Right, let's get started. Good morning, everyone. Thank you for joining us this morning for the Telecom Plus full-year results presentation for the year ending 31 March 2024. I'm Stuart Burnett, CEO, and with me is Nick Schoenfeld, CFO. We are very pleased to report another year of record performance across the board, with record customer and service numbers, as well as record profits and returns to shareholders. Now, before we get into the detail, here's a quick overview of the running order for this morning. I'm gonna kick off with our FY 2024 highlights. Nick will then take you through our continued strong financial performance, and I'll then finish with our positive outlook for the year and years ahead. Now, as we go through the update today, I think there were three key takeaways that I wanted to call out.
First, our recent and future double-digit growth performance is underpinned by our unique multi-service business model, our structural cost advantage, and our partner route to market, which together enable us to sustainably outcompete. Second, we've got a medium-term target of hitting 2 million customers. And as we go on that journey, we expect to deliver, annually between 10%-15% annual net customer growth. And at the same time, we see a real opportunity to increase our EBITDA per customer from the sort of the mid-120s up towards the 150 mark. And third, over the year ahead, as we take our first big step from the 1 million customer mark towards the 2 million customer mark, we expect customer growth of between 12%-14%, resulting in adjusted PBT of between GBP 124 million and GBP 128 million.
Right, we'll come back to that growth and profit outlook a bit later, after we've gone through our business highlights for last year, which are summarized on this slide. And as you can see, FY 2024 was a year of record performance, with the numbers really speaking for themselves. We saw a 14% increase in customers, all acquired organically, accompanied by 12% service growth. Gross profit was up 16%. And as Nick will touch on later, gross profit is actually where we really see the P&L is starting for most purposes. And this then translated into an Adjusted PBT up 21% to just under GBP 117 million, within which, of course, is that positive Q1 impact from higher energy prices, which we mentioned at the half-year. And that explains why PBT increased slightly faster than customer growth last year.
And then finally, reflecting the capital light and cash-generative nature of the business, we increased the dividend to GBP 0.83 alongside the GBP 10 million share buyback that we did in H2. Now, I think it goes without saying that we're very pleased with these results, which show yet another year of compounding double-digit growth. But what's the story behind the headlines? And to really understand sort of how the business delivered this record performance and why it's such a positive indicator of what's to come, I think it's important to understand the key market dynamics in place during the year. Now, first, and as expected, over the course of the last year, competition returned to the energy market, with all major suppliers now open for business and sort of actively seeking to acquire new customers.
In fact, I think everybody in the room and on the call will surely have seen the significant advertising activity that's now been undertaken by Octopus, OVO, and pretty much every major supplier. However, in this post-energy crisis marketplace, with capital requirements being imposed on suppliers and a low regulated EBIT margin available, critically, and this is really important, their pricing strategies have returned to being rational. It's against that rational competitive backdrop that we're still achieving this sustained double-digit growth as our structural cost advantage really sort of kicks in. Now, within that growth, we did see a slight increase in churn, as expected, to just under 9%, still meaningfully below the churn rate of around sort of 14% that we saw sort of pre-2022.
Note that later this year, the ban on acquisition tariffs is due to be lifted, as expected, but we don't see that as having a notable impact given the rational, stable marketplace that we're now in. Now, in addition, in contrast to FY 2023, when energy prices increased significantly and we grew at that rate of over 20%, last year in FY 2024, we actually saw significant falls in energy prices. You know, the average price cap level during the course of last year was just over GBP 2,100 compared to GBP 3,100 in FY 2023. Then you look ahead to the rest of this year, FY 2025, we see the average price cap, according to latest forecasts, as being a much more stable sort of GBP 1,650-GBP 1,700 for the year as a whole.
So, as you can see, we've demonstrated our ability to grow at a double-digit rate in a rising and a falling energy market, as well as the more stable energy market that we now appear to be in. And that's because underpinning all of that growth is our structural cost advantage that we generate from our unique business model. So let's have a quick look at our business model. And look, it's a really simple but really powerful business model. And there are three key elements that all sort of work in tandem, as shown on the slide, to really drive the business forward. First, you've got our unique multi-service proposition, which attracts these high-value multi-service customers. Secondly, you've got our unique structural cost advantage, which enables us to reinvest in and make our proposition even more recommendable.
Then thirdly, we've got our unique word-of-mouth route to market, which is how we're able to acquire those multi-service customers in the first place. Each of these three core elements helps to create this sort of self-reinforcing model that's been propelling the business forward for over 25 years now, year after year. Let's just take a quick, deeper, slightly deeper look at how it works, starting with our multi-service proposition. As you can see on this sort of Venn diagram of sorts, we are the only true multi-service provider in the U.K.. By bundling together all of their, multiple services with us, customers can stop wasting time by only paying one bill, by only managing one account, by only having to remember one password, and they can stop wasting money through the great savings that we offer on our bundles.
