TIDMTEP
RNS Number : 8717H
Telecom Plus PLC
13 June 2017
Embargoed until 07.00 13 June 2017
Telecom Plus PLC
Final Results for the year ended 31 March 2017
Telecom Plus PLC (the "Company"), the UK's leading low-cost
multi-utility supplier (gas, electricity, telephony and broadband),
announces its final results for the year ended 31 March 2017.
Financial Highlights:
-- Results and dividend in line with expectations
-- Revenue down 0.6% to GBP740.3m due to lower energy prices
-- Adjusted profit before tax (continuing operations) up 9.1% to GBP53.3m
-- Statutory profit before tax (continuing operations) up 16.5% to GBP40.9m
-- Adjusted EPS (continuing operations) up 7.2% to 53.3p
-- Statutory EPS (continuing operations) up 15.9% to 38.0p
-- Full year dividend up 4.3% to 48p per share
-- Sale of Opus shareholding generates GBP62.3m exceptional profit
-- GBP25m tender offer announced
Operating Highlights:
-- Further organic growth in both Members and services
-- Over 600,000 Members
-- Service numbers up by 4.9% to 2.3 million
-- Encouraging launch of Home Insurance
-- Over 1.7m LED bulbs provided and installed free of charge in
over 40,000 households throughout the UK
-- Which? 2017 Best Telecom Services Provider Award
Andrew Lindsay, CEO, commented:
"I am pleased that against a challenging market backdrop, we
have achieved our 20th consecutive year of organic growth in both
our membership base and the number of services we supply. Almost
one in five Members are now taking all our services, which
underpins the long-term sustainability of our business model by
reducing churn and improving our quality of earnings."
"Winning the Which? 2017 Annual Award for 'Best Telecom Services
Provider' is a strong endorsement of our personal approach to
looking after our Members; we could not have achieved this without
the hard work and dedication of our UK-based customer service team,
and look forward to building on the solid foundation we have
created."
"Whilst retail energy prices remain at the centre of political
debate, our wholesale arrangements and retail pricing structure
will help to shelter us from the impact of the proposed price cap,
compared with other major suppliers. In the meantime, we expect to
continue growing our customer base over the coming year, with a
target increase of 5-10% in the number of services we supply, and a
further increase in our dividend."
There will be a meeting for analysts at the offices of Peel
Hunt, Moor House, 120 London Wall, London, EC2Y 5ET at 9.15 for
9.30am
For more information please contact:
Telecom Plus PLC
Andrew Lindsay, CEO 020 8955 5000
Nick Schoenfeld, CFO
Peel Hunt
Dan Webster / George Sellar 020 7418 8900
JP Morgan Cazenove
Christopher Wood / Hugo Baring 020 7742 4000
MHP Communications
Reg Hoare / Katie Hunt / Giles Robinson 020 3128 8156
About Telecom Plus PLC ('Telecom Plus'): www.utilitywarehouse.co.uk
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 both the
Communications and Energy markets.
Members 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 Members 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
www.utilitywarehouse.co.uk
Chairman's Statement
I am delighted to report another successful year for the Company
with adjusted profits, earnings and dividends all reaching record
levels. Looking at the figures from continuing operations, adjusted
pre-tax profits increased by 9.1% to GBP53.3m (2016: GBP48.8m), and
statutory pre-tax profits reached GBP40.9m (2016: GBP35.1m), on
revenue down by 0.6% to GBP740.3m (2016: GBP744.7m); adjusted
earnings per share for the year rose by 7.2% to 53.3p (2016:
49.7p), and statutory EPS increased to 38.0p (2016: 32.8p).
This performance was achieved in the face of challenging market
conditions, with the strong headwinds we have seen over the last
few years persisting during the first half of the year. And while
the record gap between standard variable energy tariffs and
aggressively priced introductory deals started to narrow during the
autumn, this happened too late to provide any positive impact on
our service and customer numbers for Q3.
As previously reported, we responded to this more favourable
environment by making a change to our Partner compensation plan at
the beginning of Q4; this gave Partners the opportunity to
accelerate some of the residual income they would earn on new
members who switched all their utilities to us.
This enhancement, combined with our more competitive market
position, led to an increase in Partner activity as we progressed
through Q4, taking full year customer and service numbers to
607,802 (2016: 598,613) and 2,288,918 (2016: 2,181,704)
respectively - an increase of more than 107,000 services during the
year. Within this total, there has once again been a significant
improvement in customer quality, with 102,126 (2016: 76,764)
residential Members now taking all our core services (landline,
broadband, mobile, gas and electricity).
We received a number of further endorsements from Which? during
the year, recognising both the value we offer and the quality of
service provided by our UK-based membership support teams. In
addition to being ranked amongst the top suppliers for all our core
services (Energy, Broadband/Telephony and Mobile) in each of their
sector surveys, we received Recommended Provider awards for both
our Broadband and Mobile services.
Further to this, we were delighted to receive the accolade of
Best Telecom Services Provider at the recent Which? 2017 Annual
Awards ceremony. In addition, we received four awards from
Moneywise, and were voted UK National Public Champion (and named as
a finalist in the Business of the Year category for companies with
a turnover of EUR150m or higher) in the European Business Awards.
These third party independent endorsements are a testament to our
customer-centric approach, our commitment to treating our members
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.
Results overview
Our adjusted profit from continuing operations (ie: excluding
the contribution from Opus) reflects the continuing modest organic
growth over the last two years in the number of services we are
providing to our Members, an increased proportion of revenues from
higher margin telephony services, and a one-off recovery of costs
incurred in prior years relating to the smart meter roll-out
programme under our energy supply agreement, counterbalanced by
recurring customer acquisition costs which were higher this year
(primarily due to Daffodil), continued investment in headcount and
increased spending on IT. We also generated an exceptional profit
of GBP62.3m during the year from the sale of our 20% shareholding
in Opus (see below), taking our total post-tax profit to GBP95.0m
(2016: GBP31.8m).
Revenues fell slightly due to lower average energy prices
(following an industry wide reduction in retail gas prices during
the spring of 2016, and an increasing proportion of our customer
base taking our cheapest 'Double Gold' tariffs), a reduction in
average energy usage (reflecting the progressive impact of the
energy efficiency measures that have been delivered by the industry
over the last few years and the success of our own LED light bulb
replacement service), partially offset by an increase in telephony
revenues due to higher prices, more services, and a greater
proportion of customers taking fibre broadband.
We received GBP71.1m in cash for our 20% stake in Opus Energy
Group Limited ('Opus') following its acquisition by Drax Plc in
February 2017; this transaction generated an exceptional profit of
GBP62.3m which is included in our results for the year, alongside a
contribution of GBP2.2m from our share of its profit up to the date
of disposal.
Dividend
In line with previous guidance, we are proposing a final
dividend of 25p (2016: 24p), bringing the total for the year to 48p
(2016: 46p); this represents an increase of 4.3% compared with last
year, and will be paid on 28 July 2017 to shareholders on the
register at the close of business on 7 July 2017 subject to
approval by shareholders at the Company's AGM which will be held on
20 July 2017. We remain committed to a progressive dividend policy
consistent with the underlying strong cash generation of our
business.
Proposed Share Buyback
We previously announced our intention to carry out a tender
offer this summer, under which we would seek to return to
shareholders the cash we received from the sale of our stake in
Opus; we have now decided to reduce the maximum size of this tender
offer to GBP25m.
This will provide greater flexibility for the Company to take
advantage of the strategic opportunities that we expect to arise
over the next few years, resulting from the rapidly changing
political and regulatory environment for the services we
supply.
Full details of the tender offer will be included with the AGM
documents which will be sent to all shareholders shortly.
Churn
Our churn remains significantly below prevailing industry
levels, and we are encouraged by the clear downward trend that has
started to develop since last autumn. We attribute this to a
combination of factors including a reduction in the gap between
standard variable tariffs and introductory deals, increased
investment by us in retention activities, and the steadily
improving quality of our customer base. It is particularly
encouraging that this has been achieved against an industry
background which has seen record numbers of households switching
their energy supplier over recent months.
Proposed Energy Price Cap
It is encouraging that both the major political parties included
a commitment in their recent General Election manifestoes to
address one of the main issues within the energy industry, namely
the practice by many large suppliers of using the higher margins
earned on disengaged legacy customers to offer significantly
cheaper deals which are only available to those who switch. If
implemented, we believe these manifesto proposals will create a
fairer energy market, with lower energy bills for millions of
disengaged households who are currently paying more than they
should, simply because (for whatever reason) they are not switching
supplier on a regular basis.
In particular, we do not share the view widely expressed by some
of the other large suppliers that a widespread cap on standard
variable tariffs will be damaging to competition, as the wide
choice of attractively priced tariffs from the vast majority of
independent suppliers who do not exploit their customers in this
way would remain available. Indeed, the only tariffs that might
cease to be available will be the relatively small number which are
being unfairly cross-subsidised by those who are shouting the
loudest against this proposal.
In our view, the protection of disengaged consumers requires
such an absolute cap to be retained over the medium term (albeit
that it will need to be reviewed on a regular basis and set at a
level which enables efficient suppliers not engaged in predatory
pricing to earn a reasonable margin), or replaced in due course by
a long-term relative price cap as suggested recently by John
Penrose MP and endorsed by many independent suppliers.
Business Development
We are encouraged by the results from the soft launch of our
Home Insurance service. We anticipate volumes will start to improve
from their current low levels as we start marketing this new
service more pro-actively, and remain confident that Insurance has
the potential to make a material contribution to the financial
performance of the group in due course.
