Telecity' s (TCY) shares tumbled to a two-year low after the computer data centre provider missed consensus estimates for revenue and cash profits in 2013, and issued tepid forward earnings guidance for the current year.
Organic revenues grew at a healthy 7 per cent clip, and even better profit growth prompted a 40 per cent hike in the final dividend to 7p a share. But acquisitions in Poland, Bulgaria and Turkey pushed debt up by £50m to £304m.
Telecity's aggressive expansion means it risks overbuilding. It uses less than 80 per cent of both its space and power capacity, yet still expects annual capital expenses of £110m to £130m over the next few years. Constructing data centres is both costly and time-consuming, admits chief executive Michael Tobin, but the real challenge is to predict capacity requirements and consumer demand correctly several years in advance. "I'd rather have a little incremental capacity than be starved, as our occupancy rates will continue to rise," he says.
Analysts at Barclays trimmed their full-year estimates following the announcement. They now expect pre-tax profits of £104m and adjusted EPS of 41p, up from 36p last year.
| TELECITY (TCY) | ||||
|---|---|---|---|---|
| ORD PRICE: | 653p | MARKET VALUE: | £1.3bn | |
| TOUCH: | 652-653p | 12-MONTH HIGH: | 1,026p | 633p |
| DIVIDEND YIELD: | 1.6% | PE RATIO: | 20 | |
| NET ASSET VALUE: | 202p* | NET DEBT: | 74% | |
| Year to 2013 | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 169 | 38.1 | 17.8 | nil |
| 2010 | 196 | 45.9 | 19.4 | nil |
| 2011 | 240 | 59.4 | 21.7 | nil |
| 2012 | 283 | 76.1 | 29.1 | 7.5 |
| 2013 | 326 | 88.4 | 32.2 | 10.5 |
| % change | +15 | +16 | +11 | +40 |
Ex-div: 3 Mar Payment: 11 Apr *Includes intangible assets of £179m, or 88p a share | ||||
