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Keycom PLC (KCO)

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Thursday 16 December, 2010

Keycom PLC

Final Results

RNS Number : 0481Y
Keycom PLC
16 December 2010
 

 

KEYCOM PLC

 

RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2010

 

Keycom plc (the "Company" and, together with its subsidiaries, the "Group"), is pleased to announce audited results for the year ended 30 September 2010.

 

FINANCIAL HIGHLIGHTS

 

·     26% rise in revenue to £6,138,000 (2009: £4,856,000)

 

·     EBITDA of £1,442,000 (2009: £638,000) an improvement of £804,000 (126%) on the prior year

 

·     Maiden profit after tax of £97,000 represents an improvement of £685,000 on the prior year (2009: loss £588,000)

 

·     Gross profit margin maintained at 62% (2009: 62%)

 

 

Enquiries:

   

Keycom plc                                                                                                 

Rod A Matthews, Chief Executive                                                                   07775 755500  

Graham L Robertson, Finance Director                                                         01785 717411                                                 

www.keycom.co.uk 

 

Seymour Pierce Limited                 

John Cowie/Tom Sheldon (Corporate advisory)

Paul Jewell (Broking)                                                                                      020 7107 8000

www.seymourpierce.com

 



KEYCOM PLC

ANNOUNCEMENT OF RESULTS TO 30 SEPTEMBER 2010

 

CHAIRMAN'S STATEMENT

I am pleased to report on the significant progress that the Group has achieved during the year to 30 September 2010.

The Group delivered a maiden profit for the year ended 30 September 2010 of £97,000, an improvement of £685,000 from the loss of £588,000 in the prior year.

The Group generated EBITDA for the year of £1,442,000 (2009: £638,000); an improvement over the prior year of £804,000, an increase of 126% on the prior year.

 

The focus of the business continues to be on the provision of broadband services to multiple-occupancy accommodation.   Initially those services were focused on student accommodation, but the Group has previously confirmed its desire to utilize its expertise in markets with similar end-user characteristics such as NHS, key-worker and the military sector.   The current year has seen significant expansion into Ministry of Defence establishments.  Despite the reported spending cuts in the military expenditure by the government, I expect the number of rooms to continue to grow because broadband has not been provided to military barracks before.   Also the cost of provision of broadband is not borne by the government and the payment for the service comes solely from the individual members of the armed forces that wish to use our services.

 

Trading results

 

The principal driver of value in the Keycom business remains the number of broadband rooms serviced.

 

At 30 September 2010 the Group had 44,200 (2009: 32,900) active broadband rooms, an increase of 34% in the year.

 

Further new contracts have been executed in the military sector and the growth in the coming year is expected to continue.

 

Revenue for the year was £6,138,000 (2009: £4,856,000), a 26% growth on the same period last year.   £786,000 of the increase over the prior year was derived from a new contract with the University of Edinburgh which commenced on 26 August 2009 for the provision of broadband and voice services to in excess of 6,000 student rooms.

 

Broadband (and voice) services revenue increased 35% over the same period in the prior year to £4,484,000 (2009: £3,315,000).  Revenue derived from other activities was £1,654,000 (2009: £1,541,000), an increase of 7%.

 

Gross profit for the year has increased by 27% to £3,808, 000 (2009: £3,002,000).   Gross margin for the year was 62%, consistent with the previous year which was also 62%.   The broadband gross margin has been maintained at 60%, also consistent with the level of the prior year.

 

Broadband and voice services now contribute 71% of the Group's gross profit (2009: 68%). 

 

Administrative expenses, excluding depreciation, amortisation and exceptional items, despite the growth in customers and revenue, have been held static at £2,366,000 (2009: £2,364,000).  The systems supporting the services are automated and increases in broadband rooms in service and the associated revenue do not drive headcount increases.  Accordingly, the administrative expenses are only 39% of revenue, down from 49% in the prior year.

 

Financing costs of £502,000 (2009: £345,000) have increased as a consequence of the increased level of debt in the Group to finance new capital projects. 

 

Depreciation has increased to £842,000 (2009: £785,000) as a result of the increased asset base following the capital expenditure.

