Disclosure of all relevant information to auditors
The Directors who approved this report are satisfied that, as far as they are aware, there is no relevant audit information (as defined in the Companies Act 2006) of which the Company’s auditors are unaware. Each of the Directors has taken all the steps that they ought to have taken as a Director in order to make themselves aware of any relevant audit information and to establish that the Company’s auditors are aware of that information.
The names and biographical details of our Directors as at 31 March 2014 are on the Board of Directors pages. Further information regarding the Directors who served during the year can be found in the Remuneration report.
No political donations were made by the Group during the year (2013: £Nil).
Our people make all the difference to the service we can provide to our customers and enable us to differentiate ourselves from our competitors. We therefore take great care to have employment strategies in place that drive business performance but also help our people to develop to their full potential. Our employment policies are designed to provide equal opportunities irrespective of age, disability, ethnicity, gender, gender reassignment, marital status and civil partnership, nationality, pregnancy and maternity, race, religion and belief and sexual orientation.
All employees, whether part-time or full-time, temporary or permanent, are treated fairly and equally. We select employees for employment, promotion, training or other matters affecting their employment on the basis of aptitude and ability.
We take every opportunity to involve and consult with our employees and we believe that employee involvement is an essential contributor to the development of our business. Our Executive Directors regularly visit our different office locations to meet with our employees, provide updates on the performance of the Group and to receive suggestions and feedback, through both roadshow presentations and informal meetings.
Regular video and news updates are provided to all employees through our intranet, and a weekly round-up bulletin via email to keep them informed of activities and Group performance. There is also a monthly briefing document for managers to share with their teams.
In March 2013 we undertook our second Group-wide employee survey in two years, to obtain feedback on a range of topics. The results of this were fed back to employees and action plans were developed to address the key matters raised.
We encourage our employees to become shareholders by offering a Share Incentive Plan (SIP) as we believe this is one opportunity to encourage greater employee engagement. More information about this can be found in the Remuneration report.
The Company has a single class of share capital which is divided into ordinary shares of 10 pence.
Rights and obligations attaching to shares
In a general meeting of the Company voting is as follows:
- on a show of hands, every member present in person shall have one vote;
- on a show of hands, every proxy present who has been duly appointed by one or more members shall have one vote; and
- on a poll, every member who is present in person or by proxy shall have one vote for every share of which he or she is the holder.
A member is not entitled to vote in respect of any share in the capital of the Company held by him or her, if there are sums payable to the Company in respect of such share which remain unpaid.
Full details of the deadline for exercising voting rights in respect of the resolutions to be considered at the AGM to be held on 29 July 2014 are set out in the Notice of Meeting.
All dividends are paid proportionately to the amounts paid up on the shares and are paid to those members whose names are on the share register at the date at which the dividend is declared, or at such other date as determined by the Directors or by an ordinary resolution of the Company.
If the Company is wound up, the liquidator, with the sanction of a special resolution of the Company or any other sanction required by law, may divide the whole or any part of the assets of the Company among the shareholders and may determine how the division of the assets will be carried out.
Transfer of shares
All transfers of uncertificated shares must be made in accordance with, and be subject to, the Uncertificated Securities Regulations 2001 and in accordance with any arrangements made by the Board.
All transfers of certificated shares must be in writing in a form which has been approved by the Directors; this is known as ‘the Instrument of Transfer’. The Instrument of Transfer must be signed by, or on behalf of, the transferor and the transferor will remain as the holder of the share until the name of the transferee is entered into the share register.
The Directors may refuse to register the transfer of any share which is not fully paid or which is in favour of more than four persons jointly. The Directors may also refuse to recognise an Instrument of Transfer if it is not lodged at the Company’s registered office or at any other place which the Directors have determined.
If the Directors refuse to register a transfer they will send to the transferee a notice of the refusal and the Instrument of Transfer within two months of the date on which the transfer was lodged with the Company.
Allotment of shares
At the AGM in 2013, the Company was authorised by the members to allot shares up to an aggregate nominal amount of £17,220,130. Authority was also given at the same time for the partial disapplication of pre-emption rights, up to a maximum aggregate value of £2,583,019. As at the date of this report no shares had been allotted under this authority.
Repurchase of shares
At the AGM in 2013, the Company was authorised by members to purchase its own shares, up to a maximum of 51,660,391. During the year, the Company did not purchase any of its own shares.
The Company funds Employee Share Trusts (ESTs) to meet its obligations under the Company’s share schemes. During the year the ESTs purchased 12,043,000 (2013: 15,130,000) shares on the London Stock Exchange at a cost of £1,778,000 (2013: £11,053,000) with a nominal value of £1,204,300 (2013: £1,513,000). These shares represent 2.33 per cent of the called-up share capital and are held in trust until they vest; therefore the purchase of these shares does not reduce the share capital in issue. The total number of shares held in trust to meet obligations under the Company’s share schemes is:
|000’s of shares|
|As at 1 April 2013||9,524|
|As at 31 March 2014||205|
Further details around the purchase of shares in the year are set out in note 25 to the financial statements.