The downward trend in energy prices which has prevailed for over
three years has started to reverse, with rising commodity prices
being accompanied by higher regulatory, distribution and policy
costs. This has led to higher retail prices for both standard
variable tariffs and fixed price introductory deals, albeit that
the gap between them has narrowed. Although undoubtedly positive
for us, this gap still remains significantly wider than we would
have liked, due partly to the continuing practice by some suppliers
of simultaneously offering both an expensive Standard Variable
Tariff ('SVT') and a cheap introductory fixed price deal, and also
the decision by a number of new suppliers to price their energy at
near zero gross margin in order to attract market share.
The energy market remains polarised between the 'Big 6', who are
broadly maintaining or increasing profitability whilst losing
customers, and a rapidly increasing number of independent suppliers
at the other end of the spectrum, who are largely gaining market
share but (almost without exception) incurring significant losses
whilst doing so. All of these market participants are reliant on
the same wholesale costs and use similar distribution channels
(namely price comparison sites and bulk switching initiatives) to
attract customers who generally choose their new supplier based
predominantly on price and, in many cases, will switch again as
soon as they reach the end of their introductory fixed-price
period. And although new suppliers enjoy a significant initial cost
advantage by being exempt from certain policy costs, these cease to
apply as they gain scale. We find it difficult to understand how in
the face of these market dynamics, this multitude of sub-scale
competitors can develop a viable long-term business model.
Project Daffodil, our innovative free LED light bulb replacement
service, has gathered momentum over the course of the year, and has
now been provided in over 40,000 households. We are now installing
free light bulbs in around 3,500 households each month; this is
available to both new and existing Members who have switched their
energy and telephony services to us. Daffodil reduces household
electricity usage for the vast majority of Members receiving this
benefit, which goes a long way towards narrowing the gap between
our energy prices and the introductory tariffs available elsewhere;
this has been a major factor behind the improvement in the quality
of new Members joining the Club, as well as encouraging existing
Members to add additional services in order to take advantage of
this valuable benefit.
In March, we launched a number of films featuring Joanna Lumley
as the new face of Utility Warehouse, explaining who we are and the
benefits we provide to those looking to save money (by joining as a
new member) or make money (by becoming a Partner). These new tools
were well received, and we have since seen an encouraging increase
in the number of new Partners joining the business.
We have also taken steps to simplify our customer proposition,
replacing the previous choice of benefits available to Double Gold
Members with an extra 10% discount on the fixed monthly cost of
their broadband (including landline rental) worth between GBP31.80
and GBP46.79 per year.
The mobile app we launched around 12 months ago has gained
widespread acceptance, with around 65,000 Members using it each
month to submit meter readings, top-up their mobile and/or CashBack
card, track their mobile usage, and find their nearest CashBack
retail outlets; further functionality will be added in due course,
including being able to manage their insurance cover.
Our smart meter roll-out programme has been hampered by the
persistent failure of one of our meter operators ("MOP") to meet
their agreed service levels; in addition to slowing our rollout
programme, this also affected our ability to install pre-payment
meters in a significant part of the country during the second half
of the year, leading to a temporary small rise in delinquency
levels. Notwithstanding these challenges, we have now appointed a
new MOP to take over this work, and successfully installed over
100,000 meters (around 10% of our current base).
We continue to increase our investment in IT and have completed
a number of important IT projects during the year including
strengthening our cyber-defences, PCI compliance, launching Home
Insurance, and preparing for the mass rollout of smart
metering.
By virtue of our unique route to market and focus on treating
our Members fairly, we have found a balance which combines
sustainable growth in both service numbers and profitability, thus
creating real long term value for all our stakeholders. We remain
focussed on growing our business to one million households (and
beyond) over the medium term.
Route to Market
Significant numbers of new Partners continued to join the
business during the year, with an improvement in the both the
quality and quantity of new recruits since our annual sales
conference in March. At the year end we had 41,717 registered
Partners; this was below the level we reported 12 months ago
largely due to our decision last autumn to start providing
automatic refunds to many of those who join the business, but find
themselves unable (for whatever reason) to take advantage of the
opportunity we offer to build an attractive and secure part-time
additional income. These early automatic refunds, combined with the
natural underlying level of cancellations we would normally expect
to see after 12 months, led to a larger reduction in the total
number of registered partners over the period than would otherwise
have occurred.
Whilst it is more challenging for Partners to gather new Members
and build their Utility Warehouse businesses when there are such
large pricing differentials in the energy markets, we have been
pleased to see many of them still achieve significant success
during the year by focussing on the unique strengths of our
proposition and the exclusive benefits we offer.
We have invested in providing them with new tools to help them
meet this challenge, including the new suite of films featuring
Joanna Lumley, as well as continuing to improve the personal
development and training programmes we make available, free of
charge, to both new and existing Partners.
It is encouraging that despite the absence of 'loss leader'
introductory deals for new Members, the combined impact of our
improved training courses, effective Partner incentive structure,
the unique multi-service proposition and attractive benefits we
offer to our Members, means we are continuing to see a consistently
high proportion of new Partners making a successful start to
building their Utility Warehouse business.
Board Changes
We were delighted to welcome Andrew Blowers as a new independent
non-executive director, who joined the Board in November. Andrew is
currently a non-executive director of AA PLC, the UK's leading
provider of roadside assistance, and of CETA Insurance Limited, a
specialist online insurance provider. His career spans over 25
years in the UK financial services industry, including as founder
and CEO of Swiftcover.com, Chairman of IIC NV, and an executive
director of Churchill Insurance. He is already bringing a valuable
new perspective to the Board.
As previously reported, Julian Schild, became Chairman of the
Audit Committee following the retirement of Michael Pavia at last
year's AGM. Andrew Blowers has replaced Julian as Chair of the
Remuneration Committee, and Beatrice Hollond has become Chair of
the Nomination Committee.
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.
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.
Outlook
Recent Trading
Our annual sales conference took place on 18/19 March 2017, and
was attended by over 5,000 Partners. At the event, we announced the
launch of our Home Insurance service to Members, the introduction
of new films featuring Joanna Lumley, and a simplification to our
'Double Gold' bundle making it more competitive and easier to
promote.
Since making these changes the quality of new members being
gathered by Partners has remained exceptionally high, with over 50%
switching all their services to us. The number of new Members is
running slightly ahead of the levels we saw during the
corresponding period last year, and we are also seeing encouraging
numbers of new Partners joining the business.
Energy Prices
Following an extended period in which falling energy commodity
prices outweighed the additional costs of renewing and extending
the distribution network, replacing nuclear and coal-fired
generating plants that are approaching the end of their useful
lives, rolling-out smart meters, funding capacity incentives, and
paying for the various renewable energy programmes which have been
introduced, wholesale energy prices have increased significantly
since last autumn. This has exerted significant upward pressure on
retail energy prices, with both standard variable prices and the
cheapest introductory deals having increased by around GBP90 and
GBP140 respectively for a typical domestic customer.
It appears that the incoming Government is committed to
introducing a widespread cap on standard variable tariffs. Whilst
the timing of implementation, the level at which the cap would be
set, and the specific details of whom it would affect are unclear,
we strongly welcome this proposal as we believe it will create a
fairer energy market and make it more difficult for suppliers with
large legacy bases to use the profits they are earning from
disengaged customers to fund cheap introductory deals to those who
are switching. Whilst the gap between SVTs and the cheapest
introductory deals is likely to narrow, the market will remain
highly competitive, and there are many suppliers who will be
unaffected by the proposed price cap who will be able to continue
offering attractive tariffs to those looking to switch.
Our wholesale arrangements, retail pricing structure and low
cost base mean the impact of this price cap (when implemented) on
our profitability is likely to be significantly less than other
major suppliers.
Regulatory
The Competition and Markets Authority published their final
report on the domestic energy market during the year. Whilst we
welcomed their proposals to remove the current restrictions on
discounts, bundling, and the number of tariffs each supplier can
offer, we believe they are fundamentally misconceived in believing
their proposed database of disengaged customers will achieve
anything other than greater bureaucracy, more costs and increased
confusion. We hope this proposal will be quickly abandoned once the
mooted price cap on standard variable tariffs takes effect.
Our programme to roll out smart meters for all our Members is
well underway, with around 100,000 (largely dual fuel) meters
having been installed by the beginning of June 2017. The programme
is expected to gather pace over the coming months and we anticipate
making good progress this year towards the 2020 target date. As
previously highlighted, the financial benefits from this programme
(excluding any timing differences which may arise between when
costs are incurred and when they are recovered) will depend on the
speed and efficiency of our roll-out relative to other suppliers.
However, the continuing delays in finalising the specification of
SMETS2 meters, in getting them certified, and in the smart Data
Communications Company ('DCC') testing schedule, have led many
commentators to question whether the original target completion
date for this programme is still achievable, and the level of
fulfilment costs (which will ultimately be borne by consumers) from
trying to do so.
We remain concerned at the high and increasing costs imposed on
the industry in order to comply with government policy, much of
which seems to be imposed with inadequate thought given to
delivering such initiatives in a way that will minimise costs,
which ultimately get passed on by suppliers to customers through
higher bills. Examples include the current faster switching
initiative, the Green Deal programme, the establishment of Smart
Energy GB, the structure of the smart meter roll-out programme, the
over-engineering of the specification for the DCC, and the
unrealistic time-frames which are invariably adopted for any
industry change.
