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LONDON (Alliance News) - Utility services firm Telecom Plus PLC on Thursday said it expects modest profit growth despite a challenging environment, as it also increased its total return to shareholders.
During its financial year, which ended March, Telecom Plus said there was a "significant" gap between the low introductory fixed price energy deals available from some suppliers and the standard variable prices charged by the 'Big 6'.
The energy market also saw record switching levels, it said, though its own churn was well below the 20% of customers changing supplier during the period.
Telecom Plus said these factors creating a difficult environment but the company was able to maintain its track record of profit growth, though it conceded this was modest.
Adjusted pretax profit for its recently ended year is expected to be GBP54.0 million, a slight increase in the GBP53.3 million posted in its prior year, in line with previous guidance.
If there are no "unforeseen circumstances", adjusted pretax profit for its recently started year is expected to be between GBP55.0 million and GBP60.0 million, which would represent further modest growth.
Telecom Plus expects to pay a final dividend of 26.00 pence per share, taking its total payout to 50.00p, which would be a 4.2% rise on its prior year total return of 48.00p.
A year ago, Telecom Plus launched a home buildings & contents insurance business. Policy sales have grown "steadily" in the following 12 months to just under 5,000 householders.
During its fourth quarter it launched a marketing campaign to existing members to gather home insurance renewal dates, and it collected 60,000 by the end of March. Telecom Plus said this is an "encouraging lead indicator" suggesting a higher uptake of policies in its coming year.
It is confident the new business will make a "small" initial profit contribution in its current year.
Telecom Plus also announced a small acquisition on Thursday, snapping up a 75% stake in domestic gas boiler and warranty and care plan provider Glow Green Ltd for GBP2.0 million.
Telecom Plus is "well positioned" for growth, and it expects a proposed UK price cap for energy later this year to improve its market position.
Chief Executive Andrew Lindsay said: "Following a successful sales conference a few weeks ago, our focus over the coming months will be to build on the renewed confidence and engagement amongst the Partner network."
"I am excited about the longer-term prospects for Glow Green, our recent acquisition. Although currently only a small business, the market for replacement boilers and their associated servicing needs are substantial; this gives us an exciting opportunity to leverage the strong relationship and brand loyalty we have established with our members, to provide them with these additional services in steadily increasing volumes over the coming years."
Results for its full year will be released on June 19. Shares in Telecom Plus were trading at 1,100.00 pence each Thursday, up 1.1%.
