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Keycom PLC (KCO)

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Wednesday 08 June, 2011

Keycom PLC

Half Yearly Report

RNS Number : 0267I
Keycom PLC
08 June 2011
 

8 June 2011

 

KEYCOM PLC

 

INTERIM RESULTS FOR THE SIX MONTHS TO 31 MARCH 2011

 

Keycom plc (the "Company" or the "Group"), is pleased to announce unaudited interim results for the six months to 31 March 2011.

 

FINANCIAL HIGHLIGHTS

 

·      A post-tax profit of £407,000 (2010: £68,000)

 

·      A trebling of pre-tax profit to £207,000 (2010: £68,000)

 

·      Earnings per share 0.7 pence (2010: 0.1 pence)

 

·      27% EBITDA improvement to £942,000 (2010: £740,000)

 

·      10% rise in revenue to £3.4million (2010: £3.1million)

 

·      Gross profit margin maintained at 64% (2010: 64%)

 

·      EBITDA now 28% of revenue (2010: 24%)

 

 

 

Enquiries:

   

Keycom plc:

 

Rod Matthews (Executive Chairman and CEO)                       07775 755 500

Graham Robertson (Finance Director)                                    01785 717 411

www.keycom.co.uk 

 

Seymour Pierce Limited:

 

John Cowie / Tom Sheldon (Corporate advisers)                      020 7107 8000

Paul Jewell (Broking)                                                                 

www.seymourpierce.com

 



 

 

Keycom plc

 

Interim Results for the six months ended 31 March 2011

 

Chairman's Statement

 

I am delighted to report a post-tax profit for the period of £407,000 compared with £68,000 for the same period last year.

 

Keycom's turnover for the six month period ended 31 March 2011 increased 10% on the prior year to £3,422,000, with an increase of 15% in the core business revenue of broadband services.  The increase primarily arises from the delivery of broadband services to the military sector.

 

The Company started the financial year with 12,000 broadband rooms in operation in the military sector.  During the first six months of the year this number was increased by 1,000.  The revenue from the military rooms described above has grown each month as the take-up increases.  The military revenue for the first half was £357,000 (2010: £67,000).  The number of rooms has increased since 31 March to 14,000 with a current revenue run rate on those rooms of £900,000 per annum; this will grow rapidly as take-up increases and the new contracts are implemented.  Further contracts have been executed with Defence Estates to enable the Company to continue implementation of further military rooms in the coming months.

 

Management is confident that the military sector will be a major contributor to the future growth of the business.

 

The revenue from broadband & voice managed services in the university & NHS key-worker sector was £2,252,000 (2010: £2,203,000).  The growth of 2%, year on year, has been modest with little change in the number of rooms serviced.  Management expects to see an increase in the number of universities seeking to outsource their broadband requirements for their residential accommodation as a consequence of the comprehensive spending review and the need to realise savings; we are already in negotiations which are likely to lead to significant growth in rooms serviced.

 

Trading

 

The turnover for the period was £3,422,000 (2010: £3,101,000), a 10% growth on the same period last year. 

 

EBITDA for the period improved by 27% to £942,000 (2010: £740,000)

 

Keycom's trading profit before tax has increased to £207,000 (2010: £68,000).

 

 

Revenue

6 months ended 31 March

 

2011

 

2010

 

Change


£'000

£'000

£'000


Broadband & voice managed services

2,609

2,270

339

+ 15%

Engineering & maintenance services

617

666

(49)

- 7%

Training

196

165

31

+ 19%

Total

3,422

3,101

321

 + 10%

 

Gross profit

6 months ended 31 March

 

2011

 

2010

 

Change


£'000

£'000

£'000


Broadband & voice managed services

1,642

1,367

275

+ 20%

Engineering & maintenance services

356

467

(111)

- 24%

Training

178

137

41

+ 30%

Total

2,176

1,971

205

+ 10%

 

 

Overall gross margin was 64% (2010: 64%) which is in line with the gross margin achieved in the broadband and voice managed services of 63% (2010: 60%).  The engineering and maintenance services businesses generated a gross margin of 58% (2010: 70%), while the training revenue generated a gross margin of 91% (2010: 83%).

 

Administrative expenses continue to be kept under tight control; at £1,234,000 (2010: £1,231,000). Turnover and gross profit have increased 10% with no increase in administrative expenses.   The administrative expenses have now fallen to 36% of revenue (2010: 40%).

