Amcom profit grows to $7.6m, up 66%

24/02/2010 - 11:56

Telco networks provider Amcom Telecommunications has announced a net profit after tax of $7.6 million for the first half of this financial year, a gain of 66 per cent over the previous corresponding period's $4.5 million NPAT.

Amcom profit grows to $7.6m, up 66%

Telco networks provider Amcom Telecommunications has announced a net profit after tax of $7.6 million for the first half of this financial year, a gain of 66 per cent over the previous corresponding period's $4.5 million NPAT.

The NPAT prior to equity accounted earnings of associates was $4.8 million, up from $3.5 million.

For the six months to December 31 the company increased its revenue by 16 per cent, to $29 million, and increased EBITDA by 21 per cent, which the company said was driven by new sales in the period and the momentum of growth in new customer
connections experienced in the 2009 financial year.

Amcom chief executive Clive Stein was pleased with the results, backed up by the strength of Amcom's business model.

"Our recently-announced contract to provide high-speed fibre based telecommunications services to the Northern Territory Government demonstrates Amcom's ability to win new business in new markets," he said.

"With the company's strong balance sheet and track record of recurring earnings, Amcom is now poised for future growth."

The company's earnings guidance for FY10 is an increase of at least 20 per cent, which would result in $9.5 million of net profit after tax from wholly-owned operations excluding equity accounted earnings of associates and the transaction costs arising from the company's recently announced proposed acquisition of IP Systems.

These results follow yesterday's announcement of a proposed acquisition of voice and communications technology provider, IP Systems for up to $20.5 million to expand its product range into enterprise voice solutions.

"This gives us the potential to significantly increase Amcom's share of our customers' spend on telecommunications services," Mr Stein said of the potential acquisition.

"IPS has 10 years' experience in deploying reliable market leading voice and communications technology, and its products are ideally suited to Amcom's existing customer base.

"We are very pleased that as a result of this acquisition we will be able to provide our existing customers with a 'best of breed' voice and communication solution that enhances our already strong customer relationships."

He added that private company IP Systems will add about $12 million revenue to Amcom, and the transaction will be EPS accretive for shareholders in the first full year of ownership.

Initial consideration for the acquisition will be $6.5 million, consisting of $5.3 million in cash and 4.1 million Amcom shares at 30 cents each.

Amcom will issue more shares, with a minimum floor of $3 million and a maximum cap of $14 million, should IP Systems meet agreed profitability levels.

Amcom said the transaction has been priced upon a normalised earnings before interest and tax multiple of 5x subject to the consideration cap and floor.

Shareholders will need to approve the transaction, and a meeting has been scheduled for April.

Amcom shares were off slightly, down half a cent, or 1.67 per cent, to 29.5 cents per share at 1440AEST.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

Subscription Options