Management at Hull-based telecoms group KCOM (KCOM) is sufficiently confident in the performance of its telephony and broadband business that it has committed to grow the dividend by 10 per cent every year until 2016. That helped the shares jump about 8 per cent on the day these full-year figures appeared.
That confidence doesn't look especially misplaced, either. The KC unit - which offers telephony and broadband services in Hull and East Yorkshire - increased cash profits by 2.4 per cent in the year to £54.5m. While penetration of higher-margin bundled services among customers increased from 25 per cent to 42 per cent in the year - that's quite a pace given that KCOM only received regulatory approval to sell bundles in 2010.
Still, the KCOM unit - which provides communication services for business and the public sector - is being hit by weak economic conditions. Revenue here fell 5.5 per cent to £273.4m and cash profits slipped 5.2 per cent to £29.4m. However, contract wins with Morrisons and a growing order book offer hope. Progress was also made on the group's pensions deficit, with £10m transferred into the scheme.
Broker Espirito Santo expects adjusted pre-tax profit of £50m for 2014, giving EPS of 7.62p (from £50.4m and 7.49p in 2013) and a dividend of 4.84p.
KCOM (KCOM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 82.8p | MARKET VALUE: | £428m | |
| TOUCH: | 82.8-83p | 12-MONTH HIGH: | 89p | LOW: 66.9p |
| DIVIDEND YIELD: | 5.3% | PE RATIO: | 11 | |
| NET ASSET VALUE: | 16p* | NET DEBT: | 107% | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 472 | -111 | -20.7 | 1.50 |
| 2010 | 413 | 19.2 | 3.50 | 1.75 |
| 2011 | 395 | 32.9 | 4.40 | 3.60 |
| 2012 | 387 | 51.1 | 7.41 | 4.00 |
| 2013 | 373 | 50.4 | 7.49 | 4.40 |
| % change | -4 | -1 | +1 | +10 |
Ex-div: 26 Jun Payment: 2 Aug *Includes intangible assets of £100m, or 19p a share | ||||
