Alternative Networks reports 42.0% Net Income growth while 1.6 pp EBITDA Margin decline from 15.7% to 14.1%
09 Dec 2015 • About Alternative Networks (
$AN.) • By InTwits
Alternative Networks reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Alternative Networks has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.0%.
- The company has highly profitable business model: ROIC is at 20.2%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Alternative Networks ($AN.) key annual financial indicators
| mln. £ | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 117.3 | 114.8 | 114.3 | 134.4 | 146.8 | 9.2% |
| Gross Profit | 44.8 | 44.8 | 44.8 | 55.3 | 60.7 | 9.7% |
| SG&A | | | 32.4 | 43.8 | | -100.0% |
| EBITDA | 14.3 | 15.3 | 15.3 | 21.1 | 20.7 | -1.8% |
| Net Income | 6.6 | 9.8 | 9.7 | 8.1 | 11.5 | 42.0% |
Balance Sheet
|
|---|
| Cash | 11.7 | 21.4 | 17.9 | 3.8 | 2.4 | -37.7% |
| Short Term Debt | 0.1 | 0.1 | 0.1 | 5.1 | 6.6 | 29.1% |
| Long Term Debt | 0.8 | 0.7 | 0.7 | 28.0 | 14.5 | -48.2% |
Cash flow
|
|---|
| Capex | 0.6 | 0.6 | 0.5 | 0.8 | 4.0 | 375.2% |
Ratios
|
|---|
| Revenue growth | 21.9% | -2.1% | -0.4% | 17.5% | 9.2% | |
| EBITDA growth | 27.9% | 7.2% | 0.1% | 38.1% | -1.8% | |
| Gross Margin | 38.1% | 39.0% | 39.2% | 41.2% | 41.3% | 0.2% |
| EBITDA Margin | 12.2% | 13.3% | 13.4% | 15.7% | 14.1% | -1.6% |
| Net Income Margin | 5.6% | 8.5% | 8.4% | 6.0% | 7.8% | 1.8% |
| SG&A, % of revenue | | | 28.3% | 32.6% | | -32.6% |
| CAPEX, % of revenue | 0.5% | 0.5% | 0.4% | 0.6% | 2.7% | 2.1% |
| ROIC | 36.7% | 35.2% | 33.7% | 28.5% | 20.2% | -8.3% |
| ROE | 22.7% | 28.2% | 26.4% | 22.4% | 28.7% | 6.4% |
| Net Debt/EBITDA | -0.8x | -1.3x | -1.1x | 1.4x | 0.9x | -0.5x |
Revenue and profitability
Alternative Networks's Revenue increased on 9.2% in FY2015. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased on 2.1 pp from -1.7% to 0.39% in FY2015.
Gross Margin showed almost no change in FY2015.
Net Income marign increased slightly on 1.8 pp from 6.0% to 7.8% in FY2015.
Capital expenditures (CAPEX) and working capital investments
In FY2015 the company had CAPEX/Revenue of 2.7%. Alternative Networks's CAPEX/Revenue increased on 2.3 pp from 0.48% in FY2012 to 2.7% in FY2015. Average CAPEX/Revenue for the last three years was 1.3%.
Return on investment
The company operates at high and attractive ROIC (20.24%) and ROE (28.75%). ROIC decreased on 8.3 pp from 28.5% to 20.2% in FY2015. ROE increased on 6.4 pp from 22.4% to 28.7% in FY2015.
Leverage (Debt)
Debt level is 0.9x Net Debt / EBITDA and 1.0x Debt / EBITDA. Net Debt / EBITDA dropped on 0.5x from 1.4x to 0.9x in FY2015. Debt dropped on 36.2% in FY2015 while cash dropped on 37.7% in FY2015.
Valuation
The company's trades at EV/EBITDA 11.4x and P/E 19.0x while industy averages are 10.5x and 26.1x.
