The Company announces that all resolutions proposed at the Company’s Annual General Meeting (“AGM”) this morning were duly passed.
For further information contact:
| Keycom plc Meri Braziel (Chief Executive) |
Tel: 01785 717427 |
| Daniel Stewart David Hart/James Felix |
Tel: 020 7776 6550 |
THE DIRECTORS OF THE COMPANY ACCEPT RESPONSIBILITY FOR THE CONTENTS OF THIS ANNOUNCEMENT
The Company announces that it has posted a circular (the “Circular”) to Shareholders seeking their approval for a series of resolutions to be proposed at the Company’s Annual General Meeting (“AGM”) that relate to the Company’s efforts to restructure its debt and carry out a capital reorganisation.
As part of a concerted effort to reduce the Company’s financing costs, it has been agreed with Leslie T. Halpin (“Mr Halpin”), who was Chairman of the Company until he was forced to retire through ill health on 1 October 2012, that a proportion of debt owing to him will be capitalised into ordinary shares, with the remaining debt consolidated into Convertible Loan Notes.
As previously announced on 14 February 2013 when the Company released its Annual Financial Report and Accounts, the Company faced difficult trading conditions last year and reported a substantial loss. Net debt also rose to nearly £4 million during the year and has increased further since the year end. Most of the debt has been provided by Mr Halpin, who is also the Company’s largest shareholder following his underwriting of the rights issue through which the Company raised £1.4 million in March last year.
The board believes it is vital to have access to additional finance in order to develop the business as all contract wins entail new capital expenditure. Of the loans outstanding at the year end, approximately £2.4 million of principal was provided by Mr Halpin who has agreed to defer payment of interest due for the time being. Mr Halpin has provided further loan finance of £700,000 since the year end. The board is extremely grateful to him for his substantial and vital continuing support for the Company.
Part of the agreement that has been reached with Mr Halpin will result in £1.35m of the debt due to him being converted into New Ordinary Shares, conditional upon the Capital Reorganisation occurring, at a price of 45 pence per share, which is somewhat higher than the post Capital Reorganisation equivalent to the current quoted mid market price for the Existing Ordinary Shares. The second part of the agreement will see the outstanding principal and accrued interest totalling at 30 June 2013, £2,618,210, which currently consists of differing debt instruments, all being re-financed into the Convertible Loan Notes at a reduced interest rate of 10%.. This would result in Mr Halpin’s shareholding being in excess of 50% of the Company’s Enlarged Share Capital. As a consequence, the Company is seeking a waiver of Rule 9 of the Takeover Code, which would otherwise require Mr Halpin to make an offer to acquire the New Ordinary Shares that he did not own. A resolution seeking Independent Shareholder approval of the Rule 9 Waiver is included in the Notice of Annual General Meeting. The agreement with Mr Halpin is conditional on the Waiver Resolution and Resolutions 2, 7, 8 and 9 being approved by Shareholders at the AGM.
In addition to the Debt Restructuring and to enable it, it has been agreed to reduce the excessive number of shares in issue for such a relatively small Company, which will also have the effect of raising the share price above par thereby making it possible to issue new shares, and the Company intends to implement this by carrying out the Capital Reorganisation.
It is proposed that every 10,000 Existing Ordinary Shares held by Shareholders on the Record Date will be consolidated into 1 ordinary share of £100 each. The ordinary shares arising on such consolidation will then be split into 1 new Ordinary Share of £1.00 each and 1 Deferred Share of £99.00 each, with each new Ordinary Share of £1.00 being immediately then sub-divided into 50 New Ordinary Shares of £0.02.
Pre conversion of Mr. Halpin’s £1.35 million of debt into New Ordinary Shares, the Shareholders will hold the same proportion of the Company’s share capital as before the Capital Reorganisation (subject to any fractional entitlements) and the New Ordinary Shares will carry equivalent rights under the Articles of Association of the Company to the Existing Ordinary Shares. Fractions of shares arising as a result of the Capital Reorganisation will be aggregated and sold on behalf of the relevant shareholders and the net proceeds of sale (subject to retention by the Company of amounts not exceeding £3) will be paid pro rata to those shareholders entitled to them. Shareholders holding less than 10,000 Existing Ordinary Shares will cease to hold any shares in the Company and their shares will be sold and the net proceeds of sale (subject to retention by the Company of amounts not exceeding £3) paid to them which will effect a disposal of their entire holding for tax purposes. It is intended that such payments will be made on 17 May 2013.