Regulation has an important role to play in ensuring the energy
markets are operating in a transparent manner, creating a framework
which encourages real competition, protecting the rights of
consumers, and ensuring they receive a fair deal for their energy.
However, it is not clear that the right balance has recently always
been struck. There needs to be a clearer understanding of the need
to reduce the burden of regulation which ultimately falls on those
least able to afford it - namely domestic customers.
We are disappointed that deregulating the domestic water supply
market was absent from the new Government's manifesto; this would
have created an exciting new opportunity for us to add the supply
of water to the existing range of utilities we offer, further
extending the benefits to consumers of our integrated multi-utility
approach. We urge the Government not to miss the chance to
introduce competition into this market, which would ultimately lead
to more choice, lower prices and better service for over 27 million
households who are currently forced to buy from a local monopoly
water supplier.
Prospects
Successfully navigating the constant stream of changes flowing
across all the sectors in which we operate is challenging, however
our experienced senior management team have demonstrated a
consistent ability to do so in a way which creates significant and
growing value for all our stakeholders.
Our mobile proposition is currently more competitive than ever
before, due to the imminent abolition of EU roaming charges, and
the recent improvements we have made to data allowances for some
Double Gold members. Combined with our recent award from Which? as
the UK's best provider of Broadband and Mobile services, these are
expected to further reduce mobile churn and increase penetration
over the coming year.
Sales of Home Insurance policies are expected to increase as we
add further underwriters to our panel, and progressively start
marketing this service to both new and existing members over the
course of the year. Whilst our ambitions for the current year are
extremely modest, this service has the potential to make a material
contribution to the business in due course.
Our strategy of achieving consistent high quality growth through
delivering savings, simplicity and exceptional customer service
continues to bear fruit. We have seen a significant improvement in
the proportion of new members who are switching all their services
to us over the course of the last two years (from c.35% to over
50%); these better quality customers have the highest expected
lifetime value, although they cost significantly more to acquire.
Based on recent levels of Partner activity, we anticipate the
number of services we supply will increase by between 5% and 10%
over the coming year.
From a financial perspective, the modest growth in the number of
services added over the last few years, combined with higher
customer acquisition costs (due to both faster growth and better
quality new members), and an increasing investment in IT, mean that
our adjusted pre-tax profits from continuing operations for the
current financial year, as previously announced, are likely to be
at a similar level to the year just ended. The benefit from faster
organic growth will, if current trends continue, be reflected in
our reported results for the following financial year.
In the meantime, and in the absence of unforeseen circumstances,
the steadily improving quality of our membership base and the good
visibility it provides over future revenues and margins, means that
we expect to increase our dividend to 50p per share for the current
year. Our intention going forward is to bring our dividend pay-out
ratio back to around 85% of adjusted EPS over the medium term,
whilst maintaining our progressive dividend policy.
It only remains for me to thank my boardroom colleagues for
their support and all our staff and Partners for their loyalty and
hard work during the past year, and to wish each and every one of
them success in the years to come.
Charles Wigoder
Executive Chairman
12 June 2017
Chief Executive's Review
Markets
We supply a wide range of essential services under the Utility
Warehouse brand (gas, electricity, landline, broadband and mobile)
to both domestic and small business Members throughout the UK;
these are all substantial markets and represent a vast opportunity
for further organic growth.
The markets we operate in are dominated by a relatively small
number of former monopoly suppliers and other owners of
infrastructure assets, although in each there are also a number of
independent suppliers carving out their own niches, generally based
on offering highly competitive introductory deals promoted through
price comparison sites.
Business model
We have a fundamentally different business model to any other
utility provider in the UK in three key respects:
-- we operate our business as a Discount Club; each of our
customers becomes a Member, receiving a level of service
commensurate with that status;
-- we are the only fully integrated provider of both energy and
communications services in the country. This enables us to enjoy
unparalleled levels of operating efficiency as we are able to
spread a single set of overheads across the multiple revenue
streams that we derive from each of our Members; and
-- we have a unique route to market, with an 'army' of over
40,000 part-time self- employed Partners; rather than seeking to
attract new Members through expensive advertising or price
comparison sites, we instead benefit from personal recommendations
by both our Partners and our existing Members.
Partners can earn a small percentage of the monthly revenues
generated by any Members gathered, either personally, or by someone
in their team. On a similar basis, we reward our existing Members
with shopping vouchers when they introduce a new Member to the
Club.
We continue to follow a different strategy to that of our
competitors in both the energy and communications markets,
focussing on delivering an integrated multi-utility proposition
that includes three key benefits: Savings (compared with the prices
they were previously paying), Simplicity (just one convenient
monthly bill making it easier to manage a significant part of their
monthly household budget), and Service (delivered by our
award-winning UK-based support teams).
These benefits are supported by our commitment to treating our
Members fairly, avoiding the typical marketing strategy adopted by
our competitors of combining cheap introductory deals for new
customers with much higher tariffs charged to their legacy customer
bases. We believe their approach is not only fundamentally unfair
on loyal customers, but less likely to create a sustainable long
term business, as customers who have chosen to switch once based
solely on the headline price on a comparison site will have a
higher propensity to do so again when their introductory deal
expires; this view is supported by recent switching data within the
electricity market for domestic customers, where reported churn
amongst small and medium suppliers (excluding ourselves) is now
running at an annualised rate of over 30%.
Our alternative approach is to focus on treating all our Members
in a fair manner, and to give everyone consistently good value on
all their services, rewarding loyalty and commitment with
additional discounts and benefits available to our most valuable
and long-standing Members.
The delivery of these core values is critical to our route to
market, giving our Partners the confidence to promote our services
to their friends and family - as well as generating recommendations
from existing Members who in many cases also become advocates for
our brand. The Net Promoter Scores ('NPS') of around 50 that we
consistently achieve reflect our relentless focus on this goal, and
are in stark contrast to the negative NPS scores prevalent within
the utility and telecoms markets.
Against a backdrop where most of our competitors seem focussed
almost solely on price, we believe that genuinely earning the Trust
of our Members is the key point of differentiation that will enable
us to achieve our medium-term growth objectives and help us
maximise long term shareholder value. By treating our Members
fairly, as we would like to be treated ourselves, we aim to earn
both their loyalty (which delivers long term, sustainable revenues)
and their enthusiasm for our business model (which creates growth
through referrals).
Examples of this approach include not offering short-term
discounts to new Members as an inducement to switch, and always
allowing existing loyal Members to benefit from any new tariffs we
introduce. And keeping our best deals and lowest prices for those
who have switched the most services to us.
We continue to invest in our IT systems, which enable us to
integrate all the services we supply into a single monthly bill,
supported by just one set of central overheads (including all
administrative and membership support functions). This highly
efficient cost base is a key factor in enabling us to offer
attractive pricing and a wide range of valuable benefits to our
Members, a secure residual income to our Partners, and a growing
dividend stream to shareholders. We have embarked on a programme to
enhance and update these systems over the course of the next three
to five years, and look forward to the greater business efficiency
and flexibility this will deliver in due course.
We have strong commercial relationships with all our key
suppliers, who recognise the value of our unique route to market
and the importance of maintaining our competitive market position.
To this end, there are ongoing discussions with each of them about
how the market dynamics for each of our services are changing, and
the best way to ensure these are appropriately reflected in our
wholesale pricing structure.
We are extremely pleased with the further progress we have made
this year in taking advantage of our multiple key points of
differentiation, and towards securing our position as the Nation's
most trusted utility provider.
Strategy
Our strategy is to progressively increase our share of the
markets in which we operate through organic growth, and to build a
robust, sustainable and profitable business.
We will achieve this by maintaining our focus on delivering
best-in-class service and support to our Members, treating them
fairly, investing in our systems and staff. We will seek to
simplify and, where possible, improve the competitiveness of our
services even further, encouraging existing Members to talk about
the unique benefits we offer to their friends and acquaintances,
and making it easier for our Partners to promote our services more
effectively.
We continue to explore the possibility of expanding our current
range of core services into areas where we can build upon our
existing strong relationship with our Members by offering them both
a better experience and better value on services they currently
obtain from other suppliers, whilst also delivering a satisfactory
return for our shareholders. This approach is demonstrated by the
recently announced launch of our new Home Insurance service, which
we anticipate will be accompanied by a range of other insurance
products in due course; in the medium term we look forward to
supplying water; and in the longer term, other potential new
services might include television and home emergency cover
(including boiler cover), and combining the national rollout of
smart meters with other 'connected home' products and services to
leverage our position as the only fully integrated multi-utility
supplier in the country.
Operational performance and non-financial KPIs
Despite a challenging competitive environment, our overall
performance for the year has been encouraging in a number of key
respects:
-- continuing strong organic growth with service numbers up by 107,214 (2016: 88,257)
-- materially higher proportion of Members taking our 'Double Gold' bundle
-- launch of our new Home Insurance service
-- successful rollout of Project Daffodil - our free LED light
bulb replacement service
-- introduction of new films featuring Joanna Lumley
-- winner of 2017 Best Telecom Services Provider at annual Which? awards
-- Which? 'Recommended Provider' for Mobile April 2017
-- Which? 'Recommended Provider' for Broadband March 2017
-- consistently high Net Promoter Scores
Against the background of a slow growing economy, and with
household incomes remaining under pressure, our value-based
consumer proposition and the part-time income opportunity we offer
remain extremely attractive to both Members and Partners
respectively.
Our continuing organic growth is underpinned by high levels of
confidence amongst our Partners in our brand and financial
strength, the good value we provide through our fair pricing
policies, and our commitment to delivering best-in-class service
and support to our Members.
