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Challenging enterprise market conditions hit KCOM H1 numbers

The comms specialist has updated the markets on the progress of its first half with the enterprise side of the business showing weakness

Graham Sutherland has only been sitting in the chief executive chair at KCOM for a matter of weeks but he has already gained an insight into the state of the business.

The comms specialist shared its interim numbers for the six months ended 30 September, with the firm talking about a disappointing set of numbers with revenues down by 5%.

Revenues of £143.4m were down on the £151.3m generated in the same period last year and pre0tax profits also declined by 4% compared to 2017 to come in at £13m.

The enterprise division performance was flat with revenues of £43.5m. All three segments in that operation - projects, managed service and network - all came in with a performance that was largely the same as H1 2017.

National Network Services saw a £8.1m drop in revenue to £50.3m with connectivity, voice, hosting and managed services all down on the same time last year.

The firm has spent its first half focusing on the public sector, particularly being able to deliver Health and Socal Care Networks (HSCN). KCOM is now a preferred supplier on four aggregated procurements and the positive impact on connectivity revenues will start to appear in the resuls into the first half of the next fiscal year.

The firm saw a decline in its National Network Services business because of churn and flat revenues in the enterprise market, "reflecting disappointing order intake performance".

“Despite only joining the business last month, I believe KCOM has considerable skills, assets and capabilities. The full fibre rollout in Hull and East Yorkshire leads the market, provides us with sustainable cash flows and enables the further development of our service offering," said Sutherland.

"However, the current financial performance of our two national businesses is below our expectations, in particular,in National Network Services where we are experiencing high levels of customer churn. In the second half of the year, we will focus on three key priorities - review of our business strategy to identify how we create the best value from KCOM’s assets, implementing initiatives to improve business performance and improving transparency through clear metrics on which our progress can be measured," he added.

The plan is to update the markets on the progress of that strategic review in March next year, at the end of the firm's fiscal year.

Investors were given a warning that the challenging issues on the NS side of the business were not only likely to extend into the second half but would also continue into the next fiscal year.

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