Telecom Plus Plc (TEP) Earnings Call Transcript & Summary

Good morning, everybody, and welcome to the Telecom Plus Plc results presentation for H1 FY '24. I'm Stuart Burnett, Co-CEO, and I'm joined by Andrew Lindsay, my Co-CEO, and Nick Schoenfeld, CFO. Now, as you would have seen from the release this morning, it was another half year of a very strong performance across the board, which is what we've come to expect and what we absolutely expect to continue. Now as we go through the presentation today and talk in more detail about these results, about the key drivers of our strong business performance and about the positive outlook, I think there were 3 key takeaways, which you can see here on the slide. First of all, despite the return of competition in the energy market, the business is performing very strongly in what is now a normalized and rational energy marketplace, and we're continuing to deliver comfortable double-digit percentage customer growth. In fact, we're now in our fifth consecutive half-year period of this double-digit growth, and we expect it to continue for the foreseeable. Secondly, we've opened up these incremental growth opportunities by deepening our long-term relationship with E.ON, increasing our confidence and not just hitting but in actually exceeding our growth targets over the coming years. And finally, and this is really important to remember, this is a long-term growth story that stretches back 25 years. And it's all underpinned by our self-reinforcing business model, which enables us to consistently deliver for our customers, for our partners and also for our investors. And whatever the shorter-term dynamics at play, and there will always be short-term dynamics at play, it's this that really gives us such confidence in our ability to consistently deliver on our growth ambitions and take us from the 1 million customer mark to 2 million customers and beyond over the medium term. So those are the 3 key takeaways for today. In terms of our top line performance, as you can see here, the results were very strong across the board. We saw an annualized increase in customers of 14%, all acquired organically. Adjusted profit before tax was up 36% to GBP 44 million, although this did benefit to an extent from the particularly high energy prices in Q1 before they then settled down at around the GBP 2,000 mark. And finally, we've increased the interim dividend to 36p, and we'll be commencing an initial buyback of around GBP 10 million worth of shares over the coming months. So all very much in line with expectations and the high expectations that we have for the business, and we're incredibly proud of continuing to deliver this compounding double-digit percentage annualized growth. Now before I come back to talk in more detail about the key drivers of that growth and why we're so confident and positive about the future, I'm going to hand over to Nick briefly to talk you through some of the numbers in more detail. So Nick, over to you.

