Amcom 2010 profit rises to $17.3m

Fibre network provider Amcom Telecommunications has posted a 43 per cent increase in its net profit after tax.

Amcom's said it will pay a fully franked dividend of 1 cent per share after recording a $17.3 million profit for the 2010 financial year.

The company said the result was based on strong demand for its core fibre-based communications services.

Amcom is looking forward to record growth in 2011 and anticipated net profit after tax to be at least 20 per cent up on this year to about $20.7 million.

Amcom CEO Clive Stein said the company's performance in FY10 was excellent.

"This result builds on our proven track record of consistent industry out-performance in recent years," he said.

"It demonstrates the strength of the company's business strategies and our focus on high growth market segments, where data has become an essential service for business today."

See full company statement below:

Amcom Telecommunications Limited ("Amcom'') (ASX: AMM), a leading fibre network provider, today announced a 43% increase in reported net profit after tax to $17.3m for the financial year ended 30 June 2010.

The board has declared a fully franked final dividend of 1 cent per share bringing the dividend for the year to 1.4 cents per share. This is an increase of 75% on the previous financial year. The dividend increase reflects the board's confidence in the company's strong financial position and outlook.

The net profit after tax from 100% owned operations excluding equity accounted earnings of associates and significant items increased 34% to $10.6m for the financial year ended 30 June 2010.

The result was based on continued strong demand for Amcom's core fibre-based communications services. Revenue growth of 18% was driven by continued demand for high-speed data services. Record sales in FY11 reflect Amcom's focus on this high growth segment of the telecommunications market.

EBITDA growth of 22% reflected improved margins driven by greater utilisation of the company's fibre networks.

Financial highlights
- Revenue $63m - up 18%

- EBITDA $22.4m - up 22%

- EBITDA margin expanded from 34% to 36%

- EBIT $15.6m - up 23%

- Final fully franked dividend of 1 cent bringing annual dividend to 1.4 cents per share - up 75%

- Strong balance sheet with negligible gearing.

Amcom CEO Clive Stein said the company's performance in FY10 was excellent.

"This result builds on our proven track record of consistent industry out-performance in recent years. It demonstrates the strength of the company's business strategies and our focus on high growth market segments, where data has become an essential service for business today.

"We are continuing to see very strong demand for our products from the corporate, government and wholesale sectors as we move into the new financial year. With the company's strong balance sheet and track record of recurring earnings, Amcom is well placed to continue on its growth trajectory.

"Furthermore, following our acquisition of IP Systems earlier this year, we now have offices in major cities across Australia which gives us a national presence to grow our business," Mr Stein said.

Final dividend
The final dividend of 1 cent per share will be paid on 10 November 2010 with a record date of 22 October 2010.

Amcom's operating cash flows are more than adequate to fund growth capital expenditure in the medium-term and the company's balance sheet remains relatively ungeared. As a result, the company's dividend policy will be to maintain a pay-out ratio of approximately 50%.

Outlook
The outlook for the company is strong. Organic growth adds to the company's recurring revenue base each year. During FY11 this will be supplemented by a full year contribution from the recently acquired IP Systems business and from the Northern Territory Government contract secured in early 2010.

The company anticipates FY11 net profit after tax to be at least 20% up on this year, which would result in at least $20.7m. This includes equity accounted earnings from Amcom's strategic investment in iiNet Limited based upon analyst consensus forecasts for iiNet in FY11.