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KCom Group Plc KCOM Preliminary Results Announcement



  KCom Group Plc (KCOM) - Preliminary Results Announcement

RNS Number : 8013D
KCOM Group PLC
22 May 2012
 



 

 

                                                                   22 May 2012

 

                      KCOM GROUP PLC (KCOM.L) ANNOUNCES

                UNAUDITED PRELIMINARY RESULTS TO 31 MARCH 2012

                                       

                    "Delivering another year of progress"

Summary

 

The Group has delivered another strong set of results, with the business
moving ahead on most metrics. The anticipated small decline in revenue
reflects growth from the strategic focus of the Group offset by the residual
decline in low margin, non-core activities. Performance across each brand is
seeing the results of pursuing our growth strategy. The Group's underlying
financial strength provides a solid foundation for further progress.

 

                                            Unaudited       Audited     Change

                                           Year ended    Year ended       over

                                        31 March 2012 31 March 2011 prior year

                                          (£ million)   (£ million)        (%)
  Results from continuing
  operations before exceptional items

 
Revenue                                         387.3         395.4      (2.0)
EBITDA                                           77.9          76.0        2.5
Operating profit                                 57.8          48.6       18.9
Profit before tax                                51.1          41.2       24.0
Adjusted  basic  earnings  per  share  (pence)   7.41          5.62       31.9
(note 4)
Reported results
Net cash inflow from operations                  56.0          68.0     (17.6)
Net debt (note 6)                                75.3          82.0
Profit before tax                                51.1          32.9       55.3
Basic earnings per share (pence)  (note          7.41          4.44       66.9
4)
Proposed final dividend (pence)                  2.67          2.50        6.8

Proposed full year  dividend per  share          4.00          3.60       11.1
(pence)

 

 

Bill Halbert, Executive Chairman said "The Group continues to perform well,
making good progress against its longer term objectives. We remain focused on
executing our growth strategy and we expect the performance of the Group to
continue to reflect this during the current financial year. The strength in
earnings and associated strong conversion into cash emphasises the quality of
the service we provide and forms a stable foundation for increasing
shareholder returns and the pursuit of growth.

 

"Based on another strong set of results, we are pleased to be recommending a
final dividend of 2.67p per share, giving a full year dividend of 4.00p per
share. We reiterate also our commitment to a minimum 10 per cent dividend
growth in the coming year, reflecting the Board's confidence in future
financial performance."

 

Outlook

 

The KCOM Group continues to deliver growth in profits and generate excellent
cash conversion which, together with our strong balance sheet, enables the
Group to continue its investment in growth in our chosen markets. The results
demonstrate the progress we are making towards our longer term objectives. The
Board expects the Group to continue to perform in line with market
expectations in the current year.

 

Our reconfirmed commitment to a minimum 10 per cent dividend growth over the
coming year, reflects the Board's confidence in future financial performance.

 

Enquiries:

 

KCOM Group PLC:

 

Bill Halbert, Executive Chairman   Tel: 07778 335735 
                                    
Paul Simpson, CFO

Cathy Phillips, Investor Relations

Brunswick:                                    
Jon Coles                          Tel: 020 7404 5959

 

 

Business and operating review

 

Group overview

 

Group revenue declined by 2% to £387.3 million (2011: £395.4 million). This is
reflective of a 2.7% decline in the Kcom segment and a 1.1% growth in KC.

 

Group EBITDA before exceptional items increased 2.5% to £77.9 million (2011:
£76.0 million) reflecting that growth, a pensions credit and the continued
reduction in operating costs across the Group.

 

Group profit before tax increased by 55.3% to £51.1 million (2011: £32.9
million) driven by the increase in EBITDA together with a reduction in
exceptional costs, reduced borrowing costs and lower depreciation and
amortisation.

 

Net debt reduced to £75.3 million (2011: £82.0 million) despite the payment of
an accelerated contribution of £10.0 million to the Group's defined benefit
pension schemes shortly before the year end. This reduction in net debt
reflects the underlying cash-generative nature of the Group's operations,
coupled with continued strong management of working capital.

 

KC

 

The KC segment covers the performance of our KC brand which operates telephony
and broadband over our East Yorkshire network and publishing services. These
results were historically reported as part of the "KC & Eclipse" segment.
Performance of our Eclipse brand is now reported under the Kcom segment and
the comparatives for 2011 have been restated to reflect this change on a like
for like basis.