The Deferred Shares will have nominal rights and in practical terms they will have no value and they will not be admitted to trading on ISDX. The Board may decide to cancel the Deferred Shares at a future date. If the Reorganisation is approved, the share capital of the Company will comprise, including New Ordinary Shares issued on Conversion, 6,807,850 New Ordinary Shares and 3,807,850 Deferred Shares, subject to any adjustments which may arise as a result of dealing with fractional entitlement.
It is expected new Share Certificates in respect of the New Ordinary Shares will be despatched on 17 May 2013. No Certificates will be issued in respect of the Deferred Shares. Shares to be issued under existing options and warrants will be adjusted to reflect the Capital Reorganisation.
A notice of the AGM (“AGM Notice”) to be held on 9 May 2013 at 10am at the offices of Daniel Stewart & Company plc, Becket House, 36 Old Jewry, London, EC2R 8DD, is included in the Circular sent to shareholders. The AGM Notice and the Circular have also been uploaded to the Company’s website (www.keycom.co.uk).
For further information contact:
Keycom plc
Meri Braziel (Chief Executive) - Tel: 01785 717427
Daniel Stewart
David Hart/James Felix - Tel: 020 7776 6550
THE DIRECTORS OF THE COMPANY ACCEPT RESPONSIBILITY FOR THE CONTENTS OF THIS ANNOUNCEMENT
Keycom plc (the “Company” and, together with its subsidiaries, the “Group”), announces audited results for the year ended 30 September 2012.
The Directors of the Company accept responsibility for the content of this announcement.
This is my first report to you since I was invited to join the Board, which I did on 1st October 2012, and became chairman in succession to Les Halpin who had to step down for health reasons.
The year that ended on 30th September 2012 was not an easy one for the Company with a number of changes at senior level and many challenges and some areas of progress. We continue to be subject to competitive pricing pressures in our traditional areas of business, especially in the higher education sector, but are pleased that the military accommodation sector has continued to develop well.
Trading results
Despite the difficult conditions, the total Group revenue for the year increased by 5% to £7,066,000 (2011: £6,729,000) with the core activity of broadband accounting for 77% of that revenue (2011: 74%). The revenue from managed broadband services increased 9% to £5,429,000 (2011: £4,984,000). Reductions in higher education broadband revenues were offset by the growth in the military sector where we increased revenue by 76% to £1,408,000 (2011: £800,000) after increasing the wireless broadband (WiFi) capability at many of our sites.
The gross number of serviced broadband rooms at 30 September 2012 was 53,100 (2011: 46,000). Of that total, 28,000 rooms were in the education and key-worker sectors and 25,100 in the military sector. The rooms in the military sector have increased in the year by 8,000. The number of student rooms fell during the year reflecting the loss of two contracts for 4,500 rooms and the securing of contracts for 3,300 new rooms.
Revenue derived from the other activities, engineering maintenance and training, decreased 6% to £1,637,000, with an operating profit of £112,000 (2011: £169,000). We have found that customers continue to defer training and capital investment because of lack of confidence in the outlook for their businesses.
Gross profit for the year after exceptional costs decreased by 3.6% to £4,043,000 at a margin of 57% (2011: £4,195,000; 62% margin). Wages and salary costs increased by 5.6% due to the need for additional staff on the introduction of 24 hour customer support 7 days a week and higher senior management costs. Administrative expenses, excluding depreciation and profit on disposal of fixed assets, increased to £3,075,000 (2011: £2,541,000). The company undertook financial and strategic reviews in 2012 with external advisers, incurring one off consultancy costs. Recruitment and interim staffing costs were higher as a result of the changes in the senior management team and the Group incurred marketing and rebranding expenses, which it had not the previous year. The Group EBITDA was £1,036,000 (2011: £1,654,000).
Financing costs of £511,000 (2011: £511,000) have remained similar to last year despite an increase in the level of debt.
Depreciation increased to £1,378,000 (2011: £947,000) reflecting capital expenditure on new customer sites, and accelerated depreciation of £155,000 as a result of termination of a higher education contract.