Members
2017 2016
-------- --------
Residential
Club 578,799 568,986
Business Club 29,003 29,627
-------- --------
Total Club 607,802 598,613
Whilst we continue to regard our Business Club as an exciting
long-term opportunity, the dynamics of this market make it
extremely difficult to grow in the current energy wholesale pricing
environment. Our focus will therefore remain on the domestic
market, until market conditions become more favourable.
Within the residential Club, there is a significant difference
in average expected customer lifetimes between Members (and
therefore in the revenues and profits they will generate),
depending on whether they are an owner-occupier, and on the number
of services we are providing to them. The most attractive category
are owner-occupiers taking our 'Double Gold' bundle.
Our focus on attracting this type of Member has been reflected
in an increasing proportion of new Members switching all their
services to us (landline, broadband, mobile, electricity and/or
gas) over the last two years as can be seen from the following
figures:
Percentage of
new Members
taking 'Double
Gold' bundle
-------------------
Q1 FY16 35.1%
Q2 FY16 35.3%
Q3 FY16 46.3%
Q4 FY16 47.7%
Q1 FY17 51.5%
Q2 FY17 44.7%
Q3 FY17 46.6%
Q4 FY17 55.1%
Individual energy supply point churn remained at around 1.1% per
month, driven by collective switching initiatives and a record gap
during the first half of the year between the introductory fixed
price deals available from other suppliers and the range of tariffs
we offer. In the context of higher levels of switching activity
throughout the industry, it is pleasing that the proportion of
energy customers leaving us remains on average significantly below
other suppliers:
Energy
supply point
churn
-----------------
FY11 16.3%
FY12 13.3%
FY13 11.2%
FY14 10.4%
FY15 11.2%
FY16 13.1%
FY17 13.2%
Average revenue per Member has once again fallen slightly, as
the combined impact of falling average energy consumption and lower
retail energy tariffs outweighed the benefit from the higher
penetration of communications services (particularly mobile) that
we are now seeing:
Average Revenue
per Member
----------------------
1999 GBP190
2000 GBP286
2001 GBP316
2002 GBP329
2003 GBP459
2004 GBP482
2005 GBP505
2006 GBP634
2007 GBP801
2008 GBP819
2009 GBP1,064
2010 GBP1,149
2011 GBP1,137
2012 GBP1,186
2013 GBP1,359
2014 GBP1,304
2015 GBP1,279
2016 GBP1,226
2017 GBP1,191
(These revenue figures relate solely to our Customer Management
operating segment, the figures for 2008 to 2014 inclusive are
restated as detailed in the 2015 Annual Report)
Services
The full range of services we offer includes landline telephony
(calls and line rental), broadband, mobile, gas, electricity, and
our CashBack card. At the year end, we supplied a total of
2,288,918 services to Club Members (2016: 2,181,704), an increase
of 4.9% during the year.
2017 2016
---------- ----------
Electricity 551,622 542,430
Gas 446,394 440,872
Fixed Telephony
(calls and NGN) 320,269 306,087
Fixed Telephony
(line rental) 303,787 286,763
Broadband 276,721 256,777
Mobile 201,372 169,136
CashBack card 188,753 179,639
Total 2,288,918 2,181,704
Residential Club 2,205,462 2,096,730
Business Club 83,456 84,974
---------- ----------
Total 2,288,918 2,181,704
All the core services we provide (landline, broadband, mobile,
gas and electricity) grew during the year, with the highlight being
a 19% rise in the number of mobile services. This increase means
that penetration of mobile within our residential Club has now
reached 35%, and is starting to catch up with our other services;
this is due to a strategic decision to place mobile at the heart of
our retail proposition, and to improve its competitive
position.
We made 4G available to our Members last Autumn, and have just
increased the data allowance for Double Gold members on our
ValueMax+ tariff to 10GB at no extra cost.
CashBack
Our exclusive CashBack card has proven an important Member
acquisition and retention tool. It gives our Members the
opportunity to achieve additional savings of between 3% and 7% on
their shopping at a wide range of participating retailers, which
they receive as an automatic credit on their next monthly bill from
us. Since launching the programme, the total value of CashBack
funded by participating retailers and credited to Members now
exceeds GBP33m (2016: GBP28m).
We saw a 5% increase during the year in the number of cards in
issue to 188,753 (2016: 179,639), with the c.50% of new residential
Club Members gathered directly by our Partners applying for a card
being partially offset by those with inactive cards choosing not to
renew when their card expired. We believe this continuing strong
demand demonstrates the attractiveness of this unique membership
benefit, and would be even higher were it not for the difficulties
faced by some new Members in funding the switch from paying in
arrears on their credit card, to paying for their purchases in
advance with our prepayment card.
Many Members continue to use our online shopping portal to
reduce their bills, receiving in aggregate around GBP0.5m of
CashBack over the course of last year; this is in addition to any
savings from using their CashBack Cards.
The CashBack that we pay to our Members each month is funded
entirely by the retailers in the programme, and many Members
achieve a reduction of 20% to 30% on the amount they pay for their
utilities simply by using their CashBack card (instead of an
alternative payment card) for most of their regular household
shopping, and/or our online shopping portal.
Member Service and Support
We pride ourselves on delivering first-class service to our
Members through a single support centre based in the UK. We try to
ensure where possible that the first person a Member speaks to is
able to resolve any issues they may have with their multi-utility
account.
We have a relentless focus on improving the service experience
we deliver to our Members; we readily invest in technology that we
believe will genuinely achieve this objective, and continually
assess the numerous qualitative and quantitative performance
measurement tools that we employ to monitor all aspects of our
Members' interactions with us to improve the overall quality of
their experience.
We have been delighted at the consistently high ratings, awards
and recognition we receive from Moneywise and in Which? magazine
for the quality of the service and support provided to our Members,
and the overwhelmingly positive feedback we receive from Members in
our own surveys.
We were particularly proud to be win 'Best Telecommunications
Services Provider' at the 2017 Which? Awards Ceremony a few weeks
ago, alongside being voted UK National Public Champion in the
European Business Awards. These are clear independent third party
endorsements of our commitment to looking after our customers, and
treating them as we would wish to be treated ourselves.
Partners
Our Partners are one of the key strengths of our business. In
contrast to the routes to market adopted by other suppliers of
similar household services, the alignment of financial interest
provided by our revenue-sharing model, the structure of our
compensation plan, and the substantial number of Partners who hold
equity or share options in the Company, incentivise them to focus
their activities on finding creditworthy higher-spending Members
who will reap the maximum savings from using our services, and will
thus be least likely to churn; by doing so, they maximise their own
long-term income. This ensures that cases of mis-selling are both
inadvertent and extremely rare.
We provide a variety of training and personal development
courses, both online and classroom-based, designed to provide the
skills and knowledge they need to gather Members and recruit other
Partners effectively and successfully; all of these courses are
free to attend. In addition, we offer a hire purchase scheme which
gives Partners access to a Tablet so they can present the benefits
of our unique Discount Club more effectively.
We introduced a new Quick Income Plan on 1(st) January 2017,
giving Partners the opportunity to accelerate some of their
residual income. This has been well received, and enables any
Partner who wants to develop their Utility Warehouse business on a
full-time basis, to earn a full-time income whilst they do so. As
such, it has the potential to transform the way potential new
recruits look at this opportunity.
Our Car Plan, which provides eligible Partners with a subsidised
Utility Warehouse branded BMW Mini (or in some cases a BMW X5),
remains extremely popular with around 900 vehicles now delivered
(2016: c.800). Owners inform us that they find these helpful in
raising their local profile, resulting in enquiries from both
potential new Members and Partners.
Smart Meter roll-out
We have installed around 100,000 smart meters to date
notwithstanding operational challenges with one of our MOPs which
meant we were unable to achieve the number of installations that we
had forecast last year. Having addressed these issues, our rollout
this year is currently running ahead of forecast.
The industry anticipates the transition from first generation
SMETS1 smart meters to second generation SMETS2 smart meters will
occur this autumn, and we look forward to further accelerating our
rollout programme thereafter.
In addition to much-debated efficiency benefits, smart meters
have the potential to materially improve the relationship between
customers and energy suppliers. We are therefore broadly supportive
of the nationwide smart meter programme, albeit we remain concerned
over the significant additional costs that are being incurred as a
result of an ill-conceived and sub-optimum rollout strategy - a
cost that will ultimately be met by consumers.
IT Systems
The journey we embarked on last year to start reviewing the
systems and processes which have evolved over the course of the
last 20 years, and to prepare for the introduction of new services,
is gathering steam. And while this is creating significant
additional costs in the short term, with benefits that may take
many years to arrive, I am confident that making this investment is
the right decision for the business.
In the meantime, our operating costs remain lower than those of
any of our peers on a like-for-like basis, and we look forward to
the operating efficiencies and performance improvements which our
new systems are expected to deliver in due course.