 

Our KC brand has bucked the trend of national incumbent operators, delivering
a continued increase in revenue of 1.1% to £103.6 million (2011 restated:
£102.5 million), reflecting the increasing demand for higher bandwidth
services from business customers and growth from the consumer market as a
result of the continued success in the migration to bundled services, and the
upgrade to KC Talk packages.  

 

This growth in revenue combined with lower operating costs resulted in  EBITDA 
increasing by 3.1% to £53.2 million (2011 restated: £51.6 million).

 

Our initial deployment of fibre technology, delivering 100Mbps broadband
services across areas of Hull and East Yorkshire, is progressing well with
early indications suggesting a higher than expected level of take up. Our
initial deployment is scheduled to reach 15,000 homes by December 2012.

 

By our interim results in November, we expect to be in a position to provide a
further update from our experience on the commercial opportunities and
associated investment requirements in relation to future fibre deployment.   

 

 

 

Kcom

 

Our Kcom segment covers the performance of our national business
communications activities. These activities are delivered to customers through
our Kcom, Eclipse and Smart421 brands. These results were previously reported
as "Kcom & Smart" and now incorporate the results of the Eclipse brand
previously included in the "KC & Eclipse" segment. This reflects the focus of
our Eclipse brand towards the business market and the support capability it
provides in current Kcom activity. The comparatives for 2011 have been
restated to reflect this change on a like for like basis.

 

We continue to invest successfully in those skills, capabilities, services and
systems, to support the exploitation of Kcom's growth opportunities.

 

The progress made has been recognised through external awards, such as the
Cisco Public Sector Partner of the Year and Avaya Partner of the Year, and a
developing reputation in the market place evidenced by the growth in order
backlog and pipeline of new opportunities.

 

Revenue within Kcom's strategic focus areas showed some early growth. Overall
revenue declined by 2.7% to £289.3 million (2011 restated: £297.2 million)
with a reduction in lower margin premium rate services and other non-core
activities offsetting that growth. Revenue of £11.7 million (2011: £13.1
million) was associated also with a specific network build contract that will
not recur in future years.

 

The multi-year contracted order backlog has grown by 14% as Kcom continues to
focus on longer term recurring revenue. This growth provides improved
visibility of performance both in the near and longer term.

 

EBITDA before exceptional items was £31.0 million (2011 restated: £32.0
million). This represents a consistent margin to sales of 11%. The reduction
in amount being attributable to non-recurring items in the previous year's
EBITDA reported for the Eclipse brand.

 

The particular focus of Kcom's pursuit of its growth strategy during the year
included:

·      Maintaining and developing selected market leadership positions such as
the provision of services to Public Sector Network initiatives in
Staffordshire, Dorset and East Midlands.

·      Investing in the development of a Kcom Workplaces proposition to be
launched in the second half of the current year. This will deploy Cisco hosted
collaboration services alongside what is already recognised as a leading
unified communications service offering.

·      Securing new customer relationships with, amongst others, Asda, the
Health Lottery, Molson Coors, United Utilities, iPSL and WorldPay whilst
renewing or extending our relationships with others including NHS BSA,
Dominos, Morrisons, BA and the Gloucestershire and Cheshire Police forces.

 

PLC and associated costs ("PLC")

 

This segment includes Public Company, central and share scheme expenses and
the costs, excluding current and past service costs, associated with the
Group's defined benefit pension schemes. The net pre-exceptional costs
incurred in the PLC segment have reduced to £6.4 million (2011: £7.7 million)
as a result of a credit associated with the Group's defined benefit schemes of
£1.6 million (2011: £0.3 million cost). This credit has arisen due to lower
interest costs as a result of the reduction in liabilities at 31 March 2011.

 

Group operating profit

 

Group operating profit increased to £57.8 million (2011: £40.3 million). The
overall improvement in operating profit of £17.5 million is a result of:

 

·      £1.9 million improvement in Group EBITDA before exceptional items;

·      £8.3 million reduction in exceptional costs; and

·      £7.3 million reduction in depreciation and amortisation, the majority
of which reflects the anticipated reduction in amortisation of intangibles
relating to acquisitions.

