587 14,063 Cash and cash equivalents 8,728 10,324 12,048 31,989 25,101 26,111 Total assets 64,670 49,863 50,213 EQUITY AND LIABILITIES: Equity Called up share capital Share premium 5,442 4,900 5,019 Capital redemption reserve Merger reserve 2,704 2,704 2,704 Treasury shares held -1,422-1,422-1,422 Retained earnings 21,619 18,510 20,312 28,408 24,755 26,678 Current liabilities 33,162 22,812 21,488 Deferred tax liabilities 2,303 1,424 2,047 Non-current liabilities Total liabilities 36,262 25,108 23,535 Total equity and liabilities 64,670 49,863 50,213 15

16 Profit and Loss Account Unaudited Unaudited Audited Six months to Six months to Year to 31 March March September Turnover 59,040 47,114 96,242 Cost of sales -37,307-30,075-61,771 Gross profit 21,733 17,039 34,471 Operating profit 4,196 4,536 9,143 Total operating profit - analysed: Operating profit before share based payments and amortisation of intangible assets acquired 7,071 5,685 11,505 Share based payments Amortisation of intangible fixed assets -1, ,384 Scalable deferred consideration to Employees -1, Scalable acqusition costs Total operating profit 4,196 4,536 9,143 Finance income Finance costs Profit on ordinary activities before taxation 4,201 4,581 9,236 Taxation on profit on ordinary activities -1,264-1,214-2,532 Profit on ordinary activities after taxation 2,937 3,367 6,704 Attributable to:- Equity shareholders of the company 2,937 3,367 6,704 Earnings per ordinary share: Basic 6.7p 8.0p 15.7p Diluted 6.1p 7.5p 14.5p 16

17 17 Ten Year Track Record ,737 4,836 1,029 18,354 6, ,454 9,086 1,044 35,211 13,226 3,087 41,027 15,989 3,387 46,404 18,202 4,300 23,489 6,436 25,230 8,310 32,795 10,579 30,824 9,070 34,471 11,598 65,964 72,083 93,707 89,676 96, ,000 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10, Sales Gross Profit Pre-tax profit

18 Other Stats Sundry KPIs at 31 March 2010 Group excluding Scalable & AKJ 2011 Group excluding Scalable & AKJ Mobile Data splits Converged devices Smartphones 18,482 19,185 Converged devices as a % base 29% 30% Data only Mobile broadband 9,187 11,764 Customer splits and spend data Number of customers over 1k pcm 1,249 1,240 Average monthly spend of customers over 1k pcm 4,738 4,997 Number of larger customers taking 3 or more products Average monthly spend of larger customers taking 3 or more products 5,488 5,761 Cross selling - % total base taking more than 1 product 43% 47% Cross selling larger customers - % taking more than 1 product 77% 78% Cross selling larger customers - % taking 3 or more products 58% 60% 18