In line with current accounting standards, we continue to recognise £600,000 of the potential benefits of the Group’s accumulated tax losses as a deferred tax asset which is the same figure as was reported at the interim stage.
I regret we are reporting a net loss for the year of £4,740,000 (2011 profit: £681,000), which includes the exceptional write-offs previously announced with the half year’s results and a substantial impairment of goodwill. The Board has undertaken a detailed review of the goodwill associated with previous acquisitions and decided to reduce this by £3,654,000, to bring it to a figure that it believes to be more realistic.
Financing
Net debt increased by £528,000 to £3,998,000 during the year and this was in addition to the £1,404,000 (net) of new share capital raised in March 2012, which was used to fund capital expenditure on the expansion of military rooms serviced.
It is vital to have access to additional finance in order to develop the business as all contract wins entail new capital expenditure. Of the loans outstanding at the year end, £2,698,569 of principal was provided by Les Halpin who has agreed to defer receipt of interest for the time being. Les has provided further loan finance of £700,000 since the year end. The board is extremely grateful to him for his substantial and vital continuing support for the Company. Shortly, we shall be putting proposals to shareholders for formal approval for a restructuring of these loan facilities.
Outlook
Due to the nature of the business and in particular the long lead times for new contracts in the education sector, we do not anticipate a significant change in the trading results in 2012/13, and we are going to be incurring increased financing charges. All costs are being reviewed to ensure that the operation is as lean and efficient as possible.
We plan to continue participating in higher education sector tenders for new outsourced contracts but will only bid at prices that justify the investment of capital expenditure on acceptable terms. New tenders will not deliver new student rooms before September 2013. In December 2012, we were awarded a contract by a university for 250 rooms for delivery in September 2013. Existing education and key worker customers continue to add rooms and there are 1,500 rooms in the pipeline for this sector in the current year.
Further new military sites have been added recently and we expect the revenue growth to continue. For 2012/13 we will complete the rollout of WiFi across all the military sites and plan to add 4,500 more rooms, taking the military sector to nearly 30,000 potential users. We will focus on growing revenues from the existing subscriber base and increasing the take up on existing sites.
We have updated the branding of all our operations bringing a fresh and contemporary look to our online and print marketing materials. This includes the military sector, trading under the name Media Force, which is now a well recognised brand in the military accommodation sector. The previously acquired brands of MCW and Masterpoint Engineering are no longer used. Training, maintenance, and engineering has been re-organised as a new sector called Corporate Solutions and trading under the Keycom brand. We hope that this will encourage greater cross selling of services to existing and new customers.
People
As mentioned above there have been a number of senior management changes over the last year. Both Rod Matthews and Graham Robertson stepped down from the board and we are grateful to them for their efforts over many years to develop and expand the business. Also Les Halpin was sadly forced to retire following his being diagnosed with motor neurone disease and the debilitating consequences that it can so rapidly bring. We all have reason to be extremely grateful to Les for the support and advice he has provided to the business and wish him all the very best for the future.
We are pleased to have welcomed Paula Benoit to the team as Commercial Director during the second half of 2012 and James Blessing as Chief Technology Officer who joined us recently and we look forward to working with them to further the development of the Company.
Finally on behalf of all shareholders I must thank Meri Braziel and all those who work in the Group for their individual contributions to the progress of the business. I very much hope that the hard work and dedication they put in will be rewarded, and that Keycom will become the successful and profitable business which we all wish it to be.
Jocelin Harris – Chairman
Keycom is pleased to announce that it has appointed Daniel Stewart & Company plc as its new ISDX Corporate Adviser and sole broker with immediate effect.
24 October 2012
Keycom Plc
(“Keycom” or the “Company”)
Notification of Shareholding Change
On 22 October 2012 the Company confirmed that on 23 May 2012 Mr. Arthur Ronald Morris increased his shareholding to 29,900,000 ordinary shares in the Company, representing 3.9% of the issued share capital of the Company.
For further information contact:
| Keycom plc Meri Braziel (Chief Executive) |
Tel: 01785 717427 |
| IAF Capital Limited Gary Pinkerton Catherine Stott |
Tel: 020 7036 6700 |
THE DIRECTORS OF THE COMPANY ACCEPT RESPONSIBILITY FOR THE CONTENTS OF THIS ANNOUNCEMENT
The directors of Keycom announce that Les Halpin has resigned from the board for health reasons. The Board wishes to thank Les for the outstanding support and services he has given the Company over the last few years and wishes Les well.
