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Smart421 growth bolsters KCOM's first-half

Comms giant sees overall revenues drop but is in bullish mood as new banking facility secured

Systems integrator Smart421 was the star performer for KCOM Group as the comms group issued a buoyant interim statement.

Although the London-listed firm posted a revenue fall for its half year to 30 September, profits rose sharply and it announced an increased dividend and new £200m banking facility.

Total revenue fell eight per cent to £194.8m, which KCOM Group attributed to its sale of some "low-margin" maintenance contracts to Phoenix in January and its strategy to focus on “long-term profitable customer relationships”.

Profit before tax and exceptional items spiked by 36 per cent to £22m, which KCOM Group said reflected its efforts to simplify its business.

Last year, KCOM Group united the majority of its national B2B activities under the Kcom banner. Kcom saw revenue fall 11 per cent to £123.5m, despite recent contract wins with British Airways and Phones4U.

In contrast, its Smart 421 arm, which specialises in systems integration and managed services of business-critical systems, saw sales boom 33 per cent to £10.8m. KCOM Group said this reflects the growing demand for the provision of applications integration and consultancy.

Overall revenues for its KC and Eclipse businesses fell 3.7 per cent to £62.5m.

KCOM Group executive chairman Bill Halbert said the first-half performance was in line with expecations.

“Our strong profit growth in the first half reflects the actions taken over the past eighteen months to simplify and strengthen the Group,” he said.

“The signing of our new banking facility to July 2015, coupled with greater visibility of our pension commitments, means that financial stability is assured. This stability and strengthened competitive position gives us the ability and confidence to commit to increased shareholder returns whilst also forming a platform for future organic growth.”