Final Results
Telecom Plus PLC
06 June 2006
TELECOM plus PLC
6 June 2006
Preliminary results for the year ended 31 March 2006
Telecom plus PLC, the UK's leading low-cost multi-utility supplier (gas,
electricity, telephony, internet), announces preliminary results for the year
ended 31 March 2006.
Financial and business highlights:
• Turnover up 33% to £136.3m (2005: £102.5m)
• Loss before tax of £1.6m (2005: profit £10.5m)
• Final dividend of 1.0p (2005: 6.0p)
• Elimination of exposure to wholesale energy prices
• Number of services provided increased 23% to 496,000 (2005: 402,000)
• Significant increase in value of investment in Oxford Power Holdings
Peter Nutting, Chairman, said:
'We are still the UK's only fully-integrated supplier of a wide range of
attractively-priced utility services, combined with a distribution channel of
proven ability in cost effectively gathering significant numbers of high quality
new customers each month. This combination continues to give us a considerable
competitive advantage in the domestic market. With the recent elimination of
our exposure to wholesale energy prices, the directors are confident that the
current year will see a return to overall profitability and a resumption of
growth in our dividend payments to shareholders.'
For press enquiries, please contact:
Charles Wigoder/Stephen Davis Neil Boom/Tanya Feness
Telecom plus PLC Gresham PR Ltd.
020 8955 5000 020 7404 9000
CHAIRMAN'S STATEMENT
As you will already be aware, we experienced very difficult trading conditions
last year due to the extreme volatility and record prices in the wholesale
energy markets during November and December. Indeed, the losses we experienced
in our gas business alone during those two months reached almost £8m, more than
off-setting the satisfactory profits of £5.5m achieved during the first
half-year.
This led to our decision to enter into the transaction with npower which we
announced in February 2006. Although not completed until 31 March 2006, it
became effective retrospectively from 1 January 2006 in all financial respects,
and enabled our energy business to return to profitability during the last
quarter of the financial year. The structure of the transaction preserves our
unique business model from a customer perspective as a fully integrated
multi-utility supplier, whilst passing the substantive risks and rewards of
hedging and buying energy to a larger business partner. In future, we expect to
make a small positive margin from supplying energy to our customers, albeit at a
lower level than anticipated when we entered the energy business some years ago,
irrespective of the level (or volatility) of wholesale energy prices, or
fluctuations in demand caused by unseasonably cold or warm weather.
Notwithstanding these issues, I am pleased to report that we achieved
considerable growth during the year, with turnover increasing by 33% to £136m
(2005: £102m). This was due to a combination of higher retail energy prices and
growth of over 23% to 496,000 (2005: 402,000) in the number of services being
provided to our customers.
However, as a result of the losses in our gas business during November and
December, combined with exceptional costs of around £1.9m associated with
entering into the new npower arrangements, we incurred an overall pre-tax loss
for the year of £1.6m (2005: profit £10.5m). Notwithstanding this small loss, we
are proposing a final dividend of 1p for the year, reflecting our strong balance
sheet and confidence in the future prospects for the business.
The final dividend will be paid on 4 August 2006 to shareholders on the register
at the close of business on 7 July 2006 and is subject to approval by
shareholders at the Company's Annual General Meeting which is being held on 12
July 2006.
Important highlights during the year included the successful launch of our new
Business Club in August 2005, which we anticipate will become an increasingly
important growth area for the Company over the coming years; substantial growth
in the number of broadband customers we supply; and the extremely encouraging
take-up by both existing and new customers of the opportunity to transfer their
home phone line rental to us.
Since the year-end, International Power Plc has announced the purchase from
existing shareholders (other than Telecom plus) of a 30% stake in Oxford Power
Holdings Ltd ('OPH'). This transaction places an implicit value of £4.8m on our
20% investment in OPH compared with a total cost of £1m.
At the AGM we will be saying good-bye to John Levin who is not standing for
re-election as a Director. He was one of the original founders of the business
and made a significant contribution to the management of the Company during its
start-up period. I would also like to take this opportunity to thank all the
people involved with Telecom plus who have played such an important role in
developing the business this year, in particular our extremely hard-working head
office team and our network of Independent Distributors, who display great skill
and determination in continuing to grow our business.
Outlook
Since the year end, Carphone Warehouse (through their Talk Talk brand) have been
attracting considerable publicity for their new combined broadband and telephony
package. Although it is still early days, we have seen little effect from this
offer on our own business, either in relation to growth in our own broadband
base or on churn.
