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VICOM Limited’s Latest Earnings: Dividend Increases 8%

Vicom Limited (SGX: V01) released its fiscal fourth-quarter earnings yesterday evening. The reporting period was for 1 October 2015 to 31 December 2015.

Vicom is a leading provider of technical testing and inspection services with operations primarily in Singapore. The company is majority-owned by land-transport giant ComfortDelGro Corporation Limited  (SGX: C52).

You can catch up with Vicom’s fiscal third-quarter earnings here.

Financial highlights

The following’s a quick take on Vicom’s latest financial figures:

  1. Revenue for the fourth-quarter came in at $25.7 million, down 4.6% from the same quarter a year ago. For the full year, Vicom clocked in $106.7 million in sales, a slight 1.3% decline from a year ago.
  2. But, net profit for the fourth-quarter increased by 3.9% year-on-year to $8.2 million. For 2015, Vicom’s bottom-line defied the odds to post a 4.2% year-on-year increase to $31.9 million.
  3. Consequently, earnings per share (EPS) for the reporting quarter also went up by close to 4% from 8.74 cents a year ago to 9.07 cents. For the full year, Vicom recorded an EPS of 35.45 cents, up 4.2% from a year ago.
  4. Cash flow from operations and capital expenditures for the fourth quarter of 2015 came in at $10.2 million and $1.2 million, respectively. This gave Vicom S$9 million in free cash flow for the quarter,  up 15% from the free cash flow of $7.8 million seen a year ago ($9.5 million in cash flow from operations and $1.7 million in capital expenditures). For the whole of 2015, free cash flow was S$32.6 million, unchanged from 2014.
  5. As of 31 December 2015, Vicom had $100.1 million in cash and equivalents and no debt. This is a minor increase from the net cash balance of $91 million recorded a year ago.

In short, Vicom’s revenue continued to fall but its bottom-line rose despite the fact. The company’s balance sheet had strengthened compared to the year before and it has carried on generating healthy free cash flow.

The board of directors also proposed a final dividend of 9.5 cents per share and a special dividend of 10.25 cents. The sum of both is an 8.2% increase from a year ago when there was a final dividend of 8.75 cents and a special dividend of 9.5 cents.

Together with the interim dividend of 8.75 cents per share, Vicom would be paying out 28.5 cents in dividend for the whole of 2015, up 5.5% from the 27 cents seen in 2014 .

Operational highlights

In a similar manner to the third quarter, the company’s management had a cautious outlook:

“Demand for vehicle testing services is expected to be lower as more vehicles will be deregistered during the year. Demand for non-vehicle testing services is expected to fall with the slow down in some pertinent industries [note that pertinent is a new word added that wasn’t present in the previous outlook statement].”

I had previously mentioned that the higher rate of vehicle deregistration may affect Vicom’s vehicle testing business, but the future will be a better judge of the quarters ahead for Vicom.

Foolish summary

At its closing price yesterday of $5.79, Vicom traded at 16.3 times its latest trailing earnings and carried a trailing dividend yield of 4.9%.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong owns shares in Vicom Limited.