However, the Hull-based company said the group’s Hull and East Yorkshire segment, which is the largest contributor to group EBITDA (earnings before interest, taxation depreciation and amortisation), continues to perform well and in line with market expectations.
KCOM has provided an update on the group’s trading outlook for 2019 and 2020 and its dividend commitment for the current financial year.
The statement said: “The board now believes that the group’s trading performance for the current financial year ending March 31 2019, on a pre-IFRS 15 basis, will be weaker than originally expected.
“This is principally the result of flat revenue, driven by lower than expected order intake, in the group’s enterprise segment and continued customer churn in the group’s national network services segment. It is the board’s view that these trends will continue into the following financial year.”
The board now expects EBITDA (pre-IFRS 15) for the current financial year to be around 5 per cent below current market expectations.
The statement added: “However, as a result of the factors outlined above, it is also the board’s expectation that EBITDA (pre-IFRS 15)
for the financial year ending March 31 2020 will be significantly below current market expectations.”
The board also expects the group’s net debt at March 31 2019 to be around 10 per cent higher than current market expectations.
The statement added: “Taking these changes to the group’s medium-term trading performance, cash flow and balance sheet into account, the board now considers it inappropriate to commit to continuing to pay an uncovered dividend.
“As such, the board has decided to review the group’s ongoing dividend policy, resolving to pay a dividend of not less than 3 pence per share for the current financial year ending 31 March 2019, rather than the previously stated commitment to pay 6 pence per share.”