Telecoms firm’s profits ahead despite lower revenue

Hull telecoms group KCom has reported profit ahead of expectations despite lower revenue as it continued to make progress against a challenging backdrop.

For the year to the end of March, the group posted £301.9m in revenue, down from £331.3m the year before, held back mainly by the anticipated decline in legacy activities within its national network services division.

The group said its Enterprise division experienced an unexpected slowdown in Government spend and was affected also by previously disclosed software contract issues. However, the company said it succeeded in delivering a strengthened margin performance while achieving important new wins and renewals.

Statutory profit before tax increased by 11.5% from £30.5m to £34m, reflecting lower level of exceptional costs partially offset by increased depreciation and amortisation.

The group net debt increased from £42.4m to £62.6m, which KCom attributed to its capital investment, including continued investment in fibre.

KCom is recommending a final dividend of 4 pence per share which, if approved, will bring its full year dividend to 6 pence per share.

Graham Holden, chairman, said: “In a challenging environment, we have made continued progress and have achieved year on year growth in EBITDA and profit before tax, ahead of our expectations.  Our objective remains to deliver long-term sustainable value for our shareholders. The operating segments we established last year have allowed us to more clearly articulate our segments’ goals and understand their individual performance and value. This leads to our continued refinement of the allocation of investment and resources.

“Our Hull & East Yorkshire performance this year was particularly pleasing, with our ultrafast fibre deployment firmly on target for completion next year and another strong performance secured in our key consumer market.  Enterprise delivered strengthened margins against a difficult backdrop, largely driven by an unexpected slowdown in government spending.  We remain focused on capitalising on the growing trend for business applications moving to the cloud, our enterprise team’s greatest strength.”

Meanwhile, KCom said it is making good progress in managing leadership changes within the business as a hunt for a new CEO continues.

“We are well advanced in our search for a replacement for our CEO Bill Halbert, who is providing strong continuity whilst we complete that task,” the company said.