Andrew Lindsay MBE
Chief Executive Officer
12 June 2017
Financial Review
Overview of Results
Continuing Adjusted(1) Statutory
operations
2017 2016 Change 2017 2016 Change
---------- ---------- ------- ---------- ---------- -------
Revenue GBP740.3m GBP744.7m (0.6)% GBP740.3m GBP744.7m (0.6)%
Profit before
tax GBP53.3m GBP48.8m 9.1% GBP40.9m GBP35.1m 16.5%
Basic EPS 53.3p 49.7p 7.2% 38.0p 32.8p 15.9%
Dividend per
share 48.0p 46.0p 4.3% 48.0p 46.0p 4.3%
(1) As a result of the relative size and historical volatility
of share incentive scheme charges (GBP1.2m), these are excluded
from adjusted profit before tax and adjusted basic EPS. In view of
the size and nature of the charge as a non-cash item, the
amortisation of the intangible asset (GBP11.2m) arising on entering
into the energy supply arrangements with Npower in December 2013
has also been excluded from adjusted profit before tax and adjusted
basic EPS. For ease of comparability, following the sale of the
Group's 20% shareholding in Opus Energy Group Limited ('Opus') in
February 2017 (resulting in Opus becoming a discontinued
operation), the contribution from Opus across all years and the
profit from its sale in 2017 have been excluded in the above
table.
Summary
The small decrease in revenue during the year has been driven
mainly by lower average energy prices as a result of retail gas
price reductions in the Spring of 2016, and reduced average energy
usage due to the continuing impact of energy efficiency measures
across the industry combined with a steadily increasing number of
LED light bulbs installed in our Member's homes following the
progressive successful implementation of Project Daffodil (the
provision of free LED light-bulbs to multi-service Members). These
negative factors were partly offset by an increase in telephony
revenues, resulting from an increasing penetration of fibre
broadband and some higher fixed monthly charges, and the overall
increase in the number of services provided to Members.
The improvement in adjusted pre-tax profits (continuing
operations) of 9.1% mainly reflects the continuing modest organic
growth over the last two years in the number of services we are
providing to our Members, an increased proportion of revenues from
higher margin telephony services relative to energy services, and a
one-off recovery of GBP4.2m of costs incurred in prior years
relating to the smart meter roll-out programme under our energy
supply agreement (of which 70% was credited to cost of sales with
the remaining 30% credited to administrative expenses). These are
counterbalanced by recurring higher customer acquisition costs,
increased investment in staff headcount and higher IT related
charges. We also generated an exceptional profit of GBP62.3m during
the year from the sale of our 20% shareholding in Opus (see below),
taking our total statutory post-tax profit to GBP95.0m (2016:
GBP31.8m).
Within our Customer Acquisition operating segment, losses
increased to GBP18.3m (2016: GBP14.6m) primarily due to the
inclusion of a full year of costs from Project Daffodil and an
increase in the proportion of new members switching all their
services to us.
Distribution expenses reduced slightly to GBP21.1m (2016:
GBP21.4m), mainly reflecting lower energy commissions (following
the reduction in energy revenues previously highlighted), partly
offset by increased commissions paid to Partners on the larger
number of services being taken by our growing membership base.
Administrative expenses increased during the year by GBP2.8m to
GBP55.2m (2016: GBP52.4m) mainly as a result of continued
investment in growing staff headcount to sustain our current high
standards of customer service as the business grows, and higher IT
related charges.
Adjusted earnings per share (continuing operations) increased by
7.2% to 53.3p (2016: 49.7p), statutory EPS (continuing operations)
38.0p (2016: 32.8p). In accordance with previous guidance and our
strong cash position, the Board is proposing to pay a final
dividend of 25p (2016: 24p) per share, making a total dividend of
48p (2016: 46p) per share for the year.
Margins
Our overall gross margin for the year was 17.6% (2016: 16.6%)
reflecting the shifting mix from energy towards higher margin
telephony services, and the recovery of previously incurred smart
meter rollout costs mentioned above.
Customer Management
We have continued to achieve steady growth in the number of
services we are supplying, with an increase of over 107,000
services during the course of the year. This takes the total number
of services provided within our Discount Club to almost 2.3 million
- an increase of 4.9% compared with the previous year.
We continue to focus on making it easier for Partners to gather
new Members by simplifying our processes, improving membership
benefits, making our prices more competitive, and improving the
quality of service and support we provide to our membership base.
As a result, all our core services have continued to see organic
growth in a challenging competitive environment.
Revenues decreased slightly overall due to reduced gas pricing
and lower average consumption across both types of energy service,
with growing revenues in all other service areas following
increases in the number of services being provided:
Revenues GBPm 2017 2016
------ ------
Electricity 310.4 313.7
Gas 265.8 273.9
Landline and Broadband 106.7 102.1
Mobile 27.5 24.4
Other 12.4 13.8
722.8 727.9
Customer Acquisition
Our Customer Acquisition operating segment loss increased during
the year to GBP18.3m (2016: GBP14.6m), mainly due to the inclusion
of a full year of costs relating to Project Daffodil, our free LED
replacement light-bulb offer to multi-service Members, where the
mass-rollout started in January 2016.
Distribution and Administrative Expenses
Distribution expenses include the share of our revenues that we
pay as commission to Partners, together with other direct costs
associated with gathering new Members which are included as part of
the Customer Acquisition Segment result for the year. These reduced
slightly to GBP21.1m (2016: GBP21.4m), mainly reflecting lower
energy commissions following the industry wide gas price reductions
at the start of the financial year, partly offset by increased
commissions paid to Partners from the increase in new Members and
services.
Within administrative expenses, the bad debt charge for the year
fell slightly to 1.1% of revenues (2016: 1.2%), falling in absolute
terms to GBP7.8m (2016: GBP8.4m).
The number of prepayment meters we installed during the year,
many of which were provided at the Member's own request, fell to
5,357 (2016: 6,775), partly due to delays in fitting prepayment
meters following service level issues with one of our meter
operators ('MOPs') in the second half of the year; a new MOP has
recently been appointed to take on this work. At the end of the
year we had an installed base of 69,828 (2016: 71,026) prepayment
meters, representing approximately 7.0% of the energy services we
supply; this remains significantly below the average level of
prepayment meters within the industry of around 16% (source:
CMA).
Delinquent Members
----------------------
FY12 1.46%
FY13 1.23%
FY14 1.15%
FY15 1.10%
FY16 1.09%
FY17 1.15%
Delinquency (the proportion of Members who have at least two
energy bills outstanding) has been on a steady downward trajectory
over the last few years, although in the last year it has increased
slightly to 1.15% (2016: 1.09%). This increase is primarily due to
a delay in fitting prepayment meters during the second half of the
year, which resulted from operational challenges with one of our
MOPs; this issue should be resolved over the coming months
following the recent appointment of a new MOP.
The average number of employees increased from 908 to 1,049.
This reflects our commitment to continue delivering the best
possible experience to our Members (increasing numbers of which are
taking multiple services from us), the additional services we are
now supporting (such as Insurance, Daffodil and the smart meter
roll-out) and a significant ongoing investment in strengthening
both our IT resources and our management team. Personnel expenses
(excluding the non-cash accounting cost of share incentive schemes)
increased by 14.5% during the year to GBP35.3m (2016:
GBP30.8m).
Overall, administrative expenses increased during the year by
GBP2.8m to GBP55.2m (2016: GBP52.4m) mainly as a result of higher
staff costs and increased investment in IT, partly offset by the
recovery of previously incurred smart meter rollout costs mentioned
above.
Opus
Our 20% stake in Opus Energy Group Limited ('Opus') was sold in
February 2017, resulting in Opus becoming a discontinued operation.
The sale resulted in the receipt of GBP71.1m of cash and an
exceptional profit from the sale of GBP62.3m. As explained in the
Chairman's Statement above, we intend to undertake a tender offer
this summer, through which we will be seeking to return up to
GBP25m of these proceeds to shareholders; full details will be sent
to shareholders alongside the forthcoming AGM documents.
Cash, Capital Expenditure and Working Capital
During the year we received an exceptional cash inflow of
GBP71.1m following the sale of our shareholding in Opus, paid the
GBP21.5m deferred consideration to npower, and fully repaid our
revolving borrowing facilities pending the announced tender offer.
We ended the period with no debt and a cash balance of GBP18.7m
(2016: cash before borrowings of GBP35.3m).
As expected, our net working capital position showed a year on
year cash outflow of GBP9.2m primarily due to timing differences
related to our energy purchasing arrangements with npower.
Under the terms of our energy supply arrangements, Npower
remains responsible for funding the working capital requirements
associated with providing energy to Members who have chosen to pay
on a Budget Plan.
Borrowings
Our balance sheet at the year-end shows a net cash position of
GBP18.7m with zero debt drawn down from our revolving borrowing
facilities (2016: net debt of GBP56.3m), following receipt of the
GBP71.1m proceeds from the sale of our shareholding in Opus.
Following the return of cash to shareholders under the impending
share tender offer, the Group's Net Debt / EBITDA ratio would still
remain below 1.0x.
Dividend
The final dividend of 25p per share (2016: 24p) will be paid on
28 July 2017 to shareholders on the register at the close of
business on 7 July 2017 and is subject to approval by shareholders
at the Company's Annual General Meeting which will be held on 20
July 2017. This makes a total dividend payable for the year of 48p
(2016: 46p), an increase of 4.3% compared with the previous
year.
We believe our strong underlying cash flow, rising adjusted
earnings and strong credit profile will enable us to refinance any
remaining borrowings as they fall due, whilst maintaining a
progressive dividend policy. In the light of the steadily improving
quality of our membership base and the good visibility it provides
over future revenues and margins, we expect to increase our
dividend to 50p per share for the current year. Our intention going
forward is to bring our dividend pay-out ratio back to around 85%
of adjusted EPS over the medium term, whilst maintaining our
current progressive dividend policy.
Share Incentive Scheme Charges
Operating profit is stated after share incentive scheme charges
of GBP1.2m (2016: GBP2.5m). These relate to an accounting charge
under IFRS 2 Share Based Payments ('IFRS 2').
