Telecom Plus PLC (LON:TEP) shares were on the slide on Tuesday as the utilities firm warned that “uncertainty” over its bad debt outlook and the potential impact of coronavirus on the economy meant the possible outcomes for its 2021 financial year were “much wider than usual”.
In a trading update for the year ended 31 March, the FTSE 250 group, which trades under the Utility Warehouse brand, added that it expected its profit outturn for the current year to be “marginally below” that for the year just ended.
This was despite what Telecom Plus said was a “record year” for revenues and profits, although the adjusted pre-tax profit figure was still expected to be towards the lower end of previous guidance at around £60mln compared to £56.3mln in 2019 as a result of lower retail energy prices, higher regulatory costs and initial extra costs associated with the coronavirus pandemic.
The company also confirmed plans to pay a 57p total dividend for the prior year provided there was not a “significant increase in the level of non-payment by customers over the coming months”.
Chief executive Andrew Lindsay added that the company’s “robust balance sheet, clearly differentiated business model, and strong underlying profitability” put it in a “uniquely strong position” relative to their competitors and that the firm was entering a period where its home-based income opportunity was “expected to flourish” and customers stayed indoors during the pandemic lockdown.
In a note, analysts at the company’s house broker Peel Hunt retained their ‘buy’ rating and 1,350p target price, saying that while they expected the present situation to put the business models of a number of sector payers under “severe strain”, they predicted Telecom Plus will “come through this in excellent shape”.
Shares in the company fell 1.4% to 1,226.6p in early deals.