 

 

Finance costs

 

Net finance costs have reduced to £6.6 million (2011: £7.4 million). The
reduction mainly relates to the write-off of arrangement fees in the prior
year on the previous borrowing facility, following the agreement of a new
facility in November 2010.

 

The Group anticipates a reduction in finance costs in the next financial year
due to a change in fixed rate swap arrangements. From January 2012 existing
hedging arrangements on £80 million of debt at a weighted average rate of 5.5%
expired and were replaced by fixed rate swap arrangements for £60 million of
debt at a weighted average rate of 2.7%.

 

Taxation

 

The taxation charge of £13.4 million (2011: £10.3 million) reflects the
ongoing unwind of the deferred tax asset as the Group moves towards a tax
payment position. No corporation tax liability is anticipated in respect of
the current year due to the payment of an accelerated contribution of £10
million into the Group's defined benefit scheme shortly before the year end.
As well as reflecting the wider financial strength of the Group, making such
payments in the financial year allows the Group to benefit from the credit
against higher corporation tax rates of 26%, compared to 24% in the next
financial year.

 

The overall effective rate of 26.2% (2011: 31.3%) is broadly in line with the
corporation tax rate for the current year of 26%.

 

Dividend

The Board is proposing a final dividend of 2.67 pence per share (2011: 2.50
pence per share) resulting in a total dividend for the year of 4.0 pence per
share (2011: 3.60 pence per share). In addition, the Board reiterates its
commitment to delivering a minimum of ten per cent per annum dividend growth
over the current financial year, reflecting its confidence in the Group's
future cash generation and performance.

Subject to Shareholder approval at the KCOM Group PLC Annual General Meeting
on 19 July 2012, the final dividend will be payable on 27 July 2012 to
Shareholders registered at the close of business on 29 June 2012.

 

Pension scheme

 

Net liabilities associated with the Group's retirement benefit obligations
have increased to £13.9 million (2011: £6.9 million). The year on year
increase arises as a result of an increase in scheme assets of £16.7 million
offset by an increase in retirement benefit liabilities of £23.7 million.

 

The increase in scheme assets mainly arises due to the accelerated payment of
£10.0 million to the Group's defined benefit pension schemes shortly before
the year end. This comprised a £6.9 million advance payment of previously
committed deficit contributions in respect of the financial year ended 31
March 2013, and an additional one-off contribution of £3.1 million.

 

The increase in liabilities since the previous year end predominately arises
due to a fall in corporate bond yields and the associated discount rate to
4.7% from 5.5%.

 

The Group has continued to work with the trustees throughout the year to
minimise the impact of volatility in the equity market on scheme assets. As a
result of this the trustees of the Kingston Communications Pension Scheme, the
Group's main defined benefit scheme, have committed to reducing the level of
 holding of "return-seeking" scheme assets to 40% compared to 60% which had
been historically targeted.

 

 

 

Cashflow and net debt

 

Net debt reduced to £75.3 million (2011: £82.0 million) reflecting the
continued cash flow strength of the underlying business and a particularly
strong working capital performance in Q4 of the financial year. Net cash
inflow from operations reduced to £56.0 million (2011: £68.0 million)
principally due to the accelerated payment of £10.0 million into the Group's
defined benefit schemes.

 

Our strong cash generation provides us with capacity to carefully increase the
level of investment in support of growth. Cash outflows associated with the
purchase of tangible and intangible assets have increased to £22.1 million
(2011: £13.9 million), lower than the Group's previous guidance due to timing
differences on a number of larger investment programmes.

 

Reflecting this timing difference, the Group anticipates capital expenditure
in the region of £30.0 million in respect of the next financial year.

 

Forward-looking statements

 

Certain statements in  this preliminary report  are forward-looking.  Although 
the Group believes  that the expectations  reflected in these  forward-looking 
statements are reasonable, we  can give no  assurance that these  expectations 
will prove to have  been correct. Because these  statements involve risks  and 
uncertainties, actual results  may differ materially  from those expressed  or 
implied by these forward-looking statements.

 

We undertake no obligation to update any forward-looking statements whether as
result of new information, future events or otherwise.

