The energy market is in a state of flux, with significant price deflation taking its toll on a number of service providers. Telecom Plus (TEP) hasn't escaped unscathed. It is locked in a 20-year electricity and gas supply contract with Npower, which has left it exposed as prices have moved lower. But chief executive Andrew Lindsay is confident a turn in the cycle is "inevitable", and once it happens Telecom Plus is well positioned to benefit from higher revenue and margins.
Not that the company isn't weathering the storm well already. During the past financial year revenue grew 2 per cent, while better gross margins helped push adjusted pre-tax profit up 4.2 per cent to £54.4m. That said, moving into larger offices and £2.5m in share incentive scheme charges left statutory profit lower. But the group remains focused on selling to new, 'high-quality' customers, half of whom are opting for a full-range package including not just energy, but broadband, landline and mobile services as well.
Analysts at Peel Hunt expect pre-tax profit of £57m for the year ending March 2017, giving EPS of 58.5p, compared with £54.4m and 56.4p in FY2016.
| TELECOM PLUS (TEP) | ||||
|---|---|---|---|---|
| ORD PRICE: | 969p | MARKET VALUE: | £775m | |
| TOUCH: | 965-969p | 12-MONTH HIGH: | 1,215p | LOW: 791p |
| DIVIDEND YIELD: | 4.7% | PE RATIO: | 24 | |
| NET ASSET VALUE: | 248p* | NET DEBT: | 28% | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 471 | 30.7 | 33.8 | 27.0 |
| 2013 | 602 | 34.6 | 38.7 | 31.0 |
| 2014 | 660 | 34.7 | 37.7 | 35.0 |
| 2015 | 729 | 42.1 | 40.6 | 40.0 |
| 2016 | 745 | 40.7 | 39.8 | 46.0 |
| % change | +2 | -3 | -2 | +15 |
Ex-div: 7 Jul Payment: 29 Jul *Includes intangible assets of £202m, or 253p a share | ||||
