KCOM back in the black but sales slide

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KCOM back in the black but sales slide

Microscope contributor

The cost cutting and restructuring activities undertaken by KCOM underpinned the comms provider's return to profit though its decision to exit product only sales dented revenues.

In unaudited prelims for the year to 31 March, KCOM made a profit of £22.4m compared to losses of £151.6m a year earlier while sales fell 12.6% to £412.8m.

Bill Halbert, executive chairman at KCOM, pointed to the progress the firm has made since its strategic review in November 2008 that resulted in stark improvements on the bottom line and improved cash generation.

"This has been achieved through a number of successful financial measures, our increased focus on profitable customer relationships and actions to exit low margin commoditised revenues stream," he said.

The workforce was reduced by 8.3% in 2008 following a poor set of financials and in January and February last year KCOM made further cuts.

The business reorganised around two key pillars; the comms and Internet brands and the managed comms services business and then brought in industry veteran Paul Renucci as chief executive who rebranded operations.

More recently, KCOM backed off its network management operation to BT and sold its network break fix arm to Phoenix IT Group.

Kingston Communication - the telco, Internet and information services unit - saw sales fall 3.5% to £123.5m, due in large to a decline in fixed line call volumes that was reflected across the industry. EBITDA fell 1% to £57.3m.

KCOM - the managed comms operation - saw revenue drop 15.8% to £291m, "This reduction relates to the planned exit of product and associated field engineering services," said the company in a statement.

EBITDA in this business unit was £22.7m compared to £14.2m in the 12 months earlier, due to the reduction in staff and the BT outsourcing deal.

Cash inflow from group operations went up to 19% to £74.6, while KCOM reduced its debts by 26% to £116.8m.

For the current financial year, the firm said it wanted to return to sales growth and "continue to improve the overall financial position of the group through an appropriate combination of measures, including debt and working capital management and expenditure control."


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