Good morning, everybody. Welcome, and thank you for joining us today for the Telecom Plus half-year results presentation for the period ending 30 September 2024. I'm Stuart Burnett, CEO, and I'm joined by Nick Schoenfeld, CFO, and we are very pleased to report another six months of record performance across the board, with record customer and service numbers, record profits, and returns to shareholders. Now, before we get into the detail, here's a quick overview of the running order for the day. I'm going to kick off with a run-through of the highlights from the first half of the year. Nick will then take you through our continued strong financial performance, and I'll then finish with our outlook for the years ahead. Now, as we go through the update today, I think there are three key takeaways you can see on the slide.
First of all, our double-digit growth performance is underpinned by our unique multi-service business model, our structural cost advantage, and our unique partner route to market, which together enable us to sustainably outcompete as we stride on towards our medium-term target of 2 million customers, with expectations of growing at between 10% and 15% a year as we go on that journey. Second, for the current financial year, FY25, we have reiterated our forecasts of 12%- 14% customer growth and adjusted profit before tax of between GBP 124 million and GBP 128 million, and then, over time, as we head towards that medium-term target of 2 million customers, we see a real opportunity to increase our EBITDA per customer from the sort of mid-120s, where they are today, up towards the 130, 140, and then 150 mark.
And then, third, we're continually investing in and enhancing, improving our multi-service customer proposition, ensuring that we're able to continue attracting high-quality customers and really give them exactly what they want. During the period, we launched our first market-leading EV charging tariff, as well as ultrafast b roadband, and Apple Pay on the Cashback Card. And we're really pleased that we've received clearance to bring all of our insurance products back to market, and we see a really huge opportunity to really scale our insurance offering going forwards. So, without any further ado, here are the business highlights for the last six months, with the headlines summarized on this slide. And as you can see, we've had a very strong start to FY25. We saw a 13% annualized increase in customers, all acquired organically, and we saw services growing by 139,000.
Gross profit was up by 1.7%, and this translated into adjusted profit before tax up 5.5% to just over GBP 46 million. Now, as you'll notice, the profit increase across both these metrics appears slightly smaller than the growth in customer numbers, and this is reflective of the significant fall in energy prices compared to last year, and in particular, the first quarter of last year, when you may recall that there was a positive impact of a handful of million pounds. And when you strip that out, profit growth is broadly tracking in line with customer growth. And then, finally, we've increased the interim dividend to 37p, and we'll come back a little bit later to explain our updated capital allocation policy in a bit more detail. Now, I think it goes without saying that we're once again very pleased with these results.
I think it's really important to call out that we're now three full years into delivering double-digit percentage growth. It was September 2021 that this growth trajectory sort of really kicked off, and this three-year trend, which takes us through a whole range of different market conditions and sort of energy price dynamics, really gives us significant confidence about the future, but to 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 really important to understand as well the market dynamics in play during the year, so, over the last year or so, it's really evident that competition has firmly returned and embedded itself in the energy market.
All of the major energy suppliers are actively seeking new customers, and I think you'll all, in various parts of your life, have seen the extensive advertising that all the energy suppliers out there are doing, but despite this, the stable and resilient marketplace that we're now in, with, for example, capital requirements now being imposed on suppliers and the low regulated EBIT margin in the marketplace. This means that all their pricing strategies critically have remained rational, which is exactly how they should be, given that this is a highly regulated, commoditized, essential services marketplace. Now, note also that the ban on acquisition tariffs has been extended for at least another 18 months, which, at the margins, will help to reinforce this dynamic.
Now, having shown that the business can grow rapidly when energy prices rose significantly in FY22 and FY23, and when energy prices then fell significantly last year in FY24, we've now demonstrated that the business can grow rapidly when energy prices are much more stable. And you can see in the middle bullets here that energy prices really appear, while still high relative to sort of historic norms, they appear to be operating in a much more stable, less volatile range between sort of the 1650-1750 level for the average household. And within this sort of normalized, more competitive marketplace, we've continued to deliver this sustained double-digit growth, and that's thanks to our structural cost advantage and our business model, which we'll come back onto a little bit later.
As a result of that, we've been able to consistently offer market-leading variable and fixed energy prices to our customers, as well as continuing to enhance our customer proposition, and again, we'll come back to that a bit later, and all of this has contributed to this very healthy customer growth of 13%. Now, our slightly slower rate of service growth relative to customer growth is due to a combination of things, including the fact that we had this temporary pause on new sales of insurance due to an increase in customers taking two service bundles rather than three service bundles.
Earlier in the year, we introduced the ability to take a fixed energy tariff from us when you just took two services, whereas previously you had to take three services to get a fixed tariff, as well as an increase in some customers joining us just for mobile only, and also some energy churn in part related to us not having an EV tariff until very late in the period. We only launched our first EV charging tariff in September, so right at the very end of the period. Looking sort of beyond us into what's happening in the sort of broader energy market just for a moment, obviously with the new government, there's new priorities.
Some of the things that they're doing include looking at the balance of standing charges versus unit rate in the price cap, and that's something they're going to be coming back to feedback on sort of either at the end of this year or early next year, as well as also looking at the mix and balance of things like operating cost allowances and bad debt allowances in the price cap. So again, we'll get more insight on that over the coming months. One small point to clarify, just because we get quite a lot of questions about this, is GB Energy, which is the newly created national energy company that Labour are creating.
