Shares of Hull-based communications firm KCOM plunged 30% on Tuesday after it warned its trading performance for the current financial year “will be weaker than originally expected” and it cut its dividend.

“This is principally the result of flat revenue (driven by lower than expected order intake) in the group’s enterprise segment and continued customer churn in the group’s National Network Services segment (NNS),” said KCOM.

“It is the board’s view that these trends will continue into the following financial year.

“The performance of the Group’s NNS segment has resulted in the board’s decision to impair the carrying value of goodwill in NNS.

“A non-cash exceptional item of £32.2 million will be recognised in the group’s upcoming interim results.

“The group’s Hull & East Yorkshire segment, which is the largest contributor to Group EBITDA, continues to perform well and in line with market expectations …

“As a result, the board now expects EBITDA (pre-IFRS 15) for the current financial year ending 31 March 2019 to be c.5% below current market expectations. 

“However, as a result of the factors outlined above, it is also the board’s expectation that EBITDA (pre-IFRS 15) for the financial year ending 31 March 2020 will be significantly below current market expectations …

“The group’s net debt at 30 September 2018 is £108.5 million (30 September 2017: £67.8 million, 31 March 2018: £62.6 million) …

“The board expects the group’s net debt at 31 March 2019 to be c.10% higher than current market expectations.

“Taking these changes to the group’s medium-term trading performance, cash flow and balance sheet into account, the board now considers it inappropriate to commit to continuing to pay an uncovered dividend.

“As such, the board has decided to review the group’s ongoing dividend policy, resolving to pay a dividend of not less than 3 pence per share for the current financial year ending 31 March 2019, rather than the previously stated commitment to pay 6 pence per share.”