Interim Management Statement

28 January 2011

KCOM Group PLC (KCOM.L) Interim Management Statement

KCOM Group PLC ("the Group") today publishes its Interim Management Statement.

Current trading

KCOM Group's trading is in line with market expectations.

Customer contracts

During a quarter which saw a strengthened multi-year order backlog within Kcom, the Group won an important new contract to design and deliver Staffordshire County Council's Public Sector Network (PSN). The agreement will see Kcom provide the Council with a county-wide network designed to allow any public sector body in Staffordshire access to the PSN and the ability to exploit its benefits. The PSN approach is a key public sector initiative that will result in several similar PSN opportunities around the country.

Other contracts secured in the quarter include the delivery of an applications integration programme for Virgin Atlantic Airways, new contracts with Sky Bet and Volkswagen and the renewal and extension of managed services provided to Admiral Insurance.

Further PSN developments across the country, and the continued extension of existing customer relationships, are among the key market opportunities for Kcom.

Outlook

The Board expects the Group to continue trading in line with current market expectations, through the final quarter of this financial year. The previously announced commitment to medium term dividend progression underlines the Board's confidence in ongoing cash generation and earnings.

Bill Halbert, Executive Chairman says: "Recent customer wins in Kcom and Smart421 and the introduction of new services within KC demonstrate our increasing strength and competitiveness in our chosen markets. Our ability to build strong relationships and help our customers exploit the power of communications to deliver tangible benefits, underpin our positive outlook for future years."

The KCOM Group announces its preliminary results on 24 May 2011.

Forward-looking statements

Certain statements in this interim 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 be 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 a result of new information, future events or otherwise.

Principal risk & uncertainties

The risks and uncertainties faced by the Group as disclosed on pages 22 and 23 of the Annual Report and Accounts to 31 March 2010 are still valid.

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