Just to clarify, this is only operating in sort of the upstream sort of renewable generation side of things, not in the downstream supply segment, which is where we're operating, so we don't see an impact on us from this. So those are some of the key market dynamics in play during the period, showing essentially that we are back into exactly the type of marketplace that our business model was originally designed for. And here you can see that business model on a slide. It's a very simple, but very incredibly powerful business model. And there are three key elements. First of all, you have our multi-service customer proposition, which attracts really high-quality multi-service customers. Second of all, you have our unique structural cost advantage, which enables us to reinvest in and make our proposition even more recommendable.
And then finally, you have our unique word-of-mouth route to market, which is how we're able to acquire those multi-service customers in the first place. And each of these three elements sort of works together to create the sort of self-reinforcing model that's been propelling the business forward year after year for over 25 years now. Now, rather than sort of step through the sort of the fundamentals behind each of these three elements in detail, which is something that I've done before we did that over the summer, instead this time what I wanted to do was try and bring them to life a little bit by showcasing some of what we're actually doing in each of these three areas, kicking off with our multi-service proposition.
So as you can see here, we're continually improving and investing in our customer proposition to make sure it's as competitive as it needs to be, and we're really giving customers exactly what they want. On the energy side, as well as offering sort of market-leading fixed and variable energy pricing, in September, as I mentioned, we launched our first market-leading EV charging tariffs with fantastic overnight charging rates as low as 7p a kWh. And we've already, even though this only launched in September, we've already attracted our first 1,000 customers to these EV tariffs. On the broadband side, we launched again in September our higher-speed broadband, sort of 900-speed full fibre broadband, which nearly doubles the top speed of broadband that we were previously offering. And we're already seeing just under 10% of new customers choosing this top speed of broadband when they're signing up for us.
On top of that, in September, there was a sort of a change in the whole broadband industry called One Touch Switching, which simplifies and speeds up the ability to switch broadband provider, which we view as being something that's particularly important and favorable for us, given our route to market, as it makes the role of the partner as part of the sign-up and switching process a lot more simple. Something else just worth calling out on the broadband side is that I think it's a really powerful endorsement of our model and the role that our partners play in signing up customers for broadband that CityFibre are heavily supporting our offering. They're actually investing in a six-month try-before-you-buy promotion, which they've given exclusively to us.
The reason why they're willing to invest in us in that way is because of the ability of our partners to generate that full fibre sign-up when the other methods that they're trying are finding it more difficult. So that's going to be a really interesting area to watch. On the mobile side, our mobile service goes from strength to strength, and you'll see that in the strong mobile service numbers during the period. A part of that comes off the back of the launch of the multi-SIM mobile offer that we launched over the summer. Then moving finally onto the Cashback Card, again in September, we launched Apple Pay on our Cashback Card, which obviously makes it even easier for our customers to get money back on their everyday shopping. We've already seen our first 40,000 cardholders signing up to Apple Pay.
This is a sort of a sign of sort of how powerful the Cashback Card is. In October alone, we hit our record month for providing cashback to our customers, and we went through GBP 1 million of cashback on our customers' bills in one month for the first time, so a really nice milestone, because a Cashback Card is a genuinely unique way of not only reducing customers' bills, but also, as a result, really building loyalty in that relationship. These constant refinements and improvements to our proposition really help to ensure longevity in our multi-service customer relationships, as well as contributing to us winning accolades, which again really give our partners confidence. We won best value at the 2024 Uswitch Energy Awards, for example.
And then to top it all off, our multi-service proposition is getting back to full strength now that we've been able to reopen insurance sales. So just by way of a bit of background here, since launching insurance as our fourth service a couple of years ago, uptake has really been building across the board. And in addition to that, we set up our own underwriter last year to provide security of supply. Now, as we discussed at the full year over the summer, at the end of last financial year, we began a product review with the FCA. As part of that, we voluntarily paused new sales of our Bill and Income Protector product and also our Boiler & Home Cover policies. We didn't end up pausing our home insurance sales.
Over the last few months, the positive dialogue we've been having with the regulator has resulted in all of our insurance products being cleared for new sales, and we're now in the process of reintegrating those products back into all of our different channels and different customer journeys. As part of that, we also completed a modest redress exercise for certain of our Bill Protector customers, which we mentioned over the summer, and that redress was in line with the non-material provision that we took in our FY24 accounts. So stepping back, while the brief pause to insurance sales resulted in a sort of modest drop in insurance policy numbers in H1, we expect to begin to see a return to healthy growth in this service once those products are all sort of fully integrated into all of the different channels.
We're really excited about the opportunity for insurance more generally. We see a real opportunity to scale. Currently, only around just over 10% of our current customers take insurance from us, so there's a real opportunity to drive further penetration into our existing customer base. On top of that, we're looking at what additional insurance products that we can offer that will be complementary to our current offering. There's products like motor, travel, and pet, for example, that our customers and our partners are asking us for that we don't currently offer and that would be very complementary to the offering. On top of that, we've got a range of data that we see about our customers, which is beyond what most insurance brokers and underwriters have because of the range of services that we provide.
