Alternative Networks plans special interim dividend despite sales fall

5th Jun 2013 11:57

Telecoms reseller Alternative Networks (AN) saw profits wane in the first half of the year but a resilient performance and cost discipline has led to the announcement of a special dividend. Revenues in the six months to March 31st slid 4.0% to £55.3m, with pre-tax profits shrinking 2.0% to £5.5m. Executive Chairman, James Murray, noted that the company had made good progress selling to larger enterprises, citing the winning of a "ground breaking" new managed services contract and a record order backlog at the Advanced Solutions business standing £1.6m higher than the previous year at £3.5m.He blamed European Union regulation changes in mobile roaming data charges that came into force in July 2012 for "more than half" of the decline in revenues. Murray said a further £0.8m of the decline was due to the year-on-year increase in the company's order book, which he pledged "will convert into revenue in the second half of the year". Cash generation from operations was down 4.0% at £6.5m, the cash conversion ratio down slightly from 90% of adjusted earnings before interest, tax, amortisation (EBITDA) to a still-strong 88%.At the end of the half year, the AIM 100 group had net cash of £15.3m in the coffers and after returning more than £10m to shareholders during the period, of which £6.5m was by way of share buy backs, the board has declared a 10% increase in its interim dividend to 4.4p a share and will also pay an additional special dividend of 4.0p. Management indicated that they expected the full year payout to be no less than 12.65p a share, with a minimum of 10% increase per annum in the year to September 30th 2014. "Alternative Networks has delivered a resilient performance in the first half of the year, despite the tough market, demonstrating that our strategy continues to work," said Chief Executive Edward Spurrier. "The major components of our growth strategy all played their part: we gained mobile market share; we maintained high levels of cross-selling across our customer base; we continue to see market leading levels of low churn; and we invested in areas where we know we already have a competitive advantage."The mobile subscriber base rose 10%, with revenues up 5.0% year-on-year, but offset by the historical decline in the fixed line market where AN fought to deliver continued margin growth.Shares in Alternative Networks were down 2.5% at 345p at 12:30 on Wednesday.OH