Kingston Communications in massive profit slump

Telecoms provider has growth in sales, but makes huge loss

Kingston Communications has seen turnover rocket during its 2006 financial year, but still chalked up £80.8m in losses before taxation.

Its 2006 turnover was up 30.3 per cent to £453.9m from £348.4m last year. However its £8m of profit last year slumped to £80.8m in losses in 2006.

A company statement claimed the losses were a result of "the impact of a network impairment provision of £89.5m, reflecting the changing business mix and increasing commoditisation of legacy network services".

However, Kingston's VAR arm Affiniti saw revenue rise 42.6 per cent, from £232.9 last year, to £332m in 2006. Earnings before interest, taxes, depreciation and amortisation also rose 47 per cent, from £23.4m in 2005, to £34.4m this year.

Michael Abrahams, chairman of Kingston Communications, said: "Our strategy remains clear. The successful repositioning of the Group to deliver integrated converged communication services strengthens our position in a demanding market environment. The combination of clear strategy, strong management and improved business performance led to a much stronger second half."

Malcolm Fallen, chief executive of Kingston Communications, added: "This has been a year of progress and transition for the company. We remain in a unique position - a resilient cash generative incumbent that continues to grow strongly through our broadband activity, complemented by our growth engine, Affiniti, that is ideally positioned to capitalise on the opportunities that convergence brings.

"We are flexible enough to respond positively to our customers' changing requirements and the market challenges facing the industry. We are building long term customer relationships that will provide sustainable growth and continue to deliver returns to shareholders," added Fallen.