RNS Number:6299Z
Project Telecom PLC
28 February 2001
Press Release
Project Telecom plc
Preliminary results for year ended 31 December 2000;
appointment of new board director
Financial highlights (figures in #millions)
Year ended 31 December 2000 1999
Turnover 257 117 Up 119 %
Operating profit (pre-exceptional items) 6.3 3.4 Up 85 %
Exceptional items * 1.3 -
Profit before taxation (after exceptional items) 5.9 3.7 Up 59 %
Earnings per ordinary share (pence) 1.92 1.28 Up 50 %
* Exceptional items include provision for NIC on share options and flotation
expenses
o Project Telecom's performance for 2000 reflects strong organic growth
in both the Group's core operating divisions.
o Successful London listing raised approximately #17.6 million (net) to
fund further rapid growth.
o Corporate Services division increased turnover by 46 per cent and
operating profit by 105 per cent, reflecting a 49 per cent increase in
corporate subscriber base from 35,000 to 52,000, above average ARPU and low
customer churn.
o Retail Services division experienced further strong demand with
turnover up 139 per cent to #220.4 million and operating profit up 75 per cent
to #3.9 million. Encouraging demand for new electronic mobile phone top-up
service with in excess of 800 terminals installed by the year-end.
o Network Services division was established to take advantage of growing
demand for data services. In December 2000, acquired new media design and
development business, MooCow, for #527,000 in cash, to enhance portal design
and delivery elements of solutions offered.
o Colin MacDougall, Managing Director of Corporate Services division,
has been appointed to the main board.
Tim Radford, Chief Executive, commented: "2000 was another year of rapid
organic growth and development for the Group. The business continues to
benefit from strong demand for its services and its position in the market as
an independent virtual network operator. This year has started well and
current trading is in line with our expectations."
For further information contact:
Tim Radford
Chief Executive, Project Telecom
Tel: 07831 642911
Richard Cunningham
Finance Director, Project Telecom
Tel: 07785 707070
Simon Bloomfield
Partner, Bankside Consultants
Tel: 020 7220 7477
Mobile: 07771 758517
Full preliminary announcement follows
Overview
The financial performance for the year 2000 of Project Telecom plc, the
independent UK telecom services group, reflects strong organic growth across
all operating divisions and continued rapid expansion of the Group's customer
base.
Turnover for the year to 31 December 2000 grew by 119 per cent to #257 million
(1999 - #117m). Operating profit before exceptional items rose 85 per cent to
#6.3 million (1999 - #3.4 million). Profit before tax (after exceptional
items) increased by 59 per cent to #5.9 million (1999 - #3.7 m) and earnings
per share were up 50 per cent from 1.28 pence to 1.92 pence.
Tim Radford, Chief Executive of Project Telecom, commented: "Last year was
another very exciting year in the development of the Group with all operating
divisions continuing to experience strong demand for their services.
Following the flotation of the company's shares on the London Stock Exchange
last September and the raising of approximately #17.6 million of new equity,
the Group has a solid financial platform for further rapid expansion of its
customer base. I am confident that the business will make further progress
this year and is well positioned to take advantage of the many opportunities,
including acquisitions, that are arising as the market for telecom services
continues to expand."
The directors propose that a final dividend of 0.28 pence per share be paid on
31 May 2001 to shareholders on the register on 17 April 2001.
Corporate Services
The Corporate Services division, which mainly supplies contracted
telecommunication services to corporate customers, substantially improved
margins reflecting accelerated growth of the customer base. Turnover rose 46
per cent to #36.3 million (1999 - #24.8 million) with operating profit up 105
per cent to #2.36 million (1999 - #1.15 million).
The division's corporate subscriber base grew in the year by 49 per cent to
over 52,000 at the year end (1999 - 35,000) and new corporate accounts won
include Aberdeen Council, Aer Lingus, British Waterways, Channel 4, Fuji Film,
Konica, Nelson Bakewell, Pretty Polly, Qantas, Reed Elsevier, Sabena, Swiss
Air, Swiss Life and TWA.
