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Eircom Reports FY05

Eircom reports revenue of €1.69B, compared to €1.59B last year

May 22, 2006

4 Min Read

DUBLIN -- HIGHLIGHTS FOR THE YEAR END UNDER INTERNATIONAL FINANCIAL REPORTING STANDARDS

  • Revenue of €1,693 million (compared to €1,598 million last year).

  • EBITDA before restructuring programme costs, non-cash pension charges and profit on disposal of property and investments, of €601 million, resulting in an EBITDA margin on the same basis of 35%.

  • Significant pre taxation profits on disposal of property and investments in the year end of c. €52 million, not included above, and c. €63 million of cash received.

  • €233 million of capex cash outflow in the financial year, with a focus on increasing capacity, demand led growth, DSL roll-out and capex relating to Meteor since December 2005.

  • Increased sales & marketing spend and discounts to drive DSL and Talktime packages. DSL customers increased to 230,000 at 31 March 2006 and to 250,000 customers as of 12 May 2006.

  • The acquisition by eircom Limited of Meteor Ireland Holdings, LLC, the holding company of Meteor Mobile Communications Limited, from Western Wireless International Holding Corporation was completed on 23 November 2005.

  • Meteor results were EBITDA positive for the four months ended 31 March 2006. Total mobile subscribers of 625,000 as at 31 March 2006.

  • The rights issue to fund the acquisition of Meteor was completed on 7 October with 313,349,862 ordinary shares being issued at a share price of €1.35 per share.

  • Second interim dividend of 5.2 cents in respect of the financial year ended 31 March 2006 approved by the board on 14 May 2006 with a payment date of 26 June 2006 and a record date of 26 May 2006. The ordinary shares will go ex-dividend on 24 May 2006.



Offer update

On 24 April 2006, the Independent Board5 of the Company announced that it had entered into a bidding agreement with Babcock & Brown Capital Limited (BCM) and the eircom ESOP Trustee Limited (the ESOT) under which it agreed to provide due diligence information on the Company to BCM and the ESOT. The bidding agreement was entered into in the context of the potential offer by BCM and the ESOT of €2.20 in cash for each ordinary share in the Company (together with the right for shareholders to receive a dividend of approximately 5.2 cents per ordinary share) with a preference share alternative entitling ordinary shareholders to receive unlisted preference shares in the offeror bidding vehicle.

Due diligence and discussions between the Independent Board of the Company and BCM and the ESOT are continuing and a further announcement will be made if and when appropriate.

Dividend

On 14 May 2006 the board declared a second interim dividend in respect of the financial year ended 31 March 2006 of 5.2 cents per ordinary share payable on 26 June 2006 to all ordinary shareholders on the register of members as at 26 May 2006. The second interim dividend is in substitution for a final dividend in respect of the financial year to 31 March 2006 and no final dividend will be proposed at the annual general meeting.

Commenting on the results, eircom Chief Executive, Dr Philip Nolan said:

This year eircom has continued to deliver on the three strands of our stated strategy, driving performance in our core fixed line business, growing broadband and capturing value in mobile. All of this has been achieved against a backdrop of significant corporate activity, including the highly successful rights issue to fund the Meteor purchase.

Although the trends of increasing competition and pressure on margins continue, our core fixed line business recorded a strong fourth quarter delivering Adjusted EBITDA of €157 million. This brings the full year performance of the fixed line business to an Adjusted EBITDA of €597 million down by €13 million (2%) versus last year. A positive contribution from Meteor in quarter four brings Adjusted EBITDA for the group to €601 million.

Our investment in DSL Broadband is now delivering consistent growth, with around 250,000 customers today. Currently c.85% of our lines are connected to broadband enabled exchanges, allowing around three-quarters of the population to access broadband. DSL broadband availability in Ireland is now at a comparable level to our European peers.

Meteor continues to grow strongly. Subscriber numbers have grown by 66% over the year to 625,000 at the year-end whilst turnover has approximately doubled year on year. Subscriber growth in the fourth quarter was 60,000, of which 13,000 were post-paid customers. Post-paid now accounts for c.8% of the total subscriber base. Meteor’s total market share at 15% is well on its way to meet our target of 20% set at the time of the acquisition. Despite investing heavily for growth, Meteor contributed €4 million to Group EBITDA in the last quarter.

Investment in our fixed network continues and we have commenced a major investment programme to enhance the Meteor network. Our total capex for the year including Meteor and property was €233 million.

Overall the company continues to perform well whilst building a platform for the future and the strong performance allows the board to declare a second interim dividend of 5.2 cents which will be paid 26 June 2006.

eir

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