Thank you, Stuart. So yes, let's start with the P&L, and it does indeed show a very strong performance for the first half. And as Stuart mentioned, adjusted PBT is up 36% to GBP 44 million. Now this is driven by the strong year-on-year customer growth on the one hand, but also higher Q1 energy prices across the industry. Now going forward, the average energy bills have settled down to an average price of around GBP 2,000 from Q2 onwards. And as we've mentioned before, that's what we and the market expect to be the long-term new normal. So highlighting the main themes within the P&L, this higher Q1 energy price, together with customer growth, have fed into the revenue growth, which as we've mentioned before, is a KPI which is not particularly relevant as a driver of profit growth. And that's because the energy [ commodity ] cost movements have to be passed on to customers. More importantly, the same price and customer growth effects feed into the gross margin, which is up year-on-year by 48%. Now similarly, admin costs increased 44% year-on-year, and that includes the investment we've been making in customer service and technology, given the growth which we've been experiencing, and we expect to continue experiencing. Now as expected, the bad debt charge for the period increased to GBP 19 million, and that represents 2.1% of sales. Now as a reminder, bad debt expressed as a percent of revenues is typically higher in the first half than for the year as a whole, and that's given the seasonal consumption profile of energy across the year. And so therefore, we currently expect that bad debt percent for the full year to be somewhat lower as per the broker forecasts. Now over and above the higher energy price environment we are now in, this year-on-year increase in that bad debt primarily reflects the temporary moratorium on the installation of prepayment meters under warrant. Now we expect this to be gradually relaxed as we move into the new year. And as an aside, we're pleased that Ofgem is currently consulting on the increasing -- on increasing the bad debt allowance within the price cap, given the increased debt levels seen across the industry as a whole, so this gives us long-term comfort that bad debts are not a threat to the P&L. So all this contributes to the half-year adjusted PBT increasing 36% to GBP 44 million with adjusted EPS, earnings per share, increasing 14%, and that's primarily due to the higher tax rate this year versus the prior year. So if we now look at the balance sheet, from these numbers, we've removed the cash timing distortions from the early cash payments which we received from the government energy price guarantee scheme and other government schemes during FY '23 and which have since reversed. Now that's the same approach that we took in the year-end presentation back in June and also our half-year results presentation last year, where we experienced this equivalent temporary set of cash inflows. Now as a reminder, in these last 6 months, we also saw the expected unwind of the timing lag from some of the wholesale energy payments which we make, and that's due to the unusually high energy prices that we experienced last winter. And these trued up, if you like, during this H1 that's just gone. So to look at the underlying picture through all this, the best view is actually the year-on-year variance from September 2022 to September 2023. And that looks through these cash timing distortions. And this view, this difference is shown in the last column of this table. So if you look at that, September to September movement of net current assets, which is a rough proxy for working capital, we see that the underlying outflow was around [ GBP 18 million ] year-on-year for that item. And as you know, we provide indications of approximately GBP 25 million to GBP 30 million of annual working capital outflows, given the double-digit percent levels of growth that we're seeing. And similarly, net debt after all of this unwind of all these cash timing distortions, was GBP 83 million at the half year, which is up GBP 16 million year-on-year, and it maintains an appropriate net debt-to-EBITDA position of 0.7x. So before we move on from this balance sheet, it's probably worth mentioning that we've refinanced our borrowing facilities. So the new facilities include a continuation of our GBP 175 million RCF for a term of 4 years. And that's supplemented with GBP 75 million of private placement debt, which has a maturity of 7 years, and that diversifies our sources of capital, going forward. Now these new facilities, of course, they're to support the ongoing double-digit annual growth plans of the company, going forward. So if we look at the cash flow now, this again adjusts out the energy price guarantee, temporary timing cash distortions as per the previous presentations that we've made. And this cash flow for this half year starts with an EBITDA of GBP 50 million. There's a working capital outflow of GBP 59 million in this half year, which, as I mentioned, when we were looking at the balance sheet, is primarily the reversal of the one-off cash timing distortions from the energy supply agreement payments, which we made, given the unusually high energy prices last winter. Now as I said a moment ago, on the balance sheet, the underlying working capital outflow, on an annual basis, continues to be around GBP 25 million to GBP 30 million. So after the dividend payment and the working capital outflow, which has now normalized, as expected, net debt is now GBP 83 million with that appropriate net debt-to-EBITDA ratio that I mentioned earlier. So then this leads on to our planned returns to shareholders. Now consistent with the capital allocation approach that we mentioned at our year-end results and given the strong balance sheet that you've seen, we will make a modest increase to the interim dividend from 34p last year to 36p this year, and we expect to make a further modest increase to the final dividend. We've also announced an initial share buyback of around GBP 10 million during this half 2. Stuart?