Yeah, it's a genuinely sort of hassle-free way of managing your home services. It's a true point of differentiation between us and all other utility suppliers. Not only do our customers benefit from the ease of this multi-service offer, but we as a business benefit from the increased customer lifetimes that we get, because the more services a customer takes, the longer that they stay with us. Now, the other great thing about multi-service is that multi-service customers are the core of our structural cost advantage. This is the best way probably of visualizing that. You see, we generate up to four revenue streams from our customers, but we've only got a single set of overheads. That means that relative to all of our competitors, we have a lasting operating cost advantage that we share back with our customers in the form of sustainable long-term savings.
It's a real, win-win. But more than that, our one-of-a-kind proposition, combined with these great long-term savings, creates a service that is really worthy of recommendation. That's exactly what our partners are for. We have a network of over 68,000 partners who are based all over the country, as you can see, on this sort of heat map on the slide. These partners are experts at recommending our unique model to their friends, their families, people in their local communities, and sort of breaking down that nationwide inertia to switching, and in particular, to switching multiple services in one go. They're part-time. You know, they're fitting what they do as a UW partner in and around their busy lives, their busy jobs.
But like most of Middle England, they're people for whom an extra few hundred GBP a month and a long-term trail income could really make all the difference. I like to think of them as sort of micro-influencers. So whether that's at the school gates of the golf club or online on Facebook or Instagram, think of them as micro-influencers. And so there you have it, the three key pillars of our unique business model. Now, before handing over to Nick, here's a quick run-through of some of the key developments that took place during the year as we continue to invest in both managing and maximizing the growth opportunity in front of us. And some of the managed highlights are set out on this slide. Firstly, this is really important. Our core operations are now scaled for growth.
We've invested significantly over the last few years in our people and systems, particularly since the energy crisis kicked off, from the front line all the way through to the executive leadership level. And now that we're seeing core volumes, in particular, start to return to sort of pre-crisis typical levels, and we're comfortably managing the growth rate, we've begun sort of streamlining the business with tighter management of our full-time workforce. And as a result, we expect to see our admin cost per customer gradually fall going forward. But critically, this hasn't come as a cost, however, to our customer experience. In fact, the opposite.
And this year, we've had multiple endorsements from Uswitch and Trustpilot, among others, and there are more to come over the to be announced over the next week or so, while our tech team won Tech Team of the Year for 2024 at the prestigious National Technology Awards. We've made a number of sort of developments, big and small, over the course of the year, including things like we've launched a new WhatsApp contact channel to provide a low-cost form of contact with our customers. We've introduced one-way video calls so our advisors can quickly resolve technical broadband issues, for example, with customers. And we've also continued to invest in our platforms using AI where appropriate to ensure that we're sort of scaled and ready to be able to support 2 million+ customers.
So that's how we've been managing the growth, but now to how we've been maximizing the growth. We've made a number of significant updates to our multi-service proposition over the course of the year, including creating a new GBP 100 energy discount for four service customers and also introducing a new fixed energy tariff for two service customers, whereas previously you had to take three or more services from us in order to be able to access our fixed tariffs. We've been working on the launch of our sort of first new sort of EV tariff, as well as the relaunch of our UW business offering, both of which we expect to land later in FY 2025.
Then over the year ahead, we'll be looking to further accelerate multi-service take-up and, in particular, growth in our mobile services by giving customers access to our multi-service discounts when they take a second mobile SIM from us, whereas previously, only the first SIM counted towards multi-service discounts. We expect this increase in multi-service, sorry, in mobile service growth that we expect to see from this to at least offset slightly slower insurance service growth, given that we've temporarily decided to pause new insurance sales while we discuss some elements of our policies with the FCA as part of what's an informal process. Now, we've already removed Income Protector and Bill Protector. Bill Protector's a legacy product. We've removed them from new customer sales, but we're continuing with renewals.
We're planning on temporarily pausing boiler and home insurance sales, probably at the end of this month or in early July while we review them as well. We expect this review to take a few months. To be clear, it's a voluntary informal process that we're following. Onto the cashback card. In FY 2024, our customers spent over GBP 500 million on their prepaid cashback cards, resulting in over GBP 10 million of cashback. To further drive that spend, we've been adding new cashback partners over the course of the year, including Aldi, IKEA, and Adidas, to name a few, as well as adding the U.K.'s top five streaming services, which we launched back at our Power Up Partner event earlier this year. Those are Netflix, Spotify, Disney+, Paramount, and Amazon Prime.
