RNS Number:3225J
Project Telecom PLC
3 September 2001
Project Telecom plc
Rapid, profitable growth in first half of 2001 strengthens platform to exploit
future opportunities
Financial highlights (figures in #millions)
Six months ended 30 June 2001 2000 Growth Year ended
31.12.00
Turnover 158 111 + 42% 257
Operating profit (pre-exceptionals/goodwill) 4.4 2.6 + 69% 6.3
Pre-tax profit (pre-exceptionals/goodwill) 4.8 2.8 + 71% 7.2
Exceptional items/goodwill (0.5) - - (1.4)
Earnings per ordinary share (pence) 1.39 0.97 + 43% 2.45
(pre-exceptionals/goodwill)
Dividend (pence) 0.25 *0.25 - 0.53
* 2000 Interim dividend paid prior to flotation
- Rapid, profitable growth for the first half of 2001 achieved despite
challenging market conditions
- Strong operational cash flow with net cash at period end of #7.7m
- Management continues to focus on its strategy of building Project
Telecom as the UK's leading independent provider of mobile telephony
services, developing and delivering high margin, value added telecom services
to the corporate sector
- Corporate Services, the number one strategic priority, driving Project
Telecom's performance with operating profit up 177% to #3.1 million as the
result of retaining and winning customers. Corporate customer base of
Hutchison Cellular Services, acquired for #14 million in March 2001,
successfully integrated. Total number of subscribers increased from 52,000
to 118,000 at 30 June 2001 with the current total now in excess of 140,000.
- Turnover from Retail Services up 31% to #123 million but operating
profit fell 12% to #1.3 million as the result of an increasingly competitive
market for the provision of pre-pay services. At 30 June 2001 approximately
1,700 electronic top-up terminals installed with consumer demand growing
strongly.
- Management plans to build the Project Telecom brand in line with its
strategy to develop value added services for corporate customers
"Project Telecom's eight year track record of strong, profitable growth
reflects the consistent delivery of top quality service to blue-chip
customers. As the UK's leading, independent provider of wireless solutions to
the corporate market, we are ideally positioned to exploit the opportunities
from next generation GPRS and 3G data services. We are confident that we
will deliver further profitable growth for the full year as we continue to
expand our customer base and add value to our range of services."
Tim Radford, Chief Executive
For further information contact:
Tim Radford
Chief Executive, Project Telecom
Tel: 07831 642911
Richard Cunningham
Finance Director, Project Telecom
Tel: 07785 707070
Simon Bloomfield/Michelle Doughty
Bankside Consultants
Tel: 020 7444 4140
PROJECT TELECOM PLC
INTERIM ACCOUNTS
6 MONTHS TO 30 JUNE 2001
P1 Chairman's Statement
P3 Independent Review Report to Project Telecom plc
P4 Consolidated Profit and Loss
P5 Consolidated Balance Sheet
P6 Consolidated Cashflow Statement
P7 Notes to the Accounts
Interim Report
Chairman's Statement
Introduction
I am pleased to report another period of strong growth and development for
Project Telecom despite a background of challenging trading conditions and a
very competitive market place. The Group has continued to focus on its
strategy of taking advantage of the growth in the mobile telecommunications
market and supplies a rapidly growing customer base with a wide range of
services, sourcing capacity from a variety of network operators.
Results and dividend
Turnover for the 6 months to 30 June 2001 grew by 42% to #158 million (2000 -
#111 million) delivering operating profits, before amortisation of goodwill
and exceptional items, up 69% to #4.4 million (2000 - #2.6 million). Pre-tax
profits before goodwill amortisation and before the exceptional credit rose by
71% to #4.8 million (2000 - #2.8 million). On a similar basis earnings per
share rose 43% to 1.39p per share (2000-0.97p per share).
During the period the Group continued to demonstrate its ability to generate
positive cashflow with a net cash inflow from operations of #6.9 million (2000
- #10.2 million). In addition to this the Group had net cash of #7.7m which
puts it in a strong position to pursue its strategic objectives.