We are committed to maintaining a competitive position in this sector, and
expect to be launching a new range of broadband packages later this year once
the proportion of local exchanges which are unbundled has increased. We are
confident the competitive advantages provided by our integrated business model
and low-cost route to market will enable us to generate an acceptable return
from supplying this service in future.
Within our telephony business, margins have started to edge upwards recently as
we negotiate lower wholesale prices with our partners. Our position has been
helped by consolidation within the sector, which has made the call volumes under
our control increasingly sought after.
We are still the UK's only fully integrated supplier of a wide range of
attractively-priced utility services, combined with a distribution channel of
proven ability in cost effectively gathering significant numbers of high quality
new customers each month. This combination continues to give us a considerable
competitive advantage in the domestic market. With the recent elimination of our
exposure to wholesale energy prices, the directors are confident that the
current year will see a return to overall profitability and a resumption of
progressive growth in our dividend payments to shareholders.
Peter Nutting
Chairman
6 June 2006
BUSINESS REVIEW
Performance
Our overall performance for the year has been encouraging in a number of key
respects, against a background of extremely difficult conditions in the
wholesale energy markets and continued competition in supplying both telephony
and broadband services.
We have seen considerable growth in turnover which increased by 33% to £136m
(underpinned by a 23% increase in the number of services we supply) although our
profitability was severely affected by the volatility and record wholesale
prices for energy during the last quarter of 2005.
The new arrangements with npower, which became retrospectively effective on 1
January 2006 (following completion on 31 March 2006), have eliminated the
wholesale price risks which we previously faced, and will enable us to earn a
positive contribution from supplying energy to our customers in future.
Activity within our distribution channel was subdued during the second half of
the year, largely as a result of uncertainty over the outcome of our energy
issues, however we still experienced an increase of 360 distributors during the
year, bringing the total to over 16,000 by the year end. We were particularly
encouraged by the pick-up in activity during March following the announcement of
the new npower arrangements.
The Market
Our primary focus is on supplying a wide range of essential utility services
(gas, electricity, home telephony, mobile telephony and broadband internet) to
domestic customers. These are substantial markets and represent a considerable
organic growth opportunity for our business.
At the year end we were supplying around 496,000 services to over 211,000
households throughout the UK. We remain however a small operator in a market
dominated by the former monopoly suppliers. Our unique position as the only
integrated multi-utility supplier provides us with a highly efficient cost-base,
and enables us to combine good service and competitive pricing with a single
monthly bill for each customer.
The approximate size of the UK market for the principal services we provide is
estimated at around £34 billion as follows:
Number of Retail Market
Households Value
Gas 20m £10.1bn
Electricity 25m £10.5bn
Home Phone - Calls 24m £3.9bn
Home Phone - Line Rental (Lines) 24m £2.4bn
Mobile (Excluding Pre-Pay) 15m £5.0bn
Broadband 10m £2.1bn
Retail market values based on average prices charged by us to customers for each
service during the year ended 31 March 2006.
We have also been providing a similar range of services to small and medium
sized business customers since August 2005, when we introduced the Utility
Warehouse Discount Club for Business. This new opportunity was warmly welcomed
by our Distribution Channel, who had recruited over 2,200 businesses by the year
end.
Our Customers
The majority of our customers choose to take advantage of our multi-service
proposition, with over 65% having joined our Discount Club since its launch in
October 2003.
On average each member takes 2.76 services (2005: 2.25) with over 75% taking 2
or more services, and almost 50% taking 3 or more services. These figures are
illustrated by the analysis below, which demonstrates the effectiveness of our
Club concept in encouraging customers to subscribe for additional services:-
Members Non-Members
1 Service 24% 66%
2 Services 28% 19%
3 Services 22% 11%
4 Services 15% 3%
5 Services 8% 1%
6 Services 2% -
7 Services 1% -
Non-members relate to customers gathered prior to the launch of our Discount
Club in October 2003.
This has been reflected in a further increase in Average Revenue per Customer,
which has been increasing steadily against a background of considerable price
deflation in the fixed telephony market since we first implemented our
multi-utility strategy.