Thank you, Nick. So as Nick shown us, the business is performing incredibly well. And what's really important to recognize here is that it's performing like this in a normalized, rational, stable energy marketplace. And what are the key features of this marketplace? Well, as Nick mentioned, energy prices have now broadly stabilized at around the GBP 2,000 level, which is where they're also forecasted to remain for some time. It's important to note that these are still really high energy prices, around double the long-term average. But the extreme sort of volatility of the last couple of years now seems to be largely behind us. Meanwhile, Ofgem has fundamentally concluded its reforms to ensure ongoing stability, resilience and sustainability in the energy retail market. The door has been firmly closed on both the irresponsible suppliers and many of the irresponsible behaviors, that the irrational pricing in that period of what's now seemed to be artificial price-based competition. And finally, we've seen a true return of competition in the market that all suppliers are now back open for business. I'm sure many of you will have heard Octopus Energy advertising on the radio or British Gas, EDF, E.ON overall advertising on billboards or in the press. But critically, as we've been indicating and saying for some time that all pricing rationally and therefore, they aren't leading on price because it simply doesn't make commercial sense for them to compete hard in price when they've got almost no margin to play with, they've got no structural cost advantage to bring to bear, they need to strengthen their balance sheet to build up that GBP 115 of net assets per customer. And the price-sensitive customers that they would acquire through their conventional reach to market if they were competing hard on price, would dessert them the moment that they weren't offering them loss-leading acquisition pricing. And so throughout all of this period, we are continuing to provide the best value, both variable and fixed price energy pricing, as well as highly competitive prices across all of our services. And that's why we're now into our fifth consecutive half-year period of this comfortable double-digit percentage customer growth. And what this, I think, clearly demonstrates is that this is a business that is geared to grow faster in a normalized market. And that's what gives us such high confidence in our medium-term growth plans. As we go through the second half, we're expecting to pass through the 1 million customer mark, and then we've got our plans to double the business from 1 million customers to 2 million customers over the medium term. And pushing us further along this growth trajectory, we're really pleased to have deepened our relationship with E.ON and then, therefore, opened up these incremental growth opportunities. Now the structure that we put in place to enable these incremental opportunities also results in, I guess, what is that, a derisking of certain elements in the agreement for both UW and E.ON. And what this means is that the amount that we paid to E.ON on is more closely matched to the wholesale component of the price cap, rather than a proxy percentage discount, which is what -- sort of how the agreement was originally set up. You might remember that there wasn't any price cap in place back when the agreement was put in place back in 2013. And that's why a proxy percentage was used. And what we now have is the mechanism that would have been put in place had there been a price cap back in 2013. So going forward, what does that mean? What it means, for example, when you look at an example of a risk area over the next few years, which Nick touched on earlier, which is around bad debts, we will now get full recovery of whatever the price cap cost allowance is for bad debt, whereas previously, with the proxy percentage, this may or may not have been fully catered for within our discount. Now in terms of the growth opportunities, first of all, we now have the ability to offer a broader range of fixed energy tariffs, which were priced off the latest forward curve. And we're already experimenting with this when we kicked off experiment with that during the latter part of the first half. And we've already launched off the back of that, a 2 service fixed tariff, whereas previously, we only had offered a fixed [ tariff ] to customers taking 3 services or more. Secondly, we have the ability to offer now a more competitive business energy tariffs. In the past, we picked up 20-odd thousand, also micro and small business customers, which we essentially picked up by accident as our partners also signed up their friends and family members small businesses as well as their homes. But our supply agreement was always priced off the residential [ SVT ] or residential variable energy price. And within that, there are some costs that aren't born by businesses. I mean a couple of examples are [ eco ] and Warm Home Discount that relate to home insulation and customers with a limited financial means, so they're not relevant for business customers. And what that meant was we weren't able to be as competitive as we needed to be in order to really go after this marketplace. Well, we've now sorted that. And so we're in the process of building out a small business proposition, which we aim to kick off as we head into next year, scaling up into FY '26. And finally, we're also now able to build and then launch time-of-use tariffs, including, for example, EV tariffs, which were types of tariffs that just simply weren't in the mind's eye of anyone back in 2013 when the agreement was put together, where all the pricing was based off sort of the standard variable pricing rather than the sort of the elements required in order to price for these more innovative tariffs. So again, we've sorted this, and we'll be looking to launch our first EV tariff as we move through next year, again, scaling up as we move into FY '26. Now we see these as real incremental growth opportunities. And to take full advantage of them, we will need to make some modest gross margin investment as well as a small amount of sort of tech and people costs, and we expect this investment to show from FY '26. And fundamentally, this investment is to ensure that we not only have a compelling customer proposition to put into the marketplace, but also we've got something that our partners can get really excited about and go and talk to all of their [ contact book ] about. So that's an overview of the very positive rational marketplace we're now in and a brief look forward to some of the significant opportunities in front of us. But as I mentioned at the beginning, underpinning all of this today, tomorrow, just as in the past, are the core and [ enduring ] fundamentals of our business model, which Andrew is going to talk about. Andrew?

