TIDMKCOM

RNS Number : 9142I

KCOM Group PLC

22 June 2017

KCOM GROUP PLC

ANNUAL FINANCIAL REPORT

22.06.2017

Publication of 2016/17 Annual Report

KCOM Group PLC announces that the Annual Report and Accounts for the year ended 31 March 2017 was posted or otherwise made available to shareholders from 20 June 2017:

The document is also available on the Company's website at www.kcomplc.com and, in accordance with Listing Rule 9.6.1, a copy has been submitted to the National Storage Mechanism and will shortly be available for inspection at www.hemscott.com/nsm.do.

A condensed set of the Company's consolidated financial statements (including related party transactions) and information on important events that have occurred during the financial year and their impact on the financial statements was included in the Company's announcement of its preliminary results on 6 June 2017. That information, together with the information set out below, which is extracted from the Company's 2016/17 Annual Report, constitutes the information required to comply with DTR 6.3.5.

Principle Risks and Uncertainties

 
 Area                   Change   Why is it important?           What are we doing 
                         in                                      to mitigate the risk? 
                         level 
                         of 
                         risk 
---------------------  -------  -----------------------------  ----------------------------- 
 Growing                         As noted last                  There has been a 
  revenue                         year, we continue              lot of focus internally 
  in our                          to move away                   over recent years 
  Enterprise                      from the delivery              on clearly defining 
  segment                         of network-based               the strategy for 
  to offset                       services and                   the business. The 
  the decline                     are focused                    Executive Leadership 
  of network-based                strategically                  Team has participated 
  revenues                        on the provision               in a number of strategy 
                                  of complex communication       days where the strategy 
                                  solutions and                  has been discussed 
                                  cloud-based                    and tested using 
                                  services. There                various scenarios. 
                                  is a risk that,                There has also been 
                                  during this                    strategic advice 
                                  transition from                sought externally 
                                  old to new technologies,       from industry experts, 
                                  revenue from                   all of which has 
                                  legacy activities              supported the strategic 
                                  may decline                    direction of KCOM. 
                                  faster than                    We believe that our 
                                  revenue from                   experience and skill-set 
                                  the new services               give us a unique 
                                  grows.                         position in the market 
                                                                 to provide our customers 
                                                                 with new and more 
                                                                 efficient ways to 
                                                                 collaborate and interact, 
                                                                 which in turn will 
                                                                 lead to significant 
                                                                 growth in the Enterprise 
                                                                 segment, to offset 
                                                                 the decline of legacy 
                                                                 revenues. 
                                                                 We have updated our 
                                                                 reporting in the 
                                                                 year to separate 
                                                                 out the legacy network 
                                                                 customers from the 
                                                                 complex IP solutions 
                                                                 customers, which 
                                                                 gives us greater 
                                                                 transparency in relation 
                                                                 to the progress being 
                                                                 made in the strategic 
                                                                 focus area. 
---------------------  -------  -----------------------------  ----------------------------- 
 Substitute                      Much of our                    We are always seeking 
  technologies                    consumer business              to improve our services 
  entering                        is currently                   to our consumers 
  the consumer                    based on the                   and to provide a 
  market                          provision of                   speed and quality 
                                  services over                  of service that would 
                                  a fixed-line                   not be achievable 
                                  network. If                    over a wireless network. 
                                  substitute technologies        Our fibre deployment 
                                  were developed                 is part of this aim. 
                                  to the extent                  We also provide bundles 
                                  where similar                  of products and services 
                                  services could                 that offer our consumers 
                                  be provided                    value for money and 
                                  without the                    which would provide 
                                  use of a fixed-line            a clear alternative 
                                  network then                   to a substitute technology, 
                                  this would clearly             should one enter 
                                  present a competitive          the market. We have 
                                  threat to the                  also appointed a 
                                  consumer part                  Director of Product 
                                  of our business.               and Technology Innovation 
                                                                 in the year to drive 
                                                                 our thinking around 
                                                                 new and innovative 
                                                                 products and services 
                                                                 that we can offer 
                                                                 to our consumers, 
                                                                 either on our own 
                                                                 or through our partnership 
                                                                 arrangements. 
---------------------  -------  -----------------------------  ----------------------------- 
 Upgrading                       The equipment                  We are continuing 
  of our                          used to run                    with our investment 
  network                         our network                    plan to mitigate 
  equipment                       in Hull and                    the risk of service 
                                  East Yorkshire,                failure from obsolete 
                                  and to provide                 equipment. At the 
                                  some of our                    same time we are 
                                  national network-based         investing in the 
                                  services, requires             continued deployment 
                                  upgrading as                   of our superfast 
                                  demand for broadband           fibre-based broadband 
