There's not too much excitement at Hull-based telecoms group,
KC, the part of the business offering telephony and broadband services in Hull and East Yorkshire, proved more resilient as underlying cash profits held steady at £27.8m. Expansion, too, is in the offing. After passing 15,000 homes and businesses with its fibre-to-the-premise network by October, KC plans to pass another 30,000 premises with its high-speed network by March 2015. Annual capital spending is pegged at £30m until the target is met.
Increases in working capital outflow, higher capital spending - plus meeting the group's share scheme obligations - pushed up net debt by a quarter to £93.4m, although stronger net cash flow from operations is expected in the second half. However, although the board has committed to a full-year 10 per cent dividend increase, uncertainty hangs over future dividend levels given the next actuarial valuation looms next April.
Broker finnCap forecasts full-year adjusted pre-tax profit of £52.3m and EPS of 7.5p, up from £51.1m and 7.1p, respectively, last year.
|ORD PRICE:||70p||MARKET VALUE:||£361.6m|
|TOUCH:||69.5-70p||12-MONTH HIGH:||86p||LOW: 65p|
|DIVIDEND YIELD:||5.9%||PE RATIO:||9|
|NET ASSET VALUE:||13p*||NET DEBT:||137%|
|Half-year to 30 Sep||Turnover (£m)||Pre-tax profit (£m)||Earnings per share (p)||Dividend per share (p)|
Ex-div: 2 Jan
Payment: 1 Feb
*Includes intangible assets of £97.6m, or 19p a share
With only modest EPS growth on the cards, and dividend doubts beyond the full year, we downgrade our buy advice to hold.