Shares held by ESTs
The trustees of the Kingston Communications 2000 EST and the Kingston Communications All Employee Share Plan vote any shares held in the ESTs as they wish, having due regard to the interests of the employees as potential beneficiaries.
There are two other ESTs, the Kingston Communications Qualifying Employee Share Ownership Trust and the KCOM Group PLC Employee Benefit Trust, that are currently dormant and hold no shares.
Significant agreements – change of control
The following significant agreements contain provisions entitling the counterparties to exercise termination or other rights in the event of a change of control of the Company:
- under our £200 million multi-currency revolving facility agreement dated 4 June 2014, the Company must notify Lloyds Bank PLC, the Agent of the agreement, within seven days of becoming aware of a change of control of the Company. Any bank or financial institution named within the facility agreement may then notify the Agent within seven days that they wish to cancel their commitments. The Agent must then give at least 21 days’ notice to the Company of this and all outstanding amounts due to that bank or financial institution will become immediately due and payable. For these purposes, a ‘change of control’ occurs if any person or group of persons acting in concert gains control of the Company; and
- the Company’s share schemes, details of which are contained in the Remuneration report, contain provisions which take effect in the event of a change of control, as a result of which options and awards may vest and become exercisable. The provisions do not entitle participants to a greater interest in the shares of the Company than that created by the initial grant or award under the relevant scheme.
The Company does not have any agreements with any Director or employee that would provide compensation for loss of office or employment resulting from a takeover.
Pursuant to section 414c of the Companies Act 2006 the Strategic report contains disclosures in relation to future developments, dividends, financial risk management and the disclosure of the Greenhouse Gas emissions for which the Company is responsible.
Annual General Meeting
Our AGM will be held at the KC Stadium, Hull, on Tuesday 29 July 2014 at 11.00am. The Notice of Meeting accompanies this annual report and is also available on our Group website at www.kcomplc.com. Four resolutions will be proposed as special business. Explanatory notes on these resolutions are set out in the Notice of Meeting.
The Directors consider that all the resolutions proposed are in the best interests of the Company and it is their recommendation that shareholders support these proposals as they intend to do so in respect of their own holdings.
As at 31 March 2014, the Company had been notified of the following interests amounting to three per cent or more of the voting rights in the issued ordinary share capital of the Company. As at 18 June 2014, there had been no additional disclosures received.
|Number of shares with
|% of total voting rights|
|Invesco Asset Management||70,171,901||13.58|
|Aberforth Partners LLP||24,336,606||4.71|
|Scottish Widows Investment Partnerships||22,773,730||4.41|
|Legal & General Investment Management||16,285,090||3.15|
|Norges Bank Investment Management||15,933,680||3.08|
Directors’ responsibilities statement
The Directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations. Company law requires the Directors to prepare financial statements for each financial year. Under that law, the Directors have prepared the Group and Company financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union (EU). Under company law, the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and the Company and of the profit or loss of the Group for that period.
In preparing these financial statements, the Directors are required to:
- select suitable accounting policies and then apply them consistently;
- make judgements and accounting estimates that are reasonable and prudent;
- state whether applicable IFRSs as adopted by the EU have been followed, subject to any material departures disclosed and explained in the financial statements; and
- prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and the Group and enable them to ensure that the financial statements and the Directors’ Remuneration report comply with the Companies Act 2006 and, as regards the Group financial statements, Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the Group’s website, www.kcomplc.com. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Directors’ statement pursuant to the Disclosure and Transparency Rules
Each of the Directors whose names and functions are listed on the Board of Directors pages confirm that, to the best of their knowledge:
- the financial statements, which have been prepared in accordance with IFRSs as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit of the Group and Company; and
- the Strategic report and Directors’ report contained in the annual report includes a fair review of the development and performance of the business and the position of the Group and Company, together with a description of the principal risks and uncertainties that it faces.
Conclusion on the annual report
The Board is responsible for reviewing the annual report and, after consideration, has concluded that the annual report, taken as a whole, is fair, balanced and understandable and that it provides the necessary information for shareholders to assess performance, business model and strategy. In reaching this conclusion, the Board has considered the different types of shareholders that the Group has, the reports and presentations that the Board has received during the year and the reports submitted to the Audit Committee during the year by both the internal and external auditors and combined this with the Board’s collective knowledge of the business, gained through both formal and informal meetings and personal interactions across the Group at all levels.
Amendments to the Company’s Articles of Association
Any amendments to the Company’s Articles of Association may be made by passing a special resolution at a general meeting of the shareholders.
The Directors confirm that, having reviewed the Group’s budget and forecasts along with the principal risks and uncertainties facing the Group, they are satisfied that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly the Group continues to adopt the going concern basis in preparing the financial statements.
This report has been reviewed and approved by the Board of KCOM Group PLC.
Signed on behalf of the Board
18 June 2014