Flick points to M&A activity as cloud revenues surge

BGF-backed Olive Communications has reported sharp growth in cloud revenues, up 48% at year end (31st January 2019), driving a three percentage points improvement in gross margins to 44.2%, with gross profit falling less than 1%. 

The High Wycombe-based comms provider’s EBITDA has risen 43% to £2.1m on revenues down 7.6% at £28.9m, as a consequence of ongoing mobile pressures such as EU roaming charges and Mobile Network Operator moves to optimise tarifs. 

Ongoing cost reductions resulted in a 43% increase in EBITDA to £2.1m, for a 7.3% margin. 

Operating cash flow of £3.8m represented 178% conversion of EBITDA due to positive working capital movements, funding £1.1m of interest and a £269k of capex, facilitating a £2.5m decline in net debt to £10.4m, or £0.7m excluding shareholder loan notes.

Brett Morris, CFO at Olive Communications, said: “Our cloud services are going from strength-to-strength, delivering high recurring revenues plus associated project and implementation revenues.

“This continued growth in cloud services, supported by Vodafone encouraging mobile only users to adopt OneNet unified comms, together with a better year for mobile means we expect revenues to return to growth in the current year to January 2020. 

"EBITDA margins are set to continue to expand, which all points to continuing EBITDA growth for the current year.”

CEO Martin Flick added: “We’re now in a strong position to consider further expansion opportunities and M&A activity to enhance our capabilities and develop our proposition.”

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