                                  and cloud-based                in Hull and East 
                                  services continues             Yorkshire which provides 
                                  to increase                    market leading broadband 
                                  at a fast pace.                speeds and which 
                                                                 is on track to be 
                                                                 available to approximately 
                                                                 150,000 properties 
                                                                 by the end of December 
                                                                 2017. 
---------------------  -------  -----------------------------  ----------------------------- 
 Accuracy,                       The security,                  We have clear and 
  security                        confidentiality                comprehensive policies 
  and confidentiality             and accuracy                   in place and have 
  of customer                     of our customer                run mandatory training 
  data                            data is of paramount           in this area for 
                                  importance to                  all employees. The 
                                  us and to our                  forthcoming implementation 
                                  customers.                     of the General Data 
                                                                 Protection Regulation, 
                                                                 in May 2018, means 
                                                                 that there will be 
                                                                 more stringent requirements 
                                                                 in this area and 
                                                                 we have formed a 
                                                                 Steering Group, consisting 
                                                                 of representatives 
                                                                 from across the business, 
                                                                 to focus on compliance 
                                                                 with the new requirements. 
                                                                 We also have a Data 
                                                                 Strategy team in 
                                                                 place to look at 
                                                                 other data matters 
                                                                 across the business, 
                                                                 whose primary focus 
                                                                 in the year has been 
                                                                 the accuracy of customer 
                                                                 data. 
---------------------  -------  -----------------------------  ----------------------------- 
 Customer                        Our aim is to                  Last year we reported 
  service                         provide exceptional            that we were aware 
  and delivery                    service wherever               of some issues in 
                                  we can. The                    the customer experience 
                                  risk of not                    we were providing 
                                  achieving this                 in our Hull and East 
                                  is therefore                   Yorkshire business. 
                                  a key risk for                 During the year we 
                                  the business.                  have implemented 
                                                                 new technology in 
                                                                 our call centres 
                                                                 and provided additional 
                                                                 training to our people 
                                                                 which has resulted 
                                                                 in a reduction in 
                                                                 our call waiting 
                                                                 times. Our fibre 
                                                                 deployment is key 
                                                                 to ensuring the service 
                                                                 received by our customers 
                                                                 meets or exceeds 
                                                                 expectations but 
                                                                 we also continue 
                                                                 to invest in our 
                                                                 copper network to 
                                                                 improve the experience 
                                                                 for all of our customers 
                                                                 where possible. 
---------------------  -------  -----------------------------  ----------------------------- 
 Security                        We need our                    We hold a number 
  and resilience                  networks and                   of standards that 
  of our                          IT systems to                  relate to security 
  networks                        continue operating             and resilience, including 
  and IT                          in order to                    ISO 27001, the Information 
  systems                         continue to                    Security Management 
                                  provide service                standard, and ISO 
                                  to our customers.              22301, the Business 
                                  It is therefore                Continuity Management 
                                  essential that                 standard. We have 
                                  we have secure                 a Head of Security 
                                  and resilient                  and Compliance who 
                                  systems and                    is responsible for 
                                  networks in                    ensuring a consistent 
                                  place.                         approach to security 
                                                                 and resilience across 
                                                                 the business and 
                                                                 we have detailed 
                                                                 policies and processes 
                                                                 in place. We regularly 
                                                                 test our resilience 
                                                                 plans and have held 
                                                                 a specific test in 
                                                                 relation to our systems 
                                                                 resilience in the 
                                                                 year. Any lessons 
                                                                 learnt from such 
                                                                 tests are fed back 
                                                                 into the resilience 
                                                                 planning process, 
                                                                 which in turn is 
                                                                 continually reviewed 
                                                                 and updated on an 
                                                                 ongoing basis. 
---------------------  -------  -----------------------------  ----------------------------- 
 A breach                        As a provider                  We have an in-house 
  of our                          of telecommunications          Regulatory team which 
  regulatory                      services, we                   is responsible for 
  obligations                     are regulated                  ensuring we understand 
                                  by Ofcom and                   our obligations and 
