KCom dials up dividend hike
TELECOMS firm KCom is to more than double its interim dividend after posting half year profits up by more than 35%.
The Hull-based group is increasing the interim dividend to 1.1p from 0.5p last year as part of a move to grow full year dividend payments by at least 10% a year over the next two years.
KCom said the dividend plan reflected confidence in continuing earnings and cash generation.
Executive chairman Bill Halbert said “We are pleased to report half year performance in line with expectations. Our strong profit growth in the first half reflects the actions taken over the past eighteen months to simplify and strengthen the group.
“The signing of our new banking facility to July 2015, coupled with greater visibility of our pension commitments, means that financial stability is assured.
“This stability and strengthened competitive position gives us the ability and confidence to commit to increased shareholder returns whilst also forming a platform for future organic growth.”
EBITDA before exceptional items improved to £38.9m from £37m reflecting lower operating costs across the group.
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Profit before tax and exceptional items increased by 35.8% to £22m. However, revenues reduced to £194.8m from £210.8m, which KCom said was caused by a number of factors including the sale of certain break-fix maintenance contracts to Phoenix IT Group earlier this year.
Strong cash generation reduced net debt further to £111.8m from £146.2m.
The £200m revolving credit facility, with maturity to July 2015, replaces KCom’s existing £250m facility, which was due to expire in March 2012.
The facility is provided by a group of six banks comprising existing syndicate members, RBS, Barclays and Lloyds, who are joined by Yorkshire Bank, HSBC and Santander.
Paul Simpson, chief financial officer of KCom, said: “We are delighted to announce our new banking facility, with a strong syndicate of banks. The terms and duration of this facility, which has been agreed well in advance of our previous arrangements expiring, reflect the substantial improvements we have made to the Group’s financial position over the last 24 months.”
Mr Halbert added that KCom expects to continue to trade in line with current market expectations over the second half of its financial year.