Average Revenue
per Customer
Year £
1999 190
2000 286
2001 316
2002 329
2003 459
2004 482
2005 505
2006 634
We enjoy high levels of overall customer satisfaction, as evidenced by the
relatively low churn we experience. For example, our energy churn of under 1.5%
per month compares with an industry average of around 5% per month amongst
customers who have switched away from their original supplier. Similarly, our
telephony monthly churn of around 2% (which we anticipate will reduce in future
as a result of the rapid take-up of our line rental service, which enables
customers to terminate their historic relationship with BT) compares favourably
with our understanding of the much higher levels (typically around 4%)
experienced by other suppliers.
Services
Our range of essential utility services includes fixed telephony (calls and line
rental), mobile telephony, gas, electricity and internet. At the year end we
supplied a total of 495,679 services (2005: 401,561), representing an increase
of over 23% during the course of the year.
2006 2005
Services:
Gas 86,379 69,362
Electricity 101,710 81,494
Home phone 169,990 166,960
Line rental 40,519 -
Freephone 11,056 11,265
Mobile 45,197 48,554
Internet 40,828 23,926
-------------- -------------
Total 495,679 401,561
-------------- -------------
As can be seen from the above table, we experienced significant growth during
the year in the number of customers to whom we supplied gas, electricity,
internet and home phone line rental. Overall, our home phone service saw modest
growth, whilst our mobile service experienced a modest fall in customer numbers,
reflecting increasing competition in these areas of our business.
In relation to our Business Club, over 2,200 customers had joined by the year
end taking in aggregate around 4,000 services. We are extremely encouraged by
these strong early sales, and the enthusiastic response of our Distribution
Channel to this opportunity (where over 2,400 distributors have attended special
Business Club training sessions during the year). The substantial size of the
target market (there are over 1m home-based, small and medium sized businesses
in the UK) gives us considerable confidence that this will make a significant
contribution to the Group in due course.
Customer Service
We pride ourselves in offering first class customer service through a single
call centre, based in the UK. Our policy is to try and ensure that the first
person a customer speaks to is able to resolve all issues raised, irrespective
of how many different services we are providing to them.
We were delighted to have the quality of our customer service recognised this
year by Which? magazine, who in a reader survey rated our customer service at
78%, compared to BT at 29%. This survey was subsequently widely reported in the
national press.
Meanwhile, we are constantly striving to enhance further all aspects of the
service we provide. During the year we introduced a range of qualitative and
quantitative performance measurement tools into our Call Centre, which have
continued to improve the overall quality of our members' customer service
experience.
Our People
Our customers rely on the combined efforts of around 210 employees to manage
relationships with both our Customers and Distributors, and deliver a
consistently high quality of service at all times. We pay considerable attention
to recruiting and retaining appropriate people.
The Company operates an Inland Revenue-approved employee share option scheme,
under which employees are granted an option to purchase shares in the Company
between 3 and 7 years from the date of grant. The exercise price is the market
price at the time of granting the option. Our policy is to issue options to all
employees after the satisfactory completion of their probationary period,
without any performance conditions being attached to the exercise thereof. As at
31 March 2006, options over 1,342,100 shares had been granted to staff,
representing 2% of the issued share capital of the Company.
During the year, the Company launched a scheme under the government approved
Home Computer Initiative (HCI), to encourage employees to obtain computers for
home use in a tax efficient way. Over half the group's employees participated in
the scheme. It is regrettable that the government have withdrawn this initiative
in respect of any future equipment purchases, with effect from 6 April 2006.
We also encourage all employees to participate in a stakeholder pension scheme
operated by Legal & General. Participants can choose their own contribution
level which is matched by the Company, within certain limits depending on length
of service.
Our Distributors
Our Distributors remain one of our key strengths compared with other utility
suppliers. The alignment of financial interests provided by our revenue sharing
model ensures they focus their activities on finding credit-worthy and high
spending customers who will reap the maximum savings from using our services,
and will thus be least likely to churn. By doing so, they maximise their own
long-term returns.
Our Car Plan, which provides eligible Distributors with a subsidised
fully-branded Mini has become increasingly popular, and we have now supplied
almost 50 cars. Users find these extremely useful in raising their local
profile, resulting in enquiries from both potential new customers and
Distributors.
Distributors have seen a considerable increase in their average earnings from
each customer during the year as a result of the growth in the average number of
services taken combined with sharply higher energy prices. This trend can be
expected to continue during the course of the current year, as they have not yet
received the full benefits from the latest energy price rises which took effect
on 1 March and 1 May 2006 respectively, making this predominantly part-time
career increasingly attractive to potential new recruits.
