There has always been something slightly secure about Manx Telecom (MANX) – the leading (and in some cases, only) provider of fixed-line telecommunications, broadband and mobile services in the Isle of Man. However, while its dominance provides solid cash flows and an operating cash conversion rate of over 100 per cent, growth and innovation have historically been sparse.
The launch of Goshawk changes that. Alongside its first-half results, Manx revealed its new mobile network for those with moderate to severe hearing loss. The product will be launched on the Isle of Man later this month and in the UK – via BT’s (BT.A) EE network – in early 2019. Chief executive Gary Lamb thinks the network will have captured 20 per cent of the 3m strong target population by its fifth year.
That will hopefully inject some dynamism into group numbers which, at the half-year stage, were largely flat on 2017 comparators. Still, management rewarded shareholders with a 5 per cent dividend hike, while improvements in working capital sent free cash flow up to £2.5m (from a £0.1m outflow last year). Extra cash is expected to be invested in more products from the innovation platform including a combination mobile, satellite network and ‘internet of things’ solutions.
House broker Liberum expects annual pre-tax profit and EPS of £15.2m and 13.3p, respectively, flat on 2017.
| MANX TELECOM (MANX) | ||||
| ORD PRICE: | 170p | MARKET VALUE: | £196m | |
| TOUCH: | 169-171p | 12-MONTH HIGH: | 199p | LOW: 163p |
| DIVIDEND YIELD: | 6.8% | PE RATIO: | 16 | |
| NET ASSET VALUE: | 72.3p* | NET DEBT: | 77% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 38.5 | 5.21 | 4.60 | 3.9 |
| 2018 | 38.1 | 5.46 | 4.88 | 4.1 |
| % change | -1 | +5 | +6 | +5 |
| Ex-div: | 11 Oct | |||
| Payment: | 5 Nov | |||
| *Includes intangible assets of £88.7m, or 77p a share | ||||
