Telecity: Results in line. 2013 about improving returns after 2012's investment.

Telecity (LON:TCY) (825p and3.1% of JIC portfolio). Full year results for the year ended 31st December 2012 announced this morning seem to be pretty much in line with expectations. Adjusted earnings per share grew by 28.6% to 31.0p; consensus forecasts were for 30.5p. A final dividend of 5.0p, making 7.5p for the year, has been announced against forecasts of a total dividend of around 6.5p. The outlook statement is pretty positive with the Company saying that it has entered 2013 with a strong recurring revenue base and available capacity in all its key locations, having increased available customer power by 27% during 2012.

Conclusion: 2012 was all about investment to increase capacity, hence a number of performance indicators fell; occupancy from 83.5% to 79.6% and return on capital employed from 18.0% to 16.4%. This year should be about filling out that new capacity and getting a return on last year's capital investment. Given Telecity's high rating there is very little room for disappointment. The share price has been weak in the run up to these results and hopefully the Company has done enough to satisfy low expectations. The shares are valued at 22.4x 2013 consensus forecasts for 17% growth and 18.6x 2014 for 20% growth. Sticking with it.

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