RNS No 5456p
ATLANTIC TELECOM GROUP PLC
11th December 1997
ATLANTIC TELECOM GROUP PLC
Interim Results
for the six months ended 30 September 1997
STATEMENT BY THE EXECUTIVE CHAIRMAN, GRAHAM J DUNCAN
REVIEW
The half year to 30 September 1997 has been one of strong
progress for the Group. We increased the investment in
our growing fixed radio access business in Scotland and have
achieved considerably higher levels of customer take up than we
originally planned. We applied for a licence to run
telecommunications systems across the whole of the United
Kingdom in order to allow us to replicate the success of our
Scottish based operations south of the Border.
Although the licensing consultation processes have still to be completed, we are
pleased that the first stage of approval to our plans was agreed by the
Government, in principle, in November 1997. Moreover, during the half year we
received our licence to run telecommunications systems throughout the rest of
the most populated areas of Scotland. Finally, we sold our main narrowband cable
TV operating company, Broadcast Satellite Television Ltd ("BSTV").
The results for the half year are in line with
expectations. Turnover, 34% of which came from our
telecommunications activities, was #5.4m. In the
equivalent period last year, our telecommunications
turnover was insignificant. Our operating loss prior to
interest, depreciation and discontinued activities
amounted to #2.6m. The operating loss for the period was
#3.7m and, after allowing for a further write down of #497,000
in BSTV and net interest income of #160,000, the loss for the
half year was #4.0m.
TELEPHONY OPERATIONS
Towards the end of September 1997, and only 11 months from the
launch of commercial operations in Glasgow, we completed the
build of the network in the City of Glasgow with 42 base
stations in place at the half year, an increase of 40% over
the corresponding figure at 31 March 1997. Although it
involves some degree of estimation, we believe the network
covers an area of approximately 200,000 homes. The Group now
releases quarterly statistical information to the market and
at 30 September 1997, we had 11,288 lines in Scotland
installed or pending installation. In terms of customers,
this represents 5,763 customers. The total line count
includes 2,144 business lines across 671 business customers.
We are very pleased indeed with this overall performance
particularly as averaged across the half year, our residential
customers have delivered #34 per month in revenue and our
business customers #77 in revenue per month, both excluding
value added tax but including line rental. Our innovative
package provides a second line to the customer for the price
of a single line rental and we are seeing an increase in usage
which causes our residential revenues to be closer to those of
mobile operators than to fixed link operators, a most
satisfactory result.
In September we launched our indirect service Crest. This
utilises a proprietary electronic routing box developed by
Atlantic and enables customers to benefit from Atlantic's
value added, innovative charging structure, by routing calls
through British Telecom's access network. This significantly
widens the area that we are able to service to the whole of
Scotland.
Our innovative pricing and packaging is increasing usage and
has allowed us since launch of service at the end of October
last year to substantially maintain our charges and structure
without alteration. On 1 October 1997, we additionally
introduced London 0171 and 0181 numbers as local calls for our
Scottish based customers, which should help to reduce the cost
of doing business where London is an important destination.
LEAST COST ROUTING AND TELECOM MANAGEMENT SERVICES
Logicall Telecommunications Ltd has continued its progress in
the half year and at 30 September 1997, it had 6,214 lines
installed or pending installation. This compares favourably
with 4,222 lines at 31 March 1997. Operating across the
United Kingdom, Logicall is a product for larger businesses
who wish to contract out their telecommunications to be
managed and carried on a least cost basis with national and
international carriers, rather than limit their business to a
single carrier, which may be effective to some destinations
but not to others.
CABLE TELEVISION OPERATIONS
In the half year, we successfully sold the equity of BSTV our
main narrowband operating company. The Hull System continues
in our ownership and will be closed in early 1998 unless a
suitable buyer can be found. The sale of BSTV has resulted in
further write downs of #497,000 in the half year to reflect
the details of the transaction concluded. Aberdeen Cable
Services Ltd, the broadband cable TV operator for the City of
Aberdeen, has seen its customer base decline from 17,392 at 31
March 1997 to 15,792 at 30 September 1997, a not unexpected
result as the base declines every summer. Nevertheless
competitive offers on satellite dish systems and the advent of
digital television later in 1998 are likely to subdue the
seasonal uplift in the subscriber base in the second half of
the year. A promotional dual service offer allowing cable TV
customers a discount on their telephony services if they
subscribe to our indirect telephone service offering will be
helpful in sustaining the base. In other respects, Aberdeen
Cable performs well with average monthly revenue per customer
at #28.81 for the half year, an increase of 8% over the full
year to 31 March 1997 and substantially ahead of the UK
industry average.
OUTLOOK
We are firmly focused on developing our telecommunications
services both in Scotland and elsewhere. The growth in both
direct and indirect connections in this dynamic market has
been well ahead of our expectations.
The current quarter has seen our line base in Scotland
continue to increase at levels even higher than that
experienced to date. This, we believe, is due to our higher
market profile since the summer and the launch of our Crest
service.
