FTSE 250 utility services supplier Telecom Plus (TEP) has committed to pay its final 30p per share dividend for the March 2020 financial year, joining the rare group of companies sticking to existing shareholder payout plans.
That implies a 57p per share payout for the whole 12 month period, up from 52p paid in the previous year, despite profits coming in at the lower end of its previous guidance.
Dividend guidance was conditional on the ‘absence of a significant increase in the level of non-payment by customers over the coming months’, the company said today.
LOWER PROFITS STEER
Adjusted pre-tax profit for the year through March was expected at around £60m, up from £56.3m on-year.
It would come in at the lower end of expectations due to lower retail energy prices from 1 October reflecting a reduction in a UK regulatory price cap, higher regulator costs and initial costs associated with the coronavirus pandemic.
Shares in the company slipped around 2% to £12.18, roughly in line with the overall UK market on Tuesday. The stock has lost around 25% of its value since the coronavirus outbreak started ripping through the UK.
A ROBUST BUSINESS
The company, which trades as the Utility Warehouse, said its business was demonstrating a ‘high levels of resilience’ and that its balance sheet was robust, with sufficient liquidity to meet any likely scenario.
Customer numbers for the year through March 2020 increased 2.7% to 652,237 and service numbers grew 6.2% to 2,689,639.
Analysts at Numis Securities trimmed their 2020 pre-tax forecasts by around 3% to reflect the new guidance. But the analysts have taken the red pen to 2021 and 2022 estimates, slashing 17% and 14% respectively off pre-tax profit as a precaution, although this could change again when Telecom Plus gives more detail when it reports the detailed 2020 results on 16 June.
But analysts remain positive about the company beyond the current fall out, with Megabuyte’s Philip Carse suspecting that Telecom Plus will be a relative beneficiary of the current crisis, as ‘households look to save energy, communications and insurance costs in the current environment, boosted by an improved competitive position in energy as smaller suppliers go to the wall.’
