Alternative Networks reports 33.2% Net Income decline and 1.4 pp EBITDA Margin decline from 14.1% to 12.7%
08 Dec 2016 • About Alternative Networks (
$AN.) • By InTwits
Alternative Networks reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Alternative Networks has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.1%. At the same time it's a lot of higher than industry average of 41.3%.
- CAPEX is quite volatile: 1.8 in FY2016, 4.0 in FY2015, 0.85 in FY2014, 0.48 in FY2013, 0.55 in FY2012
- The company has highly profitable business model: ROIC is at 15.2%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Alternative Networks ($AN.) key annual financial indicators
| mln. £ | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 114.8 | 114.3 | 134.4 | 146.8 | 135.8 | -7.5% |
| Gross Profit | 44.8 | 44.8 | 55.3 | 60.7 | 55.5 | -8.6% |
| SG&A | | 32.4 | 43.8 | | | |
| EBITDA | 15.3 | 15.3 | 21.1 | 20.7 | 17.3 | -16.7% |
| Net Income | 9.8 | 9.7 | 8.1 | 11.5 | 7.7 | -33.2% |
Balance Sheet
|
|---|
| Cash | 21.4 | 17.9 | 3.8 | 2.4 | 4.4 | 85.8% |
| Short Term Debt | 0.1 | 0.1 | 5.1 | 6.6 | 0.0 | -100.0% |
| Long Term Debt | 0.7 | 0.7 | 28.0 | 14.5 | 23.5 | 61.9% |
Cash flow
|
|---|
| Capex | 0.6 | 0.5 | 0.8 | 4.0 | 1.8 | -55.5% |
Ratios
|
|---|
| Revenue growth | -2.1% | -0.4% | 17.5% | 9.2% | -7.5% | |
| EBITDA growth | 7.2% | 0.1% | 38.1% | -1.8% | -16.7% | |
| Gross Margin | 39.0% | 39.2% | 41.2% | 41.3% | 40.9% | -0.5% |
| EBITDA Margin | 13.3% | 13.4% | 15.7% | 14.1% | 12.7% | -1.4% |
| Net Income Margin | 8.5% | 8.4% | 6.0% | 7.8% | 5.6% | -2.2% |
| SG&A, % of revenue | | 28.3% | 32.6% | | | 0.0% |
| CAPEX, % of revenue | 0.5% | 0.4% | 0.6% | 2.7% | 1.3% | -1.4% |
| ROIC | 35.2% | 33.7% | 28.5% | 20.2% | 15.2% | -5.1% |
| ROE | 28.2% | 26.4% | 22.4% | 28.7% | 18.0% | -10.7% |
| Net Debt/EBITDA | -1.3x | -1.1x | 1.4x | 0.9x | 1.1x | 0.2x |
Revenue and profitability
The company's Revenue decreased on 7.5% in FY2016. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 0.68 pp from 59.9% to 60.6% in FY2016.
Gross Margin showed almost no change in FY2016.
Net Income marign decreased on 2.2 pp from 7.8% to 5.6% in FY2016.
Capital expenditures (CAPEX) and working capital investments
Alternative Networks's CAPEX/Revenue was 1.3% in FY2016. CAPEX/Revenue increased slightly on 0.89 pp from 0.42% in FY2013 to 1.3% in FY2016. Average CAPEX/Revenue for the last three years was 1.6%.
Return on investment
The company operates at good ROIC (15.19%) and ROE (18.02%). ROIC decreased on 5.1 pp from 20.2% to 15.2% in FY2016. ROE dropped on 10.7 pp from 28.7% to 18.0% in FY2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 1.1x and Debt / EBITDA is 1.4x. Net Debt / EBITDA surged on 0.2x from 0.9x to 1.1x in FY2016. Debt jumped on 11.3% in FY2016 while cash jumped on 85.8% in FY2016.
Valuation
Alternative Networks's trades at EV/EBITDA 10.6x and P/E 21.3x while industy averages are 15.6x and 19.1x. The company's EV/(EBITDA-CAPEX) is 11.8x with the industry average at 19.0x.