And we've also launched the card on Google Pay to make it even easier for customers to spend. I mean, this cashback card, it's not as well known as our other services, but it's a truly differentiated and hugely powerful tool to sign up new customers, to build loyalty, and to reduce their bills. And it's critical, it's funded by the retailers where our customers are doing their weekly shop. So, if you haven't got one, I'd recommend that you get one. And then finally, capitalizing and investing in the demand that's clearly there for our partner income model. And this is so important. I've actually got another separate slide of this because what they do and what we offer, through our partner income opportunity is increasingly of its time.
Now, of course, over recent years, there has been a tailwind from higher interest rates and the increased cost of living. But of course, that sort of cost of living tailwind is by definition temporary, even though it's not going away, particularly fast. And the upfront income that a partner can get of GBP 300 per customer can make a real difference to thousands of people who are struggling to pay their bills or meet their higher mortgage costs. But I think that there are two much more significant tailwinds in play, which we expect to drive growing interest in our partner income opportunity over the years ahead. Now, the first of those is the work transition. You know, there are now more than 20 million people in the U.K. with an additional sort of second, third, fourth part-time income.
Our partner part-time income model is much closer to the norm. It fits squarely into that sort of modern way of working where people who want to escape the 9:00 A.M. to 5:00 P.M., who want to be their own boss. Of course, this work transition shift is only going to accelerate over the years ahead. Then I think even more significantly, you know, I think that the big, the biggest financial crisis that we expect to see over the coming decades is the pensions crisis. You see, there are literally tens of millions of households who are not saving adequately and are therefore facing retirement poverty. Government and policymakers, they've only got two answers or two solutions to this. One is to work harder. The other is to contribute more. Sorry, work longer. The other is to contribute more or some combination of that.
Unsurprisingly, neither of those are particularly popular options. Our model, however, our partner income model, where you can get an upfront income plus an ongoing income, which is effectively a revenue share or a residual income, it's a small cut of every bill that the customer that you sign up pays into perpetuity. It fits squarely into the gap. I'd like to maybe just give two sort of little anecdotes or examples to really try and bring to life how, how powerful an opportunity this is for our, our partner model. When we passed through the 1 million customer mark earlier this year, we went back and we traced down and tracked down our very first customer. And of course, because our customers stay with us for a long, long time, they're still a customer 25 years later.
But even more interestingly, our very first partner who signed up our very first customer has been paid a small cut of her bills every single month for the last 25 years. Now, that's the power of the residual income, annuity-style income that you can get from being a partner in action. And then secondly, to try and sort of demonstrate sort of how significant this income opportunity could be. If you were to sign up just two multi-service customers a month, that's One a fortnight. We're not talking about a huge sort of time commitment here. One a fortnight, two a month for five years. Then at the end of five years, you'll have 120 multi-service customers that will generate you an annuity-style residual income equivalent to having a pension pot valued at over GBP 100,000, GBP 100,000-pound pension pot.
Now, according to DWP, the average household pension pot is about GBP 30,000. I think if you look at sort of older age brackets, it maybe gets into the GBP 90,000 or approaching GBP 100,000. But either way, this small amount of additional effort over a relatively short time frame gives you the opportunity to multiply your potential retirement income and retirement prospects. Whichever way you look at it, this could be life-changing. And that is the power of our partner income model. Now, given these tailwinds, of course, we expect growing interest in our partner income opportunity over the years ahead.
You can see in the box on the right-hand side of this slide how we might envisage our total partner numbers, our active partners per year, and our active partners per month to evolve over time as we go on that journey from 1 million to 2 million customers. Pulling all of these growth elements together, including those exciting changes being planned for our mobile proposition, we have a lot of confidence in our customer growth expectations and the P&L range that we have shared today. I'll come back to that in a moment. In the meantime, over to Nick for the financials.
Thank you, Stuart. So, let's start with the P&L, which shows a very strong performance across the year. Now, as Stuart mentioned, adjusted profit before tax is up 21% to GBP 117 million. That's driven primarily by the strong year-on-year customer growth. Now, if we look at the main themes within the P&L, revenues of just over GBP 2 billion are 18% lower than the prior year. That's driven by energy prices returning from their very high underlying levels in the prior year to more normal levels going forward. As we've mentioned before, are expected to increase below the rate of customer growth, in the coming year. The bad debt charge as a percent of total sales was 1.5%.
