Good morning, everybody, and welcome to the Telecom Plus PLC results presentation for H1 FY 2024. I'm Stuart Burnett, co-CEO, and I'm joined by Andrew Lindsay, my co-CEO, and Nick Schoenfeld, CFO. Now, as you'd have seen from the release this morning, it was another half year of a very strong performance across the board, which is what we've come to expect and what we absolutely expect to continue. Now, as we go through the presentation today and talk in more detail about these results, about the key drivers of our strong business performance, and about the positive outlook, I think there are three key takeaways, which you can see here on the slide.
First of all, despite the return of competition in the energy market, the business is performing very strongly in what is now a normalized and rational energy marketplace, and we're continuing to deliver comfortable double-digit % customer growth. In fact, we're now in our fifth consecutive half year period of this double-digit growth, and we expect it to continue for the foreseeable. Secondly, we've opened up these incremental growth opportunities by deepening our long-term relationship with E.ON, increasing our confidence in not just hitting, but in actually exceeding our growth targets over the coming years. And finally, and this is really important to remember, that this is a long-term growth story that stretches back 25 years, and it's all underpinned by our self-reinforcing business model, which enables us to consistently deliver for our customers, for our partners, and also for our investors.
Whatever the shorter term dynamics at play, and there will always be short-term dynamics at play, it's this that really gives us such confidence in our ability to consistently deliver on our growth ambitions and take us from the 1 million customer mark to 2 million customers and beyond over the medium term. Those are the three key takeaways for today. In terms of our top-line performance, as you can see here, the results were very strong across the board. We saw an annualized increase in customers of 14%, all acquired organically. Adjusted profit before tax was up 36% to GBP 44 million, although this did benefit, to an extent from the particularly high energy prices in Q1 before they then settled down at around the 2,000 GBP mark.
Finally, we've increased the interim dividend to 36 pence, and we'll be commencing an initial buyback of around GBP 10 million worth of shares over the coming months. All very much in line with expectations and the high expectations that we have for the business, and we're incredibly proud of continuing to deliver this compounding double-digit % annualized growth. Now, before I come back to talk in more detail about the key drivers of that growth and why we're so confident and positive about the future, I'm going to hand over to Nick briefly to talk you through some of the numbers in more detail. So, Nick, over to you.
Thank you, Stuart. So yes, let's start with the P&L, and it does indeed show a very strong performance for the first half. As Stuart mentioned, adjusted PBT is up 36% to GBP 44 million. Now, this is driven by the strong year-on-year customer growth on the one hand, but also higher Q1 energy prices across the industry. Now, going forward, the average energy bills have settled down to an average price of around GBP 2,000 from Q2 onwards. As we've mentioned before, that's what we and the market expect to be the long-term new normal.
Highlighting the main themes within the P&L, this higher Q1 energy price, together with customer growth, have fed into the revenue growth, which, as we've mentioned before, is a KPI which is not particularly relevant as a driver of profit growth, and that's because the energy commodity cost movements have to be passed on to customers. More importantly, these same price and customer growth effects feed into the gross margin, which is up year-on-year by 48%. Now, similarly, admin costs increased 44% year-on-year, and that includes the investment we've been making in customer service and technology, given the growth which we've been experiencing and we expect to continue experiencing. Now, as expected, the bad debt charge for the period increased to GBP 19 million, and that represents 2.1% of sales.
Now, as a reminder, bad debt expressed as a % of revenues, is typically higher in the first half than for the year as a whole, and that's given the seasonal consumption profile of energy across the year. And so, therefore, we currently expect that bad debt % for the full year to be somewhat lower as per the higher energy price environment we're now in, this year-on-year increase in that bad debt % primarily reflects the temporary moratorium on the installation of prepayment meters under warrant. Now, we expect this to be gradually relaxed as we move into the new year.
And as an aside, we're pleased that Ofgem is currently consulting on increasing the bad debt allowance within the price cap, given the increased debt levels seen across the industry as a whole. So this gives us long-term comfort that bad debts are not a threat to the P&L. So all this contributes to the half year adjusted PBT increasing 36% to GBP 44 million, with adjusted EPS, earnings per share, increasing 14%, and that's primarily due to the higher tax rate this year versus the prior year. So if we now look at the balance sheet, from these numbers, we've removed the cash timing distortions from the early cash payments we were, which we received from the government energy price guarantee scheme and other government schemes during FY 2023, and which have since reversed.
Now, that's the same approach that we took in the year-end presentation back in June, and also our half-year results presentation last year, where we experienced this equivalent temporary set of cash inflows. Now, as a reminder, in these last six months, we also saw the expected unwind of the timing lag from some of the wholesale energy payments which we make, and that's due to the unusually high energy prices that we experienced last winter, and these trued up, if you like, during this H1 that's just gone. So to look at the underlying picture through all this, the best view is actually the year-on-year variance from September 2022 to September 2023, and that looks through these cash timing distortions. And this view, this difference, is shown in the last column of this table.
