ii view: Telecom Plus reports record customers, profit and dividend

Full-year results to 31 March

• Revenues down 10% to £1.84 billion
• Adjusted pre-tax profit up 8% to £126 million
• Final dividend of 57p per share
• Total dividend for the year up 13.3% to 94p per share
• Net debt down 5% to £116 million

Chief executive Stuart Burnett said:

“During what seems likely to be a challenging period for the global economy, we are fortunate that our business model makes us largely immune to any changes in trade tariffs, interest rates, economic growth, or business confidence. Indeed, such environments have historically been positive for us, with increasing numbers of people seeking additional income sources and ways to reduce their household bills.

“By helping households to save time and money on their essential bills, whilst supporting tens of thousands of Partners to earn an additional income, we expect to deliver continuing strong growth in customer numbers, profits and returns to shareholders over the years ahead."

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ii round-up:

Telecom Plus (LSE:TEP) today detailed record customer numbers and profit, enabling the company which trades under the ‘Utility Warehouse’ brand to also declare a record annual dividend payment. 

Customer numbers climbed by a double-digit amount for a fourth consecutive year to 1.16 million, driving adjusted pre-tax profit up 8% to £126 million. A final dividend of 57p per share, payable to eligible shareholders on 15 August, takes the total annual payout to 94p per share, up 13.3%.

Shares in the FTSE 250 company fell 2% in UK trading having come into these latest results up by a fifth so far in 2025. The FTSE 250 index is up 3% year-to-date. Fellow energy supplier Centrica (LSE:CNA) is up by a quarter during that time. 

Telecom Plus supplies UK households and businesses with services from electricity and gas to broadband internet, mobile phone contracts, and even insurance policies, all on one monthly bill. Over 71,000 so-called ‘partners’ or individuals help sell its services.

The group continues to target two million customers over the medium-term, with forecast customer growth of 15% over the financial year expected to lift adjusted pre-tax profit to between £132 million and £138 million. 

Shareholder returns over this latest financial year totalled 80% of adjusted pre-tax profit, with management pursuing a progressive distribution policy and returns of 80-90% of adjusted profit over the medium term. 

Revenue for the year to 31 March fell 10% to £1.84 billion, hindered by a 20% reduction in the energy cap set by the regulator to £1,700, although with sales of other services aiding an increase in the gross profit margin to 19.5% from the prior year’s 17.4%. 

The group’s AGM is scheduled for 6 August. 

ii view:

Founded in 1996, Telecom Plus uses commission paid partners to sell services to new customers, as opposed to advertising or using price comparison sites. Electricity supply accounted for its biggest slug of revenues over this latest financial year at 49%. That was followed by gas supplied at 34%, broadband 8%, mobile phones 4.5%, and other services including insurance the balance of 4.5%.   

For investors, customer growth adjusted for acquisitions slowed to 12.6% during this latest year, down from 14.1% over its last financial year, likely due to falling energy prices. Customer bad debts of £33.4 million, or 1.8% of sales, require monitoring with any major upturn in UK unemployment likely feeding in. Increased government taxes and a raised minimum wage now feed into group costs, while geographical exposure is limited to the UK only.

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More favourably, a differentiated business model sets it apart from rival suppliers such as SSE (LSE:SSE) and Centrica. Customer numbers continue to grow, with a tough economic backdrop considered favourable by management given consumers increase focus on saving money. Group net debt has reduced, while climate change and required energy transition may keep energy prices volatile, fuelling demand for its cost saving services.  

In all, and despite ongoing risks, a consensus analyst fair value estimate above £27 per share and forecast dividend yield of more than 4% look to give grounds for continued investor support.

Positives: 

• Differentiated business model
• Targeting two million customers over the medium term

Negatives:

• Elevated costs
• Potential rising customer bad debts

The average rating of stock market analysts:

Buy