Organic growth rate picks up at Telecom Plus

5th Oct 2011 08:29

Telecom Plus, the utility services provider that trades under the Utility Warehouse brand, saw organic growth accelerate in the second quarter, and expects its half-year figures will be significantly up on last year.This spells good news for shareholders, who can expect a significant increase in the interim divided as a result. Customer numbers during the second quarter of the firm's financial year (which runs to the end of March) rose at an annualised rate of 15% to 392.7m from the end of March 2011 figure of 371.4m. The proportion of new customers taking at least four services has almost doubled since the year-end, to an average of around 40% over the last few months, the company said.Service numbers in the second quarter increased at an annualised rate of 20% to 1.27m from 1.17m at the end of March. The average number of services being taken by each member continued to rise during the first half, reflecting the firm's focus on gathering home owning customers who take a combination of energy and communications services. "Notwithstanding the extra short-term costs associated with adding more new customers than we were previously achieving, the board remains comfortable with consensus full year market expectations for both earnings and dividends," the company statement said.Market consensus for full-year profit before tax is £29.9m, while the full-year dividend pay-out is expected to be 25.4p.Distributor numbers continue to grow, with more than 1,000 new distributors signing up during each of the last six months; this brings the total number of distributors to 34,496 (31 March 2011: 31,459). The company is now cash positive, having had debt of £13.1m at the end of March. Cash at the end of September stood at around £5m, While the company's debt position has improved, so has its bad debts position, with the group seeing a significant reduction in the proportion of delinquent customers within its customer base since last Autumn. The group is not counting its chickens, however, given the current economic climate, and has pledged to keep bad debt management as a high priority for the foreseeable future.Plans to beef up the group's online presence have not worked out as well as hoped, and the relaunch planned for the summer did not take place. "However, we have recently completed field trials and are confident that it will be launched shortly," the group said. The share price of Telecom Plus was trading up 6.5p at 716.5p shortly after the trading update. --jh