For the six months ending September 30, Thus posted earnings before interest, tax, depreciation and amortization at 18.1 million pounds ($33.5 million) down from 20.6 million pounds ($38 million) a year earlier. Its net loss increased to 28.8 million pounds ($53 million) from a net loss of 11.8 million pounds ($21.8 million) in the year-ago period. The company also said it expects to report its first ever net profit in the first half of next year.
In September, the Glasgow, UK-based company had warned that it expected lower interim profits and tighter margins, as it suffered from predatory pricing in a market plagued by overcapacity and falling prices.
Sales, meanwhile, rose 13% to 177.5 million pounds ($329 million), thanks to the securing of a number of significant new contracts with the likes of Chrysalis Radio and the Scottish Prison Service. Net debt was reduced to 33.3 million pounds ($62 million) from 40.9 million pounds ($76 million) in the same period in 2003.
The carrier also reported strong growth in broadband, with UK ADSL customer numbers up 77% at 70,000. In contrast, income from traditional narrowband, or dial-up Internet access fell sharply, down 23% year-on-year in subscribers to 90,000. Thus also said it had retained all major customer contracts up for renewal in the first half and won new business from 13 of the group’s existing top 20 customers.
Commenting on the results, Thus chief Executive William Allan said: While there has been dilution in our margins from the acceleration in demand for broadband services and carrier pre-select and aggressive pricing for corporate accounts in traditional service areas, broadband and carrier pre-select services are earnings and cash accretive. Our stronger revenue growth, operating scale, and customer retention give us confidence in the resilience of our business model to create long term shareholder value.
Looking ahead into the second half, while we remain cautious on pricing and the market structure for telecommunication services in the UK, contract renewals and business expansion from existing customers combined with new customer accounts will deliver further growth. Against this background, it is expected that for the year ending 31 March 2005, Thus will deliver revenues of not less than 360 million pounds ($667 million), continued positive cash flow and EBITDA of not less than 39 million pounds ($72 million).
Thus was founded in 1994, but is struggling in an overcrowded market with telecommunications companies aggressively cutting prices to win corporate customers. It provides voice, data, Internet and interactive services, operating principally under the Thus and Demon brands. It demerged from utility ScottishPower around four years ago, and in July this year sold its non-core business call center division to Glasgow-based contact center company Response Handling in a deal worth 4 million pounds ($7.4 million).
