amcom lifts revenue 30 percent profit 82 percent

Amcom lifts revenue 30 percent, profit 82 percent
By Stuart Corner
Tuesday, 12 September 2006
Amcom Telecommunications (ASX: AMM) has reported revenue growth of 30 percent to $31.5 million for the year to 30 June and an after tax (before derivative income) profit up 82 percent to $3.2 million.

Net Profit rose to $4.8 million and included a derivative income after tax of $1.6 million; which reflects the benefits of the interest free $20.5m loan provided by major shareholder, Futuris Corporation. Directors have declared a dividend for the year of 0.375 cents per share, an increase of 50 percent on the previous year.

CEO Eddy Lee said that both the company's fibre and Amnet DSL divisions had performed above expectations. According to Lee, during the past year, Amcom's core network fibre and Internet infrastructure have been upgraded "to provide a sustainable platform for growth," and back-office integration, including provisioning and billing systems have been overhauled "to facilitate the seamless growth of customers."

"By managing our costs efficiently, we held our margins whilst investing some $9 million in customer connections and DSL infrastructure," he said.

Amcom's Fibre Division supplies last mile fibre optic network connections in Perth, Adelaide and Darwin. Over the last two years the network has grown by 37 percent to 950 fibre kilometres and now enters 655 buildings. It lifted revenue by 17 percent and EBITDA by 16 percent. "The strong growth came from contracting new clients and meeting our existing clients demand for ever increasing volumes of faster data," Amcom said.

During the year the division won a $7.35 million contract to build, manage and access a 92 kilometre fibre-optic network throughout Adelaide. This expanded network is expected to commence operation in January 2007.

"The roll-out of this fibre optic infrastructure in Adelaide expands Amcom's fibre reach beyond the CBD, enabling Amcom to provide high speed data services to most of the satellite business and technology centres throughout Adelaide's greater metropolitan area," the company said.

The DSL division, Amnet, reduced EBITDA losses to $0.2 million from $1.1 million in the previous year and achieved a 39 percent increase in gross profit. In Perth, Amcom rolled out another 15 DSLAMs taking the total to 30 and doubled the capacity of the first 15 exchanges. It now also has seven exchanges in Adelaide and says the rollout of further ADSL capacity is a priority for the current year.

The company expects the Amnet Division to make a positive contribution to company profits for the first time in the current year.

Amcom chairman, Tony Grist, said: "The majority of our DSLAM rollout for our Amnet DSL division has been completed and so net cashflow after capex will be strongly positive. We are budgeting to use the resultant surplus cash flow after capex to increase dividends and reduce debt...Whilst we believe the environment in which we operate remains challenging, we are nonetheless cautiously optimistic that Amcom will continue to deliver a minimum of 20 percent growth in underlying earnings in FY2007."