Interim Results

Telecom Plus PLC
13 December 2006



                                TELECOM plus PLC


13 December 2006


           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.'

For press enquiries, please contact:

Charles Wigoder/Richard Hateley                                    Neil Boom/Laura Black
Telecom plus PLC                                                        Gresham PR Ltd.

020 8955 5000 020 7404 9000


Chairman's Statement


I 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 Dividend


Our 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 Changes


I 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.


Outlook


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.





Peter Nutting

Chairman

13 December 2006


                                TELECOM plus PLC

                         Consolidated income statement

                   For the six months ended 30 September 2006

                                               6 months    6 months       Year
                                                  ended       ended      ended
                                                     30          30   31 March
                                              September   September       2006
                                                   2006        2005  (audited)
                                            (unaudited) (unaudited)
                                                  £'000       £'000      £'000

Revenue                                          68,499      51,897    136,343

Cost of sales                                    53,159      38,338    117,603

Gross profit                                     15,340      13,559     18,740

Distribution expenses                             3,884       3,392      7,810

Administrative expenses                           6,443       5,503     11,659

Operating profit / (loss) before                  5,013       4,664      (729)
exceptional costs

Exceptional costs in respect of                       -           -    (1,860)
restructuring

Operating profit / (loss)                         5,013       4,664    (2,589)

Financial income                                    356         342        641

Financial expenses                                    -          35         39

Net financial income                                356         307        602

Share of profit of associates                       153         112        343

Profit / (loss) before taxation                   5,522       5,083    (1,644)

Taxation                                        (1,611)     (1,617)        263

Profit / (loss) for the period                    3,911       3,466    (1,381)

Basic earnings / (loss) per share                  5.7p        5.3p     (2.1p)

Diluted earnings / (loss) per share                5.7p        5.2p     (2.1p)

Interim dividend per share                         2.0p         Nil



                                TELECOM plus PLC

                           Consolidated Balance Sheet

As at 30 September 2006

                                                   As at       As at      As at
                                                      30          30   31 March
                                               September   September       2006
                                                    2006        2005  (audited)
                                             (unaudited) (unaudited)
                                                   £'000       £'000      £'000
Assets
Non-current assets
Property, plant and equipment                        992       1,659      1,016
Goodwill and intangible assets                     3,828       3,959      3,894
Investments in associates                          1,101         524        940
Deferred tax                                         525         200        509
Other receivables                                  2,919       2,970      2,954
Total non-current assets                           9,365       9,312      9,313

Current assets
Inventories                                          393         981        512
Trade and other receivables                        1,302         910      4,951
Prepayments and accrued income                    19,047      14,007     25,078
Cash and cash equivalents                         24,570      20,974      5,888
Total current assets                              45,312      36,872     36,429
Total assets                                      54,677      46,184     45,742

Current liabilities
Trade and other payables                         (5,138)     (3,409)    (5,906)
Current tax payable                              (1,900)     (1,400)       (12)
Accrued expenses and deferred income            (19,163)    (11,839)   (14,869)
Total current liabilities                       (26,201)    (16,648)   (20,787)

Total assets less total liabilities               28,476      29,536     24,955

Equity
Share capital                                      3,425       3,418      3,421
Share premium                                     19,121      19,027     19,065
Retained earnings                                  5,930       7,091      2,469

Total equity                                      28,476      29,536     24,955


                                TELECOM plus PLC

                     Consolidated Cash Flow Statement
                     Six months ended 30 September 2006

                                                      6 months    6 months         Year
                                                         ended       ended        ended
                                                  30 September          30     31 March
                                                          2006   September         2006
                                                   (unaudited)        2005    (audited)
                                                               (unaudited)
                                                         £'000       £'000        £'000

Operating activities
Operating profit / (loss)                                5,013       4,664      (2,589)
Depreciation of property, plant and                        224         217          445
equipment
Depreciation of intangible assets                           66          66          131
Profit on disposal of property, plant and                 (44)           -        (282)
equipment
Decrease in inventories                                    119         153          622
Decrease / (increase) in trade and other                 9,707         830     (14,266)
receivables
Increase in trade and other payables                     3,526       1,913        7,439
Costs attributed to the issue of share                     219         210          434
options
Corporation tax refunded / (paid)                          277     (1,600)      (1,601)
Net cash flow from operating activities                 19,107       6,453      (9,667)

Investing activities
Purchase of property, plant and equipment                (226)       (154)        (484)
Sale of property, plant and equipment                       70           -        1,028
Cash flow from investing activities                      (156)       (154)          544

