The KCOM Group is a leading provider of communications services to consumer and business markets across the UK.Our goal is to become an acknowledged leader in the markets we serve and an automaticpartner of choice for individual consumers and organisations in those markets. We aim to help our customers exploitcommunications and associated technologies to improve the performance of theirbusinesses and organisations and to enhance their personal communications experience.
Welcometo the KCOM Group – a leading providerof communications services to consumersand organisations across the UK.Our business was founded over 100 years ago and has grown and developedboth organically and by acquisition. Today, we are stronger than ever. As anational business, our Group is organised to serve its two principal markets andoperates through four distinct customer-facing brands.The aim of this brochure is to introduce you to what we do and to illustrate thevalue that we bring to our customers. You will see that, whether for consumers athome, small businesses or major organisations, we have the expertise, knowledgeand resources to deliver a communications solution that is perfect for you.Our aim is to establish leadership in the markets we serve by continuing to buildour reputation for service excellence and by exploiting our ‘best-in-class’partnerships. Our plans for the future are ambitious, but achievable. We hopethat you will join us on our journey, as we continue to deliver excellence now andin the future.Bill Halbert, Executive Chairman
Our GroupWe want to enable our customersto exploit the communicationsrevolution to enhance their personalcommunications experience and tohelp businesses and organisationsimprove their performance.What we doThe KCOM Group is a leading provider of communicationsservices to both consumer and business markets acrossthe UK. The Group is organised to serveOur customersWe are passionate about serving our customers – they are its two principal marketsat the centre of everything we do. We seek to understandtheir needs, match our capabilities and those of ourpartners to their requirements and to deliver on ourpromises better than the competition.Our goalOur goal is to become an acknowledged leader in themarkets we serve and an automatic partner of choice forindividual consumers and organisations in those markets.Our strategyIn recent years the strategy of our Group has been drivenby the changing communications needs of our customers.As a result, we are successfully creating a trusted andprofitable communication services business.By structuring our organisation around the markets weserve, we aim to deliver a high-quality customer experience,a key ingredient in the creation of long term, sustainablerelationships.
Our strategic relationships Our strategic relationships demonstrate our commitment to focusing on the core activities that help us to deliver the value added services our customers expect. Consumers and businesses in the BT and Phoenix IT Hull and East Yorkshire region Our strategic relationship with BT gives us extended market reach and new services. By combining the footprint ofSmall businesses and KCOM’s national network with BT’s, we are able to offerconsumers nationally unparalleled network reach and develop new competitive propositions and services throughout the UK. The relationship means that BT undertakes the management of our network and provides KCOM Group with access to BT’s network across the UK. Going forward, we will be able to offer our customers complete access to a Telecommunications and set of differentiated Next Generation Network products and services based around BT’s 21st Century Network internet-based services programme. Our partnership with Phoenix gives us access to industry leading field service engineering and maintenance services, an integral and essential component of our propositions. UK based businesses and public sector organisations Tailored communications solutions to support business goals
Proud to be part of local life KC is proud to provide Our aims: a range of telecommunications and G To grow KC revenues through broadband services to businesses and new products and services, including bundled propositions consumers throughout Hull and East and the roll out of a minimum Yorkshire. It is the only telecoms provider in broadband speed of 2Mbps to all customers the UK to offer inclusive local calls in all its telephone packages and is one of the G To achieve targeted geographic expansionfounding UK providers of broadband internet. KC is consistently at the forefront of G To establish a revitalised brand communications to deliver the best quality experience customer experience. G To champion the Digital Agenda in the regeneration of Hull and East Yorkshire and to shape the future of broadband services Our customers: KC has delivered a number of industry ‘firsts’ for its customers. These include Britain’s best-value telephone calls packages, the UK’s first weekday off-peak broadband service, free local directory enquiries and one of the fastest broadband services in the country. According to independent tests by
‘We don’t have to worry about how much we’redownloading anymore, which is fantastic. It is important people have a choice of packages to meet their needs. Karoo Internet has always been very quick’ Lee Jenkinson Karoo Customer, Hull broadband benchmarking company Epitiro, Karoo, KC’s broadband service, consistently offers the fastest speeds of any UK broadband provider. KC Business recently launched KC Cloud, a range of services for businesses which deliver hosted Microsoft applications via a broadband connection. KC also delivers the fastest response and highest fix rate performance for local businesses in the country and is the UK’s largest wholesale directory enquiries (DQ) provider. The business has committed to a multi-million pound upgrade to the core network infrastructure in Hull and its surrounding areas to provide a platform for the launch of new products and services. KC is committed to delivering on its corporate and social responsibilities to help break the barriers to an inclusive society. We have a programme of activities designed to raise the aspirations of young people in the region. Using our skills and technology, we believe we have the opportunity to make a real difference to the local community. Further information: To find out more about KC and its activities, go to: www.k-c.co.uk
Eclipse Internet provides a range of Internet-based services to small and medium sized business anddiscerning consumers acrossthe UK.Through the delivery of exceptional service and innovative technical solutions, Eclipse Internet offers a communications one-stop-shop that gives businesses the freedom togrow and develop their own organisation.
