Hull-based telecoms group Kcom (KCOM) delivered a workman-like performance in the year to March, but underlying fundamentals paint a rosier picture. A strong increase in cash conversion in the second half enabled the group to deliver on its promise of raising the dividend by 10 per cent, as net debt fell from £88.2m to £75m.
The KC unit, which provides technology and broadband services in Hull and east Yorkshire, attracted good demand, and remains on target to connect 45,000 premises by December next year. That's 30 per cent of the addressable market, compared with 27 per cent at the moment. Average revenue per user also rose to over £5 a month.
Group revenue was flat, though, with strong consumer demand offset by lower revenue in the Kcom division, which focuses on business communications. The slip reflected pricing pressures from regulatory changes and a switch away from commoditised carrier-only services. This trend is expected to trim revenue in the current year as well, although there is considerable scope to exploit strengthening demand for multi-channel packages.
Analysts at Barclays Capital are forecasting pre-tax profits of £46m and EPS of 7.2p for 2015 (from £50.5m and 7.6p in 2014).
| KCOM (KCOM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 93.2p | MARKET VALUE: | £481m | |
| TOUCH: | 93.2-93.4p | 12-MONTH HIGH: | 106p | LOW: 77p |
| DIVIDEND YIELD: | 5.3% | PE RATIO: | 12 | |
| NET ASSET VALUE: | 16p* | NET DEBT: | 88% | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 413 | 19.2 | 3.5 | 1.75 |
| 2011 | 395 | 32.9 | 4.4 | 3.6 |
| 2012 | 387 | 51.1 | 7.4 | 4 |
| 2013 | 373 | 47.7 | 7.1 | 4.44 |
| 2014 | 371 | 50.5 | 7.6 | 4.88 |
| % change | -1 | +6 | +7 | +10 |
Ex-div: 25 Jun Payment: 1 Aug *Includes intangible assets of £108mm or 21p a share | ||||
