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Keycom PLC (KCO)


Tuesday 13 December, 2011

Keycom PLC

Final Results



Keycom plc (the "Company" and, together with its subsidiaries, the "Group"),
announces audited results for the year ended 30 September 2011.


  * 10% rise in revenue to £6,729,000 (2010: £6,138,000)
  * 15% rise in EBITDA of £1,654,000 (2010: £1,442,000)
  * Profit before tax increased to £351,000 (2010: £97,000)
  * Profit after tax increased to £681,000 (2010: £97,000)
  * Gross profit margin maintained at 62% (2010: 62%)
The Directors of the Company accept responsibility for the content of this


Keycom PLC
Rod Matthews, Chairman
Graham Robertson, Finance Director
T: 01785 717 777

IAF Capital Limited
Gary Pinkerton
T: 020 7036 6701




I am pleased to report the continued progress that the Group has achieved in
the year ended 30 September 2011.

The Group has delivered a profit after taxation of £681,000 (2010: £97,000), an
improvement year on year of £584,000.

Revenue has increased to £6,729,000 (2010: £6,138,000) with the core activity
of broadband and voice services accounting for 74% of that revenue (2010: 73%).

I have previously reported the development of selling the broadband and voice
services into the military accommodation sector. The revenue is generated by
individual members of the armed forces choosing to purchase broadband services
from us in their residential accommodation. The Ministry of Defence does not
bear the cost of the services and the Group is, therefore, not adversely
affected by the reported spending cuts.

We have managed to more than treble that revenue this year to £800,000 (2010: 
£230,000). Further new military sites have been activated recently and so I
expect the revenue growth to continue in the next twenty-four months.

The Group generated EBITDA of £1,654,000 (2010: £1,442,000) an increase of
14.7% on the prior year; and a pre-tax profit of £351,000 (2010: £97,000). The
requirement of IFRS to recognise some of the benefits arising from available
tax losses has resulted in the post-tax profit increasing to £681,000 (2010: 

Trading results

The principal drivers for the business remain numbers of rooms serviced and the
underlying costs of data circuits and transit charges. Charges for broadband
services have come under some pressure from competitors, but with falling
wholesale prices for backhaul and transit it has been possible to absorb these
reductions and still maintain our margins.

The revenue from the broadband and voice services increased 11.2% to £4,984,000
(2010: £4,484,000). As a consequence of the automated back office systems, the
operating profit from that business segment increased 32.9% to £1,458,000
(2010: £1,097,000).

The number of broadband rooms in service at 30 September 2011 was 46,000 (2010:
44,200). Of that total, 28,900 rooms were in the education and key-worker
sectors and 17,100 in the military sector. The rooms in the military sector
have increased in the year by 5,000 from 12,100. The number of student rooms
serviced has fallen by 3,200 since September 2010 as a consequence of some
properties being closed for refurbishment or demolition and some properties
moving to another supplier as a rationalisation of supplier management.

Revenue derived from the other business activities of engineering, maintenance
and training increased 5.5% to £1,745,000, with a corresponding operating
profit of £169,000 (2010: £225,000). There has been some evidence of customers
reducing and/or delaying training and new equipment investment as a consequence
of the recession and although it has been possible to increase revenue, the
margins on those sales have been lower.

Gross profit for the year has increased by 10% to £4,195,000 (2010: £
3,808,000). The gross margin for the year was 62%, consistent with that of the
last two years. The gross margin in broadband and voice services has increased
to 61% (2010: 60%). Broadband and voice services now account for 73% of the
Group's gross profit (2010: 71%).

Administrative expenses, excluding depreciation and profit on disposal of fixed
assets, have increased to £2,541,000 (2010: £2,366,000). This represents a
reduction to 38% of revenue (2010: 39%).

Financing costs of £511,000 (2010: £502,000) have remained similar to last year
despite a modest increase in the level of debt in the Group to finance new
capital projects.

Depreciation has increased to £947,000 (2010: £842,000) as a result of the
increased asset base following the capital expenditure in new customer sites.

