These results mark the end of a year of challenge and achievement for Thus

Willaim Allan, chief executive

"We expect trading conditions to remain challenging," chief executive William Allan said.

The "greater uncertainty" facing many rivals could "affect overall confidence in the alternative carrier sector", he added.

But Mr Allan said Thus was set to meet its targets, thanks to success both in gaining new customers and increasing revenues from existing clients.

"Given... the confidence our customers have shown in our ability to develop and manage high quality services UK-wide, we remain confident of the trajectory of our business," he said.

The Glasgow-based firm, newly demerged from Scottish Power, was continuing to target turnover growth of 20-25%.

"We remain resolute in our focus to deliver the strong growth we promised," Mr Allan said.

'Prudent' accounting

The pledge came as Thus reported a profit of �3.1m for the year to the end of March, compared with a loss of �24.6m a year before.

The figure was reported under a new accounting technique Thus has adopted to distance itself from the concerns which have surrounded bookkeeping methods adopted by some other telecoms companies.

Firms including Global Crossing, WorldCom and Cable & Wireless have been forced to defend so-called IRU revenues gained through capacity swaps.

"Thus adopts very conservative accounting policy for IRU transactions," Monday's statement said.

As calculated by the previous accounting method, Thus's profits came to �19.8m for the year, ahead of City forecasts averaging �11.2m.

This shares rose 5% in early trade on Monday, before dropping back to 18.75p, down almost 4%, by lunchtime.

Mixed fortunes

The results statement covered a period in which Thus ditched its Scottish residential telephone service to increase its focus on business customers.

Clients gained included household products giant Unilever and photo shop chain Jessops.

In internet services too, the corporate market proved the most lucrative, with sales up by more than one third to �37.6m.

Subscription revenues from traditional, dial-up internet services fell by 18% to �20.8m.

"These results mark the end of a year of challenge and achievement for Thus," Mr Allan said.

Thus was founded by Scottish Power in 1994, and floated in 1999 before being fully demerged last month.