Pipe Networks' half year profit up 62 percent

Stuart Corner
Monday, 16 February 2009 03:07

IT Industry - Market

Pipe Networks (ASX: PWK) has reported revenue from operating activities for the half year to December 2008 of $23.7m up from $16.1m for the same period in 2007. NPAT was $5.3m, a 62 percent increase over the previous corresponding half result of $3.3m. EBITDA for the half year was $8.9m up from $5.9m at HY07.

"Demand for the company's entire suite of domestic products combined with additional capacity available for sale was translated into strong growth in new contracted recurring revenue," Pipe said. "Investments in international bandwidth continue and are not expected to significantly contribute to net profit until next financial year.

Fibre capacity available for sale increased by 22.5 percent over the prior period and the company maintained usage rates of 22.4 percent of available stock at December 2008 (22.2 percent December 07).

Pipe expects growth in fibre capacity sales to continue with the completion of metropolitan networks in Adelaide and Perth to service customers in these markets. It adds that "The impact of new Data Centre facilities providing additional capacity for sale has been significant in this product area. Strong demand for these services and the effect of recurring revenue over the period provided a 147.4 percent increase in revenue from $1.1m (HY07) to $2.6m (HY08).

Pipe's domestic operations now include over 1,202km of fibre optic cable sold as dark fibre and related products, data centres (tele-housing and co-location services), what is claimed to be Australia's largest independent Internet peering service and managed services provided to wholesale customers.

Pipe raised $9.8m, wants more
Pipe Networks has completed a placement of 3.5 million new shares with institutional investors to raise $9.8 million, half of which will be used to meet a payment commitment on its PPC-1 cable project due in the current quarter.

The placement, jointly-managed by ABN AMRO Morgans Corporate and Wilson Corporate Finance HTM, was priced at $2.80 per share, representing a 10 percent discount on the prior five day VWAP of $3.11 at close of trading on 12 February. According to Pipe it attracted strong interest from a range of existing institutional shareholders.

The company also plans to offer existing Australian and New Zealand shareholders new shares up to a maximum value of $10,000 under a share purchase plan. There is no minimum or maximum amount to be raised.