So we're also exploring how we can really sort of bring together and leverage that data to enhance our insurance offering and really drive growth. So long story short, great to get the insurance sort of service back on the road, and we're really looking forward to building that out and growing this exciting service as a key part of our multi-service bundle going forward. So the multi-service proposition is in great shape, and the great thing about multi-service customers is they are core to delivering our unique structural cost advantage. And to underpin our structural cost advantage, we've been doing lots of things, but we've been increasingly focused on driving efficiency in the business over the last period, in particular given the way that you'll have seen our admin costs increasing over the last two or three years.
And I wanted to dive briefly into how we've been improving our operations specifically through AI, starting with some of the things that we're already doing, already trialing in our call centers. So we've already launched a tool that enables us to automatically verify nearly 40% at the moment of the emails that come in that we receive, whereas previously all of those emails required manual verification before they could be responded to. We've also introduced some AI-powered knowledge assistants. We're creating two chatbots on the WhatsApp channel, one that we're using for our partners and one for our customers, so people can ask questions 24/7, including when our call centers are closed.
We've just started using, and this is really exciting, what we call Copilot, which effectively enables. It's effectively a bot that listens into a customer call in real time with an agent and then surfaces to the agent the help articles, the information, the what-to-do-next type information in real time, so they're able to try and have a better chance, essentially, of resolving that customer query accurately and at first time of asking. These are just the start, relatively early stages in all of this. Not only do these things really increase efficiency, and we're seeing some of that already, but they also improve the overall customer experience. You can see that through a number of different sort of points that we look at. We've currently got an excellent rating on Trustpilot.
We run the Uswitch Customer Service Award for 2024, and we currently have a sort of really strong NPS, particularly when you compare it to our sort of energy sector peers. At the last check, it was around sort of plus 28. Now, looking forward over the coming months, we're already starting to look at how we can also use AI techniques in order to drive revenue growth as well as just sort of driving sort of operational efficiency. For example, we're looking at how we can use machine learning to sort of develop this. We've got like a cross-sell tool that we're sort of working on, which early signs are that it increases both engagement and customer sign-up for marketing campaigns, and on top of this, we're creating enhanced churn models, which are much better at predicting when customers are likely to churn.
So we can identify customers who are at risk and then take action to retain them in advance. And then finally, as we look out slightly further into the medium term, and this is where we see the opportunity to do things using the same sort of capabilities and technologies that everybody has access to, but in a way that we sort of uniquely can benefit from it because of the unique features of our business model.
That sort of copilot capability I mentioned earlier that we're using in our call center for our call center agents. We believe that we're able to use that almost as a copilot for our partners, which will help partners in meetings and discussions with potential prospects, potential new customers, again, providing information that will help to answer some of the more difficult, more detailed questions, helping to overcome objections, and really improving the likelihood of getting a conversion from each conversation. On top of that, and finally, we see an opportunity through sort of gamification techniques using AI. At the moment, we do a lot of gamification in our partner world, but it's all very manual, and therefore, by necessity, it's very one-size-fits-all.
Through using AI to support the gamification process, it can be much more tailored to individual partners, and they'll be much more powerful at sort of driving the right activity and getting the right outcomes that you're looking for. I said, we're doing a lot here already, but it's very early stages, and there's a lot more to come. There's a lot of things in here, particularly in the operational efficiency side of things, which are things that lots of businesses will be doing, and it's really important for us to make sure that we are sort of hitting those same notes and hitting all those sort of table stakes areas.
But finding those areas where either because of our multi-service business model or because of our partner route to market, where we can leverage those same capabilities but in a different, unique way, that's where we see some real sort of competitive advantages flowing through. So with all that, hopefully, you can see how our one-of-a-kind multi-service value and service proposition creates a product that is very worthy of recommendation, and that is exactly what our partners are for. As a quick reminder of who our partners are, it's a network of over 70,000 people based all over the country, and you can see on the heat map on the right-hand side of this chart, they are literally based everywhere in the country, obviously focusing on the areas where there's greater population density.
What they do, they're basically experts at recommending everything that I've just been talking about, that value and service proposition, to their friends, families, and people in their local communities. They're predominantly part-time, fitting this in around the rest of their jobs and busy lives. They're people for whom that extra few hundred pounds a month that you can get from recommending what we do to their friends and family and the long-term residual income they can build can make a real difference. Sort of think of them as micro-influencers, whether at the school gates, in the golf club, on Facebook or Instagram. We've also begun, and I think we mentioned this over the summer, we're sort of trialing our partners introducing small businesses as corporate partners in their local areas.
Think of it as being mortgage brokers, estate agents, small plumbers, businesses with their own small local networks, which they can use to help spread the word about UW. In terms of the drivers, I mean, we really feel that this partner model is increasingly of its time. Over the last few years, of course, there's been a tailwind of cost of living pressures, higher interest rates, etc. But we increasingly think post-budget that these pressures on household budgets aren't going away anytime soon, so that tailwind is set to continue. And then there were these two sort of more longer-term, more structural tailwinds. There's the work transition, where our partner model, that sort of part-time multiple income opportunity is increasingly the norm. There's now 20 million people in the U.K. with a part-time income.
And then there's the pensions crisis, where there are literally tens of millions of people not saving enough for retirement, and where our partner income model, we feel, really could be one of the solutions to that. So to bring to life that sort of pension-style opportunity and where our partner model fits in, I wanted to share a quick video briefly. And this is one of the videos that we use to show to new potential partners about what they could achieve with UW. And it really shows how our partner opportunity really could be part of the solution to the pensions crisis. So take a look at this.
