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Reduced borrowing needs

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UK telco Thus has released a reasonably good set of results and set aside some people's fears of impending financial trouble but increased its pre-tax loss to £42.75 million from £37.27 million.

The company, which owns Demon Internet, reported increased sales for the six months to 30 September - up 36 per cent to £140.8 million; reduced loss before interest, tax etc of £1.8 million from £37.3 million but an increased loss thanks to a six-fold increase in interest costs.

The market was initially relieved that the company said things were looking good and it didn't expect to have to borrow such large sums of money (it was expected to need £140 million, that now looks like £90 million). Thus' £320 million overdraft facility should be enough to carry it through to 2003 and the company reckons will reach positive cash flow by 2004 or 2005. As such, share price went up slightly as the market opened but has since fallen.

Today Thus also announced deals to: supply BT Ignite with voice and data services; extra optical fibre for Linx; and the services and technology behind Amstrad's e-m@iler product (which isn't universally loved), when it is re-relaunched in the next couple of months.

"Thus continues to deliver on its promises," said William Allan, Chief Executive. "The first half of this financial year was marked by strong growth generated by our core business services... Our strategy, outlined at the time of flotation, to focus on delivering high quality reliable services to corporate and small-to-medium enterprise customers, is delivering results.

"During the year, we have successfully managed our transition from UK-wide geographic expansion to a more sharply focused sales and marketing led business [It got rid of its media sales business to iTouch last month for one]."

"With our core network complete, we have enhanced our sales and marketing and service development capabilities, winning new customers nationwide..." - okay, we'll stop it there.

Basically, Thus looks like it's making the best of a tough time. Waiting until 2004 or 2005 for positive cash flow is still going to worry many investors but if it keeps knocking out results like this, there shouldn't be too many problems. ®

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