Pre-tax profits at Eircom owner Valentia Telecommunications grew by 36 per cent year-on-year to €34 million in the three months to June 30th, according to accounts the firm filed yesterday.
The accounts, published to the holders of the €1 billion in bonds issued by the firm last month, show turnover in the second quarter of the year fell 3 per cent to €410 million from €424 million in the same period last year.
The fall in sales reflected a depressed fixed-line market. There was a similar drop in the cost of sales, which boosted gross profits slightly from €293 million in the second quarter of 2002 to €297 million this year. Operating costs slipped from €161 million to €159 million, reflecting the company's reduced headcount.
There was also a €4 million drop in the provision made for depreciation from €97 million to €93 million, leaving the firm with operating profits for the quarter of €35 million, up from €25 million during the comparable period last year.
But there was an exceptional charge of €1 million against this, which arose from the sale of its Eircom retail network and its Eircom Response premium telephone line service. This left the company with pre-tax profits for the quarter of €34 million, €9 million or 36 per cent ahead of last year's return for the same period of €25 million.
The company increased capital expenditure year-on-year. The accounts show it spent €69 million repairing and renewing its existing network, compared with €60 million last year. But a €50 million loan to the Eircom employee share option trust made during the second quarter of 2002 is included under the capital expenditure and financial investment heading, bringing the total to €110 million. The trust repaid this loan last month.
The firm repaid €113 million of outstanding long-term debt during the quarter, leaving it with a long-term liability to its bankers of €2.025 billion. In addition, it had short-term debts of €92 million and a €1 million overdraft.
But the firm refinanced last month, raising €1 billion through a bond issue. Of this, a €512 million dividend was paid to shareholders, including €20 million to Sir Anthony O'Reilly, who owns 5 per cent of Valentia. It also entered into a new €1.4 billion credit deal, and drew down €1.1 billion of this facility once the refinancing was complete.
Before the refinancing deal, Sir Anthony and the other Valentia shareholders, Soros Private Equity and Providence Private Equity, transferred their interests to Valentia Holdings Ltd, a UK-based shelf firm. Valentia Telecommunications was then registered as an unlimited public company. The firm could not comment on the accounts yesterday as it is in a "bond registration period", which is similar to the "closed period" enforced by stock exchange rules.
It is also obliged to produce statutory accounts under Irish company law, and a set of regulatory accounts for communications regulator, ComReg. These quarterly accounts will ultimately form part of the statutory accounts.