Appendix 1: Peers in Fixed Line Telecommunications
Below you can find Alternative Networks benchmarking vs. other companies in Fixed Line Telecommunications industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Telefonica Sa ($TDE) | -0.8% | -8.5% | -23.8% | 26.4% | |
| Syqic ($SYQ) | 37.6% | 20.5% | 126.5% | 9.2% | |
| Adept Telecom ($ADT) | | -4.1% | -0.8% | 5.8% | 30.9% |
| Verizon Communications Inc ($VZC) | 4.5% | 4.1% | 5.4% | 3.6% | |
| Telecom Egypt ($TEEG) | 1.6% | 11.0% | 9.2% | 0.2% | |
| |
|---|
| Median (13 companies) | -0.2% | -4.1% | -1.6% | -0.4% | 18.4% |
|---|
| Alternative Networks ($AN.) | | -0.4% | 17.5% | 9.2% | -7.5% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Kt Corp ($KTCD) | 75.5% | 76.0% | 77.9% | 77.9% | |
| Verizon Communications Inc ($VZC) | 60.1% | 62.8% | 60.7% | 60.1% | |
| Telecom Egypt ($TEEG) | 41.4% | 41.9% | 44.2% | 41.6% | |
| Syqic ($SYQ) | 57.3% | 59.9% | 43.6% | 41.2% | |
| Adept Telecom ($ADT) | 32.2% | 34.5% | 36.4% | 37.6% | 40.3% |
| |
|---|
| Median (5 companies) | 57.3% | 59.9% | 44.2% | 41.6% | 40.3% |
|---|
| Alternative Networks ($AN.) | 39.0% | 39.2% | 41.2% | 41.3% | 40.9% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Ooredoo Qsc ($ORDS) | 46.0% | 42.4% | 37.6% | 39.2% | |
| Verizon Communications Inc ($VZC) | 25.6% | 40.3% | 28.4% | 37.3% | |
| BT Group ($BT.A) | 31.2% | 32.0% | 31.9% | 33.5% | 33.4% |
| Rostelekom ($RKMD) | 39.7% | 39.0% | 33.0% | 33.4% | |
| Koninklijke Kpn Nv ($0O8F) | 35.9% | 34.1% | 39.1% | 33.2% | |
| |
|---|
| Median (13 companies) | 34.0% | 33.1% | 31.9% | 29.9% | 26.7% |
|---|
| Alternative Networks ($AN.) | 13.3% | 13.4% | 15.7% | 14.1% | 12.7% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Ooredoo Qsc ($ORDS) | 21.9% | 27.5% | 25.3% | 26.5% | |
| Telecom Egypt ($TEEG) | 5.1% | 6.8% | 13.0% | 21.4% | |
| Rostelekom ($RKMD) | 31.7% | 23.6% | 19.3% | 21.1% | |
| Telefonica Sa ($TDE) | 15.2% | 17.0% | 19.1% | 18.7% | |
| Orange Polska Sa ($OPLD) | 16.6% | 16.9% | 17.6% | 16.9% | |
| |
|---|
| Median (13 companies) | 13.6% | 13.8% | 13.0% | 14.4% | 7.4% |
|---|
| Alternative Networks ($AN.) | 0.5% | 0.4% | 0.6% | 2.7% | 1.3% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| BT Group ($BT.A) | 23.6% | 27.0% | 34.7% | 37.5% | 21.6% |
| Syqic ($SYQ) | 38.9% | 3.2% | 33.9% | 22.9% | |
| Verizon Communications Inc ($VZC) | 8.0% | 16.7% | 10.1% | 19.3% | |
| O2 Czech Republic As ($O2CZ) | 11.8% | 11.7% | 7.2% | 14.5% | |
| Adept Telecom ($ADT) | 11.6% | 15.5% | 13.2% | 14.3% | 16.4% |
| |
|---|
| Median (13 companies) | 9.6% | 8.5% | 7.7% | 7.1% | 19.0% |
|---|
| Alternative Networks ($AN.) | 35.2% | 33.7% | 28.5% | 20.2% | 15.2% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Telefonica Sa ($TDE) | 2.5x | 2.5x | 3.6x | 4.2x | |
| Koninklijke Kpn Nv ($0O8F) | 3.8x | 3.4x | 3.0x | 3.6x | |
| Verizon Communications Inc ($VZC) | 1.7x | 0.8x | 2.8x | 2.1x | |
| Ooredoo Qsc ($ORDS) | 1.6x | 1.7x | 2.0x | 2.0x | |
| Rostelekom ($RKMD) | 1.7x | 1.8x | 1.8x | 1.8x | |
| |
|---|
| Median (13 companies) | 1.7x | 1.3x | 1.6x | 1.3x | 1.6x |
|---|
| Alternative Networks ($AN.) | -1.3x | -1.1x | 1.4x | 0.9x | 1.1x |
