Highlights:
•?? Group turnover £176.8 million.
• ??Turnover from continuing operations up 5% to £174.5 million.
•? ?EBITDA from continuing operations £18.1 million (H1 05 £18.0 million).
•?? Operating loss in continuing operations reduced 75% to £5.8 million.
•? ?Free cash flow positive3 for fourth consecutive half year at £0.7 million.
•?? Net debt £30.1 million. Net gearing 9%.
•?? Bank facility refinanced at £55 million on improved terms and conditions.
Commenting on today’s results, Chief Executive, William Allan said:
‘During the first half, THUS has continued to grow and generate cash, with a sharp reduction in operating losses. ‘Our early investment in a ‘next generation network’ coupled to our continued focus on service, quality and innovation have enabled us to maintain a good rate of growth in new customer contracts, particularly for IP MPLS enabled services, and continued expansion of business with existing customers.
‘The UK telecommunication market is undergoing a fundamental change from investment in new networks and service capability, and industry consolidation. We believe these changes will benefit the industry and our customers in the longer term but, in the shorter term, we expect aggressive pricing to continue throughout this year.
‘In addition to organic growth, we confirm our intent to explore and capitalise on opportunities from industry consolidation but only if these opportunities create value for our shareholders and accelerate our business plan to generate a return on capital employed. ‘While we believe market conditions will remain challenging, we expect to continue to grow and to generate positive free cash flow for the second half and the full year.’
100,000 Broadband Connections
UK broadband turnover grew 24% to £17.4 million, with Demon broadband customers now exceeding 100,000, up from 70,000 a year ago. To aid retention and remain competitive for small and medium sized business customers, Demon repackaged its broadband services to offer greater speed and better value. THUS is also preparing to take part in BT’s 8Mbit/s broadband trials.
Growth from UK broadband was offset by the continued decline in traditional dial up Internet access, where turnover fell by £4.3 million year on year, down 39% to £6.6 million. The decline in traditional narrowband Internet access, although a short term phenomenon, had a particularly acute impact on profit, reducing gross profit before depreciation, impairment and amortisation by some £3.4 million. Total Internet turnover fell 3% to £43.6 million, with UK turnover down 5% to £33.4 million.