The board has declared an interim dividend of 0.25p per share. The dividend
will be paid on 31 October 2001 to shareholders on the register at the close
of business on 5 October 2001.
Trading and Financial Review
Corporate Services
Turnover rose by 116% to #35.6 million (2000 - #16.5 million) and operating
profits, before goodwill amortisation, increased by 177% to #3.1 million
(2000 - #1.1 million).
As indicated in the Company's results for 2000, the expansion of the Corporate
Services Division is our number one priority. The financial results and
strong growth in the customer base confirm the excellent progress which has
been made.
At 30 June 2001 the Corporate customer base at 118,000 was more than double
the December 2000 number of 52,000. Strong organic growth was achieved by
winning and retaining key accounts whilst maintaining the quality of service
we provide. Among the new major accounts gained during the period were
Arriva, East Riding Council, Investec and Northern Foods.
The Corporate Services Division's organic growth was supplemented by the
acquisition in March of the Vodafone and BT Cellnet customer base of Hutchison
Cellular Services Limited for #14 million. This acquisition has been
successfully integrated and the customers are now being managed from our
customer management facility in Newark.
On 5 July 2001 the Group announced the acquisition of a further 20,000
business customers from the liquidator of Newgate Communications Limited which
traded under the NETnet brand. As a result of this further acquisition, the
Corporate Services Division's customer base has now grown to in excess of
140,000.
Retail Services
Turnover for the Retail Services Division grew by 31% to #123 million (2000 -
#94 million) but operating profit fell by 12% to #1.3 million (2000 - #1.4
million).
Although sales continued to grow during the period the results were adversely
affected by further margin pressure and an increasingly competitive market for
the provision of pre-pay products and services.
During the period the division continued to roll out its electronic top-up
solution which provides retailers with electronic top-up facilities via
in-store terminals as an alternative to paper top-up vouchers. At 30 June
2001, approximately 1,700 terminals had been installed and consumer demand for
the service has grown strongly.
Network Services
The Network Services Division, which was launched in December 2000 to take
advantage of the growing demand for data services delivered via SMS, WAP and
the internet, has made a good start. Progress has been made with the launch
of a number of services and several new contracts secured. The financial
results for this Division are included within the results for the Corporate
Services Division on the grounds of materiality.
Our People
Once again I must pay tribute to all our staff who have worked hard to deliver
another set of excellent results. The Group employed 460 people at 30 June
2001 (December 2000 - 396) and I would like to thank them all for their
valuable contribution.
Outlook
Whilst the market for telecommunication services remains very competitive, the
Group continues to make good progress. Our strategic priority is to expand
the Corporate Services Division both organically and by acquisition and to
continue to build the Project Telecom brand. Project Telecom is the UK's
leading independent provider of wireless voice and data services to the
corporate market and will continue to broaden the range of products and
services delivered to its customers. We look forward to the future with
confidence and expect further growth in turnover and profits for the full
year.
Philip Rogerson
31 August 2001
INDEPENDENT REVIEW REPORT TO PROJECT TELECOM PLC
Introduction
We have been instructed by the company to review the financial information for
the six months to 30 June 2001 which comprises the profit and loss account,
the balance sheet, the cash flow statement and related notes 1 to 11. We have
read the other information contained in the interim report and considered
whether it contains any apparent misstatements or material inconsistencies
with the financial information.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by the directors. The directors
are responsible for preparing the interim report in accordance with the
Listing Rules of the Financial Services Authority which require that the
accounting policies and presentation applied to the interim figures should be
consistent with those applied in preparing the preceding annual accounts
except where any changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with the guidance contained in Bulletin
1999/4 issued by the Auditing Practices Board for use in the United Kingdom.