Now, that higher level of bad debt overall relative to lower historical levels is driven by the temporary moratorium imposed by Ofgem on the involuntary installation of prepayment meters for those customers who refuse to pay, 100% to the group. Now, all this contributes to an adjusted PBT increase of 21% to GBP 117 million, as mentioned before, with adjusted share buyback, which we undertook in half two of last year. Stuart.
Thank you, Nick. So look, we've talked through our record operational and financial performance for FY 2024, which continues that sort of exciting trading outlook that began all the way back in FY 2022 and which has recently taken us through that 1 million customer milestone, which is a really sort of symbolic milestone for the business. So now to look forward to the years ahead and our journey from the 1 million customer milestone to our next milestone, which is 2 million customers. So as you can see here on this chart, with 1 million customers, and not all of our customers take energy, which is why we appear slightly below the 1 million customer line on the slide, we've got 3% energy market share.
That makes us the seventh largest energy supplier and the biggest independent challenger to the new Big Six, who you can see all on the right of the slide. Of course, our market share is meaningfully smaller than 3% in our other services. When we go on that journey from 1 million to 2 million customers, 2 million customers will have 6% energy market share. Only be the seventh largest energy supplier and the largest, most significant independent challenger to the Big Six. The question to my mind is not about the size of the opportunity, but it's about the journey to deliver on it. Here you can see the 25-year journey that we've been on to get to this point.
And I think there were three things that I'd like to call out, which are sort of labeled on the slide. First of all, we were delivering a double-digit compound annual growth rate in the period from 2008 to 2014, which was a period where we first became sort of truly multi-service business. And it was a sort of normalized marketplace, very similar to the one that we're back in today. It was a marketplace where there were, you know, around 15 or so suppliers in the energy market. They were competing, but they were engaging in rational competition. And there was an expectation that suppliers would all make a fair return.
Then we had that period between 2015 and 2021, that sort of slightly flatter period, the price war period, where a failure of regulation led to there being over 70, so from 15 to over 70 suppliers. And we emerged into a period of what was irrational price-based competition with suppliers offering energy at negative gross margin. And that resulted in a loss-making sector where we were pretty much the only profitable energy supplier, albeit a slower-growing energy supplier. And then now, having gone through the energy crisis, which cleared out those unsustainable operators, the regulator has rightly reformed the marketplace to be rational and profitable. It's a marketplace in which our unique business model has thrived and is set to continue thriving.
And that's why we've been seeing and expect to continue seeing that double-digit net customer growth, which is what we were expecting for FY 2025 in the 12%-14% range as we've set out. And then in this sort of normalized marketplace with our market-leading customer proposition and those growing, growing tailwinds, around our partner opportunity that I mentioned earlier, we've got a lot of confidence in our continued growth trajectory. So what does this customer growth opportunity mean in terms of profits and returns? Well, you can see on the right-hand side of this chart our EBITDA per customer evolution over time. Now, it was typically around the GBP 100 a year mark. And then it structurally increased to the sort of mid-GBP 120 marks into around FY 2023. And that was originally driven by a combination of higher energy prices and also increased energy supply profitability.
Now, you might recall that our FY 2023 profit outcome can be sort of traced back to, like an implied energy price for the year of GBP 2,000, which is actually pretty similar to the average price cap level that I mentioned that we saw in FY 2024 last year as well. Albeit that last year there was that positive impact I mentioned in Q1 from the very high energy prices that sort of fell over into the first quarter of last financial year. And that explains why our EBITDA per customer last year was actually over GBP 130. Although if you strip out the Q1 impact, then you actually get back the underlying was once again in the mid-120s. So looking forward to the new year, FY 2025, we again expect an EBITDA per customer resulting in the mid-120s.
That assumes that energy price cap levels remain broadly in line with the latest forecast. That's because we've already taken the necessary steps to offset the impact of energy prices falling from that sort of GBP 2,000-pound level that was the reference point last year and the year before to the current forecast for this year of around the GBP 1,650-GBP 1,700-pound level. Now, in terms of the drivers behind our EBITDA per customer level and looking further out as we head towards the 2 million customer mark, we can see, you know, a clear opportunity to further increase our EBITDA per customer from that mid sort of 120s, sort of baseline up to the 130s, 140s, and ultimately towards 150 over time. Now, again, the key components are set out on the slide.
On the gross profit side of things, the main levers are implied improved supplier terms, you know, you know, the sort of improvements that you get with sort of greater scale and greater buying power. Secondly, from selling additional higher-margin services into our customer base and increasing our multi-service penetration. Third, by optimizing our pricing for overall returns rather than just for growth. Together, when you put all of these elements together, and we see these elements as being worth well in excess of GBP 10, maybe as much as GBP 20 of additional EBITDA per customer, with the rate of delivery being partly impacted by any need to offset any further falls in energy prices over the years ahead. This is trying to put that additional sort of EBITDA on the gross profit side into context.
