British utility services group Telecom Plus posted a lower first-half profit on increased costs but said it was on target to report both strong revenue and dividend for the full year.

The company, which supplies gas, electricity, fixed-line telephony and broadband under the Utility Warehouse trading name, said second-half results would benefit from increasing customer numbers and the rise in energy consumption.

Finance Director Chris Houghton told Reuters that the company was comfortable with full-year pretax profit outlook of 16.5 million pounds ($27.53 million) to 17 million pounds on revenue of 350 million pounds to 360 million pounds.

Last year, Telecom Plus posted a pretax profit of 22.5 million pounds on revenue of 278.3 million pounds.

The company, which provides a range of household services on a single monthly bill, gets about 80 percent of its revenue from low-margin energy business, while the rest comes from telephony.

Telecom Plus, whose first-half gross margin was about 18 percent, expects it to settle at about 14 percent to 15 percent for the full year on increased demand for energy utilities, FD Houghton said by phone.

The company reiterated its intention to pay a total dividend of 22 pence for the current year, up from last year's 17.5 pence.

Customer numbers rose to over 317,000 in the first half and the company targets a million customers in the medium term.

HIGHER COSTS

Pretax profit was 5.8 million pounds for the six months ended Sept. 30, compared with 9.8 million pounds in the year-ago period.

The company said its performance was hurt by higher customer costs resulting from faster growth, and a sharp reduction in financial income, partly due to lower interest rates.

Revenue rose 40 percent to 124.8 million pounds.

Telecom Plus' shares have gained 12.1 percent in the last three months, outperforming a 5.3 percent rise in FTSE Small Cap Index .FTSC.

They were trading down 1.5 pence at 312.5 pence at 1241 GMT on Wednesday on the London Stock Exchange.

($1=.5993 Pound)

(Reporting by Purwa Naveen Raman in Bangalore; Editing by Vinu Pilakkott)