 

 

ENDS

 

Consolidated Income Statement

                                                        Unaudited      Audited
                                                             Year         Year
                                                            ended        ended
                                                      31 Mar 2012  31 Mar 2011
                                                Note        £'000        £'000
Revenue                                          1        387,316      395,412
Operating expenses                                      (329,546)    (355,118)
Group operating profit                                     57,770       40,294
Analysed as:
Group EBITDA before exceptional items            1         77,875       75,963
Exceptional items                                2              -      (8,337)
Depreciation of property, plant and equipment            (17,591)     (18,464)
Amortisation of intangible assets                         (2,514)      (8,868)
Finance costs                                             (6,633)      (7,393)
Share of (loss)/ profit of associates                        (15)           11
Profit before taxation                                     51,122       32,912
Taxation                                         3       (13,395)     (10,291)
Profit for the year attributable to equity
holders                                                    37,727       22,621
Earnings per share (pence)
  
Basic                                            4           7.41         4.44
Diluted                                          4           7.13         4.26

 

 

 

 

 

Consolidated Statement of Comprehensive Income

                                                            Unaudited  Audited
                                                                 Year     Year
                                                                ended    ended
                                                               31 Mar   31 Mar
                                                                 2012     2011
                                                                £'000    £'000
Profit for the year                                            37,727   22,621
Other comprehensive income
Cash flow hedges fair value movements                            (62)    3,468
Actuarial (losses) / gains on retirement benefit
obligation                                                   (25,466)   31,504
Tax on items taken directly to other comprehensive income       5,616 (10,269)
Total comprehensive income for the year

attributable to equity holders                                 17,815   47,324
                                                                            
 
                                                                            
 

Consolidated Balance Sheet

 

                                                           Unaudited   Audited
                                                               As at     As at
                                                              31 Mar    31 Mar
                                                                2012      2011
                                                      Note     £'000     £'000
Non-current assets
Goodwill                                                      85,272    85,272
Other intangible assets                                        7,044     4,659
Property, plant and equipment                                117,901   115,979
Investments                                                    1,050     1,065
Deferred tax assets                                           28,372    35,297
                                                             239,639   242,272
Current assets
Inventories                                                    3,663     2,150
Trade and other receivables                                   71,867    70,793
Cash and cash equivalents                              6       8,333     6,535
                                                              83,863    79,478
Total assets                                                 323,502   321,750
Current liabilities
Trade and other payables                                   (144,134) (143,028)
Derivative financial instruments                                (17)   (3,703)
Provisions for other liabilities and charges                 (2,352)   (4,815)
Non-current liabilities
Trade and other payables                                       (388)     (135)
Bank loans                                             6    (83,464)  (88,004)
Retirement benefit obligations                              (13,886)   (6,927)
Derivative financial instruments                             (3,748)         -
Provisions for other liabilities and charges                 (2,056)   (1,944)
Total liabilities                                          (250,045) (248,556)
Net assets                                                    73,457    73,194
Capital and reserves, attributable to equity holders
of the Company
Share capital                                                 51,660    51,660
Share premium account                                        353,231   353,231
Hedging and translation reserve                              (2,945)   (2,883)
Accumulated losses                                         (328,489) (328,814)
Total equity                                                  73,457    73,194

 

 

 

 

 

Consolidated Statement of Changes in Shareholders' Equity

 

                                                  Hedging
                                        Share         and
                                Share premium translation Accumulated
                              capital account     reserve      losses    Total
                                £'000   £'000       £'000       £'000    £'000
At 31 March 2010               51,660 353,231     (6,351)   (362,783)   35,757
Profit for the year                 -       -           -      22,621   22,621
Decrease in fair value of

financial derivative
instruments                         -       -       3,468           -    3,468
Actuarial gains on defined

benefit pension schemes             -       -           -      31,504   31,504
Tax on actuarial gains on
defined  

benefit pension schemes             -       -           -     (9,333)  (9,333)
Tax on movement in cash flow
hedges                              -       -           -       (936)    (936)
Total comprehensive income
for the

 year ended 31 March 2011           -       -       3,468      43,856   47,324
Tax credit relating to share
schemes                             -       -           -         226      226
Employee share schemes              -       -           -       2,027    2,027
Dividends                           -       -           -    (12,140) (12,140)
                                    -       -           -     (9,887)  (9,887)
At 31 March 2011               51,660 353,231     (2,883)   (328,814)   73,194
Profit for the year                 -       -           -      37,727   37,727
Increase in fair value of

financial derivative
instruments                         -       -        (62)           -     (62)
Actuarial losses on defined

