HULL-based telecoms company KCom Group, the former Kingston Communications, has blamed the global credit crunch for a sharp drop in annual profits.
Chief executive Malcolm Fallen said weakening economic conditions had hit the part of firm's business which deals with large private and public sector clients - many of whom were now tightening their belts.
The sector accounts for 25 per cent of K
Com's integrated and management services business.
The business saw just a 2.7 per cent increase in revenue over the 12 months to the end of March.
The group reported pre-tax profits of £4.4m in 2008, down from £10.6m last year.
Mr Fallen said the company had now embarked upon a series of measures to compensate for the weak performance.
But the group's performance was buoyed by its Telecom and Internet Services business, which supplies smaller companies and individuals and includes Internet service provider Karoo.
It saw a 9.7 per cent increase in revenue from £222.7m in 2007 to £244.4m this year contributing to an overall group revenue increase of 7.1 per cent to £517.3m.
Mr Fallen said: "Following a reduction in our revenue in the first half of the year, we are encouraged by like for like growth in the second half of 3.8%, and a £26.4m increase in our contract order book. We remain confident in our targets for this segment of our business.
"In parallel, we continue to invest organically in the Telecoms & Internet Services business to sustain the strong returns being generated by this part of the business and help to continue to grow dividends."
The company increased full dividends by 44.6 per cent to 2.82p, which will be paid on a one third/two thirds split between the interim and final dividends.
Kcom's share price opened at 51p today, down 1.25p on the previous day.
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