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On 27th February 2019, Vocus Group Limited (ASX:VOC) which is in communication services business, announced its H1FY19 results. The company reported revenue of $974.2 million in 1HFY19 as compared to the previously reported number of $967.3 million in 1HFY18, a modest gain of just below 1% which was supported by growth in Vocus Networks but offset by declining revenues in Vocus Retail.
The New Zealand business reported relatively stronger Revenue growth. The revenue rose from NZ$180.04 in 1HFY18 to NZ$188.2 million in 1HFY19, posting a growth of 4.3% which was led by increased fibre penetration. [optin-monster-shortcode id="swikrbu1d9j9aq0o4cko"]
The underlying EBITDA saw a decline of 10% from A$188.8 million in 1HFY18 to A$170.7 million in 1HFY19. The reason for the decline was an increase in the technology cost and declining performance of the business. While the statutory EBITDA also saw a decline of around 10% from $188.1 million in 1HFY18 to $168.6 million in 1HFY19.
Due to almost flat revenue and decreasing EBITDA, the net profit after tax (NPAT) took a hit. The underlying NPAT for 1HFY19 stood at $48.8 million, down by almost 29% from $68.6 million reported in 1HFY18. Net financing cost increased by noteworthy 23.6% to $26.2 million in 1HFY19 from $21.2 million in 1HFY18 which contributed to the decline in the NPAT. The statutory NPAT saw a significant decline of 56% to $16.5 million in 1HFY19 from $37.3 million in 1HFY18.
The fall in the earnings has consequently resulted in fall in the earnings per share (EPS) as well. The basic EPS declined by more than half to 2.65 cents per share in 1HFY19 from 6 cents per share in 1HFY19. The diluted EPS also decreased by more than half from 5.99 cents per share in 1HFY18 to 2.62 cents per share in 1HFY19.
The company did not declare an interim dividend for 1HFY19 as 1HFY18 was also skipped.
On the balance sheet front, the net debt of the company has also increased with a marginal reduction in cash at the same time. The net debt stated at the end of 30th June 2018 was $1001.2 million which increased to $1089.2 million as at 31st December 2018. The funding of ASC project which costed around $133 million primarily led to the increase in the net debt. The cash decreased from $57.9 million as at of 30th June 2018 to $56.4 million at the end of 31st December 2018.
The company also stated some insights about the future outlook of the business. It expects the underlying EBITDA to be around $350 million to $370 million for FY19. The depreciation and Amortization is expected to be around $160 million to $165 million while capital expenditure (excluding ASC project) is expected to be around $160 million to $170 million for the FY19. The company is also reinvesting in the business in order to drive the earnings and revenue growth in FY20 and beyond.
After the results, the stock price surged by 9.9% to close the day at A$3.86 (as of 27th February 2019) from the previous closing of A$3.51. This will add a significant contribution to the YTD return of 14.33% as of 26th February 2019.
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