A review consists principally of making enquiries of group management and
applying analytical procedures to the financial information and underlying
financial data and based thereon, assessing whether the accounting policies
and presentation have been consistently applied unless otherwise disclosed. A
review excludes audit procedures such as tests of controls and verification of
assets, liabilities and transactions. It is substantially less in scope than
an audit performed in accordance with United Kingdom Auditing Standards and
therefore provides a lower level of assurance than an audit. Accordingly, we
do not express an audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months to
30 June 2001.
Deloitte & Touche
Chartered Accountants
1 Woodborough Road
Nottingham NG1 3FG
31 August 2001
CONSOLIDATED PROFIT & LOSS ACCOUNT
6 MONTHS TO 30 JUNE 2001
6 months 6 months Year to
to 30 June to 30 June 31 December
2001 2000 2000
#000 #000 #000
Note
TURNOVER: 2
Continuing operations 146,319 110,574 256,663
Acquisitions 11,940 - -
____________ ____________ ____________
158,259 110,574 256,663
Cost of sales (143,575) (101,012) (234,994)
____________ ____________ ____________
Gross profit 14,684 9,562 21,669
Administrative expenses:
Other (10,307) (6,996) (15,338)
Exceptional items 3 457 - (1,296)
Amortisation of goodwill (939) (33) (65)
_____________ ___________ ____________
(10,789) (7,029) (16,699)
_____________ ___________ ____________
OPERATING PROFIT (POST GOODWILL
AMORTISATION) :
Continuing operations 3,464 2,533 4,970
Acquisitions 431 - -
_____________ ___________ ____________
3,895 2,533 4,970
Interest payable and similar (127) (120) (260)
charges
Interest receivable and similar 547 371 1,141
income
_____________ ___________ ____________
PROFIT ON ORDINARY ACTIVITIES 2 4,315 2,784 5,851
BEFORE TAXATION
Tax on profit on ordinary (1,899) (977) (2,065)
activities
_____________ ___________ ____________
PROFIT ON ORDINARY ACTIVITIES AFTER 2,416 1,807 3,786
TAXATION
Dividend 5 (544) (472) (1,081)
_____________ ___________ ____________
RETAINED PROFIT FOR THE PERIOD 1,872 1,335 2,705
Basic earnings per ordinary share 4 1.11p 0.96p 1.92p
Diluted earnings per ordinary share 4 1.06p 0.94p 1.83p
Earnings per ordinary share before 4 1.39p 0.97p 2.45p
exceptional items and amortisation
of goodwill
There are no recognised gains or losses or movements on shareholders' funds
other than the results for the period and prior periods and the issue of
shares.
There is no material difference between the result as disclosed in the group
profit and loss account and the result on an unmodified historical cost basis.
CONSOLIDATED BALANCE SHEET
AT 30 JUNE 2001
At 31
At 30 At 30 December
June 2001 June 2000 2000
#000 #000 #000
FIXED ASSETS
Intangible assets 13,500 110 587
Tangible assets 9,910 7,700 9,000
_________ _________ _________
23,410 7,810 9,587
_________ _________ _________
CURRENT ASSETS
Stock 15,105 13,267 17,985
Debtors: amounts falling due 35,041 25,242 28,977
within one year
Debtors: amounts falling due after 3,260 1,509 2,066
more than one year
Cash at bank and in hand 10,770 12,463 20,750
_________ _________ _________
64,176 52,481 69,778
CREDITORS: amounts falling due
within one year (58,954) (53,068) (52,069)
_________ _________ _________
NET CURRENT ASSETS/ (LIABILITIES) 5,222 (587) 17,709
_________ _________ _________
TOTAL ASSETS LESS CURRENT 28,632 7,223 27,296
LIABILITIES
CREDITORS: amounts falling due (2,548) (2,687) (2,618)
after more than one year
PROVISION FOR LIABILITIES AND
CHARGES (696) (23) (1,153)
_________ _________ _________
25,388 4,513 23,525
CAPITAL AND RESERVES
Called up share capital 544 472 544
Share premium account 17,599 38 17,608
Profit and loss account 7,245 4,003 5,373
__________ __________ __________
TOTAL EQUITY SHAREHOLDERS' FUNDS 25,388 4,513 23,525
CONSOLIDATED CASH FLOW STATEMENT
6 MONTHS TO 30 JUNE 2001
6 months 6 months Year to
to 30 to 30 31
June June December
2001 2000 2000
#000 #000 #000
