13th Dec 2006 07:01
Telecom Plus PLC13 December 2006 TELECOM plus PLC 13 December 2006 Interim results for the six months ended 30 September 2006 Telecom plus PLC, the UK's leading low-cost multi-utility supplier (gas,electricity, telephony, internet), announces interim results for the six monthsended 30 September 2006. Financial and business highlights • Turnover up 32% to £68.5m (2005: £51.9m) • Profit before tax up 9% to £5.5m (2005: £5.1m) • Net cash balance up £18.7m during the period • Interim dividend of 2p per share (2005: Nil) • Services provided up 5% to 521,000 during the period • Launch of attractive new broadband packages • Positive contribution from energy, with npower agreement protecting Telecom plus from fluctuations in wholesale energy markets Peter Nutting, Chairman, said: "The difficulties of last winter are now firmly behind us, and the business isnow in excellent shape. We are confident of delivering results for the full yearwhich exceed our previous best pre-tax profits of £10.5m to 31 March 2005, andwe look forward to the future with renewed confidence." For press enquiries, please contact: Charles Wigoder/Richard Hateley Neil Boom/Laura BlackTelecom plus PLC Gresham PR Ltd. 020 8955 5000 020 7404 9000 Chairman's Statement I am pleased to report significant progress in the development of our businessduring the period covered by these results. Pre-tax profits rose by 9% to £5.5m (2005: £5.1m) on turnover which increased by32% to £68.5m (2005: £51.9m). The reduction in gross margin from 26% to 22% isdue to the changing sales mix within our business, where the proportion ofturnover which is derived from energy and telephony line rental has increased to59% (2005: 43%). The number of services provided to our customers climbed to 521,000, an increaseof 5% over the period, with the total customer base increasing marginally toaround 213,000 households. The absence of significant net customer growth mostlyresulted from our decision to delay responding to the so-called "free" broadbandoffers launched by other companies during the spring and early summer, until thenecessary network infrastructure to support such services was more widelyavailable and had been properly tested. On 17 September 2006, our annual Distributor conference was attended by around2,500 of our business partners. We announced a number of important changesincluding the launch of "BroadCall" (a new service available to all residentialhouseholds in the UK from just £20 per month), which combines line rental,broadband and attractive call prices within a single package. We also announcedthe introduction of "Free UK Calls" as a multi-service discount, replacing ourprevious "Cashback" scheme. These changes were well received by those present, and the resultant increase inactivity, particularly in respect of the number of new Distributors now joiningthe business each week, is an encouraging sign that customer growth will resumeduring the second half. We have received a positive response to these changes from our customers, withmany of them having already chosen to transfer additional services to us inorder to increase the value of the benefits they receive. Our relationship with npower is progressing well, and we are achieving thepositive contribution from supplying energy which we anticipated at the time thetransaction was announced earlier this year. We are now fully insulated from anyfluctuations in the wholesale energy markets over the winter months, and lookforward to a further positive contribution from our energy business during thesecond half. Cash Flow and Dividend Our cash balances increased by over £18 million during the period, reflectingthe combination of strong underlying profits, the final unwinding of ourhistoric energy purchasing commitments following the transfer of buyingresponsibility to npower, and the positive seasonal cash flow swing fromsupplying energy on "Budget Plan" (where a customer's expected annual energyconsumption is divided into 12 equal monthly instalments). The greater working capital expected to be absorbed by the business during thewinter in funding Budget Plan, needs to be reflected in the timing of futuredividend payments. This means that the total amount we distribute toshareholders each year can be expected to be weighted towards the finaldividend. The Board have therefore decided to pay an interim dividend of 2p per share(2005: Nil) which will be made on 1 February 2007 to shareholders on theregister at the close of business on 12 January 2007. Boardroom Changes I am delighted to announce that Michael Pavia (60) has agreed to join the Boardas a non-executive director and chairman of the audit committee with immediateeffect. Michael is a Fellow of the Institute of Chartered Accountants in Englandand Wales (ICAEW), and has significant experience of the energy industry, havingserved on the Boards of LASMO, SEEBOARD and London Electricity. He is currentlya non-executive director of Thames Water, British Nuclear Fuels PLC and WHAMEnergy PLC, and is a member of the Council of the ICAEW. I am sorry to announce that Stephen Davis has decided to step down as FinanceDirector in order to join Credo Group (U.K.) Limited, a private client wealthmanagement group, and will be leaving on 31 December 2006. Over the last 18months he has played an important role in the development of the business,particularly in establishing our relationship with npower, and we wish him wellwith his future career. Stephen will be succeeded as Finance Director by RichardHateley (42) who joined the company in June 2006 as Head of Finance and CompanySecretary and will join the Board on 31 December 2006. Richard qualified as aChartered Accountant with Ernst & Young, and subsequently worked for a number ofcompanies including Level (3) Communications, Kvaerner Group and Blue Circle. Outlook The difficulties of last winter are now firmly behind us, and the business isnow in excellent shape. We are confident of delivering results for the full yearwhich exceed our previous best pre-tax profits of £10.5m to 31 March 2005, andwe look forward to the future with renewed confidence. Peter Nutting Chairman 13 December 2006 TELECOM plus PLC Consolidated income statement For the six months ended 30 September 2006 6 months 6 months Year ended ended ended 30 30 31 March September September 2006 2006 2005 (audited) (unaudited) (unaudited) £'000 £'000 £'000 Revenue 68,499 51,897 136,343 Cost of sales 53,159 38,338 117,603 Gross profit 15,340 13,559 18,740 Distribution expenses 3,884 3,392 7,810 Administrative expenses 6,443 5,503 11,659 Operating profit / (loss) before 5,013 4,664 (729)exceptional costs Exceptional costs in respect of - - (1,860)restructuring Operating profit / (loss) 5,013 4,664 (2,589) Financial income 356 342 641 Financial expenses - 35 39 Net financial income 356 307 602 Share of profit of associates 153 112 343 Profit / (loss) before taxation 5,522 5,083 (1,644) Taxation (1,611) (1,617) 263 Profit / (loss) for the period 3,911 3,466 (1,381) Basic earnings / (loss) per share 5.7p 5.3p (2.1p) Diluted earnings / (loss) per share 5.7p 5.2p (2.1p) Interim dividend per share 2.0p Nil TELECOM plus PLC Consolidated Balance Sheet As at 30 September 2006 As at As at As at 30 30 31 March September September 2006 2006 2005 (audited) (unaudited) (unaudited) £'000 £'000 £'000AssetsNon-current assetsProperty, plant and equipment 992 1,659 1,016Goodwill and intangible assets 3,828 3,959 3,894Investments in associates 1,101 524 940Deferred tax 525 200 509Other receivables 2,919 2,970 2,954Total non-current assets 9,365 9,312 9,313 Current assetsInventories 393 981 512Trade and other receivables 1,302 910 4,951Prepayments and accrued income 19,047 14,007 25,078Cash and cash equivalents 24,570 20,974 5,888Total current assets 45,312 36,872 36,429Total assets 54,677 46,184 45,742 Current liabilitiesTrade and other payables (5,138) (3,409) (5,906)Current tax payable (1,900) (1,400) (12)Accrued expenses and deferred income (19,163) (11,839) (14,869)Total current liabilities (26,201) (16,648) (20,787) Total assets less total liabilities 28,476 29,536 24,955 EquityShare capital 3,425 3,418 3,421Share premium 19,121 19,027 19,065Retained earnings 5,930 7,091 2,469 Total equity 28,476 29,536 24,955 TELECOM plus PLC Consolidated Cash Flow Statement Six months ended 30 September 2006 6 months 6 months Year ended ended ended 30 September 30 31 March 2006 September 2006 (unaudited) 2005 (audited) (unaudited) £'000 £'000 £'000 Operating activitiesOperating profit / (loss) 5,013 4,664 (2,589)Depreciation of property, plant and 224 217 445equipmentDepreciation of intangible assets 66 66 131Profit on disposal of property, plant and (44) - (282)equipmentDecrease in inventories 119 153 622Decrease / (increase) in trade and other 9,707 830 (14,266)receivablesIncrease in trade and other payables 3,526 1,913 7,439Costs attributed to the issue of share 219 210 434optionsCorporation tax refunded / (paid) 277 (1,600) (1,601)Net cash flow from operating activities 19,107 6,453 (9,667) Investing activitiesPurchase of property, plant and equipment (226) (154) (484)Sale of property, plant and equipment 70 - 1,028Cash flow from investing activities (156) (154) 544 Financing activitiesDividend paid for the previous year (684) (4,099) (4,099)Interest received 356 342 641Interest paid - (35) (39)Issue of ordinary shares 59 12,192 12,233Cash flow from financing activities (269) 8,400 8,736 Increase / (decrease) incash and cash equivalents 18,682 14,699 (387) Cash and cash equivalentsat the beginning of the period 