UW has been amazing for me in so many ways. I've got cystic fibrosis. When I was very young, I was told that I wouldn't live to be 16, so I've always done everything that I want to do at fast pace. I went into teaching and opted out of my teaching pension because, in my mind, what's the point in a pension if I'm never going to be a pensioner, and then medications changed. It's developed, thankfully, and I'm on some new treatment now, which is looking like I could live into my 70s, which is huge from being told 16. The downside is I've got no pension, so my why now is very much about building my residual income because that has become my pension, and I see it growing every month.
So when we started with the Utility Warehouse, I was in the fire service. There were lots of changes happening with the pension back then, and I realized that I kind of got to do something for myself to secure the future. With Utility Warehouse, we saw the residual income side of things. That was what mainly attracted us to it. Residual income is a great thing. It's kind of like a royalty income when a song is played on the radio and the singer of the song gets paid. All of the customers we've gathered and the team that we've helped, and we then pay that continuously as long as they stay a customer.
We know that every month we see the commission goes up from our residual side of things, and we know that's setting us up for the future, that we're being paid on what we've done in the past.
It grows and grows over time, and also it means that we're giving ourselves and our children financial security for the future.
UW is one of the best options for a pension. I'm seeing a consistency with UW gives me each month is over GBP 500 a month. I'm happy. The passive income that I'm earning is setting me up for a good quality of life. I just knew that I was going to get paid for helping other people. That wanting to earn a few pounds seems so, so long ago. It was only four years, but the journey of those four years has just given me everything I had in the army. I did 23 years in the army, and I woke up every day looking forward. Somebody said to me, "If you ever wake up and you're not looking forward to where you're going, you've burned out." And I've always applied that. You have to have a purpose. And for me, Utility Warehouse gives me that life every day.
UW for the future is looking brilliant because it's given me an income that has allowed me to build my dream. It's allowed me to have the flexibility where I'm available in the weeks, so I have the opportunity to have an extra income to go and do nice things. If I want to go and take my children off for the day and go out and have something to eat and have ice creams and all the things that some people don't always have the chance to do. And it's just given me so many avenues of experiences. It comes down to experiences.
So, there, you've just been hearing from Heather, Kat, Chris, and Jennifer, who have all been setting themselves up for retirement through UW. But we know that there are millions more out there who could greatly benefit from the partner opportunity to really help them to build a pensions-style income and become more financially secure for the future. And just very quickly to try and put some numbers on what this could mean, to give you an example of the type of money that a partner could be earning just by signing up two multi-service customers a month, so over five years, a partner could generate an annuity-style income equivalent to a pension pot of over GBP 100,000. So think about GBP 500 a month of income, so GBP 6,000 a year, annuity-style income from a pension pot of over GBP 100,000.
So whatever way you look at it, this has the potential to be life-changing for people, and that's the power of the partner opportunity. So there you have it, the three key pillars of our business model, hopefully brought to life in a way which helps to explain a little bit about why the business is performing so well and why we expect that to continue. And with that, over to Nick to talk about the numbers.
Thank you, Stuart. Let's start with the P&L, which shows a very strong performance across the half year. Now, as Stuart mentioned, adjusted PBT is up 5.5% to GBP 46 million. Now, that's driven primarily by the strong year-on-year customer growth, partly offset, as expected, by the much higher energy price cap level that there was in quarter one of the prior year before prices normalized to current levels after that. Highlighting the main themes in this P&L, you've got revenues of just under GBP 700 million, and that's 21% lower than the prior year, driven, of course, by energy prices returning from their very high levels, as we just mentioned. And as we've said before, revenue is a KPI which is not particularly relevant as a driver of profit growth. That's because the energy commodity cost movements are passed on to customers in their bills.
Now, more importantly, these same effects feed into the gross profit, which is up year-on-year by 2%, driven by customer growth, partly offset by those energy price reduction effects. Coming on to admin costs, those increased by 2% year-on-year with efficiency initiatives kicking in and some of the higher costs associated with customer service during the previous extreme energy price period no longer being needed. Now, as these initiatives develop, we expect admin expenses to continue to increase below the rate of customer growth in the coming year. In addition, the impact from the October budget of the Employers' National Insurance increase and the National Living Wage is expected for us to be about GBP 3 million, although we do anticipate being able to mitigate these through our productivity initiatives.
The bad debt charge as a percent of total sales was 2.2%, and that was broadly in line with the rate from half one of the prior year. And it's also worth mentioning on bad debt that bad debt levels across the industry are recovered through increases in the relevant Ofgem price cap allowance, all of which accrue to the group. There are higher interest costs in the period, given that each one of the prior year benefited from the temporary cash timing differences from the government's Energy Price Guarantee scheme before those normalized by September 2023. And all this contributed to that adjusted PBT increase of 5.5% to GBP 46 million, with adjusted earnings per share increasing 12%. That's primarily due to the higher group tax rate, which was incurred last year.