Note
Net cash inflow from operating activities 7 6,900 10,187 5,183
Returns on investments and servicing of finance
Interest received 501 374 1,110
Interest paid (82) (110) (176)
Interest element of finance lease rental payments (45) (36) (84)
_______ _______ _______
Net cash inflow from returns on 374 228 850
investments and servicing of finance
_______ _______ _______
Taxation
Corporation tax paid (658) (308) (2,058)
_______ _______ _______
Tax paid (658) (308) (2,058)
_______ _______ _______
Capital expenditure
Payments to acquire tangible fixed assets (1,827) (2,129) (4,102)
Receipts from sales of tangible fixed 15 31 49
assets _______ _______ _______
Net cash outflow from capital expenditure (1,812) (2,098) (4,053)
_______ _______ _______
Acquisitions
Purchase of business undertaking (13,852) - (527)
_______ _______ _______
Equity dividends paid (609) (544) (1,016)
_______ _______ _______
Net cash (outflow)/inflow before financing (9,657) 7,465 (1,621)
_______ _______ _______
Financing
Issue of shares - - 17,642
New loans - 1,047 1,050
Repayment of loans (46) (597) (631)
Capital element of finance lease rentals (277) (208) (445)
________ _______ _______
Net cash (outflow)/ inflow from financing (323) 242 17,616
________ _______ _______
(Decrease)/ increase in cash 8 (9,980) 7,707 15,995
NOTES TO THE ACCOUNTS
6 MONTHS TO 30 JUNE 2001
1. On 9 March 2001 the Group acquired the business of Hutchison Cellular
Services Limited for a cash consideration and costs of #13.9 million. The
resulting goodwill is being amortised over its estimated useful economic life
which the directors consider to be 5 years.
2. Segmental Analysis
6 months to 6 months to Year
30 June 30 June to 31
2001 2000 December
2000
#000 #000 #000
Turnover:
Corporate services:
Continuing operations 23,627 16,466 36,312
Acquisitions 11,940 - -
Retail services 122,692 94,108 220,351
__________ __________ __________
158,259 110,574 256,663
Profit before tax:
Corporate services operating
profit:
Continuing operations 1,826 1,125 2,431
Acquisitions 1,285 - -
Retail services operating 1,266 1,441 3,900
profit
__________ __________ __________
Operating profit before
exceptional items and
amortisation of goodwill 4,377 2,566 6,331
Amortisation of goodwill (939) (33) (65)
__________ __________ __________
Operating profit before
exceptional items 3,438 2,533 6,266
Exceptional items 457 - (1,296)
Net interest receivable 420 251 881
__________ __________ __________
Group profit before tax 4,315 2,784 5,851
Net assets:
Corporate services 3,985 5,605 2,831
Retail services 4,266 (8,026) 3,004
Group 17,137 6,934 17,690
__________ __________ __________
Group net assets 25,388 4,513 23,525
All turnover and profits originate from activities within the
United Kingdom.
3. Exceptional Items
Year
6 months to 30 June to 31 December
2001 2000
#000 #000
Flotation costs - 222
NIC on unapproved share (457) 1,074
options
__________ __________
(457) 1,296
NOTES TO THE ACCOUNTS
6 MONTHS TO 30 JUNE 2001
Total costs incurred during the year to 31 December 2000 associated with the
flotation of Project Telecom plc on the London Stock Exchange and the placing
of shares amounted to #2.58 million. In the directors' opinion #0.22 million
of the costs incurred relate to the flotation of the company and in accordance
with Financial Reporting Standard (FRS) 4 these costs have been recognised in
the profit and loss account. The remaining #2.36 million of costs incurred
are judged by the directors to relate to the issue of shares and have been
taken to the share premium account as permitted by CA85.
The company has provided for the National Insurance Contribution liability
arising on unapproved share options outstanding at 30 June 2001. The
liability has been calculated based on the closing mid-market price of an
ordinary share in the capital of the company at 30 June 2001 of 47.0p (31
December 2000 : 82.5p) and is reflected in the credit of #457,000 to the
profit and loss account.
