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IMPORTANT NEWS

The Morris family agrees to sell MCW Group shares to Keycom PLC and business is as usual

The Board of Keycom is pleased to announce that it has raised £4.4 million through the issue of 220,670,000 ordinary shares of 1p each ("the Placing Shares") at a price of 2p per share ("the Placing"). Application has been made for the Placing Shares to be admitted to trading on PLUS. It is expected that admission will occur on 23 September 2008.

The Board of Keycom is also pleased to announce that it has agreed to purchase MCW Group Limited and Mediaforce (UK) LLP (together "MCW") for cash consideration of £2.1m and deferred consideration payable if certain business which MCW expects to receive after completion of MCW ("Completion") is so received. The sellers of MCW have agreed to subscribe on Completion for 30 million ordinary shares in Keycom at the placing price of 2p per share. Completion is expected to take place on or before 26 September 2008 and it is expected that admission of the shares will occur on 29 September 2008.

Following completion of the Placing and Completion, the Company's issued share capital will be 482,243,378 ordinary shares of 1p each.

MCW has been, until this transaction, a competitor of Keycom in the broadband market. MCW has contracts for the provision of broadband in student rooms and also rooms occupied by members of the armed services. MCW additionally provides technical and engineering services and provides training as an accredited Microsoft Gold Partner. The turnover of the MCW business for the last twelve months was £2.1 million generating a gross profit of £1.2 million.
The deferred consideration is calculated based upon the successful award of additional new broadband contracts, anticipated in particular in the armed forces. The vendors have a window of opportunity for a period of eighteen months to be eligible for that additional consideration which is based upon additional contracts entered into within 18 months of Completion. The amount paid is directly proportional to the number of rooms contractedin that period and will be funded from the cash-flow generated from those contracts. Keycom expects the deferred consideration to be in the range of £1.2 - £2.0 million; but it is possible that the amount could be higher if the Company were particularly successful in that area.
The proceeds of the placing will be used to fund the acquisition of MCW and to provide working capital. The Company also intends to continue its market consolidation strategy.

Commenting on the Placing and acquisition, Rod Matthews, Executive Chairman and CEO of Keycom, said "I am delighted with the response we have received to this fundraising. The support from both existing and new shareholders has been very encouraging, especially in this difficult market environment. We now have the necessary financial resources to continue our consolidation strategy and are delighted to be able to announce the acquisition of MCW. Together we now have 21,000 active broadband rooms in service with contracts already awarded for a further 19,000. We are in active discussions on a number of other broadband contracts which will significantly further augment this base.

The armed forces accommodation share similar attributes to the student and key-worker market and the Company has been interested in extending its customer base into this segment. We are pleased that the acquisition of MCW provides such a significant step into that market, as the UK Government continues to improve the accommodation and services available to members of the armed forces. We look forward with confidence to the long term prospects for the Company".

Richard Morris, Chief Executive of MCW who will be joining the Keycom board on completion of the acquisition, said "I am really pleased that Keycom and MCW are coming together at such an exciting time in the development of themarket sectors in which the companies operate. I am also delighted that I will be able to share in and contribute to Keycom's ambitious plans."
If you require any further information, plese contact Richard Morris on 01978 340341 or email richard@mcwgroup.co.uk