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Telecom Plus 'in a strong position' as record energy switching continues

The multi-utility provider expects the energy price cap to fall back by around £75 this October, partially reversing the recent £125 rise

light bulb, denoting electricity
Telecom Plus's customer numbers grew 4% and service numbers swelled 8.2%

Telecom Plus PLC (LON:TEP) said it expects growth and customer and service numbers to improve in the new financial year as it posted final results in line with expectations.

On revenue up 1.5% to £804.4mln in the 12 months to 31 March, the multi-utility supplier generated adjusted profit before tax up 3.7% to £56.3mln. It had indicated in an April pre-close statement that PBT would be around £56mln, at the bottom of its guided range.

READ: Telecom Plus shares fall as energy price cap and warm winter hit profits

Adjusted earings per share increased 7.1% to 59.0p, boosted by last summer’s share buyback, while a proposed 27p final dividend will mean the total dividend will be increased 4% to 52p per share.

The group, which trades under the Utility Warehouse brand with some customers working as 'partners' to recruit new customers, has seen growing momentum in the past year, said chief executive Andrew Lindsay.

"Partner confidence built steadily during the course of the year; this manifested itself in higher levels of activity and an acceleration in the numbers of new partners joining the business, which in turn drove faster growth in both customer and service numbers.”

After customer numbers grew 4% to 635,039 and the number of services being received swelled 8.2% to 2.5mln, following a prior year that saw 0.5% and 2.3% growth respectively, Lindsay said the board expected the momentum to continue, with growth in customer and service numbers for the current year reaching reaching 5% and 10% respectively.

In a strong position

With low leverage and strong cash flow, Lindsay said the contrast to the majority of other energy suppliers, “puts us in a strong position to take advantage of a challenging retail marketplace” as record numbers of households are switching energy suppliers but the Utility Warehouse churn rate has fallen.

Record levels of energy switching have followed the government's launch of the energy price cap, which Telecom Plus expects to fall back by around £75 on 1 October, partially reversing the recent £125 rise, as forward energy commodity prices have been below the average level since February.

Lindsay said the combination of higher partner confidence, continuing steady growth and improving gross margins means it expects adjusted profits before tax to increase to between £60mln-£65mln for the current year, with a 10% increase in the total dividend to 57p per share.

Shares in Telecom Plus were up 2.5% to 1,498p in early trading on Tuesday.

Quick facts: Telecom Plus

Price: 1550 GBX

Market: LSE
Market Cap: £1.22 billion

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