29th Nov 2007 07:00
Telecom Plus PLC29 November 2007 Embargoed until 0700 29 November 2007 Telecom plus PLC Interim results for the six months ended 30 September 2007 Telecom plus PLC, the UK's leading low-cost multi-utility supplier (gas,electricity, telephony, internet), announces preliminary results for the sixmonths ended 30 September 2007. Financial Highlights: • Turnover up 4% to £71.1m (2006: £68.5m) • Profit before tax up 15% to £6.4m (2006: £5.5m) • Net cash balance up £11.0m during the period • EPS up 16% to 6.6p (2006: 5.7p) • Interim dividend of 4p per share (2006: 2p) Operating Highlights: • Number of services being provided up 10,450 during the period • New Community Fundraiser opportunity • Launch of "free" laptop offer • Competitive new mobile tariffs Commenting on today's results, Charles Wigoder, Chief Executive, said: "The changes we made to our services at our sales conference last month havebeen extremely well received, and are already having a positive impact on ourgrowth, churn and profitability. Although it is too early to assess the impactthese will have over the longer term, we are confident that our results for thefull year will be substantially ahead of the pre-tax profits of £11.6m reportedfor the year ended 31 March 2007." There will be a meeting for analysts at Smithfield's offices at 10.15 for10.30am today. For more information please contact: Telecom plus PLCCharles Wigoder, Chief Executive 020 8955 5000Richard Hateley, Finance Director SmithfieldTania Wild / Reg Hoare 020 7360 4900 Interim Management Report We are pleased to report a further period of satisfactory performance in thefirst half of the current year. We continue to manage the business in line withour strategy of becoming one of the UK's leading suppliers of utility servicesto the residential marketplace. Financial Review Pre-tax profits rose by over 15% to £6.4m (2006: £5.5m) on a 4% increase inturnover to £71.1m (2006: £68.5m). This reflects the benefit from continuedsteady growth in the number of services we provide to our customers, partiallyoffset by the effect of lower retail energy prices. Earnings per share increasedby 16% to 6.6p (2006: 5.7p). The reduction in our gross profit margin from 22.4% to 20.5% is due to thechanging sales mix, where the proportion of turnover derived from energy andtelephone line rental has increased to 64% (2006: 59%); there has also been areduction in high margin telephony revenues following the change in ourmulti-utility benefit from "CashBack" to "Free UK Calls" in October 2006. Oxford Power Holdings, in which we have a 20% equity investment, is tradingsignificantly ahead of expectations. Our share of their profits for the firsthalf of the current year has more than doubled to £401,000 (2006: £153,000) andthey are on target to report pre-tax profits of around £6m for the full year.Our investment in this company clearly represents an increasingly valuableasset. Operating Review Within our residential business, customer numbers have shown a marginalreduction since 31 March 2007 to 204,763, although our Business Club continuesto show steady growth and now has over 7,800 customers. Overall, the number ofservices we are providing has increased by 10,450 to 552,489 over the period. On 14 October 2007 the Company held its annual sales conference which wasattended by almost 3,000 Distributors and staff. We announced some significantchanges to the way in which we promote our services, as well as improvements tothe underlying services themselves, including: • a "free" laptop offer; • internet phone lines; • new mobile tariffs; • a new Community Fundraiser opportunity; and • premium membership options with enhanced benefits. Cash Flow Cash Flow has remained strong with our cash balance increasing by £11m to £36.8msince the year end. This has been achieved during a period in which we spent£3.8m on buying back 2,118,000 shares (to be held in Treasury) at an averagecost of 181p per share, following approval of our capital reduction exercise atthis year's AGM (subsequently confirmed by the High Court), and also paid afinal dividend for last year of £4.1m. Interim Dividend In the light of our strong cash position, the Board have decided to pay aninterim dividend of 4p (2006: 2p) which will be made on 7 January 2008 toshareholders on the register on 14 December 2007. Principal Risks and Uncertainties The principal risks and uncertainties affecting the Company's activities aredetailed on pages 8 and 9 of the Report and Accounts for the year ended 31 March2007. A copy of the Report and Accounts is available on the Company's website atwww.telecomplus.co.uk/annualreport. Responsibility