TELECOMPLUSPLCTrading as the Utility Warehouse, Telecom Plus PLC provides a range of services to households and small to medium sized businesses. The Company is engaged in the supply of fixed telephony, mobile telephony, gas, electricity and Internet services through independent distributors. I have a holding in my growth portfolio (epic code: TEP).
Telecom Plus issued a trading update following their interim close and continue to perform with their "direct sale" method of utility supply. They mention that during the second quarter, customer numbers were up by 20,536 and service numbers up by 101,447 representing annualised growth rates of 17% and 24% respectively; for the six months in total growth was 50% and 54% respectively.
Notwithstanding the extra short-term costs associated with their organic growth, and from starting to implement the changes associated with Ofgem's Retail Market Review, they anticipate that their interims will show pre-tax profits and EPS that are modestly ahead of the figures for the comparable period last year.
They will also increase the interim dividend by 23% to 16p per share, in line with their intention of achieving a more equal balance between the interim and final payments each year. This implies a full year dividend of about 34-36p, market expectations are for 36p.
The Board remains comfortable with consensus market expectations, which for EPS is 44.6p. Cash generation during the period has been in line with management expectations, and their reported net cash balance at 30 September 2013 will show a small overdraft position, compared to a net cash position of £3.6m at 30 June 2013. This is a strong level of cash flow considering almost £13m was paid out for the final dividend on 2 August.
The SP is up over 5% at 1307p on this announcement and, on a P/E of 27.8x 2014 and 24x 2015 earnings, the stock is priced for perfection - so any set-back will have a disproportionate effect on the SP.
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