Chairman’s statement

The business has successfully refocused on those activities that deliver most value to customers

At the same time, we are mindful that how we operate as a business is as important as the services we offer

Graham Holden

Graham Holden

Chairman

Dear shareholder

The Group has performed well during the past financial year, with progress being made in all our target markets. Subject to shareholder approval at the AGM in July, the Board is proposing a final dividend of 3.25 pence per share, which is in line with our existing commitment to increase the full year dividend by 10 per cent per annum until March 2016. This financial year also marks a key point in the transformation for our Group.

Over the past five years, Bill Halbert has led the Board and the Group as Executive Chairman. During that period, the business has successfully refocused on those activities that deliver most value to our customers and offer opportunities to grow our market presence; at the same time, we have been able to provide progressive dividend growth to shareholders. Having completed that stage of the Group’s transition, the Board agreed it was an appropriate time to move to a more traditional Board structure, with separate Chairman and Chief Executive Officer roles. This provides Bill Halbert, as Chief Executive, with additional capacity to drive forward the Group’s strategy and I am delighted and proud to have taken up the role of Chairman.

Having seen the Group develop and transform during my time as a Non-Executive Director, I know that there is a wealth of talent within the organisation and it has such a great heritage on which to build. In my role as Chairman, my focus will be to ensure that your Board operates effectively and in line with good governance. I am also committed to being an ambassador for the Group both internally and externally, supporting Bill and his leadership team as they steer the business through its next stage of transformation.

We have an extremely effective Board, with strong, experienced Non-Executive Directors with a range of skills and experience which enables a good level of debate and challenge. Having transitioned to a new Board structure, we have been looking to appoint an additional Non-Executive Director and are mindful that one of the key challenges facing many publicly quoted companies is that of reflecting diversity on their Boards. As a Group, we are committed to reflecting diversity of all kinds, and gender in particular. This forms an important part of our People Strategy and has been a key area of focus in our selection process for a new Non-Executive Director. While the selection process is ongoing, our aim is to bring wider diversity to the Board within the next 12 months, subject to finding a candidate with the right experience and skills. Any new appointments to the Board will stand for election by shareholders at the AGM in 2015.

Kevin Walsh, one of our Executive Directors, announced his intention to retire from the Group during the summer of 2014 and he will not be seeking re-election at the AGM. Kevin joined the business in May 2004 and, alongside his Executive Director role, was responsible for the management of our KC brand for the past 10 years. During that time, he oversaw its transition into the UK’s leading provider of fibre-based services. On behalf of the Board, I’d like to thank him for his contribution and insight and wish him well with his retirement plans.

As part of our ongoing transformation, we are mindful that how we operate as a business is as important as the services we offer. There has been a great deal of progress in both areas. KC has been shortlisted in three categories in this year’s Internet Service Providers (ISPA) Awards including Best Superfast Broadband, Best Business Customer Service and Best Business Use of Cloud for our fibre-based CCTV offering. Our Eclipse brand was recognised in the Comms National Awards in the SME Vertical Solution category for its supply of ICT products and services. Our community programmes, which offer employees the chance to give something back to their local area, remain very popular with individuals and as team building opportunities. As part of our patronage of the Prince’s Trust, people across the Group have donated over 2,000 volunteering hours, in this year alone, to help disadvantaged young people to find work.

Finally, I’d like to acknowledge the immense contribution made by everyone across our organisation. Working against a backdrop of economic uncertainty and ongoing business transformation, it is challenging to deliver such progress. I’d like to thank everyone for their efforts over the past year. It is their commitment to providing inspiring customer experiences that builds our growing reputation in the market.

Graham Holden

Non-Executive Chairman
18 June 2014