Information  X 
Enter a valid email address

Thus PLC (THUS)

  Print      Mail a friend

Wednesday 08 November, 2000

Thus PLC

Interim Results

Thus PLC
8 November 2000


                                   THUS PLC

                               INTERIM RESULTS


                       SIX MONTHS ENDED 30 SEPTEMBER 2000

Financial results

  * Second quarter turnover up 5% to £53.3 million on quarter one. First
    half turnover up 3% to £103.9 million, with business sales up 24% to £67.1
    million

  * Second quarter EBITDA flat on quarter one at negative £8.6 million.

First half EBITDA negative £17.3 million (first half 1999-00: positive £5.7
million)

  * Operating loss from continuing operations £35.6 million (first half
    1999-00: £6.8 million)

Funding

  * ScottishPower to extend revolving working capital facility put in place
    at flotation by

£100 million to £320 million

  * Facility to cover national network roll-out and service development
    programme on plan to be completed by December 2001

Board

  * Board strengthened with appointment of new CFO, John Maguire, joining on
    18 December from Cable & Wireless, together with the addition of
    Non-executive Directors, Jo Connell, Group Managing Director FI Group plc
    and Michael de Kare Silver

Sales and marketing

  * Sales team increased to 220, with the majority of new staff based in
    England. Corporate sales team restructured to more aggressively capture
    new business and develop existing accounts

  * Channel marketing partners increased from less than 20 to over 200

  * New corporate customers added in the first half include Sky, Scottish
    Provident, Wincanton Logistics, BVL, Intelligent Finance, GE Capital and
    Virgin Cars

  * Service provision to ScottishPower extended to support its domestic
    telephony strategy and Internet joint venture

Services

  * New Internet access services launched, including Demon Premier Connect
    for better value and unmetered dial up access, Demon Express for higher
    bandwidth ADSL access and Demon Now for mobile Internet access

  * Hosted web site development and e-commerce application, entry level
    dedicated server and wide scale video streaming services launched

  * Demon tops JD Power and Associates Customer Satisfaction Study,
    reinforcing leading quality position

Network and infrastructure

  * £76 million invested in first half, principally in network development
    and service capabilities

  * National network fibre expanded by 75% to 6750 kms since beginning of
    roll-out. Service launched in Reading, Swindon, Leeds and Middlesbrough
    during first half

  * Web hosting capacity more than trebled to 35,000 square feet

  * Capacity into London Internet Exchange upgraded and additional points of
    presence added at key US Internet exchange points to enhance peering

Commenting on the results, William Allan, Chief Executive said:

'These results reflect the transition of the Company from a regional provider
of traditional telecommunications services to a nationwide provider of
advanced data and Internet services to corporate and SME customers.

'During the first half, we have taken three important steps to accelerate this
transition.

'First, we have given stronger focus to business service growth which is
showing good progress with sales up 24% to £67.1 million.


'Secondly, we have restructured our corporate sales team to enable us to
compete for and grow major nationwide accounts more effectively. Evidence of
our success is demonstrated by the high profile, blue chip additions to our
customer base during the period.

'Thirdly, we have invested in and launched six new Internet services to
significantly enhance Demon's capabilities and build its position as a
business ISP.

'The appointment of our new CFO and two new Non-executive Directors,
significantly strengthens the management team and, together with the extended
financing commitment from ScottishPower, demonstrate continued support for the
strategy and potential of the business. We remain confident that we are on
track to achieve stronger revenue growth and improve performance in the second
half.'

For further information, please contact:

Thus plc

Kathryn Rhinds, Investor Relations Manager               020 7613 6108


                                        07974 160013

Claire Rowberry, Head of Corporate Communications          07771 980905

Smithfield Financial

John Antcliffe   020 7360 4900

Mark Woolfenden  07973 840926

An analysts' conference will take place this morning at 9.00 for 9.30am in The
Great Eastern Room, The Great Eastern Hotel, Liverpool Street, London EC2M
7QN. A live webcast of the presentation can be viewed at www.thus.net.


Overview of financial results

Turnover was £103.9 million compared with £101.1 million for the six months
ended 30 September 1999, with second quarter sales up 5% to £53.3 million
compared with £50.6 million in quarter one this year.