As a result of the relative size of share incentive scheme
charges as a proportion of our pre-tax profits, we are separately
disclosing this amount within the Consolidated Statement of
Comprehensive Income for the period (and excluding these charges
from our calculation of adjusted profits and earnings) so that the
underlying performance of the business can be clearly identified.
Our current adjusted earnings per share have also therefore been
adjusted to eliminate these share incentive scheme charges.
Taxation
A full analysis of the taxation charge for the year is set out
in note 4 to the financial statements in the Annual Report. The tax
charge for the year is GBP10.4m (2016: GBP8.9m).
The effective tax rate for the year was 9.9% (2016: 21.9%), due
to the sale of our 20% shareholding in Opus on which no tax will be
paid as it is eligible for the substantial shareholding exemption.
Excluding the sale of Opus and the share of profit from Opus in
both years, the effective tax rates for 2017 and 2016 would be
25.5% and 25.4% respectively.
Nick Schoenfeld
Chief Financial Officer
12 June 2017
Principal Risks and Uncertainties
Background
The Group faces various risk factors, both internal and
external, which could have a material impact on long-term
performance. However, the Group's underlying business model is
considered relatively low-risk, with no need for management to take
any disproportionate risks in order to preserve or generate
shareholder value.
The Group continues to develop and operate a consistent and
systematic risk management process, which involves risk ranking,
prioritisation and subsequent evaluation, with a view to ensuring
all significant risks have been identified, prioritised and (where
possible) eliminated, and that systems of control are in place to
manage any remaining risks.
A formal document is prepared by the executive directors and
senior management team on a regular basis detailing the key risks
faced by the Group and the operational controls in place to
mitigate those risks; this document is then reviewed by the Audit
Committee. No new principal risks have been identified during the
period, and save as set out below, nor has the magnitude of any
risks previously identified significantly changed during the
period.
Business model
The principal risks outlined below should be viewed in the
context of the Group's business model as a reseller of utility
services (gas, electricity, fixed line telephony, mobile telephony,
broadband and insurance services) under the Utility Warehouse and
TML brands. As a reseller, the Group does not own any of the
network infrastructure required to deliver these services to its
membership base. This means that while the Group is heavily reliant
on third party providers, it is insulated from all the direct risks
associated with owning and/or operating such capital intensive
infrastructure itself.
The Group's services are promoted using 'word of mouth' by a
large network of independent Partners, who are paid solely on a
commission basis. This means that the Group has limited fixed costs
associated with acquiring new Members.
The principal specific risks arising from the Group's business
model, and the measures taken to mitigate those risks, are set out
below.
Reputational risk
The Group's reputation amongst its Members, suppliers and
Partners is believed to be fundamental to the future success of the
Group. Failure to meet expectations in terms of the services
provided by the Group, the way the Group does business or in the
Group's financial performance could have a material negative impact
on the Group's performance.
In relation to the service provided to its membership base,
reputational risk is principally mitigated through the Group's
recruitment processes, a focus on closely monitoring staff
performance, including the use of direct feedback surveys from
Members (Net Promoter Score), and through the provision of rigorous
staff training.
Responsibility for maintaining effective relationships with
suppliers and Partners rests primarily with the appropriate member
of the Group's senior management team with responsibility for the
relevant area. Any material changes to supplier agreements and
Partner commission arrangements which could impact the Group's
relationships are generally negotiated by the executive Directors
and ultimately approved by the full Board.
Information technology risk
The Group is dependent on its proprietary billing and membership
management software for the successful operation of its business
model. This software is developed and maintained in accordance with
the changing needs of the business by a team of highly skilled,
generally long-standing, motivated and experienced individuals. The
Group relies on this software and any failure in its operation
could negatively impact service to Members and potentially be
damaging to the Group's brand.
All significant changes which are made to the billing and
membership management software are tested as extensively as
reasonably practicable before launch and are ultimately approved by
the Chief Technology Officer and Billing departments in
consultation with the Chief Executive as appropriate.
Back-ups of both the software and underlying billing and
membership data are made on a regular basis and securely stored
off-site. The Group also maintains a disaster recovery facility in
a warm standby state in the event of a failure of the main system,
designed to ensure that a near-seamless service to Members can be
maintained.
The Group has full strategic control over the source code behind
its billing and membership management system, thereby removing any
risk of future software development not being able to meet the
precise requirements of the Group.
Data security risk
The Group processes sensitive personal and commercial data
during the course of its business. The Group looks to protect
customer and corporate information and data and to keep its
infrastructure secure. A significant breach of cyber security could
result in the Group facing prosecution and fines, loss of
commercially sensitive information, financial losses from fraud and
theft, lost productivity from not being able to process orders and
invoices, and unplanned costs to restore and improve the Group's
security. This could damage the Group's brand and distributor
confidence which might take an extended period of time to rebuild.
Ultimately, individuals' welfare could be put at risk in the event
that the Group was not able to provide services or personal data
was misappropriated. The Group uses high specification firewalling,
network segmentation, and multifaceted network and endpoint
anti-viral mitigation systems; external consultants are also used
to conduct penetration testing of the Group's internal and external
IT infrastructure.
Legislative and regulatory risk
The Group is subject to varying laws and regulations, including
possible adverse effects from European regulatory intervention. The
energy markets in the UK and Continental Europe are subject to
comprehensive operating requirements as defined by the relevant
sector regulators and/or government departments. Amendments to the
regulatory regime could have an impact on the Group's ability to
achieve its financial goals and any failure to comply may result in
the Group being fined and lead to reputational damage which could
impact the Group's brand. Furthermore, the Group is obliged to
comply with retail supply procedures, amendments to which could
have an impact on operating costs.
The Group is a licenced gas and electricity supplier, and
therefore has a direct regulatory relationship with Ofgem. If the
Group fails to comply with its licence obligations, it could be
subject to fines or to the removal of its respective licences.
Proposed regulatory changes such as the imposition of retail
energy price caps, the rapid rollout programme of smart energy
meters (with the potential for additional costs if existing meters
must be replaced prior to the end of their planned lives), and the
replacement of existing environmental and social policies, could
all have a potentially significant impact on the sector, and the
net profit margins available to energy suppliers.
In general, the majority of the Group's services are supplied
into highly regulated markets, and this could restrict the
operational flexibility of the Group's business. In order to
mitigate this risk, the Group seeks to maintain appropriate
relations with both Ofgem and Ofcom (the UK regulators for the
energy and communications markets respectively), the Department for
Business, Energy and Industrial Strategy ('BEIS'), and the
Financial Conduct Authority ('FCA'). The Group engages with
officials from all these organisations on a periodic basis to
ensure they are aware of the Group's views when they are consulting
on proposed regulatory changes or if there are competition issues
the Group needs to raise with them.
It should be noted that the regulatory environment for the
various markets in which the Group operates is generally focussed
on promoting competition; it therefore seems reasonable to expect
that most potential changes will broadly be beneficial to the
Group, given the Group's relatively small size compared to the
former monopoly incumbents with whom it competes, although these
changes, and their actual impact, will always remain uncertain.
Political and consumer concern over energy prices and fuel
poverty may lead to further reviews of the energy market which
could result in further consumer protection legislation being
introduced through energy supply licences with price controls for
certain customer segments currently being proposed. In addition,
political and regulatory developments affecting the energy and
telecoms markets within which the Group operates may have a
material adverse effect on the Group's business, results of
operations and overall financial condition.
Financing risk
The Group has debt service obligations which may place operating
and financial restrictions on the Group. This debt could have
adverse consequences insofar as it: (a) requires the Group to
dedicate a proportion of its cash flows from operations to fund
payments in respect of the debt, thereby reducing the flexibility
of the Group to utilise its cash to invest in and/or grow the
business; (b) increases the Group's vulnerability to adverse
general economic and/or industry conditions; (c) may limit the
Group's flexibility in planning for, or reacting to, changes in its
business or the industry in which it operates; (d) may limit the
Group's ability to raise additional debt in the long term; and (e)
could restrict the Group from making larger strategic acquisitions
or exploiting business opportunities.
Each of these prospective adverse consequences (or a combination
of some or all of them) could result in the potential growth of the
Group being at a slower rate than may otherwise be achieved.
Fraud and bad debt risk
The Group has a universal supply obligation in relation to the
provision of energy to domestic customers. This means that although
the Group is entitled to request a reasonable deposit from
potential new Members who are not considered creditworthy, the
Group is obliged to supply domestic energy to everyone who submits
a properly completed application form. Where Members subsequently
fail to pay for the energy they have used ('Delinquent Members'),
there is likely to be a considerable delay before the Group is able
to control its exposure to future bad debt from them by either
switching their smart meters to pre-payment mode, installing a
pre-payment meter or disconnecting their supply, and the costs
associated with preventing such Delinquent Members from increasing
their indebtedness are not always fully recovered.
Fraud and bad debt within the telephony industry may arise from
Members using the services, or being provided with a mobile
handset, without intending to pay their supplier. The amounts
involved are generally relatively small as the Group has
sophisticated call traffic monitoring systems to identify material
occurrences of usage fraud. The Group is able to immediately
eliminate any further usage bad debt exposure by disconnecting any
telephony service that demonstrates a suspicious usage profile, or
falls into arrears on payments.
More generally, the Group is also exposed to payment card fraud,
where Members use stolen cards to obtain credit (e.g. on their
CashBack card) or goods (e.g. Smartphones and Tablets) from the
Group; the Group regularly reviews and refines its fraud protection
systems to reduce its potential exposure to such risks.
