A move away from break-fix services and product resale allowed KCOM Group to lift profit and reduce debt during FY11, despite a sales decline.
Group revenue for the 12 months to 31 March fell four per cent annually to £395.4m, but operating margins leapt from 8.9 to 12.3 per cent. This gave the firm an operational bottom line of £48.6m. Over the course of the year net debt was also reduced from £116.8m to £82m.
The firm's IT integration and services arm - which includes the Kcom and Smart421 brands - saw reported revenue drop 4.8 per cent year on year to £276.9m during FY11. But EBITDA was up a healthy 13.6 per cent to £25.8m.
The rise in profitability was chalked up to the firm moving out of product resale and low-margin maintenance contracts - a clutch of which were sold to rival Phoenix in March 2010.
Managed services outfit Smart421 enjoyed a year of particularly impressive growth in FY11, with turnover rising 42 per cent to £23m.
Meanwhile progress across KCOM's ISP operations - comprising KC and Eclipse - went at a rather more serene pace. Revenue for FY11 dropped 0.5 per cent to £122.9m, but profit, again, was up, albeit only marginally. Full-year EBITDA rose one per cent: from £57.3m to £57.9m.
KCOM executive chairman Bill Halbert said: "Our results are ahead of expectations, with strong cash generation and a further strengthening of the balance sheet. Recent contract wins show the group beginning to deliver on its return-to-growth strategy. They underline our growing reputation and recognition in our chosen markets and we are excited about the group's future opportunities."
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