An additional GBP 10 is less than GBP 1 a month of additional gross profit per customer. I think that that's why it sort of feels so, so achievable over time. Now, in addition, on the admin cost side of things, as mentioned earlier, we're now scaled for growth and expect to start delivering operating leverage while maintaining our, our high standards of customer service. In addition, there are real benefits to come from AI and sort of the continued investments that we've been making in our technology platform. So together, we can see sort of admin cost opportunities over time in the region of, again, GBP 20 or more, which again feels very realistic if you, sort of, consider the fact that a few years ago our admin cost per customer was around the GBP 100 mark. It's now sort of well over the GBP 140 mark.
There's a significant opportunity to sort of rebate back sort of, and if you take the midpoint between those two, you can see where that GBP 20 sort of comes from. And then in terms of what do those growing profits over time mean in terms of actual returns? Now, Nick stepped you through the headlines earlier, but our capital-light business model means that we expect our growing profits to convert into growing shareholder returns. And we expect to return in the region of 80%-90% of adjusted profits after tax through an inflationary dividend supplemented by share buybacks. So in summary, in FY 2025, the new year, we expect customer growth of 12%-14%, adjusted PBT of between GBP 124 million and GBP 128 million, and an inflationary increase to the dividend supplemented by share buybacks where appropriate.
Over the medium term, you know, from FY 2026 to FY 2027 onwards, we expect to start seeing the benefits of sort of the new launch of our EV tariffs and our business offering, which we're planning on launching later this year as we look to increase our market share across all of our services, stepping on our journey from 1 million customers towards that 2 million customer milestone at an annual 10%-15% customer growth rate with growing shareholder returns as we go. Then over the longer term, you know, as we've talked about, our customer proposition and partner model both have really significant further potential. You know, as a reminder, 2 million customers, when we get there, that will only be 6% market share in energy.
And 100,000 sort of partners, that was one of the numbers that I mentioned on our partner slide, that will be just 0.5% of the 20 million people who are currently multi-income individuals in the country. So stepping back, it's very easy to see how over time our model could really emerge as the leading platform for taking new services into customers' homes over the years to come. Thank you very much, everybody. I think on that note, we're going to move on to questions. And on the slide, you can see some awesome highlight snaps from our Power Up event, earlier this year. If you've not been to it, I'd very much encourage you to get to it, over time. Ask anyone who's been, and they'll give it a rave review, no doubt. Oh, I think we'll start off with questions in the room. Charles.
I can second the rave review.
Oh, we need a mic.
Thank you. It's Charles Hall from Peel Hunt. Stuart, could we start on the insurance point, and just give us the background to why you've withdrawn the Bill Protector and the reviews of the boiler cover and home cover? What gives you confidence that there's nothing material that you need to change and that it'll be a relatively short period that you're not able to issue those to new customers?
Yeah, sure. So look, the backdrop here is this came out because we had an individual customer complaint about an aspect of our Bill Protector product. As a reminder, our Bill Protector product, it's sort of like a legacy sort of non-core product. It doesn't feature in our service numbers and doesn't make a material sort of contribution to the P&L. But the right thing to do was to sort of review the terms of that policy. So we've taken it off the market for new customers, but only a handful of new customers take that product, in any event. But we're keeping going with renewals for existing customers while we sort of step through that process.
While doing that, it's obviously the right thing to do is to obviously step back and take a look at your other products as well. That's what we're planning on doing with boiler cover and home insurance. We don't have a date for this yet, but we're planning on either later this month or early in July taking them off the market as well. You know, don't know exactly how long these reviews can take, but we expect a few months. But yeah, that's the sort of ballpark.
Just as a reminder, when you sort of step back and think about what we're trying to do with our products, we're trying to, sort of, you know, be a challenger brand to the sort of established big players in each of our marketplaces by providing better service and better value across our products. And that's true across our insurance products as well. So we're confident that these products are, you know, our boiler cover product. We've been sort of running it at sort of break-even for the last few years. It's a really comprehensive product that's really keenly priced. Same with our home insurance product, which is, you know, five-star Defaqto rated.
And we only sign up customers onto these products where they're offering better value than what they're already paying or what they're quoted for elsewhere as well for these products. So we're confident in the value that we're offering, but you've got to step through the process. And until that time, then we'll temporarily withdraw them from the market. The key thing is we don't expect any impact on our growth outturn or the P&L outturn that we've set out today. And in fact, when we look at the changes that we're making to our mobile proposition, you know, mobile is a more ubiquitous service than something like boiler cover. Pretty much every household has got multiple mobiles in it. And it's a much simpler and easier switch. It's an easier sale.
