The Manx Telecoms (MANX) board has recommended a £256m offer from infrastructure investor Basalt Infrastructure Partners, representing 215p in cash per share for shareholders, after accounting for a 7.9p interim dividend.
Chief executive Gary Lamb said that Basalt supported Manx’s growth ambitions, which last year saw investment of £23.3m in its Goshawk business, and included the development of revolutionary hearing loss phone technology. Investment in that business, coupled with costs relating to its transformation programme, pushed net debt up to 2.3 times adjusted cash profits, from a multiple of 2.1 in the prior year. However, improvements in working capital sent free cash flow up 5 per cent to £9.5m, with operating cash flow conversion coming in at an impressive 150 per cent.
Goshawk sits within Manx’s growth arm, Vannin Ventures. Peel Hunt analysts believe that Basalt’s offer represents too low a premium to Manx’s current share price, on the basis that it ignores Vannin’s potential, which includes growing activity in the nascent 'internet of things' space.
Peel Hunt forecasts full-year 2019 pre-tax profits and earnings per share of £15.5m and 13.4p, respectively, against prior-year figures of £15.4m and 13.3p.
| MANX TELECOM (MNX) | ||||
| ORD PRICE: | 214.5p | MARKET VALUE: | £127m | |
| TOUCH: | 214-215p | 12-MONTH HIGH: | 215p | LOW: 150p |
| DIVIDEND YIELD: | 5.6% | PE RATIO: | 21 | |
| NET ASSET VALUE: | 144p* | NET DEBT: | 75% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2014 | 79.3 | 5.7 | 0.7 | 9.9 |
| 2015 | 79.6 | 16.6 | 5.4 | 10.4 |
| 2016 | 80.8 | 8.8 | 14.7 | 10.9 |
| 2017 | 78.5 | 11.9 | 7.8 | 11.4 |
| 2018 | 81.5 | 11.6 | 10.5 | 12.0 |
| % change | +4 | -3 | +34 | +5 |
| Ex-div: | na** | |||
| Payment: | na** | |||
| *Includes intangible assets of £90m, or 152p a share **Pending outcome of takeover | ||||
