Despite a sweltering summer that dampened UK energy demand, Telecom Plus (TEP) grew its customer base by 7 per cent to over 565,000. That helped the communications and utilities supplier increase its operating profit by nearly a third to £14.6m.
Telecom Plus trades as Utility Warehouse, providing gas, electricity, broadband and both fixed-line and mobile telephony to businesses and consumers. Its eclectic product range remains popular - about half of its new customers applied for at least four services, and underlying churn fell below 1 per cent a month. The group also benefited from the wholesale energy-supply arrangements it struck with npower in December. That served to widen its gross margin by almost four percentage points to 19.8 per cent.
Unlike many of its telco peers, Telecom Plus is shying away from the "confusing", ultra-competitive TV market. Instead, it plans to provide home and motor insurance and boiler cover, and to break into the water supply market once regulators open it up to competition in 2017.
Telecom Plus renegotiated its loan facility with Barclays, giving it scope to raise its dividend payout ratio from 63 to 75 per cent of adjusted EPS. It expects to pay out 40p a share this year, giving a prospective yield of 3.1 per cent.
Broker Peel Hunt expects pre-tax profits of £63m, giving EPS of 63.7p, up from £44.6m and 49.7p.
| TELECOM PLUS (TEP) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,298p | MARKET VALUE: | £1.0bn | |
| TOUCH: | 1,298-1,299p | 12-MONTH HIGH: | 1,959p | LOW: 1,169p |
| DIVIDEND YIELD: | 2.9% | PE RATIO: | 33 | |
| NET ASSET VALUE: | 251p* | NET DEBT: | 42% | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 246 | 12.6 | 14.3 | 16 |
| 2014 | 267 | 15.4 | 14.4 | 19 |
| % change | +9 | +22 | +1 | +19 |
Ex-div: 27 Nov Payment: 15 Dec *Includes intangible assets of £219m, or 273p a share | ||||