Statement The Directors are responsible for the preparation of the condensed set offinancial statements and interim management report comprising this set ofInterim Results for the six months ended 30 September 2007, each of whomaccordingly confirms that to the best of his knowledge: • the condensed set of financial statements has been prepared in accordance with IAS 34; • the interim management report includes a fair review of the information required by the Financial Statements Disclosure and Transparency Rules (DTR) 4.2.7R (indication of important events during the first six months and their impact on the financial statements and description of principal risks and uncertainties for the remaining six months of the year); and • the interim management report includes a fair review of the information required by DTR 4.2.8R (disclosures of related party transactions and changes therein). The Directors of Telecom plus PLC are listed in the Telecom plus PLC Report &Accounts for the year ended 31 March 2007. Outlook Wholesale energy prices have increased substantially since the summer, and weanticipate that the "Big 6" retail energy suppliers will begin passing thesethrough to their customers during the first quarter of 2008. Although we are nolonger directly exposed to the wholesale markets or any volatility in short-termprices, we will nonetheless benefit from any widespread market move towardshigher retail prices through increased turnover and an improvement in the netcontribution we earn from supplying energy. The changes we made to our services at our sales conference last month have beenextremely well received, and are already having a positive impact on our growth,churn and profitability. Although it is too early to assess the impact thesewill have over the longer term, we are confident that our results for the fullyear will be substantially ahead of the pre-tax profits of £11.6m reported forthe year ended 31 March 2007. Given on behalf of the Board CHARLES WIGODER RICHARD HATELEYChief Executive Finance Director 28 November 2007 Independent Review Report to Telecom plus PLC We have been engaged by the Company to review the condensed set of financialstatements in the half-yearly financial report for the six months ended 30September 2007 which comprises the consolidated income statement, consolidatedstatement of changes in equity, consolidated balance sheet, consolidated cashflow statement and the related explanatory notes. We have read the otherinformation contained in the half-yearly financial report and considered whetherit contains any apparent misstatements or material inconsistencies with theinformation in the condensed set of financial statements This report is made solely to the Company in accordance with the terms of ourengagement. Our review has been undertaken so that we might state to the Companythose matters we are required to state to it in this report and for no otherpurpose. To the fullest extent permitted by law, we do not accept or assumeresponsibility to anyone other than the Company for our review work, for thisreport, or for the conclusions we have reached. Directors' responsibilities The half-yearly financial report is the responsibility of, and has been approvedby, the directors. The directors are responsible for preparing the half-yearlyfinancial report in accordance with the Disclosure and Transparency Rules of theUnited Kingdom's Financial Services Authority. As disclosed in note 1, theannual financial statements of the group are prepared in accordance with IFRSsas adopted by the European Union. The condensed set of financial statementsincluded in this half-yearly financial report has been prepared in accordancewith International Accounting Standard 34, "Interim Financial Reporting," asadopted by the European Union. Our responsibility Our responsibility is to express to the Company a conclusion on the condensedset of financial statements in the half-yearly financial report based on ourreview. Scope of review We conducted our review in accordance with International Standard on ReviewEngagements (UK and Ireland) 2410, "Review of Interim Financial InformationPerformed by the Independent Auditor of the Entity" issued by the AuditingPractices Board for use in the United Kingdom. A review of interim financialinformation consists of making enquiries, primarily of persons responsible forfinancial and accounting matters, and applying analytical and other reviewprocedures. A review is substantially less in scope than an audit conducted inaccordance with International Standards on Auditing (UK and Ireland) andconsequently does not enable us to obtain