Thus buoyed as funding gap falls

THUS, the telecoms and internet service group controlled by ScottishPower, has been boosted by a promise that the funding gap between now and break-even is lower than originally thought, despite growing pre-tax losses.

'The market may be impatient but we have always said that we would announce our new financing arrangement before the end of the financial year,' said chief executive Bill Allan. 'We now need well south of £100m to fund us until we reach positive cash flow,' he added. The shares rose 2 1/2p to 38p.

Thus is 50.1% owned by ScottishPower, which has also provided a £320m funding facility. It had been reckoned to need up to £150m to take it through to its 2004-05 financial year and break even.

Refinancing is expected to include third-party money but will not involve ScottishPower reducing its stake because that would trigger a capital gains tax charge of about £500m.

Allan said the sale of consumer businesses to iTouch and greater synergies achieved through putting together its three core business services had helped cut the funding gap. He said that by delaying the refinancing, the group had not only cut the amount it needed to raise but should also have to pay less for it. Thus also said it had won a major contract to supply voice and data services to one of its main rivals, BT Ignite.

Revenues rose by 36% to £140.8m in the six months to the end of September. Losses before interest, tax, depreciation and amortisation were cut from £17.3m to £1.8m.

But the soaring interest charge, up from £1.64m to £9.97m, pushed pre-tax losses up from £37.3m to £42.7m and losses per share from 3.5p to 6.33p.