Telecom Plus : FY21 preliminary results

18 June 2021

Telecom Plus Plc

Final Results

Year ended 31 March 2021

Introduction

Telecom Plus PLC - Final Results for the year ended 31 March 2021

Telecom Plus PLC (trading as Utility Warehouse), which supplies a wide range of utility services focussed on domestic customers, today announces its final results for the year ended 31 March 2021.

Financial Highlights:

• Results in line with expectations
• Revenue of £861.2m (2020: £875.8m)
• Adjusted profit before tax of £56.1m (2020: £60.8m)
• Statutory profit before tax of £43.5m (2020: £48.1m)
• Adjusted EPS of 57.4p (2020: 61.8p)
• Statutory EPS of 41.5p (2020: 45.9p)
• Full year dividend maintained at 57p per share

Operating Highlights:

• Resilient performance across all aspects of the business despite covid challenges
• Continued growth in both customers and Partners
• Number of services supplied up 2.5%
• Good progress in digital transformation project
• Which? Utilities Brand of the Year 2020

Outlook:

• Anticipate adjusted current year profit before tax increasing to around £60m, with a maintained dividend of 57p

Andrew Lindsay, CEO, commented:

"Against the challenging backdrop of the past year, I am very pleased with the resilient performance of the business, and incredibly proud of the spirit that our staff and Team Purple - our 48,000 Partners - have demonstrated throughout the period.

"We are emerging from the pandemic with considerable optimism about the future: as millions prepare to return to their workplaces after prolonged periods of working from home, the alternative flexible income opportunity that we offer our Partners has never held such appeal.

"We are hugely excited by the prospect of helping many more people to get on in life and achieve their goals in partnership with UW over the months and years ahead, and are investing in both our customer and Partner propositions to meet the rising demand that we anticipate."

There will be a virtual meeting for analysts today at 9.00am. Please contact MHP Communications at: telecomplus@ mhpc.com for dial in details.

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Introduction continued

For more information please contact:
Telecom Plus PLC
Andrew Lindsay, CEO / Nick Schoenfeld, CFO	020 8955 5000
Peel Hunt
Dan Webster / Andrew Clark	020 7418 8900
Numis
Mark Lander / Simon Willis	020 7260 1000
MHP Communications
Reg Hoare / Catherine Chapman / Amy O'Sullivan	020 3128 8778

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

Cautionary statement regarding forward-looking statements

This Announcement may contain "forward-looking statements" with respect to certain of the Company's plans and its current goals and expectations relating to its future financial condition, performance, strategic initiatives, objectives and results. Forward-looking statements sometimes use words such as "aim", "anticipate", "target", "expect", "estimate", "intend", "plan", "goal", "believe", "seek", "may", "could", "outlook" or other words of similar meaning. By their nature, all forward-looking statements involve risk and uncertainty because they are based on numerous assumptions regarding the Company's present and future business strategies, relate to future events and depend on circumstances which are or may be beyond the control of the Company which could cause actual results or trends to differ materially from those made in or suggested by the forward-looking statements in this Announcement, including, but not limited to, domestic and global economic business conditions; market-related risks such as fluctuations in interest rates; the policies and actions of governmental and regulatory authorities; the effect of competition, inflation and deflation; the effect of legislative, fiscal, tax and regulatory developments in the jurisdictions in which the Company and its respective affiliates operate; the effect of volatility in the equity, capital and credit markets on profitability and ability to access capital and credit; a decline in credit ratings of the Company; the effect of operational risks; an unexpected decline in sales for the Company; any limitations of internal financial reporting controls; and the loss of key personnel. Any forward-looking statements made in this Announcement by or on behalf of the Company speak only as of the date they are made. Save as required by the Market Abuse Regulation, the Disclosure Guidance and Transparency Rules, the Listing Rules or by law, the Company undertakes no obligation to update these forward-looking statements and will not publicly release any revisions it may make to these forward-looking statements that may occur due to any change in its expectations or to reflect events or circumstances after the date of this Announcement.

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Chairman's Statement

I am pleased to report a resilient performance by the Company during some of the most challenging conditions that we, in common with most other businesses, have ever faced. Against this backdrop, we are delighted to have achieved modest growth in both customer and service numbers, with profitability remaining close to last year's record level, and are proposing to pay a maintained full-year dividend.

Adjusted pre-tax profits fell by 7.7% to £56.1m (2020: £60.8m) reflecting higher admin expenses (including covid-related

factors), on revenue down by 1.7% to £861.2m (2020: £875.8m) largely due to lower energy prices during the peak winter

period. Adjusted earnings per share for the year declined by 7.1% to 57.4p (2020: 61.8p). Statutory pre-tax profits fell

by 9.6% to £43.5m (2020: £48.1m), and statutory EPS fell by 9.6% to 41.5p (2020: 45.9p).

Customer numbers increased by 0.8% to 657,411 (2020: 652,237) with service numbers growing by 2.5% to 2,073,797

(2020: 2,022,716). These reflect a modest pick-up in activity during the second half as Partners became increasingly confident in the competitiveness of our proposition, and more proficient at using the remote sign-up tools we introduced during last spring.