Aiming to become the number 1ISP for small businessHistory: Our customers:Eclipse was formed 15 years ago in 1995 by Our focus is on small to medium sized small business marketplace. We constantly lookentrepreneur Mark Lang. Positioned as a businesses and discerning consumers looking for for ways to innovate our service so that we arespecialist ISP delivering innovative, technical exceptional service. We aim to exceed adding more and more value to our targetproducts and services, the business went from customers’ expectations and to equip smaller market. Recent innovations range from givingstrength to strength. It joined the KCOM Group organisations with the communications customers more diagnostic tools so they can fixin 2005 and has built a successful reputation as resources they need to grow their own business. their faults themselves to pro-active servicethe leading ISP for small businesses across the monitoring that enables us to see a problem We provide a range of broadband services before a customer does.UK. including hosted e-mail, anti-spam/anti-virus e-mail protection, domain registration, and The Group’s agreement with BT gives usOur aspirations: managed server hosting as well as our extensive national network reach and enables super-fast fibre broadband which delivers us to deliver leading-edge, technologicalG To become the number one download speeds of up to 40Mbps and upload internet and hosting solutions to our growing speeds of up to 10Mbps – five times faster than customer base. ISP for small businesses existing standards. This enables businesses to benefit from increased connection speedsG and services including VPN, video conferencing Further information: To differentiate our brand in the and VoIP. To find out more about Eclipse and its market by delivering an industry leading customer experience Our single UK based call centre promises activities, go to: business customers an answer to a technicalG To have a team so good at what support call in less than 60 seconds. Our fault www.eclipse.net.uk rate is the lowest in the industry when we do, we win industry awards compared to BT industry average reports across every year the last 12 months. We fix more than 70% of our faults when a customer calls us, at that first point of contact. As a result, we are increasingly recognised as a leading ISP provider to the ‘Eclipse’s flexibility and excellent customer service give small business start-ups like mine a chance to really compete in our own market’ Jeremy Lennard Managing Director JS3 Recruitment
Time to create tomorrow RKcom is dedicated to helping customers realise their ambitions by taking care oftheir critical communicationsso they are free to plan, think and progress.
We aim to lead the market in the management of critical communications Our goals: G To transform our internal operational processes and G To lead the market in the systems, in order to drive delivery of Managed efficiencies Communications Services G To become a business renowned G To achieve significant revenue for uniting, energising and and margin growth by inspiring introducing compelling communications-based Our customers: propositions and services to the Our focus is on multi-site private and public market that exploit fully our sector organisations that have complex networking requirements but often lack the relationship with BT, our internal resources to meet their increasingly managed services capability and complex communications needs. our expertise in specific customer The outsourcing of our network to BT gives us sectors extensive network reach in the UK, access to new customers and allows us to focus on the G experience we deliver to our customers. To differentiate ourselves in the market by delivering an industry Kcom also has a well-established reseller channel providing solutions to partners that leading customer experience allow them to increase their revenues and grow their businesses. Further information: To find out more about Kcom and its activities, go to: www.kcom.com ‘They took the task beyond a quick fix and gave truly insightfulthought-leadership guidance on where we could take the systems capabilities in thefuture. They’ve helped make our growth possible.’ Simon Townley Head of Infrastructure Hermes
Facilitating business growth through Smart421 specialises in systems integration and History: managed services of business-critical systems for Smart421 was founded in 1999 and joined the KCOM Group in September 2006. large organisations with complex IT requirements. Through taking an agile, specialist Our ambitions: G To continue building long-term, approach to technology, Smart421 is able to successful partnerships with deliver intelligent business technology solutions leading UK organisations more reliably than offshore outsourcing G Continual development of new companies and more cost-effectively than larger propositions that enable our IT consultancies. clients to remain innovative and Its expert approach means that it can help competitive organisations to align information technology G To deliver exceptional customer to business strategy, ultimately releasing service and the same or better internal resources to enable companies to return on investment than the compete, plan and grow. global IT consultancies Customers: Smart421 provides flexible, responsive and cost-effective IT solutions that facilitate the delivery of business results. We provide specialist communications packages, from architecture and design consultancy, through to the delivery of business integration services, data management and managed services.
