Final Results

Telecom Plus PLC 04 June 2003 TELECOM plus PLC 4th June 2003 Preliminary results for the year ended 31 March 2003 Telecom plus plc, the UK's best value multi-utility (gas, electricity, telephony, internet), announces preliminary results for the year ended 31 March 2003. Financial and business highlights: •Turnover up 78% to £58.0m (2002: 32.7m) •Profits before tax up 38% to £5.6m (2002: £4.0m) •Final dividend of 3.25p (total of 5.75p for the full year) to be paid on 11 July 2003 •Subscriber base increased 40% to 134,000 (2002: 96,000) •Number of services provided increased 40% to 225,000 (2002: 160,000) •Award of Electricity Supply Licence from OFGEM Peter Nutting, Chairman, said: 'Since the year end, the level of new customer growth within our core Telecom plus business has been maintained, as has the level of new distributors joining the business. If the current monthly figures for customer acquisition are maintained, we will exceed last year's growth rate during the current financial year. 'We are clearly beginning to see the benefits of our strong competitive position as the UK's first low-cost multi-service utility company, which should be reflected in significantly higher profits for the coming year. Confidence within our distribution channel is high and I look forward to the future with great optimism.' For press enquiries, please contact: Charles Wigoder Neil Boom/Theresa Forrest Telecom plus PLC Gresham PR Ltd. 020 8955 5000 020 7404 9000 TELECOM plus PLC CHAIRMAN'S STATEMENT I am pleased to report a strong set of results, reflecting significant progress across all areas of our business. Turnover and pre-tax profits for the year reached £58m (2002: £32.7m) and £5.6m (2002: £4.0m) respectively. These figures reflect another strong performance from our Virtual Network business where operating profits increased by 42% to £8.4m (2002: £5.9m), and include a maiden contribution of £0.6m from Telecommunications Management Limited ('TML'). This was partly offset by higher investment within our Distribution business of £3.1m (2002: £2.2m). At the half year I said that the current level of customer growth would see our customer base increasing to 120,000 by the year end. In the event, we have seen an acceleration in new customers choosing Telecom plus as their supplier, taking our customer base at the year end to 134,000 (2002: 96,000). These customers subscribe for over 225,000 services (2002: 160,000), representing an organic growth rate of 40% for the year. We have also seen a steady increase in average monthly revenues per customer during the year. We continue to enjoy strong cash flow from our trading activities. This enabled us to invest £5.6m in TML and Oxford Power Holdings Limited ('Opus') during the year, and still have cash balances at the year end of £6.1m (2002: £8.4m). At the same time, we have increased our dividend payments significantly. TML, a business supplying fixed and mobile telephony to around 6,500 smaller and medium sized companies, was successfully integrated into our main billing and administration systems during the year and is now trading profitably, while Opus has made an encouraging start towards establishing itself as a credible electricity supplier to the commercial market. In view of our solid balance sheet and continued cash generation, your Board is recommending a 30% increase in the final dividend to 3.25p (2002: 2.5p) making a total of 5.75p (2002: 4.5p) for the full year. This will be paid on 11 July 2003 to shareholders on the register at 27 June 2003. The final dividend is subject to approval by shareholders at the Company's Annual General Meeting which is to be held on 8 July 2003. We remain committed to the continued profitable long term growth of the business and to maintaining a progressive dividend policy that reflects the Company's anticipated growth in earnings. Excellent customer service is a key part of our successful growth. To ensure we maintain high service standards we have made a significant investment in building our customer service team during the year. We continue to recruit and train new staff members for our call centre and energy administration teams in line with our rapid organic growth. We now have over 140 employees and 10,000 independent distributors, and I would like to take this opportunity to thank all of them for their continued loyalty, enthusiasm and dedication. Outlook Since the year end, the recent high levels of new customer growth within our core Telecom plus business have continued, as has the level of new distributors joining the business. This reflects both the increasing acceptance by customers of our attractive range of services, combined with the extensive training now being made available to all new distributors through our National Training Program, the College of Excellence, which was launched 18 months ago. If the current monthly figures for customer acquisition are maintained, we will exceed last year's growth rate during the current financial year. The recent investment in Opus has enabled us to start taking advantage of the low cost of electricity in the wholesale markets, and we anticipate a significant improvement in our margins from selling electricity during the current year. In addition, we have now received an Electricity Supply Licence from OFGEM, making us a licensed domestic supplier of both gas and electricity in our own right. We have recently launched a new brand, The Utility Warehouse, which is currently running alongside our established Telecom plus identity. This new brand more accurately reflects the nature of our activities, and may replace the existing brand identity in due course. We are clearly beginning to see the benefits of our strong competitive position as the UK's first low-cost multi-service utility company, which should be reflected in significantly higher profits for the