So if you look at that September to September movement of net current assets, which is a rough proxy for working capital, we see that the underlying outflow was around GBP 18 million year-on-year for that item. And as you know, we provide indications of approximately GBP 25 million-GBP 30 million of annual working capital outflows, given the double-digit % levels of growth that we're seeing. And similarly, net debt, after all of this unwind of all these cash timing distortions, was GBP 83 million at the half year, which is up GBP 16 million year-on-year, and it maintains an appropriate net debt to EBITDA position of 0.7 times. So before we move on from this balance sheet, it's probably worth mentioning that we've refinanced our borrowing facilities.
The new facilities include a continuation of our GBP 175 million RCF for a term of four years, and that's supplemented with GBP 75 million of private placement debt, which has a maturity of seven years, and that diversifies our sources of capital going forward. These new facilities, of course, are there to support the ongoing double-digit annual growth plans of the company going forward. If we look at the cash flow now, this again adjusts out the Energy Price Guarantee temporary timing cash distortions as per the previous presentations that we've made. This cash flow for this half year starts with an EBITDA of GBP 50 million.
There's a working capital outflow of GBP 59 million in this half year, which, as I mentioned, when we were looking at the balance sheet, is primarily the reversal of the one-off cash timing distortions from the energy supply agreement payments, which we made given the unusually high energy prices last winter. Now, as I said a moment ago, on the balance sheet, the, the underlying working capital outflow on an annual basis continues to be around GBP 25 million-GBP 30 million. So after the dividend payment, and the working capital outflow, which is now normalized, as expected, net debt is now GBP 83 million, with that appropriate net debt to EBITDA ratio that I mentioned earlier. So, so then this leads on to our planned returns to, to shareholders.
Now, consistent with the capital allocation approach that we mentioned at our year-end results, and given the strong balance sheet that you've seen, we will make a modest increase to the interim dividend from 34 pence last year to 36 pence this year, and we expect to make a further modest increase to the final dividend. We've also announced an initial share buyback of around GBP 10 million during this half too. Stuart?
Brilliant. Thank you, Nick. So, as Nick shown us, the business is performing incredibly well, and what's really important to recognize here is that it's performing like this in a normalized, rational, stable energy marketplace. And one of the key features of this marketplace, well, as Nick mentioned, energy prices have now broadly stabilized at around the GBP 2,000 level, which is where they're also forecast to remain for some time. Now, it's important to note that these are still really high energy prices, around double the long-term average, but the extreme sort of volatility of the last couple of years now seems to be largely behind us. Meanwhile, Ofgem has fundamentally concluded its reforms to ensure ongoing stability, resilience and sustainability in the energy retail market.
You know, the door has been firmly closed on both the irresponsible suppliers and many of the irresponsible behaviors that led to irrational pricing in that period of what's now seen to be artificial price-based competition. Finally, we've seen a true return of competition in the market, that all suppliers are now back open for business. I'm sure many of you will have heard Octopus Energy advertising on the radio, or British Gas, EDF, E.ON, OVO, all advertising on billboards or in the press. But critically, as we've been indicating and saying for some time, they're all pricing rationally, and therefore, they aren't leading on price, because it simply doesn't make commercial sense for them to compete hard on price when they've got almost no margin to play with. They've got no structural cost advantage to bring to bear.
They need to strengthen their balance sheets to build up that GBP 115 of net assets per customer. And, you know, the price-sensitive customers that they would acquire through their conventional route to market if they were competing hard on price, would desert them the moment that they weren't offering them loss-leading acquisition pricing. And so throughout all of this period, we are continuing to provide the best value, both variable and fixed-price, energy pricing, as well as highly competitive prices across all of our services, and that's why we're now into our fifth consecutive half-year period of this comfortable double-digit % customer growth. And what this, I think, clearly demonstrates is that this is a business that is geared to grow fast in a normalized market, and that's what gives us such high confidence in our medium-term growth plans....
As we go through the second half, we're expecting to pass through the 1 million customer mark, and then we've got our plans to double the business from 1 million customers to 2 million customers over the medium term. And pushing us further along this growth trajectory, we're really pleased to have deepened up our relationship with E.ON and then, therefore, opened up these incremental growth opportunities. Now, the structure that we put in place to enable these incremental opportunities also results in, I guess, what is a de-risking of certain elements of the agreement for both UW and E.ON.
And what this means is that the amount that we pay to E.ON is more closely matched to the whole, to the wholesale components of the Price Cap, rather than a proxy percentage discount, which is what, sort of how the agreement was originally set up. You might, you might remember that there wasn't any Price Cap in place back when the agreement was, put in place back in 2013, and that's why a proxy percentage was used, and what we now have is the mechanism that would have been put in place had there been a Price Cap back in 2013. So going forward, what does that mean?