First half sales from business services increased 24% to £67.1 million,
excluding the ScottishPower facilities management contract. However, as
reported in the first quarter trading statement, overall growth was held back
by a faster than expected decline in consumer services. This was led by a 40%
fall in premium rate Interactive services, lower residential telephony
revenues, a decline in the number of Internet dial up subscribers and changes
to the NTS charging regime which have the effect of reducing the proportion of
revenues ISPs receive for terminating calls.

These factors, together with general competitive pressures and the build up of
additional network depreciation and infrastructure costs associated with
business expansion, led to a £12.6 million reduction in gross profit to £26.4
million.


Operating costs were £62.0 million compared with £45.7 million last year,
falling from 62% of sales in the first quarter to 58% of second quarter
revenues in line with anticipated efficiencies.


Depreciation and amortisation was £18.3 million, up £5.8 million from the
first half last year, giving rise to EBITDA of negative £17.3 million compared
with equivalent earnings of £5.7 million last year. EBITDA for the second
quarter at negative £8.6 million was flat compared with £8.7 million in
quarter one.

.

The operating loss from continuing operations was £35.6 million compared with
£6.8 million for the same period last year and interest fell £9.3 million to £
1.6 million, resulting in a loss before tax of £37.3 million.

Cash inflow from operations of £10.7 million compared with a cash outflow of £
8.6 million for the same period last year.

Capital expenditure during the period was £76.0 million, with 50% invested in
network expansion, 17% in network assurance, 24% in service capabilities and
the remaining 9% on system improvements.

Net debt as at 30 September 2000 was £81.1 million compared with net funds of
£24.5 million at 31 March 2000.

Segmental analysis of turnover

Data and telecoms turnover increased 29% to £41.9 million, with second quarter
sales up 48% year on year to £23.5 million and up 28% compared with quarter
one.

Sales to external business customers increased 45% to £29.3 million.

In addition, the ScottishPower facilities management contract contributed £
11.1 million to turnover, up from £10.0 million received in the same period
last year. However, residential telephony revenues fell 34% to £1.5 million,
reflecting both the planned withdrawal from fixed radio access services last
year and the Company's decision to place less focus on its residential
indirect service.


Internet sales were flat at £37.3 million against £37.2 million for the first
half last year, with a 36% growth in business service sales to £12.5 million.
Within business services, leased line customers increased to over 1,500,
commercial web hosting customers to 17,000 and subscribers to virtual ISP
services, including Ondigital and freebeeb.net were 147,000.


Despite this strong growth, Internet revenues were adversely impacted by a
reduction in dial up subscribers and lower revenue from termination payments
on dial up Internet calls as a result of regulatory changes. After adjusting
for a one-off 15,000 correction in the customer count following the
implementation of a new billing system reported in the first quarter, UK dial
up subscribers fell 8% over the first half to 177,000, indicating an average
monthly churn of 1.5%. However, average monthly usage per dial up customer was
21.4 hours compared with 20.4 hours at the year end, indicating that Demon is
retaining its high quality business users. New dial up and ADSL Internet
access services launched at the end of the first half are aimed at improving
retention and arresting this decline.

Overall, it is estimated that the proportion of Internet revenues attributable
to business customers rose to 66% of first half sales compared with 59% for
the same period last year.

The 40% fall in Interactive services to £11.5 million resulted from strong
competition in the premium rate services market which was felt particularly
within the competitions operation. Through the introduction of test marketing
ahead of the launch of new competitions, management arrested the decline and
held second quarter sales flat on quarter one at £5.8 million. The business
also successfully launched a new format for its football information service
Clubcall.com, backed by an extensive football portal in association with
Haymarket Publishing's popular 'Four, Four, Two' title.

Contact centre sales rose 7% in the first half to £13.1 million, with second
quarter sales down 15% to £6.0 million on quarter one, principally as a result
of lower call volumes within individual accounts.

Sales and marketing

The sales team increased to 220, with the majority of new staff based in
England. To drive forward business sales more aggressively in the second half,
the corporate sales team was restructured into account acquisition and account
development teams. In addition, sales remuneration has been changed to align
more closely to revenue. Following a successful recruitment campaign, channel
marketing partners were increased from less than 20 to over 200 which will
provide Thus with wider service distribution.


