Annual Report and Accounts 2007/08

• Business & operating review
• Financial review
• Corporate social responsibility
• Corporate governance
  • Good governance and the Code of Best Practice
  • The Board of Directors
  • Board committees
  • Internal control
  • Appointment of auditors to non-audit engagements
  • Statement of Directors' responsibilities
  • Relations with shareholders
• Board of Directors

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Directors’ report

Corporate governance

Relations with shareholders

The Company is committed to establishing constructive relationships with investors in order to assist it in developing an understanding of the views of its shareholders. Meetings are held from time to time with the Company’s principal shareholders to discuss the Company’s strategy and performance, and to obtain feedback. The Company also has in place a formal programme of meetings with institutional investors. The Company has published detailed Group financial and operating data half yearly.

The Company has an investor relations function which aims to actively encourage communications between the Company and its shareholders. Private investors may obtain information on the Company’s strategy and performance from the Company’s website at www.kcom.com, which includes details of press releases and copies of presentations given at analysts’ briefings. Copies of the Group’s financial reports may also be found on the Company’s website.

The Chairman and Senior Independent Non-Executive Director are always available to meet with our major shareholders if required. Additionally, the Board is briefed monthly on investor relations and any relevant shareholder concerns. Our Non-Executive Directors would be very willing to meet with shareholders, if such meetings were requested. All Directors attend our Annual General Meeting during which there is an opportunity for shareholders to meet and talk with the Directors over refreshments.

The Board considers that the Company’s Annual General Meeting represents a forum for communication between the Company’s shareholders and its Directors. The Company’s Chairman and Directors will be available to answer questions at the AGM. The Board has sought to encourage shareholder participation by inviting questions in advance and referring minority interest questions for later detailed response. Details of the resolutions to be proposed at the AGM are set out in the separate notice of the AGM provided to all shareholders.

The Company will disclose proxy voting totals both at the AGM and subsequently on the Company website.

The Company welcomes the opportunity for active shareholder participation at its AGM. With approximately 35,000 local private shareholders, many of whom are also customers, the Board believes that voting on a show of hands provides a valuable opportunity for local sentiment and concerns to be expressed, but will keep under review developing best practice with regard to voting of all resolutions on a poll.

Signed on behalf of the Board

Paul Simpson

Company Secretary

29 May 2008