Telecom Plus : Annual Report 2024

Report and Accounts

Year ended 31 March 2024

Contents

Strategic Report

Financial and Operational Highlights	1
At a glance	2
Investment case	3
Chairman's Statement	4
Co-Chief Executives' Review	8
Financial Review	18
Principal Risks and Uncertainties	21
People and Organisation	28
Sustainability Report	34
Task Force on Climate-Related Financial Disclosures Report	47

Governance Reports

Board of Directors	55
Corporate Governance Statement	58
Nomination Committee Report	66
Audit and Risk Committee Report	68
Directors' Remuneration Report	71
Directors' Report	93
Directors' Responsibilities	98

Financial Statements

Independent Auditor's Report to the members of Telecom Plus PLC	99
Financial Statements	109
Notes to the Financial Statements	115

Financial and Operational Highlights

Revenue

				2018
			on
		increase		£2,475.2m	£2,039
		.2%
		157
						.1m
£792	£804	£875.	£861.	£967.4m
.9m	.4m	8m	2m
2018	2019	2020	2021	2022	2023	2024
Adjusted pretax profit*
				2018
			on
		increase			£116.
		115
		.3%
					£96.2m	9m
		£60		£61
£54.3m	.£563m	.8m	.£561m	.9m

2018 2019 2020 2021 2022 2023 2024

Services provided

					2018
				on
			increase
			.9%				3,127,097
			78
	1,901,319	2,022,706	2,073,797	2,264,909	2,798,148
	1,748,124
2018	2019	2020	2021	2022	2023	2024

• Revenues of £2,039.1 million (2023: £2,475.2m)
• Gross profit up 16.0% to £355.2 million (2023: £306.2m)
• Adjusted pre-tax profit* up 21.5% to £116.9 million (2023: £96.2m)
• Statutory pre-tax profit up 17.6% to £100.5 million (2022: £85.5m)
• Adjusted EPS* up 9.9% to 109.0p (2023: 99.2p)
• Statutory EPS up 3.8% to 89.9p (2023: 86.6p)
• Full year dividend of 83p (2023: 80p) per share
• Net debt to adjusted EBITDA ratio at 0.9x
• Number of customers up 14.1% to 1,011,489 (2023: 886,579)
• Number of services supplied up by 328,949 to 3,127,097 (2023: 2,798,148)
• Insurance policies up 38.3% to 139,109 (2023: 100,590)
• Ranked "Best Value for Money" and "Most Likely to be Recommended" in Uswitch 2023 Energy Awards; rated "Excellent" on Trustpilot
• Increase in Partner numbers to 68,251 (2023: 59,842) reflecting ongoing strong demand for our income opportunity as cost of living pressures continue

• Adjusted pre-tax profit (£116.9m), adjusted EBITDA (£133.3m) and Adjusted EPS exclude share incentive scheme charges (£5.2m), and the amortisation of the energy supply contract intangible asset (£11.2m). The reconciliations for adjusted profit before tax, adjusted EBITDA and net debt, and adjusted EPS are set out in notes 1 and 19 respectively of the financial statements.

Strategic Report

Governance Report

Financial Statements

Shareholder Information

Telecom Plus PLC Report and Accounts 2024 / 01

At a glance

The UK's multi-service provider with over one million customers

We are the only multi-service provider in the UK, serving over one million customers under the Utility Warehouse brand. We offer our customers a one-stop shop for their essential services, bundling energy, broadband, mobile and insurance. We offer competitive prices over the long term, and we pride ourselves on genuinely helping our customers to stop wasting time and money on their household bills.

A track record of growth in all conditions: on track for two million customers

The business has delivered uninterrupted growth in customer numbers for every one of its 25+ years. This has been achieved in a broad spectrum of market and macroeconomic conditions. This is evidence of the continuing strength of our business model, and the sustainable double-digit customer growth and earnings potential ahead. We remain firmly on track to add a further one million customers over the medium term.

Our structural cost advantage

Our unique multi-service customer proposition spans the energy, broadband, mobile and insurance markets and allows our customers to bundle many of their essential household services together with UW. As a result, we receive up to four revenue streams from each of our customers but have just one single back office supporting all the services we provide to them. This gives us an inbuilt and enduring cost advantage that our competitors have been unable to replicate, and which we share with our customers year-on-year through lower prices

Fair pricing and loyal customers

This long-term, fair pricing approach, enhanced by top-rated customer service and the convenience of having one bill, one account, and one app to manage all their household services, builds loyalty amongst our customers to our brand; as a result, our typical homeowning customers display below-market rates of churn and bad debt, further compounding our cost advantage. We have launched our Price Pledge to new customers taking three or more services - guaranteeing UW will save them money.