 

In accordance with IFRS accounting rules, with the move into profit, the Company now expects to utilize historical tax losses of £11,500,000 and has begun the recognition of the related deferred tax asset with a credit to the income statement of £200,000 for the six month period.

 

 

Funding

 

The company continues to refinance its debt with loans of longer terms.

 

The company has made loan repayments during the six month period of £1,404,000 and raised new lease & loan finance of £1,500,000.  That new loan finance has been raised on 4 and 5 year terms. 

 

The debt and leasing market continues to be difficult in the UK, but the company continues to make progress with fund raising, albeit on a timetable slower than is preferred.

 

During the six month period, the company has made capital expenditure of £535,000 in respect of new MOD broadband contracts and upgrades to university contracts.  This expenditure has been made to ensure the development of the broadband revenues over the coming months and years. 

 

Prospects

 

Keycom now provides broadband services to in excess of 45,000 rooms, of which 14,000 are in the military sector.  The Company has a strong pipeline which should lead to a significantly higher number of rooms being serviced in the medium term.

 

We are delighted that the increased scale of the Company's operations has moved Keycom into profit.  We now have a firm base for further growth which gives your Board great optimism for the future.

 

 

Rod A Matthews

Chairman

8 June 2011

 

 



Keycom plc

Consolidated statement of comprehensive income

for the six months ended 31 March 2011

 


 

 

 

 

Note

 

Six months

to 31 March 2011

   £'000


 

Six months

to 31 March 2010

£'000


 

Year

to 30 September 2010

£'000








Revenue


3,422


3,101


6,138

 

Cost of sales


 

(1,246)


 

(1,130)


 

(2,330)

 

Gross profit


 

2,176


 

1,971


 

3,808

 

Administrative expenses


 

(1,234)


 

(1,231)


 

(3,209)

 

Operating profit before depreciation


 

942


 

740


 

1,442

Depreciation


(465)


(437)


(843)

 

Operating profit

 

 

 

477


 

303


 

599








Finance charges


(270)


(235)


(502)

 

Profit on ordinary activities before taxation


 

207


 

68


 

97








Taxation


200


-


-

 

Profit attributable to ordinary shareholders


 

407


 

68


 

97

 

Earnings per share:


 

Pence


 

Pence


 

Pence

 

Earnings per share - basic

 

2

 

0.07


 

0.01


 

0.02

Earnings per share - diluted

2

0.07


0.01


0.02

 

The Group has no recognised gains or losses other than those included in the results above.  All activities are continuing.

 

 

Keycom plc

Consolidated balance sheet

as at 31 March 2011

 


 

 

 

 

As at

 31 March 2011

   £'000


As at

 31 March 2010

£'000


As at

30 September 2010

£'000








Non-current  assets







Goodwill


8,584


8,675


8,734

Property, plant and equipment


4,597


4,018


4,377

Deferred tax asset


200


-


-

 

 


 

13,381


 

12,693


 

13,111

 

Current assets







Trade and other receivables


1,785


1,284


1,992

Cash and cash equivalents


164


10


470



1,949


1,294


2,462








Current liabilities







Trade and other payables


(1,391)


(2,684)


(1,341)

Deferred consideration


(100)


(740)


(240)

Current tax




Borrowings


(1,378)


(1,133)


(1,298)



(2,869)


(4,557)


(2,879)








 

Net current liabilities


 

(920)


 

(3,263)


 

(417)








Non-current liabilities







Deferred consideration


(126)


(457)


(309)

Borrowings


(2,684)


(2,047)


(2,468)



(2,810)


(2,504)


(2,777)








Accruals & deferred income


(1,314)


(1,356)


(1,987)








 

Net assets


 

8,337


 

5,580


 

7,930

 

Equity







Ordinary shares


6,116


4,822


6,116

Share premium account


18,122


17,095


18,122

Other reserve


459


459


459

Retained earnings


(16,360)


(16,796)


(16,767)

 

Equity shareholders' funds

 

 

 

8,337


 

5,580


 

7,930

 

 

 

Keycom plc

Consolidated statement of changes in shareholders' equity

for the six months ended 31 March 2011

 

 


Six months to 31 March 2011


Six months to 31 March 2010


Year to

30 September 2010


£'000


£'000


£'000







Opening equity

7,930


5,512


5,512







New equity issued

-


-


2,321

Net profit for the period attributable to equity shareholders

 

407


 

68


 

97







Closing equity

8,337


5,580


7,930

 

 



Keycom plc

Consolidated statement of cash flows

for the six months ended 31 March 2011

 