Our national training programme has seen considerable improvements during the
year, with new modules to support the launch of our Business Club, the
introduction of Commercial Energy, the increasing popularity of BlackBerrys, and
a Personal Development Programme to provide our next generation of leaders with
the additional skills they will need.
The Environment
The environment is becoming an increasingly important concern and we participate
in programmes to help reduce the environmental impact of our activities.
Our energy efficiency commitment programme for the year was designed to deliver
430 GW hours of savings through subsidised loft insulation and cavity wall
insulation in private homes and for local authorities, 50% of which was targeted
at priority groups. 5.7% of our electricity purchases are from renewable
sources, obtained under government approved arrangements.
In addition, we operate an energy efficiency helpline to provide advice on how
customers can reduce their energy usage, and we also participate actively in the
'Shred-it' recycling programme, with a certificated saving of 50 trees during
2005.
Principal risks
The Group faces various risk factors, both internal and external, which could
have a material impact on long-term performance.
Reputation risk
Telecom plus' reputation amongst our business partners, suppliers, shareholders
and customers is fundamental to the future success of the Group. Failure to meet
expectations in terms of the services we provide, the way that we do business or
in our financial performance could have a material effect on the Group. These
risks are mitigated through our focus on quality customer service, the training
of our staff and our systems of internal control and risk management.
Wholesale Prices
The Company does not currently own or operate any network infrastructure itself,
choosing instead to purchase the capacity needed from third parties. The
advantage of this approach is that the Company is not exposed to either
technological risk, capacity risk or the risk of obsolescence, as it can
purchase each month the exact amount of each service required to meet its
customer's needs.
While there is a theoretical risk that in some of the areas in which the Company
operates it may be unable to secure access to the necessary infrastructure on
commercially attractive terms, in practice the pricing of access to such
infrastructure is either regulated (as in the energy market) or subject to
significant competitive pressures (as in telephony). The profile of our
customers combined with our clearly differentiated route to market has
historically proven attractive to potential partners, who compete aggressively
in order to secure a share of our business.
The supply of Energy, which has been accounting for an increasing proportion of
our sales each year, has different risks associated with it. The wholesale price
can be extremely volatile, and customer demand can be subject to considerable
short term fluctuations depending on the weather. These issues caused the
Company to incur substantial losses during the third quarter of last year, hence
our decision to seek a relationship with a larger energy supplier which
preserved our integrated multi-utility business model whilst passing the
substantive risks and rewards of hedging and buying energy to them. The
transaction with npower which was completed on 31 March 2006 achieved these
objectives, and will enable the Company to earn a positive contribution from
providing energy in future, irrespective of the level of underlying wholesale
prices, market volatility or abnormal seasonal temperature fluctuations. It also
removes the need for the Company to tie up valuable capital to support forward
positions in the wholesale energy markets which would otherwise have been
required.
Competitive risk
The Group operates in highly competitive markets and significant product
innovations or increased price competition could affect our margins. In order to
maintain our competitive position, we constantly focus on ways of improving our
operating efficiency and keeping our cost base as low as possible.
Legislation and regulatory risk
The Group is subject to varying laws and regulations, including possible adverse
effects from European regulatory intervention.
Risk management
The business continues to develop and operate a consistent and systematic risk
management process, which involves risk ranking, prioritisation and subsequent
evaluation, with a view to ensuring all significant risks have been identified
and prioritised, and systems of control are in place to manage such risks.
Charles Wigoder
Chief Executive
6 June 2006
FINANCIAL REVIEW
The Group's Annual Report for 2006 is presented for the first time under
International Financial Reporting Standards ('IFRS'). This accounting change
has, however, had little overall impact on our results as the additional cost of
accounting for the equity value of share options through the Income Statement
has been offset by the benefit of including our share of profits from Oxford
Power Holdings Limited and no longer needing to amortise the goodwill from
acquiring Telecommunications Management Limited some years ago.
Overview
Revenues of £136m were 33% higher than in the previous financial year to 31
March 2005. The pre-tax profit (before the exceptional charge of £1.9m in
respect of reorganising the energy business) was £0.2m compared with £10.5m in
the last financial year. This reduction in profitability together with the
growth in our energy business created a net cash outflow from operating
activities of £9.7m; there was however only a slight reduction in our net cash
position at the year end from £6.3m to £5.9m, due to the share issue which took
place in May 2005 when we raised £12.2m.