Financing activities
Dividend paid for the previous year                      (684)     (4,099)      (4,099)
Interest received                                          356         342          641
Interest paid                                                -        (35)         (39)
Issue of ordinary shares                                    59      12,192       12,233
Cash flow from financing activities                      (269)       8,400        8,736

Increase / (decrease) in
cash and cash equivalents                               18,682      14,699        (387)

Cash and cash equivalents
at the beginning of the period                           5,888       6,275        6,275

Cash and cash equivalents
at the end of the period                                24,570      20,974        5,888



                                TELECOM plus PLC

               Reconciliation of Movement in Capital and Reserves
                       Six months ended 30 September 2006


                                       Ordinary  Share   Share  Retained
                                        Shares  Capital Premium Earnings  Total
                                         '000    £'000   £'000   £'000    £'000

Balance at 1 April 2005                  62,161   3,108   7,145    7,526  17,779

Profit for the period ended 30 September 2005                      3,466   3,466
Deferred tax on share options                                       (11)    (11)

Total recognised income and expenses                               3,455   3,455

Dividends                                                        (4,099) (4,099)
Issue of share capital                    6,209     310  12,082           12,392
Share issue costs                                         (200)            (200)
Credit arising on share options                                      209     209

Balances at 30 September 2005            68,370   3,418  19,027    7,091  29,536

Balance at 1 October 2005                68,370   3,418  19,027    7,091  29,536

Profit for the period ended 31 March                             (4,847) (4,847)
2006
Deferred tax on share options                                          -       -

Total recognised income and expenses                             (4,847) (4,847)

Issue of share capital                       59       3      38               41
Credit arising on share options                                      225     225

Balances at 31 March 2006                68,429   3,421  19,065    2,469  24,955

Balance at 1 April 2006                  68,429   3,421  19,065    2,469  24,955

Profit for the period ended 30 September 2006                      3,911   3,911
Deferred tax on share options                                         15      15

Total recognised income and expenses                               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



                                TELECOM plus PLC

                                     NOTES


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 been
neither audited nor reviewed by the auditors.


The statutory accounts for year ended 31 March 2006 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 2006.


This Interim Report has been approved for issue by the Board of Directors on 13
December 2006.


Cyclicality of business: in respect of the energy segment of the business
approximately 60% is consumed by customers in the second half of the financial
year.


Business segments


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 segment information.
                         6 months ended        6 months ended           Year ended
                        30 September 2006     30 September 2005       31 March 2006
                           (unaudited)           (unaudited)            (audited)

                         Revenue    Result      Revenue   Result      Revenue    Result
                           £'000     £'000        £'000    £'000        £'000     £'000

Virtual Network -         31,228     5,957       29,220    6,528       59,440    13,538
telephony
Virtual Network -         36,087       409       21,368      (5)       74,437  (10,776)
energy
Distribution               1,184   (1,353)        1,309  (1,859)        2,466   (3,491)

Total                     68,499     5,013       51,897    4,664      136,343     (729)

The above Result relates to Operating profit / (loss) before exceptional costs.

The exceptional costs in respect of restructuring for the year ended 31 March 2006,
related to transferring the Group's energy customers to individually licensed
companies, which were ultimately disposed of to npower Limited on 31 March 2006.

                                            6 months        6 months           Year
                                               ended           ended          ended
                                        30 September    30 September       31 March
                                                2006            2005           2006
                                         (unaudited)     (unaudited)      (audited)
                                               £'000           £'000          £'000
Dividends

Amounts recognised as distributions to
equity holders in the period:

Final dividend for the year ended 31             684           4,099          4,099
March 2006 of 1.0p (2005 : 6.0p) per
share

Interim dividend for the year ended 31             -               -              -
March 2006 of Nil (2005 : Nil) per
share


An interim dividend of 2.0p per share will be paid on 1 February 2007 to
shareholders on the register at close of business on 12 January 2007.

The estimated amount to be paid is £1.4 million. In accordance with IFRS
accounting requirements this dividend has not been recognised in these accounts.

Earnings per share

The calculation of the basic and
diluted earnings per share is based on
the following data:

Earnings

Earnings / (loss) for the purpose of           3,911           3,466        (1,381)
basic and diluted earnings per share

Number of shares
                                              Number          Number         Number
Weighted average number of ordinary       68,444,429      65,931,678     67,170,166
shares for the purpose of basic
earnings per share

Effect of dilutive potential ordinary        171,823         648,218              -
shares (share options)

Weighted average number of ordinary
shares for the purpose of diluted 
earnings per share                        68,616,252      66,579,896     67,170,166





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