We received a number of awards during the year recognising both the value we offer and the quality of service provided by our UK-based support teams; these are testament to our customer-centric approach, our commitment to treating our customers fairly, our ongoing mission to be the Nation's most trusted utility provider, and the significant resources invested in delivering the best possible customer service.

Dividend

We are proposing a final dividend of 30p (2020: 30p), bringing the total for the year to 57p (2020: 57p), reflecting our strong balance sheet and confidence in the outlook for the coming year. It will be paid on 30 July 2021 to shareholders on the register at the close of business on 9 July 2021 subject to approval by shareholders at the Company's AGM which will be held on 22 July 2021.

We remain committed to a progressive dividend policy consistent with the underlying strong cash generation of our business.

Our environmental, social and governance strategy

We have undertaken a comprehensive review of our Environmental, Social & Governance ('ESG') strategy and the initiatives which support our efforts. Engaging with our key stakeholders and conducting a materiality assessment has helped clarify the priority issues for our business going forwards, which are set out in detail in our ESG Report.

This Report sets out the commitments we are making for this year and the years to come, and how they align with the ambitions of the UN Sustainable Development Goals ('SDGs').

Whilst we have limited scope to influence how much electricity from each type of generation enters the National Grid each year, we particularly acknowledge that as an organisation supplying energy to consumers, we have a responsibility to help to protect our environment and continue to play our part in the UK transition to Net Zero.

We are pleased with the steps we have taken this year to define and implement our ESG strategy, albeit acknowledging that, like all businesses, there is always more we can do.

Corporate Governance

The UK Corporate Governance Code (the 'Code') encourages the Chairman to report personally on how the principles in the Code relating to the role and effectiveness of the Board have been applied.

As a board we are responsible to the Company's shareholders for delivering sustainable shareholder value over the long term through effective management and good governance. A key role of mine, as Executive Chairman, is to provide strong leadership to enable the Board to operate effectively.

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Chairman's Statement continued

We believe that open and rigorous debate around key strategic issues and risks faced by the Company is important in achieving our objectives and the Company is fortunate to have non-executive directors with diverse and extensive business experience who actively contribute to these discussions.

Further detail of the Company's governance processes and compliance with the Code is set out in the Corporate Governance Statement in the Annual Report.

Recent Trading and Outlook

Recent Trading

With partial lockdown restrictions still in place, it is taking longer than expected for Partner activity to return to pre-covid levels; we anticipate this will happen progressively over the coming months as the remaining restrictions on social distancing are lifted, and the economy weans itself off the unprecedented government financial support which is still being provided.

We have seen a reduction in churn over recent weeks compared with the same period last year and are also starting to see improved penetration of our financial services products amongst new customers following their recent incorporation into the customer initial sign-up journey.

Energy Prices

The level of the energy price cap increased by almost £100 at the start of April, a substantial rise that reflects both rising wholesale prices and higher covid-related costs. Since then, wholesale costs have remained at an elevated level, which makes the switching market particularly challenging for all market participants.

Despite this, many independent suppliers are still setting their retail prices at whatever level is required to attract new customers on price comparison sites, irrespective of the impact it will inevitably have on their profitability and cashflow; as a result, we continue to see them reporting significant and unsustainable losses in their latest published accounts. A number of further suppliers have left the market over the last 12 months, with further insolvencies likely in the event that the current Ofgem consultation (designed to prevent suppliers using customer deposits as a substitute for shareholder capital) becomes effective.

Outlook

We remain well positioned to build shareholder value over both the near term and the years ahead, with a diverse portfolio of essential household services, a motivated distribution channel, a unique integrated multi-utility business model, market leading levels of customer retention, and a strong balance sheet. These attributes have enabled us to build an exceptionally high-quality customer base and provide significant confidence over our future earnings stream.

Whilst our business model benefits from enormous financial resilience - as clearly demonstrated last year - over the shorter term the levels of Partner activity (and hence our net growth) can be impacted by the wider macroeconomic climate. Currently, and over the last year, the combination of higher household savings and unprecedented government support resulted in lower Partner activity and a corresponding reduction in net growth; at other times, such as during the aftermath of the Global Financial Crisis of 2007, we saw an environment where reducing household expenditure became much more important to consumers, and the need to make money (addressed by our Partner opportunity) became far more urgent - combining to deliver sharply higher net growth.

And in the meantime, prolonged periods of working from home have led many to reconsider their work-life choices, and the growing attractiveness of the meaningful near-term income opportunity we offer, which requires no previous qualifications and has no geographic limitations. This is expected to drive increased Partner recruitment and activity in the months and years ahead; and as macroeconomic conditions start to swing back in our favour this autumn, we are increasingly confident that the pent-up demand for our flexible income opportunity will deliver a return to pre-pandemic levels of net service growth, and provide a solid platform from which to deliver our medium term goals.

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