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Vicom Limited’s 2017 Earnings: Dividend Increases by More Than a Third

VICOM Limited (SGX: V01) is Singapore’s leading provider of technical testing and inspection services. On Friday, the company announced its financial results for the full year ended 31 December 2017.

Here are 10 things investors should know from the earnings announcement:

1. Revenue for the year fell 4.1% year-on-year to S$97 million on the back of lower business volumes.

2. Operating profit slumped from S$32.4 million in 2016 to S$30.5 million in 2017.

3. Net profit declined 5.9% to S$26.5 million.

4. Earnings per share fell from 31.77 cents in 2016 to 29.90 cents for the latest year.

5. Net profit margin for 2017 was 27.3%, a slight fall from 2016’s 27.8%.

6. As at 31 December 2017, VICOM had S$107.5 million in cash and cash equivalents with no debt. This is an improvement from one year back where it had S$105.7 million in cash and zero debt.

7. Return on equity for 2017 came in at 17.9%, down from 18.8% clocked in a year ago.

8. Cash flow from operations was S$33.3 million and S$4.4 million was spent on capital expenditure. Therefore, VICOM brought in S$28.9 million in free cash flow for 2017, a 1% decrease from S$29.2 million generated in 2016.

9. The board of directors has proposed a final dividend of 22.88 cents per share, up from 2016’s final dividend of 8.50 cents and a special dividend of 10.00 cents. Together with the interim dividend of 13.12 cents already paid out, the total dividend for 2017 would be 36 cents per share. This translates to a 36% increase over 2016’s total dividend of 26.5 cents per share.

10. VICOM Limited had the following outlook (emphasis mine):

“The vehicle and non-vehicle testing businesses are expected to remain stable. The recent change in regulations by the National Environment Agency for registration of new petrol and diesel vehicles to meet Euro VI standards has no impact on the vehicle inspection business.”

In the previous quarter, it mentioned that the “non-vehicle testing business is expected to remain weak”. So there seems to be an improved outlook with regards to the non-vehicle testing business in the latest announcement.

VICOM Limited ended Friday at S$5.83 per share. The price gives rise to a trailing price-to-earnings ratio of 19.5 and a trailing dividend yield of 6.2%.

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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 Sudhan P owns shares of VICOM Limited.