Our unique word-of-mouth customer acquisition model

The key to acquiring new multi-service customers is our unique and hard-to-replicateword-of-mouth acquisition model. Over many years we have built up a UK-wide community of some 68,000 Partners who are real advocates for our proposition. They overcome the natural inertia that exists to simultaneously switch multiple essential household services by personally explaining to family, friends, work colleagues and acquaintances the convenience of a single UW account for all their household services, and the long-term value we offer. This unique approach enables us to successfully grow our multi-service customer base in a way that other customer acquisition strategies cannot replicate. Our Partners are attracted by the opportunity to earn a second income amidst cost of living pressures, the flexible nature of the work, and by a mission to help their community through lower everyday bills.

Telecom Plus PLC Report and Accounts 2024 / 02

Investment case

Why invest in Telecom Plus?

Telecom Plus is a unique UK multi-service provider with a purpose: to stop households wasting time and money on essential services. We have partnerships with leading suppliers of energy, broadband, mobile and insurance, and a high quality customer base. This leads to a high growth, predictable, capital-light and cash generative business model supporting a clear capital allocation policy of high returns through dividends supplemented by share buybacks.

1. The UK's only multi-service provider

We have a unique award-winning customer proposition providing multiple essential services including energy, broadband, mobile and insurance to over one million UK customers under the Utility Warehouse brand. This provides consistently larger savings than peers, and simplicity through a single bill and point of service.

2. Significant growth opportunity

Our ability to offer lower prices than competitors, combined with award-winning customer service, means we are able to achieve sustainable double digit customer growth. We are the leading challenger in our markets and with a c.3% share of the UK energy market, around 1% of the broadband and mobile markets, and a nascent position in insurance, there is ample opportunity for growth.

3. Differentiated route to market

Our business model is based on a unique and hard-to- replicate word-of-mouth route to market. Our Partners refer UW to their friends, family and their personal networks, attracting loyal multi-service homeowner customers which other operators find hard to reach. Customer satisfaction and loyalty gives market-leading

customer lifetimes and lower bad debts. Our Partners value the opportunity to earn an additional income, providing a high quality and low cost means of customer acquisition, while fulfilling our social purpose.

4. Structural cost advantage

We have a structural cost advantage as we have multiple revenue streams but only one set of overheads, unlike our competitors. This allows us to offer the most attractive prices to our multi-service customers, permitting us to be more profitable and reinvest in the business to improve our value for money still further - reinforcing our competitive position and sustaining our superior growth rate.

5. Capital light business model

We do not own any infrastructure, as we are a virtual service provider meaning we do not need significant capital expenditure to grow. We are able to offer high quality services from the best providers, benefiting from 20 year relationships and long term contracts. Our long track record increases supplier and Partner confidence in us. Our model means we differentiate on price, simplicity and service while not taking capacity or technology risk.

6. Proven financial track record with strong returns

We generate predictable, growing earnings from the supply of essential services. We are highly cash generative due to our capital light model. Over the last ten years our gross profit has grown by 254%, adjusted profit before tax by 162% and dividend per share by 137%. We consistently generate strong returns with a ROCE of above 30%. We pursue a progressive distribution policy with a total payout of 80-90% of adjusted net income including a dividend rising modestly with inflation and supplemented by share buybacks, with an appropriate level of gearing.

Strategic Report

Governance Report

Financial Statements

Shareholder Information

Telecom Plus PLC Report and Accounts 2024 / 03

Chairman's Statement

I am pleased to report another exceptional performance during FY24 with customer and service numbers continuing to show strong organic growth, and with record profits and dividends.

Adjusted pre-tax profits increased by 21.5% to £116.9m (2023: £96.2m), slightly above market expectations, reflecting the continuing double-digit growth in our customer and service numbers, and a modest tailwind from higher energy prices in Q1 (compared with the remainder of FY24).

