LONDON (Alliance News) - Shares in multi-utility provider Telecom Plus PLC rose Tuesday as it reiterated its profit guidance and dividend commitment despite a challenging market caused by falling energy prices.
Shares in Telecom Plus were up 5.7% at 873.70 pence Tuesday morning, the third biggest gainer in the FTSE 250.
Telecom Plus, which trades as Utility Warehouse, said it is confident of achieving a full-year adjusted pretax profit of at least GBP54 million for the financial year that ended in March. This is in line with guidance it gave last August, when it said it expected to report an adjusted pretax profit of between GBP54 million and GBP58 million for the year.
It continues to expect to pay a total dividend of 46.00 pence, up 15% from the 40.00 pence it paid in the previous year, when adjusted pretax profit came in at GBP52.2 million. The company adjusts its pretax profit to exclude amortisation and share incentive scheme changes.
Telecom Plus said it saw 4.2% growth in service numbers during the year, taking the total number of services supplied through its Utility Warehouse brand to 2.18 million from 2.09 million, whilst membership increased by 17,100 to 598,613.
The company said this growth had been below the level it had originally expected, but highlighted a tough market, with a rising gap between standard variable energy tariffs and the cheapest fixed term introductory deals offered to customers. Telecom Plus attributed this rising gap to number of factors, including further deflation in wholesale commodity prices.
Telecom Plus noted, however, that this gap has narrowed slightly in recent weeks on the back of industry-wide price reductions to standard variable tariffs.
For the year ahead, the company expects to see more progress and said it will provide more detailed guidance with its full year results June 14.
The company provides utility services including gas, electricity, broadband, fixed line and mobile services to customers. It said its new Project Daffodil initiative, which involves the supply and fit of low-energy LED bulbs free of charge for its 'Double Gold' members, has been gathering momentum with over 300,000 bulbs installed in the UK.
This has led to a positive trend in the proportion of member signed up by partners switching their services to Telecom Plus, and the company said that, if this trend continues, it would expect it to deliver a "modest increase" to its service growth rate in the coming year.
Elsewhere, Telecom Plus welcomed draft proposals from the UK Competition & Markets Authority to remove the current restrictions on discounts, bundling and the number of tariffs each supplier can offer. This would be a boon for Telecom Plus as it would allow the company more flexibility in terms of new packages as it expands its range of services in the future.
It did, however, express disappointment that the competition regulator had not proposed "more radical" initiatives to address the issue of suppliers offering attractive introductory deals at the expense of the rest of the customer base.
By Hana Stewart-Smith; hanassmith@alliancenews.com; @HanaSSAllNews
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Telecom Plus (TEP)