Telecom Plus holds on to its cash, for now

Executive chairman Charles Wigoder was keen to stress that the decision not to return the full amount to shareholders was not taken from a point of weakness. That's fair; with net cash, no debt and operating cash inflows of £43.4m reported in the period, the balance sheet is in good shape. He also suggested that "recent uncertainties may have created investment opportunities", in reference to the surprise outcome of the general election. "We've decided to keep our powder dry for the potential."

In spite of the buyback disappointment, there are many positives to take from these results. The number of service contracts increased by 5 per cent to 2.3m, with about half of the new customers taking the group's full suite of services - mobile and fixed telephony, broadband, gas and electricity. The long-term outlook is therefore encouraging as these customers have low churn rates. However, in the short term these customers bring higher initial costs (Telecom Plus installs their homes with free LED lightbulbs), meaning management and broker FinnCap expect adjusted pre-tax profits for the year to March 2018 to remain flat at £53m. Adjusted EPS is forecast to rise slightly from 53p to 53.8p.

Top-line forecasts are distinctly more impressive as the group is expected to benefit from a turnaround in the energy market. In these numbers electricity and gas sales fell 1 per cent and 3 per cent, respectively, against the backdrop of low energy prices in a fiercely competitive market. But the government's proposed cap on standard variable tariffs should benefit Telecom Plus, which already offers very low average prices and doesn't rely on hefty initial discounts to attract new customers.