Telecom plus announce 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 months ended 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 is now in excellent shape. We are confident of delivering results for the full year which exceed our previous best pre-tax profits of £10.5m to 31 March 2005, and we look forward to the future with renewed confidence."
Chairman's StatementI am pleased to report significant progress in the development of our business during the period covered by these results.
Pre-tax profits rose by 9% to £5.5m (2005: £5.1m) on turnover which increased by 32% to £68.5m (2005: £51.9m). The reduction in gross margin from 26% to 22% is due to the changing sales mix within our business, where the proportion of turnover which is derived from energy and telephony line rental has increased to 59% (2005: 43%).
The number of services provided to our customers climbed to 521,000, an increase of 5% over the period, with the total customer base increasing marginally to
around 213,000 households. The absence of significant net customer growth mostly resulted from our decision to delay responding to the so-called "free" broadband offers launched by other companies during the spring and early summer, until the necessary network infrastructure to support such services was more widely available and had been properly tested.
On 17 September 2006, our annual Distributor conference was attended by around 2,500 of our business partners. We announced a number of important changes
including the launch of "
BroadCall" (a new service available to all residential households in the UK from just £20 per month), which combines line rental,
broadband and attractive call prices within a single package. We also announced the introduction of "Free UK Calls" as a multi-service discount, replacing our previous "Cashback" scheme.
These changes were well received by those present, and the resultant increase in activity, particularly in respect of the number of new Distributors now joining the business each week, is an encouraging sign that customer growth will resume during the second half.
We have received a positive response to these changes from our customers, with many of them having already chosen to transfer additional services to us in
order to increase the value of the benefits they receive.
Our relationship with
npower is progressing well, and we are achieving the positive contribution from supplying energy which we anticipated at the time the
transaction was announced earlier this year. We are now fully insulated from any fluctuations in the wholesale energy markets over the winter months, and look forward to a further positive contribution from our energy business during the second half.
Cash Flow and DividendOur cash balances increased by over £18 million during the period, reflecting the combination of strong underlying profits, the final unwinding of our
historic energy purchasing commitments following the transfer of buying responsibility to npower, and the positive seasonal cash flow swing from
supplying energy on "Budget Plan" (where a customer's expected annual energy consumption is divided into 12 equal monthly instalments).
The greater working capital expected to be absorbed by the business during the winter in funding Budget Plan, needs to be reflected in the timing of future
dividend payments. This means that the total amount we distribute to shareholders each year can be expected to be weighted towards the final dividend.
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 the
register at the close of business on 12 January 2007.
Boardroom ChangesI am delighted to announce that Michael Pavia (60) has agreed to join the Board as a non-executive director and chairman of the audit committee with immediate effect. Michael is a Fellow of the Institute of Chartered Accountants in England and Wales (ICAEW), and has significant experience of the energy industry, having served on the Boards of LASMO, SEEBOARD and London Electricity. He is currently a non-executive director of Thames Water, British Nuclear Fuels PLC and WHAM Energy 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 Finance Director in order to join Credo Group (U.K.) Limited, a private client wealth
management group, and will be leaving on 31 December 2006. Over the last 18 months he has played an important role in the development of the business,
particularly in establishing our relationship with npower, and we wish him well with his future career. Stephen will be succeeded as Finance Director by Richard Hateley (42) who joined the company in June 2006 as Head of Finance and Company Secretary and will join the Board on 31 December 2006. Richard qualified as a Chartered Accountant with Ernst & Young, and subsequently worked for a number of companies including Level (3) Communications, Kvaerner Group and Blue Circle.
OutlookThe difficulties of last winter are now firmly behind us, and the business is now in excellent shape. We are confident of delivering results for the full year which exceed our previous best pre-tax profits of £10.5m to 31 March 2005, and we look forward to the future with renewed confidence.
Peter Nutting
Chairman
13 December 2006
Labels: corporate-news
posted by Jeremy Tromans at 12/13/2006 11:55:00 AM
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