Well, it means, for example, when you look at an example of a risk area over the next few years, which Nick touched on earlier, which is around bad debts, we will now get full recovery of whatever the Price Cap cost allowance is for bad debts. Whereas previously, with the proxy percentage, this may or may not have been fully catered for within our discount. Now, in terms of the growth opportunities, first of all, we now have the ability to offer a broader range of fixed energy tariffs, which were priced off the latest forward curve, and we're already experimenting with this. And we kicked off experiments with that during the latter part of the first half, and we've already launched off the back of that, a two-service fixed tariff.
Whereas previously, we only had offered a fixed tariff to customers taking three services or more. Secondly, we have the ability to offer now more competitive business energy tariffs. You know, in the past, we picked up 20,000 or so micro and small business customers, which we essentially picked up by accident, as our partners also signed up their friends and family members' small businesses, as well as their homes. But our supply agreement was always priced off the residential SVT or residential variable energy price, and within that, there are some costs that aren't borne by businesses. A couple of examples are ECO and Warm Home Discount that relate to home insulation and customers with a limited financial means, so they're not relevant for business customers.
What that meant was we weren't able to be as competitive as we needed to be in order to really go after this, this marketplace. Well, we've now sorted that, and so we're in the process of, building out a small business proposition, which we aim to kick off as we head into next year, scaling up into FY 2026. And finally, we're also now able to build and then launch time of use tariffs, including, for example, EV tariffs, which were, types of tariff that just simply weren't in the mind's eye of anyone back in 2013, when the agreement was put together, where all the pricing was based off sort of the standard variable pricing rather than the, sort of the elements required in order to price for these more innovative tariffs.
So again, we've sorted this, and we'll be looking to launch our first EV tariff as we move through next year. Again, scaling up as we move into FY 2026. Now, we see these as real incremental growth opportunities, and to take full advantage of them, we will need to make some modest gross margin investment, as well as a small amount of sort of tech and people cost. And we expect that this investment to show from FY 2026. And fundamentally, this investment is to ensure that we not only have a compelling customer proposition to put into the marketplace, but also we've got something that our partners can get really excited about and go, go and talk to all of their, all of their, their concept work about.
So that's an overview of the very positive, rational marketplace we're now in, and a brief look forward to some of the significant opportunities in front of us. But, as I mentioned at the beginning, underpinning all of this, today, tomorrow, just as in the past, are the core and enduring fundamentals of our business model, which Andrew is going to talk about. Andrew?
Brilliant. Thank you very much. So I think it's very easy to get distracted and caught up trying to understand the working capital flows that Nick's talking about, or the latest version of the E.ON agreement, and forget and lose sight of the underlying fundamentals of the business. And so I want to give you a couple of minutes just to run through those, which... 'cause they are incredibly strong and really quite straightforward. You know, we are the only supplier of multiple home services in the U.K. Nowhere else can a customer get their energy, their broadband, their mobile, and their insurance on a single bill.
That multi-service proposition, that differentiated, you know, bundle, is not just about a customer experience, it's what delivers the fundamental cost advantage that we rely on as a business, and what powers our business model. I've said this to many of you before, but each of you at the moment has a mobile phone on your desk. You've got an energy supplier at home, you've got a broadband supplier at home, you've got a home insurance policy, and that means that there are four companies supporting you at the moment. There are four companies waiting with somebody in a call center to answer your question, four companies investing in a tech stack to support the app that you use, and ultimately, four companies trying to make a profit out of you.
And if you were with Utility Warehouse, which of course you should be, then we could be supplying with all four of those services, but only incurring one set of overheads, one app, one person in a call center, one profit stream from you. And this is absolutely the crux of the business model. It delivers us a operating cost advantage that is enduring and that we can then share with our customers on an enduring basis, in a win-win situation. And that is what you see here on this slide, which is, you know, on the left-hand side, if a customer comes to us just for energy—we are, to all intents and purposes, a standard energy supplier. We're no different to any of the names that Stuart mentioned a moment ago.
And we will essentially sell energy at around the standard price, just below the price cap. The customer doesn't get a differentiated proposition, and to all intents and purposes, they are not an ideal customer of ours at all. If we move them to the right, and we get them to take broadband as well as energy, then we make a full margin on their broadband. That means we can cross-subsidize a discount on their energy into perpetuity for as long as they have both services, and that means they get lower pricing that will encourage them to remain with us. So their longevity, their lifetime with us is extended, and at the same time, we are making a higher contribution out of them overall. If one moves them further down, following the green arrow to the right, you further extend their lifetime.
You further extend their contribution by getting them to take three services. So they take mobile, we can cross-subsidize a discount on the broadband, we can cross-subsidize a further discount on the energy. They're now getting the lowest priced energy that is possible in the UK. They're getting the best savings, so they get a multi-service, convenient proposition and the cheapest tariff in the marketplace, and we get a higher value customer. And it is this combination where they get the best value and experience, and we get the most valuable customer that is unique to our business model, and it is the obvious question, the always question is: so if you've done it, then why hasn't anyone else emulated this if it's so clever?