benefit pension schemes             -       -           -    (25,466) (25,466)
Tax on actuarial losses on
defined 

benefit pension schemes             -       -           -       5,602    5,602
Tax on movement in cash flow
hedges                              -       -           -          14       14
Total comprehensive income
for the

 year ended 31 March 2012           -       -        (62)      17,877   17,815
Tax credit relating to share
schemes                             -       -           -         854      854
Purchase of ordinary shares         -       -           -       (420)    (420)
Employee share schemes              -       -           -       1,800    1,800
Dividends                           -       -           -    (19,786) (19,786)
                                    -       -           -    (17,552) (17,552)
At 31 March 2012               51,660 353,231     (2,945)   (328,489)   73,457

 

Consolidated Cash Flow Statement

 

                                                           Unaudited  Audited
                                                                Year     Year
                                                               ended    ended
                                                              31 Mar   31 Mar
                                                                2012     2011
                                                               £'000    £'000
Cash flows from operating activities
Operating profit                                              57,770   40,294
Adjustments for:
- depreciation and amortisation                               20,105   27,332
- (increase)/decrease in working capital                       (629)   17,035
- restructuring cost and onerous lease payments              (3,451)  (7,507)
- pension deficit payments                                  (16,888)  (9,773)
Taxation received                                                  -      483
(Profit) / loss on sale of property, plant and equipment       (913)      145
Net cash generated from operations                            55,994   68,009
Cash flows from investing activities
Purchase of property, plant and equipment                   (17,249) (10,920)
Purchase of intangible assets                                (4,899)  (3,028)
Proceeds from sale of property, plant and equipment              913        -
Net cash used in investing activities                       (21,235) (13,948)
Cash flows from financing activities
Dividends paid                                              (19,786) (12,140)
Interest paid                                                (7,363)  (8,574)
Capital element of finance lease repayments                    (392)    (702)
Repayment of bank loans                                      (5,000) (40,000)
Purchase of ordinary shares                                    (420)        -
Net cash used in financing activities                       (32,961) (61,416)
Increase / (decrease) in cash and cash equivalents             1,798  (7,355)
Cash and cash equivalents at the beginning of the year         6,535   13,890
Cash and cash equivalents at the end of the year               8,333    6,535

 

Notes to the unaudited financial information

 

1. Segmental analysis

 

The chief operating decision-maker of the Group is the KCOM Group PLC Board.
The Board considers the performance of the four brands and the PLC function in
assessing the performance of the Group and making decisions about the
allocation of resources. These are the Group's operating segments.

 

The KC brand addresses the needs of our East Yorkshire customers whilst the
Eclipse, Kcom and Smart421 brands serve enterprise, public sector
organisations and small business markets across the UK.

 

The Board assessed that the Kcom, Smart421 and Eclipse brands have similar
profiles offering similar products and services, similar production and
distribution processes and operate in a consistent regulatory environment. In
line with IFRS 8, the Kcom, Smart421 and Eclipse brands are aggregated
together and reported as the 'Kcom' segment for the year ended 31 March 2012.
The remaining brands of KC and the PLC function are reported respectively in
the 'KC' segment and 'PLC' segment. This reporting is also consistent with the
reporting to the KCOM Group PLC Board.

 

For the year ended 31 March 2011, the Group considered the brands KC and
Eclipse and the brands Kcom and Smart421 as two reporting segments presented
as 'KC & Eclipse' and 'Kcom & Smart421'. In the year ended 31 March 2012, the
Eclipse brand has become increasingly focused on the national SME business
market and has increased its level of cross-over with the customer bases of
the Kcom and Smart421 brands. 

 

Segmental disclosures for 31 March 2011 have been restated to reflect the
change in the allocation of the Eclipse brand from the 'KC' segment into the
'Kcom' segment.

