Esprit Telecom Announces Record Third Quarter 1998 Results; Total Revenue Up 49% Over Second Quarter; Gross Margins Increase for the Fourth Consecutive Period.LONDON--(BUSINESS WIRE)--Aug. 19, 1998--Esprit Telecom Group plc (Nasdaq: ESPRY; Easdaq: ESPR ESPR European Society of Paediatric Radiology ESPR Espressivo (music) ESPR Ethnicity and Social Policy Research Unit (University of Bradford) ESPR European Society of Paediatric Research ) one of Europe's leading independent telecommunications companies See telecom company. , today announced its financial results for the quarter ended 30 June June: see month. 1998. Strong growth in retail sales revenue, customer numbers and minutes carried contributed to significant increases in total revenues and enhanced gross margin. During the third quarter ended 30 June 1998 total revenue was 21.7 million pounds sterling, an increase of 49% over revenue of 14.5 million pounds sterling for the second quarter ended 31 March 1998. Retail customer numbers, switched minutes and gross profit also reached their highest ever levels during the quarter. Retail revenue grew to a record 14.9 million pounds sterling during the quarter, a 222% increase over retail revenue of 4.6 million pounds sterling during the same period one year ago and a 66% increase over the 9.0 million pounds sterling retail revenue reported in the second quarter ended 31 March 1998. According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. David L. Oertle, Chief Executive Officer at Esprit Telecom Group plc: "Esprit Telecom has again shown excellent progress in all key areas of the business. Retail sales, the barometer of our overall performance, once again showed substantial quarter on quarter growth. These retail sales now account for 69% of total group revenue compared with 34% for the same quarter last year. We again exceeded our target of 20% retail growth per quarter, achieving 26% organic retail growth in the third quarter. With the continued growth of our business in continental European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. markets, 59% of our revenue is now generated outside the UK." For the fourth consecutive quarter, gross margin increased. For the quarter ended 30 June 1998, gross margin reached 19.4%, compared with 18.3% for the previous quarter. Gross margin has now increased by 5.2 percentage points from the 14.2% gross margin reported for the third quarter ended 30 June 1997. This resulted in gross profit of 4.2 million pounds sterling for third quarter ended 30 June 1998, more than double the gross profit of 1.9 million pounds sterling reported for the same period last year, and up by 58% over the 2.7 million pounds sterling gross profit reported for the second quarter ended 31 March 1998. Esprit Telecom billed over 170 million minutes during the third quarter of 1998, more than doubling the 71 million minutes billed during the third quarter of 1997 and an increase of 42% over the 122 million billed minutes the previous quarter. Customer numbers grew to 5,902 during the third quarter of 1998, more than tripling the 1,575 customers reported at the end of the same period in 1997. Of the increase in customers, 670 were attributable to the PLUSNET PlusNet is an Internet Service Provider (ISP) based in Sheffield in the UK and owned as of January 30th 2007 by BT Group. PlusNet also operate other brands in the UK Internet marketplace; Force9, Free-Online and Metronet. acquisition. Esprit Telecom began re-establishing its wholesale business during the third quarter after a period of deliberate curtailment Curtailment The act of contracting or reducing operations of a company in the hope of bringing it financial or operational stability. This management technique is often used when a company has grown too fast and is unable to effectively manage its operations. . This accounted for a rise in wholesale revenue to 2.7 million pounds sterling in the third quarter from 1.6 million pounds sterling in the second quarter. A number of significant operational milestones were also reached during the third quarter. In April 1998, the first ring of the Esprit Telecom pan-European broadband broadband Term describing the radiation from a source that produces a broad, continuous spectrum of frequencies (contrasted with a laser, which produces a single frequency or very narrow range of frequencies). fibre network a 1,267 route kilometre fibre SDH (Synchronous Digital Hierarchy) The European counterpart to SONET. See SONET. SDH - Synchronous Digital Hierarchy ring between London London, city, Canada London, city (1991 pop. 303,165), SE Ont., Canada, on the Thames River. The site was chosen in 1792 by Governor Simcoe to be the capital of Upper Canada, but York was made capital instead. London was settled in 1826. and Paris became operational. Over the next 15 months, Esprit Telecom plans to extend its pan-European telecommunications network A telecommunications network is a of telecommunications links and nodes arranged so that messages may be passed from one part of the network to another over multiple links and through various nodes. 9,000 route kilometres throughout Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). ,
