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Keycom PLC (KCO)

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Wednesday 13 October, 2010

Keycom PLC

Trading Statement

RNS Number : 2753U
Keycom PLC
13 October 2010
 



13 October 2010

 

 

Keycom plc ("Keycom" or "the Company")

Trading statement

 

 

The Board of Keycom is pleased to provide the following trading update prior to entering a closed period in advance of the announcement of the full year results to 30 September 2010.  The full year results are planned to be announced on 16 December 2010.

 

Preliminary results

 

The revenue of the Company has, historically, always been seasonal because student residential accommodation is occupied primarily during term-time.  This position has been changing with the shift toward student accommodation landlords contracting for a full 52 weeks per annum, coupled with the development of the broadband services into the military sector, where there is no seasonality of our income.  Although seasonality has not been completely eradicated, revenue for the second half of the year is up 20% on the prior year and approaching that of the first six months (£3.1 million).   Revenue for the twelve months to 30 September 2010 will, therefore, exceed £6.0 million.  This represents a year on year increase of approximately 25%.

 

Improved costs have been negotiated on broadband circuit and backhaul, so the margins have improved modestly in the second six months compared to the prior year.  The gross margin of 62% reported for the year ended 30 September 2009 has been maintained.  That, together with the stability of administrative expenses, means that the EBITDA for the second six months is expected to be close to that of the first six months; with a full year EBITDA anticipated of approximately £1.4 million, an increase of some 120% over the prior year.

 

The Company expects to report a profit for the twelve months to 30 September 2010 of approximately £0.1 million (2009: loss £0.6 million).

 

Operations

 

The Company starts the new financial year with total broadband rooms in operation of over 44,000 (2009: 32,900).  Further contracts have recently been executed with Defence Estates to enable the Company to continue implementation of further military rooms in the coming months.

 

Take-up in the military rooms is not as high as that experienced in the student market; however, the rooms are occupied all-year round except when those members of the armed forces are away on tours of duty.  Management expects the take-up of broadband services in the military sector to increase significantly over the coming twenty-four months.  Revenue in the military broadband sector was £80k in the year ended 30 September 2009.  The revenue from the sector has trebled this year.

 

At the date of this announcement, the Company has more than 12,000 rooms operational in this sector (2009: 4,000) and management is confident that the military sector will be a major contributor to the future growth of the business.

 

Funding

 

As previously announced, the Company successfully raised £1.9 million of cash through a new equity issue during the year at a subscription price of 2.0 pence per share.  It also converted £450k of loans into equity in addition to securing a further £2.5 million of debt finance during the year.  That fundraising has enabled the Company to fund ongoing capital expenditure, repay short term debt and trade & other creditors, with a consequential improvement to the Company's balance sheet which has previously shown significant net current liabilities. 

 

The Company has finished the financial year with cash balances of £460k at 30 September 2010 (2009: net overdraft of £32k).

 

The Directors are pleased with the continuing positive progress being made by the Company.

 

 

 

 

 

Contacts:

 

Keycom plc:

 

Rod Matthews (Executive Chairman and CEO)                    07775 755 500

Graham Robertson (Finance Director)                                  01785 717 411

 

Seymour Pierce:

 

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

Paul Jewell (Broking)                                                              020 7107 8000

 


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