Fibernet cuts losses and wins £58m new business

The telecoms company Fibernet unveiled a dramatic narrowing of losses yesterday while painting a rosier picture of current trading after signing up an extra £58m worth of business.

Charles McGregor, its chief executive, said: "Fibernet is well placed to build on the progress we have made over the last 12 months and we continue to view the future with optimism."

The company, which gets more than a third of its revenue from financial organisations, said the markets for its services and the pipeline for new and additional business both remained "strong".

It said: "Our revenues from long-term, high-quality customer contracts now cover our ongoing operating expenses. As we recognise revenues from recent and forthcoming contracts, we have the prospect of a return to sustainable profitability firmly in our sights."

In the year to 31 August, Fibernet recorded a pre-tax loss of £5m - well beneath the £92.4m loss of a year before when it was hit by the cost of closing its operations in France and reducing its business in Germany. Sales for the year were more or less flat at £36.3m.

The company signed up £58m of new business in the year, £21m more than last year, and said long-term contracted revenue - firm orders that it has yet to account for - now stood at £97.8m, of which nearly £29m would fall in the current year.

Fibernet, which finished the year with a £25m cash pile down from £34.3m, also said it remained "confident" that it had "substantial cash headroom" for its business plan.

Mr McGregor said the company's cash pile had been fairly stable for the past three quarters, noting much of the cash burn happened in the first quarter and related to its exit costs from Europe. He insisted yesterday that Fibernet was "fully funded", saying the company had "more than enough" cash to see it through to profitability. Analysts estimate will make a profit next financial year.

Analysts at Investec said the figures "provided the necessary proof" that the company had emerged successfully from last year's restructuring exercise. "Fibernet has delivered on its objectives and exceeded expectations," they said.

The company's broker, Arbuthnot, lifted its revenue estimate to £44m from £41.8m for the year and now expects a loss of £7.4m compared with its previous forecast of a loss of £8.9m. The company also said it wasbranching out with wins in the retail, transport and outsourcing markets.