The Ofgem energy price cap during FY24 averaged £2,140 (2023: £3,100). This significant reduction

led to a fall in overall revenues for the business to £2,039.1m (2023: £2,475.2m) notwithstanding a significant increase in service numbers and higher revenues from non-energy services. These factors were also responsible for our higher gross profit margin, which at 17.4% (2023: 12.4%) is returning towards historically normal levels, and the 16.0% increase in our gross profit to £355.2m (2023: £306.2m). Adjusted earnings per share for the year rose by 9.9% to 109.0p (2023: 99.2p). Statutory pre-tax profits rose by 17.6% to £100.5m (2023: £85.5m), and statutory EPS rose by 3.8% to 89.9p (2023: 86.6p).

Our strong organic growth continued during the year, with customer numbers increasing by 14.1% to 1,011,489 (2023: 886,579) and service numbers rising by 328,949 to 3,127,097 (2023: 2,798,148).

Families across the UK faced strong inflationary pressures throughout the year, and we remain proud of the role we played in helping both customers and Partners navigate the challenges this created. Our unique business model shares the benefits we derive as an integrated multi-service supplier with our customers (by giving them sustainable long-term savings on their essential household services), whilst our Partner opportunity offers hard-working people, from all walks of life, the ability to earn an additional long-term income (which helps offset their rising cost of living whilst building financial freedom). As a result we are seeing ongoing strong demand in both these areas, with our total Partner numbers increasing by 14.1% to 68,251.

I am very proud of the commitment and achievements of our employees without which this record Company performance could not have been achieved. Amongst other accolades, we were awarded "Best Value for Money" and "Most likely to be Recommended" by Uswitch in their 2023 Energy Awards, came out top in the latest Which? league table of Energy Suppliers, were rated 5 stars for customer service by Uswitch in their 2024 Broadband Rankings, and achieved an "Excellent" rating on Trustpilot. This positive recognition reflects the outstanding customer service delivered by our colleagues, as

well as the great value for money of our customer offering and the dedication of

our Partners.

Telecom Plus PLCReport and Accounts 2024 / 04

Sustainability

Our people and the communities we serve are at the heart of our strategy. As a company, we are culturally focussed on our sustainability - not just in our approach to building long-term relationships with our customers and Partners and supporting our employees, but also in ensuring that we are doing business responsibly. This includes considering our wider impact on the environment around us and supporting the UK's transition to net zero.

I am pleased with the further progress we have made this year towards improving our sustainability, including leveraging our updated E.ON contract, which enables UW to develop products that will better serve our customers as the UK moves towards net zero.

On our diversity and inclusion agenda, not only have we exceeded our targets for management roles held by women and employees from ethnically diverse backgrounds, we have also developed and launched our UW Belonging Groups, with six such groups created during FY24. We also conducted a Diversity & Inclusion audit, the findings of which will help us shape the future of this agenda at UW, ensuring we create an environment where everyone feels they belong and can develop to their full potential.

As families across the UK continue to face ongoing cost of living challenges, we are proud of the role we play in helping our customers and Partners navigate these sustainably, through a combination of savings on their household services (for customers) and an additional income to help offset the rising cost of living (for Partners). I am delighted that we have been able to quantify the positive socio-economic impact of the UW Partner opportunity, with 86% of the Partners who responded to our survey saying that being able to earn flexibly through UW had improved their quality of life.

Looking ahead, our FY25 ESG objectives demonstrate the Company's continued commitment to improving its sustainability and I look forward to delivering further progress over the year ahead. Further detail of the Company's sustainability agenda and ongoing progress is set out in our ESG and Sustainability Reports.

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 Non-Executive Chairman, is to provide strong leadership to enable the Board to operate effectively.

We believe that open and rigorous debate around key strategic issues, risks, and opportunities 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.

Dividend and capital allocation

The Company continues to deliver strong underlying cash generation, notwithstanding our ongoing double-digit organic customer growth.

We are proposing a final dividend of 47p (2023: 46p),

bringing the total for the year to 83p (2023: 80p). This will be paid on 23 August 2024 to shareholders on the register at the close of business on 2 August 2024 subject to approval by shareholders at the Company's AGM which will be held on 13 August 2024. The Company also completed a share buyback of £10.2 million during the year, bringing the total return to shareholders for FY24 to 87.1% (see note 18) of adjusted net income.