Corporate wins

As a result of these changes in sales and marketing, Thus was able to
significantly improve its customer base with the addition of a number of key
national corporate accounts.

Second quarter wins included a contract to provide the infrastructure and
hosting facilities for one of Sky's new digital satellite services, as well as
contracts for the provision of web streaming services to support Channel 4's
popular 'Big Brother' production and BBC2's 'Attachments' series. New business
was also won from Scottish Provident for switched services, together with
Wincanton Logistics for contact centres.

In September Thus began providing service to BVL, a major account win in
quarter one. Thus is providing network services to enable BVL to supply an
indirect residential telephony service for one of the UK's leading
broadcasters and implementation of the contract has significantly increased
volumes across the Company's network.

Thus also worked closely with ScottishPower on the launch of an indirect
residential service to its customers in Scotland and the North West of
England. Customer take up exceeded ScottishPower's expectations and the two
companies are now working closely together to evaluate the opportunities for
extending the service. In addition, Thus is providing web hosting and contact
centre support to ScottishPower's Internet joint venture with the Royal Bank
of Scotland.

Service development

Service development focused on enhancing Demon's Internet access and hosting
services to help retain dial up customers and enhance business sales,
rebalancing revenues away from dial up termination payments.

Demon Premier Connect was launched in October, providing customers with better
value dial up rates and unmetered Internet access. Since launch, over 3,300
customers have moved to this package.

At the end of September the Company also began sales of its ADSL services,
Demon Express following extensive customer trials. To date, over 1,200
customer orders have been received of which 650 have been connected.

In addition, Demon Now was introduced giving customers the opportunity to
access their Demon account via a WAP service. The service has attracted over
3,000 users to date.

New hosting services included the launch of an entry level, dedicated server
product, a hosted web site set up and e-commerce application and expansion of
the Company's video streaming capabilities.

Infrastructure

Expansion of the national network continued to make good progress, with
operational fibre up 75% to 6,750kms since the beginning of the roll-out this
time last year. During the first half, service was launched in Reading,
Swindon, Leeds and Middlesbrough, with effort currently being directed towards
completion of the Southern ring and the achievement of countrywide
connectivity.

The Company's web hosting capability was extended by some 25,000 square feet,
with the launch of a new facility at Park Royal in West London, adding to the
existing 10,000 square feet of hosting space in London.

The Company also upgraded its capacity into the London Internet Exchange,
increased its transatlantic capacity and built out points of presence to an
additional 3 key Internet exchange points in the US at Washington, Chicago and
San Jose. These new Internet exchange points provide East to West US
connectivity and will enable Thus to enhance its peering and improve Internet
service quality.

Board

Three new Board appointments were made, including a new CFO and two new,
independent, Non-executive Directors. Together, these appointments bring a
wealth of telecoms and hi-tech sector experience and significantly strengthen
the Board and management team.

Financing

A revolving working capital facility of £220 million was put in place with
ScottishPower at the time of Thus's flotation in November 1999. ScottishPower
supports Thus's strategy and has agreed to extend the facility by a further £
100 million to cover, in particular, the national network roll-out and the
service development programme which is planned to be completed by December
2001. In the longer term, it is expected that Thus will refinance the facility
in the debt and capital markets.


Outlook

In view of progress made in the second quarter, the Board remains confident
that revenue growth will improve in the second half of the year, although full
year growth will remain materially below the 31% growth attained in the
previous year.

As indicated in the first quarter statement, the Board continues to believe
that due to the lower annual growth rate, the cost of investing in future
expansion and competitive pressure, EBITDA for the full year will be negative.


Thus plc

Group Profit and Loss Account

for the six months ended 30 September 2000
                                               First        First         Full
                                                half         half         year
                                              2000-01       1999-00     1999-00
                                  Notes        £'000        £'000        £'000
Turnover from continuing            2         103,865      101,143     216,903
operations
Cost of sales                                 (77,489)     (62,212)   (126,994)
Gross profit from continuing                   26,376       38,931      89,909
operations

Selling and distribution                      (21,231)     (19,607)    (38,894)
Administration expenses                       (40,774)     (26,131)    (59,973)
Operating loss from continuing                (35,629)      (6,807)     (8,958)
operations