Thank you very much. So I think it's very easy to get distracted and caught up trying to understand the working capital flows that Nick was talking about or the latest version of the E.ON agreement and forget and lose sight of the underlying fundamentals of the business. And so I want to give you a couple of minutes just to run through those, because they are incredibly strong and really quite straightforward. We are the only supplier of multiple home services in the U.K. Nowhere else can a customer get their energy, their broadband, their mobile and their insurance on a single bill. And that multiservice proposition, that differentiated bundle is not just about customer experience, it's what delivers the fundamental cost advantage that we rely on as a business and what powers our business model. And I've said this to many of you before, but each of you at the moment has a mobile phone on your desk, you've got an energy supply at home, you've got a broadband supply at home, you've got a home insurance policy. And that means that there are 4 companies supporting you at the moment, there are 4 companies waiting with somebody in the call center to answer your question, 4 companies investing in a tech stack to support the app that you use and ultimately, 4 companies trying to make a profit out of you. And if you were with utility warehouse, which, of course, you should be, then we could be supplying with all 4 of those services, but only incurring 1 set of overheads, 1 app, 1 person in a call center, 1 profit stream from you. And this is absolutely the crux of the business model. It delivers us an operating cost advantage that is enduring and that we can then share with our customers on an enduring basis in a win-win situation. And that is what you see here on this slide, which is, on the left-hand side, if a customer comes to us just for energy, we are, to all intents and purposes, a standard energy supplier, we're no different to any of the names that Stuart mentioned a moment ago. And we will essentially sell energy at around standard price, just below the price cap, the customer doesn't get a differentiated proposition. And to all intents and purposes, they are not an ideal customer of ours at all. If we move them to the right and we get them to take broadband as well as energy, then we make a full margin on their broadband. That means we can cross-subsidize a discount on their energy into perpetuity for as long as they have both services, and that means they get lower pricing that will encourage them to remain with us. So their longevity, their lifetime with us is extended. And at the same time, we are making a higher contribution out of them, overall. If I'm moving further down, following the green arrow to the right, you further extend their lifetime, you further extend their contribution by getting them to take 3 services. So they take mobile, we can cross-subsidize a discount on the broadband. We can cross-subsidize a further discount on the energy, they're now getting the lowest price energy that is possible in the U.K. They're getting the best savings, so they get a multiservice convenient proposition and the cheapest tariff in the marketplace and we get a higher-value customer. And it is this combination where they get the best value experience and we get the most valuable customer that is unique to our business model. And it is the win-win that underpins the success of the business. And the obvious question, the always question is, so if you've done it, then why hasn't anyone else emulated this if it's so clever? And the answer is that many people have tried, and here, you've got the 4 marketplaces that we operate in. And you can see that there are single areas of focus. There are energy companies, there are broadband companies. There are insurance companies. And they've all viewed the movement into semi-adjacent marketplaces as a value-add opportunity that gets a little bit of attention, whereas we view it as our fundamental strategic focus from the get-go to get multiservice customers. Trying to cross-sell and upsell is a hard, hard slog, and you get low levels of penetration, [ that ] being able to acquire multiservice customers at the front door is something that we focus on specializing and achieve successfully through our unique partner word of mouth through to market. And it's thanks to this highly differentiated approach that over 70% of the customers that our partners sign up today will take 2 or more of our core services. That is an astonishing statistic. And it's not only that they are spending the time to talk about services that they benefit from themselves to their friends and family and you should look at this and explain the benefits of each of the services; actually, just as importantly or perhaps more importantly, what they do is overcome the apathy and the inertia that inevitably exists to the perceived hurdle of switching all of your services simultaneously to a new supplier. And however persuasive I might have been a minute ago that you should all join UW for your home services, the truth is that not a single one of you will tonight, go home, log on to your computer and go through the effort of switching your energy, your broadband, your mobile and your insurance to us, although you all know that you should. What will change that is if I say to you, "I'm going to come around and have a cup of coffee with you tomorrow at 11:00, and I'm going to help you dig out your bills and I'm going to help you overcome that perceived hurdle," and within half an hour, you will have switched to a much more convenient, better savings model with UW. So that is exactly what our partners do for us, day in day out. They overcome that significant perceived hurdle, which isn't really a huge hurdle. And by doing that, they give us a competitive advantage that nobody else can emulate. They give us multiservice customers to a degree that no one else can hope for, and that is what unlocks the multiservice model. So our partners are a really, really fundamental part of our business model, and they are a very, very significant [ barrier ] to entry for anyone who wanted to emulate a high-quality multiservice customer base like ours. And I think it's worth just for a moment, pausing to think about what that means in the current macroeconomic environment, where there are Middle England families feeling real financial pressure. And so we are seeing continued really healthy demand for our part-time income opportunity from people who are seeking to earn additional income in their spare time and not having many options. And this month, there will be -- I don't know exactly who they will be, but there will be around 5,000 active partners successfully recommending us to their neighbors, their friends, their colleagues. And between them, they'll earn around GBP 3 million of commission for doing that. And I think it's really important to reflect on who those people are. They are hard-working entrepreneurial people, who are trying to take control of their finances in a difficult macroeconomic and climate environment. And they should be applauded for that. But I think what it opens up is the real win-win nature of this business that -- it is succeeding because it is able to offer consumers the lowest-priced services through its multiservice model. It's able to offer our partners, thousands of them, a really meaningful additional income when they are facing economic pressure themselves and they need to sort out their finances, and this gives them the means to do it. And yet at the same time, it's offering our shareholders long-term, sustainable, growing and really healthy financial returns. And it's a win-win that isn't very often, I think, in business. And the 2 key USPs of the business being the multi-service model that is unlocked by the word of mouth through to market, that is what is consistently, over the last 25 years, delivered the long-term growth that we've seen year in, year out, sometimes faster, sometimes slower, upper trajectory and growth towards that 1 million customer mark that we are just about to reach in the next couple of months. And I think it's worth just looking at that graph and going there hasn't actually been a time in the history of the business when the businesses fell in such good health. There is a stable, rational energy market, as Stuart has spoken about, in which our model really is working. There is a really compelling customer proposition not just in energy, but across broadband, mobile and now insurance that customers are enjoying and benefiting from. There is a macroeconomic environment that is driving people to want to earn additional income and therefore, driving our word of mouth through to market. And then slightly deeper under the skin, we've spent the last 7 years investing fair amount of money in our technology platform. And we are really ready for that to scale. We've got the infrastructure in place now for us to be able to look at that scaling from 1 million customers to 2 million customers without launching, given that we've made that investment. And finally, the team that is around Stuart and Nick now, the bench is so much bigger than it used to be. It really is a very, very talented exec leadership team and further down, business leadership group throughout the business that is up for the challenge of taking the business on to the next phase of growth. And whilst I'm stepping aside and passing the baton to Stuart from next summer after 16 years at [ UW ]. I'm really, really pleased that I'm going to carry on being involved with my beloved Team Purple and helping to execute their strategy and help as many of them to achieve their goals as we achieve the corporate goal of going to 2 million and beyond.

