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5G Networks Limited (ASX:5GN), established in 2013, is headquartered in Melbourne and offers services like high speed unlimited Internet access, wholesale cloud, virtual private network, business phone systems, managed services cloud infrastructure services, integrated fibre and wireless network, cloud infrastructure as well as consulting services to clients in Australia.
The company recently released its financial report and commentary for the half year ended December 31st, 2018 (1H FY2019) affirming a positive business stance with significant sales performance driving growth for both incremental and retained revenues.
For the concerned period, there was continued exponential growth in the reported revenue to $ 23.576 million, reflecting from a staggering rise of 1900% from $ 1.134 million in the previous corresponding period (H1 FY2018). Â The normalised EBITDA for the first half total was posted at $ 1.385 million, representing a dramatic growth as compared to the $ 94k EBITDA achieved in the previous corresponding period. However, the EBITDA for 1H FY2019 excludes acquisition costs and expensed option costs. The transition to services-based revenue and the growth in multi-product holdings have also largely stimulated the companyâs growth prospects.
The company reported cash receipts from customers for the first half at $ 22.8 million, relative to $ 1.3 million in the previous period and the maintainable quarterly cash flow of $ 880,000, excluding abnormal payments for staff leave entitlements and acquisition costs.
The net cash and cash equivalents at the end of the period stood at ~ $ 2.8 million. There were cash inflows from operating activities at $ 1.41 million resulting from receipts from customers. The financing activities too contributed to cash inflows amounting to AUD 139K.  On the contrary, the investing activities led to cash burns of $ 2.098 million primarily due to acquisition of Anittel/Hostworks group.
The nationwide works including the development of network access and infrastructure for the deployment of the high-speed network, were also completed during the first half with services due to be launched in H2 FY2019.
During the half year, the company recorded a strong sales performance which secured $ 11 million of new and retained revenue followed by the acquisition of Hostworks and Anittel in August 2018 along with several other deals, delivering more than $ 5 million of new incremental revenue. Several long-term contracts were also signed with new and existing customers, totalling to a value of $ 13 million in H1. Besides, the company also achieved its transition to a single enterprise management platform for operations management.
For the remaining half year, the company foresees various potential strategic acquisitions as the market sentiment for progressing merger and acquisition opportunities appears positive and lucratively priced. The future capital investment is expected to be well funded through internally generated cash flow. Also, the Capex was tightly controlled at $ 138,000 for the quarter ended December 31st, 2018, and $ 398,000 for the half year. Furthermore, future Capex is estimated to be driven primarily by customer growth.
5G Networks Limited has a market capitalisation of AUD 34.23 million. With the close of the market trading on February 25th, the 5GN stockâs last sell-off price stood at AUD 0.670, soaring high by 9.836%. Today, the stock is trading at AUD 0.685, up 2.24% (As at 2:00 PM AEST, 26 February 2019). Overall, the stock performance has been reasonably good in the past one year with the three-month and the six-month return yields of 54.02% and 19.64% respectively. 5GN has also generated a positive YTD return of 59.52%.
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