Now, if we look at the balance sheet, net current assets, which are driven by working capital, are impacted favorably by some cash timing effects, which I'll cover off in more detail in the next cash flow slide. This all resulted in net debt improving slightly relative to the year-end position to GBP 115 million. Now, as a reminder, our debt facilities include our GBP 175 million revolving credit facility, which has a maturity to 2027, together with GBP 75 million of private placement debt, which has a remaining maturity to 2030. That, of course, diversifies our sources of capital. All of those facilities are to support, of course, the ongoing double-digit annual growth plans that the company has.
So now looking at the cash flow, in those prior year H1 FY24 numbers, we've removed the cash timing distortions from the early cash payments, which were previously received from the government's Energy Price Guarantee scheme and which permanently reversed by September 2023, as we showed them last time. And separately from that, as a reminder, H1 in that prior year was also impacted by the reversal of the one-off cash timing distortions from the energy supply agreement payments due to the very high energy prices from the earlier winter period. So now looking at the current H1 FY25 cash flow numbers, these start with an EBITDA of GBP 57 million. There's a temporary working capital inflow of GBP 12 million, and that reflects a working capital benefit from short-term cash timing differences.
Now, this relates to energy customers who are typically billed a flat monthly amount throughout the year, and that progressively adjusts to new consumption and price cap levels. So this takes time for those payments to adjust to those new normalized price cap levels and result in this effect. The typical working capital outflow expected across the whole year, given our rate of growth, continues to be a GBP 25-GBP 30 million outflow. You then have the tax charge and then CapEx of GBP 6 million, which continues to be primarily technology development, and there the annualized expectation continues to be in the GBP 12-GBP 15 million range. And with all of this, you've got a small improvement in net debt by GBP 8 million- GBP 115 million, and that results in a net debt to 12-month rolling EBITDA ratio of 0.8 times.
And that's in line with the leverage of around one times which we usually have. So if we now look at capital allocation, the backdrop to all this is, of course, our capital light business model, given that it's got low working capital requirements as we grow, and it has CapEx, which is limited primarily to technology development. And that's what determines our progressive distribution policy, where we maintain low leverage of around one times net debt to EBITDA and at the same time return between 80%- 90% of adjusted net income to shareholders. And that planned level of overall returns to shareholders will remain the same. However, the board has decided to revert to the previous policy of focusing on dividends rather than a combination of dividends and limited buybacks in terms of returns to shareholders.
Now, as the U.K. moves to a lower interest rate environment, albeit more gradually post-budget than previously anticipated, a higher dividend yield is expected to be of greater benefit to shareholders. Now, with this revised policy, we expect to see a full year dividend growth of at least 13% to GBP 0.94. Stuart.
Thank you, Nick. So we've talked through our record operational and financial performance during the first half of the year. So now let's look forward to the years ahead and our journey to our next big milestone of 2 million customers. Now, as you can see here on the chart, we have around 3% market share in energy, and we are the seventh largest supplier and the biggest independent challenger to the new Big Six. And of course, our market share in our other services, broadband, mobile, and insurance, is meaningfully smaller than 3%. So what does that mean? Well, it means that when we hit our 2 million customer target, we will have only a 6% market share in energy, and we'll still be only the seventh largest energy supplier. So the question to my mind is not about the size of the opportunity. The opportunity is real.
The opportunity is significant. The question is about our journey to deliver on it, and here you can see as a reminder our 25-year journey to this point, and I think there were three things that I'd like to call out. First of all, if you look at that sort of 2008 to 2014 period, the first sort of label on the chart, we were delivering a double-digit compound annual growth rate in that period, and that was a period where we first became a truly multi-service business, and we were in a rational competitive marketplace very similar to the one that we're back in today, then we had the period in the middle, that sort of slightly flatter period, which is the price war period between 2015 and 2021.
And that was a period where a failure in regulation essentially led to there being over 70 suppliers in the marketplace pursuing irrational price-based competition and where energy was a loss-making sector where we were pretty much the only profitable or the slow-growing supplier in the marketplace. And now, having gone through the energy crisis, which cleared out all of the unsustainable suppliers in the market, the regulator has rightly sort of reformed the marketplace to make sure that it is rational and profitable going forward. And that'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're expecting for the full year of FY25 in the 12%-14% range.
In this sort of normalized marketplace with our market-leading customer proposition and these tailwinds that I was talking earlier about our partner opportunity, hopefully you can see why we've got a lot of confidence in our continued growth trajectory. What does that continued customer growth opportunity mean in terms of returns? You'll see on the right-hand side here our EBITDA per customer evolution over time. Now, it was typically around sort of the GBP 100 a year mark, and then it structurally increased up to the mid-120s from FY23. This was originally driven by a combination of higher energy prices and increased energy supply profitability. Now, you might recall that our FY23 profitability can be traced back to a sort of a GBP 2,000 implied price cap level, which is pretty similar to what we saw in FY24 last year as well.
Albeit, as we mentioned earlier, in Q1 of last year, there was that impact in Q1 of very high energy prices, and that was what led to our EBITDA per customer last year of being in the early 130s rather than the mid-120s. But when you strip out that Q1 impact last year, the underlying EBITDA per customer was in the mid-120s. And this year in FY25, we again expect an EBITDA per customer in the mid-120s, having offset the further fall in energy prices from that GBP 2,000 level to the sort of the GBP 1,650, GBP 1,750 level that we're now seeing today.