Very significant achievements were made in the half year, and
we look forward to rapidly rolling out Greater Glasgow and the
other main cities of Scotland before embarking on our focused
approach in England, subject to suitable licensing. Our
strategy is clear, we will continue to be a niche player in
this business and will provide our target customer groups with
high quality, value added and innovative services in specific
geographical areas, using appropriate technologies.
ENQUIRIES
Graham J. Duncan
Executive Chairman
Atlantic Telecom Group PLC Today: Tel: 0468 106107
Thereafter: Tel: 01224 646644
http://www.atlantic-telecom.co.uk
ATLANTIC TELECOM GROUP PLC Interim
Results
for the six months ended 30 September 1997
CONSOLIDATED PROFIT AND LOSS ACCOUNT
6 months to 6 months to 12 months
30.09.97 30.09.96 31.03.97
(unaudited) (unaudited) (audited)
#'000 #'000 #'000 #'000
TURNOVER
Continuing operations 5,030 3,076 7,348
Discontinued operations 360 933 1,545
_______ _______ _______
5,390 4,009 8,893
Cost of sales (3,145) (2,442) (5,598)
_______ _______ _______
Gross profit 2,245 1,567 3,295
Other operating costs (5,920) (1,784) (5,801)
_______ _______ _______
OPERATING LOSS
Continuing operations (3,653) (165) (2,444)
Discontinued operations (22) (52) (62)
_______ _______ _______
(3,675) (217) (2,506)
Exceptional items
Provision for operations
to be discontinued - - (1,028)
Discontinued operations:
(Loss)/profit on sale of discontinued
operations (1,410) 3,779 3,779
Less provision
at 31 March 1997 913 - -
Less reinstatement of goodwill previously
written off - (3,238) (3,238)
_______ _______ _______
(497) 541 541
_______ _______ _______
(LOSS)/PROFIT ON ORDINARY
ACTIVITIES BEFORE INTEREST (4,172) 324 (2,993)
Net interest 160 (24) 145
_______ _______ _______
(LOSS)/PROFIT ON ORDINARY
ACTIVITIES BEFORE TAXATION (4,012) 300 (2,848)
Tax on (loss)/profit on ordinary activities - - -
_______ _______ _______
(LOSS)/PROFIT FOR THE PERIOD (4,012) 300 (2,848)
==== ==== ====
(LOSS)/EARNINGS PER SHARE (7.93)p 0.99p (7.35)p
==== ==== ====
The directors regard earnings before interest, tax,
depreciation and amortisation, which is set out below and is
often used in the telecommunications and cable industry, as an important
measure of the operating cash flow of the business.
Operating loss (3,675) (217) (2,506)
Depreciation and amortisation
of good will 988 298 964
Cost of network leases 82 94 176
_______ _______ _______
Earnings before interest, tax, depreciation
and amortisation (2,605) 175 (1,366)
===== ===== =====
ATLANTIC TELECOM GROUP PLC
Interim Results
CONSOLIDATED BALANCE SHEET as at 30
September 1997
30.09.97 30.09.96 31.03.97
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
FIXED ASSETS
Intangible assets 3,965 3,439 4,048
Tangible assets 19,704 6,968 13,297
_______ _______ _______
23,669 10,407 17,345
CURRENT ASSETS
Stock 909 627 1,049
Debtors: amounts falling due
after more than one year 5,848 4,562 5,366
Debtors: amounts falling due
within one year 3,833 1,379 2,246
Cash at bank 7,675 777 17,475
_______ _______ _______
18,265 7,345 26,136
CREDITORS
Amounts falling due within one year 9,771 4,773 6,946
_______ _______ _______
NET CURRENT ASSETS 8,494 2,572 19,190
_______ _______ _______
TOTAL ASSETS LESS
CURRENT LIABILITIES 32,163 12,979 36,535
CREDITORS
Amounts falling due after more
than one year 4,563 1,681 4,946
_______ _______ _______
27,600 11,298 31,589
===== ===== =====
CAPITAL AND RESERVES
Called up share capital 12,644 7,550 12,639
Share premium account 22,840 4,454 22,822
Profit and loss account (7,884) (706) (3,872)
_______ _______ _______
27,600 11,298 31,589
===== ===== =====
ATLANTIC TELECOM GROUP PLC
Interim Results
for the six months ended 30 September 1997
CONSOLIDATED CASH FLOW STATEMENT
6 months to 6 months to 12 months
30.09.97 30.09.96 31.03.97
(unaudited) (unaudited) (audited)
#'000 #'000 #'000 #'000 #'000 #'000
RECONCILIATION OF OPERATING LOSS
TO NET CASH OUTFLOW FROM
OPERATING ACTIVITIES
Operating loss from
continuing activities (3,675) (165) (2,444)
Depreciation 988 328 952
Amortisation of lease prepayment 82 82 164
Network lease prepayments (875) (750) (1,625)
Decrease/(increase) in stock 140 (555) (977)
Decrease in debtors (836) (150) (900)
Increase in creditors 2,163 (1,426) (1,591)
Gain on disposal of fixed assets (26) (27) (11)
_______ _______ _______
Net cash outflow from continuing operating
activities (2,039) (2,663) (6,432)
Net cash inflow from
discontinued operations - 192 182
_______ _______ _______
NET CASH OUTFLOW FROM OPERATING
