Shares in Telecity Group (TCY) jumped 14 per cent after release of full-year results that were accompanied by details of a non-binding agreement to acquire European data centre specialist InterXion. The all-share merger values InterXion at a 15 per cent premium to its New York share price. The deal would give Telecity shareholders 55 per cent of the combined group and InterXion's investors the remainder.
Telecity posted a 7 per cent increase in cash profits to £164m, despite an overall increase in the number of customers that discontinued their contracts. However, the 'churn rate' was actually in decline through the second half of 2014. The closure of an inefficient data centre in London dragged on revenues. But Telecity's business in the rest of Europe fared much better, with increased customer demand for multi-national services resulting in gross order wins rising by almost a quarter.
In addition to implementing a £400m share buy back programme, management is committed to increasing the dividend pay-rate to 50 per cent of EPS by 2017. To support this, management is prepared to increase net debt as a proportion of cash profits.
Analysts at Numis expect adjusted EPS of 41.5p in 2015, up from 38.2p in 2013-14.
| TELECITY GROUP (TCY) | ||||
|---|---|---|---|---|
| ORD PRICE: | 974p | MARKET VALUE: | £2.0bn | |
| TOUCH: | 972-975p | 12-MONTH HIGH: | 1,000p | LOW: 625p |
| DIVIDEND YIELD: | 1.4% | PE RATIO: | 33 | |
| NET ASSET VALUE: | 211p* | NET DEBT: | 74% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 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 |
| 2014 | 349 | 81.0 | 29.5 | 13.5 |
| % change | +7 | -8 | -8 | +29 |
Ex-div:19 Mar Payment:24 Apr *includes intangible assets of £157.8m or 78p per share | ||||