coming year. Confidence within our distribution channel is high and my Board colleagues and I look forward to the future with great optimism. Peter Nutting Chairman 3 June 2003 TELECOM plus PLC Consolidated Profit & Loss Account Year ended 31 March 2003 Other Continuing Total Acquisitions Operations 2003 2002 ------------ --------- --------- -------- £'000 £'000 £'000 £'000 Turnover 13,564 44,472 58,036 32,677 Cost of sales (9,986) (29,753) (39,739) (20,460) ------------ --------- --------- -------- Gross profit 3,578 14,719 18,297 12,217 Sales and marketing costs (1,441) (3,102) (4,543) (2,703) Administrative expenses (1,894) (6,620) (8,514) (5,819) ------------ --------- --------- -------- Operating profit 243 4,997 5,240 3,695 Interest receivable 464 529 Interest payable (116) (189) --------- -------- Profit on ordinary activities 5,588 4,035 before taxation Tax on profit on ordinary (1,607) (1,080) activities --------- -------- Profit after taxation 3,981 2,955 Dividends (3,424) (2,534) --------- -------- Retained profit for 557 421 the year ========= ======== Basic earnings per share 6.8p 5.4p Diluted earnings per share 6.6p 5.2p Dividend per share 5.75p 4.5p The Group has no recognised gains or losses other than the profit for the period. TELECOM plus PLC Consolidated Balance Sheet As at 31 March 2003 2003 2002 ----- ----- £'000 £'000 £'000 £'000 FIXED ASSETS Tangible assets 1,946 2,026 Intangible assets 4,198 - Investments 1,038 - ------ ------ 7,182 2,026 CURRENT ASSETS Stocks 590 1,327 Debtors (due within one 7,994 3,852 year) Debtors (due after one 2,822 785 year) Investments - 2,541 Cash 6,056 8,421 ------ ------ 17,462 16,926 CREDITORS Amounts falling due within one year (13,418) (8,411) ------ ------ NET CURRENT ASSETS 4,044 8,515 ------ ------ TOTAL ASSETS LESS CURRENT LIABILITIES 11,226 10,541 CREDITORS Amounts falling due after more than one year (convertible debt instruments) (350) (1,560) ------ ------ 10,876 8,981 ====== ====== CAPITAL AND RESERVES Called up share capital 3,002 2,862 Share premium account 5,856 4,658 Profit and loss account 2,018 1,461 ------ ------ SHAREHOLDERS' FUNDS 10,876 8,981 ====== ====== Approved by the board on 3 June 2003 TELECOM plus PLC Consolidated Cash Flow Statement Year ended 31 March 2003 2003 2002 £'000 £'000 Reconciliation of operating profit to cash flow from operating activities Operating profit 5,240 3,695 Goodwill amortisation 360 - Depreciation 503 318 Decrease in stocks 737 721 Increase in debtors (2,332) (1,326) (Decrease)/increase in creditors 818 (41) Amortisation of loan stock issue costs 25 24 -------- ------- Net cash flow from operating activities 5,351 3,391 ======== ======= CASH FLOW STATEMENT Net cash flow from operating activities 5,351 3,391 Returns on investments and servicing of finance 319 327 Capital expenditure (363) (210) Acquisitions 5,461 - Corporation tax paid (1,952) (83) Dividends paid (2,903) (1,913) -------- ------- Net cash flow before management of liquid (5,009) 1,512 -------- ------- resources and financing Management of liquid resources 2,541 (2,541) Financing 103 442 -------- ------- Decrease in cash (2,365) (587) Reconciliation of net cash flow to movement in net funds Decrease in cash (2,365) (587) Cash outflow from capital element of hire purchase contract - 20 repayments -------- ------- Change in net funds resulting from cash flows (2,365) (567) Conversion of loan stock to equity shares 1,235 561 Cash released from liquid resources (2,541) 2,541 -------- ------- Movement in net funds for the year (3,671) 2,535 Net funds at 1 April 2002 9,347 6,812 -------- ------- Net funds at 31 March 2003 5,676 9,347 ======== ======= TELECOM plus PLC NOTES 1 The results for the year ended 31 March 2003 are not statutory accounts and are unaudited. The results for the year to 31 March 2002 are an abridged version of the Company's full accounts which received an unqualified audit report and have been filed with the Registrar of Companies. 2 DIVIDENDS 2003 2002 ------ ------ £'000 £'000 Interim dividend paid 2.5p (2002: 2p) per share 1,472 1,103 Final dividend proposed 3.25p (2002: 2.5p) per share 1,952 1,431 ------- -------- 3,424 2,534 ======= ======== 3 EARNINGS PER SHARE The calculation of basic earnings per share is based on a profit of £3,981,000 (2002: £2,955,000) and a weighted average of 58,671,471 (2002: 55,029,043) shares in issue. 2003 2002 ------ ------ Basic earnings per share 6.8p 5.4p Diluted earnings per share 6.6p 5.2p ======= ======= Diluted earnings per share assumes dilutive options and convertible loan notes have been converted into ordinary shares. The calculations are as follows: 2003 2002 ---- ----- Profit Shares No. Profit Shares No. £'000 000 £'000 000 Basic earnings 3,981 58,671 2,955 55,029 Dilutive effects: - Options - 1,103 - 1,059 -------- -------- ------- -------- - Loan notes 36 761 153 3,230 ======== ======== ======= ======== Diluted earnings 4,017 60,535 3,108 59,318 ======== ======== ======= ======== 4 TURNOVER AND SEGMENTAL ANALYSIS The activities of the Group divide into two segments: the Distribution Business, which is responsible for obtaining new customers, and the Virtual Network Business, which supplies airtime, gas, electricity and value added services to those customers. All of its activities are carried out in the UK. Other continuing Total Acquisitions operations 2003 2002 £'000 £'000 £'000 £'000 Virtual Network Turnover 13,308 41,879 55,187 30,181 Operating profit 633 7,719 8,352 5,890 Net assets 1,329 10,910 12,239 8,522 ========= ======== ======= ======== Distribution Turnover 256 2,593 2,849 2,496 Operating loss (390) (2,722) (3,112) (2,195) Net (liabilities) / assets (674) (689) (1,363) 459 ========= ======== ======= ======== This information is provided by RNS The company news service from the London Stock Exchange

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