The Company is pleased to announce the appointment of Jocelin Harris as non-executive chairman of the Company with immediate effect. Mr Harris is a Director of Durrington Corporation, which provides financing and advice for start-up and early stage businesses. He studied at St Peter’s College, Oxford where he gained a MA Jurisprudence and is a qualified solicitor.
The information below in relation to Mr Harris is disclosed pursuant to paragraph 18 of Appendix 1 of the PLUS Rules for Issuers. In addition to that of the Company, Mr Harris holds or has held the following directorships or has been a partner in the following partnerships within the five years prior to the date of this announcement.
| Current Directorships: | Past Directorships: |
|---|---|
|
|
Until March 2006, Jocelin Harris was a director of The Resource Connection Limited, which was dissolved in October 2010. He was also a director of Food Trak Limited and Automat International Limited when they were dissolved in January 2009 and May 2009 respectively and both of which were voluntarily struck off the register of companies. He was a director of Teviotdale Windows & Doors Limited until October 2009. This company has subsequently been placed in liquidation in October 2010 and the Liquidator has applied for the company to be dissolved.
There are no further details to be disclosed pursuant to paragraph 18, Appendix 1.
For further information contact:
| Keycom plc Meri Braziel (Chief Executive) |
Tel: 01785 717427 |
| IAF Capital Limited Gary Pinkerton Catherine Stott |
Tel: 020 7036 6700 |
THE DIRECTORS OF THE COMPANY ACCEPT RESPONSIBILITY FOR THE CONTENTS OF THIS ANNOUNCEMENT
Keycom plc (the “Company”) announces unaudited interim results for the six months to 31 March 2012.
2012 will be a year of transition for the Company. I have taken over the role of non-executive Chairman and have overseen a comprehensive review initiated by the Chief Executive to examine the financial, strategic and operational aspects of the Company. The review, which has now been completed, was to ensure that the Company is focussed on its cost structure and making the best return on capital for the Shareholders. As a result of the review we have identified the need for a reassessment of certain prepaid balances which are being dealt with as an exceptional item and is explained below in more detail.
From an operational perspective the Company launched a new wireless product offering to both the tertiary education and military sectors in May 2012 to complement its wired broadband services. This is meeting the demands the Company is seeing from the increasing number of tablets and Wi-Fi enabled smartphones being used by our customers.
The Company has successfully renegotiated transit and circuit costs with its key carrier service providers, which will result in significant annual cost savings in excess of £350,000. With competitive pressures on margin in the tertiary education sector, these cost savings will enable the Company to compete for the larger tenders.
In March 2012 the Company raised £1.4 million net of share issue costs by issuing new ordinary shares. The funds have been used by the Company to fund the capital expenditure necessary to increase the number of rooms serviced in both the tertiary education and military sectors which will generate future growth for the Company.
As announced in April this year, I have taken over the role of non-executive Chairman from Rod Matthews and Meri Braziel was appointed Chief Executive in September 2011.
The Company announces that Graham Robertson has left the Company. Until a successor has been formally appointed, the role of finance director will be undertaken by group financial controller Joanne Nixon. A further announcement will be made in due course.
Turnover for the six month period ended 31 March 2012 increased 2% on the prior year to £3,485,000 (2011: £3,422,000), with an increase of 3% in the core business revenue of broadband services. A 10% decrease in the revenue from the tertiary education sector was expected following the reduction in the number of rooms contracted at the start of the year. That reduction was mitigated by the 86% growth in revenues from the delivery of broadband services to the military sector.
In the tertiary education sector, the Company successfully extended the contracts for 3,074 rooms, which were due to expire within the next twelve months. The Company has been awarded three new contracts for 3,286 rooms at Heriot-Watt University, Robert Gordon University, and a private landlord in Aberdeen which all commence in September 2012. Following the completion of a formal tender procurement process, two Universities have appointed another provider which will result in a future reduction of the education sector broadband rooms of 4,892, for a net reduction of 1,606 rooms. The Company now services 27,300 rooms in tertiary education. The Company has seen an increase in the amount of activity over previous years and continues to bid for new contracts. It is hoped that additional contracts for education rooms will be awarded for the start of the next academic year.