Subscriber churn (the rate of disconnection) remained low at under 15 per cent
per annum and average revenues per user (ARPU), continued to be significantly
in excess of the industry average, illustrating the quality of the company's
customer base.
The Managed Services business, established during the year to provide branded
telephony services on behalf of other virtual operators, won a number of new
contracts, including agreements with Ericsson and Siemens, and is expected to
grow strongly as new services are launched by the company's partners.
Retail Services
The Retail Services division, which distributes pre-paid cellular handsets,
top-up vouchers, accessories, point of sale material and marketing support to
20,000 convenience stores in the UK, continued to experience strong demand
during the year with 139 per cent growth in sales to #220.4 million (1999 - #
92.3 million) producing a 75 per cent increase in operating profit to #3.9
million for the year (1999 - #2.22 million).
During the year the company entered into an agreement with De La Rue
Transaction Services Limited to provide retailers with e top-up facilities via
in-store terminals, as an alternative to paper top-up vouchers. During the
final quarter of the year the company installed approximately 800 terminals.
Early demand for e top-up facilities has been encouraging and the company
expects demand for this service to grow strongly in the current year.
Network Services
In December, the company announced that it had established a new Network
Services division to take advantage of the growing demand for data services
delivered via SMS, WAP and the Internet. This new division will develop its
own value added services platform from which Project Telecom will be able to
launch a range of services and wireless applications to existing and new
customers of the group.
In December, the Group also announced the acquisition of Newark-based
multi-media design and development business, MooCow, for a consideration of #
527,000 payable in cash. MooCow is a successful provider of multi-media and
web based design services that will be integrated into the Network Services
division enhancing the portal design and delivery elements of its data
solutions.
Investment in customer service
During 2000, the Group invested in state-of-the-art customer management, call
centre and logistics facilities in Newark both at its Retail Services division
- with the further development of the call centre and warehouse facilities at
Glenholm Park - and at its Corporate Services division through a new
development at Brunel Park.
At Brunel Park, Project Telecom is currently recruiting a further 100 customer
services, account management and credit control staff to accommodate the
expansion of the business.
Board appointment
Mr Colin MacDougall has been appointed to the Board of Project Telecom with
effect from 27 February 2001. Colin joined the Group in October 2000 as
Managing Director of the Corporate Services Division including the new managed
services business. Prior to his appointment he was Corporate Marketing
Director with Vodafone UK.
Outlook
Trading for the current year has started well and is in line with management
expectations. The market for telecommunication services continues to expand
and Project Telecom continues to look for new opportunities to strengthen its
market position and create shareholder value.
Chief Executive, Tim Radford, commented, "Our strategy is to build a
substantial telecom services group and to supply a wide range of services to
our expanding customer base from a single source. Being a Virtual Network
Operator unconstrained by network infrastructure, this business is highly
scaleable and we can look forward to further rapid growth. The current year
has started well and the Board views the future with confidence."
CONSOLIDATED PROFIT & LOSS Note Pre Post
ACCOUNT
Exceptional Exceptional Exceptional
FOR THE YEAR ENDED 31 DECEMBER Items Items Items
2000 2000 2000 1999
#000 #000 #000 #000
TURNOVER 1 256,663 - 256,663 117,087
Cost of sales (234,994) - (234,994) (102,550)
_______ _______ _______ _______
Gross profit 21,669 - 21,669 14,537
Administrative expenses 3 (15,403) (1,296) (16,699) (11,159)
_______ _______ _______ _______
OPERATING PROFIT 6,266 (1,296) 4,970 3,378
Interest payable and similar (260) (134)
charges
Interest receivable and similar 1,141 445
income
_______ _______
PROFIT ON ORDINARY ACTIVITIES
BEFORE TAXATION 5,851 3,689
Tax on profit on ordinary (2,065) (1,278)
activities
_______ ______
PROFIT ON ORDINARY ACTIVITIES
AFTER TAXATION FOR THE YEAR 3,786 2,411
Dividend (1,081) (827)
_______ _______
RETAINED PROFIT FOR THE YEAR 2 2,705 1,584
Basic earnings per ordinary 4 1.92p 1.28p
share
Diluted earnings per ordinary 4 1.83p 1.26p
share
Earnings per ordinary share 4 2.45p 1.37p
before exceptional costs and
amortisation of goodwill
All amounts relate to continuing operations.
