Interim Results

Telecom Plus PLC
14 December 2004


                                TELECOM plus PLC

14 December 2004

           Interim results for the six months ended 30 September 2004

Telecom plus PLC, the UK's leading low-cost integrated multi-utility (gas,
electricity, telephony, internet), announces interim results for the six months
ended 30 September 2004.

Financial and business highlights:

   • Profit before tax up 31% to £6.4 m (2003: £4.9m)

   • Turnover up 15% to £42.8m (2003: £37.2m)

   • Interim dividend up 11% to 5p (2003: 4.5p)

   • New mobile and broadband services launched

Peter Nutting, Chairman, said:

'We are a highly focused business and expect to see continuing
organic growth by providing more utility services to a growing
customer base. Our unique business model gives us a strong
competitive edge over our much larger competitors, and despite the
short-term losses within our gas business, we face the future with
great confidence.'


For press enquiries, please contact:

Charles Wigoder                                                  Neil Boom
Telecom plus PLC                                                 Gresham PR Ltd.
020 8955 5000                                                    020 7404 9000







                                TELECOM plus PLC
                              CHAIRMAN'S STATEMENT

I am pleased to report that profits before tax in the six months to the end of
September 2004 have increased by 31% to £6.4m (2003: £4.9m) on a 15% increase in
turnover to £42.8m (2003: £37.2m). This has been achieved despite losses within
our domestic gas supply business and greater competition in fixed line
telephony.

Although gas continues to present us with a margin problem in the short-term as
I explain below, the directors have decided to pay an increased interim dividend
of 5p per share (2003: 4.5p), having taken into consideration the continuing
strong cash flow and our confidence in the future growth of the business. This
interim dividend will be paid on 31st January 2005 to shareholders on the
register on 7th January 2005.

My previous statement to shareholders reported on the progress we had made
towards becoming the UK's first low cost fully integrated multi-utility. Our
turnover from supplying gas and electricity is becoming increasingly
significant, reflecting the higher average household spend on energy compared
with telecommunications. Our continuing low cost of acquiring customers,
combined with our integrated billing and administration systems, give us a
strong competitive advantage and should enable us to maintain our position as
the UK's cheapest gas and electricity supplier whilst earning a satisfactory
return for our shareholders in the medium term.

However, rapid growth in energy turnover from a low base has presented some
short-term challenges. In my previous statement I warned that margins in our gas
supply business were under considerable pressure. Since then, the wholesale cost
of gas has continued to rise, with particularly high volatility during a period
when we were changing shippers and thus unable to hedge forward our
requirements. In addition, as a new energy supplier growing our market share
during a period of rising prices, we face an innate disadvantage due to the
lower average commodity cost being paid by our competitors as a result of their
historic hedging activities. The result is an anticipated loss approaching £4
million within our gas business during the second half of the current financial
year, based on current market prices, in addition to losses of around £450,000
which we incurred in this area of our business during the period under review.

We have now begun to hedge forward our requirements to protect against future
volatility in the wholesale market and our strategy will be to maintain a
hedging profile broadly in line with the industry. Nevertheless we anticipate
continuing losses in our gas business in the 12 months to the end of March 2006,
after which we expect to see the benefits from the substantial gas supply
business we will have created. An examination of overhead costs within our main
competitors suggests that in the medium term we could expect gross margins
within our energy business of around 12% whilst retaining a competitive pricing
proposition for our customers.

By contrast (benefiting from our investment in Oxford Power Holdings) we had
hedged forward the majority of our electricity requirements in a similar rising
market and I am pleased to report that our electricity business is providing an
acceptable return. In telephony I am also delighted that we have been able to
increase our margins despite the price reductions we have made for some types of
calls.

A record attendance of Distributors (around 50% higher than last year) were
present on 17 October 2004 for our annual Express Day, where we launched a
number of new initiatives. This included enhancements to our Home Phone service,
extremely competitive new mobile tariffs, a clearly refocused brand identity, an
exciting new range of broadband services and several incentives aimed at
rewarding consistent effort by individual Distributors over the coming year.
These announcements were enthusiastically received by those present, and the
effectiveness of these changes has already been demonstrated by a noticeable
increase in activity. Indeed, over one thousand new Distributors joined the
business during the subsequent six weeks.

We are a highly focussed business and expect to see continuing organic growth by
providing more utility services to a growing customer base. Our unique business
model gives us a strong competitive edge over our much larger competitors, and
despite the short-term losses within our gas business, we face the future with
great confidence.

