Half-year figures for Manx Telecom (MANX) were nothing if not consistent, with cash profits flat on the same period last year, and revenues from the core fixed-line internet and data businesses 1.3 per cent up year on year. With business trading in line with board expectations, and the long-term migration trends to 4G and superfast broadband still evident, these numbers offered few surprises for investors in the Isle of Man's incumbent telecoms firm - but in a way that's the point of a dividend stock.
The dip in the top line can be partly explained by a 16 per cent decline in sales to data centre customers, although this was due to a fall in low-margin kit sales and customer consolidation, and was largely offset by strong growth in the global solutions business. Elsewhere, cash generation - rarely a problem for a company unencumbered by corporate taxes - was again strong, with free cash flow up 32 per cent to £8m.
The cash position was not affected by a £2m unrealised loss on an interest rate swap in the period, which explains the dip in reported pre-tax profits, and was the one unwelcome hit to the balance sheet too. Brokerage Liberum is guiding for full-year pre-tax profits of £15.3m and EPS of 13.4p, rising to £16.0m and 13.9p in the 12 months to December 2017.
MANX TELECOM (MANX) | ||||
|---|---|---|---|---|
| ORD PRICE: | 200p | MARKET VALUE: | £226m | |
| TOUCH: | 198-202p | 12-MONTH HIGH: | 226p | LOW: 179p |
| DIVIDEND YIELD: | 5.3% | PE RATIO: | 16 | |
| NET ASSET VALUE: | 76p* | NET DEBT: | 62% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 39.8 | 8.6 | 7.6 | 3.5 |
| 2016 | 39.2 | 6.3 | 5.6 | 3.7 |
| % change | -2 | -26 | -26 | +6 |
Ex-div: 13 Oct Payment: 7 Nov *Includes intangible assets of £84.6m, or 75p a share. | ||||
