KCom in pledge to increase dividend

Hull-based KCom Group, which also reported a three per cent rise in full-year profit, raised its total dividend to 4.4p for the year ended March 2013 from 4p a year earlier.

“The company has underlined its confidence in future cash generation capability by increasing the dividend by 10 per cent per year for the next three years,” Barclays Capital analyst Maurice Patrick said in a note.

KCom Group, which provides communications services for enterprise and public sector organisations in the UK, said underlying pre-tax profit rose to £52.7m from £51.1m a year earlier.

Revenue fell 3.7 per cent to £372.9m. The bulk of the decline related to a one-off network build contract in 2012 of £11.7m.

Net debt increased across the year to £88.2m from £75.3m the previous year, mainly due to share scheme purchases.

Executive chairman Bill Halbert described the results as “pretty positive”.

He told the Yorkshire Post: “In the economic circumstances it’s a strong set of results. If you take out the one-off cost of the network build contract what you see is growth.”

KC, the part of the business offering telephony and broadband services in Hull and East Yorkshire, continued the roll-out of its high-speed broadband service and said it had achieved take-up rates “well in excess of initial expectations”.

It added: “The uptake of our fibre-based services, Lightstream, remains above the levels of our initial expectations, with over 20 per cent of premises passed taking our high-speed services.

“There are currently 3,600 customers using our Lightstream services.

“Our next financial year’s fibre deployment is expected to reach a further 15,000 homes and premises. We remain on target to make the service available to a total of 45,000 homes in the region, by March 2015.”

KC delivered a 0.9 per cent increase in revenue to £104.6m, which it said reflected the continued demand for bundled services within the consumer market.

New contract wins in the business market included Humberside Fire and Rescue, Network Rail and Victoria Plumb.

In Kcom, revenues were 5.5 per cent lower than the previous year at £273.4m, which it put down to the “economic conditions”, although it saw a growth in its managed services revenue.

Key customer wins included a five-year managed service contract with the National Farmers Union Mutual as well as contracts with Morrisons and Phones4U.

Although Mr Halbert said big customers were still hesitant to spend money, he added some companies had reached a point where decisions could not be put from £51.1m a year earlier off any longer. “Where these opportunities, even given the economy, do arise we are competing very well in the market place,” he said.

Shares in KCom Group, which employs just over 1,800 staff, were up 11 per cent at 85.21p yesterday morning, making them the top percentage gainer on the FTSE-250 midcap index.

Looking ahead to the next 12 months, Mr Halbert said: “I don’t think we will see much change economically. In our case, we will continue to step forward. We have some leading capabilities in the market place and we will do better than many of our peers.”

He added: “Our customers are interested in the service rather than network capability. We are big enough to have a strong balance sheet but not huge and customers feel that our skill matches their requirements.”

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