And the answer is that many people have tried, and here you've got the four marketplaces that we operate in, and you can see that there are single areas of focus. You know, there are energy companies, there are broadband companies, there are insurance companies, and they've all viewed the movement into semi-adjacent marketplaces as a value-add opportunity that gets a little bit of attention, whereas we view it as our fundamental strategic focus from the get-go to get multi-service customers. Trying to cross-sell and upsell is a hard, hard slog, and you get low levels of penetration. Being able to acquire multi-service customers at the front door is something that we focus on, specialize in, and achieve successfully through our unique partner word of mouth route to market.
And it's thanks to this highly differentiated approach that over 70% of the customers that our partners sign up today will take two or more of our core services. Yeah, that is an astonishing statistic, and it's not only that they are spending the time to talk about services that they benefit from themselves to their friends and family and go: "You should look at this," and explain the benefits of each of the services. Actually, just as importantly or perhaps more importantly, what they do is overcome the apathy and the inertia that inevitably exists to the perceived hurdle of switching all of your services simultaneously to a new supplier.
You know, however persuasive I might have been a minute ago, that you should all join UW for your home services, the truth is that not a single one of you will tonight go home, log on to your computer, and go through the effort of switching your energy, your broadband, your mobile, and your insurance to us, although you all know that you should. What will change that is if I say to you, "I'm gonna come round and have a cup of coffee with you tomorrow at 11:00 A.M., and I'm gonna help you dig out your bills, and I'm gonna help you overcome that perceived hurdle," and within half an hour, you'll have switched to a much more convenient, better savings model with UW. So that is exactly what our partners do for us day in, day out.
They overcome that significant perceived hurdle, which isn't really a huge hurdle, and by doing that, they give us a competitive advantage that nobody else can emulate. They give us multi-service customers to a degree that no one else can hope for, and that is what unlocks the multi-service model. So our partners are a really, really fundamental part of our business model, and they are a very, very significant barrier to entry for anybody who wanted to emulate a high-quality multi-service customer base like ours. And I think it's worth just for a moment pausing to think about what that means in the current macroeconomic environment, where there are Middle England families feeling real financial pressure.
So we are seeing continued really healthy demand for our part-time income opportunity from people who are seeking to earn an additional income in their spare time and not having many options. This month, there will be around 5,000 active partners successfully recommending us to their neighbors, their friends, their colleagues. Between them, they'll earn around GBP 3 million of commission for doing that. I think it's really important to reflect on who those people are. They are hardworking, entrepreneurial people who are trying to take control of their finances in a difficult macroeconomic and climate environment, and they should be applauded for that.
But I think what it opens up is the real win-win nature of this business, that it is... This UW is succeeding because it is able to offer consumers the lowest priced services through its multi-service model. It's able to offer our partners, and thousands of them, a really meaningful additional income when they are facing economic pressure themselves, and they need to sort out their finances, and this gives them the means to do it. And yet, at the same time, it's offering our shareholders long-term, sustainable, growing, and really healthy financial returns. And it's a win-win that isn't very, very often, I think, in business.
The two key USPs of the business being the multi-service model that is unlocked by the word-of-mouth route to market, that is what has consistently, over the last 25 years, delivered the long-term growth that we've seen year in, year out, sometimes faster, sometimes slower, upward trajectory in growth, towards that 1 million customer mark that we are just about to reach, in the next couple of months. I think it's worth just looking at that graph and going, there hasn't actually been a time in the history of the business when the business is held in such good health. You know, there is a stable, rational energy market, as Stuart's just spoken about, for in which our model really is working.
There is a really compelling customer proposition, not just in energy, but across broadband, mobile, and now insurance, that customers are enjoying and benefiting from. There is a macroeconomic environment that is driving people to want to earn an additional income, and therefore, driving our word of mouth through to market. And then slightly deeper under the skin, you know, we've spent the last 7 years investing a fair amount of money in our technology platform, and we are really ready for that to scale. We've got the infrastructure in place now for us to be able to look at that scaling from 1 million customers to 2 million customers, without blanching, given that we've made that investment.
Finally, the team that is around Stuart and Nick now, the bench is so much bigger than it used to be. It's really a very, very talented exec leadership team and further down, business leadership group throughout the business, that is up for the challenge of taking the business on to the next phase of growth. You know, whilst I'm stepping aside and passing the baton to Stuart from next summer, after 16 years at UW, I'm really, really pleased that I'm gonna carry on being involved with my beloved Team Purple, and helping to execute their strategy and help as many of them to achieve their goals through UW, as we achieve the corporate goal of going through 2 million and beyond.
Brilliant. Thank you, Andrew. Yeah, can I just add what an invaluable contribution Andrew's made over the last 16 years? You know, the business genuinely is in fantastic shape with a very exciting future, and we're delighted as well that Andrew's gonna be staying involved with, sort of helping to support and advise on his beloved Team Purple. So this brings us, I think, neatly on to the outlook. Now, we've, as you can see from the chart, we've got a 3% market share in energy, and we've got far less. We've got 1% in broadband and mobile and a fraction of a percent in insurance, and that means that 97 out of every 100 households is still with another energy supplier. And you can see here, we're the seventh-largest supplier. There's a new Big Six.