operating at an initial minimum capacity of 2.5 Gbits/second (STM-16).During the third quarter, Esprit Telecom acquired the business of PLUSNET Gesellschaft fr Netzwerk Services mbH ("PLUSNET") from Thyssen Telecom, a subsidiary of Thyssen AG. The deal positions Esprit Telecom as one of the leading telecommunications service providers A Telecommunications Service Provider or TSP is a type of Communications Service Provider that has traditionally provided telephone and similar services. This category includes ILECs, CLECs, and mobile wireless companies. in the $47 billion German telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. market. David L. Oertle said: "With PLUSNET, we acquired not only one of the largest and most respected telecommunications operators in Germany Germany (jûr`mənē), Ger. Deutschland, officially Federal Republic of Germany, republic (2005 est. pop. 82,431,000), 137,699 sq mi (356,733 sq km). , but also gained unique and invaluable management, sales, and technical skill sets that have helped us establish a leading position in Europe's largest single market. The integration of PLUSNET and Esprit Telecom has been smooth and is now effectively complete, with virtually no loss of staff or customers. This marks the latest and most significant in a series of acquired businesses that have been successfully integrated into the Esprit Telecom Group." Following the PLUSNET acquisition, German revenue now accounts for 25% of Esprit Telecom group revenue and will be reported as a separate geographic category as of the current quarter. Also during the third quarter ended 30 June 1998, Esprit Telecom completed a formal agreement with French national operator France Telecom for the technical interconnection in·ter·con·nect v. in·ter·con·nect·ed, in·ter·con·nect·ing, in·ter·con·nects v.intr. To be connected with each other: The two buildings interconnect. v.tr. of the telecommunications networks of the two companies. Further progress was made in France when, in June, the French Administrative Supreme Court (Conseil Conseil taxonomically talented servant of Prof. Aronnax. [Fr. Lit.: Twenty Thousand Leagues Under the Sea] See : Pedantry d'Etat) confirmed Esprit Telecom's right to receive the single digit A single character in a numbering system. In decimal, digits are 0 through 9. In binary, digits are 0 and 1. digit - An employee of Digital Equipment Corporation. See also VAX, VMS, PDP-10, TOPS-10, DEChead, double DECkers, field circus. national carrier select code '6' in France. The award of the single digit code also know as an 'E Digit' - positions Esprit Telecom with a select group of six telecommunications companies entitled en·ti·tle tr.v. en·ti·tled, en·ti·tling, en·ti·tles 1. To give a name or title to. 2. To furnish with a right or claim to something: to compete on an equal basis with France Telecom across France. Esprit Telecom is in the process of building a national fibre network in France. To support the continued expansion of the Esprit Telecom business across Europe, in June Esprit Telecom successfully raised an aggregate 140 million pounds sterling ($150 million at 10.875% and DM 150 million at 11.000 %) of Senior Notes due 2008. Subsequent Events This week, the company announced the appointment of Dr. Hans-Peter Kohlhammer as managing director, sales and marketing, effective October October: see month. 1, 1998. Dr. Kohlhammer joins Esprit Telecom from Thyssen Telecom AG, where he was chairman of the Board of Management. Since 1996, Dr. Kohlhammer has also been president of Germany's leading telecommunications industry body, VATM VATM Verband der Anbieter Von Telekommunikations und Mehrwertdiensten (German) (The Association of Providers of Telecom and Value Added Value Added The enhancement a company gives its product or service before offering the product to customers. Notes: This can either increase the products price or value. Services). He brings to Esprit Telecom 27 years of senior management experience at leading telecommunications companies. The company made two other significant senior management appointments during the quarter. In July July: see month. , the company named Dr. Jrgen Hernichel, formerly managing director of PLUSNET, as managing director for all of Esprit Telecom's German operations. In May, the company announced the appointment of Jaime Jaime. For Spanish rulers thus named, use James. Gamell-Riera as Managing Director of Esprit Telecom Spain Spain, Span. España (āspä`nyä), officially Kingdom of Spain, constitutional monarchy (2005 est. pop. 40,341,000), 194,884 sq mi (504,750 sq km), including the Balearic and Canary islands, SW Europe. . Gamell-Riera brings 28 years of senior management experience, incorporating 14 years in a telecommunications environment across four continents. In July, Esprit Telecom became the first independent telecommunications company in Belgium Belgium (bĕl`jəm), Du. België, Fr. La Belgique, officially Kingdom of Belgium, constitutional kingdom (2005 est. pop. 10,364,000), 11,781 sq mi (30,513 sq km), NW Europe. to receive a national public network operator licence. Included in the licence is the right to interconnect (1) To attach one device to another. (2) A physical port (plug, socket) or wireless port (transmitter, receiver) used to attach one device to another. with dominant national operator Belgacom The Belgacom Group, composed of Belgacom NV/SA and its subsidiaries, is the leading telecommunications company in Belgium. Group structure The Group is divided into three main fields of activity:
