REFILE-UPDATE 1-KCom profit falls on higher investment; chairman to become CEO
Nov 26 (Reuters) - British telecoms company KCom Group Plc reported a 5.4 percent drop in first-half profit, hurt by increased investment in infrastructure and broadband fibre deployment services in the Hull and East Yorkshire region.
KCom Group, which caters to enterprise and public sector organisations across UK, said it remained confident about the group's longer-term prospects and success, and expected the full-year outturn to be in line with market expectations.
KCom said profit before tax fell to 24.7 million pounds ($39.9 million) in the six months ended Sept. 30 from 26.1 million pounds a year earlier. Revenue fell 1.7 percent to 185.5 million pounds.
Shares in KCom fell as much as 6.1 percent in morning trade on Tuesday on the London Stock Exchange, making it one of the top percentage losers on the FTSE-250 Midcap Index.
KCom said separately that it would split the roles of its chairman and chief executive. Bill Halbert will assume the role of group chief executive in April 2014, while board member Graham Holden will take over as non-executive chairman.
The company also said it won a major government contract but did not disclose details of the size and type of contract.
"It is the largest contract we have won in our current guise. We will conclude the contract negotiations in the second half, but we don't expect to begin work on the contract until late in the second half," Halbert told Reuters.
The contract will give the company a boost and offset expected negative EBITDA effects of regulatory changes, FinnCap analyst Andrew Darley said in a note.
The company said it expects a 5 million pound hit to future revenue due to regulatory changes, including the outcome of the wholesale narrowband market review.
Revenue from its KC division, which operates in Hull and East Yorkshire, fell marginally to 53.3 million pounds due to a reduction in business revenue and publishing.
Revenue fell 2 percent to 134.7 million pounds in its Kcom division, which accounts for three-fourths of total revenue.
KCom group's customers include City of London Corp and Dorset County Council in the public sector and WM Morrisons , Dominos Pizza Group, and British Airways in the private sector.
Shares in the company were down 3 percent at 101.9 pence at 1050 GMT.
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