RNS Number:1125S
TeleCity PLC
17 November 2003
17 November 2003
TeleCity plc
2003 Third Quarter Results
for the quarter ended 30 September 2003
Key Points
* Q3 EBITDA of #0.3m - the 9th consecutive quarter of improvement
* EBITDA profit of #0.8m for the nine months, compared to #4.5m loss for
the same period last year
* Customer numbers in excess of 420 - a 70% increase over last year
* Some significant and strategic customer wins such as the DE-CIX German
Internet Exchange in Frankfurt
* #2.5m overdraft facility for working capital purposes now in place
* Operational cash consumption of #3.4m for the nine months, a 56%
decrease compared to #7.8m for the same period last year
Michael Hepher, Chairman, said:
"TeleCity has seen a continuing turnaround in performance during the 3rd
quarter. Our customer numbers have continued to increase and there have been
some significant wins, particularly in the corporate and enterprise markets.
"The Board expects that trading for the remainder of the year will remain stable
and that the Company remains well positioned to benefit substantially from an
upturn in general market demand."
For further information:
TeleCity 020 7519 4886
Rick Hudson, Chief Executive
Josh Joshi, Finance Director
Citigate Dewe Rogerson 020 7638 9571
Sue Pemberton/Anthony Kennaway
2003 Third Quarter Results
for the quarter ended 30 September 2003
Overview
The turnaround in performance at TeleCity continued into the third quarter.
Revenues have been maintained; profitability at the EBITDA level has improved;
operating cash outflows have reduced significantly; and the customer base
continues to grow and diversify.
As a pan-European provider of colocation and related managed services, TeleCity
is emerging as a market leader within Europe and remains well positioned to
benefit substantially from an upturn in general market demand.
Results
Turnover for the third quarter was #5.9m, unchanged from the second quarter but
slightly increased from #5.8m in the same period last year. Turnover for the
nine months ended 30 September 2003 was #17.7m, just below the #17.9m in the
same period last year.
This stable trend in revenues masks two opposing factors affecting the Company's
financial performance. First, during the nine months to 30 September 2003
nearly #6m of business was won through the acquisition of new customers and the
renewal of existing contracts. All contracts are for a minimum of a year, and on
average are for approximately 2.5 years. Over 80% of this new business is
recurring revenues, and has an annualised revenue impact in excess of #4.7m per
annum. Second, in annualised revenue terms, the success in signing new customers
has been tempered in almost equal measure by the planned reduction by some
customers who over-committed for space at the peak of the market. This
realignment is now largely complete, and as space reductions become less of a
feature of the business mix, the positive growth from new business can start to
lift overall revenues.
The positive EBITDA of #0.8m for the nine months compares to a loss of #4.5m in
the corresponding period last year (prior period stated before exceptional
items). EBITDA for the three months to 30 September 2003 was #291,000, improved
from #276,000 in Q2.
Cash continues to track expectations. Cash outflow from operations for the nine
months was #3.4m compared to #7.8m for the same period last year, an improvement
of #4.4m. Included within cash outflow from operations is the cash outflow of
exceptional items, such as residual payments incurred in exiting surplus leases.
Cash outflow from operations before these exceptional cash items was #1.7m in
the period, compared to #6.4m in the same period last year.
Sales and Marketing
Customers numbered 420 at the end of the quarter having passed the 400 mark for
the first time. This represents a 70% increase over the last year, and the
Company continues to win approximately 20 new customers each month.
Of particular importance was the agreement to house the DE-CIX German Internet
Exchange in Frankfurt. This significantly enhances the attractiveness of the
Frankfurt facility and is the result of a continued strategy by the Company to
achieve prominence in housing peering exchanges. We are also pleased to announce
that, after the close of the third quarter, the Company was chosen by Nexagent
to host one of their peering points in Frankfurt. We believe that this could
deliver significant business for TeleCity in Germany, and hope to further extend
our relationship with Nexagent to other locations in 2004.
