Kingston shares fall as spending erodes profits

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The Independent Online
KINGSTON Communications, the Hull-based telecoms operator, saw a rare fall in its share price yesterday after it said a substantial investment programme would cut near-term profitability by more than analysts had expected.

The high-flying shares were also undermined amid talk that Kingston-Upon- Hull city council, which holds almost 45 per cent of the pounds 2bn-plus company, may pare its stake.

Michael Price, the council's chief financial officer, said he was obliged to advise councillors of their investment options. "We do need to take professional advice on this," he said.

The four-member councillors' committee that oversaw Kingston's July flotation would be reconvened, he added. No change in holdings is permitted until a lock-up period expires on 19 January.

Kingston shares dropped 45p from Tuesday's record close to 591.5p. The stock has doubled since listing.

The company said yesterday that pre-tax, pre-exceptional profits in the six months to September fell to pounds 4.37m from pounds 7.15m as investment was stepped up. Turnover rose 27 per cent to pounds 93m. Capital expenditure rose 52 per cent to pounds 33.4, a level which will be sustained in the second half.

Kingston is rolling out its regional Torch Telecom networks, has invested in multi-media services around Hull, and is extending its north-east franchise.