In August, Esprit Telecom announced that it had purchased and is currently deploying an advanced billing and customer care system. This system will be implemented on a pan-European basis and provides a solid basis for long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. growth as Esprit Telecom builds a consistent billing and customer care platform to support its pan-European products and services. The system has the ability to support a broad range of services in multiple languages and multiple currencies, including the Euro. Also in August, Esprit Telecom became the first independent operator in Europe to offer customers pricing in Euros. About Esprit Telecom Esprit Telecom Group plc, a NASDAQ and EASDAQ quoted company trading under the symbols "ESPRY" and "ESPR" respectively, is one of the largest independent European telecommunications service providers. Established in 1992, the company has sales offices in 26 major cities in the United Kingdom, Germany, The Netherlands Netherlands (nĕth`ərləndz), Du. Nederland or Koninkrijk der Nederlanden, officially Kingdom of the Netherlands, constitutional monarchy (2005 est. pop. 16,407,000), 15,963 sq mi (41,344 sq km), NW Europe. , Spain, France, Belgium and Italy and operates a pan-European telecommunications network that reaches more than 30 cities in eight European countries. Except for the historical information contained herein, there are matters discussed in this news release that are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. . Such statements are only predictions and actual events or results may differ materially. For a discussion of important factors including, but not limited to, the development of the Company's business, actions of regulatory authorities Noun 1. regulatory authority - a governmental agency that regulates businesses in the public interest regulatory agency administrative body, administrative unit - a unit with administrative responsibilities and competitors, and other factors, which could cause actual results to differ materially from the forward-looking statements, refer to the Company's Senior Notes prospectus dated December 12, 1997. -0-
ESPRIT TELECOM GROUP PLC
Unaudited Financial Highlights (UK GAAP) (1)
(In thousands, except per ordinary share, per ADS and per minute
amounts, number of customers and numbers of employees and route
kilometres)
Three Months Ended Nine Months Ended
June 30 June 30
------------------ -----------------
1998 1997 1998 1997
----- ---- ---- ----
pounds pounds pounds pounds
sterling sterling sterling sterling
Consolidated Profit
and Loss Account Data:
Revenue 21,681 13,475 49,315 32,742
Cost of revenue (17,478) (11,567) (40,257) (27,233)
------ ------ ------ ------
Gross profit 4,203 1,908 9,058 5,509
Other operating
expenses:
Selling, general and
administrative (8,809) (4,133) (20,507) (9,946)
Restructuring costs - - - (377)
Stock option
compensation
costs (2) 27 (34) (112) (407)
Depreciation and
amortization (3,133) (735) (5,775) (1,885)
European network
depreciation (527) - (527) -
------ ------ ------ ------
Operating loss before
interest (8,239) (2,994) (17,863) (7,106)
Profits on the sale of
investment - - 200 -
Net interest
income/(expense) (5,398) 385 (8,327) 451
------ ------ ------ ------
Loss on ordinary
activities
before taxation (13,637) (2,609) (25,990) (6,655)
Taxation on loss on
ordinary activities - - (2) -
------ ------ ------ ------
Loss for the period (13,637) (2,609) (25,992) (6,655)
====== ====== ====== ======
Pro forma loss per
Ordinary Share (0.11) (0.02) (0.21) (0.07)
====== ====== ====== ======
Proforma weighted
average number of
shares (3) 124,656 120,071 124,357 99,492
Equivalent pro forma
loss per ADS (4) (0.77) (0.15) (1.46) (0.47)
====== ====== ====== ======
Other Financial Data
EBITDA (5) (4,579) (2,259) (11,361) (5,221)
Summary Operating Data:
Number of billable
minutes (000s) (6) 173,753 71,213 390,485 176,896
Average revenue per
billable minute 0.125 0.189 0.126 0.185
Average gross margin
per billable minute 0.024 0.027 0.023 0.031
Number of customers
(at period-end) 5,902 1,575
Number of employees
(at period-end) 639 240
European Network -
Route Kilometres (7) 1,267 n/a
1. The Company prepares its financial statements in accordance with
accounting principles generally accepted in the United Kingdom
(UK GAAP), which differ in certain significant respects from the
accounting principles generally accepted in the United States.
The financial results set forth above represent the Company's
financial results under UK GAAP. All amounts derive from
continuing operations.
2. Since September 1997, the Company's financial information has
been restated from that previously published in order to give
effect to a change in UK GAAP relating to the granting of
employee stock options at a discount to the market price. The
financial value of such discounts are now recognised as employee
compensation and charged against net income. As required by UK
GAAP, this accounting change has been effected by restating the
results of previous periods.
3. Under UK GAAP, pro forma loss per Ordinary Share is calculated
based upon the weighted average number of shares outstanding
during the period, adjusted to reflect the redesignation of the
"A" ordinary shares as Ordinary Shares and the fifty for one
Share Split that occurred in February 1997.
4. Each ADS represents seven Ordinary Shares.
5. Earnings before interest and similar items, taxes, depreciation
and amortisation ("EBITDA") is presented because it is a measure
commonly used in the telecommunications industry and is presented
solely to enhance the understanding of the Company's operating
results. EBITDA, however, should not be considered as an
alternative to operating income or income for the periods as an
indicator of the operating performance of the Company. Similarly,
EBITDA should not be considered as an alternative to cash flows
from operating activities as a measure of liquidity.
6. Billable minutes are those minutes during which a call is
connected to any Company switch and for which the Company bills a
customer.
7. Route Kilometres is the number of kilometres of distance of
physically diverse controlled infrastructure operating at STM1
capacity or above within Esprit Telecom's European Network. The
total excludes Transatlantic cable capacity.
CONTACT: Esprit Telecom Group plc Roy Merritt, 44 (0) 118 951 4066 http://www.esprittele.com |
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