assurance that we would become awareof all significant matters that might be identified in an audit. Accordingly, wedo not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believethat the condensed set of financial statements in the half-yearly financialreport for the six months ended 30 September 2007 is not prepared, in allmaterial respects, in accordance with International Accounting Standard 34 asadopted by the European Union and the Disclosure and Transparency Rules of theUnited Kingdom's Financial Services Authority. PKF (UK) LLP London, UKRegistered Auditors 28 November 2007 Consolidated Income Statement 6 months 6 months Year ended ended ended 30 September 30 September 31 March 2007 2006 2007 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Revenue 71,069 68,499 176,065 Cost of sales 56,495 53,159 141,136 ----------- ----------- ----------- Gross profit 14,574 15,340 34,929 Distribution expenses 3,353 3,884 8,327 Administrative expenses 6,143 6,443 16,584 ----------- ----------- ----------- Operating profit 5,078 5,013 10,018 ----------- ----------- ----------- Financial income 887 356 1,105 Financial expenses - - 6 ----------- ----------- -----------Net financial income 887 356 1,099 ----------- ----------- ----------- Share of profit of associates 401 153 473 ----------- ----------- -----------Profit before taxation 6,366 5,522 11,590 Taxation (1,828) (1,611) (2,982) ----------- ----------- ----------- Profit for the period 4,538 3,911 8,608 ----------- ----------- ----------- Basic earnings per share 6.6p 5.7p 12.5p ----------- ----------- ----------- Diluted earnings per share 6.6p 5.7p 12.5p ----------- ----------- ----------- Interim dividend per share 4.0p 2.0p ----------- ----------- Consolidated Balance Sheet As at As at As at 30 September 30 September 31 March 2007 2006 2007 (unaudited) (unaudited) (audited) £'000 £'000 £'000AssetsNon-current assetsProperty, plant and equipment 969 992 884Goodwill and intangible assets 3,755 3,828 3,761Investments in associates 1,823 1,101 1,422Deferred tax 852 525 904Other receivables 873 2,919 858 ----------- ----------- -----------Total non-current assets 8,272 9,365 7,829 ----------- ----------- ----------- Current assetsInventories 154 393 202Trade and other receivables 3,344 1,302 3,258Prepayments and accrued income 17,506 19,047 28,649Cash and cash equivalents 36,806 24,570 25,801 ----------- ----------- -----------Total current assets 57,810 45,312 57,910 ----------- ----------- -----------Total assets 66,082 54,677 65,739 ----------- ----------- ----------- Current liabilitiesTrade and other payables (5,202) (5,138) (3,727)Current tax payable (1,929) (1,900) (1,969)Accrued expenses and deferred income (30,070) (19,163) (27,695) ----------- ----------- -----------Total current liabilities (37,201) (26,201) (33,391) ----------- ----------- ----------- ----------- ----------- -----------Total assets less total liabilities 28,881 28,476 32,348 ----------- ----------- ----------- EquityShare capital 3,452 3,425 3,446Share premium - 19,121 19,444Treasury shares (3,830) - -Retained earnings 29,259 5,930 9,458 ----------- ----------- -----------Total equity 28,881 28,476 32,348 ----------- ----------- ----------- Consolidated Cash Flow Statement 6 months 6 months Year ended ended ended 30 September 30 September 31 March 2007 2006 2007 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Operating activitiesOperating profit 5,078 5,013 10,018Depreciation of property, plant andequipment 232 224 447Depreciation of intangible assets 7 66 133Profit on disposal of property, plantand equipment - (44) (44)Decrease in inventories 48 119 310Decrease in trade and otherreceivables 11,042 9,716 218Increase in trade and other payables 3,850 3,526 10,647Costs attributed to the issue of shareoptions (114) 219 425Corporation tax (paid) / refunded (1,855) 277 (1,402) ----------- ----------- -----------Net cash flow from operatingactivities 18,288 19,116 20,752 ----------- ----------- ----------- Investing activitiesInvestment in Associates - (9) (9)Purchase of property, plant andequipment (318) (226) (341)Sale of property, plant and equipment 2 70 70 ----------- ----------- -----------Cash flow from investing activities (316) (165) (280) ----------- ----------- ----------- Financing activitiesDividend paid for the previous year (4,142) (684) (2,062)Interest received 883 356 1,105Interest paid - - (6)Issue of ordinary shares 122 59 404Purchase of own shares (3,830) ----------- ----------- -----------Cash flow from financing activities (6,967) (269) (559) ----------- ----------- ----------- ----------- ----------- -----------Increase in cash