4. Earnings Per Share
Basic earnings per share is calculated by dividing profits after tax of #
2,416,000 by the weighted average number of ordinary shares in issue during
the period. The weighted average number of ordinary shares in issue was
217,570,229 (6 months to 30 June 2000 : 188,998,800; year to 31 December 2000
: 197,061,422).
Diluted earnings per share is calculated by adjusting the weighted average
number of ordinary shares in issue on the assumption of conversion of all
dilutive potential ordinary shares. Dilutive potential ordinary shares
comprise the difference between the number of shares subject to share options
and the number of shares that would have been issued at estimated average fair
values in each period. The resulting adjusted average number of ordinary
shares was 228,460,440 (6 months to 30 June 2000 : 193,123,800; year to 31
December 2000 : 207,437,769).
Earnings before amortisation of goodwill and exceptional items are presented
in addition to the basic earnings per share calculated in accordance with FRS
3 and FRS 14 since, in the opinion of the directors, this presents a better
like-for-like comparison of the earnings of the Group between the relevant
periods.
Basic earnings per share may be reconciled to earnings per share before
amortisation of goodwill and exceptional items as follows:
6 months to 6 months to Year to 31
30 June 30 June December
2001 2000 2000
p p p
Earnings per share before 1.39 0.97 2.45
amortisation of goodwill and
exceptional items
Amortisation of goodwill (0.43) (0.01) (0.03)
Exceptional items 0.21 - (0.66)
Tax related to exceptional items (0.06) - 0.16
Basic earnings per share -FRS 3 basis 1.11 0.96 1.92
NOTES TO THE ACCOUNTS
6 MONTHS TO 30 JUNE 2001
5. Dividends
6 months to 6 months to Year to 31
30 June 2001 30 June 2000 December
2000
#000 #000 #000
Interim Proposed - 0.25p per 544 472 472
ordinary share
(6 months to 30 June 2000 -
0.25p;
year to 31 December 2000 -
0.25p)
Final Paid - - 609
(year to 31 December 2000 -
0.28p)
__________ __________ __________
544 472 1,081
The interim dividend will be paid on 31 October 2001 to shareholders on the
register at the close of business on 5 October 2001.
6. Accounting policies are as stated in the last annual financial
statements, except for the implementation of FRS 18. The implementation has
not affected the Group's results for this period or the prior period.
7. Reconciliation of Operating Profit to Net Cash Inflow from Operating
Activities
6 months to 6 months to Year to 31
30 June 2001 30 June 2000 December
2000
#000 #000 #000
Operating profit 3,895 2,533 4,970
Depreciation 1,146 653 1,554
Amortisation of goodwill 939 33 65
Loss on sale of fixed 32 25 28
assets
Decrease/ (increase) in 2,880 (6,524) (11,238)
stocks
(Increase) in debtors (7,212) (5,346) (9,636)
Increase in creditors 5,677 18,813 18,366
(Decrease)/ increase in (457) - 1,074
provision
__________ __________ __________
6,900 10,187 5,183
__________ __________ __________
8. Analysis of Changes in Net Funds
At Other At
1 January Cash non-cash 30 June
2001 flow changes 2001
#000 #000 #000 #000
Cash at bank and in hand 20,750 (9,980) - 10,770
Hire purchase (913) 277 (276) (912)
Debt due within one year
Loans (97) 46 (44) (95)
Debt due after one year:
Loan (2,142) - 45 (2,097)
__________ __________ __________ __________
17,598 (9,657) (275) 7,666
NOTES TO THE ACCOUNTS
6 MONTHS TO 30 JUNE 2001
9. The figures for the year ended 31 December 2000 and six months
to 30 June 2000 are extracted from the audited accounts for those periods, on
which the auditors to the Group have issued an unqualified audit report which
did not contain a statement under section 237(2) or (3) of Companies Act 1985,
and which have been delivered to the Registrar of Companies.
10. The directors approved this Interim Report on 31 August 2001.
11. Post Balance Sheet Events
On 5 July 2001, for a consideration of #3.2 million, the Group acquired the
Cellnet and Vodafone customer base from the liquidator of Newgate
Communications Limited which traded under the NETnet brand.
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