REG - Telecom Plus PLC - Trading Update and Notice of Results

Telecom PlusAnnouncement

28/04/2022 07:00

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RNS Number : 6029J  Telecom Plus PLC  28 April 2022

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

 

 

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