The military revenue for the first half year is £664,000 (2011: £357,000). The Company started the financial year with 17,100 broadband rooms in operation in the military sector. During the first six months of the year this number has been increased by 4,900 to 22,000. The current revenue run rate is now £1,400,000 per annum and this is expected to continue to grow as take-up increases and 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 remains confident that the military sector will be a significant contributor to the future growth of the business.
|
2012 |
2011 |
Change |
||
| Revenue
|
£’000 |
£’000 |
£’000 |
% |
| Broadband & voice managed services: | ||||
| Tertiary education & key-worker sector | 2,033 | 2,252 | (219) |
- 10% |
| Military sector | 664 | 357 | 307 |
+ 86% |
| Total | 2,697 | 2,609 | 88 |
+ 3% |
| Engineering & maintenance services | 638 | 617 | 21 |
+ 3% |
| Training | 150 | 196 | (46) |
- 23% |
| Total | 3,485 | 3,422 | 63 |
+ 2% |
Overall gross margin was 58% (2011: 64%) which is in line with the gross margin achieved in the broadband and voice managed services of 56% (2011: 63%). The engineering and maintenance services businesses generated a gross margin of 62% (2011: 58%), while the training revenue generated a gross margin of 77% (2011: 91%).
Administrative expenses (excluding depreciation and exceptional costs) continue to be kept under control; at £1,345,000 for the six-month period (2011: £1,234,000). The administrative expenses are 39% of revenue (2011: 36%).
EBITDA for the period before exceptional costs was £742,000 (2011: £942,000). Keycom’s trading loss before tax and exceptional items was £39,000 (2011: £207,000).
In accordance with IFRS accounting rules, with the move into profit last year, the Company now expects to utilise the historical tax losses and has continued to recognise the related deferred tax asset. This has resulted in a credit to the income statement of £200,000 for the six month period (2011: £200,000).
As mentioned above as a result of the review we have identified the need for a reassessment of certain prepaid balances which are explained as follows.
Firstly, the Company has invested £229,000 over the past two years in a project to deliver advertising income and that investment has been held in prepayments on the balance sheet. The project has not realised any bookings for advertising and therefore the Directors consider it prudent to provide in full against this investment. Work continues on new projects to increase the level of advertising income from other sources.
Secondly, the Company has prepaid certain expenses amounting to £203,000 which relate to the installation and activation of broadband services for military sites. With the benefit of the review the Directors consider that these expenses should be included as costs in the income statement and not included in the prepaid balances. The impact of these changes has not been material to any one year in isolation and accordingly no restatements are considered necessary.
Lastly, in March 2012 the Company raised £1.5 million by issuing new shares at the nominal value of the shares and consequently there was no share premium arising on the issue. It therefore is not possible to offset the issue costs against the share premium reserve. The costs of £96,000 associated with the issue have been included in the income statement as an exceptional item.
The Company issued 150,000,000 new ordinary shares on 5 March 2012 at par, which raised £1,404,000 net of expenses.
The Company has made loan repayments during the six month period of £236,000 and raised new lease and loan finance of £149,000. The new loan finance has been raised on 4 and 5 year terms. At 31 March 2012 the debt was £3,816,000, a reduction of £87,000 since 30 September 2012 and a reduction of £246,000 since 31 March 2011.
The debt and leasing market continues to be difficult in the UK however the Company continues to seek to refinance its debt with loans of longer maturity and 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 £912,000 (2011: £535,000) in respect of new MOD broadband contracts and upgrades to university contracts. This expenditure has been made to ensure the continuing development of broadband revenues over future periods.
Keycom now provides broadband services to 49,300 rooms, of which 22,000 are in the military sector. The recent wins of over 3,000 rooms in the tertiary education sector confirm that the Company has a competitive and robust service offering to this sector. The Company has a strong pipeline in the military sector, which should lead to a significantly higher number of rooms being serviced in the medium term. Focus will remain on the review and negotiation of all operational costs with a view to maintaining a competitive cost structure during these economically challenging times.
Les Halpin
Chairman
28 June 2012