and cash equivalents 11,005 18,682 19,913 ----------- ----------- ----------- Cash and cash equivalentsat the beginning of the period 25,801 5,888 5,888 Cash and cash equivalents ----------- ----------- -----------at the end of the period 36,806 24,570 25,801 ----------- ----------- ----------- Consolidated Statement of Changes in Equity Ordinary Share Share Treasury Retained Shares Capital Premium Shares Earnings Total '000 £'000 £'000 £'000 £'000 £'000 Balance at 1 April2006 68,429 3,421 19,065 2,469 24,955 Profit for theperiodended 30 September 3,911 3,9112006Deferred tax onshare options 15 15 -------- ------- 3,926 3,926 -------- ------- Dividends (684) (684)Issue of sharecapital 75 4 56 60Credit arising onshare options 219 219 ------- ------- -------- -------- -------- -------Balance at 30September 2006 68,504 3,425 19,121 5,930 28,476 Balance at 1 October2006 68,504 3,425 19,121 5,930 28,476 Profit for theperiod 4,697 4,697ended 31 March 2007Deferred tax onshare options 3 3 -------- ------- 4,700 4,700 -------- ------- Dividends (1,378) (1,378)Issue of sharecapital 425 21 323 344Credit arising onshare options 206 206 ------- ------- -------- -------- -------- -------Balances at 31 March2007 68,929 3,446 19,444 9,458 32,348 Balance at 1 April2007 68,929 3,446 19,444 9,458 32,348 Profit for theperiodended 30 September 4,538 4,5382007Deferred tax onshare options (41) (41) -------- ------- 4,497 4,497 -------- ------- Dividends (4,142) (4,142)Issue of sharecapital 103 6 116 122Cancellation ofshare (19,560) 19,560 -premiumPurchase of treasuryshares (3,830) (3,830)Credit arising onshare options (114) (114) ------- ------- -------- -------- -------- -------Balance at 30September 2007 69,032 3,452 - (3,830) 29,259 28,881 ------- ------- -------- -------- -------- ------- Notes to the Interim Report 1. 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 notbeen audited by the auditors. The statutory accounts for year ended 31 March 2007 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 2007 and has been drawn up in accordancewith International Accounting Standard 34, "Interim Financial Reporting". This Interim Report has been approved for issue by the Board of Directors on 28November 2007. Seasonality of business: in respect of the energy supplied by the company,approximately two thirds is consumed by customers in the second half of thefinancial year, however due to the majority of our energy customers being onbudget plans paying equal monthly instalments during the year, our cash flowgeneration is biased to the first half of the year. 2. Business segments For management reporting purposes, the Group is currently organised into twooperating divisions: Customer Management and Customer Acquisition. Thesedivisions are the basis on which the Group reports its primary segmentinformation. 6 months ended 6 months ended Year ended 30 September 2007 30 September 2006 31 March 2007 (audited) Operating Operating Operating Revenue Profit Revenue Profit Revenue Profit £'000 £'000 £'000 £'000 £'000 £'000 Customer Management 70,054 6,732 67,315 6,366 173,735 13,107Customer 1,015 (1,654) 1,184 (1,353) 2,330 (3,089)Acquisition Total 71,069 5,078 68,499 5,013 176,065 10,018 3. Dividends 6 months 6 months Year ended ended ended 30 September 30 September 31 March 2007 2006 2007 (unaudited) (unaudited) (audited) £'000 £'000 £'000Amounts recognised as distributionsto equity holders in the period: Final dividend for the year ended 31March 2007 of 6.0p per share (2006:1.0p) 4,142 684 684 Interim dividend for the year ended31 March 2007 of 2.0p per share (2006: - - 1,378Nil) --------- --------- --------- An interim dividend of 4.0p per share will be paid on 7 January 2008 toshareholders on the register at close of business on 14 December 2007. The estimated amount to be paid is £2.7 million. In accordance with IFRSaccounting requirements this dividend has not been recognised in these accounts. 4. Earnings per share The calculation of the basic and diluted earnings per share is based on thefollowing data: Earnings Earnings for the purpose of basicand diluted earnings per share 4,538 3,911 8,608 --------- --------- ---------Number of shares Number Number NumberWeighted average number of ordinaryshares for the purpose of basicearnings per share 68,325,229 68,444,429 68,606,607 Effect of dilutive potentialordinary shares (share options) 413,071 171,823 170,959 Weighted average number of ordinaryshares for the purpose of diluted earnings --------- --------- ---------per share 68,738,300 68,616,252 68,777,566 --------- --------- --------- This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Telecom Plus