Exceptional item
- Loss on termination of an         3              -       (43,467)    (43,467)
operation
Loss on ordinary activities                   (35,629)     (50,274)    (52,425)
before interest

Net interest charge                            (1,641      (10,972)    (10,688)
Loss on ordinary activities                   (37,270)     (61,246)    (63,113)
before taxation

Taxation on loss on ordinary        4              -         6,272       6,387
activities
Loss after taxation                           (37,270)     (54,974)    (56,726)
Minority interest                                 404         (109)         30
Loss for the period                           (36,866)     (55,083)    (56,696)

Appropriations - non equity         6          (1,250)           -      (1,127)
Loss retained before transfer to
balance with
ScottishPower                                 (38,116)     (55,083)    (57,823)

Transfer to balance with                           -        55,192      55,192
ScottishPower

(Loss) / profit retained                      (38,116)         109      (2,631)

Loss per ordinary share (pence)                 (5.43)       (9.18)      (9.02)
Adjusting item - exceptional item                  -          7.24        6.78
(pence)
Loss per ordinary share before
exceptional item
(pence)                             5           (5.43)       (1.94)      (2.24)

Diluted loss per ordinary share                 (5.43)       (9.18)      (9.02)
(pence)
Adjusting item - exceptional item                   -         7.24        6.78
(pence)
Diluted loss per ordinary share
before exceptional
item (pence)                        5           (5.43)       (1.94)      (2.24)

The Notes on pages 11 to 13 form part of these Accounts.



Thus plc

Statement of Total Recognised Gains and Losses

for the six months ended 30 September 2000
                                                First        First       Full
                                                 half         half       year
                                               2000-01       1999-00    1999-00
                                                £'000        £'000        £'000
Loss for the period                            (36,866)    (55,083)    (56,696)
Currency translation differences                    76           -          13
on overseas net assets
Total recognised losses for the                (36,790)    (55,083)    (56,683)
period



Reconciliation of Movements in Shareholders' Funds

for the six months ended 30 September 2000
                                                First        First         Full
                                                 half         half         year
                                               2000-01       1999-00    1999-00
                                   Note         £'000        £'000        £'000
Loss for the period                            (36,866)   (55,083)     (56,696)
Appropriations - non equity          6          (1,250)         -       (1,127)
Loss retained                                  (38,116)   (55,083)     (57,823)
Currency translation differences                    76          -           13
on overseas net assets
Transfer from ScottishPower loan                     -     55,192       55,192
account
Reversal of appropriations - non     6           1,250          -        1,127
equity
Share capital issued                                -          -       334,937
Net movement in shareholders'                  (36,790)       109      333,446
funds
Opening shareholders' funds                    348,148     14,702       14,702
Closing shareholders' funds                    311,358     14,811      348,148



Analysis of Consolidated Loss

for the six months ended 30 September 2000
                                                 First       First        Full
                                                  half        half        year
                                                 2000-01    1999-00     1999-00
                                                 £'000       £'000       £'000
Pre merger period to 30 September
1999
Company (from date of incorporation)                 -           -           -
Businesses acquired by the Company on 30             -     (55,192)    (55,192)
September 1999
Subsidiaries                                         -         109         109
                                                     -     (55,083)    (55,083)

Post merger period to 30 September
2000
Company                                          (36,608)        -      (1,697)
Subsidiaries                                        (258)        -          84
                                                 (36,866)        -      (1,613)

Total                                            (36,866)    (55,083)  (56,696)

The Notes on pages 11 to 13 form part of these Accounts.

Thus plc

Group Balance Sheet

as at 30 September 2000
                                                30              30          31
                                         September       September       March
                                              2000            1999        2000
                                             £'000           £'000       £'000
Fixed assets
Intangible assets                            1,016           1,187       1,654
Tangible assets                            403,178         243,907     346,837
Investments                                 14,781               -           -
                                           418,975         245,094     348,491
Current assets
Stocks                                       9,270          15,049       8,680
Debtors:
- Other debtors                             66,267          70,939      74,736
- Funds deposited with                       4,602               -      29,533
ScottishPower
                                            70,869          70,939     104,269
Cash at bank and in hand                     2,192             637       1,524
Total current assets                        82,331          86,625     114,473