Appendix 1: Peers in Fixed Line Telecommunications
Below we provide Alternative Networks benchmarking against other companies in Fixed Line Telecommunications industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Syqic ($SYQ) | 190.6% | 37.6% | 20.5% | 126.5% | |
| Telecom Egypt ($TEEG) | -3.4% | 1.6% | 11.0% | 9.2% | |
| Verizon Communications Inc ($VZC) | 4.0% | 4.5% | 4.1% | 5.4% | |
| Rostelekom ($RKMD) | 7.4% | -0.2% | -1.6% | 2.8% | |
| BT Group ($BT.A) | | -5.9% | -4.2% | 1.0% | -1.7% |
| |
|---|
| Median (13 companies) | 3.5% | -0.8% | -4.1% | -1.6% | 2.1% |
|---|
| Alternative Networks ($AN.) | | -2.1% | -0.4% | 17.5% | 9.2% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Kt Corp ($KTCD) | 81.6% | 75.5% | 76.0% | 77.9% | |
| Verizon Communications Inc ($VZC) | 58.6% | 60.1% | 62.8% | 60.7% | |
| Telecom Egypt ($TEEG) | 45.0% | 41.4% | 41.9% | 44.2% | |
| Syqic ($SYQ) | 59.6% | 57.3% | 59.9% | 43.6% | |
| Adept Telecom ($ADT) | 35.9% | 32.2% | 34.5% | 36.4% | 37.6% |
| |
|---|
| Median (5 companies) | 58.6% | 57.3% | 59.9% | 44.2% | 37.6% |
|---|
| Alternative Networks ($AN.) | 38.1% | 39.0% | 39.2% | 41.2% | 41.3% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| O2 Czech Republic As ($O2CZ) | 41.6% | 39.1% | 38.6% | 41.0% | |
| Koninklijke Kpn Nv ($0O8F) | 39.5% | 35.9% | 34.1% | 39.1% | |
| Ooredoo Qsc ($ORDS) | 45.9% | 46.0% | 42.4% | 37.6% | |
| Hellenic Telecom.Organization S.A. ($OTES) | 33.0% | 32.0% | 28.8% | 35.4% | |
| Orange Polska Sa ($OPLD) | 39.2% | 34.3% | 30.1% | 33.2% | |
| |
|---|
| Median (13 companies) | 33.0% | 34.0% | 33.1% | 31.9% | 27.1% |
|---|
| Alternative Networks ($AN.) | 12.2% | 13.3% | 13.4% | 15.7% | 14.1% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Ooredoo Qsc ($ORDS) | 20.7% | 21.9% | 27.5% | 25.3% | |
| Rostelekom ($RKMD) | 28.0% | 31.7% | 23.6% | 19.3% | |
| Telefonica Sa ($TDE) | 14.5% | 15.2% | 17.0% | 19.1% | |
| Orange Polska Sa ($OPLD) | 17.5% | 16.6% | 16.9% | 17.6% | |
| Hellenic Telecom.Organization S.A. ($OTES) | 14.2% | 11.7% | 14.8% | 15.4% | |
| |
|---|
| Median (13 companies) | 14.2% | 13.6% | 13.8% | 13.0% | 6.8% |
|---|
| Alternative Networks ($AN.) | 0.5% | 0.5% | 0.4% | 0.6% | 2.7% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| BT Group ($BT.A) | 23.3% | 23.6% | 27.0% | 34.7% | 37.5% |
| Syqic ($SYQ) | 64.3% | 38.9% | 3.2% | 33.9% | |
| Adept Telecom ($ADT) | 11.9% | 11.6% | 15.5% | 13.2% | 14.3% |
| Hellenic Telecom.Organization S.A. ($OTES) | 4.8% | 8.2% | 5.4% | 10.4% | |
| Verizon Communications Inc ($VZC) | 7.8% | 8.0% | 16.7% | 10.1% | |
| |
|---|
| Median (13 companies) | 11.2% | 9.6% | 8.5% | 7.7% | 25.9% |
|---|
| Alternative Networks ($AN.) | 36.7% | 35.2% | 33.7% | 28.5% | 20.2% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Telefonica Sa ($TDE) | 3.0x | 2.5x | 2.5x | 3.6x | |
| Kt Corp ($KTCD) | 2.0x | 2.1x | 2.1x | 3.1x | |
| Koninklijke Kpn Nv ($0O8F) | 2.4x | 3.8x | 3.4x | 3.0x | |
| Verizon Communications Inc ($VZC) | 1.4x | 1.7x | 0.8x | 2.8x | |
| Ooredoo Qsc ($ORDS) | 1.7x | 1.6x | 1.7x | 2.0x | |
| |
|---|
| Median (13 companies) | 1.7x | 1.7x | 1.3x | 1.6x | 0.9x |
|---|
| Alternative Networks ($AN.) | -0.8x | -1.3x | -1.1x | 1.4x | 0.9x |
