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).
TEP issued an interim management statement today for the period of their 1st quarter to 30 June 2013. They stated that Customer numbers were up by 3.1% to
474,404 and number of services contracted were up 4.5 to 1,666,327, with the average number of services taken by residential Club customers
growing from 3.80 to 3.85 during the period.
Their mobile
business is growing particularly strongly, with annualised growth running at
more than 34%.
TEP is a highly cash generative business and during the quarter produced £2.8m, resulting in a net cash balance of £3.6m as at 30 June 2013.
The somewhat negative part of the statement appeared in the outlook as they predict that profits for the first half are expected to be modestly ahead of the
corresponding figures for last year. Although they do state that they expect record
figures for turnover, profits, earnings and dividends for the full year in line
with market expectations. Which should mean sales of £690m, EPS of 44.6p and dividends of 36p, so sales and EPS growing by 15% and dividends by 16%.
If you are rated at 36x historic earnings and 31x current year earnings and, you disappoint ever so slightly in the short-term, expect the market to punish the SP. Currently it is down almost 6%.
I sold 20% of my holding last week at 1360, as I thought they had become somewhat overvalued, a great growth story and much more to come, but the price is a little ahead of events.
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