So, not only do we expect the increase in mobile service growth from those changes in our mobile proposition to offset any sort of slowdown in the insurance service growth, it could actually be a sort of a broader growth accelerator, sort of more generally.
What was the specific issue with the Bill Protector product?
So, one of the features of Bill Protector is that it provides sort of coverage of your utility bills in a scenario where you might lose your, be unable to work for certain reasons, like redundancy, for example. Certain customers who might have taken the product, while they were working, at a certain stage in life, they might stop working. Obviously, over time, work trends are pushing that age up, you know, further up as people are working longer and longer. But for people who get to certain of the older age groups, the propensity to claim for that product is less high. And it's a less relevant product for people of that age group. So that's the area that we're looking at. But it's confined to a relatively narrow cohort of people.
And the second SIM, what's the reason for making that change now? What, why haven't you not done that before?
It's a really good point. And I've actually been giving my team a bit of a hard time now that we've sort of started thinking about it in this way. And we see the opportunity from it for why we hadn't thought of it earlier. And why we've been looking at it sort of more in response to this issue. But I think it could be very powerful. But obviously, time will tell as to, I mean, it'll certainly drive and improve and increase mobile service growth.
I like to think it will increase multi-service penetration more generally, as it makes it easier and more attractive for customers to become multi-service. Because of that, it may also be a tailwind for growth overall.
Great. Thanks.
I think John was next. So we can pass the mic over to John.
It's one coming that way, John.
Thanks. Thank you. It's John Karidis from Deutsche Numis. Actually, I have two sets, so I'll just ask the first one, if I may. The first one, Nick, it would be really useful if you can help us conceptualize the difference in EBITDA per service, between energy, broadband, mobile, and insurance. Because I know, for example, the OpEx for some services is less than it is for energy, maybe. And that way we can sort of see what could happen if you choose to lead on different services over time.
And then secondly, I just wanted to confirm that what you're saying about operating leverage essentially means that if you have 10%-15% customer growth, the adjusted PBT growth would be what? How would you summarize it? 15%-20%, over that period of time? These are my two questions for the time being, please.
Sure. Well, in terms of the margins per service or, you know, contributions per service, we don't actually disclose that. But to give you a feel, the energy side of our business is high volume, low margin. And the sort of non-energy side of our business is, if you like, lower volume, higher margin. So, you know, the margins that we're talking about on the energy side of the business are, you know, in the low tens of, sorry, between, you know, 10%-15%. And the non-energy side of the business is materially higher than that.
So, it's just to give you a little bit of a feel for that. But we don't actually disclose specific numbers in terms of a per service element.
Just to explain why we don't do that. And we're really focused on the customer level. And we've therefore, that's why obviously I was talking earlier about EBITDA per customer. And that's how we think about things. And that's because one of the real strengths of our multi-service bundle is that our multi-service offers that we can choose where we price and where we take our margin. And therefore, we can react to different market and competitive dynamics. And we're also able to again react to a falling energy price environment by increasing the price of our non-energy services to partly offset that.
The way I like to think about the multi-service offer is almost a little bit like we've got the power of like a graphic equalizer where across each of our services, if there's a particularly sort of competitive marketplace in mobile at one time, we can reduce our mobile pricing and offset that investment by increasing our price elsewhere. Therefore, if we were to report sort of more in a more granular way our sort of margins per and contribution on a per-service line basis, they could be moving all over the place as we did that graphic equalizing, causing more confusion than help, I think, over time. That's why we focus on the customer-level contribution.
Fair. Absolutely. And then on your question about operating, around operating leverage, where we're obviously, you know, where we're talking about, you know, growth rates in the, you know, in the sort of 14% we've seen this year, for instance, there going forward, assuming that level of growth rate, we would expect, if you look at our, if you look at our admin costs, those went up between FY 2022 and FY 2023 materially. And then they are now much closer to, slightly higher than that rate of customer growth. Going forward, we would expect the rate of customer growth to be in the single-digit percentage points per year.
Admin costs, right? Admin costs.
Admin costs. Sorry.
What did I say?
Sorry. Admin costs. Admin cost growth to be in the single-digit percent growth range per year. So if you've got, say, 14% growth, as we've had this year, you would expect mid-single-digit percent growth per year. That sort of order of magnitude.
By implication, therefore, adjusted PBT growth will be faster than customer growth?
Well, it depends on there's a whole bunch of other dynamics which will take place, the degree to which we want to invest in pricing or in the offer in some way, shape, or form. So, you know, we like to guide conservatively.
