Telecom Plus sees full-year profits 'slightly ahead' of market expectations

Telecom Plus said on Tuesday that profits for the full year are expected to be "slightly ahead" of current market expectations as it reported a rise in profit and revenue for the first half.

In the six months to the end of September, adjusted pre-tax profit was up 6% to £25.7m on revenue of £299m, up from £291m in the first half of last year. Adjusted earnings per share rose 6.1% to 26p and the company - which owns and operates the Utility Warehouse brand - lifted its interim dividend by 4.3% to 24p per share.

Customer numbers were up by 5,265 in the period to 613,067, while total services supplied increased by 36,348 to 2,325,266.

The group said it now reckons full-year pre-tax profits will be slightly ahead of current market expectations of £51.4m.

Chief executive Andrew Lindsay said he welcomes the proposed legislation to introduce a price cap on standard variable tariffs, adding that this will create "a fairer energy market" in which the benefits of competition are felt by all consumers rather than being restricted to those who switch on a regular basis.

"Service growth during the first half of the financial year was at the lower end of management expectations, albeit that revenues and profits both reached record levels. We are optimistic that the proposed SVT price cap will materially improve our competitive position, and will act as the catalyst that takes our growth rates back towards the double-digit levels we have historically achieved," he said.

Telecom Plus noted that following the decision to retain the majority of the proceeds from the sale of Opus earlier this year, it now has "a particularly strong" balance sheet, with capital in excess of its current operating requirements.

"This will remain the case until these funds are either utilised to take advantage of an appropriate strategic opportunity, or are instead returned to shareholders. The board is keeping this situation under review, and in the meantime, in order to prevent the level of excess capital continuing to increase, intends to use any retained profits from this and any future financial periods to buy back shares in the market."

RBC Capital Markets said: "The fact management has suggested the possibility of a share buyback demonstrates the company consider their shares are good value. With the possibility of an energy price cap ahead, we believe TEP is well positioned. The strong sell off from the last few days creates a good entry point, in our view."

At 1000 GMT, the shares were up 2.8% to 1,193p.