Dividend cheer as KCom reveals extent of new investment

The Hull-based FTSE 250 firm, which provides communications services for customers such as British Airways and Virgin Group, said it has also invested in value added services for the enterprise market.

The group told shareholders at yesterday’s annual general meeting that it will pay a final dividend of 3.254p. This brings the total dividend to 4.88p, an increase of 10 per cent on the year.

Payment of the final dividend will be made on August 1. The group confirmed its commitment to delivering a ten per cent increase in full-year dividend a year over the next two years.

Analyst Andrew Darley at FinnCap said: “KCOM reported performance in line with unchanged expectations derived from looking to opportunities in existing key markets, alongside continuing investment in and cultivation of demand for fibre-based broadband services.

“With the reiteration of the commitment to 10 per cent dividend growth to March 2016, our 130p target is unchanged, based on a four per cent yield to March 2015.”

KCom has said it plans to invest more “aggressively” in the business after securing a finance package worth £200m earlier this year.

Chief executive Bill Halbert said plans could include investing in faster deployment of fibre broadband and also in higher value added services such as developing IT services activity within the enterprise market.

“It gives us a little headroom to invest more aggressively,” he said.

Mr Halbert said that the group would also consider acquisitions. “The right acquisition would make sense if it was targeted in the right area,” he said.

The finance was secured from a banking syndicate comprising Lloyds Bank Commercial Banking, Barclays, HSBC, Santander and RBS.

The group, which is over 100 years old, has also agreed an uncommitted accordion facility of £50m if required.

KCom said pre-tax profit fell marginally to £49.9m for the year ended March 31, down from £50m a year earlier. Revenue fell slightly to £370.7m.

Mr Halbert said there continues to be growing demand for its fibre services in its KC division with take-up rates remaining ahead of its expectations.