Interim Results
Telecom Plus PLC
29 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 six
months 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 have
been extremely well received, and are already having a positive impact on our
growth, churn and profitability. Although it is too early to assess the impact
these will have over the longer term, we are confident that our results for the
full year will be substantially ahead of the pre-tax profits of £11.6m reported
for the year ended 31 March 2007.'
There will be a meeting for analysts at Smithfield's offices at 10.15 for
10.30am today.
For more information please contact:
Telecom plus PLC
Charles Wigoder, Chief Executive 020 8955 5000
Richard Hateley, Finance Director
Smithfield
Tania Wild / Reg Hoare 020 7360 4900
Interim Management Report
We are pleased to report a further period of satisfactory performance in the
first half of the current year. We continue to manage the business in line with
our strategy of becoming one of the UK's leading suppliers of utility services
to the residential marketplace.
Financial Review
Pre-tax profits rose by over 15% to £6.4m (2006: £5.5m) on a 4% increase in
turnover to £71.1m (2006: £68.5m). This reflects the benefit from continued
steady growth in the number of services we provide to our customers, partially
offset by the effect of lower retail energy prices. Earnings per share increased
by 16% to 6.6p (2006: 5.7p).
The reduction in our gross profit margin from 22.4% to 20.5% is due to the
changing sales mix, where the proportion of turnover derived from energy and
telephone line rental has increased to 64% (2006: 59%); there has also been a
reduction in high margin telephony revenues following the change in our
multi-utility benefit from 'CashBack' to 'Free UK Calls' in October 2006.
Oxford Power Holdings, in which we have a 20% equity investment, is trading
significantly ahead of expectations. Our share of their profits for the first
half of the current year has more than doubled to £401,000 (2006: £153,000) and
they are on target to report pre-tax profits of around £6m for the full year.
Our investment in this company clearly represents an increasingly valuable
asset.
Operating Review
Within our residential business, customer numbers have shown a marginal
reduction since 31 March 2007 to 204,763, although our Business Club continues
to show steady growth and now has over 7,800 customers. Overall, the number of
services 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 was
attended by almost 3,000 Distributors and staff. We announced some significant
changes to the way in which we promote our services, as well as improvements to
the 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 £36.8m
since 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 average
cost of 181p per share, following approval of our capital reduction exercise at
this year's AGM (subsequently confirmed by the High Court), and also paid a
final dividend for last year of £4.1m.
Interim Dividend
In the light of our strong cash position, the Board have decided to pay an
interim dividend of 4p (2006: 2p) which will be made on 7 January 2008 to
shareholders on the register on 14 December 2007.
Principal Risks and Uncertainties
The principal risks and uncertainties affecting the Company's activities are
detailed on pages 8 and 9 of the Report and Accounts for the year ended 31 March
2007. A copy of the Report and Accounts is available on the Company's website at
www.telecomplus.co.uk/annualreport.
Responsibility Statement
The Directors are responsible for the preparation of the condensed set of
financial statements and interim management report comprising this set of
Interim Results for the six months ended 30 September 2007, each of whom
accordingly 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 we
anticipate that the 'Big 6' retail energy suppliers will begin passing these
through to their customers during the first quarter of 2008. Although we are no
longer directly exposed to the wholesale markets or any volatility in short-term
prices, we will nonetheless benefit from any widespread market move towards
higher retail prices through increased turnover and an improvement in the net
contribution we earn from supplying energy.
The changes we made to our services at our sales conference last month have been
extremely well received, and are already having a positive impact on our growth,
churn and profitability. Although it is too early to assess the impact these
will have over the longer term, we are confident that our results for the full
year will be substantially ahead of the pre-tax profits of £11.6m reported for
the year ended 31 March 2007.
Given on behalf of the Board
CHARLES WIGODER RICHARD HATELEY
Chief 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 financial
statements in the half-yearly financial report for the six months ended 30
September 2007 which comprises the consolidated income statement, consolidated
statement of changes in equity, consolidated balance sheet, consolidated cash
flow statement and the related explanatory notes. We have read the other
information contained in the half-yearly financial report and considered whether
it contains any apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements
This report is made solely to the Company in accordance with the terms of our
engagement. Our review has been undertaken so that we might state to the Company
those matters we are required to state to it in this report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company for our review work, for this
report, or for the conclusions we have reached.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved
by, the directors. The directors are responsible for preparing the half-yearly
financial report in accordance with the Disclosure and Transparency Rules of the
United Kingdom's Financial Services Authority. As disclosed in note 1, the
annual financial statements of the group are prepared in accordance with IFRSs
as adopted by the European Union. The condensed set of financial statements
included in this half-yearly financial report has been prepared in accordance
with International Accounting Standard 34, 'Interim Financial Reporting,' as
adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the half-yearly financial report based on our
review.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information
Performed by the Independent Auditor of the Entity' issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly, we
do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe
that the condensed set of financial statements in the half-yearly financial
report for the six months ended 30 September 2007 is not prepared, in all
material respects, in accordance with International Accounting Standard 34 as
adopted by the European Union and the Disclosure and Transparency Rules of the
United Kingdom's Financial Services Authority.