Revenue and margins
Revenue increased by 33% from £102m to £136m during the year, a significant
proportion of which was accounted for by increases in the energy prices charged
to our customers.
The reduction in operating profits (from a profit of £9.7m to a loss of £0.7m
before exceptional costs) was primarily due to losses incurred in our gas
business resulting from unprecedented volatility and record prices in the
wholesale energy markets during the late autumn, combined with higher
administration costs resulting from continued growth in the number of services
we provide and the strengthening of our senior management team.
Revenue and margins in our telephony business were slightly lower than last year
notwithstanding the significant growth in our broadband customer base, for four
principal reasons:
1. Revenues from call charges (particularly to mobile destinations)
were substantially lower following price reductions to all customers which were
introduced in September 2004.
2. An increasing proportion of turnover relates to the supply of
Home Phone Line Rental, where the gross margin is significantly lower than for
calls. Indeed, during most of the last financial year prior to wholesale price
reductions from BT in March 2006, the gross margin was negative (although still
considered of overall benefit to the business due to anticipated lower churn on
customers who no longer have a direct relationship with BT).
3. Within TML, our wholly-owned subsidiary focussed on the SME
segment of the telephony market, revenues reduced by almost £2m to £10.1m due to
lower retail prices and the decision to withdraw from the particularly
competitive area of supplying mobile services to large corporates, although
margins remained at a satisfactory level.
4. Mobile revenues reduced by around £2m caused by a combination of
lower retail tariffs, more customers taking advantage of our loyalty discount
scheme, and a small reduction in the number of customers using this service.
The effect of these reductions in turnover was largely offset by considerable
growth in the number of customers taking Broadband and Home Phone Line Rental
from us.
Distribution
The loss in respect of our Distribution business increased during the year to
£3.5m (2005: £2.3m). This was mainly caused by faster growth in the number of
broadband customers being supplied, where we incur a charge from BT of £50 for
each new broadband connection (reduced to £40 with effect from 1 March 2006)
together with the cost of providing a free USB modem to most customers.
Operating expenses
Operating expenses before exceptional items have increased substantially during
the year from £15m to £19.5m. The principal elements of this are higher
commission payments to our Distributors and an increase in our bad debt charge
(in line with the growth in turnover), and an increase in the average number of
staff we employ to 211 during the year under review (which has enabled us to
improve customer service, as well as significantly enhancing the strength of the
management team).
Share Option Costs
The operating loss is stated after share option expenses of £434,000 (2005:
£303,000). These expenses relate to an accounting treatment in respect of IFRS 2
'share based payment'.
Taxation
The amount of corporation tax payable in respect of the year is £13,000 (2005:
£3.0m).
Cash Flow
The small overall pre-tax loss for the year combined with the substantial
additional working capital requirements of our energy businesses during the
second half, resulted in a net cash out flow from operating activities of £9.7m
(2005: Inflow £2.6m). This was offset by the £12.2m net proceeds from the share
placing which took place in June 2005.
In February 2006, we entered into a sale and leaseback arrangement on 2
buildings which formed part of our head office complex for an aggregate
consideration of £1m.
As at 31 March 2006, our cash balance amounted to £5.9m (2005: £6.3m). This is
however expected to increase significantly during the first 6 months of the
current year once the new settlement structure with npower has taken full
effect. The March cash position is also (and will continue to be in future)
adversely affected by energy customers who pay by Budget Plan, where the high
proportion of annual energy consumption used during the winter period means that
our energy debtors reach a peak at the end of each winter before falling sharply
as we go into the summer.
The Group does not have a policy with respect to interest rate management as it
currently has no debt funding requirements. With regard to cash surpluses, these
are placed on deposit to secure the highest return available.
International Financial Reporting Standards
The Group has adopted International Financial Reporting Standards (IFRSs) in
this annual report for the first time. A full explanation of the effects of
transition to IFRS is detailed in the notes to the financial statements, but the
main impacts from adopting IFRS are set out below:
Goodwill amortisation
Under IFRS, goodwill is not subject to annual amortisation but there is a
requirement for an annual impairment review. Any impairment identified is
charged immediately to the income statement.
Share options
Under UK GAAP, there was no profit and loss account charge in respect of share
options granted at market value. IFRS requires the fair value of the options to
be charged to the income statement. The charge is spread over the vesting
period, and is calculated using the binomial model. An exemption applies to
options granted prior to 7 November 2002.
