This morning, Kcom, a telecoms company that is listed in London, has lost a third of its value after it said that its trading performance for the current financial year was “weaker than originally expected.”
The shares of the company dropped by 35 percent from 91.8p last Wednesday night to 59.5p shortly before noon on Thursday.
Kcom is a telecoms and broadband provider that has its headquarters in Hull. It focuses on providing services to the Hull area which, for historical reasons, is the only place in the United Kingdom that is not served by the landlines of BT.
The firm also said that it has plans on reducing its dividend from 6p per share to 3p per share.
It attributed the drop in the value of its shares to its poor performance on flat revenue that was driven by the lower than expected orders in its enterprise segment as well as the “continued customer churn” in its national network services (NNS) segment.
Its board said that it sees these trends continuing into the next financial year.
Kcom said that the poor performance of the NNS business signified that the board had decided to impair the carrying value of goodwill in NNS with a non-cash exceptional item that amounted to £32.2 million to be recognised in the interim results of the group which are expected on the 27th of November.
As a result of the company’s poor performance, the board currently expects that the earnings before interest, tax, depreciation and amortisation (Ebitda) for the year ended 31 March 2019 to be around five percent below the market expectations.
Kcom said that it expects its (Ebitda) for the year ended 31 March 2020 will be “significantly below current market expectations.”
Its net debt at 30 September amounted to £105.8 million is up from £67.8m a year prior and £62.6 million on the 31st of March.
The board said that it expects that its net debt at 31 March 2019 to be approximately 10 percent higher as compared to the current market expectations.