Wholesale prices risk
The Group does not own or operate any utility network
infrastructure itself, choosing instead to purchase the capacity
needed from third parties. The advantage of this approach is that
the Group is protected from technological risk, capacity risk or
the risk of obsolescence, as it can purchase the amount of each
service required to meet its Members' needs.
Whilst there is a theoretical risk that in some of the areas in
which the Group operates it may be unable to secure access to the
necessary infrastructure on commercially attractive terms, in
practice the pricing of access to such infrastructure is either
regulated (as in the energy market) or subject to significant
competitive pressures (as in telephony and broadband). The profile
of the Group's Members, the significant quantities of each service
they consume in aggregate, and the Group's clearly differentiated
route to market has historically proven attractive to
infrastructure owners, who compete aggressively to secure a share
of the Group's growing business.
The supply of energy has different risks associated with it. The
wholesale price can be extremely volatile, and Member demand can be
subject to considerable short term fluctuations depending on the
weather. The Group has a long-standing supply relationship with
npower under which the latter assumes the substantive risks and
rewards of hedging and buying energy for the Group's Members, and
where the price paid by the Group is set by reference to the
average of the standard variable tariffs charged by the 'Big 6' to
their domestic customers less an agreed discount; this may not be
competitive against the wholesale prices paid by new and/or other
independent suppliers. However, if the Group did not have the
benefit of this long term supply agreement it would be exposed to
the pricing risk of securing access to the necessary energy on the
open market and the costs of balancing.
Competitive risk
The Group operates in highly competitive markets and significant
service innovations or increased price competition could impact
future profit margins. In order to maintain its competitive
position, there is a consistent focus on ways of improving
operational efficiency. New service innovations are monitored
closely by senior management and the Group is generally able to
respond within an acceptable timeframe by offering any new services
using the infrastructure of its existing suppliers. The increasing
proportion of Members who are benefiting from the genuinely unique
multi-utility solution that is offered by the Group, and which is
unavailable from any other known supplier, is considered likely to
materially reduce any competitive threat.
The Directors anticipate that the Group will face continued
competition in the future as new companies enter the market and
alternative technologies and services become available. The Group's
services and expertise may be rendered obsolete or uneconomic by
technological advances or novel approaches developed by one or more
of the Group's competitors. In the event that smaller independent
energy suppliers were to experience financial difficulties as a
result of increasing wholesale prices for instance, it is possible
that customers could also have a loss of confidence in the Group,
given that it is also an independent energy supplier. The existing
approaches of the Group's competitors or new approaches or
technologies developed by such competitors may be more effective or
affordable than those available to the Group. There can be no
assurance that the Group will be able to compete successfully with
existing or potential competitors or that competitive factors will
not have a material adverse effect on the Group's business,
financial condition or results of operations. However, as the
Group's membership base continues to rise, competition amongst
suppliers of services to the Group is expected to increase. This
has already been evidenced by various volume-related growth
incentives which have been agreed with the Group's three largest
wholesale suppliers. This should also ensure that the Group has
direct access to new technologies and services available to the
market.
Infrastructure risk
The provision of services to the Group's Members is reliant on
the efficient operation of third party physical infrastructure.
There is a risk of disruption to the supply of services to Members
through any failure in the infrastructure e.g. gas shortages, power
cuts or damage to communications networks. However, as the
infrastructure is generally shared with other suppliers, any
material disruption to the supply of services is likely to impact a
large part of the market as a whole and it is unlikely that the
Group would be disproportionately affected. In the event of any
prolonged disruption isolated to the Group's principal supplier
within a particular market, services required by Members could in
due course be sourced from another provider.
Energy industry estimation risk
A significant degree of judgement and estimation is required in
order to determine the actual level of energy used by Members and
hence that should be recognised by the Group as sales. There is an
inherent risk that the estimation routines used by the Group do not
in all instances fully reflect the actual usage of Members.
However, this risk is mitigated by the relatively high proportion
of Members who provide meter readings on a periodic basis, and the
rapid anticipated growth in the installed base of smart meters
resulting from the national rollout programme.
Gas Leakage within the national gas distribution network
The operational management of the national gas distribution
network is outside the control of the Group. There is a risk that
the level of leakage in future could be higher than those
historically experienced, and above the level currently
expected.
Key man risk
The Group is dependent on its key management for the successful
development and operation of its business. In the event that any or
all of the members of the key management team were to leave the
business, it could have a material adverse effect on the Group's
operations.
Single site risk
The Group operates from one principal site and, in the event of
significant damage to that site through fire or other issues, the
operations of the Group could be adversely affected.
Acquisition Risk
The Group may invest in other businesses, taking a minority,
majority or 100% equity shareholding, or through a joint venture
partnership. Such investments may not deliver the anticipated
returns, and may require additional funding in future.
Consolidated Statement of Comprehensive Income
For the year ended 31 March 2017
Note 2017 2016
GBP'000 GBP'000
Continuing operations
Revenue 1 740,290 744,732
Cost of sales (609,859) (620,858)
---------- ----------
Gross profit 130,431 123,874
Distribution expenses (21,116) (21,424)
Share incentive scheme charges (101) (36)
----------------------------------- ------- ---------- ----------
Total distribution expenses (21,217) (21,460)
Administrative expenses (55,195) (52,355)
Share incentive scheme charges (1,084) (2,479)
Amortisation of energy supply
contract intangible (11,228) (11,228)
----------------------------------- ------- ---------- ----------
Total administrative expenses (67,507) (66,062)
Other income 449 397
---------- ----------
Operating profit 1 42,156 36,749
Financial income 89 126
Financial expenses (1,378) (1,801)
---------- ----------
Net financial expense (1,289) (1,675)
Profit before taxation 40,867 35,074
Taxation (10,424) (8,909)
Profit for period 30,443 26,165
Discontinued operations
Profit for period from associate 64,517 5,609
Profit and other comprehensive
income for the year attributable
to owners of the parent 94,960 31,774
---------- ----------
Basic earnings per share
Continuing operations 38.0p 32.8p
Discontinued operations 80.6p 7.0p
---------- ----------
2 118.6p 39.8p
Diluted earnings per share
Continuing operations 37.8p 32.6p
Discontinued operations 80.1p 7.0p
---------- ----------
2 117.9p 39.6p
Consolidated Balance Sheet
As at 31 March 2017
2017 2016
Assets GBP'000 GBP'000
Non-current assets
Property, plant and equipment 31,117 33,063
Investment property 9,089 9,211
Intangible assets 190,575 198,364
Goodwill 3,742 3,742
Investments in associate - 11,604
Other non-current assets 15,593 13,800
--------- ---------
Total non-current assets 250,116 269,784
--------- ---------
Current assets
Inventories 2,676 2,762
Trade and other receivables 29,812 27,749
Prepayments and accrued income 98,320 97,233
Cash 18,732 35,343
--------- ---------
Total current assets 149,540 163,087
--------- ---------
Total assets 399,656 432,871
--------- ---------
Current liabilities
Deferred consideration - (21,500)
Trade and other payables (24,608) (26,580)
Current tax payable (5,407) (936)
Accrued expenses and deferred
income (111,322) (114,583)
--------- ---------
Total current liabilities (141,337) (163,599)
--------- ---------
Non-current liabilities
Long term borrowings - (70,152)
Deferred tax (605) (839)
Total non-current liabilities (605) (70,991)
Total assets less total liabilities 257,714 198,281
--------- ---------
Equity
Share capital 4,024 4,016
Share premium 138,642 137,729
Treasury shares (760) (760)
JSOP reserve (1,150) (1,150)
Retained earnings 116,958 58,446
Total equity 257,714 198,281
--------- ---------
Consolidated Cash Flow Statement
For the year ended 31 March 2017
2017 2016
GBP'000 GBP'000
Operating activities
Profit before taxation - continuing
operations 40,867 35,074
Adjustments for:
Net financial expense 1,289 1,675
Depreciation of property, plant
and equipment 3,203 3,596
Profit on disposal of fixed assets (21) (12)
Amortisation of intangible assets 12,088 11,228
Amortisation of debt arrangement
fees 229 985
Decrease/(increase) in inventories 86 (1,869)
(Increase)/decrease in trade and
other receivables (4,084) 8,202
(Decrease)/increase in trade and
other payables (5,241) 1,206
Share incentive scheme charges 1,185 2,515
Corporation tax paid (6,190) (8,755)
--------- --------
Net cash flow from operating activities 43,411 53,845
--------- --------
Investing activities
Purchase of property, plant and
equipment (2,066) (4,080)
Purchase of intangible assets (3,406) -
Disposal of property, plant and
equipment 60 22
Payment of deferred consideration (21,500) -
Disposal of associated company 71,103 -
Distribution from associated company 5,074 5,474
Purchase of shares in associated
company (55) (626)
Interest received 91 115
Cash flow from investing activities 49,301 905
--------- --------
Financing activities
Dividends paid (37,633) (34,331)
Interest paid (1,370) (2,202)
Drawdown of long term borrowing
facilities - 71,241
Repayment of long term borrowing
facilities (71,241) (70,000)
Fees associated with long term
borrowing facilities - (1,147)
Issue of new ordinary shares 921 496
Cash flow from financing activities (109,323) (35,943)
--------- --------
(Decrease)/increase in cash and
cash equivalents (16,611) 18,807
Net cash and cash equivalents at
the beginning of the year 35,343 16,536
Net cash and cash equivalents at
the year end 18,732 35,343
--------- --------
Consolidated Statement of Changes in Equity
For the year ended 31 March 2017
Share Share Treasury JSOP Retained
Consolidated capital premium shares reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 April 2015 4,011 137,238 (760) (2,275) 58,106 196,320
Profit and total comprehensive
income - - - - 31,774 31,774
Dividends - - - - (34,331) (34,331)
Credit arising on share
options - - - - 1,224 1,224
Credit arising on exercise
of JSOP - - - 1,125 1,673 2,798
Issue of new ordinary
shares 5 491 - - - 496
Balance at 31 March
2016 4,016 137,729 (760) (1,150) 58,446 198,281
-------- -------- -------- -------- --------- --------
Profit and total comprehensive
income - - - - 94,960 94,960
Dividends - - - - (37,633) (37,633)
Credit arising on share
options - - - - 1,185 1,185
Issue of new ordinary
shares 8 913 - - - 921
Balance at 31 March
2017 4,024 138,642 (760) (1,150) 116,958 257,714
-------- -------- -------- -------- --------- --------
Notes
1. Segment reporting
The Group's reportable segments reflect the two distinct
activities around which the Group is organised:
-- Customer Acquisition; and
-- Customer Management.
