News 2004
Virgin Mobile Interim Results - Pre-close update statement
28/09/2004
Virgin Mobile Holdings (UK) plc ("Virgin Mobile"), the UK's largest mobile virtual network operator (MVNO), is today issuing a trading update prior to entering the close period for its interim results to September 30th 2004, in line with market practice. It is Virgin Mobile's intention to announce an update on key performance indicators alongside interim results on November 18th 2004.
Highlights
Virgin Mobile continues to enjoy strong consumer demand for its products and services, experiencing further rapid customer growth during the first six months of the financial year. While headline price competition continues to be a feature of the market, Virgin Mobile's brand appeal, recently increased distribution, and competitive proposition is enabling continued expansion and gains in market share.
Virgin Mobile anticipates its first half results will demonstrate the company's strong performance in these key areas:
- Revenue growth
- Improving EBITDA and EBIT margins
- Continued capital efficiency
- High cash conversion allowing rapid de-gearing
The successful application to the High Court for the reduction in the share premium account of our operating subsidiary Virgin Mobile Telecoms Limited (VMTL) eliminates VMTL's negative distributable reserves and has cleared the way to pay a dividend for the year to March 2005.
New marketing developments
Virgin Mobile aims to continue to successfully attract and retain high value customers. In the coming weeks, the company will enhance and broaden its approach to pre-pay pricing to reward higher-spending customers. This development will also provide consumers with some attractive benefits often associated with a contract proposition.
This initiative, combined with a refreshed camera-phone range and the recent introduction of Virgin Mobile Bites, further strengthens and extends the company's position in the market.
Outlook
Half year to 30th September 2004
Virgin Mobile continues to build value from customer acquisitions. The company has pursued a rapid growth strategy, which is highly profitable, despite having a dilutionary effect on ARPU. The combination of the company's low acquisition costs and its efficient operating model has also contributed to margin expansion.
Service revenue growth is strong and the company expects first half percentage growth in the mid-twenties, compared to the first half of the last financial year.
Free cash flow generation has been strong. Capex in the half year will be less than 4% of revenue and is expected to remain at these levels for the full year. There has already been a £30m reduction in drawn debt during the first half.
Year to 31st March 2005
The company expects continued rapid customer growth for the full year.
The planned OFCOM termination cuts will impact service revenue growth in the second half. Despite this, the company expects a service revenue growth percentage in the high teens for the full year. Virgin Mobile's strongly growing revenue and operating leverage leaves the company firmly on track to deliver substantial improvements in earnings and margins.
Chief Executive Tom Alexander said: "We have built on our first quarter achievements. The combination of strong customer growth and our efficient operating model will result in margins for the first half being well ahead of the same period a year ago. We have some exciting new product developments in the second half that will continue to increase our popularity, particularly among higher usage customers."
Contacts
| Steven Day |
| Virgin Mobile +44 (0)7931 777 777 or +44 (0)20 7484 4300 |
 |
| James Murgatroyd |
| Finsbury + 44 (0)20 7251 3801 |
Notes to Editors
Virgin Mobile Holdings (UK) plc, the UK's largest mobile virtual network operator, is majority owned by Sir Richard Branson's Virgin Group and uses T-Mobile's network. Since its launch in November 1999, Virgin Mobile has attracted more than 4.2 million customers.
In the UK, Virgin Mobile phones are available direct on 0845 6000 600; on the web at www.virginmobile.com or on the High Street at approximately 5,000 outlets including Virgin Mobile Specialist Stores, Virgin Megastores, Sainsbury, Tesco, Safeway, Asda, John Lewis, Littlewoods, Argos, The Link, Dixons, Carphone Warehouse, Curry's, Comet, Phones 4 U, TOMO, Woolworths, Toys R Us and Rymans.
Virgin Mobile employs approximately 1,400 staff at three sites, Trowbridge, London and Daventry, and has an outsourced customer service centre operated by approximately 200 staff in Middlesbrough. It has been voted one of the top 50 places to work in Britain for two years running in an annual Financial Times survey.
Virgin Mobile's customers are considered the most satisfied in the pre-pay sector according to a recent UK survey by market researchers JD Power and Associates.
Cautionary Statement Regarding Forward-Looking Statements
This document contains certain forward-looking statements. We have based these forward-looking statements on our current plans, expectations and projections about future events. These forward-looking statements are subject to risks, uncertainties and assumptions about us. Forward-looking statements speak only as of the date they are made. If any one or more of the foregoing assumptions are ultimately incorrect, our actual results may differ from our expectations based on these assumptions. Also, the sector and markets in which we operate may not grow over the next several years as expected, or at all. The failure of these markets to grow as expected may have a material adverse effect on our business, operating results and financial condition and the market price of our ordinary shares.
