TIDMTEP
RNS Number : 7905C
Telecom Plus PLC
20 April 2017
20 April 2017
Telecom Plus PLC
Trading Update and Notice of Results
Telecom Plus PLC (trading as the Utility Warehouse), which
supplies a wide range of utility services to both residential and
business customers, today issues a trading update for its financial
year ending 31 March 2017.
Highlights
-- Customer and service numbers for the full year show further
modest growth, with an encouraging upward trend starting to emerge
during Q4
-- Total dividend of 48p (2016: 46p) per share for the year (+4.3%)
-- Launch of new Home Insurance service
Financial
Full year adjusted pre-tax profits from continuing operations,
excluding the contribution from our 20% shareholding in Opus Energy
Group Limited ('Opus') which was sold to Drax Group plc in February
2017, are expected to be around GBP53m (2016: GBP48.8m excluding
Opus) in line with previous guidance.
The Company's full year results will also include total profit
from discontinued operations of c.GBP65m following the recent sale
of our 20% shareholding in Opus. As previously announced, the cash
proceeds from the sale of Opus are expected to be returned to
shareholders through a GBP70m tender offer this summer.
Cash flow remains strong, in line with management
expectations.
Growth
The strong headwinds we have seen over the last few years
persisted during the first half of the year, with continuing low
commodity prices creating a record gap between standard variable
energy tariffs and aggressively priced introductory deals.
As reported in our interim statement on 21 November 2016, this
gap had begun to narrow in the late autumn, although too late to
provide any positive impact on our service and customer numbers for
Q3.
To boost Partner confidence and kick-start activity after a
prolonged period of modest growth, we implemented a change to our
Partner compensation plan with effect from 1 January 2017; this
gave them the opportunity to accelerate some of the residual income
they would earn on new members who switch all their utilities to
us. Combined with our more competitive customer proposition, growth
began to accelerate as we progressed through Q4; this took full
year customer and service numbers to 607,802 (2016: 598,613) and
2,288,918 (2016: 2,181,704) respectively, in line with previous
guidance.
Our annual sales conference took place on 18/19 March and was
attended by around 5,000 Partners. We launched a range of
promotional films featuring Joanna Lumley as the new face of
Utility Warehouse, explaining who we are and the benefits we
provide to those looking to save money (by joining as a new member)
or make money (by becoming a Partner). These were well received,
and we have since seen an encouraging increase in the number of new
Partners joining the business.
Launch of Home Insurance
Following a successful trial of Home Insurance to Partners over
the winter, we announced at our recent sales conference that this
new service will shortly be made available to all members. The
initial level of policy sales is expected to be extremely modest
while we ramp up our internal resources and add new insurers to our
panel in order to broaden the types of property we can cover
competitively.
Home Insurance is expected to have a negligible impact on our
profitability for the current financial year, but thereafter has
the potential to make a progressively significant contribution as
penetration of policies within our membership base begins to
grow.
Dividend
The Company intends to pay a total dividend per share for the
year just ended of 48p (2016: 46p), representing an increase of
4.3% compared with the prior year. The final dividend of 25p is
expected to be paid on 28 July 2017, subject to shareholder
approval at the AGM which will be held on 20 July 2017.
Outlook
Our strategy of achieving consistent high quality growth through
delivering savings, simplicity and exceptional customer service is
bearing fruit. We have seen a significant improvement in the
proportion of new members who are switching all their services to
us over the course of the last two years (from c.30% to c.55%);
these better quality customers have the highest expected lifetime
value, although they cost significantly more to acquire. Based on
recent levels of Partner activity, we anticipate the number of
services we supply will increase by between 5% and 10% over the
coming year.
From a financial perspective, the modest growth in the number of
services added over the last few years, combined with these higher
anticipated customer acquisition costs and an increasing investment
in IT, mean that our adjusted pre-tax profits from continuing
operations for the current financial year are likely to be at a
similar level to the year just ended. The benefit from faster
organic growth will, if current trends continue, be reflected in
our reported results for the following financial year.
We look forward to providing more detailed guidance with our
full year results on 13 June 2017.
Andrew Lindsay said:
"I am delighted we are at last beginning to see green shoots
emerging as the retail energy market has started to normalise.
Confidence within our Partner network is increasing, and our focus
over the coming months will be on doing everything we can to build
on the momentum that is beginning to gather."
"We look forward to returning the proceeds of the sale of our
investment in Opus to shareholders this summer through a tender
offer, and are excited about the prospects for the business over
the coming years as the fundamental cost advantages that led to our
historic faster growth begin to re-assert themselves."
For further information, please contact:
Telecom Plus PLC
Andrew Lindsay, CEO 020 8955 5000
Nick Schoenfeld, CFO
Peel Hunt
Dan Webster / George Sellar 020 7418 8900
JP Morgan Cazenove
Christopher Wood / Hugo Baring 020 7742 4000
MHP Communications
Reg Hoare / Katie Hunt / Giles Robinson 020 3128 8156
About Telecom Plus PLC ("Telecom Plus"):
www.utilitywarehouse.co.uk
Telecom Plus, which owns and operates the Utility Warehouse
brand, is the UK's only fully integrated provider of a wide range
of competitively priced utility services spanning both the
Communications and Energy markets.
Members benefit from the convenience of a single monthly
statement, consistently good value across all their utilities and
exceptional levels of service. Telecom Plus does not advertise,
relying instead on 'word of mouth' recommendation by existing
satisfied Members and Partners in order to grow its market
share.
Telecom Plus is listed on the London Stock Exchange (Ticker: TEP
LN). For further information please visit
www.utilitywarehouse.co.uk
This information is provided by RNS
The company news service from the London Stock Exchange
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