KCom cuts dividend on swing to 2009 loss

U.K. service provider posts £111.3 million pretax loss after restructuring costs.

Telecommunications and Internet service provider KCom Group PLC Tuesday cut its final dividend as it swung to a heavy fiscal 2009 pretax loss after restructuring costs, but said it is in a stronger position going forward. For fiscal 2009, ended March 31, the Yorkshire, U.K.-based company incurred a pretax loss after restructuring costs and impairment charges of GBP111.3 million, compared with a profit of GBP4.4 million in fiscal 2008. Before charges, KCom posted pretax profit of GBP17.9 million, up from GBP8.4 million in fiscal 2008.

Sales fell more than 8% to GBP472.4 million, which the company said was in line with expectations. KCom cut its final dividend to 1 pence a share from 1.88 pence a share, giving a total dividend for the year of 1.5 pence a share, down from 2.82 pence a share last year.

It said it has identified ways to significantly reduce its ongoing fixed costs and capital base.

Separately, KCom also said Tuesday that Executive Deputy Chairman Bill Halbert will become Group Executive Chairman, following Michael Abrahams' retirement.

Analysts said that the most telling element of the results was in the outlook, which highlighted that prospects for the company are largely dependent on the ongoing success of management efforts to "improve the quality of group's activities." "Unlike peers the focus is not on macroeconomic bleakness," said FinnCap analyst Andrew Darley."With integration and managed services having returned to profitability, and capex under the spotlight the company can return to an operationally based earnings approach to valuation, potentially substantially lifting the valuation," he said. Darley retains a "buy" recommendation on the stock.

Dow Jones Newswires, 2nd June 2009

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