News 2004
Interim results for the six months ended 30 September 2004
18/11/2004
The following review of Virgin Mobile’s operations for the six months ended 30 September 2004 is compared to both the statutory results and the pro forma results reflecting the current Telecommunications Supply Agreement (TSA), signed 29 January 2004 (see page 7 for definition), for the six months ended 30 September 2003. The purpose of the pro forma comparison is to provide a like-for-like picture of underlying performance. Management considers the pro forma comparison as the more relevant when reviewing operational performance on an ongoing basis. The new TSA was in operation for the whole of the six months ended 30 September 2004.
Unaudited | Six months ended 30 September 2004 (£ million) | Six months ended 30 September 2003 (£ million) | Change over period | Pro forma(1) Six months ended 30 September 2003 (£ million) | Pro forma change over period |
|---|---|---|---|---|---|
Turnover | 256.7 | 218.0 | 18% | 210.7 | 22% |
Turnover before exceptional items | 256.7 | 214.8 | 20% | 207.5 | 24% |
Operating profit before exceptional items | 47.3 | 41.5 | 14% | 33.2 | 42% |
Exceptional items | (11.7) | 3.2 | N/A | 3.2 | N/A |
Operating profit | 35.6 | 44.7 | (20%) | 36.4 | (2%) |
Underlying EPS per share (pence) (2) | 11.7p | 18.5p | (37%) | 7.8p | 50% |
EPS (pence) | 7.8p | 19.4p | (60%) | 8.7p | (18%) |
Operating free cash flow (2) | 45.9 | 35.4 | 30% | 27.1 | 69% |
Operating free cash flow margin | 17.9% | 16.5% | 1.4pp | 13.1% | 4.8pp |
(1) The reconciliation of statutory to pro forma results and statutory EPS to underlying EPS is set out on page 9.
(2) Definitions for underlying EPS and operating free cash flow are set out in notes 4 and 5 in the Operating Data, on page 7.
FINANCIAL HIGHLIGHTS
For the six months ended 30 September 2004 (H1 FY05) compared to pro forma results for the six months ended 30 September 2003 (H1 FY04), before exceptional items for both periods.
Revenue increase driven by rapid growth in customer numbers
- Customer base up 47% to 4,609,000 (H1 FY04: 3,138,300)
- Net customer additions increased by 29% to 647,500 (H1 FY04: 501,200)
- Turnover up 24% to £256.7m (H1 FY04: £207.5m)
- Service revenue up 25% to £230.7m (H1 FY04: £184.9m)
Profitability and cash generation enhanced
- EBITDA increased by 40% to £55.4m (H1 FY04: £39.6m); Operating profit increased by 42% to £47.3m (H1 FY04: £33.2m)
- Margins expanded, reflecting operating leverage: EBITDA margin up 2.5pp to 21.6% (H1 2003: 19.1%); Operating profit margin up 2.4pp to 18.4% (H1 FY04: 16.0%)
- Average operating costs per customer down 27%
- Continued capital efficiency with capital expenditure at 2.2% of revenue
- Operating free cash flow up 69% to £45.9m (H1 FY04: £27.1m)
- Strong cash generation leading to reduction in net debt to £264.1m from £311.4m
Charles Gurassa, Chairman, commented:
“I am pleased to report, following the Company’s recent listing on the London Stock Exchange, that the business continues to perform very well and is delivering strong customer growth, profits and margin improvement. Our commitment to great value, innovation and service in the UK mobile market is attracting ever-increasing numbers of customers to our brand. The results underline the ability of our low capital investment business model to generate high cash conversion, grow revenue rapidly and improve profitability.”
Tom Alexander, Chief Executive, commented:
“Virgin Mobile has delivered excellent results for the first half. In a competitive marketplace Virgin Mobile continues to perform well, gaining market share from competitors.
“Following a strong first quarter, rapid growth continued into the second quarter as we added more than 360,000 net new customers - a total of 647,500 in the half. This rapid growth has resulted in a marked improvement in productivity, driving down average operating costs per customer by 27%.
“Our ongoing success and continued rapid customer growth are the result of our brand strength, of the commitment of our employees to industry-leading customer service, and of our promise of transparent, entertaining and good value-for-money services. Together, these values create a unique consumer proposition that is at the heart of our financial performance and I am confident that they will underpin our success in the future.”
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