Creditors: amounts falling
due within one year
Other creditors                           (102,411)        (73,240)   (107,751)
Loans and other borrowings:
- ScottishPower loan account               (80,600)       (236,282)          -
- Loans and other borrowings                (2,902)         (2,140)     (2,153)
                                           (83,502)       (238,422)     (2,153)
Total creditors falling due               (185,913)       (311,662)   (109,904)
within one year

Net current (liabilities) /               (103,582)       (225,037)      4,569
assets

Total assets less current                  315,393          20,057     353,060
liabilities

Creditors: amounts falling due after more
than one year
Loans and other borrowings                  (4,354)         (4,527)     (4,402)
Provisions for liabilities                    (270)           (739)       (680)
and charges
Deferred income                                (27)            (53)        (42)

Net assets                                 310,742           14,738    347,936

Capital and reserves
Called-up share capital                      42,637          15,000     42,637
Share premium                               307,933             633    307,933
Profit and loss account                     (39,212)           (822)    (2,422)
Shareholders' funds                         311,358          14,811    348,148
Equity minority interest                       (616)            (73)      (212)
Capital employed                            310,742          14,738    347,936

Equity Shareholders' funds                  283,981          14,811    322,021
Non equity Shareholders'                     27,377               -     26,127
funds
Total Shareholders' funds                   311,358          14,811    348,148

The Notes on pages 11 to 13 form part of these Accounts.

Approved by the Board on 7 November 2000 and signed on its behalf by

William Allan     Ian Russell

Chief Executive     Chairman

Thus plc

Group Cash Flow Statement

for the six months ended 30 September 2000
                                               First        First         Full
                                                half         half         year
                                              2000-01       1999-00     1999-00
                                  Notes        £'000        £'000        £'000

Cash inflow / (outflow) from
continuing operating
activities                          7         10,677       (8,619)      (2,331)
Returns on investments and                    (1,448)     (10,972)     (10,357)
servicing of finance
Taxation - group relief received                   -           15        6,225
Free cash flow                                 9,229      (19,576)      (6,463)
Capital expenditure and financial           (113,793)     (44,241)    (124,481)
investment
Cash flow before acquisitions               (104,564)     (63,817)    (130,944)
Acquisitions *                                (1,000)      (1,000)      (1,000)
Cash flow before management of              (105,564)     (64,817)    (131,944)
liquid resources
Management of liquid resources                24,931            -      (29,533)
Cash outflow before financing                 80,633)     (64,817)    (161,477)
Financing                                     81,857       65,768      163,420
Increase in cash in the period      8          1,224          951        1,943

Free cash flow represents cash flow from continuing operating activities after
adjusting for returns on investments and servicing of finance and taxation.

* There were no acquisitions in any of these periods. The cash outflow in
respect of acquisitions represents payments of deferred considerations.



Reconciliation of Net Cash Flow to Movement in Net (Debt) / Funds

for the six months ended 30 September 2000
                                                 First        First        Full
                                                  half         half        year
                                                2000-01       1999-00   1999-00
                                    Note         £'000        £'000       £'000

Increase in cash in the period        8          1,224          951       1,943
Cash (inflow) / outflow from          8         (81,857)     (65,768)   171,517
(increase) / reduction in debt
Cash (inflow) / outflow from
(decrease) / increase in liquid
resources                             8         (24,931)          -      29,533
Change in net (debt) / funds          8         (105,564)    (64,817)   202,993
resulting from cash flows
Other non-cash movements                             -       56,188      55,192
Movement in net (debt) / funds in               (105,564)    (8,629)    258,185
the period
Net funds / (debt) at beginning of    8         24,502     (233,683)  (233,683)
the period
Net (debt) / funds at end of the      8         (81,062)   (242,312)     24,502
period

The Notes on pages 11 to 13 form part of these Accounts.

Thus plc

Notes to the Accounts

for the six months ended 30 September 2000


1     Basis of preparation

      These interim Accounts have been prepared on the basis of accounting
      policies consistent with those set out in the Annual Report and Accounts
      for the year ended 31 March 2000.

      The interim Accounts are unaudited but have been formally reviewed by the
      Auditors and their report to the company is set out on page 14.

