TalkTalk's response to its critics has been to boost profits, cut costs and, crucially, dramatically improve customer service. Moreover, chief executive Dido Harding has pushed through a chunky dividend hike and plans to lift the payout by at least another 15 per cent next year.
The group gained 77,000 new broadband users in the year, while an improved product mix has lifted average revenue per user to £25.6 from £25 last year. The cash profit margin has grown to 19.3 per cent from 15.6 per cent – largely reflecting ongoing cost savings, which have shaved £23m off costs so far, with a further £27m-£32m to be realised over the next two years. Encouragingly, Ms Harding expects margins to rise to between 20-21 per cent in 2013. TalkTalk's infamous reign as the worst customer service provider in this sector could be set to come to an end, too. The group recorded a 31 per cent contraction in calls to its contact centres and a 36 per cent fall in complaints.
Broker Daniel Stewart expects pre-tax profit for 2013 of £229.6m, giving EPS of 18.4p (2012: 207m/17.4p).
TALKTALK TELECOM (TALK) | ||||
|---|---|---|---|---|
| ORD PRICE: | 152p | MARKET VALUE: | £1.39bn | |
| TOUCH: | 152-153p | 12-MONTH HIGH: | 158p | LOW:116p |
| DIVIDEND YIELD: | 5.9% | PE RATIO: | 10 | |
| NET ASSET VALUE: | 49p* | NET DEBT: | 97% | |
| Year to 31 Mar | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 1.42 | 20.0 | na | nil |
| 2009 | 1.39 | 115 | na | nil |
| 2010 | 1.69 | 11.0 | -0.3 | 4.65 |
| 2011 | 1.77 | 57.0 | 3.9 | 5.60 |
| 2012 | 1.69 | 127 | 15.6 | 9.00 |
| % change | -5 | +123 | -300 | +61 |
Ex-div: 4 Jul Payment: 3 Aug *Includes intangible assets of £682m, or 75p per share | ||||