Associated Companies
Under IFRS the Group exercises significant influence over its investment in
Oxford Power Holding Limited, and as such, the investment is classified as an
associate. This investment is accounted for using the equity method.
Dividend accrual
IFRS does not recognise a dividend until it is declared, usually after the
accounting period to which it relates.
Going Concern
The Directors, having made appropriate enquiries, consider it reasonable to
assume that the Group and the Company have adequate resources to continue for
the foreseeable future and, for this reason, have continued to adopt the going
concern basis in preparing the financial statements.
Stephen Davis
Finance Director 6 June 2006
TELECOM plus PLC
Consolidated income statement
For the year ended 31 March 2006
Notes 2006 2005
£'000 £'000
Revenue 136,343 102,467
Cost of sales 117,603 77,747
------- -------
Gross profit 18,740 24,720
Distribution expenses 7,810 6,157
Administrative expenses 11,659 8,876
------- -------
Operating (loss)/profit before exceptional costs (729) 9,687
Exceptional costs in respect of restructuring the
energy (1,860) -
business ------- -------
Operating (loss)/profit (2,589) 9,687
------- -------
Financial income 641 533
Financial expenses 39 14
------- -------
Net financial income 602 519
------- -------
Share of profit of associates 343 251
------- -------
(Loss)/profit before taxation (1,644) 10,457
Taxation 263 (2,809)
------- -------
(Loss)/profit for the period (1,381) 7,648
======= =======
Basic (loss)/earnings per share 2 (2.1p) 12.4p
======= =======
Diluted (loss)/earnings per share 2 (2.1p) 12.1p
======= =======
TELECOM plus PLC
Consolidated statement of recognised income and expense
For the year ended 31 March 2006
2006 2005
£'000 £'000
(Loss)/profit for the period (1,381) 7,648
Transfer of deferred tax on share options against equity (11) (378)
----------- --------
Total recognised income and expense for the period (1,392) 7,270
=========== ========
TELECOM plus PLC
Consolidated Balance Sheet
As at 31 March 2006
2006 2005
£'000 £'000
Assets
Non-current assets
Property, plant and equipment 1,016 1,723
Goodwill and intangible assets 3,894 4,025
Investments 940 597
in associates
Deferred tax 509 236
Other receivables 2,954 2,912
---------- ---------
Total non-current assets 9,313 9,493
---------- ---------
Current assets
Inventories 512 1,134
Trade and other receivables 4,951 2,939
Prepayments and accrued income 25,078 12,866
Cash and cash equivalents 5,888 6,275
---------- ---------
Total current assets 36,429 23,214
---------- ---------
Total assets 45,742 32,707
---------- ---------
Current liabilities
Trade and other payables 5,906 5,832
Current tax payable 12 1,592
Accrued expenses and deferred income 14,869 7,504
---------- ---------
Total current liabilities 20,787 14,928
---------- ---------
---------- ---------
Total assets less total liabilities 24,955 17,779
========== =========
Equity
Share capital 3,421 3,108
Share premium 19,065 7,145
Retained earnings 2,469 7,526
---------- ---------
Total equity 24,955 17,779
========== =========
These accounts were approved and authorised for issue by the Board on 6 June
2006.
TELECOM plus PLC
Consolidated Cash Flow Statement
Year ended 31 March 2006
2006 2005
£'000 £'000
Operating activities
Operating (loss)/profit (2,589) 9,687
Depreciation of property, plant and equipment 445 407
Amortisation of intangible assets 131 131
Profit on disposal of property, plant and equipment (282) (25)
Decrease in inventories 622 12
Increase in trade and other receivables (14,266) (6,887)
Increase in trade and other payables 7,439 2,122
Amortisation of loan stock issue costs - 6
Costs attributed to the issue of share options 434 302
Corporation tax paid (1,601) (3,190)
---------- ---------
Net cash flow from operating activities (9,667) 2,565
---------- ---------
Investing activities
Purchase of property, plant and equipment (484) (629)
Sale of property, plant and equipment 1,028 43
Expenditure on intangible assets - (30)
---------- ---------
Cash flow from investing activities 544 (616)
---------- ---------
Financing activities
Dividends paid (4,099) (6,498)
Interest received 641 533
Interest paid (39) (14)
Issue of ordinary shares 12,233 470
Redemption of Loan stock - (22)
---------- ---------
Cash flow from financing activities 8,736 (5,531)
---------- ---------
Decrease in cash and cash equivalents (387) (3,582)
Cash and cash equivalents at the beginning of the year 6,275 9,857
---------- ---------
Cash and cash equivalents at the end of the year 5,888 6,275
========== =========
TELECOM plus PLC
NOTES
1. The financial information set out above does not constitute the Group's
statutory information for the years ended 31 March 2006 or 2005, but is derived
from these accounts. Statutory accounts for 2005 have been delivered to the
Registrar of Companies and those for 2006 will be delivered following the
Company's annual general meeting. The auditors have reported on these accounts,
their reports were unqualified and did not contain statements under the
Companies Act 1985, s237(2) or (3).