That you do. Thank you. I'll wait for the next turn, if I may.
Great. Next for you.
Hi. Ed Mansfield with you here from Liberum. Just two questions along a similar theme. Just in terms of drivers of growth, is it predominantly do you see it from new customers, or is it from greater penetration of adding additional services with your existing customer base? And linked to that, you talked about the duration of your customer base. And you know, you pulled out that example of the person being there 25 years. Do you track the sort of penetration of their service lines over time? Do you see the value of that customer grow over time? So if you know, they start with just energy, then they add mobile, then they add insurances, as that relationship develops, and that drives your marginal incremental margin?
Yeah. So up until this stage, we've always really focused on, when we've obviously got, you know, you've always got to properly focus for impact. And we've always focused our investment to acquiring new customers rather than sort of upselling to existing customers. We also believe that if you want to build a true multi-service customer base, you've got to acquire multi-service customers at the front door. And that's what our partners enable us to do because they overcome that natural inertia to switching multiple services at once, whereas conventional advertising routes aren't, you know, don't enable you to. No one's, no one else has found a way through other sort of routes to market to acquire at the front door multi-service customers.
Now, for sure, there are opportunities for incremental sales of additional, you know, upselling and cross-selling additional services into your existing base. It's not something that we put firepower behind, but it's something that over the coming years, we absolutely see some incremental opportunity for doing it. But that's not the big opportunity. The big opportunity is us signing up lots more multi-service customers at the front door, some of whom we will incrementally upsell over the course of time. So the focus then is making sure that we've got services at the front door that enable pretty much everyone that we speak to to become multi-service.
You know, there's always somebody who's got a, you know, a broadband arrangement that means that they're not in a position to switch, either because they're with a, and where they live, they've got a particular full fiber provider that isn't maybe a mainstream one, or they're locked into a long-term contract, or they've got a work mobile, or there might be a range of different reasons. So us having the right range of services in the front end means that we give everybody the maximum chance of becoming multi-service.
Because once you've got them multi-service and they understand you as being a multi-service provider, then they'll be much more willing to take multiple services from you rather than being maybe a single-service customer who you're then having to try and educate them that you do something more than just provide a single service, which is a different challenge.
Hi. Joe Brent from Liberum. I've got three questions as well, please. Maybe just one at a time. On bad debts, could you give us an indication of where the bad debt percentage of sales should settle medium term?
Sure. So the bad debt percentage of sales, you've seen that in the prior year FY 2020, in the prior year FY 2023, it was around 1.2% as a percent of total sales. In this year, it was a 1.5% as a percent of total sales. Actually, a good way to look at it is to remove the Energy Price Guarantee element, which is, if you recall, when the government stepped in to pay an element of a person's bill. If you look at and therefore there shouldn't be any bad debt on that, assuming government behaves itself. So, if you look at the underlying customer sales, I look at the bad debt as a percentage of the underlying customer sales in both FY 2024 and FY 2023, it was 1.6%.
That is linked to, you know, higher energy prices, the moratorium on prepayment meters, which is a very, very important way of recovering bad debt for customers who can pay but won't pay. That's restarted and will ramp up. A conservative assumption, which we encourage, is the continuation of that 1.6%. In practice, what should happen is that should eventually come down over time as both, you know, inflation erodes. And importantly, these levers to recover bad debt for those types of customers are back in play.
But funnily enough, whatever that number is, and a very important point to understand is actually that our customer demographic is higher than average by virtue of our route to market, where the partners are eventually paid their trail commission only when the customer pays their bill. So therefore, by definition, we get a higher customer demographic. And also, we incentivize more towards multi-service homeowners in terms of rewards provided relative to tenants, for instance, where the home move process can lead to bad debt. So we've got a higher quality customer base. Now, why am I going on about that? It's because the Ofgem price cap model has within it a bad debt recovery component, which is based on the average recovery for the industry as a whole.
So as Ofgem as it is, as it has been doing, increases that bad debt component level within the Ofgem price cap. It will do it at the average industry level. Our bad debt experience should be lower than the industry level. So it's important to just understand that circularity, which sort of almost means, I'm exaggerating to make a point, that the it doesn't sort of really matter what the outcome is on bad debt. I'm exaggerating to make a point. Hope that makes sense.
That does. Thank you. You know, meeting you for the first time, just wanted to understand how you account for customer acquisition costs, and in particular, the future payments to the Purple Team.
