Margins up at Telecom Plus

Utility services provider Telecom Plus saw profits shoot up by almost a third in the first half and has hiked its dividend by 25%, as promised.

Profit before tax came in at £11.1m in the six months to the end of September, a 31% rise on the £8.5m recorded year before. Earnings per share rose to 12.2p, from 9.4p in 2010.

The company said it would pay an interim dividend of 10p per share, up from 8p in 2010, in line with previous guidance.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

It intends to pay a total dividend of 27p for the current year. That commitment tallies with broker finnCap's forecast, an important point for what the broker regards as a "safe, healthy-yielding hold".

Telecom Plus said retail energy prices during the first half were broadly unchanged compared with the same period last year, while consumption was slightly lower than normal due to the particularly warm weather experienced during the spring.

"This had the effect of increasing our gross margin for the period, which also benefited from the impact of more favourable commercial terms which we managed to negotiate with a number of our key wholesale partners," it said.

The company, which trades under the Utility Warehouse brand, added that the second half of its financial year had started strongly, with retail energy prices increasing across the industry over the last few months, driven by rising wholesale costs.

"We took advantage of these changes to reposition ourselves more aggressively, by raising our own tariffs by less than most of our competitors," the firm said.

"As a result, we have seen an increase in our net growth to approaching 10,000 energy services per month."

MM