‘Smart421 are one of our most trusted partners. They consistently deliver on time and to budget, and their people are flexible, reliable and committed to our business’ Group IT Manager, ONEtechnology Smart421 technology specialists provide clients with the market intelligence and technological knowledge to enable their business to remain flexible and one-step-ahead. Smart421’s ever- evolving propositions enable clients to stay ahead of the technology curve to exploit new trends and innovations, increasing their competitive edge. Smart421 primarily serves the Financial Times UK 500 list of large enterprise companies and public sector organisations across the UK and Europe, delivering added value solutions to their complex IT requirements. Further information: To find out more about Smart421 and its activities, go to: www.smart421.com
The KCOM Group recognises the importance ofapproaching its responsibilities for corporatesocial responsibility in a co-ordinated andcommitted fashion. Consultation with partners and employees Our ISO 14001 compliant Environmental has allowed us to develop a corporate social Management System continues to ensure we responsibility programme that is focused on manage our environmental responsibilities four key areas: effectively, and our Environmental Plan ensures clear objectives are set. G Our work in the community This year has also seen a much greater focus on G the Carbon Reduction Commitment (CRC) and Our commitment to our work has taken place in a number of areas to workplace ensure we have a full programme in place to capture the data required to meet our G Our environmental policy obligations under the CRC. The Group has also signed up to the 10:10 G Our ethical policy initiative. This is a project aimed at uniting every sector of British society to achieve a 10 per cent cut in the UK’s carbon emissions in Our work in the community: 2010. Involvement in the local community is of paramount importance to the KCOM Group. Our Our workplace: consumer-facing brands are committed to supporting their local area and we actively We recognise that our employees are vital to encourage involvement in a variety of activities the success of the Group and this principle including competitions and sponsored events. guides our decision making on how we approach the management of people. Last Our KC brand has an active community year, we were delighted to achieve re- programme and has committed financial and accreditation of the Investors in People award, human resource to three main community an award which recognises business success partners for the next two years: Hull & Humber through its people. KC Cares, Cat Zero and Hull Children’s University. Recognising and celebrating the achievements of employees is an important part of our Annually, across the Group, we adopt a national workplace ethos and we have a variety of charity and organise a series of events and recognition schemes in place. We encourage our activities to raise funds. Our Group Charity of employees to participate in the success of the the Year is always selected through an Group through share ownership. Our award employee voting system and for this financial winning SIP scheme has entered its fourth year year (2010/11), we will be working with the with over 60 per cent of the Group’s employees Stroke Association. We aim to raise in excess of owning shares in the business. £45,000. Our ethical policy: Our environmental policy: We have an Ethics and Anti-Fraud Policy We are committed to achieving a real and confirming our commitment to a culture of sustainable positive impact on the broader openness, trust and integrity and to treat community in which we live and work. We employees fairly and with respect. It confirms believe that it is essential that both as a firm our commitment to protect employees, and as individuals we should operate in an partners, suppliers, customers and shareholders environmentally conscious manner. Our from illegal or damaging actions by individuals. objective is to minimise the impact of our The Policy also sets out the Group’s zero business activity on the environment, wherever tolerance approach to fraud. possible. This includes ensuring that our suppliers do likewise and that we persuade our clients to consider environmental matters wherever possible.
Financial statementsConsolidated income statementFor the year ended 31 March 2010 2010 2009 £’000 £’000Continuing operationsRevenue 412,800 472,439Operating expenses (386,250) (571,688)Group operating profit/(loss) 26,550 (99,249)Analysed as:Group EBITDA before exceptional items 69,795 65,141Exceptional items – impairment of goodwill – (106,890)Exceptional items – other (10,205) (22,380)Depreciation of property, plant and equipment (20,074) (20,331)Amortisation of intangible assets (12,966) (14,789)Finance costs (7,368) (12,304)Finance income - 197Share of (loss)/profit of associates (12) 11Profit/(loss) before taxation 19,170 (111,345)Taxation (1,477) 4,863Profit/(loss) for the year 17,693 (106, 482)Profit/(loss) for the year attributable to equity holders of the Company 17,693 (106,482)Earnings/(loss) per share from continuing operationsBasic 13.47p (20.70p)Diluted 3.38p (20.70p)Consolidated statement of comprehensive incomeFor the year ended 31 March 2010 2010 2009 £’000 £’000Profit/(loss) for the year 17,693 (106,482)Other comprehensive incomeCash flow hedges 920 (6,568)Actuarial gains/(losses) on retirement benefit obligation 5,620 (53,550)Tax on items taken directly to equity (1,832) 14,957Total comprehensive income/(loss) for the year attributable to equity holders 22,401 (151,643)
Balance sheetsAs at 31 March 2010 Consolidated Parent Company 2010 2009 2010 2009 £’000 £’000 £’000 £’000Non-current assetsGoodwill 85,272 86,410 - -Intangible assets 10,547 20,502 - -Property, plant and equipment 124,057 131,009 - -Investments 1,054 1,049 234,215 234,215Deferred tax assets 56,115 59,424 14,104 17,078Amounts owed from subsidiary undertakings - - 260,267 237,239 277,045 298,394 508,586 488,532Current assetsInventories 3,608 4,117 - -Trade and other receivables 76,927 86,469 232 512Cash and cash equivalents 13,890 17,508 - - 94,425 108,094 232 512Total assets 371,470 406,488 508,818 489,044Current liabilitiesTrade and other payables (144,678) (136,944) - -Non-current liabilitiesBank loans (129,458) (174,195) - -Retirement benefit obligation (50,373) (60,993) (50,373) (60,993)Long term provisions and other payables (11,204) (13,737) - -Total liabilities (335,713) (385,869) (50,373) (60,993)Net assets 35,757 20,619 458,445 428,051Capital and reserves attributable to equityholders of the companyShare capital 51,660 51,660 51,660 51,660Share premium account 353,231 353,231 353,231 353,231Hedging and translation reserve (6,351) (7,271) - -Retained earnings (362,783) (377,001) 53,554 23,160Total equity 35,757 20,619 458,445 428,051