ACTIVITIES (2,039) (2,471) (6,250)
_______ _______ _______
CASH FLOW STATEMENT
NET CASH OUTFLOW FROM OPERATING
ACTIVITIES (2,039) (2,471) (6,250)
RETURNS ON INVESTMENTS AND
SERVICING OF FINANCE
Interest received 331 80 471
Interest paid (250) (104) (288)
_______ _______ _______
Net cash inflow/(outflow) from returns on
investments and servicing
of finance 81 (24) 183
CAPITAL EXPENDITURE AND
FINANCIAL INVESTMENT
Purchase of intangible
fixed assets - (1,407) (1,999)
Purchase of tangible
fixed assets (7,518) (659) (5,787)
Sale of tangible
fixed assets 49 66 82
_______ _______ _______
Net cash outflow from capital
expenditure and financial
investment (7,469) (2,000) (7,704)
ACQUISITIONS AND DISPOSALS
Acquisition of subsidiary
undertaking - (383) (117)
Loan repaid on purchase
of subsidiary - - (85)
Sale of subsidiary
undertaking 100 7,019 1,980
Receipt of inter-company debtor
on disposal of subsidiary - - 5,040
_______ _______ _______
Net cash inflow from acquisitions
and disposals 100 6,636 6,818
MANAGEMENT OF LIQUID RESOURCES
Cash withdrawn/(placed) on
short term deposit 10,000 - (16,000)
FINANCING
Issue of shares 23 - 25,462
Receipt from borrowing - - 2,000
Repayment of borrowing (200) - (100)
Capital element of
finance leases (675) (176) (435)
Expenses paid in connection
with share issue - - (2,005)
_______ _______ _______
Net cash (outflow)/inflow
from financing (852) (176) 24,922
_______ _______ _______
(DECREASE)/INCREASE IN CASH (179) (1,965) 1,969
===== ===== =====
ATLANTIC TELECOM GROUP PLC
Interim Results
for the six months ended 30 September 1997
NOTE TO THE CONSOLIDATED CASH FLOW STATEMENT ANALYSIS
OF NET FUNDS
At 1 April Non-cashAt 30 September
1997 Cash Flow Items 1997
#'000 #'000 #'000 #'000
Cash 17,475 (9,800) - 7,675
Less cash on deposit (16,000) 10,000 - (6,000)
_______ _______ _______ _______
1,475 200 - 1,675
Overdraft (694) (379) - (1,073)
_______ _______ _______ _______
781 (179) - 602
Liquid resources
Cash on short
term deposit 16,000 (10,000) - 6,000
_______ _______ _______ _______
16,781 (10,179) - 6,602
_______ _______ _______ _______
Debt after one year (1,500) 200 - (1,300)
Debt within year (600) - - (600)
Finance leases (4,606) 675 (738) (4,669)
_______ _______ _______ _______
(6,706) 875 (738) (6,569)
_______ _______ _______ _______
Net funds 10,075 (9,304) (738) 33
===== ===== ===== =====
ATLANTIC TELECOM GROUP PLC
Interim Results
for the six months ended 30 September 1997
NOTES TO THE INTERIM REPORT
1.Preparation of Interim Report
The interim financial information for the six months ended
30 September 1997 was approved by the directors on 11
December 1997. It has been prepared in accordance with
relevant accounting standards on a consistent basis using
accounting policies set out in the 1997 Annual Report. The
interim financial information is unaudited but has been
reviewed by the auditors.
2.Financial information
The financial information set out does not constitute full
accounts for the purposes of section 240 of the Companies
Act 1985. Comparative figures for the year ended 31 March
1997 are extracted from the full financial statements which
have been delivered to the Registrar of Companies. The
report of the auditors on those financial statements was
unqualified and did not contain a statement under section
237 of the Companies Act 1985.
3.Disposals
On 31 July 1997, the Company disposed of Broadcast Satellite
Television Ltd, which formed the majority of its narrowband
cable operations. The narrowband operation in Hull remains,
although it is likely that this will be discontinued prior
to 31 March 1998.
The results of Broadcast Satellite Television Ltd are shown
within discontinued operations in the profit and loss
account. The cash flow from these discontinued operations
has not been separately identified within the cash flow
statement as it is not material to the overall group cash
flow.
Also included within discontinued operations in the period
to 30 September 1996 and the year to 31 March 1997 are the
results of Coventry Cable Ltd for one month. Coventry Cable
Ltd was sold on 29 April 1996.
4.Earnings per share
The loss per share is based on the loss attributable to the
group of #4,012,000 (30 September 1996 - profit #300,000)
and on the weighted average number of Ordinary Shares in
issue during the period of 50,570,898 (30 September 1996
30,198,301).
5.Dividend
In view of the deficit on reserves the directors cannot
recommend a dividend and the loss for the period has
therefore been transferred to reserves.
END
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