Our traditional markets of Telecommunications and Internet Service Providers
show positive signs of recovery. We were delighted to add ESB Telecoms and
DataPipe to our client list in the period and to extend or renew agreements with
T-Systems, Real Data Services and LambdaNet. Our diversification into the
corporate and enterprise markets continues steadily, with 32% of new sales by
order value in the nine months coming from these sectors, examples being our
support of G&V Associates in Paris, Synstar in Frankfurt and Skyways in
Stockholm. Additionally, 18% of new sales were to ASP, Content and Hosting
businesses. We are particularly pleased that two important new customers
announced in the first quarter, Sony Computer Entertainment Europe and Tullett
Liberty, have both augmented their contractual agreements with TeleCity in the
period.
Our managed IP platforms continue to add value to our core data centre services,
with over 40% of new customer contracts in the period including the provision
and management of IP. Other managed services added to the portfolio more
recently (back-up, storage, monitoring and security) have all been positively
received, but have yet to make a material contribution to our revenues. Overall,
the services portion of new sales in Q3 was over 45%.
Overdraft Facility
In October, the Company entered into a #2.5m overdraft facility with its
bankers. This facility is for working capital purposes and is supported by a
secured guarantee from 3i Group plc. The security for this guarantee required
shareholder approval, which was obtained at an Extraordinary General Meeting on
6th November 2003.
Outlook
The Board expects that trading for the remainder of the year will remain stable
and that overall 2003 will be a good year for the Company with the improvements
in the business continuing as planned which will provide a solid platform for
2004.
CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the nine months ended 30 September 2003
Nine months Nine months Year
30 September 30 September 31 December
2003 2002 2002
Notes #'000 #'000 #'000
Continuing operations
Turnover
-- before exceptional item 17,705 17,933 23,750
-- exceptional item -- -- 1,204
17,705 17,933 24,954
Operating loss
-- EBITDA before exceptional items 775 (4,493) (5,258)
-- depreciation (5,084) (7,044) (9,223)
-- exceptional items 2 -- (9,742) (26,207)
(4,309) (21,279) (40,688)
Net interest (payable)/receivable (225) 216 84
Loss on ordinary activities
before taxation (4,534) (21,063) (40,604)
Taxation -- -- --
Retained loss for the period
attributable to ordinary shareholders (4,534) (21,063) (40,604)
Loss per ordinary share
- basic and diluted 3 (2.2)p (10.5)p (20.2)p
CONSOLIDATED BALANCE SHEET
at 30 September 2003
30 September 30 September 31 December
2003 2002 2002
Notes #'000 #'000 #'000
Fixed assets
Tangible assets 44,512 64,749 47,130
Current assets
Stocks 24 38 21
Debtors 6,856 6,894 6,635
Cash at bank and in hand 4 2,765 7,079 6,476
9,645 14,011 13,132
Creditors - amounts falling due
within one year
Borrowings (151) (10) (84)
Other (12,354) (15,526) (14,305)
Net current liabilities (2,860) (1,525) (1,257)
Total assets less current liabilities 41,652 63,224 45,873
Creditors - amounts falling due
after more than one year
Borrowings (1,429) (98) (1,334)
Provisions for liabilities and charges (4,532) (6,406) (5,991)
Net assets 35,691 56,720 38,548
Capital and reserves
Called up share capital 203 201 201
Share premium account 111,735 111,735 111,735
Merger reserve 17,862 17,862 17,862
Profit and loss account (94,109) (73,078) (91,250)
Equity shareholders' funds 35,691 56,720 38,548
Movement in shareholders' funds
Opening shareholders' funds 38,548 76,455 76,455
Translation differences 1,675 1,328 2,697
Loss for the financial period (4,534) (21,063) (40,604)
Shares issued 2 -- --
Closing shareholders' funds 35,691 56,720 38,548
CASH FLOW STATEMENT
for the nine months ended 30 September 2003
Nine months Nine months Year
30 September 30 September 31 December