The Board adopts a disciplined approach to the allocation of capital, with the overriding objective being to enhance long-term shareholder value, whilst maintaining an appropriate level of gearing; this means retaining sufficient

Strategic Report

Governance Report

Financial Statements

Shareholder Information

Telecom Plus PLC Report and Accounts 2024 / 05

Chairman's Statement continued

resources within the business to ensure that our organic growth is not constrained by lack of capital. We intend to continue following a progressive distribution policy, returning 80%-90% of adjusted net income to shareholders over the medium term, with the dividend growing in line with inflation, and with the balance being allocated to buying back shares.

Board changes

As previously announced last autumn, Andrew Lindsay is stepping down as Co-CEO and from the Board after 16 years with the company. The current Co-CEO structure that has been in place for the past two years provides a clear succession path, and Stuart Burnett will assume overall responsibility for the business as sole CEO from our forthcoming AGM in August. Andrew will remain with the business on a part-time basis over the medium term, with a focus on supporting and further growing our Partner community.

We are delighted to welcome Bindi Karia as a new independent non-executive director to the Board. Ms Karia will join the Board immediately following the AGM. We expect her extensive experience, particularly in technology and innovation (where she has held senior board, investment, and advisory roles across the technology sector in Europe), to be of considerable value over the coming years.

Outlook

Sustainable growth

As the only fully-integrated supplier in the UK spanning four essential household markets (energy, broadband, mobile and insurance), our one-stop-shop proposition delivers long-term savings funded by the inherent efficiency of our bundled multi-service proposition, with significant and growing appeal. This sustainable cost advantage sets us apart from our competitors, each of whom are focussed on individual market segments; and with 97 out of every 100 UK households taking their essential home services from these other suppliers, our organic growth opportunity has barely been tapped.

Since autumn 2021, over two and a half years ago, we have grown our customer numbers at an annualised compound rate of over 18%, spanning a period during which energy commodity prices increased steeply and

then fell sharply, before stabilising at or around current levels. During the period of steeply rising energy prices, our annualised customer growth rate was in excess of 20% (albeit on a smaller opening customer base), whilst during the periods of both falling and now broadly stable prices our annualised growth rate has been consistently around 14%. That we have been able to deliver such strong double-digit growth during a rising, falling and stable environment for energy prices gives us considerable confidence in our ability to continue doing so in future.

Regulatory environment

We fully endorse the more responsible regulatory environment for retail energy suppliers now in force, an outcome which we spent many years lobbying for. The combination of new capital adequacy requirements being imposed upon suppliers and the low regulatory EBIT margin allowed by Ofgem, make it extremely challenging for any standalone energy supplier to sell below the level of the price cap and earn an acceptable return on capital. As a result, we are uniquely positioned to outcompete over the longer term increasing our market share both sustainably and profitably.

Against that backdrop, and with energy prices having fallen significantly from their peak, rational competition has returned. All the major energy suppliers are actively seeking to acquire new customers, with a marked increase in advertising but, critically, based upon sensible pricing strategies. In this competitive marketplace, it has been encouraging to see our recent growth rate continuing into the new financial year, consistent with our guidance range set out below.

Energy prices

The average energy price this year is expected to fall by around 20% during the current year compared with FY24 (from £2,140 to around £1,650); this creates a modest headwind by reducing our average revenue per customer. However, the negative impact on our profitability from these lower energy prices will be offset by improving our operating leverage and selectively increasing our non-energy pricing, whilst maintaining a market-leading competitive position across all our services.

Looking forward, we retain significant levers to grow our EBITDA per customer over time, including further multi- service pricing optimisation, higher service penetration, and improved operating leverage.

Telecom Plus PLC Report and Accounts 2024 / 06

Guidance

We remain focussed on doubling the size of the business to over two million customers, with the following medium- term internal base case planning assumptions:

• annual percentage customer growth is expected to remain within the 10-15% range, with 12-14% organic customer growth expected during FY25;
• adjusted pre-tax profits are expected to increase broadly in line with customer growth, with Adjusted PBT for FY25 expected to be within a range of £124m to £128m; and
• excess capital will be returned to shareholders through a combination of steadily increasing dividends and buying back shares.

Both our people and our technology are vital to delivering an exceptional UW experience to our customers, and we will continue to invest in strengthening our teams at all levels as we scale, whilst evolving and improving our systems. It has been exciting to see our Partners referring our strong and differentiated consumer proposition to a record number of households, delivering significant and high quality organic growth. With UK households facing continuing challenges and uncertainties over the coming year, and with continuing uncertainty around the ability of

households to effectively fund a comfortable retirement, we anticipate that demand from new Partners joining UW to earn a valuable and secure residual income stream will remain strong.I would like to thank my boardroom colleagues for their support and all our staff and Partners for their energy, drive and hard work through another exciting year of growth, and the contribution they are making to the ongoing strong performance of the business.

