AGM and Interim Management Statement

16 July 2010

KCOM Group PLC (KCOM.L) AGM and Interim Management Statement

KCOM Group plc ("KCOM") today publishes its Interim Management Statement for the period from 1 April to 30 June 2010. This update will also be provided to shareholders attending the Company's AGM at 11am today.

Current trading

KCOM Group's trading for the three months to 30 June 2010 has been in line with expectations, as set out in our preliminary results announcement on 25 May 2010.

Following the substantial change and progress last year, our emphasis is on a return to growth in this, the second year of transformation. We will achieve this by exploiting our core strengths and capability, together with those of our new strategic partnerships.

Pensions update

As announced in May, in parallel with the funding discussions, we undertook consultation on proposals to close KCOM's two defined benefit pension schemes to future accrual whilst breaking the link to final salary alongside other changes to our pension arrangements. This consultation is now concluded and both schemes are due to close to future accrual in September 2010. From 1 October, the Group will provide a single defined contribution scheme for all employees.

The tri-annual valuation of the Kingston Communications Pension Scheme commenced on 1st April 2010. We have reached an agreement, pending the final outcome of the actuarial valuation, that KCOM will make total deficit repair payments to this Scheme of £21 million over the three years to March 2013 (previous deficit funding had been £2.9m per annum). Of this, £9.2 million will be paid during the current financial year with the remainder spread equally over the subsequent two years.

Outlook

As previously stated, our aims for this year are to return to growth and to provide medium term certainty with regard to our pension funding position.

We continue also to improve further the overall financial position of KCOM through a combination of measures, including debt and working capital management and rigorous cost control.

KCOM Group expects to announce its interim results on 23 November 2010.

Forward-looking statements

Certain statements in this statement are forward-looking. Although the Group believes that the expectations reflected in these forward-looking statements are reasonable, we can give no assurance that these expectations will prove to have been correct. Because these statements involve risks and uncertainties, actual results may differ materially from those expressed or implied by these forward-looking statements.

We undertake no obligation to update any forward-looking statements whether as result of new information, future events or otherwise.

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