 

                                                                      Restated

                                                       Unaudited     Unaudited
                                                      Year ended    Year ended
                                                          31 Mar        31 Mar
                                                            2012          2011
                                                           £'000         £'000
      Revenue
KC                                                       103,595       102,536
Kcom                                                     289,316       297,218
PLC                                                      (5,595)       (4,342)
Total                                                    387,316       395,412
      Group EBITDA
KC                                                        53,223        51,593
Kcom                                                      31,043        32,020
PLC1                                                     (6,391)       (7,650)
Total - before exceptional items                          77,875        75,963
Exceptional items:
KC                                                             -         (149)
Kcom                                                       1,100      (10,951)
PLC1                                                     (1,100)         2,763
Total exceptional items                                        -       (8,337)
EBITDA post exceptional items                             77,875        67,626
 

 

 

 

 

 

 

Notes to the unaudited financial information continued

 

 

1. Segmental analysis (continued)

 

A reconciliation of total EBITDA to total profit before income tax is provided
as follows:

 
                                                                      Restated

                                                       Unaudited     Unaudited

                                                      Year ended    Year ended

                                                          31 Mar        31 Mar

                                                            2012          2011

                                                           £'000         £'000
EBITDA post exceptional items                             77,875        67,626
Depreciation                                            (17,591)      (18,464)
Amortisation                                             (2,514)       (8,868)
Finance costs                                            (6,633)       (7,393)
Share of (loss)/profit of                                   (15)            11
associates
Profit before tax                                         51,122        32,912

 

The split of total revenue between external customers and inter-segment
revenue is as follows:

 

                                                   Restated

                                       Unaudited  Unaudited
                                      Year ended Year ended
                                          31 Mar     31 Mar
                                            2012       2011
                                           £'000      £'000
    Revenue from external customers
KC                                        97,562     97,804
Kcom                                     288,916    296,830
PLC1                                         838        778
Total                                    387,316    395,412
Inter-segment revenue
KC                                         6,033      4,732
Kcom                                         400        388
PLC1                                     (6,433)    (5,120)
Total                                          -          -
                                         387,316    395,412

 

None of the revenue or operating profit arising outside the United Kingdom is
material to the Group.

 

                                                                       

[1] PLC includes Public Company central and share scheme expenses,
inter-segment eliminations and the costs, excluding current and past service
costs, associated with the Group's defined benefit pension schemes and the
related assets and liabilities

Notes to the unaudited financial information continued

 

2. Exceptional items

 

Exceptional items are separately disclosed by virtue of their size or
incidence to enable a full understanding of the Group's financial performance.

                                                      Unaudited        Audited
                                                     Year ended     Year ended
                                                         31 Mar         31 Mar
                                                           2012           2011
                                                          £'000          £'000
Exceptional items:
- Onerous leases                                          1,100              -
- (Credit)/charge on network                            (1,100)          7,088
build loss provision
- Restructuring costs                                         -          4,199
relating to employees
- Pension curtailment gain                                    -        (2,950)
Charged to operating profit                                   -          8,337
               

              Onerous lease provisions arose as a result of continued
              rationalisation of the Group's property portfolio.

               

              The loss on Network Build in the year ended 31 March 2011
              related to the forecast loss arising on the build stage of a
              contract to build and manage a broadband network on behalf of a
              third party provider. The build aspect of the contract was
              completed during the year ended 31 March 2012 and through
              improved operational focus, the overall level of loss incurred
              was reduced.

               

              Restructuring costs arose as a result of organisational changes.

               

              The pension curtailment gain arose on the closure of the Group's
              two defined benefit schemes to future accrual.

               

               

               

              3. Taxation

 

The taxation charge on activities is set out below:

 

                   Unaudited    Audited
                  Year ended Year ended
                      31 Mar     31 Mar
                        2012       2011
                       £'000      £'000
Corporation tax            -        484
Deferred tax        (13,395)   (10,775)
Total               (13,395)   (10,291)

 

There are deferred tax assets of £1.4 million (2011: £1.3 million) which have
not been recognised, as there is insufficient evidence as to the generation of
suitable profits against which these assets can be offset.

 

  

 

 

 

 

Notes to the unaudited financial information continued

 

4. Earnings per share

 

                                                        Unaudited      Audited
                                                       Year ended   Year ended
                                                           31 Mar       31 Mar
                                                             2012         2011
Weighted average number of shares                             No.          No.
For basic earnings per share                          509,443,836  509,452,227
Share options in issue                                 19,388,758   21,238,004
For diluted earnings per share                        528,832,594  530,690,231
Earnings                                                    £'000        £'000
Profit attributable to equity holders of the
company                                                    37,727       22,621
Adjustments:
Exceptional items                                               -        8,337
Tax on exceptional items                                        -      (2,334)
Adjusted profit attributable to equity holders

of the company                                             37,727       28,624
Earnings per share
                                                            Pence        Pence
Basic                                                        7.41         4.44
Diluted                                                      7.13         4.26
Adjusted basic                                               7.41         5.62
Adjusted diluted                                             7.13         5.39