Customer Acquisition revenues mainly comprise sales of equipment
including mobile phone handsets and wireless internet routers to
customers. Customer Management revenues are principally derived
from the supply of fixed telephony, mobile telephony, gas,
electricity, internet services and home insurance to residential
and small business customers.
The Board measures the performance of its operating segments
based on revenue and segment result, which is referred to as
operating profit. The Group applies the same significant accounting
policies across both operating segments.
Operating segments - continuing operations
Year ended 31 March Year ended 31 March
2017 2016 (restated)
Customer Customer Customer Customer
Management Acquisition Total Management Acquisition Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 722,748 17,542 740,290 727,936 16,796 744,732
----------- ------------ --------- ----------- ------------ ---------
Segment result 60,445 (18,289) 42,156 51,305 (14,556) 36,749
----------- ------------ --------- ----------- ------------ ---------
Operating profit 42,156 36,749
Net financing expense (1,289) (1,675)
Profit before taxation 40,867 35,074
Taxation (10,424) (8,909)
--------- ---------
Profit for the year from
continuing operations 30,443 26,165
--------- ---------
Segment assets 390,639 9,017 399,656 411,292 9,975 421,267
Investment in associates - - - 11,604 - 11,604
----------- ------------ --------- ----------- ------------ ---------
Total assets 390,639 9,017 399,656 422,896 9,975 432,871
Segment liabilities (138,850) (3,092) (141,942) (231,553) (3,037) (234,590)
--------- ---------
Net assets 257,714 198,281
--------- ---------
Capital expenditure (5,343) (129) (5,472) (3,988) (92) (4,080)
Depreciation 3,127 76 3,203 3,515 81 3,596
Amortisation 12,088 - 12,088 11,228 - 11,228
----------- ------------ --------- ----------- ------------ ---------
Statutory operating profit is stated after deducting share
incentive scheme charges (GBP1.2m) and the amortisation of the
energy supply contract intangible asset (GBP11.2m). It also
includes a one-off recovery of GBP4.2m of costs incurred in prior
years relating to the smart meter rollout programme under our
energy supply agreement.
Revenue by service
2017 2016
GBP'000 GBP'000
Customer Management
* Electricity 310,370 313,689
* Gas 265,822 273,889
* Fixed communications 106,653 102,085
* Mobile 27,500 24,434
* Other 12,403 13,839
------- -------
722,748 727,936
Customer Acquisition 17,542 16,796
740,290 744,732
------- -------
The Group operates solely in the United Kingdom.
2. Earnings per share
The calculation of basic and diluted earnings per share ("EPS")
is based on the following data:
2017 2016
GBP'000 GBP'000
Earnings for the purpose of
basic and diluted EPS 94,960 31,774
Share of profit related to
associate (net of tax) (64,517) (5,609)
--------- ---------
Earnings for the purpose of
basic and diluted EPS - continuing
operations 30,443 26,165
Share incentive scheme charges
(net of tax) 968 2,278
Amortisation of energy supply
contract intangible assets 11,228 11,228
--------- ---------
Earnings excluding share incentive
scheme charges and amortisation
of intangibles for the purpose
of adjusted basic and diluted
EPS 42,639 39,671
--------- ---------
Number Number
('000s) ('000s)
Weighted average number of
ordinary shares for the purpose
of basic EPS 80,073 79,789
Effect of dilutive potential
ordinary shares (share incentive
awards) 438 363
--------- ---------
Weighted average number of
ordinary shares for the purpose
of diluted EPS 80,511 80,152
Continuing operations
Adjusted basic EPS(1) 53.3p 49.7p
Basic EPS 38.0p 32.8p
Continuing operations
Adjusted diluted EPS1 53.0p 49.5p
Diluted EPS 37.8p 32.6p
It has been deemed appropriate to present the analysis of
adjusted EPS excluding share incentive scheme charges due to the
relative size and historical volatility of the charges. In view of
the size and nature of the charge as a non-cash item the
amortisation of intangible assets arising from the energy supply
agreement with Npower has also been adjusted.
3. Dividends
2017 2016
GBP'000 GBP'000
Prior year final paid 24p (2016:
21p) per share 19,205 16,734
Interim paid 23p (2016: 22p) per
share 18,428 17,597
-------- --------
The Directors have proposed a final dividend of 25p per ordinary
share totalling approximately GBP20.1 million, payable on 28 July
2017, to shareholders on the register at the close of business on 7
July 2017. In accordance with the Group's accounting policies the
dividend has not been included as a liability as at 31 March 2017.
This dividend will be subject to income tax at each recipient's
individual marginal income tax rate.
4. Related parties
Identity of related parties
The Company has related party relationships with its
subsidiaries, formerly its associate until disposal on 10 February
2017 and with its directors and executive officers.
Transactions with key management personnel
Directors of the Company and their immediate relatives control
approximately 23.3% of the voting shares of the Company. No other
employees are considered to meet the definition of key management
personnel other than those disclosed in the Directors' Remuneration
Report.
Details of the total remuneration paid to the directors of the
Company as key management personnel for qualifying services are set
out below:
2017 2016
GBP'000 GBP'000
Short-term employee benefits 1,475 1,377
Social security costs 196 184
Post-employment benefits 80 80
1,751 1,641
Share incentive scheme charges 186 1,555
------- -------
1,937 3,196
------- -------
During the year, the Company acquired goods and services worth
approximately GBP130,000 (2016: GBP59,000) from companies in which
directors have a beneficial interest. No amounts were owed to these
companies by the Company as at 31 March 2017. During the year, the
Company sold goods and services worth approximately GBP12,000
(2016: GBP33,000) to companies in which directors have a beneficial
interest.
During the year directors purchased goods and services on behalf
of the Company worth approximately GBP118,000 (2016: GBP161,000).
The directors were fully reimbursed for the purchases and no
amounts were owing to the directors by the Company as at 31 March
2017.
Other related party transactions
Associates
During the year ended 31 March 2017 up to the date of disposal
on 10 February 2017, the associate supplied goods to the Group
which amounted to GBP1,304,000 (2016: GBP1,371,000). Transactions
with the associate are priced on an arm's length basis. Dividends
received during the year from the associate amounted to
GBP5,074,000 (2016: GBP5,474,000) relating to the financial year to
31 March 2016.
Subsidiary companies
During the year ended 31 March 2017, the Company's subsidiaries
purchased goods and services from the Company in the amount of
GBP61,235,000 (2016: GBP50,519,000). At 31 March 2017 the Company
owed the subsidiaries GBP34,023,000 which is recognised within
trade payables (2016: GBP35,466,000 owed by the Company to the
subsidiaries).
5. Basis of preparation
The financial information set out above does not constitute the
Group's statutory information for the years ended 31 March 2017 or
2016, but is derived from those accounts. The Group's consolidated
financial information has been prepared in accordance with
accounting policies consistent with those adopted for the year
ended 31 March 2016. Statutory accounts for 2016 have been
delivered to the Registrar of Companies and those for 2017 will be
delivered following the Company's annual general meeting. The
auditor has reported on these accounts, their reports were
unqualified and did not contain statements under the Companies Act
2006, s498(2) or (3).
6. Directors' responsibility statement
The directors confirm, to the best of their knowledge:
(a) the financial statements, prepared in accordance with
International Financial Reporting Statements ("IFRSs") as adopted
by the European Union, give a true and fair view of the assets,
liabilities, financial position and profit or loss of the Group and
the undertakings included in the consolidation taken as a whole;
and
(b) the Chairman's Statement, Chief Executive's Review,
Financial Review and Principal Risks and Uncertainties include a
fair review of the development and performance of the business and
the position of the Group and the undertakings included in the
consolidation taken as a whole, together with a description of the
principal risks and uncertainties that they face.
The directors of Telecom Plus PLC and their functions are listed
below:
Charles Wigoder - Executive Chairman
Julian Schild - Deputy Chairman and Senior Non Executive
Director
Andrew Lindsay - Chief Executive Officer
Nick Schoenfeld - Chief Financial Officer
Andrew Blowers - Non Executive Director
Beatrice Hollond - Non Executive Director
Melvin Lawson - Non Executive Director
By order of the Board
(1) Adjusted basic and diluted EPS for continuing operations
exclude share incentive scheme charges and the amortisation of the
intangible asset recognised as a result of the new energy supply
arrangements entered into with Npower in December 2013.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR EAXKAFDNXEFF
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June 13, 2017 02:00 ET (06:00 GMT)
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