It's some slightly different names to the, the Big Six of yesteryear, but there's a new Big Six, and we are the number one challenger to that Big Six, as the seventh-largest supplier. And we could double in size, and guess what? We'll still be the seventh-largest supplier and the number one challenger. And, you know, the opportunity in front of us is absolutely huge. So bringing that opportunity back to the here and now, as a quick recap. In the first half, we had again delivered comfortable double-digit growth off this, a continued and growing demand for the savings and the additional income that we offer, and we're well on track to passing that 1 million customer mark as we move through the second half.
We've increased the interim dividend, as Nick mentioned, and in line with our capital allocation policy, we're commencing an initial share buyback of around GBP 10 million. Looking forwards in terms of H2 and the full year, as we mentioned a few times, we're now into our fifth, well into our fifth consecutive half year period of comfortable double-digit growth. Another half of this double-digit customer growth will result in another year of profits growing at broadly that same double-digit growth rate, and we're confident on delivering on market expectations for FY 2024, with broker estimates in the region of GBP 110 million-GBP 116 million for Adjusted PBT.
And then, in line with our updated capital allocation policy, as Nick mentioned, we expect to modestly increase our full-year dividend, supplemented where appropriate with the share buyback program that we're now commencing. And then, looking further ahead, yeah, as we mentioned, we're looking to scale the business from 1 million customers to 2 million customers over the medium term, and really increasing our market share of... in each of our four core service areas. And in addition, we've opened up those incremental growth opportunities that we talked about, in particular, around small businesses and EV and other sort of innovative tariffs. And as we scale the business from 1 million customers to 2 million customers, doubling the size of the business, we also expect to double our profits from the early 100 and something million GBP mark to the 200 million GBP plus mark.
And at the same time, because our business is inherently capital light and cash generative, we expect to be able to sustainably reward our investors with a growing dividend, now supplemented by share buybacks. Now, on top of that, at the full year, over the summer, we flagged that there were real opportunities for us to, in addition, increase our profit per customer as we grow. But I think it's really important to recognize that this is the icing on the cake. The cake is what we've been talking about here today, which is the core growth in customers, compounding at a comfortable double-digit annual percentage year after year after year, which we are very excited about and hope that you are too. So thank you, and I think we're now going to open up for-...
to questions, and I think we're starting off with some questions on the phone.
If you would like to ask a question, please press star one on your telephone keypad. Please ensure your line is unmuted locally, as you'll be advised when to ask your question. The first question comes from the line of Charles Hall from Peel Hunt. Please go ahead.
Morning, everyone.
Morning, Charles.
Morning!
Good morning. But could I first ask... Well, actually, first of all, say congratulations on the performance in the first half. A great start to the year, but also particularly to Andrew for the last 16 years. Very impressive of what, what's been achieved. And I think, Andrew, if you could just touch a little bit more on why you're stepping down as of next summer, what you're going to be doing with Team Purple, and what you're going to be doing more generally.
Right. Gosh! It sounds like sort of radio broad morning interview. Thank you, Charles. So I think we realistically getting to the 1 million customer mark is something that I've had in my crosshairs sort of since I joined. It's taken a lot longer than I would have liked it to have done, and I'm challenging Stuart that it will take a lot less than that to get to the next 1 million. But the truth is that achieving 1 million customers is a big milestone, and to me, there's my sort of tick in the box for achievement. I don't feel that there's still quite a lot of unfinished business for me personally with Team Purple. Because Team Purple is an incredibly interesting part of the business.
It's a psychological challenge of how to mobilize an army of 65,000 volunteers to achieve their goals, and that's something that I find particularly interesting, and I'm gonna be carrying on in a part-time role. So, you know, a day a week, but not sort of full-time and certainly not sitting on the board or the exec leadership team. But focused on the business that I'm really passionate about, and trying to help Justin, who's the Partner Director, and Stuart, and the team to really mobilize and maximize the power of that 65,000-strong community. On the other four days of the week, I would expect to be pursuing other business interests. I'm a much more sleeves rolled-up kind of business person.
That's where I enjoy spending my time. And so I would like to be getting involved in small businesses and helping them develop in the earlier stages of growth. I think that's probably more where my skill set sits.
Just if you don't mind me jumping in just to add. I mean, this has been very deliberately a sort of a transition of continuity. And that's something that, you know, the strategy that we're currently pursuing to double the size of the business from 1 million to 2 million customers is mine and Andrew's strategy, which will continue to be my strategy when Andrew steps down. It's really about consistency and continuity, and as Andrew mentioned, all the pieces of the jigsaw seem to sort of be in place now for us to really crack on and do that.
