Telecoms and internet communications provider Kcom Group hiked its dividend 10 per cent as promised but the top line continued to shrink.Sales fell for the fifth year in a row, with revenues from continuing operations slipping 3.7% to £372.9m in the 12 months to 31st March, while earnings before interest, tax, depreciation and amortisation dropped 1.3% to £76.9m.However, the FTSE 250 group counteracted the tighter top line by keeping good control of costs, tax, capital expenditure and being proactive on its pension situation. It lifted pre-tax profits 3.1% to £52.7m and earnings per share 5.1% to 7.79p.While net cash flow from operations shrank 10.2%, the board has committed to growing the dividend at 10% per year to 2016, and hence proposed a 10% increase in the final dividend to 4.4p a share. Cash flow fell mainly due to the timing of working capital movements offset by lower pension deficit payments but the Yorkshhire-based group saw stronger net cash inflow in the second half of the year.Of the two main group segments, the KC East Yorkshire telephony and broadband services provider grew sales slightly as customers continued to demand its bundled services and particularly its new fibre broadband service. New contracts for business and contact centre services for KC were won with organisations including Humberside Fire and Rescue, Network Rail and Victoria Plumb.The other half of the business, Kcom, a national enterprise, public sector organisations and small business provider, saw sales slip 5.5% due to a one-off contract in the previous year, together with tougher markets due to the economic conditions, regulation and pricing issues.Kcom won deals with the National Farmers Union Mutual, Morrisons, Phones4U and extended its relationship with Amazon.Executive Chairman Bill Halbert said: "The group has made further progress in improving the quality and long term sustainability of the business. This is evidenced by the continued strong performance in KC and some of the key customer wins during the year, as a result of the strengthening of our competitive position in target markets." Net debt increased from £75.3m to £88.2m mostly due to share purchases from its share scheme. Looking forward, the board said it remained focused on executing its strategy for profitable growth across each brand, underpinned by continued investment in certain areas "that support scalable and efficient delivery of services to our customers". Broker Espirito Santo said Kcom's "growing yield and robust financials underpin the shares" and analysts reiterated their 100p fair value price target.They noted that at the opening share price the commitment to grow the dividend by the same amount until 2016 "would imply a yield of 7.6% in the final year, which compares favourably with the average sector yield of 5.8%"."We are of the opinion that even with sluggish top line growth management's disciplined approach to costs, capex, tax and pensions will ensure that this payout can be sustained without the need to increase leverage."After falling in early trading, shares in Kcom Group were up 9.3% at 83.97p at 12:22 on Friday.OH