Can I just add what an invaluable contribution Andrew has made over the last 16 years. The business, genuinely, is in fantastic shape, with a very exciting future. And we're delighted as well that Andrew is going to be staying involved with sort of helping to support and advise on his beloved Team Purple. So this brings us, I think, neatly on to the outlook. Now we've -- as you can see from the chart, we've got a 3% market share in energy. And we've got far [ less ]. We've got 1% in broadband and mobile and a fraction of a percent in insurance. And that means that 97 out of every 100 households is still with another energy supplier. And you can see here, we're the seventh largest supplier. As a new big 6, it's some slightly different names to the big 6 of yesteryear. But there's a big 6, and we are the #1 challenger to that big 6 and [ now ] the seventh largest supplier. And we could double in size. And guess what? We will still be the seventh largest supplier and the #1 challenger. And the opportunity in front of us is absolutely huge. So bringing that opportunity back to the here and now as a quick recap, in the first half, we had again delivered comfortable double-digit growth off of this, a continued and growing demand for the savings and the additional income that we offer. And we're well on track to passing that 1 million customer mark as we move through the second half. We've increased the interim dividend, as Nick mentioned. And in line with our capital allocation policy, we're commencing an initial share back of around GBP 10 million. Looking forward, in terms of H2 and the full year, as we mentioned a few times, we're now into our fifth, well into our fifth consecutive half-year period of comfortable double-digit growth. And another half of this double-digit customer growth will result in another year of profits growing at broadly that same double-digit growth rate. And we're confident in delivering on market expectations for FY '24, with broker estimates, I mean, in the region of GBP 110 million to GBP 116 million for adjusted PBT. And in line with our updated capital allocation policy, as Nick mentioned, we expect to modestly increase our full-year dividend, supplemented where appropriate with the share buyback program that we're now commencing. And then looking further ahead, as we mentioned, we're looking to scale the business from 1 million customers to 2 million customers over the medium term and really increasing our market share in each of our 4 core service areas. And in addition, we've opened up those incremental growth opportunities that we talked about, in particular around small businesses and EV and other sort of innovative tariffs. And as we scale the business from 1 million customers to 2 million customers, doubling the size of the business, we also expect to double our profits from the early GBP 100-something million mark to the GBP 200 million-plus mark. At the same time, because our business is inherently capital-light and cash-generative, we expect to be able to sustainably reward our investors with a growing dividend, now supplemented by share buybacks. Now on top of that and at the full year, over the summer, we flagged that there are real opportunities for us to, in addition, increase our profit per customer as we grow. But I think it's really important to recognize that this is the icing on the cake. The cake is what we've been talking about here today, which is the core growth in customers compounding at a comfortable double-digit annual percentage year after year after year, which we are very excited about and hope that you are, too. So thank you, and I think we're now going to open up to questions, and I think we're starting off with some questions on the phone.