We have, pursuant to the accounting standards, been required to recognise some
of the benefits of the accumulated tax losses. Accordingly, we have recognised
£400,000 on the balance sheet, whilst writing down anticipated R&D tax credits.
The net impact has been to increase the pre-tax profit of £351,000 (2010: £
97,000) to a post-tax profit of £681,000 (2010: £97,000).


There has been evidence of increased activity in the tertiary education sector
with tenders being issued for new outsourced contracts. We shall participate in
these tenders with the goal of winning a share of those new room contracts.
These are unlikely to deliver new student rooms before September 2012. However,
we have a significant number of new sites in the military sector that are
seeking the service now and our focus, to deliver revenue growth in the 2011/12
financial year, is with those opportunities. The pace at which those new
military sites are activated is dependent upon access to debt finance. We
believe that the EBITDA of the business will assist with access to that debt

The continued improvement in the profitability of the business has enabled the
Board to strengthen the senior management team by the appointment of Ms Meri
Braziel as Chief Executive. Meri joined the Group on 12 September 2011,
bringing a background in sales and marketing to assist us with our growth and
allowing me to move to the position of non-executive Chairman.

I am excited about the future for the business with increased marketing
capability and the new broadband products that we have developed for launch in

The Board is grateful to its shareholders for their continued support.
Management remains confident of the continued transformation of Keycom into a
profitable and cash generative business.

Rod Matthews - Chairman
12 December 2011

Consolidated Statementof Comprehensive Income

Year ended 30 September 2011

                                                                 2011          2010
                                                                £'000         £'000
Revenue                                                         6,729         6,138
Cost of sales                                                 (2,534)       (2,330)
                                                            ---------     ---------
Gross profit                                                    4,195         3,808
Administrative expenses                                       (3,333)       (3,209)
                                                            ---------     ---------
Operating profit before depreciation and                        1,654         1,442
exceptional items                                                                  
Profit on disposal of fixed assets                                155             -
Depreciation                                                    (947)         (843)
Operating profit                                                  862           599
Finance costs                                                   (511)         (502)
                                                            ---------     ---------
Profit on ordinary activities before taxation                     351            97
Tax on profit on ordinary activities                              330             -
                                                            ---------     ---------
Profitattributable to ordinary shareholders                       681            97
                                                            =========     =========
Profit per share:                                                                   
Profit per share - basic (pence)                                0.11p         0.02p
Profit per share - diluted (pence)                              0.11p         0.02p

Consolidated Balance Sheet

30 September 2011

                                                               2011             2010
                                                              £'000            £'000
Non-current assets                                                                  
Intangible assets                                             8,584            8,734
Tangible assets                                               5,108            4,377
Deferred tax asset                                              400                -
                                                           --------         --------
                                                             14,092           13,111
                                                           --------         --------
Current assets                                                                      
Trade and other receivables                                   1,571            1,992
Cash and cash equivalents                                       433              470
                                                           --------         --------
                                                              2,004            2,462
Current liabilities                                         (2,737)          (2,879)
                                                           --------         --------
Net current liabilities                                       (733)            (417)
                                                           --------         --------
Total assets less net current liabilities                    13,359           12,694
Non-current liabilities                                     (2,910)          (2,777)
Accruals and deferred income                                (1,838)          (1,987)
                                                           --------         --------
                                                              8,611            7,930
                                                           ========         ========
Equity attributable to equity holders                                               
Called-up equity share capital                                6,116            6,116
Share premium account                                        18,122           18,122
Other reserves                                                  459              459
Retained earnings                                          (16,086)         (16,767)
                                                           --------         --------
Total equity                                                  8,611            7,930
                                                           ========         ========


 1. Profit per share is calculated using the weighted average number of
    ordinary shares in issue of 611,576,712 (2010: 508,394,063) for the year.
 2. The financial information set out herein in respect of the years ended 30
    September 2011 and 30 September 2010 does not constitute the company's
    financial statements within the meaning of s434 Companies Act 2006 for
    those periods but has been derived from the audited statutory financial
    statements for those years and the unaudited financial information within
    the Chairman's Statement in the 2011 financial statements. The Group's
    statutory financial statements for the year ended 30 September 2011 will be
    delivered to the Registrar of Companies shortly. The auditors have reported
    on those accounts; their report was unqualified and does not contain
    statements under s498 (2) or (3) Companies Act 2006.

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