Now, in terms of the drivers and looking further out as we head towards two million customers, as I mentioned at the beginning, we can see a clear opportunity to further increase our EBITDA per customer from the mid-120s to the 130s, 140s, and ultimately towards the 150s over time. The key components of that we set out on the left-hand side of the slide. Just to run through them very quickly, in terms of the gross profit side of things, the main levers are, as we continue to grow and get scale, we expect to be able to get improved supplier terms through improved buying power. We also expect to be able to sell more higher value, higher margin services into our customer base as we increase multi-service penetration.
And also, we have a number of levers, as we've talked about before, to sort of optimize our pricing for returns rather than optimizing our pricing for growth. And together, when you look at these sort of gross profit levers, we can see these elements being worth certainly GBP 10, maybe well in excess, between GBP 10 and GBP 20 perhaps of additional EBITDA per customer, with obviously the rate of delivery of that being impacted by, among other things, the need to offset any further sort of changes in energy price movements. Looking at the admin cost side of things, as mentioned earlier, we are starting to deliver operating leverage, and there are real benefits to come as we sort of further build out our AI capabilities and continue to get the benefits of our investments in technology.
Again, we can see these admin cost elements being worth GBP 10, GBP 20 or so over time. So bringing all of that together, in summary, in FY25 this year, we expect continued customer growth. We reiterate our customer growth expectations of between 12% and 14% for the full year, adjusted PBT of between GBP 124 and GBP 128 million, and as Nick mentioned, a full year dividend increasing at least 13% to 94 pence. Over the medium term from sort of FY26, FY27, we expect to start seeing the benefits of launching our new EV proposition and also the business customer proposition that's in development as we increase market share across all of our services, as we make further steps towards our 2 million customer medium-term target with a 10%- 15% annualized growth rate as we go on that journey while growing our shareholder returns along the way.
Then over the longer term, both our customer proposition and our partner model, they both have significant further growth potential. As I mentioned, 2 million customers equates to 6% market share in energy. When we get our partner numbers up towards, let's say, 100,000 partners, given that there are 20 million multi-income individuals in the country now, that's just 0.5% of the second income sort of market. Stepping back, it's very easy to see how our business model can emerge as a leading platform for taking new services into customers' homes over the years to come. Thank you very much, everybody. I think we're now going to move on to questions. First question in the room.
Thank you, Stuart. Can I just ask a bit more on the admin and leveraging that admin cost base, because that's clearly been an area where admin costs have been rising faster than customer numbers, and now we look as though we're going into a period where they're rising slower. Are you saying that you expect to both improve admin costs as a percentage of customer numbers or revenues, whichever, as well as improve customer service? And how far down this journey are you?
Shall I start? And then maybe, Nick, if you want to add any more sort of detail on the numbers. So I think we're at the beginning of the journey. Over the last sort of three years or so, our admin cost per customer, which is the way that we, or one of the ways we think about these things, has increased from sort of just over GBP 100 a customer to around GBP 150 a customer. So a really meaningful increase. And that was driven by a number of things. It was partly, if you remember that sort of chart showing that sort of flat period that we were in for a number of years, obviously we were managing the business towards the end of that period, like a business that wasn't growing particularly fast because we weren't growing particularly fast.
So when we returned to growth, there was an element of needing to invest to make sure we were scaled and set up to keep growing. So there was some investment that we had to put in that was going to need to sort of probably stay in the system. There was then some temporary investment that needed to go into the system because of the unique features of the energy crisis. We had to invest in some expensive outsourced call centers, for example, to deal with all the extra contact that we were getting. And that's temporary, and that's beginning to sort of now drop out of the system. And then there's the benefits that we're driving through technology and AI, which we were at the beginning of that journey on. So going forwards, as Nick mentioned, we'd expect our admin cost per customer to start falling.
Whether our absolute pound admin costs sort of stay sort of level, rise slightly, or fall will sort of depend on a range of things, including sort of inflation and sort of the rate of growth that we're seeing across the business but absolutely, that admin cost per customer metric, we expect to see sort of falling going forward. The key for us is that we don't force that journey too quickly because in order for people to recommend, in order for our partners to have confidence to recommend what we do, they need to have confidence that there's great value on offer, but also that there's great service. People don't recommend something to their neighbors if their neighbors are going to be disappointed and let down by it, so we can't force it too fast.
We want to make sure that we take the appropriate steps on it. And that's why we make sure that we're constantly tracking our Trustpilot scores, our customer NPS, and a whole range of other metrics to make sure that as we do this, we're delivering the right experience. The key thing is that things like AI, as I mentioned, if you do that in the right way, then you not only can improve your efficiency, but you can improve the experience at the same time by giving customers the contact channels that they want, but also enabling your agents through the Copilot sort of tool that I mentioned of actually having more of the right information at their fingertips so they can get the answer right first time.
That's just more efficient because you only have one call rather than a follow-up call because you got it wrong, and it also gives the customer the confidence that they're getting looked after and they're getting the right answer.
Obviously, your competitors will be doing the same techniques to improve their customer service and their admin costs. But I guess you're in a different position because you've been more focused on personal care and a higher voice concentration than the competition. Also, it's a harder customer journey because you're doing multi-products.
