Telecom Plus PLC (LON:TEP) hiked its dividend by nearly 10% as a strong performance during the lockdown period helped deliver record sales in final results.
For the year ended 31 March, the utility services firm, which trades under the Utility Warehouse brand, reported an adjusted pre-tax profit of £60.8mln, 8% higher year-on-year, while revenues rose 8.9% to £875.8mln.
READ: Telecom Plus slides as it highlights ‘uncertainty’ over bad debt outlook amid coronavirus pandemic
The company said it had experienced “continued growth” in both members and its partners during the year, while services supplied increased by 6.4% to over 2mln.
Telecom Plus also said its membership quality had increased with over 30% of members taking energy, broadband and mobile services from the firm.
As a result of the performance, the company hiked its final dividend to 30p per share from 27p in 2019, taking the full year payout up 9.6% to 57p.
Into its current year, the company said recent trading since late April had been “encouraging”, with customer churn remaining “significantly below the elevated levels seen during the previous quarter”.
The firm said while the pandemic lockdown has caused a small reduction in its net customer base in April and May, this had now started to reverse with new partner recruitment running 40% ahead of the same period last year.
“These trends support our current expectation for a modest recovery in customer numbers over the coming months whilst the country remains in partial lockdown, with a gentle acceleration thereafter”, Telecom Plus said.
Looking ahead, the company said if social distancing restrictions continued to be progressively lifted and not retightened, they expected profits for its 2021 financial year will be “marginally below” the prior year, in line with guidance, while the full year dividend was expected to be maintained at 57p.
"Our results this morning show record sales, earnings and dividends, clearly demonstrating the resilience and strength of our business model. I am extremely pleased at how well our partners and Employees have adapted to the [coronavirus] environment, and the limited impact which this is having on our business”, said chief executive Andrew Lindsay.
"The strength of our balance sheet is in contrast to most of our competitors in the energy markets. This, combined with a highly motivated and growing Partner network, and a significant fall in the Ofgem price cap expected this autumn, means that we look forward to the year ahead with considerable confidence", he added.
In a note on Tuesday, analysts at the company’s house broker Peel Hunt hiked their target price for Telecom Plus to 1,450p from 1,350p and retained their ‘buy’ rating, saying they thought the company was “well positioned to thrive in the current environment, with the potential for a material increase in partner recruitment and activity”.
“We see Telecom Plus as being in an increasingly strong position, with a low-cost recruitment model, healthy profits and a strong balance sheet. Importantly the company also has introduced a competitive energy tariff (including savings on LED bulbs) which should enable stronger recruitment and reduce churn”, analysts said.
The company’s shares rose 4.2% to 1,406p in early deals.