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KCOM Group PLC (KCOM.L) Pre-close Statement 2012

KCOM Group PLC (KCOM) issues the following statement for the period ending 31 March 2012, prior to entering the close period for its preliminary results.

Current Trading

Current trading remains consistent with trends reported at the interim results in November.

Our KC brand continues to benefit from sustained growth in broadband penetration across the  East Yorkshire network area, with customers attracted to bundled offerings in particular . In addition, and three years ahead of the Government’s 2015 targets, we are able to provide broadband services with a minimum 2Mbps download speed to all households and businesses across our KC network.

The Kcom brand continues to see progress on securing multi-year recurring revenues to support longer term sustainable growth. Our focus on opportunities within the emerging Public Services Network (PSN) market has been maintained, as confirmed by the recent signing of the contract for East Midlands PSN.  Progress has also been seen within the enterprise market, where we have recently signed contracts with Molson Coors, United Utilities and iPSL for a range of communications and managed services.

Our Smart421 and Eclipse brands continue to make good progress with their own growth momentum.

Accelerated Pension Payments

The strength of the Group’s financial position is such that we have taken the decision to make an accelerated payment of £10.0 million to the Group’s defined benefit pension schemes. This comprises £6.9 million of advance payment to FY13’s previously committed deficit contributions and an additional one-off contribution for FY12, of £3.1 million.

As well as reflecting the wider financial strength of the Group, making these payments in the current financial year allows the Group to benefit from the higher corporation tax rates of 26% in FYE March 12, compared to 24% in FYE13. We expect the resulting net debt to be no greater than £80.0 million at 31 March 2012 (31 March 2011: £82.0 million).

Outlook

We expect the Group’s full year results to be in line with market expectations.

In addition, the Board reiterates its commitment to delivering a minimum of ten per cent per annum dividend growth in this, and the subsequent financial year, reflecting its confidence in the Group’s future cash generation and performance.

KCOM Group will announce its preliminary results on 22 May 2012.

About KCOM PLC

KCOM Group PLC is a leading provider of communications services to organisations and consumers, serving customers through four market focused brands.

KC provides a range of telephony and broadband services to consumers and businesses in Hull and East Yorkshire. Our other three brands serve organisations throughout the UK. Eclipse provides communications services to small and medium businesses across the UK, connecting them to customers, partners and suppliers and improving their productivity and flexibility, and helping them to grow.  Kcom works with some of the UK’s biggest names, delivering communications services that enable them to be flexible, efficient and more responsive to their customers. Smart421 delivers high-end consultancy, integration and management of business-critical systems for enterprise customers.

We apply the collective knowledge and expertise of our people and our partners to help our customers harness the power of communications. Our focus is on the delivery of inspiring customer experiences, and finding new and better ways to connect people.

For further information please contact:

Bill Halbert, Executive Chairman Paul Simpson, CFO
KCOM Group PLC
0207 422 8707 (PA: Clair Morris)

Jon Coles
Brunswick
02074045959

Cathy Philips
KCOM Group PLC
07778335735