                                  there are multiple             that these are communicated 
                                  conditions and                 to the appropriate 
                                  regulations                    people across the 
                                  with which we                  business so that 
                                  need to comply.                we can ensure the 
                                  We take our                    necessary controls 
                                  regulatory responsibilities    are in place. We 
                                  extremely seriously            have undertaken a 
                                  and seek to                    number of internal 
                                  ensure we are                  reviews in the year 
                                  compliant in                   to check our compliance 
                                  all regards.                   and also work closely 
                                                                 with our suppliers 
                                                                 to make sure that 
                                                                 our obligations are 
                                                                 passed on and complied 
                                                                 with in areas where 
                                                                 we are reliant on 
                                                                 third parties for 
                                                                 the provision of 
                                                                 services. 
---------------------  -------  -----------------------------  ----------------------------- 
 Health                          The health and                 We have an in-house 
  and safety                      safety of our                  Health and Safety 
                                  people is of                   team which has significant 
                                  paramount importance           experience in the 
                                  to us and we                   health and safety 
                                  have a number                  issues specific to 
                                  of people who                  our industry. We 
                                  undertake high                 have a comprehensive 
                                  risk activities,               training programme 
                                  such as climbing               in place which provides 
                                  telegraph poles,               general training 
                                  working in confined            to all of our people 
                                  spaces, working                through mandatory 
                                  alone or working               e-learning and specific 
                                  next to roads.                 training to those 
                                  It is important                who undertake higher 
                                  to us to mitigate              risk activities, 
                                  health and safety              which is then followed 
                                  risk as far                    up by on-the-job 
                                  as possible                    checks to ensure 
                                  to try to prevent              our engineers are 
                                  incidents from                 practising what they 
                                  occurring.                     have learnt. For 
                                                                 large projects which 
                                                                 contain increased 
                                                                 health and safety 
                                                                 risks, such as our 
                                                                 fibre deployment, 
                                                                 we have brought in 
                                                                 external health and 
                                                                 safety advisors to 
                                                                 work on the project 
                                                                 full-time to ensure 
                                                                 we are complying 
                                                                 with all of the appropriate 
                                                                 health and safety 
                                                                 requirements. 
---------------------  -------  -----------------------------  ----------------------------- 
 Flooding                        Flooding has                   Prior to the 2007 
                                  become an increasingly         floods we had already 
                                  regular occurrence             sought to mitigate 
                                  in many parts                  the risk of flooding 
                                  of the country                 in the design of 
                                  in recent years                our telephony network 
                                  and Hull, where                and through using 
                                  much of our                    raised floors in 
                                  business is                    some of our buildings. 
                                  based, is no                   This meant that the 
                                  exception. There               impact of the floods 
                                  were extreme                   in 2007 on our business 
                                  floods experienced             was minimal. We have 
                                  in Hull in June                continued to improve 
                                  2007 and there                 our defences further 
                                  has been smaller-scale         since that time, 
                                  flooding experienced           installing powerful 
                                  at times since.                water pumps and flood 
                                  There is a risk                alarms at key sites 
                                  that such flooding             and flood defence 
                                  could impact                   barriers where appropriate. 
                                  upon our business              We monitor flood 
                                  if we do not                   risk closely and 
                                  take the necessary             are always alert 
                                  steps to mitigate              to increased risks 
                                  the risk where                 caused by extreme 
                                  possible.                      weather and high 
                                                                 tides, so that we 
                                                                 can activate our 
                                                                 defences as necessary 
                                                                 if and when required. 
                                                                 Where we rely on 
                                                                 partners to provide 
                                                                 services we seek 
                                                                 to work with them 
                                                                 to ensure that their 
                                                                 services are resilient 
                                                                 to flooding wherever 
                                                                 possible. 
---------------------  -------  -----------------------------  ----------------------------- 
 

Directors' Responsibilities Statement

Each of the Directors as at 31 March 2017 whose names and functions are listed on pages 36 and 37 of the Annual Report 2016/17 confirm that, to the best of their knowledge:

-- The financial statements, which have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union, 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 include 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 they face.

In the event of any queries, please contact Kathy Smith, Company Secretary on 01924 882501.

This information is provided by RNS

The company news service from the London Stock Exchange

END

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