Telecom Plus (TEP) - the low-cost alternative to the UK's ‘big six’ energy suppliers - is seeing demand for its bundled service offering soar.
In fact, the upstart utility group - which provides gas, electricity, fixed-line telephony, mobile and broadband internet services - grew adjusted pre-tax profit by 25 per cent in the year to end-March. That reflects a rising customer base and an initial contribution from two energy supply businesses, acquired from Npower last year. Despite the mild winter, nearly every key metric showed progress. For instance, customer churn fell, the average number of services taken by each customer rose, and there's surging interest from sales distributors.
So chief executive Andrew Lindsay is "comfortable" that the company will meet market expectations for a 50 per cent jump in adjusted pre-tax profit this year. This will allow Telecom Plus to repay a big chunk of its debt - acquired as part of the Npower transaction - and should also boost dividends. Finance director Chris Houghton told us that he expects further dividend increases of roughly 15-20 per cent each year.
Broker Peel Hunt expects adjusted pre-tax profit of £63m for 2015, giving adjusted EPS of 63.6p (from £43.5m/47.3p in 2014).
TELECOM PLUS (TEP) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,499p | MARKET VALUE: | £1.2bn | |
| TOUCH: | 1,497-1,504p | 12-MONTH HIGH: | 1,959p | LOW: 1,197p |
| DIVIDEND YIELD: | 2.3% | PE RATIO: | 38 | |
| NET ASSET VALUE: | 257p* | NET DEBT: | 26% | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 369 | 18.2 | 19.7 | 22 |
| 2011 | 419 | 27.5 | 30.1 | 22 |
| 2012 | 471 | 30.7 | 33.8 | 27 |
| 2013 | 602 | 34.6 | 38.7 | 31 |
| 2014 | 659 | 36.6 | 39.8 | 35 |
| % change | +9 | +6 | +3 | +13 |
Ex-div: 16 Jul Payment: 1 Aug *Includes intangible assets of £225m, or 281p a share | ||||
