TIDMTEP
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 GBP70m (excluding finance leases), and undrawn
facilities of GBP75m.
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 GBP59.6m within a range of GBP59.0m to GBP60.1m.
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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