Whether it's the deeper relationship with E.ON, whether it's the sort of deep bench and really high quality team that we've been building up over the last few years, whether it's the financing that Nick talked about or the normalized marketplace that we're now sort of finally operating on as well. All the pieces of the jigsaw are there, and I think it's really great as well that Andrew's gonna be staying on to, in that sort of part-time capacity to sort of maximize the power of our very special, unique route to market.
And just talking about that deep bench, you've recently appointed a COO. Do you want to just talk through sort of the thoughts behind that recruitment and what that individual will be doing?
Yeah, yeah, sure. So I mean, so look, in fact, over the last few years, we've made a few sort of big hires. We recruited a Chief Commercial Officer, who's now our Chief Growth Officer, a guy called David Walter. So about a year and a half ago. Last year, we recruited a new Chief People Officer, who's come in and made a big impact. And then, just over a week ago, we announced the appointment of Rob Harris, who's come in as our Chief Operating Officer, and he's got really deep experience at both Barclays, where he was their sort of managing director of mortgages, and at Centrica as well, where he had held a number of sort of large roles.
He's really focused on sort of driving business performance and business transformation, making sure that you're operating really efficiently and maximizing the opportunity. So he's more the latest example of how we've really built out a really strong team. Which, again, is all part of our demonstrating our confidence in the opportunity and making sure we're sort of set up properly to take it.
Perfect. And, just lastly, really good progress on the insurance side and quite a lot of strategic moves also taking place there. Can you just talk through those and what potential you see for the insurance business over, say, a 3-5-year period?
Yeah. That's it. So our insurance continues to make, to make really strong progress. It's sort of, you know, it had a bit of a slow, slow start in its sort of first few years, sort of post sort of inception, but for the last, last couple of years, it's really started, motoring, and that, and that's due to, reasons that I think we spoke about, at the full year and last year around integrating insurance within, the, the, the proposition so that you could take insurance at the point of entry rather than as a subsequent upsell. Obviously, we, we spoke at the full year that we've also, set up our in-house, underwriter in, in Gibraltar to provide sort of like, supply resilience.
So you can't put in place the same long-term supply relationships that we in insurance that we have in energy, sort of broadband and mobile. And so with that setup, I think we're really excited about what we where we can go next with it. You know, we more than doubled the size of the our insurance sort of book over the last year. And what comes next is looking to do with home insurance what we did with boiler cover. So lots of the growth over the last year has been around boiler cover, and we're now looking to go on a similar sort of growth journey with home insurance. Leveraging some of the capabilities we'll have from our in-house insurer in Gibraltar.
And also, adding some additional complementary personal lines into the mix as well. So rather than adding any additional sort of wholly new services into the mix over the next sort of three years or so, which is, I think, the appropriate time horizon for thinking about that sort of thing. We'll be looking to add, I expect, additional insurance lines. You know, we don't offer motor insurance or travel or pet, and these are all, again, very complementary products that our partners and our customers are constantly asking us: "Why can't you provide that? It would fit so neatly within the bundle." So the opportunity is very real and big. Over thri...
You know, 3-5 years, it's all about getting from the 100-something thousand policy mark where we are today to 250, then 500,000 and beyond, and sort of playing catch-up with our other services.
That's great. Thanks very much.
We currently have no questions in the queue, so as a reminder, please press star one if you'd like to ask a question. We have no further questions on the phone lines, so I will now hand over for some questions submitted on the webcast.
Hello. Yes, we have some online questions. The first questions come from John Karidis at Numis, and it's a four-part question. What was the customer churn in the period? How is the mix of tenant versus homeowner trending over time? And can you comment on the reduction in business customers in the period?
Okay. So, customer churn during the period was around the sort of the 7% mark. You might recall that back in the price war period, we saw churn peak at one stage at around, in one period at around the 14% annualized level. During the energy crisis, it fell down to around the sort of sub-3% level. And we sort of talked for some time now about it sort of stabilizing, rising and stabilizing at a sort of a new normal somewhere in the sort of the mid to high single digits, and it's currently at that 7% level. Homeowner-tenant mix, not. I don't think that there isn't a real change in mix there.
Obviously, we do sort of gear our proposition both for customer from the customer perspective and also from the partner perspective towards homeowner customers because we view them as more valuable and with a longer life span for a number of reasons, but in particular, the fact that they move property less frequently. But what you find is, the tenants that you do have in your portfolio, they multiply because they move property so often.
That means that one tenant can become two tenants very, very, very quickly, and therefore, even if you're bringing more homeowners in at the front door, you're having to sort of play, you've got like a drag factor at the back door with your tenant population continuing to sort of increase. On the business customer side, at the beginning of the energy crisis, we actually stopped taking on new business customers. I mentioned earlier that we had acquired a number of business customers sort of by accident over the year, despite not having a proposition or the ability to create a proposition that was really geared for them and was able to be as competitive enough.