It is, but I think that in many ways, that creates one of the opportunities. So when I think about the opportunities we have in AI, there are things that might be the same capability or the same technology tool, but that we can apply it in a way that creates a benefit that no one else will be able to get in the same way. That might be, on a multi-service level, the fact that we're able to understand better what additional services a customer might want at a different time and have a really intelligent automated process around that, which works because we're a multi-service business. If you're not a multi-service business, that capability isn't relevant to you. And again, of course, there's that sort of partner copiloting scenario which I mentioned.
For us, I think voice always, certainly for the foreseeable future, will be a key part of our overall experience because you have to give customers what they want. So the key for us is when people need to speak to you and want to speak to you, that you're able to make sure that they get a really great and simple experience. The quicker you can answer their query and get it right, everybody wins from that. But in energy in particular, we believe that there are some things that you have to deal with it through voice because if people have got a really complex billing query and they're feeling emotional about it, trying to put them in front of a chatbot or on a faceless journey, I think can sometimes make matters worse.
There's absolutely a lot of use cases for that, but you've also got to make sure that you're supporting voice in the right ways as well.
Just lastly, the opportunity with the partner network to improve their sign-up process. Where are you on that? What's the timing on it? And is there an opportunity also to add services with existing customers?
Yeah, so at the moment, the focus of that Copilot sort of trial that we're doing is in our call center with our call center agents, and that's where we're focusing at the moment. Once we've built that out and got all the learnings from that, we'll then be able to start working at how we apply it elsewhere, so at the moment, it's concept rather than on the shelf waiting to be implemented, but the more we sort of work through and see how it's working in our call center environment, the more excited we can see about the capabilities and we can see the capabilities in front of us.
In terms of the upsell side of things and the multi-service upsell, we are already sort of in early stages of using AI techniques to understand customers' propensity to respond to different types of communications at different moments in time of their journey to take different services. But again, it's relatively early stages, but that's something we are in the process of actively trialing at the moment.
That's great. Thanks.
Next question in the room.
Thank you. Three quite straightforward ones from me. First of all, can you just remind me what churn was in the period? Sorry if I missed it in the statement.
Yeah. So we didn't disclose a formal churn number for the first half, and we don't typically disclose that. You might recall that we've been talking about churn being sort of settling at a sort of mid to high single digits over time, and that's still our expectation. You might also recall that the exit rate from the FY24, the full year, was sort of slightly higher than that, and that trend has sort of continued into the first half. So it isn't going to be a straight line to sort of settling at where we're expecting it to go. And there's a few sort of dynamics at play there. So we did see an increase in churn at the sort of very end of September and the very beginning bit of October, although that started to trend back down.
We believe that that was driven by a number of things, but in particular, it was the first significant increase in the price cap that we'd had for some time. There was a particular dynamic at play around that. I think we'll continue to have those sorts of moments in time that sort of play through the system, which might cause churn to be sort of slightly higher or slightly lower in different periods.
Got it. Thank you. And secondly, you spoke in the past about sort of almost a liquid market for supplier contracts. Can you just give us what your experience is of other people who use supplier contracts, whether it's in telco or utility? Recently, have there been any data points where people have sort of switched and got pricing benefits, or what's the market looking like?
It's an interesting question. There isn't a huge amount of sort of wholesale supplier switching for a variety of reasons. Certainly, for the last couple of years, we've not seen any significant moves on the telco side. Certainly, for us, all of our relationships are very long-term relationships. We've been not just in a 20-year energy wholesale supply deal, but we've been with each of our telecoms partners for sort of that order of magnitude of time as well. And for us, we actually see that as the best way to ensure we're getting the best terms because we've built really long win-win relationships where they really want to invest in and support us in our growth. And so when we need access to products or when we need some support in some ways, they're all willing to do that.
What we do know is that we do get people coming knocking on our door. So particularly in the telco arena, we get people knocking on our door trying to win our business away. And that normally is a moment for us to go back to our existing wholesale supplier and results in a sharpening of the pencil on our commercial terms. So we see a lot of that activity, and we expect that to continue because we are essentially the largest, sort of most sort of financially strong sort of player in our sort of independent player in our marketplace, and therefore sort of like a crown jewel wholesale partner. And on top of that, we're acquiring customers from different places from where they and their retail businesses are typically acquiring customers. So they don't necessarily view us as a direct competitor.
They're not going to suddenly find that they're providing us financial support and then seeing us next to them on the price comparison site, for example, next to their retail offering or on a billboard next to their billboard, and so they view us as like a complementary way of getting additional volume onto their fixed cost infrastructure.
So, typically, you said especially telco. You didn't say exclusively telco. They're coming knocking on the door.
Everybody knows that we're only halfway through a 20-year energy supply deal. So therefore, now wouldn't be the time.
Just finally and quickly on slide 25, you had a really good picture of the three sort of phases there, and you spoke about the price war, basically five plus years, 70 suppliers, and the question we get asked a lot is, what in your mind is the main reason that that will not happen again? I think you gave some examples. There was two or three, but what's the main one that means that we're not going to go back to that ever?
Yeah. So first point is it's actually not the absolute number of suppliers that's the issue. I don't mind if we end up going back to a period where there were lots and lots of suppliers again. The issue is how the suppliers are behaving. And the issue was that the reason then why there were 70, it was because there was this perception that you could come into this marketplace without any capital behind you, build your customers in advance, and end up sort of building a valuable business over time whilst pricing rationally and behaving responsibly. That was the issue rather than the absolute number of suppliers.
