LONDON (Alliance News) - Manx Telecom PLC Tuesday reported higher pretax profit for 2014 due to lower finance costs and a pension credit, while revenue rose as strong take up of high-speed broadband helped offset a decline in mobile revenue caused by the reduction in mobile termination rates.
The Isle of Man-based telecoms company reported a pretax profit of GBP5.7 million for 2014, up from GBP0.4 million a year earlier, as it booked a GBP7.0 million credit following the closure of its defined benefit pension scheme to future accruals, partially offset by a cash payment of GBP0.8 million to transition members to its defined benefit scheme.
Finance costs dropped by GBP7.5 million, mainly due to lower interest charges as it used money from last year's initial public offering to pay down debt, although this was offset by GB8.0 million of costs related to the listing.
Excluding the one-off costs, its earnings before interest, tax, depreciation and amortisation fell to GBP27.1 million, from GBP27.5 million, due to the extra costs of being a listed company, even though revenue rose to GBP79.3 million from GBP76.0 million. Its Ebitda margin slipped due to an increase in sales of lower-margin wholesale voice and SMS in its Global Solutions business.
Fixed line, broadband and data revenues grew 1.1% driven by good take-up of high speed broadband, while it reported a 23% increase in revenue in its Global Solutions business, as a result of increased wholesale volumes, machine-to-machine and Strongest Signal Mobile services revenue. Data centres revenue rose 2.3%.
This more than offset a 4.4% decline in mobile revenue that was caused by the reduction in mobile termination rates. The rates that mobile operators can charge other operators for terminating a call on its network have been cut by UK telecoms regulator Ofcom, although the reductions cease in 2015.
"We have made good progress over the year, with revenue growth driven by strong sales in Global Solutions, as well as positive take-up of high speed broadband on the island. After a slower than anticipated start the Greenhill Data Centre now has a number of new local customers ready to move in. This, and the continuing success of 4G, gives us confidence that the underlying strength in the business will continue in the year ahead."
The company separately said it has secured the Isle of Man government as anchor tenant for phase I of the Greenhill Data Centre, Manx Telecom's third data centre. Phase I was opened in March 2014, and already provides hosting and managed services to a variety of sectors including eGaming, financial services and those requiring access to big data.
The Isle of Man government has signed a five-year contract from February 1, and it took a quarter of the 100 racks of storage space in the centre. It also re-contracted for the 25 racks it occupies at Manx Telecom's data centre in Douglas North.
The company said it is also looking to develop Phase II of the Greenhill Data Centre later in 2015, "following interest from another prospective anchor tenant".
"The company remains committed to creating shareholder value through our dual strategy of defending our significant on-island presence, whilst seeking off-island opportunities to exploit and leverage our data centre and mobile infrastructure. During 2014, we successfully followed this strategy and will strive to do the same through 2015," outgoing Chief Executive Mike Dee said.
The company said it doesn't expect the strong growth in its Global Solutions business to be repeated to the same extent in 2015, but remains "encouraged by its growth potential".
Manx declared a final dividend of 6.6 pence for 2014, bringing the total for the year to 9.9p, a 7% yield on its IPO price of 142p.
Manx Telecom shares were down 0.7% at 185.62 pence Tuesday morning. The stock is up 5.5% so far in 2015.
By Steve McGrath; stevemcgrath@alliancenews.com; @stevemcgrath1
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