 

Six months to 31 March 2011

 

Six months to 31 March 2010

 

Year to

30 September 2010


Note

£'000

£'000

£'000











Cash generated by operations

3

300

816

199






Net interest paid


(193)

(235)

(343)






Net cash inflow/(outflow) from operating activities


107

581

(144)






Investing activities





Purchases of property, plant and equipment


(535)

(920)

(1,995)

Deferred consideration paid


(173)

(103)

(301)










Net cash used in investing activities

(708)

(1,023)

(2,296)






Financing activities





Proceeds from issue of shares (net of expenses)


-

-

2,320

Receipt of bank loans


-

751

-

Receipt of other loans & lease obligations


1,500

825

2,517

Repayment of bank & other loans & lease obligations


(1,205)

(1,118)

(1,895)






 

Net cash generated by financing activities


 

295

 

458

 

2,942






Net increase/(decrease)  in cash and cash equivalents

4

(306)

16

502






Cash and cash equivalents at start of period


470

(32)

(32)






 

Cash and cash equivalents at end of period


 

164

 

(16)

 

470

 

 



Notes to the financial information

 

1. Segmental information

 

Revenue and operating profit

 


Six months ended

31 March 2011

Six months ended

31 March 2010

Year ended

30 September 2010


 

Revenue £'000

Operating profit

£'000

 

Revenue £'000

Operating profit

£'000

 

Revenue £'000

Operating profit

£'000

 

By class of business:







 

Broadband & voice managed services

 

2,609

 

783

 

2,270

 

481

 

4,484

 

1,097

 

Engineering & maintenance

 

617

 

22

 

666

 

157

 

1,303

 

121

 

Training

 

196

 

65

 

165

 

50

 

351

 

104

 

 

 

3,422

 

870

 

3,101

 

688

 

6,138

 

1,322

 

Central costs


 

(393)


 

(385)


 

(723)

 

Profit from operations


 

477


 

303


 

599

 

 

2.  Earnings per share

 

The calculation of earnings per share figures for the six months ended 31 March 2011 is based on the profit attributable to ordinary shareholders of £407,000 (six months 2010: £68,000; twelve months 2010: £97,000) divided by the weighted average number of shares in issue as detailed in the table below.   

 


Six months to

31 March 2011

Six months to

31 March 2010

Year to

30 September 2010


Number of shares

Weighted average

Number of shares

Weighted average  

Number of shares

Weighted average  

 

Basic - shares in issue

 

611,576,712

 

611,576,712

 

482,243,378

 

482,243,378

 

611,576,712

 

508,394,063

 

Share options that have a dilutive effect


 

-


 

-


 

-

Diluted - adjusted number of shares


 

611,576,712


 

482,243,378


 

508,394,063

 

 

3.  Reconciliation of operating profit to net cash inflow from operating activities

 


Six months to 31 March

 2011

Six months to 31 March 2010

Year to

30 September 2010


£'000

£'000

£'000

Operating profit

477

303

599

Depreciation

465

437

843

 

Operating cash flow before movements in working capital

 

942

 

740

 

 

1,442





Decrease in receivables

207

780

72

Decrease in payables

(849)

(704)

(1,315)





 

Cash generated by operations

 

300

 

816

 

199

 

 

4.  Reconciliation of net cash flow to movement in net debt

 


Six months to 31 March

 2011

Six months to 31 March 2010

Year to

30 September 2010


£'000

£'000

£'000





Net debt at start of period

(3,297)

(2,726)

(2,726)





Increase/(decrease) in cash in the period

(306)

16

502

Cash outflow from increase in debt and lease financing

 

(295)

 

(450)

 

(1,073)





Net debt at end of period

(3,898)

(3,160)

(3,297)

 

 

5.  Analysis of net debt

 


Six months to 31 March

 2011

Six months to 31 March 2010

Year to

30 September 2010


£'000

£'000

£'000





Cash at bank net of overdrafts

164

(16)

470

Bank loans

(558)

(714)

(639)

Other loans

(2,400)

(2,237)

(2,985)

Lease obligations

(1,104)

(193)

(143)

 

Net debt

 

(3,898)

 

(3,160)

 

(3,297)

 

 

 

The Interim Statement, which has been reviewed but not audited by the Group's auditors CLB Coopers, was approved by the Board on 7 June 2011.

 

Copies of this statement will be sent to shareholders shortly and are available to the public from the Company website www.keycom.co.uk.

 

 

 

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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