Telecom Plus makes confident call for full year

Discount utility provider Telecom Plus is confident it will produce record profits for the full year on the back of strong interims.

For the six months ending September 30th, revenues were up 30% to £210m (2011: £161.7m), reflecting strong organic growth. Revenue growth was driven by the number of customers rising by 22,657 to about 0.44m, as well as an increase in the average number of services taken.

Pre-tax profits grew 8.7% to £12.1m (2011: £11.1m). A lower gross margin of 16.8% (2011: 21.1%) reflected the increased proportion of its total turnover related to lower margin energy services combined with the actions it took to make its customer proposition even more competitive.

The company anticipates that its full year gross margin will be comfortably within the 13% to 15% medium term range previously indicated. The reason for a lower margin during the second half is due to seasonal factors meaning that typically two thirds of its energy revenues fall within the second half.

Andrew Lindsay, Chief Executive of Telecom Plus, was very bullish on prospects for the full year: "The board has expressed confidence that we will deliver record turnover, profits and earnings per share for the full year; this is reflected in the 30% increase we are making in our interim dividend payment and in our intention to pay a total dividend of 31p for the full year."

Earnings per share rose 9.8% to 13.5p (2011: £12.3p), enabling the interim dividend to be increased to 30% to 13p a share (2011:10p).

Cash and equivalents at the period end fell to £0.7m from £5.3m at the same date the previous year. The company has no long-term debt.

"We anticipate steady cash generation over the coming months and a significant improvement in our net cash position at the end of our financial year," the group added.

CM