      The information shown for the year ended 31 March 2000 does not
      constitute statutory Accounts within the meaning of Section 240 of the
      Companies Act 1985 and has been extracted from the full Accounts for the
      year ended 31 March 2000 filed with the Registrar of Companies. The
      report of the auditors on those Accounts was unqualified and did not
      contain a statement under either Section 237 (2) or Section 237 (3) of
      the Companies Act 1985.


2     Segmental reporting

      Turnover has been analysed below between Internet and interactive
      services, data & telecoms services, and contact centre services. The
      directors consider these to be the same class of business and accordingly
      no segmental analysis of operating loss or net assets has been given.


                                    First half       First half       Full year
                                       2000-01          1999-00         1999-00
                                         £'000            £'000           £'000
Turnover analysis
Internet & interactive                  48,842           56,481         109,099
services
Data & telecoms                         41,893           32,388          78,664
services
Contact centre services                 13,130           12,274          29,140
                                       103,865          101,143         216,903

Turnover by origin
United Kingdom                         101,154           98,860         212,419
Europe                                   2,711            2,283           4,484
                                       103,865          101,143         216,903

Turnover by destination
United Kingdom                         100,917           98,340         211,609
Europe                                   2,948            2,803           5,294
                                       103,865          101,143         216,903


3     Exceptional item

      The exceptional charge that arose in the six months to September 1999, of
      £43,467,000, related to the costs arising as a result of the Company's
      decision to withdraw from the use of fixed radio access technology,
      including a provision for impairment of assets of £40,467,000. The
      provision for impairment comprised £20,405,000 in respect of the fixed
      radio access licence, £18,094,000 in respect of plant and equipment and 
      £1,968,000 in respect of stocks.




Thus plc

Notes to the Accounts

for the six months ended 30 September 2000


4     Taxation

      No taxation charge is required for the period due to the availability of
      taxation losses. No provision for deferred taxation is considered
      necessary at 30 September 2000, since future taxation depreciation is
      expected to exceed accounting depreciation and therefore no deferred
      taxation liabilities are expected to crystallise in the foreseeable
      future.

      The UK corporation tax credit for the first half 1999-00 and the full
      year 1999-00 represents a combination of the taxation charges and
      credits attributable to the ScottishTelecom Businesses in respect of the
      period up to 30 September 1999. As a result of the surrender of tax
      losses for the period up to 30 September 1999 to ScottishPower, the only
      tax losses available to offset taxable income in future years are those
      arising since 1 October 1999.


5     Loss per ordinary share

 (a)  Loss per ordinary share has been calculated in accordance with FRS 14
      'Earnings per Share' for all periods by dividing the loss for the
      period, after non equity appropriations, by the weighted average number
      of ordinary shares in issue during the period, based on the following
      information:-
                           First half             First half         Full year
                              2000-01                1999-00           1999-00
                                £'000                  £'000             £'000
Loss for the period          (38,116)               (55,083)          (57,823)
after non equity
appropriations
Basic weighted
average share                 701,315                600,000           640,951
capital (number of
shares, thousands)
Diluted weighted
average share                 701,315                600,000           640,951
capital (number of
shares, thousands)

The basic weighted average share capital excludes shares held by the Company
under Trust in connection with the Employee Share Schemes. The impact of the
share options is antidilutive and has therefore been excluded from the
calculation of diluted weighted average share capital.

 (b)  The calculation of loss per ordinary share, on a basis which excludes
      the exceptional item, is based on the following adjusted losses:
                           First half         First                  Full year
                                               half
                              2000-01        1999-00                 1999-00
            Note                £'000         £'000                   £'000
Loss for                     (38,116)        (55,083)                (57,823)
the
period
after non
equity
appropriations
Adjusting     3                     -        43,467                   43,467
item -
exceptional
item
Adjusted                     (38,116)       (11,616)                 (14,356)
loss

      Adjusted loss per ordinary share has been presented in addition to loss
      per ordinary share calculated in accordance with FRS 14 in order that
      more meaningful comparisons of financial performance can be made.

      The adjusting item relates to the exceptional charge that arose as a
      result of the Company's decision to withdraw from the use of fixed radio
      access technology (Note 3).

