Utilities services provider Telecom Plus is dangling the prospect of a sharply increased interim dividend in front of shareholders' eyes after a first half surge in profits.

With the group's business proving to be less seasonal these days the group is moving towards a more even split between its interim and final dividend payments each year.

The group said the positive trends seen in the first quarter of its financial year continued into the second quarter.

Customer numbers at the end of September had increased to 438,146 from 415,489 at the end of March, while service numbers jumped to 1,488,745 from 1,381,023, representing annualised growth of 11% and 16%, respectively.

The number of residential Club customers taking at least four services has exceeded 55% in each of the last six months, taking Telecom Plus's installed base of Gold Status members (those with at least four major services) up to 37% from 34% at the end of March. This is helping to drive the average number of services taken by each residential Club customer to a record high of 3.72, up from 3.63 at the end of March.

What the group calls "the continuing trend towards a higher quality customer base" - i.e. the tendency of customers to take more services from the company - is reducing both customer churn and payment delinquency levels; "churn" is industry terminology for customers moving on to another supplier.

Coupled with higher average revenues from each customer, the higher quality customer base can be expected to significantly enhance the profitability of the business in the years ahead, the group believes.

Distributor recruitment - the group's take on the Avon lady model - remains steady, with around 1,000 new distributors signing up during each of the last six months. As the wider economy remains under pressure, the group expects to see recruitment continuing at around this level over the medium term.

At the end of September the group had net cash of around £1m, similar to the level it had at the end of March, despite the company banging out £11.9m in dividends.

"We are confident that we can build upon this strong performance during the second half of the year, and meantime look forward to announcing record half yearly results in November," said Andrew Lindsay, Chief Executive Officer.

JH

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