Yeah. Absolutely. So, the way how that works is, again, we want to incentivize the partners to acquire multi-service customers. As a result of that, we will pay, for instance, you know, for a multi-service, three-service homeowner customer, we'll pay, say, GBP 250 or that sort of magnitude for that type of customer. And that's a prepayment of, say, 60 months of what otherwise would be the trail commission. And the way how we do that is we capitalize that on the balance sheet. It's called cost to acquire contracts. And we amortize it over that period of time. And if the customer leaves, then we write it off.
But actually, we happen to have a, you know, very, very healthy levels of churn because of the multi-service business model that Stuart talked about before.
Thank you. And the final question is sort of quite a big philosophical question, that clearly, the competition in the market has sort of differed over different times. And I guess if I was investing fresh in the business, I'd kind of want to know that the bad behaviors of the past don't repeat in the future. What sort of comfort can you provide on that?
Yeah. Well, so I think that the starting point phrase is sort of set so that maybe explain some of the core dynamics and some of the changes that have taken place over the last few years in response to the fallout from the energy crisis. So first of all, there are these new capital requirements that are imposed on energy suppliers. So, every energy supplier now needs to hold effectively regulatory capital, which is GBP 115 of net assets per customer. And, obviously, you've got to, you know, build up and maintain that buffer. And if you're a new entrant, you have to sort of effectively have to come in with your sort of funded business plan of net assets.
If you want to acquire a new customer, on a price-led basis, so, back to those sort of bad behaviors of the, of the past, I think the general rule of thumb is that you need to invest at least GBP 100 in pricing. So let's and then, of course, you've then got to go and put your pricing offer, your loss-making pricing offer, into the market somehow, either through a price comparison site or through playing Facebook ads or whatever it might be, which typically might cost, again, GBP 100 per customer. So for each of these customers, you need to effectively find the sort of the funding for, you know, maybe 3, you know, 300, certainly well over GBP 300 of sort of investment effectively that will be required per customer.
So if you want to go and do something interesting in the market, maybe something disruptive in the marketplace, go and acquire 1 million customers over a couple of years or something, you've got to find someone who's going to be willing to effectively support you to the tune of over GBP 300 million to go on that acquisition spree. And then you've got to think, well, what have I acquired? Well, I've acquired a customer who is a savvy switcher who's price-sensitive, who switched to me because I was offering a loss-making sort of teaser deal at the front of the market, at the bottom of the market.
So the moment I try and monetize that customer with my GBP 40-GBP 50 regulated EBIT margin, if I over time, to make that sort of really modest return from that customer, which I've been a big investment for a modest return to acquire a customer that when I try and monetize them, what level of confidence do you have that they're not going to jump ship to someone else who's offering, something cheaper than your attempt to monetize them in due course? I personally really, really struggle in this marketplace to understand that or get close to understanding the economic rationale for price-based competition or any of those behaviors of the past, unless you're doing something different that gives you a structural cost advantage. Because then you can make sense of it. And that's what we're doing.
We've got a structural cost advantage, which enables us to offer, sort of sustainably lower pricing than everybody else whilst because it's profitable whilst being, whilst being lower, lower because we're reinvesting those sort of multi-service structural cost advantage benefits. Now, over time, it's possible that someone may develop an alternative structural cost advantage model. But it has to be one that's got a barrier to entry. Otherwise, everyone else will just end up over time copying it. So if it's a piece of technology that's quite clever and means that they can do something more efficiently than someone else for a period of time, they might have a short window before everyone else catches up. Our structural cost advantage comes ultimately, our barrier to entry is our partner model.
Because it's our partners that enable us to sign up the multi-service customers that give us the cost advantage. And our partners, our 68,000-strong network of partners, is something that we built up over 25 years. And it's a genuine barrier to entry. So that's sort of hopefully a bit of a whistle-stop tour around sort of the marketplace. But the economic rationale for price-based acquisition, it doesn't stack up once you sort of spend more than a few minutes thinking about it.
Thank you.
I think on that note, I'm being given the call time signal. And I think maybe I'll just say a few words, just to wrap up. And I think I'd like to finish. Well, I started with those same three key takeaways that we spoke about at the beginning. First of all, our double-digit growth performance is underpinned by that unique multi-service business model that we were just talking about that enables us to sustainably outcompete. Second of all, we've got this medium-term target of going from the 1 million customer mark to 2 million customers over time. And as we go on that journey, we expect to deliver 10%-15% annual net customer growth.
At the same time, we see this real opportunity to increase our EBITDA per customer from the mid-GBP 120s towards the GBP 150 mark. Then finally, over the year ahead, as we take our first step to 2 million customers, we expect customer growth of between 12% and 14%, resulting in adjusted PBT of between GBP 124 million and GBP 128 million. All in all, very exciting time for the business. I hope you all feel that excitement too. Thank you.