Sales surged at CityFibre (CITY) in the first half of 2016, swinging the group - which builds fibre-optic networks in urban areas then rents out access to telecoms suppliers - to an adjusted cash profit of £0.4m, compared with a loss of £1.8m in the same period of 2015. The catalyst was its £90m purchase of network assets from KCom (KCOM), which has helped to more than triple the number of connected customer premises to roughly 3,500 across 40 UK cities.
Management signed contracts with a total initial value of almost £54m, more than double the figure for 2015 as a whole. It ended the period with ties to 49 carriers and service providers, up from 33 a year earlier. For instance, SSE Enterprise Telecoms has agreed to pay £2.3m over 15 years for network capacity between Reading and Slough, while Southend-on-Sea Borough Council will shell out £3.2m for a 50km fibre network connecting 120 public sector sites. CityFibre has also agreed to pay £5m to Redcentric (RCN) for the managed IT services group's network assets in Cambridge, Portsmouth and Southampton. It expects to recoup at least £4.5m in exchange for providing continued access over the next decade.
Broker Liberum forecasts an adjusted pre-tax loss of £9.8m for the full year, giving a loss per share of 3.7p (from losses of £6.4m and 6p in 2015).
| CITYFIBRE INFRASTRUCTURE (CITY) | ||||
|---|---|---|---|---|
| ORD PRICE: | 64p | MARKET VALUE: | £170m | |
| TOUCH: | 63-65p | 12-MONTH HIGH: | 78p | LOW: 44p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 43p | NET DEBT: | 24% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 2.7 | -2.8 | -3.0 | nil |
| 2016 | 6.6 | -7.5 | -3.0 | nil |
| % change | +147 | - | - | - |