We stop, you know, stopped taking on new business customers at the beginning of the pandemic, the energy crisis because we wanted to really double down and focus on the sort of the sudden change in our sort of acquisition rate of new residential customers, and that's basically meant that we've therefore been losing business customers but not bringing any more in the front door. So there's just been a natural sort of churn effect there. And that's one of the reasons why we're. Well, it's a small part of the reason why we're very excited about the business club opportunity or business customer opportunity that's presented from the deepened E.ON relationship. That's a massive marketplace.
You know, there's something like 5 million micro businesses in the country, and it's very much the micro businesses and the S part of the SME marketplace that we're talking about. The sort of the hairdressing salon on the high street, where one of our partners might actually be working as a hairdresser or might have a friend or a family member that's doing so. Those are the types of businesses where it's very natural for them to want to have the same proposition for their small businesses they've got at their home. And so we'd expect to see that decline not only reverse, but then start to build and accelerate forwards once we go to market with our new business proposition.
There's one final part of the question from John, which I suspect is for Nick. Nick, what, what is a reasonable tax rate estimate for the full year, please?
... I would say, look, going forward that a reasonable estimate is actually the statutory tax rate, but applied to the adjusted profit before tax number, because the amortization charge is not tax deductible. So you should assume the statutory tax rate of 25%, subject to tomorrow's announcement, and apply that to the adjusted profit before tax.
Thank you very much. There's another question, Nick, from Michael Donnelly at Investec, who's asking if you could give a little bit of color around the movement in accrued income from March to September.
Well, the issue around not looking at a non-year-on-year perspective is that items such as accrued income are substantially impacted by the fact that you've got an energy consumption, which in H1 is around 35% of the year, relative to H2, which is around 65% of the year. So the accrued income, when you look at from one half to the other half, is substantially impacted by that seasonal picture.
Thank you very much. We've had a number of questions around partner recruitment and retention, and aligned to that, whether we have plans, given the strong word-of-mouth model, of using other routes to market. In particular, people have noted the marketing campaign earlier this year.
Yes. So, the marketing campaign, just to deal with that first. The marketing campaigns that we've run are essentially brand-building campaigns. We're trying to facilitate word-of-mouth conversations between our partners and whoever they may be talking to, so they don't go: "Utility Warehouse? I've never heard of them." They go: "Oh, yes, I know who Utility Warehouse are. Great." We've got to sort of—we've opened the door and made the conversation easier for our partners. I think, being entirely frank, that the above-the-line big ad spend that we did at the tail end of the last financial year, so in this spring, was not. There was no decipherable benefit from doing that.
We haven't been able to validate it and say that's something we're going to carry on doing. But there was some signs of radio advertising, local radio advertising benefiting partners, and then them feeling that they had a sort of halo effect that helped them to grow their business. And so we ran another brief radio campaign in September. And we'll keep trying, because what we really want to do is work out how to enable more partners to recommend us to more people, and keep tapping into this rich seam of multi-service acquisition. In terms of... Sorry, multi-service customer acquisition. In terms of partner recruitment, it's running at around, as I say, around 3,000 partners a month.
What's really interesting, or pleasing and interesting, is that the productivity levels of partners, of new partners joining, or the conversion of a cohort of 1,000 into partners that actually do something, it has remained very static throughout history really, at around 1 in 3. So that means that 2 out of 3 partners think this sounds like a good idea, and then get to the point of talking about UW to a friend, and they suddenly realize this isn't what they want to be doing at all, and it's not. It doesn't fit with them. So that means that 2/3 of new partners who join us do not get going and churn.
And having been now in a high-recruitment environment for over a year, we are sort of catching our tail, which means that we are recruiting 3,000 new partners, but essentially, around the anniversary of when they joined, we're losing the 2,000 from the cohort a year ago who never got out of the blocks and never got going. So you end up with a three steps forward, two steps back kind of pattern. But that 30% conversion figure is absolutely running static. So the more partners we recruit, the more partners we do get, who are productive. And one of the challenges that I'm going to continue to grapple with is how one drives that 30% up and how one makes more than 30% of new partners become productive.
Yeah, one thing that I'd add, just on that, is just pointing back to what Andrew talked about during the talking about the sort of the core fundamentals of the business model, and it's the word-of-mouth nature of our business model that enables us to overcome that inertia and therefore unlock signing up multi-service customers. So in terms of sort of the part of the question that's sort of pointing at what are the other sort of routes to market or ways in which one can expand those routes to market, fundamentally, we do believe that it's word of mouth that overcomes the inertia and is a key, I guess, barrier to entry from anyone else making a success of becoming a true multi-service provider.
Now, that doesn't mean that there aren't ways where one can expand in a complementary way, what we mean by word of mouth, and that's the way, that's the way in which we are thinking about. We've talked before about how one can expand it towards referrals, which is light touch recommendation, where you're not doing everything that a partner does, but it's still having that endorsement to help overcome that inertia. And on the other side, you know, there's the possibility at some stage to explore things around what you might call corporate or affiliate word-of-mouth relationships, where you can effectively leverage the recommendation of another partner into their customer base about the multi-service benefits of what we offer. But we believe that the wrapper around all of this...
needs to be some element of word-of-mouth to overcome that multi-service inertia that you'd face through a direct, sort of, over-the-top channel.