If there were 70 suppliers in the marketplace today all behaving rationally and being properly capitalized and behaving in the way that the regulator expects, we'd still be expecting that we'd be outcompeting them in the way that we are at the moment because of our business model. So it's the fact that the regulator has introduced capital requirements. It's requiring that all suppliers quite rightly are hedging and hedging properly and are financially resilient and are behaving responsibly. That is the key set of dynamics. It's everything you would expect from an essential services, highly regulated, commoditized essential services marketplace, but that was missing for some reason during that period.
Thank you.
John?
Thanks. Good morning. So it's John Karidis from Deutsche Numis. I've got two questions, please. The first one is, please remind us about what happens to the seasonality of bad debt as a proportion of sales between H1 and H2 and why that sort of changes. And then secondly, it would be really nice to get some detail behind the thinking, the board's thinking in wanting to stick to a conservative one times net debt to EBITDA. So why do they want to stick to just that, please?
Yeah.
John.
Yeah, absolutely. So the first question around the bad debt as a percentage of sales, you're quite right, John, that in the first half, what you usually see is that the first half, that percentage number is mathematically higher than the full year as a whole. So for instance, in this half, we had 2.2% broadly in line with last year, but last year for the year as a whole, it actually was 1.6%. The reason for that is because the bad debt charge is worked on the billings, and customers are billed typically a 12th, a 12th, a 12th, a 12th, even though their consumption is seasonal, winter versus the summer. So the bad debt charge is therefore much more even across the year in absolute terms.
But then when you measure it as a percentage of revenues, which are booked in terms of the usage of customers, then that ratio is just mathematically higher in the half one relative to the year as a whole. And so that's why last year, for instance, we're in line with last year, and last year you had around 2.2%-2.1% for H1 moving to 1.6% for the year as a whole. So that's, I think, the first question around the bad debt mathematics between H1 and H2. The second one around our conservative approach to leverage net debt to EBITDA of one times is certainly a prudent approach for a business which is in essential household services. But it is very much the when we look at soundings from shareholders and from the board, there is a preference to be in that low net debt to EBITDA environment.
Interest rates relative to, say, a few years ago are higher. They're due to come down, but they're still at an elevated level. And so all of these things sort of feed into the view that we would prefer to stay at that conservative level of leverage, even though there are different opinions across shareholder groupings.
And the only thing I'd add to that is obviously what it does mean by maintaining that sort of roughly 1.0 times net debt to EBITDA level. In absolute pound terms, net debt is increasing as we go, given our growth rate and our EBITDA increasing. So yeah, we take a range of views that we have to sort of factor into the equation, including some views suggesting that our absolute net debt level should not be increasing or indeed should be coming down over time.
So we have to factor all these views in, and this is the decision that we came to. Thank you.
Great. I think we pretty much come to also time for one more question in the room. Yeah, go for it.
Sorry, Alex here from Berenberg. Just a bit more color on potentially growing the partnerships that you mentioned. You talked about potentially 100,000, and the pension statistics that you mentioned could be quite lucrative, so initiatives in place to really grow that partnership network and kind of how you envisage that growing would be great.
Yeah. I mean, so first of all, in terms of our sort of core partner base, that is a momentum model where if our customer proposition is really competitive, if the income opportunity that you can get from being a partner really resonates and is sort of with people and sort of really cuts through, then it's sort of customer gets partner, gets customer, gets partner. It sort of builds through its own accord. That was very difficult during that sort of flat period that I showed on the chart. Right now, it's much more. The environment is much more sort of conducive to that. Obviously, part of what we're focused on is how we can raise the profile further, in particular of the income opportunity, and that's partly why I was showcasing today sort of that pensions video, because I think it's very misunderstood.
Our partner model should be better understood as one of the solutions to the pensions crisis. At the moment, all sort of government and policymakers can propose is that you have to work longer or contribute more if you want to sort of provide yourselves with a better retirement, and many people can't do either of those things. Whereas this is something which you can fit around in the nooks and crannies of your life, very part-time, a few hours here, a few hours there, and as I said, with a relatively small amount of effort for a relatively short amount of time, build up a really meaningful additional income, so that's part of our role is to sort of find ways to raise the profile, and then finally, it's looking at ways to expand out what it means to be a partner.
I mentioned that we've now sort of begun trialing ways for our partners to introduce small business partners in their local communities. So many of our partners will know local businesses, whether it's mortgage brokers, plumbers, estate agents, and many other types who've got their own sort of loyal customer bases and finding that as a means to sort of access and sort of build out and sort of spread the word that way. But it all comes back to having a competitive customer proposition and a compelling partner income opportunity. I think on that note, in the interest of time, we're going to have to wrap up. Just to very sort of quickly sort of close off sort of where we started with a summary of the three key takeaways from today.
First of all, the business continues to deliver double-digit growth year on year, which puts us firmly on track to hit our medium-term target of 2 million customers, growing at 10%-15% a year as we go on that journey. Second, we've reiterated our FY25 guidance of customer growth of between 12% and 14% and between 124 and 128 million of adjusted PBT, with our full-year dividend increasing by at least 13% to GBP 0.94. And third, we're investing continually in our multi-service customer proposition across all our services. And we're particularly pleased that our insurance business is back up and running and perfectly positioned to scale and support driving the business forwards. Thank you all very much. Have a good day.