There are no recognised gains or losses or movements on shareholder's funds
other than the results for the year and prior year 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 Note 2000 1999
AT 31 DECEMBER #000 #000
FIXED ASSETS
Intangible assets 587 139
Tangible assets 9,000 5,824
_______ _______
9,587 5,963
_______ _______
CURRENT ASSETS
Stock 17,985 6,742
Debtors: amounts falling due within one year 28,977 20,354
Debtors: amounts falling due after more than 2,066 1,055
one year
Cash at bank and in hand 20,750 4,755
_______ _______
69,778 32,906
CREDITORS: amounts falling due within one (52,069)(34,158)
year
_______ _______
NET CURRENT ASSETS/ LIABILITIES 17,709 (1,252)
_______ _______
TOTAL ASSETS LESS CURRENT LIABILITIES 27,296 4,711
CREDITORS: amounts falling due after more (2,618) (1,510)
than one year
PROVISION FOR LIABILITIES AND CHARGES (1,153) (23)
_______ _______
23,525 3,178
CAPITAL AND RESERVES
Called up share capital 2 544 472
Share premium account 2 17,608 38
Profit and loss account 2 5,373 2,668
_______ _______
TOTAL EQUITY SHAREHOLDERS' FUNDS 23,525 3,178
CONSOLIDATED CASH FLOW STATEMENT 2000 1999
FOR THE YEAR ENDED 31 DECEMBER Note #000 #000 #000 #000
Net cash inflow from operating activities 5 5,183 7,799
Returns on investments and servicing of finance
Interest received 1,110 447
Interest paid (176) (56)
Interest element of finance lease rental payments (84) (54)
_______ _______
Net cash inflow from returns on investments 850 337
and servicing of finance
Taxation
Corporation tax paid (2,058) (389)
_______ _______
Tax paid (2,058) (389)
Capital expenditure
Payments to acquire tangible fixed assets (4,102) (4,534)
Receipts from sales of tangible fixed 49 5
assets
_______ _______
Net cash outflow from capital expenditure (4,053) (4,529)
Acquisitions and disposals
Purchase of subsidiary undertaking (527) -
Equity dividends paid (1,016) (449)
_______ _______
Net cash (outflow)/inflow before financing (1,621) 2,769
Financing
Issue of Shares 17,642 -
New loans 1,050 1,850
Repayment of loans (631) (330)
Capital element of finance lease rentals (445) (269)
_______ _______
Net cash inflow from financing 17,616 1,251
_______ _______
Increase in cash 6 15,995 4,020
NOTES
FOR THE YEAR ENDED 31 DECEMBER
1. SEGMENTAL ANALYSIS
2000 1999
#000 #000
Turnover:
Corporate services 36,312 24,830
Retail services 220,351 92,257
_______ _______
256,663 117,087
Profit before tax
Corporate services operating profit 2,366 1,154
Retail services operating profit 3,900 2,224
_______ _______
Operating profit before exceptional items 6,266 3,378
Exceptional items (1,296) -
Net interest receivable 881 311
_______ _______
Group profit before tax 5,851 3,689
Net Assets
Corporate services 2,831 2,438
Retail services 3,004 1,082
Group 17,690 (342)
_______ _______
Group net assets 23,525 3,178
All turnover and profits originate from activities within the
United Kingdom
2. STATEMENT OF MOVEMENT ON RESERVES
GROUP Profit
Share Share And loss account
Capital Premium Total
#000 #000 #000 #000
Balance at 1 January 2000 472 38 2,668 3,178
Profit for the year - - 2,705 2,705
Issue of shares 72 19,928 - 20,000
Issue costs - (2,358) - (2,358)
_______ _______ _______ _______
Balance at 31 December 2000 544 17,608 5,373 23,525
3. EXCEPTIONAL ITEMS
2000
#000
Flotation related costs 222
National Insurance Contributions on unapproved share
options 1,074
_______
1,296
Total costs incurred during the year associated with the flotation of Project
Telecom plc on the London Stock Exchange and the placing of shares amounted to
#2,580,000. In the directors opinion #222,000 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 #2,358,000 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 Companies Act 1985.