2003 2002 2002
Notes #'000 #'000 #'000
Net cash outflow from operations 5 (3,424) (7,769) (8,066)
Returns on investment and servicing
of finance
Net interest (paid)/received (61) 273 231
Taxation paid -- -- --
Capital expenditure and financial investment
Net purchase of tangible fixed assets (517) (2,496) (2,885)
Net cash outflow before financing and
management of liquid resources (4,002) (9,992) (10,720)
Management of liquid resources 42 9,292 11,794
Financing
Proceeds of issue of share capital 2 -- --
Repayment of loan (9) (7) (10)
Capital element of finance lease payments -- (55) (87)
Expenses paid in connection with
finance raised -- (706) (706)
(7) (768) (803)
(Decrease)/increase in cash in period (3,967) (1,468) 271
Reconciliation of net cash flow to movement in net funds
(Decrease)/increase in cash in period (3,967) (1,468) 271
Management of liquid resources (42) (9,292) (11,794)
(4,009) (10,760) (11,523)
Repayment of loan 9 7 10
Capital element of finance lease payments --- 55 87
Change in net funds arising from cash flows (4,000) (10,698) (11,426)
New finance leases --- --- (1,295)
Translation differences 127 42 152
Movement in net funds in period (3,873) (10,656) (12,569)
Opening net funds 5,058 17,627 17,627
Closing net funds 1,185 6,971 5,058
Net funds analysed as follows:
Cash at bank and in hand 2,765 7,079 6,476
Borrowings repayable within one year (151) (10) (84)
Borrowings repayable after more than one year (1,429) (98) (1,334)
1,185 6,971 5,058
Notes to the accounts
1 Basis of preparation
The Directors consider that the Company has adequate resources to continue in operation for the foreseeable
future. Accordingly, the accounts for the period ended 30 September 2003 have been prepared on the going
concern basis.
The accounts to 30 September 2003 are unaudited. They have been prepared using accounting policies consistent
with those used in the statutory accounts for the year ended 31 December 2002.
These accounts do not comprise full financial statements within the meaning of the Companies Act 1985. The
full accounts of TeleCity plc for the year ended 31 December 2002, on which the auditors gave an unqualified
audit report, have been delivered to Companies House.
2 Exceptional items
The exceptional items in prior periods are analysed as follows:
Nine months Year
30 September 31 December
2002 2002
#'000 #'000
Exceptional revenue --- 1,204
Provision against fixed assets (6,750) (24,939)
Costs and provisions in respect of exiting property (1,625) (870)
lease contracts
Redundancy costs incurred (1,367) (1,880)
Other --- 278
(9,742) (26,207)
3 Loss per ordinary share
The loss per ordinary share is based on the loss attributable to ordinary shareholders of #4,534,000 (30
September 2002 - #21,063,000, 31 December 2002 - #40,604,000) and the weighted average number of shares in
issue (as adjusted for the effect of Rights and Bonus Issues) of 201,816,839 (30 September 2002 - 200,583,766,
31 December 2002 - 200,590,533). As the impact of issuing potential ordinary shares is anti-dilutive, the
diluted loss per share is equivalent to the basic loss per share.
4 Cash at bank and in hand
Cash balances at 30 September 2003 include #1,933,000 (30 September 2002 - #1,821,000, 31 December 2002 -
#1,889,000) held in deposit accounts which are pledged to the Bank of Scotland in respect of bank guarantees
given on property lease contracts.
5 Reconciliation of operating loss to net cash outflow from operations
Nine months Nine months Year
30 September 30 September 31 December
2003 2002 2002
#'000 #'000 #'000
Operating loss (4,309) (21,279) (40,688)
Depreciation including profit/loss on disposal 5,084 7,044 9,223
Provision against fixed assets --- 6,750 24,939
Movement in provision for liabilities and charges (1,750) 1,852 1,326
Movement in working capital (2,449) (2,136) (2,866)
(3,424) (7,769) (8,066)
This information is provided by RNS
The company news service from the London Stock Exchange
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