LONDON (ShareCast) - A disappointing performance from its Integration & Managed Services division dragged profits down at Hull-based telecoms group KCOM.

Revenue in the year to 31 March 2008 rose 7.1% to £517.3m from £483.1m a year earlier, with the Telecoms & Internet Services (T&IS) arm showing a 9.7% rise to £244.4m, while the Integration & Managed Services (I&MS) unit grew revenue 2.7% to £278.4m.

Earnings before interest, tax, depreciation and amortisation (EBITDA) slipped 2.4% to £69.3m from £71m. EBITDA in the T&IS division rose 7.5% but the I&MS arm saw EBITDA slump 54.7% to £8.6m.

Reported pre-tax profit fell to £4.4m from £10.6m after a £7m increase in the amortisation of intangible assets arising on acquisition.

The dividend per share has been ramped up to 2.82p from 1.95p a year earlier, representing an increase of 44.6%.

The T&IS business performed strongly, helped by a high proportion of recurring revenues and the successful integration of Misteral Internet. While the decline in the volume of voice traffic materialised as expected this was more than offset by growth in network access and bandwidth revenue.

Changing market conditions, however, affected revenue in the Integration & Managed Services business. Revenue was further depressed by £5.0m year-on-year reduction in the contribution of a public sector long term managed service contract as the build phase of the project approached completion.

The unit saw organic revenue growth of 3.8% in the second half of the financial year after revenues dipped 3.1% year-on-year in the first half, and the business is now making progress towards improved performance “in line with our medium term targets,” the company said.

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