Last checked at 28 Apr 2022 07:00
28 April 2022
Telecom Plus PLC
Trading Update and Notice of Results
Telecom Plus PLC (trading as Utility Warehouse), which supplies a wide range of utility services focussed on domestic customers, today issues a trading update for its financial year ending 31 March 2022.
Highlights
● Annualised H2 customer growth rate of c.20% expected to continue in FY23
● Profits expected to be in line with expectations
● Growing interest in our income opportunity as the cost of living crisis deepens, with the number of new Partners joining the business accelerating rapidly during H2
● Total dividend of 57p for the full year (2021: 57p)
Financial
We expect full year adjusted pre-tax profits to be in line with expectations, despite additional operating costs during H2 as we positioned ourselves for an extended period of rapid organic growth.
Our balance sheet remains robust, with a year-end net debt position of around £70m (excluding finance leases), and undrawn facilities of £75m.
Trading
Customer numbers for the year increased by 71,269 (2021: 5,174) to 728,680 and core service numbers grew by 191,112 (2021: 51,081) to 2,264,909, representing growth of 10.8% and 9.3% respectively. All this growth was achieved organically, and predominantly during H2 which equates to an annualised customer growth rate for H2 of around 20%. This was achieved despite our decision not to participate in the multiple opportunities which arose to acquire customer bases from insolvent suppliers during the autumn.
As the UK's only multi-utility supplier, we remain focussed on providing our customers with a broad cross-section of essential household services, with the majority of new customers taking at least two different core services (energy, broadband, mobile, insurance) from us. The average number of services taken by new customers fell slightly during FY22 compared with the preceding year, mainly due to an influx of customers over the autumn who were only looking to replace their previous energy supplier who had ceased trading.
Interest in our income opportunity for UW Partners accelerated over the course of the year, particularly during the second half, as people focussed on the impending cost of living crisis. A record number of new Partners joined the business last month, when we were delighted to host our physical Partner 'Power-Up' conference for the first time in three years. The event featured a number of enhancements to both our customer and Partner propositions, including the simplification of our bundling structure to enable customers to lock-in guaranteed savings of up to 5% on their energy (below the price cap) when they take any combination of our other core services.
Energy churn fell to 0.25% per month during H2 (equivalent to 3% per annum) following the end of the long-running and unsustainable price war in September, with our standard energy tariffs being amongst the most competitive in the market throughout this period.
Q4 saw most other major broadband suppliers imposing automatic CPI-linked price rises of approaching 10% to their customers - a policy to which we have never subscribed. Instead, we launched a range of highly competitive introductory broadband tariffs from mid-February, which led to a significant uplift in the proportion of new customers taking this service.
Dividend
The Company reiterates its previous dividend guidance to pay a total dividend for the year to 31 March 2022 of 57p (2020: 57p) per share, which is expected to increase this coming year in line with our progressive dividend policy.
Outlook
With energy wholesale costs over the last few months remaining at (or near) record levels, a further significant increase in retail prices from 1 October now seems inevitable. Despite considerable promised Government support to mitigate the impact of these higher prices, it is anticipated that an increasing number of households are likely to struggle to pay their energy bills, leading to an increase in bad debts across the industry over the coming year. Whilst we will not be immune from these pressures, we expect to be sheltered by our strong customer demographic (which skews towards more mature, creditworthy, and multi-service homeowners), and our competitive market position where all our customers (except those choosing a longer term fixed tariff) benefit from a guaranteed discount to the Government price cap.
Our business remains well positioned to build shareholder value over both the near term and the years ahead, given our diverse portfolio of essential household services, a clearly differentiated and effective route to market, a unique integrated multi-utility business model, market leading levels of customer retention, a strong balance sheet, and growing momentum. These attributes have enabled us to build an exceptionally high-quality customer base, and provide significant confidence over our future earnings stream.
Increasing numbers of Partners are recommending our range of highly competitive services to their friends and families, in the process earning meaningful incomes that are enabling them to overcome the higher costs of everyday living that they are facing. With no signs that these pressures are likely to ease over the short to medium term, we are clearly entering an exceptionally positive environment for both Partner and customer growth.
This is evidenced by the record numbers of new customers and Partners who joined UW during March, and the continuing strong levels of activity we have seen so far this month. These give us confidence that we are likely to see continuing organic growth during FY23 at around the annualised level of 20% achieved for H2, with a corresponding increase in profits.
We will provide a further update for the coming year with our final results for the year ended 31 March 2022, which we are planning to announce on 21 June 2022.
Andrew Lindsay & Stuart Burnett, Co-CEOs, said:
"Against the backdrop of spiralling energy bills and the broader cost of living crisis, UW is uniquely positioned to help families across the UK not only save on their bills but to also earn a much needed additional income.
"Our sustainable multiservice approach means we are offering the lowest energy tariffs in the country, at a time when 22 million households have just received the largest ever price rise, with further significant increases likely in the autumn.
"At the same time we are offering our Partners a proven means of earning a meaningful additional income, exactly when more families than ever are facing a real and ongoing squeeze on household incomes.
"These dynamics are reflected in record numbers of Partners joining Team Purple, and rising levels of Partner activity, as they find their prospects increasingly attracted to the savings we deliver. As a result we expect the annualised growth in customers of c.20% that we achieved during the second half to continue throughout the new financial year."
Note:
Consensus for the year ending 31 March 2022 is adjusted profit before tax of £59.6m within a range of £59.0m to £60.1m.
For more information, please contact:
Telecom Plus PLC
Andrew Lindsay, Co-CEO 020 8955 5000
Stuart Burnett, Co-CEO
Nick Schoenfeld, CFO
Peel Hunt
Dan Webster / Andrew Clark 020 7418 8900
Numis Securities
Mark Lander / Simon Willis 020 7260 1000
MHP Communications
Reg Hoare / Catherine Chapman 020 3128 8339
About Telecom Plus PLC ("Telecom Plus"):
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 the Communications, Energy and Insurance markets.
Customers 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 customers 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 telecomplus.co.uk
LEI code: 549300QGHDX5UKE58G86