Shares in KCom (KCOM) were marked down heavily a week prior to release of its half-year results, after the telecoms group warned on full-year profits and halved its proposed annual dividend to 3p a share, giving a prospective yield of 5.2 per cent. The official figures expanded on this precursory update, with earnings into the red on a contracting gross margin and a steep rise in goodwill impairments.
At the time of the update, we learnt that the enterprise segment had seen flat revenues, driven by lower-than-expected order intake. Meanwhile, the national network services (NNS) business had endured ongoing customer churn – leading management to impair the carrying value of goodwill. In all, the group said it expected cash profits for the 2019 financial year to be around 5 per cent lower than market expectations, and “significantly below” expectations for the 2020 financial year.
House broker FinnCap expects adjusted pre-tax profits of £21.8m and EPS of 3.8p for March 2019 (FY2018: £33.3m and 5.2p).
| KCOM (KCOM) | ||||
| ORD PRICE: | 58.1p | MARKET VALUE: | £ 300m | |
| TOUCH: | 57.7-58.3p | 12-MONTH HIGH: | 107p | LOW: 54p |
| DIVIDEND YIELD: | 8.6% | PE RATIO: | na | |
| NET ASSET VALUE: | 12.6p* | NET DEBT: | 167% | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 151 | 14.8 | 2.4 | 2.0 |
| 2018 | 142 | -21.0 | -4.2 | 1.0 |
| % change | -6 | - | - | -50 |
| Ex-div: | 27 Dec | |||
| Payment: | 01 Feb | |||
| *Includes intangible assets of £52.6m, or 10p a share | ||||
