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Ipswich: Smart421 parent group KCOM reports annual results in line with expectations

PUBLISHED: 10:09 06 June 2014 | UPDATED: 17:07 06 June 2014

Inside the Smart421 offices at the North Felaw Maltings in Ipswich.

Inside the Smart421 offices at the North Felaw Maltings in Ipswich.

Communications and systems group KCOM today reported a year of “progress in key strategic areas”, with profits and revenues in line with expections.

Revenue across the Hull-based group for the year to March 31 was 0.6% down at £370.7million, against £372.9m the previous year, for which figures have been restated in line with changed accounting standards.

Turnover within the group’s Kcom segment, covering its value-added communication and IT businesses, including Ipswich-based systems integration specialist Smart421, dipped to £270.9m, compared with £273.5m the previous year, while revenues from KC, the group’s original telecoms-based business in east Yorkshire, edged ahead, from £104.6m to £105m.

Headline earnings followed a similar trend, with those at Kcom easing from £29.4m to £28.7m while the KC figure rose from £54.5m to £56.2m, leaving the group figure, after central costs, 0.5% ahead at £75.3m against £74.9m.

After exceptional items including reduced restructuring costs compared with the previous year and a credit following the termination of a regional goverment contract group earnings were 4.6% ahead at £75.9m against £72.6m.

Pre-tax profit before exceptionals was 0.2% lower, at £49.9m against £50m, but the bottom line figure was 5.9% up, at £50.5m against £47.7m.

A strong second half cash performance left net debt of £75m, reprsenting a net debt to earnings ratio of 1.0 times, down from 1.2 times at the previous year end.

A proposed final dividend of 3.25p per share will make a total for the year of 4.88p per share, in line with the board’s commitment to increase the dividend by 10% a year until March 2016.

KCOM chief executive Bill Halbert said: “This set of results reflects the progress in key strategic areas being made across the group, underpinned by the highly cash generative nature of the business.

“That ability to generate cash results in net debt reducing during the period since March 2013, and is comfortably within our target gearing levels.”

He added: “In KC, there continues to be growing demand for our fibre services, with take-up rates remaining ahead of our expectations and above UK averages. The success to date and consequent uplift in ARPU (average revenue per user) for customers has helped shape our thinking as we begin to scope the next phase of deployment.

“Across the other areas of the group, we continue to build our reputation in the design, delivery and management of value-added services in the wider enterprise market.”

Looking ahead, KCOM said it was “well positioned to continue exploiting the opportunities that exist in its key markets”.

“We will continue to invest in expanding the reach of, and building consumer demand for, our fibre-based broadband services,” it said.

However, it added: “As we focus on the delivery of value added services to the enterprise market, we expect to see a continued decline in some traditional carrier revenue.”

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