Following a European Union Regulation issued in 2002, with effect from 1 April
2005 the Group is reporting its results in accordance with International
Financial Reporting Standards (IFRS) as adopted by the European Union and so its
Annual Report and Accounts for the year ended 31 March 2006 are prepared under
IFRS. Previous accounts were prepared under UK Generally Accepted Accounting
Principles (UK GAAP) and reconciliations converting the group's results from UK
GAAP to IFRS for the year ended 31 March 2005 and the balance sheet at 1 April
2004 (the date of transition) have been previously presented.
2. BASIC (LOSS)/EARNINGS PER SHARE
The calculation of basic loss per share at 31 March 2006 was based on the loss
attributable to ordinary shareholders of £1,381,000 (2005: profit £7,648,000)
and a weighted average number of ordinary shares outstanding during the year
ended 31 March 2006 of 67,170,166 (2005: 61,921,044).
2006 2005
Basic (loss)/earnings per share (2.1)p 12.4p
Diluted (loss)/earnings per share (2.1)p 12.1p
---------- ---------
Diluted earnings per share
Diluted (loss)/earnings per share assumes dilutive options have been converted
into ordinary shares. The calculations are as follows:
2006 2005
Profit Number of shares Profit Number of shares
£'000 '000 £'000 '000
Basic(loss)/earnings (1,381) 67,170 7,648 61,921
Dilutive effects -
Options - - - 1,409
---------- --------- -------- -------
Diluted(loss)/
earnings (1,381) 67,170 7,648 63,330
========== ========= ======== =======
The share options may be dilutive in future periods.
3. TURNOVER AND SEGMENTAL ANALYSIS
For management reporting purposes, the Group is currently organised into three
operating divisions:
Virtual Network - Telephony;
Virtual Network - Energy; and
Distribution.
These divisions are the basis on which the Group reports its primary segmental
information.
Business segments
Year ended 31 March 2006 Year ended 31 March 2005
Virtual Virtual Distribution Total Virtual Virtual Distribution Total
Network Network Network Network
-telephony -energy -telephony -energy
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Revenue:
External sales 59,440 74,437 2,466 136,343 60,219 39,481 2,767 102,467
======== ====== ======== ====== ======= ====== ======= ======
Segment result 13,538 (10,776) (3,491) (729) 16,252 (4,289) (2,276) 9,687)
-------- ------ -------- ------ ------- ------ ------- ------
Operating (loss)
/profit before
exceptional items (729) 9,687
Exceptional costs
in respect of
restructuring the
energy business (1,860) -
------ ------
Operating
(loss)/profit (2,589) 9,687
Net financing
costs 602 519
Share of profit
of Associates 343 251
Taxation 263 (2,809)
(Loss)/profit
for the ------ ------
Year (1,381) 7,648
====== ======
Segment assets 20,308 23,292 1,202 44,802 19,314 11,041 1,755 32,110
Investment in
equity method
associates - 940 - 940 - 597 - 597
Total assets 20,308 24,232 1,202 45,742 19,314 11,638 1,755 32,707
Segment
liabilities (6,877) (11,234) (2,676) (20,787) (7,891) (5,072) (1,965) (14,928)
Capital
expenditure 193 291 - 484 347 282 - 629
Depreciation
and
amortisation 230 346 - 576 297 241 - 538
======== ====== ======== ====== ======= ====== ======= ======
The share of profit of associates relates to the 'Virtual Network - energy'
business segment.
All turnover is derived in the United Kingdom and substantially arises from the
provision of services.
This information is provided by RNS
The company news service from the London Stock Exchange
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