Amcom changes board after profits jump

Perth-based Amcom Telecommunications Ltd has announced major changes to its board, including the retirement of managing director Eddy Lee, following a 200 per cent increase in half-year net profit.

Amcom recorded a net profit of $2.3 million for the half-year to December 2006, up from $800,000 previously.

It increased sales by 49 per cent to $18.9 million, as well as earning $1.4 million from its 20 per cent stake in iiNet Ltd.

Despite competitive market conditions, the Fibre Division performed well with sales up 48 per cent to $13.8 million and EBITDA increasing 18 per cent to $5.3 million.

Its Amnet Division posted its first profit on sales growth of 52 per cent to $5.1million. recording an EBITDA of $500,000 from a loss in the previous corresponding period.

Mr Lee said the company's profit result highlighted the strong demand for fibre and DSL broadband, and the momentum of the business.

He told WA Business News that it was time for a change in his work after six years as managing director Amcom, and with the business in good shape.

Chief operating officer Clive Stein will take over as managing director from 1 September, while Mr Lee will continue as a non-executive director.

In addition, Futuris managing director Les Wozniczka, whose company holds a 46 per cent stake in Amcom, will be joning its board as a director.

Adding to the Futuris link, that company's former group financial controller David Hinton has been appointed Amcom's chie financial officer.

The full text of a company announcement is pasted below

Amcom Telecommunications Limited, announces a 200% increase in reported net profit after tax of $2.3m for the six months ending 31 December 2006 (2005: $0.8m). The result was based on a 49% increase in sales to $18.9m and includes equity accounted earnings of $1.4m from its 20% stake in iiNet Limited and a once off derivative loss after tax of $0.7m.

The once off derivative loss arose from the conversion of the Futuris loan to equity in the company.

EBITDA from operations increased 36% to $4.6m.

Reflecting a strong underlying performance, sales growth excluding project revenue increased 22% to $15.2m.

Despite competitive market conditions, the Fibre Division performed well with sales up 48% to $13.8m and EBITDA increasing 18% to $5.3m.

As forecast, the Amnet Division posted its first profit on sales growth of 52% to $5.1m recording an EBITDA of $0.5m from an EBITDA loss of $0.3m in the previous corresponding period.

"The record underlying sales and profit result highlight the excellent momentum within the business. Demand for fibre and DSL broadband continues to be strong and we are achieving our organic growth targets" Amcom' s Chief Executive Officer, Mr Eddy Lee said.

"Our strong performance is being driven by our infrastructure advantage and product innovation. We are well placed to sustain strong organic growth and to benefit from the current industry consolidation trend," Mr Lee said.

"Although markets remain competitive we are on track to achieve our revenue and growth targets."

The Company has achieved a number of operational and corporate goals during the period under review. The DSLAM roll out that commenced last year has now been completed as well as the Sabrenet project in Adelaide. Both of these projects were completed on time and on budget. Sabrenet will generate earnings from the fourth quarter of this financial year.

With the ongoing customer demand for faster network speeds, Amcom is investing in leading-edge DWDM (Dense Wavelength Division Multiplexing) network infrastructure. This will enable customers with speeds up to 1 Gigabit (1,000 Mb). The DWDM technology brings scalability, robustness and diversity. The infrastructure will be rolled out and will become operational at
the start of the next financial year. This initiative will leverage on the extensive fibre footprint and further enhance Amcom's competitive position in the market place.

In terms of fiscal management, the balance sheet has been significantly de-geared with the conversion of the $20.4m loan provided by our largest shareholder, Futuris Corporation Limited, into equity in the company at 17 cents a share. Shareholders other than Futuris received a 1 for 1 bonus share option which is exercisable at 17 cents per share up until 31 December 2009.

Net debt at reporting date has reduced to $602,000 with cash balances of $3.3m.

Subsequent to reporting date, Amcom has obtained long term bank facilities of $20m to fund working capital and acquisitions. These bank facilities are in addition to the equity backed $30m facility provided by Futuris Corporation Limited.

Full year outlook

The business outlook for the sector and Amcom remains positive with the company experiencing an expected level of growth.

Amcom re-confirms its earnings guidance of an increase in net profit after tax before significant items of 20% for the year ending 30 June 2007.