[Operator Instructions] The first question comes from the line of Charles Hall from Peel Hunt.

Could I first ask -- well, actually, first of all, so congratulations on the performance in the first half, a great start to the year, but also particularly to Andrew, for the last 16 years, very impressive what's been achieved. And I think, Andrew, if you could just touch a little bit more on why you're stepping down as of next summer? What you're going to be doing with Team Purple? And what are you going to be doing more generally?

Gosh, it sounds like it's radio morning interview. I think the -- so I think realistically, getting to the 1 million customer mark is something that I've had in my crosshairs since I joined, it's taking a lot longer than I would have liked it to have done. And I'm challenging Stuart that it will take a lot less than that to get to the next 1 million. But the truth is that even 1 million customers is a big milestone. And to me, there's my sort of tick in the box for achievement. I don't feel that -- there's still quite a lot of unfinished business for me personally with Team Purple because Team Purple is incredibly interesting part of the business. It's a psychological challenge of how to mobilize an army of 65,000 volunteers to achieve their goals, and that's something that I find particularly interesting. And I'm going to be carrying on, on a part-time role. So a day a week, but not so full time and certainly not sitting on the Board or the exact leadership team but focus on the business that I'm really passionate about and trying to help Justin, who's the partner Director, and Stuart and the team to really mobilize and maximize the power of that 65,000-strong community. On the other 4 days of the week, I would expect to be pursuing other business interests. I am much more sleeves-rolled-up kind of business person, that's where I enjoy spending my time. And so I would like to be getting involved in small businesses and helping them develop in the earlier stages of growth. I think that's probably more where my skill set sits.

Just to add, if you don't mind me jumping in, just to add, I mean, this has been very deliberately a sort of a transition of continuity. And that's something that the strategy that we're currently pursuing to double the size of the business from 1 million to 2 million customers is [ mine ] and Andrew's strategy, which will continue to be my strategy when Andrew steps down. It's really about consistency and continuity. And as both -- as Andrew mentioned, all the pieces of the jigsaw seem to sort of be in place now for us to really crack on and do that, whether it's the deeper relationship with E.ON, whether it's the sort of the deep bench and really high-quality team that we've been building up over the last few years, whether it's the financing that Nick talked about, the normalized marketplace that we're now sort of finally operating in as well. All the pieces of the jigsaw are there. And I think it's really great as well that Andrew's going to be staying on to -- in that sort of part-time capacity to sort of maximize the power of our very special unique [ way ] to market.

And just talking about that deep bench, you recently appointed a COO. Do you want to just talk through sort of the thoughts behind that recruitment and what that individual will be doing?

Yes, sure. I mean in fact, over the last few years, we've made a few sort of big hires. We recruited a Chief Commercial Officer, who's now our Chief Growth Officer, a guy called David Walter, so about 1.5 years ago. Last year, we recruited a new Chief People Officer, who has come and made a big impact. And then just over a week ago, we announced the appointment of [ Rob Harris ], who's coming as our Chief Operating Officer. And he's got really deep experience at both Barclays. He was a Managing Director of Mortgages and at [ Centrica ] as well, where we he had held a number of sort of large roles. And he's really focused on sort of driving business performance and business transformation, making sure that you're operating really efficiently and maximizing the opportunities. He's more the latest example of how we've really built out a really strong team, which again is all part of our demonstrating our confidence in the opportunity and making sure we're sort of set up properly to take it.