Peter Nutting
Chairman
14 December 2004




                       Consolidated Profit & Loss Account

                                          6 months         6 months         Year
                                             ended            ended        ended
                                      30 September     30 September     31 March
                                              2004             2003         2004
                                       (unaudited)      (unaudited)    (audited)

                                             £'000            £'000        £'000

Turnover                                    42,778           37,206       81,828

Cost of sales                             (29,423)         (24,570)     (56,590)

Gross profit                                13,355           12,636       25,238

Sales and marketing costs                  (2,854)          (3,203)      (6,207)

Administrative expenses                    (4,326)          (4,688)      (8,751)

Operating profit                             6,175            4,745       10,280

Interest receivable                            269              172          372

Interest payable                               (1)             (13)         (20)

Profit before taxation                       6,443            4,904       10,632

Taxation                                   (1,845)          (1,651)      (3,178)

Profit after taxation                        4,598            3,253        7,454

Dividends                                  (3,102)          (2,765)      (6,159)

Retained profit                              1,496              488        1,295

Basic earnings per ordinary share             7.4p             5.4p        12.2p

Diluted earnings per ordinary share           7.3p             5.2p        11.9p

Dividend per share                            5.0p             4.5p        10.0p

                               Segmental Analysis

                                  6 months               6 months           Year
                                     ended                  ended          ended
                              30 September           30 September       31 March
                                      2004                   2003           2004

                                     £'000                  £'000          £'000

Virtual Network

Turnover                            41,683                 35,584         79,004
Operating costs                   (34,332)               (29,078)       (65,234)
Operating profit                     7,351                  6,506         13,770

Distribution

Turnover                             1,095                  1,622          2,824
Operating costs                    (2,271)                (3,383)        (6,314)
Operating loss                     (1,176)                (1,761)        (3,490)

Total

Turnover                            42,778                 37,206         81,828
Operating costs                   (36,603)               (32,461)       (71,548)
Operating profit                     6,175                  4,745         10,280






                              Consolidated Balance Sheet

                                             As at            As at        As at
                                      30 September     30 September     31 March
                                              2004             2003         2004
                                       (unaudited)      (unaudited)    (audited)

                                             £'000            £'000        £'000

FIXED ASSETS
Intangible assets                            3,514            3,970        3,742
Tangible assets                              2,203            2,068        1,903
Investments                                  1,038            1,038        1,038
                                             6,755            7,076        6,683

CURRENT ASSETS
Stocks                                       1,092              866        1,146
Debtors (due within one year)                8,667            7,469        9,164
Debtors (due after one year)                 2,799            2,712        2,666
Cash at bank and in hand                    13,393            8,299        9,857
                                            25,951           19,346       22,833

CREDITORS
Amounts falling due within one year       (17,801)         (14,611)     (16,502)

NET CURRENT ASSETS                           8,150            4,735        6,331

TOTAL ASSETS LESS
CURRENT LIABILITIES                         14,905           11,811       13,014

CAPITAL AND RESERVES
Called up share capital                      3,100            3,048        3,076
Share premium account                        6,996            6,257        6,625
Profit and loss account                      4,809            2,506        3,313

Shareholders' funds                         14,905           11,811       13,014

These unaudited results do not amount to statutory accounts within the meaning
of section 240 of the Companies Act 1985. The results for the year ended 31
March 2004 have been extracted from the full statutory accounts for that period,
which have been delivered to the Registrar of Companies and on which the
auditors gave an unqualified report.

                        Consolidated Cash Flow Statement

                                            6 months        6 months        Year
                                               ended           ended       ended
                                        30 September    30 September    31 March
                                                2004            2003        2004
                                         (unaudited)     (unaudited)   (audited)
                                               £'000           £'000       £'000
Reconciliation of operating profit
to operating cash flow

Operating profit                               6,175           4,745      10,280
Goodwill amortisation                            228             228         456
Depreciation                                     259             220         487
(Profit) on disposal of fixed assets            (50)               -        (28)
Decrease/(increase) in stocks                     54           (276)       (556)
Decrease/(increase) in debtors                   364             635     (1,014)
Increase/(decrease) in creditors               1,128           (645)         481
Amortisation of loan stock issue costs             6              12          24
Net cash flow from operating activities        8,164           4,919      10,130

Net cash flow from operating activities        8,164           4,919      10,130

Return on investments and
servicing of finance                             268             154         346
Capital expenditure                            (509)           (342)       (416)
Corporation tax paid                         (1,284)           (775)     (2,109)
Dividends paid                               (3,394)         (1,962)     (4,717)
Financing                                        313             249         567

Increase in cash                               3,558           2,243       3,801

Reconciliation of net cash flow to
movement in net funds

Change in net funds resulting from
cash flows                                     3,558           2,243       3,801
Conversion of loan stock                          82             198         276
Movement in net funds for the period           3,640           2,441       4,077

Net funds at 31 March 2004                     9,753           5,676       5,676
Net funds at 30 September 2004                13,393           8,117       9,753




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