PKF (UK) LLP London, UK
Registered 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 £'000
Assets
Non-current assets
Property, plant and equipment 969 992 884
Goodwill and intangible assets 3,755 3,828 3,761
Investments in associates 1,823 1,101 1,422
Deferred tax 852 525 904
Other receivables 873 2,919 858
----------- ----------- -----------
Total non-current assets 8,272 9,365 7,829
----------- ----------- -----------
Current assets
Inventories 154 393 202
Trade and other receivables 3,344 1,302 3,258
Prepayments and accrued income 17,506 19,047 28,649
Cash 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 liabilities
Trade 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
----------- ----------- -----------
Equity
Share capital 3,452 3,425 3,446
Share premium - 19,121 19,444
Treasury 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 activities
Operating profit 5,078 5,013 10,018
Depreciation of property, plant and
equipment 232 224 447
Depreciation of intangible assets 7 66 133
Profit on disposal of property, plant
and equipment - (44) (44)
Decrease in inventories 48 119 310
Decrease in trade and other
receivables 11,042 9,716 218
Increase in trade and other payables 3,850 3,526 10,647
Costs attributed to the issue of share
options (114) 219 425
Corporation tax (paid) / refunded (1,855) 277 (1,402)
----------- ----------- -----------
Net cash flow from operating
activities 18,288 19,116 20,752
----------- ----------- -----------
Investing activities
Investment in Associates - (9) (9)
Purchase of property, plant and
equipment (318) (226) (341)
Sale of property, plant and equipment 2 70 70
----------- ----------- -----------
Cash flow from investing activities (316) (165) (280)
----------- ----------- -----------
Financing activities
Dividend paid for the previous year (4,142) (684) (2,062)
Interest received 883 356 1,105
Interest paid - - (6)
Issue of ordinary shares 122 59 404
Purchase 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 equivalents
at 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 April
2006 68,429 3,421 19,065 2,469 24,955
Profit for the
period
ended 30 September 3,911 3,911
2006
Deferred tax on
share options 15 15
-------- -------
3,926 3,926
-------- -------
Dividends (684) (684)
Issue of share
capital 75 4 56 60
Credit arising on
share options 219 219
------- ------- -------- -------- -------- -------
Balance at 30
September 2006 68,504 3,425 19,121 5,930 28,476
Balance at 1 October
2006 68,504 3,425 19,121 5,930 28,476
Profit for the
period 4,697 4,697
ended 31 March 2007
Deferred tax on
share options 3 3
-------- -------
4,700 4,700
-------- -------
Dividends (1,378) (1,378)
Issue of share
capital 425 21 323 344
Credit arising on
share options 206 206
------- ------- -------- -------- -------- -------
Balances at 31 March
2007 68,929 3,446 19,444 9,458 32,348
Balance at 1 April
2007 68,929 3,446 19,444 9,458 32,348
Profit for the
period
ended 30 September 4,538 4,538
2007
Deferred tax on
share options (41) (41)
-------- -------
4,497 4,497
-------- -------
Dividends (4,142) (4,142)
Issue of share
capital 103 6 116 122
Cancellation of
share (19,560) 19,560 -
premium
Purchase of treasury
shares (3,830) (3,830)
Credit arising on
share options (114) (114)
------- ------- -------- -------- -------- -------
Balance at 30
September 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 constitute
statutory accounts as defined in section 240 of the Companies Act 1985. No
statutory accounts for the period have been delivered to the Registrar of
Companies. The financial information contained in this Interim Report has not
been audited by the auditors.
The statutory accounts for year ended 31 March 2007 have been filed with the
Registrar of Companies. The auditors' report on these accounts was unqualified
and did not contain a statement under section 237(2) or 237(3) of the Companies
Act 1985.
The Group's consolidated financial information has been prepared in accordance
with accounting policies consistent with those adopted in the financial
statements for the year ended 31 March 2007 and has been drawn up in accordance
with International Accounting Standard 34, 'Interim Financial Reporting'.
This Interim Report has been approved for issue by the Board of Directors on 28
November 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 the
financial year, however due to the majority of our energy customers being on
budget plans paying equal monthly instalments during the year, our cash flow
generation is biased to the first half of the year.
2. Business segments
For management reporting purposes, the Group is currently organised into two
operating divisions: Customer Management and Customer Acquisition. These
divisions are the basis on which the Group reports its primary segment
information.
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 13,107
Customer 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 £'000
Amounts recognised as distributions
to equity holders in the period:
Final dividend for the year ended 31
March 2007 of 6.0p per share (2006:
1.0p) 4,142 684 684
Interim dividend for the year ended
31 March 2007 of 2.0p per share (2006: - - 1,378
Nil) --------- --------- ---------
An interim dividend of 4.0p per share will be paid on 7 January 2008 to
shareholders on the register at close of business on 14 December 2007.
The estimated amount to be paid is £2.7 million. In accordance with IFRS
accounting 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 the
following data:
Earnings
Earnings for the purpose of basic
and diluted earnings per share 4,538 3,911 8,608
--------- --------- ---------
Number of shares
Number Number Number
Weighted average number of ordinary
shares for the purpose of basic
earnings per share 68,325,229 68,444,429 68,606,607
Effect of dilutive potential
ordinary shares (share options) 413,071 171,823 170,959
Weighted average number of ordinary
shares 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 Exchange