The company has provided for the National Insurance Contribution liability
arising on unapproved share options outstanding at 31 December 2000. The
liability has been calculated based on the closing mid-market price at 31
December 2000 of 82.5p.
4. EARNINGS PER SHARE
a. Basic earnings per share is calculated by dividing profits after tax
of #3,786,000 by the weighted average number of ordinary shares in issue
during the period. The weighted average number of shares in issue was
197,061,422 (1999-188,998,800).
b. 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 shares was
207,437,769 (1999-191,748,800).
c. Earnings before amortisation of goodwill and exceptional costs are
presented in addition to the basic earnings per share calculated as permitted
by 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.
d. Basic earnings per share may be reconciled to earnings per share
before amortisation of goodwill and exceptional costs as follows:
2000 1999
p p
Earnings per share before amortisation of 2.45 1.37
goodwill and exceptional costs
Amortisation of goodwill (0.03) (0.09)
Exceptional costs (0.66) -
Tax related to exceptional costs 0.16 -
Basic earnings per share -FRS 3 basis 1.92 1.28
5. RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING
ACTIVITIES
2000 1999
#000 #000
Operating profit 4,970 3,378
Goodwill written off 65 187
Depreciation of tangible fixed 1,554 1,012
assets
Loss on sale do fixed assets 28 -
Increase in stock (11,238) (6,213)
Increase in debtors (9,636) (16,694)
Increase in creditors 18,366 26,129
Increase in provisions 1,074 -
_______ _______
Net cash inflow from operating activities 5,183 7,799
The increase in provisions of #1,074,000 represents the exceptional item
charged in the year relating to National Insurance Contributions on unapproved
share options (see note 3).
6. ANALYSIS OF NET FUNDS
At Other At 31 December 2000
1 January 2000 Cash non-cash
Flow changes
#000 #000 #000 #000
Cash at bank and in hand 4,755 15,995 - 20,750
Hire purchase (669) 445 (689) (913)
Debt due within one year
Loans (647) 631 (81) (97)
Debt due after one year:
Loan (1,173) (1,050) 81 (2,142)
_______ _______ _______ _______
2,266 16,021 (689) 17,598
_
7. As permitted by the provisions for group reorganisations of FRS 6
(Acquisitions and Mergers), the results have been prepared using merger
accounting following the inception of the new parent company, Project Telecom
plc, on 17th April 2000. The results for the year ended 31st December 2000 and
comparatives have been prepared assuming that the new parent company has
always been in existence.
8. The requirements of FRS 15 (Tangible Fixed Assets) and FRS 16
(Current Tax) have been considered and have had no impact on the Group's
results and there have been no changes in the Group's accounting policies.
9. The Consolidated Profit and Loss Account, Balance Sheet and Cash Flow
Statement are abridged from the Company's Statutory Accounts, which will be
reported on by the auditors and delivered to the Registrar of Companies in due
course. Copies of the report of the Directors and the audited financial
statements for the year ended 31st December 2000 will be posted to
shareholders on 27th March 2001 and may be obtained thereafter from the
company's registered office at Brunel Park, Brunel Drive, Newark,
Nottinghamshire, NG24 2EG (Tel: 01636 602500). The results for the year ended
31st December 1999 are taken from the Group's financial statements which carry
an unqualified auditors report, did not contain a statement under S.237(2) or
(3) of Companies Act 1985 and which have been filed with the Registrar of
Companies.
-ENDS-
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