 



Funding of the business

During the year, the Company raised new finance of £4,837,000 (2009: £2,765,000); comprising equity (net of associated expenses) of £2,320,000 and debt of £2,517,000.  The directors are pleased to have been able to raise such finance in the continuing difficult financial climate for debt transactions.

Equity placing & loan conversion

Following the performance of the Group in the first six months of the year, some of the shareholders offered to provide additional equity finance at 2.0p per share.  With the conversion of £450,000 of loan notes new equity of £2,320,000 was raised.

Debt

Much of the debt on the Group's balance sheet at 30 September 2009 was repayable in the short-term arising from the acquisitions in 2008.  The Group has been able to repay short-term debt and deferred consideration of £2,196,000 during the year from the effective replacement with longer-term debt of £2,517,000.

£966,000 of that new debt was raised through lease and receivables financing, repayable on 3 - 5 year term.  £800,000 of that new debt was provided by a shareholder.  That debt is repayable during the course of the next two years.  The balance of debt finance, of £751,000, came in the form of bank loans.

Since 30 September 2010, further debt finance has been raised of £300,000 to repay loans falling due within twelve months and replaced with loans repayable over a longer term.

 

The directors expect the future servicing of its debt to be achieved from operating cashflow.

 

 

Current developments

 

The management is pleased with the growth in the military sector, which until now has not had the benefit of broadband services being available to individual members of the armed forces in their residential accommodation.  Management believes that the development of the Group's services into a greater number of military accommodation sites around the UK will provide the platform for further revenue growth.  That, coupled with the degree of automated systems, lead the directors to be satisfied that the increase of scale of the enlarged Group should generate a significant increase in profit.

 

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

 

 

Rod Matthews - Chairman

 

15 December 2010

 

Consolidated Statement of Comprehensive Income

Year ended 30 September 2010

 


2010 

2009  


£'000

£'000

Revenue



Continuing operations

6,138

3,431

Acquisitions

1,425


-------------

-------------


6,138

4,856

Cost of sales

(2,330)

(1,854)


-------------

-------------

Gross profit

3,808

3,002




Administrative expenses

(3,209)

(3,249)


-------------

-------------

Operating profit before depreciation and exceptional items

1,442

638

Depreciation

(843)

(785)

Exceptional items

(100)




Operating profit/(loss)



Continuing operations

599

(767)

Acquisitions

520


-------------

-------------


599

(247)




Interest receivable

4

Interest payable and similar charges

(502)

(345)


-------------

-------------

Profit/(loss) on ordinary activities before taxation

97

(588)




Tax on profit on ordinary activities


-------------

-------------

Profit/(loss) attributable to ordinary shareholders

97

(588)


=========

=========

Profit/(loss) per share:



Profit/(loss) per share - basic (pence)

0.02p

(0.12)p

Profit/(loss) per share - diluted (pence)

0.02p

(0.12)p




 

 

 

Consolidated Balance Sheet

30 September 2010                                         

 


2010

2009


£'000

£'000

Non-current assets



Intangible assets

8,734

8,667

Tangible assets

4,377

3,492

Investments


----------------

----------------


13,111

12,159


----------------

----------------

Current assets



Trade and other receivables

1,992

2,064

Cash at bank

470

70


----------------

----------------


2,462

2,134

Current liabilities

(2,879)

(4,682)


----------------

----------------

Net current liabilities

(417)

(2,548)


----------------

----------------

Total assets less current liabilities

12,694

9,611




Non-current liabilities

(2,777)

(2,011)

Accruals & deferred income

(1,987)

(2,088)


----------------

----------------


7,930

5,512


===========

===========




Equity attributable to equity holders



Called-up equity share capital

6,116

4,822

Share premium account

18,122

17,095

Other reserves

459

459

Retained earnings

(16,767)

(16,864)


----------------

----------------

Total equity

7,930

5,512


===========

===========

 

 

 

NOTES

 

1.     Profit/(loss) per share is calculated using the weighted average number of ordinary shares in issue of 508,394,063 (2009: 482,243,378) for the year to date.

 

2.     The financial information set out herein in respect of the years ended 30 September 2010 and 30 September 2009 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 accounts for those years and the unaudited financial information within the Chairman's Statement in the 2010 accounts. The Group's statutory accounts for the year ended 30 September 2010 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.

 


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