Perfect. And just lastly, really good progress on the insurance side and quite a lot of strategic moves also taking place. Can you just talk through those? And what potential you see for insurance business over, say, a 3- to 5-year period?

Yes, sure. So insurance continues to make really strong progress, is that sort of -- it had a bit of a slow start in its sort of first few years post sort of inception. But for the last couple of years, it has really started motoring. And that's due to reasons that I think we spoke about at the full year and last year around us integrating insurance within the proposition, so that you can take insurance at the point of entry rather than as a subsequent upsell. Obviously, we spoke at the full year that we've also set up our in-house underwriter in Gibraltar to provide supply resilience, so you can't put in place the same long-term supply relationships and insurance that we have in energy and in the broadband and mobile. And so with that setup, I think we're really excited about what we -- where we can go next. We more than doubled the size of our insurance sort of book over the last year. And what comes next is looking to do with home insurance, what we did with Boiler Cover. So lots of the growth over the last year has been around Boiler Cover, and we're now looking to go in a similar sort of growth journey with home insurance, leveraging some of the capabilities we'll have from our in-house and show in Gibraltar. And also, adding some additional complementary personal lines into the mix as well. So rather than adding any additional sort of wholly services into the mix over the next sort of 3 years or so, which is, I think, the appropriate time horizon for thinking about that sort of thing; we'll be looking to add, I expect, additional insurance lines. We don't offer motor insurance or travel or pet, and these are all, again, very complementary products that our partners and our customers are constantly asking us, why can't you provide that? It would fit so neatly within the bundle. So the opportunity is very real and big. Over 3 to 5 years, it's all about getting from the 100-and-something-thousand policy mark where we are today to 250,000, then 500,000 and beyond to the playing catch-up with our services.

We currently have no questions in the queue. [Operator Instructions]. So I will now hand over for some questions submitted on the webcast.

Yes, we have some online questions. The first questions come from John Karidis at Numis, and it's a four-part question. What was the monthly -- sorry, what was the customer churn in the period? How is the mix of tenant versus homeowner trending over time? And can you comment on the reduction in business customers in the period?

Okay. So customer churn during the period was around the sort of the 7% mark. You might recall it back in the price war period, we saw churn peak at one stage at around -- in one period at around the 14% annualized level. During the energy crisis, it fell down to around the sort of sub-3% level. And we sort of talked to some time now about to sort of stabilizing, rising and stabilizing at sort of a new normal, somewhere in the sort of the mid- to high single digits, and it's currently at that 7% level. Homeowner-tenant mix -- I don't think that there wasn't a real change in mix there. Obviously, we do sort of gear our proposition both from a customer perspective and also from a partner perspective towards homeowner customers because we view them as more valuable and with a longer life span for a number of reasons, but in particular, the fact that they move property less frequently. But what you find is the tenants that you do have in your portfolio, they multiply because they move property so often. That means that 1 tenant can become 2 talents very quickly. And therefore, your -- even if you're bringing more homeowners in the front door, you're having to sort of play -- you've got like a drag factor at the back door with your tenant population continuing to sort of increase. And on the business customer side, so at the beginning of the energy crisis, we actually stopped taking on new business customers. I mentioned earlier that we had acquired a number of business customers sort of by accident over the year, despite not having a proposition or the ability to create a proposition that was really geared for them, was able to be as competitive enough. We stopped taking on new business customers at the beginning of the energy crisis because we wanted to really double down and focus on the sudden change in our sort of acquisition rate of new residential customers. And that's basically meant that we've, therefore, been losing business clusters, but not being any more in the front door. So it has been a natural sort of churn effect there. And that's one of the reasons why we're -- it's a small part of the reason why we're very excited about the business club opportunity or business customer opportunity that's presented from the [indiscernible] relationship. That's a massive marketplace. There's something like 5 million micro businesses in the country. And it's very much the micro businesses and the S part of the SME marketplace that we're talking about, the sort of the hairdressing salon on the high street where one of our partners might actually be working as a hairdresser or might have a friend or a family member that's doing so. Those are the types of businesses where it's very natural for them to want to have the same proposition for their small businesses they've got at their home. And so we'd expect to see that decline not only reverse but then start to build and accelerate forward once we go to market with our new business proposition.