 

 

  

 

Notes to the unaudited financial information continued

 

5. Dividends

 

                                                          Unaudited    Audited
                                                         Year ended Year ended
                                                             31 Mar     31 Mar
                                                               2012       2011
                                                              £'000      £'000
Final dividend for  the year  ended 31  March 2010  of               
1.25 pence per share
                                                                  -      6,457

                                                        
Interim dividend for the year ended 31                                        

March 2011 of 1.1 pence per share                                 -      5,683
Final dividend for the year ended 31 March 2011 of 2.5                        
pence per share
                                                             12,915           

                                                                             -
Interim dividend for the year ended 31                                        

March 2012 of 1.33 pence per share                            6,871          -
Total                                                        19,786     12,140

 

The proposed final dividend for the year ended 31 March 2012 is 2.67 pence per
share. In  accordance with  IAS 10,  "Events after  the balance  sheet  date", 
dividends declared  after the  balance  sheet date  are  not recognised  as  a 
liability in this financial information.

 

6. Movement in net debt 

 

                                          Unaudited    Audited
                                         Year ended Year ended
                                             31 Mar     31 Mar
                                               2012       2011
                                              £'000      £'000
Opening net debt                             81,997    116,796
Closing net debt                             75,267     81,997
Reduction in the year                         6,730     34,799
Reconciliation of movement in the year
Net cashflow from operations                 55,994     68,009
Capital expenditure                        (22,148)   (13,948)
Interest                                    (7,363)    (8,574)
Dividends                                  (19,786)   (12,140)
Other                                            33      1,452
Reduction in the year                         6,730     34,799

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes to the unaudited financial information continued

 

6. Movement in net debt (continued) 

 

Net debt comprises:

 

                             Unaudited    Audited
                            Year ended Year ended
                                31 Mar   31 March
                                  2012       2011
                                 £'000      £'000
Cash and cash equivalents      (8,333)    (6,535)
Borrowings                      83,464     88,004
Finance leases                     136        528
Total net debt                  75,267     81,997

 

 

  

  

 

 

Notes to the unaudited financial information continued

 

7. Basis of preparation and publication of unaudited results

 

General information

KCOM Group PLC is a company domiciled in the United Kingdom.

 

The Group has its primary listing on the London Stock Exchange.

 

Basis of preparation

The Group prepares its annual consolidated financial statements in accordance
with International Financial Reporting Standards (IFRS) and International
Financial Reporting Interpretations Committee (IFRIC) interpretations endorsed
by the European Union (EU) and with those parts of the Companies Act 2006
applicable to companies reporting under IFRS. The consolidated financial
information contained within this preliminary announcement is unaudited and
has been prepared under the historical cost convention, as modified by the
revaluation of financial assets and financial liabilities. The financial
information included in this preliminary announcement does not include all the
disclosures required by IFRS or the Companies Act 2006 and accordingly it does
not itself comply with IFRS or the Companies Act 2006.

The unaudited consolidated financial information in this report has been
prepared in accordance with the accounting policies disclosed in the Group's
2011 Annual Report and Accounts.

The financial information set out in this announcement does not constitute the
company's statutory accounts within the meaning of Section 434 of the
Companies Act 2006 for the years ended 31 March 2012 or 2011. The financial
information for the year ended 31 March 2011, with the exception of the
comparative segmental information provided in note 1, is derived from the
statutory accounts for that year, which have been delivered to the Registrar
of Companies. The auditors' report on those accounts was unqualified and did
not contain a statement under s498 of the Companies Act 2006. The statutory
accounts for the year ended 31 March 2012 will be finalised on the basis of
the financial information presented by the Directors in this preliminary
announcement and will be delivered to the Registrar of Companies following the
Annual General Meeting.

The financial information contained within this preliminary announcement was
approved by the Board on 22 May 2012 and has been agreed with the Company's
auditors for release.

This preliminary announcement will be published on the Company's website. The
maintenance and integrity of the website is the responsibility of the
directors. The work carried out by the auditors does not involve consideration
of these matters. Legislation in the United Kingdom governing the preparation
and dissemination of financial statements may differ from legislation in other
jurisdictions.