Thank you very much. We have another question from Mark Henderson of the Guild of Investment Managers, who's inquiring about the smaller number of services taken from new customers signed up in the period compared to the existing customer base. I don't know what comments you can give around that.
Yeah, I mean, look, we're continually optimizing the balance between absolute new customers and so what we call customer quality, where one of the measures of customer quality is number of new services or number of services they take. There are other elements as well, like the homeowner or tenant sort of status. And over time, therefore, as we're continually sort of optimizing that, we'd expect those metrics to move around a little bit. We'll see some halves where customer growth rate will be ahead of service growth rate. We'll see other halves where service growth rate will be ahead of customer growth rate, and it'll depend what it is that we've been doing. So one of-- what...
To give an example, I mentioned earlier that we've, for example, we've launched a two-service energy fix, whereas before we only had a three-service energy fix. If that drives more customers, but more customers taking two services rather than three services, a larger number of customers taking two rather than a smaller number of customers taking three services, that's the sort of thing that will have an impact on that metric. I also, again, one of the things we did sort of at the beginning of the energy crisis was we stopped mobile-only sort of orders coming through as it for various reasons. That's something that we've been experimenting with during the first half, and we're experimenting with that. Again, that's the sort of thing that will impact the metrics.
So we don't view it as anything other than just a part of the healthy sort of tension of us experimenting and sort of pulling different levers between those different elements.
And I'd just add to that, there's one thing that as one looks forward over the next, you know, the scale-up from 1 million customers to 2 million customers, you know, I'm sure that we will be increasingly defocusing our narrative around energy first and everything else. You know, Charles asked a question about insurance. Our insurance business three years ago was tiny, and it's now 118,000 services, and aiming to double that to 250 in the near term. You know, mobile's our fastest growing service at the moment. There are really interesting things happening in our non-energy marketplaces, and they are high margin, really nice businesses that we want to get back into. The last decade has been dominated by energy.
The multi-service model is the crux of the business. That means it's not just energy, it's the broadband, the mobile, and the insurance.
Thank you very much. There's another question from a private investor for, for Nick, I suspect, who, who's asking for a little bit of color around the private placement debt, around, the maturity and the coupon. I don't know if there's anything you can say, Nick.
Yeah, sure. So the private... This is the GBP 75 million private placement debt that I mentioned, which, where we are as a company, we felt it was the right strategically to have a diversified source of debt. So not just bank debt, which is our existing RCF, which at a hundred and seventy-five million, which was also extended, but supplemented with this private placement money, which has the benefit of not only being diversified, but also being typically a longer maturity.
The maturity that we have on the private placement element is 7 years, and the coupon is essentially broadly it's 7-year gilts, which is around 4%, plus an investment-grade margin of on top of the order of just in excess of 2%.
Thank you very much. And we have, we have one final question at the moment, which is around the Cashback Card offer and future plans behind developing that.
Yeah. So look, it's a bit of an unsung feature of our proposition, the cashback card. This is a really powerful tool for our partners in a way that 'cause it's something completely differentiated that no one else is offering, and a way where they can guarantee anybody that they speak to that this little card can save them money. And what it effectively is, it's a way for us to... The people just spending, using this card on their weekly shop, they effectively get cashback, which is funded by the retailer, which gets taken off their multi-service bill with UW. So it's effectively a free way for us of helping our customers to reduce their bills even further.
We see lots of interesting trends that, you know, the customers that actively use their cashback card, they stay with us for longer, they're more likely to take more services from us, et cetera. So it's a really real point of sort of connection and deepening of the relationship with us. One of the things that we've done just a couple of months ago, in fact, was sort of link up our cashback card with Google Pay. And we've got plans over the next few months to do the same with Apple Pay, so that we really sort of ensure that it's sort of properly up to scratch, so we can make sure it's a proper front-of-wallet sort of item for people.
Beyond that, the key thing is making sure that we're adding more and more retailers from it. We've got a good spread of retailers, including M&S, sort of Boots, Sainsbury's, and many others, where you can get sort of really meaningful discounts off your shopping there. So adding more retailers, get more customers taking it, spending it more often, and therefore deepening their relationship with us. Over the medium to longer term, there is the possibility of us viewing this financial services-type relationship that we're generating with some of our customers, both on the insurance side and through the cashback card, as being a sort of an entry point into a deeper financial services relationship.
That's sort of, yeah, something to maybe explore in the future.
Stuart, thank you very much. I can confirm there are no more online questions.
Okay. Brilliant, brilliant. In which case, there are no further questions. I might just have a few words to close. I just wanted to say, first of all, thank you everybody for joining us to hear about the very strong H1 performance and about the very exciting outlook ahead, and we look forward to sharing more news with you during H2 as we pass through that magic or special 1 million customer mark, and then going on the journey from 1 million customers to 2 million customers. Thank you very much.