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KCOM Group results hit by Phones4U woes

But flaky PSN demand and slowing carrier biz didn't help

Brit telco and tech services playa KCOM Group has kickstarted a cost-cutting programme to counter a wobbly top and bottom line, not helped by the collapse of Phone4You and slower than expected PSN demand.

The LSE-listed Hull-based group reported a 6.7 per cent drop in turnover to £173m for the first half of fiscal ’15, as profit before tax slumped 8.5 per cent to £23.6m.

“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,” said CEO Bill Halbert.

The KC division, which largely provides telephony and web connectivity to businesses and consumers, reported revenues of £52.5m, down 1.5 per cent on a year ago.

A breakdown of this unit saw sales rise £1m to £47.1m in the calls and broadband biz. The firm said the plan remains to provide 45k households and businesses with fibre services by the end of March next year. The contact centre and publishing services elements dropped 20 and 16 per cent respectively to £2.4m and £3m.

The Kcom segment of the organisation, which includes a tech integrator of the same name and trading brands Smart421 and Eclipse saw revenues fall 8.6 per cent to £123.1m.

B2B comms and cloud biz Eclipse saw demand from new and existing customers, the company said, growing £2m during the six months to £14.7m. IT services business unit Smart 421 dipped by £2m to £12.8m

But it was the integration wing Kcom that caused the biggest upset across the company, as turnover dropped to £95.6m from £107.2m in the same period a year ago. The company said new growth areas was “insufficient to compensate” for more traditional parts of the operation.

“In particular there has been reduced activity from multi-site organisations, especially retailers, including the loss of the Phones4U contract. Alongside this, lower numbers of opportunities have been tendered through the PSN framework, as this overall market developed more slowly than expected and had more commoditised levels of new activity,” the firm stated.

The latest batch of numbers mean that revenue growth at the KCOM Group - whose customers include BA, Red Hat, Virgin Atlantic and supermarket Morrisons - has now stalled for three and a half consecutive years.

Halbert revealed the company is taking the knife to the headcount to cut its cloth accordingly.

“We have implemented a plan to reduce costs and will take further action to accelerate progress to reposition the overall Kcom brand performance”. ®

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