6     Appropriations - non equity

                                  First       First                  Full year
                                   half        half
                                2000-01      1999-00                  1999-00
                                  £'000       £'000                    £'000
Appropriations: -

Cumulative
participating
non
redeemable
preference
shares

10%                               1,250           -                    1,127
Cumulative
preferential
appropriation


Thus plc

Notes to the Accounts

for the six months ended 30 September 2000
6     Appropriations - non equity continued

      In accordance with the provisions of FRS 4, the cumulative participating  
     non redeemable preference shares have been classified as non equity and    
    the Company has, therefore, appropriated through the profit and loss        
   account an amount equal to the preference share dividends for the period.    
  As the Company  did not have sufficient distributable reserves in order       
 to pay such preference share dividends, the amount was credited back in        
the profit and loss account reserve. This amount has been included in the      
balance of non equity interests on the face of the Balance Sheet.

7     Reconciliation of operating loss to net cash inflow / (outflow) from
      continuing operating activities
                                           First         First        Full
                                            half          half        year
                                          2000-01        1999-00    1999-00
                                           £'000         £'000       £'000
      Operating loss                      (35,629)        (6,807)    (8,958)
      Depreciation of tangible fixed       17,696         11,932     21,968
      assets
      Amortisation of intangible fixed        653            566      1,247
      assets
      Loss on disposal of tangible fixed      438            245         71
      assets
      Release of government grant             (15)           (18)       (29)
      deferred income
      Movements in provisions for            (410)          (722)      (781)
      liabilities and charges
      (Increase) / decrease in stocks        (590)        (5,576)       793
      Decrease / (increase) in debtors       8,551        (7,628)    (17,520)
      Increase / (decrease) in creditors    19,983          (611)        878
      Net cash inflow / (outflow) from      10,677        (8,619)     (2,331)
      continuing operating activities

8     Analysis of net (debt) / funds
                                                                                
                                                                      At 30
                                                   At 1            September
                                                  April
                                                   2000   Cashflow   2000
                                                  £'000      £'000  £'000
      Cash at bank and                            1,524         668     2,192
      in hand
      Overdrafts                                  (556)         556         -
                                                   968        1,224     2,192

      Loan notes due                            (1,385)      (1,425)  (2,810)
      within one year
      ScottishPower loan                              -     (80,600) (80,600)
      account - due
      within one year
      Finance leases                            (4,614)         168   (4,446)
                                                (5,999)     (81,857) (87,856)

      Funds deposited                            29,533     (24,931)   4,602
      with ScottishPower
      Total                                      24,502    (105,564) (81,062)

9     Contingent liabilities

      There have been no material changes to the Group's contingent liabilities
      disclosed in the Annual Report and Accounts for the year ended 31 March   
     2000.


10         Ultimate holding company

      Thus plc is a majority owned subsidiary of Scottish Power UK plc which    
     is, in turn, a wholly owned subsidiary of Scottish Power plc.

      Copies of the ultimate holding company's consolidated Interim Report and
      Accounts may be obtained from The Secretary, Scottish Power plc, 1        
     Atlantic Quay, Glasgow, G2 8SP.


Thus plc

Independent review report to Thus plc



Introduction

We have been instructed by the Company to review the financial information set
out on pages 7 to 13 and we have read the other information contained in the
interim report for any apparent misstatements or material inconsistencies with
the financial information.

Directors' responsibilities

The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by the directors. The Listing
Rules of the Financial Services Authority require that the accounting policies
and presentation applied to the interim figures should be consistent with
those applied in preparing the preceding Annual Accounts except where any
changes, and the reasons for them, are disclosed.

Review work performed

We conducted our review in accordance with guidance contained in Bulletin 1999
/4 issued by the Auditing Practices Board. A review consists principally of
making enquiries of management and applying analytical procedures to the
financial information and underlying financial data and, based thereon,
assessing whether the accounting policies and presentation have been
consistently applied unless otherwise disclosed. A review excludes audit
procedures such as tests of controls and verification of assets, liabilities
and transactions. It is substantially less in scope than an audit performed in
accordance with Auditing Standards and therefore provides a lower level of
assurance than an audit. Accordingly we do not express an audit opinion on the
financial information.

Review conclusion

On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 September 2000.


PricewaterhouseCoopers

Chartered Accountants

Glasgow

7 November 2000


                                                                                
                                                       

a d v e r t i s e m e n t