Having broken through the one million customer milestone during FY24, we are now firmly on track to achieve our next milestone of two million customers over the medium term, and we look forward to making significant further progress towards this over the current year.

Charles Wigoder

Non-Executive Chairman

18 June 2024

Strategic Report

Governance Report

Financial Statements

Shareholder Information

Telecom Plus PLC Report and Accounts 2024 / 07

Co-Chief Executives' Review

The year in summary

Record customers and profits

Throughout our 25-year history, we have consistently helped UK households to stop wasting time and money on their essential services, which now encompass energy, broadband, mobile and insurance. Our unique multi- service proposition continues to demonstrate its inherent ability to deliver exactly what financially stretched and time-poor households are looking for, namely savings, simplicity and service. At the same time, our word-of- mouth Partner model is increasingly 'of its time', enabling people to earn a part-time income which solves their short-term cost pressures whilst building longer-term financial freedom. Together, these provide the sustainable competitive advantage which enabled us to deliver 14.1% customer growth in FY24 and pass the one million customer milestone, putting us firmly on track to double the size of the business to two million customers over the medium term.

We are now back in a normalised energy market, with rational competition returning and robust regulation ensuring all suppliers are operating sustainably. Falling wholesale energy prices throughout the year resulted in the Ofgem SVT price cap reducing from Q2 onwards, providing some relief for households. It is testament to the strength of our multi-service model that, despite these falling prices, we were able to deliver a 14.1% increase in customer numbers and a commensurate increase in profits, demonstrating the ability of our business model to deliver in all environments.

Whilst the dynamics in each of our markets constantly vary, we continually focus our efforts on strengthening our core multi-service proposition and supporting our Partner community. During the year, we continued to innovate and evolve our multi-service customer offering, launching our first Fixed energy tariff for 2 service customers (alongside our market-leading 3 service Fixed energy tariff), improving our mobile offering through the launch of our first 5G tariff, building out CityFibre as a full fibre broadband partner, and further developing our insurance product offering and sales journeys, with the number of customers taking insurance increasing by 38.3% to 139,109 (2023: 100,590).

Confidence in the sustainable strength of our customer proposition continues to build amongst our Partners which, combined with ongoing cost of living pressures, is resulting in more and more people turning to UW to bolster their incomes. There are now over 20 million people in the UK with a second or third part-time income - a trend

which is driven by changing societal attitudes towards work, plus long-termmacro-economic developments around the need to build a sustainable retirement income. The total number of UW Partners increased by over 14% during the year to 68,251, underpinning the sustainability of our current high-quality growth with our Partners being a unique route-to-market for signing-up high quality customers (i.e. multi-service homeowners) in significant volumes.

Rather than seeking growth at any cost, we take pride in the consistent disciplined approach we have adopted to building a long-term, sustainable and consistently profitable business. In a year characterised by falling energy prices and the return of normalised energy competition, alongside inflation-beating price rises in our other core markets, we have concentrated our efforts on delivering our three key business priorities:

• Evolving our distinct company culture
• Delivering a seamless multi-service customer experience
• Bringing more multi-service homeowner customers on board

We are delighted to have made significant progress against these priorities, laying the foundations for further progress in the years ahead.

Company culture

• We codified our culture and invested in developing our leaders through the leadership fundamentals programme, coaching, and team effectiveness courses. Our leadership engagement score is above target at 82%. We also enhanced the working environment for our customer-facing teams by introducing a new workforce management system allowing us to better predict call volumes and resource requirements, decreasing the number of people needing to work on Saturdays and allowing dynamic shift swaps.

Customer experience

• Market leading customer service is vital to our success and the confidence our customers and Partners place in us. We invested in digital self-service and "right first time" query resolution through our WhatsApp channel which effectively uses AI. As well as continuing to invest in our Customer Relationship Management (CRM) systems we significantly improved our customer support capability by introducing 'one-way' video, allowing our advisors to understand and resolve energy and broadband queries faster by enabling them to see the problem the customer is experiencing in their home first hand.

Telecom Plus PLC Report and Accounts 2024 / 08