KCOM reports first half progress for Ipswich-based Smart421

The Felaw Maltings complex in Ipswich, home to businesses including Smart421.

The Felaw Maltings complex in Ipswich, home to businesses including Smart421. - Credit: Archant

Communications group KCOM, which includes Ipswich-based systems integration specialist Smart421, today reported continued underlying progress despite a fall in first-half revenues and profits.

Total revenue for the six months to September 30 dipped by 6.7% to £173.004million, from £185.458million in last year’s first half, and bottom line pre-tax profits were 8.4% lower at £23.623 against £25.794m.

However, profit from continuing operations before tax and exceptional items grew by 2.8%, from £24.7m to £25.4m.

The group’s KC business, covering its telephony and broadband business in East Yorkshire (originally known as Kingston Communications, out of which the KCOM group developed), saw continued growth.

Revenues increased from £46.7m to £47.1m and earnings from £26.4m to £26.8m, helped by growing demand for broadband services and increased penetration for bundled products.

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However, this was offset by pressure on revenues and earnings within KC’s associated contact centres and publishing businesses, resulting in overall revenues for the KC segment dipping from £53.3m to £52.5m and earnings from £28.1m to £27.7m.

The group’s Kcom segment, which covers its national business and public sector activities, including Smart421, saw revenue fall from £134.7m to £123.1m and earnings from £13.9m to £12.0m.

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Smart421’s performance was inline with the segment as a whole, with revenue falling from £14.8m to £12.8m and earnings from £1.6m to £1.4m, but KCOM said the business, based at the Felaw Maltings in Ipswich, had made “clear strategic progress, particularly in the delivery of cloud-based integration services”.

It added: “The revenue decline is solely attributable to a reduction in consulting revenue with one financial services customer. Activity to rebuild the pipeline and order book is progressing well. Overall profit margins remain consistent and we remain confident the brand will continue to grow in future periods.”

KCOM chief executive Bill Halbert said: “The group continues to make progress in terms of its strategic objectives, in spite of overall revenue performance continuing to be challenged in some specific activities.

“We’re particularly pleased with the overall performance in KC brand, (most notably in the consumer channel). Fibre services continue to see strong levels of uptake, well above the UK average, and demand remains ahead of our own initial expectations. Increasingly this investment will allow us to design and introduce advanced fibre-based services.

“In the Kcom reporting segment, Eclipse also has seen high levels of revenue growth, having begun to introduce a range of hosted services, and Smart421 continues to enhance its market leading position in cloud-based services. Within the Kcom brand, we have seen good progress with key customers, where we are adding considerable value.”

He added: “The group remains highly cash-generative and we reaffirm our existing commitment to increase the full-year dividend by 10% per annum through to March 2016.”

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