5,888 6,275 6,275 Cash and cash equivalentsat the end of the period 24,570 20,974 5,888 TELECOM plus PLC Reconciliation of Movement in Capital and Reserves Six months ended 30 September 2006 Ordinary Share Share Retained Shares Capital Premium Earnings Total '000 £'000 £'000 £'000 £'000 Balance at 1 April 2005 62,161 3,108 7,145 7,526 17,779 Profit for the period ended 30 September 2005 3,466 3,466Deferred tax on share options (11) (11) Total recognised income and expenses 3,455 3,455 Dividends (4,099) (4,099)Issue of share capital 6,209 310 12,082 12,392Share issue costs (200) (200)Credit arising on share options 209 209 Balances at 30 September 2005 68,370 3,418 19,027 7,091 29,536 Balance at 1 October 2005 68,370 3,418 19,027 7,091 29,536 Profit for the period ended 31 March (4,847) (4,847)2006Deferred tax on share options - - Total recognised income and expenses (4,847) (4,847) Issue of share capital 59 3 38 41Credit arising on share options 225 225 Balances at 31 March 2006 68,429 3,421 19,065 2,469 24,955 Balance at 1 April 2006 68,429 3,421 19,065 2,469 24,955 Profit for the period ended 30 September 2006 3,911 3,911Deferred tax on share options 15 15 Total recognised income and expenses 3,926 3,926 Dividends (684) (684)Issue of share capital 75 4 56 60Credit arising on share options 219 219 Balance at 30 September 2006 68,504 3,425 19,121 5,930 28,476 TELECOM plus PLC NOTES General Information The financial information contained in this Interim Report does not constitutestatutory accounts as defined in section 240 of the Companies Act 1985. Nostatutory accounts for the period have been delivered to the Registrar ofCompanies. The financial information contained in this Interim Report has beenneither audited nor reviewed by the auditors. The statutory accounts for year ended 31 March 2006 have been filed with theRegistrar of Companies. The auditors' report on these accounts was unqualifiedand did not contain a statement under section 237(2) or 237(3) of the CompaniesAct 1985. The Group's consolidated financial information has been prepared in accordancewith accounting policies consistent with those adopted in the financialstatements for the year ended 31 March 2006. This Interim Report has been approved for issue by the Board of Directors on 13December 2006. Cyclicality of business: in respect of the energy segment of the businessapproximately 60% is consumed by customers in the second half of the financialyear. Business segments For management reporting purposes, the Group is currently organised into threeoperating divisions: Virtual Network - telephony; Virtual Network - energy; andDistribution. These divisions are the basis on which the Group reports itsprimary segment information. 6 months ended 6 months ended Year ended 30 September 2006 30 September 2005 31 March 2006 (unaudited) (unaudited) (audited) Revenue Result Revenue Result Revenue Result £'000 £'000 £'000 £'000 £'000 £'000 Virtual Network - 31,228 5,957 29,220 6,528 59,440 13,538telephonyVirtual Network - 36,087 409 21,368 (5) 74,437 (10,776)energyDistribution 1,184 (1,353) 1,309 (1,859) 2,466 (3,491) Total 68,499 5,013 51,897 4,664 136,343 (729) The above Result relates to Operating profit / (loss) before exceptional costs. The exceptional costs in respect of restructuring for the year ended 31 March 2006,related to transferring the Group's energy customers to individually licensedcompanies, which were ultimately disposed of to npower Limited on 31 March 2006. 6 months 6 months Year ended ended ended 30 September 30 September 31 March 2006 2005 2006 (unaudited) (unaudited) (audited) £'000 £'000 £'000Dividends Amounts recognised as distributions toequity holders in the period: Final dividend for the year ended 31 684 4,099 4,099March 2006 of 1.0p (2005 : 6.0p) pershare Interim dividend for the year ended 31 - - -March 2006 of Nil (2005 : Nil) pershare An interim dividend of 2.0p per share will be paid on 1 February 2007 toshareholders on the register at close of business on 12 January 2007. The estimated amount to be paid is £1.4 million. In accordance with IFRSaccounting requirements this dividend has not been recognised in these accounts. Earnings per share The calculation of the basic anddiluted earnings per share is based onthe following data: Earnings Earnings / (loss) for the purpose of 3,911 3,466 (1,381)basic and diluted earnings per share Number of shares Number Number NumberWeighted average number of ordinary 68,444,429 65,931,678 67,170,166shares for the purpose of basicearnings per share Effect of dilutive potential ordinary 171,823 648,218 -shares (share options) Weighted average number of ordinaryshares for the purpose of diluted earnings per share 68,616,252 66,579,896 67,170,166 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Telecom Plus