Telecomplus interims

TELECOMPLUSPLC

Trading 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 announced their interims today showing revenue up 8.7% to £267.3m and adjusted PBT up 55.5% to £21.3m.  Adjusted EPS was up 40.6% to 21.8p and reported EPS up 1.4% to 14.2p, with the interim dividend being increased by 18.8% to 19p.

Despite Operating cash flow being up substantially by 63%, free cash flow was under pressure due to capital expenditure on refurbishing their new HQ, so FCF saw a decrease from £6.9m last year to £2.1m.  After receiving £4.1m in dividends from their investment in Opus and paying out the final dividend of £15.1m, net debt increased by £9.7m to £63.3m (£84.8m if you include the £21.5m of deferred consideration due to npower in December 2016).

With respect to the outlook management stated that "...We are confident that we will deliver record revenues, profits, and earnings per share for the current year. This is reflected in the 19% increase we are making in our interim dividend payment, and our intention to pay a total dividend of 40p for the full year..."

Management, in referring to the medium term, said they intend to extend their current range of services into a number of complementary areas, including insurance (eg: household and motor policies) and the provision of boiler cover.  I find this troubling, that they wish to move into the provision of insurance, when by their own admission they have such a small share of the market for their existing services and insurance brokerage (I'm assuming they don't intend to underwrite) is a very different business model.

So still on track to produce adjusted PBT of £63m, which would be impressive growth of almost 50%.