 

Going-concern basis

The Group meets its day-to-day working capital requirements through its bank
facilities. The Group's forecasts and projections, taking account of
reasonably possible changes in trading performance, show that the Group should
be able to operate within the level of its current facilities. After making
enquires, the directors have a reasonable expectation that the Group has
adequate resources to continue in operational existence for the foreseeable
future. The Group therefore continues to adopt the going concern basis in
preparing its consolidated financial statements.

 

8. Accounting policies

 

The accounting policies applied are consistent with those of the annual
financial statements for the year ended 31 March 2011, as described in those
annual financial statements.

 

The following new standards, amendments to standards and interpretations are
mandatory for the first

time for the financial year beginning 1 April 2011, but do not have any impact
on the accounting policies of the  group.

 

·     IFRIC 19, 'Extinguishing financial liabilities with equity
instruments'.  This clarifies the requirements of IFRSs when an entity
renegotiates the terms of a financial liability with its creditor and the
creditor agrees to accept the entity's shares or other equity instruments to
settle the financial liability fully or partially. The interpretation is
effective for annual periods beginning on or after 1 July 2010.

·     Amendment to IFRS 1, 'First-time adoption of IFRS - Limited exemption
from comparative IFRS7 disclosures for first-time adopters'. The amendment is
required to be applied for annual periods beginning on or after 1 July 2010.

·     IAS 24 (revised), 'Related party disclosures', issued in November 2009. 
It supersedes IAS 24, 'Related party disclosures', issued in 2003.  The
revised IAS 24 is required to be applied for annual periods beginning on or
after 1 January 2011.

 

 

Notes to the unaudited financial information continued

 

8. Accounting policies (continued) 

 

·     'Prepayments of a minimum funding requirement' (Amendments to IFRIC 14),
issued in November 2009.  The amendments correct an unintended consequence of
IFRIC 14, 'IAS 19' - The limit on a defined benefit asset, minimum funding
requirements and their interaction'.  Without the amendments, entities are not
permitted to recognise as an asset some voluntary prepayments for minimum
funding contributions. This was not intended when IFRIC 14 was issued, and the
amendments correct the problem.  The amendments are effective for annual
periods beginning 1 January 2011.

 

The following improvements to standards are applicable for the financial year
beginning 1 April 2011, but do not have a significant impact on the group.

 

·     IFRS 1, 'First-time adoption', on accounting policies changes.

·     IFRS 7,  'Financial instruments'.

·     IAS 1, 'Presentation of financial statements'.

·     IAS 27, 'Consolidated and separate financial statements'.

·     IAS 34, 'Interim financial reporting'.

·     IFRIC 13, 'Customer loyalty programmes'.

 

The following new standards, amendments to standards and interpretations have
been issued, but are

not effective for the financial year beginning 1 April 2011 and have not been
early adopted:

 

·     IFRS 1 (amendment), 'First-time adoption', on fixed dates and
hyperinflation.

·     IFRS 7 (amendment), 'Financial instruments: Disclosures' on
derecognition

·     IFRS 9, 'Financial instruments'.

·     IAS 12 (amendment), 'Income taxes' on deferred tax.

·     IAS 19 (amendment), 'Employee benefits'.

·     IFRS 10, 'Consolidated financial statements'.

·     IFRS 11, 'Joint arrangements'.

·     IFRS 12, 'Disclosures of interests in other entities'.

·     IFRS 13, 'Fair value measurement'.

·     IAS 27 (revised), 'Separate financial statements'.

·     IAS 28 (revised), 'Associates and joint ventures'.

·     IAS 1 (amendment), 'Presentation of financial statements', regarding
other comprehensive income.

 

9. Principal risks and uncertainties

 

As with all businesses, we are affected by a number of risks and
uncertainties, some of which are beyond our control. The key risks that we
have identified will be disclosed within the annual report.

 

10. Related party transactions

 

The remuneration of the Directors who are key management personnel of KCOM
Group PLC will be disclosed in the audited part of the Directors' remuneration
report in the Annual report.

 

There are no other material related party transactions.

 

Signed by Order of the Board on 22 May 2012 by:

 

 

 

 

 

 

                     This information is provided by RNS
           The company news service from the London Stock Exchange
 
END
 
 
FR BIGDULDDBGDB -0- May/22/2012 06:01 GMT
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