KCom looks to future as chief executive steps down

TELECOMS firm KCom said today it would remain focused on cutting costs as it announced a number of changes to its management team as it looks towards a stronger performance in the second half of the year.

Announcing its unaudited interim results for the half year ended 30 September 2008 the group said that overall performance had been resilient in “challenging economic conditions”.

The Hull-based group provides a range of integrated IT and communications services to businesses and internet telecommunications services to selected consumer markets within the UK, where it employs more than 2,700 people.

Over the last five years KCOM has been working towards creating two autonomous and distinct business units with their own management teams.

Having overseen these changes KCOM said today that chief executive Malcolm Fallen is to stand down from the board.

Bill Halbert, currently the group’s senior independent director, will become executive deputy chairman, taking responsibility for the group’s continuing development and operational performance.

The existing management teams will now report to Bill Halbert, who was the founding chief executive of BT’s IT services subsidiary, Syntegra.

Michael Abrahams, who has served as chairman since 1999, has indicated that he will retire from the board at the next Annual General Meeting in July 2009.

Turnover fell 6.8% to £243.6m compared to £261.3m as a result of lower volume of project sales within the Integration and Managed Services business.

The group said overall operating margin on revenue has increased to 41.3% on stronger mix of higher margin business.

Group EBITDA (earnings before interest, taxation depreciation and amortisation) before exceptional items stood at £34.4m compared to £35.9m which the group said was underpinned by strength of the Telecoms and Internet Services division.

The group said it had reduced its exceptional loss following the collapse of Lehman Brothers to £1m from £3m.

KCom said the performance of the Integration and Managed Services business has been adversely impacted by difficult market conditions.

The group said that following a strengthening of the senior management team in this business, coupled with a reduced cost base, improved second quarter order intake and the improving quality of the public sector pipeline, that it anticipates stronger performance in the second half of the year.

Chairman, Michael Abrahams said, “Overall, the group financial performance has been resilient in challenging market conditions. The group remains well financed with committed banking facilities in place until March 2012. The board is determined to make further improvements to all aspects of the group’s performance and is undertaking a strategic review of group activities with its advisors to that effect.

“It is with regret that we announce that Malcolm Fallen, our chief executive is standing down. He has demonstrated great leadership within the business through his ability and energy, and leaves behind him an established, strong team that, under the guidance of Bill Halbert, can continue to take the business forward. We wish him every success in the future.”

KCOM – previously known as Kingston Communications – is famous for underlining its independence from BT by introducing distinctive white public telephone boxes in its home town of Hull.

The group said it would be paying an interim dividend of 0.5p per share.