## Report and Accounts ## Year ended 31 March 2022 ## Contents ### Strategic Report Financial and Operating Highlights 1 Our Approach 2 Our Services 3 Chairman’s Statement 5 Co-Chief Executives’ Review 8 Financial Review 17 Principal Risks and Uncertainties 20 People and Organisation 27 Sustainability Report 31 Task Force on Climate-related Financial Disclosures 43 ### Governance Reports Board of Directors 47 Corporate Governance Statement 51 Nomination Committee Report 55 Audit Committee Report 57 Directors’ Remuneration Report 60 Directors’ Report 83 Directors’ Responsibilities 87 ### Financial Statements Independent Auditor’s Report 88 Financial Statements 96 Notes to the Financial Statements 102 ### Shareholder Information 138 # Financial and Operating Highlights ## Revenue ![img-0.jpeg](img-0.jpeg) - Revenue up 12.3% to £967.4 million (2021: £861.2m) - Adjusted pre-tax profit* up 10.3% to £61.9 million (2021: £56.1m) - Statutory pre-tax profit up 8.5% to £47.2 million (2021: £43.5m) - Adjusted EPS* up 10.1% to 63.2p (2021: 57.4p) - Statutory EPS up 8.7% to 45.1p (2021: 41.5p) - Full year dividend maintained at 57p - Number of customers up 10.8% to c. 729,000 - Number of services supplied up 9.2% to c. 2.3m - Notable improvement in customer retention levels, as customers benefit from higher savings on their UW services - Return to rational pricing environment following permanent energy retail market reset ## Adjusted pretax profit* ![img-1.jpeg](img-1.jpeg) ## Services provided ![img-2.jpeg](img-2.jpeg) *Adjusted pre-tax profit (£61.9m) and Adjusted EPS exclude share incentive scheme charges (£1.0m), amortisation of the energy supply contract intangible asset (£11.2m), the minority share of Glow Green losses (£0.5m), loss on disposal of UWHS (£1.1m), impairment of goodwill associated with Glow Green (£1.5m) and the profit on disposal of a freehold property (£0.6m). The reconciliations for adjusted profit before tax and adjusted EPS are set out in notes 1 and 19 respectively of the financial statements. Telecom Plus Plc Report and Accounts 2022 / 1 ## Our Approach Strategic Report Governance Report Financial Statements Shareholder Information ### Everything in one ### All your We bundle together all your home services - energy, ### home ### broadband, mobile and insurance - into one, great services ### value, monthly bill. And the more services our in one customers take, the more they save. ### A structural cost advantage Through providing our customers with multiple home services, we generate multiple revenue streams from a single set of overheads. This gives us a structural and enduring cost advantage relative to our competitors, enabling us to consistently price competitively across each of the services we supply. This creates a highly attractive and referable proposition for our Partners to recommend, acquiring high-quality, multiservice customers on our behalf, and maintaining our unique structural cost advantage. ### Our word-of-mouth model Unlike other suppliers, we don’t acquire our customers directly. In fact, almost every one of our 729,000 customers has been introduced to us by word-of-mouth. And at the heart of this is our community of over 48,000 self-employed Partners, who earn an income by referring UW to family, friends and people they know. Telecom Plus Plc Report and Accounts 2022 / 2 ## Our Services ## All your home ## services in one ### Unlike our competitors, we’re not We save our customers time and money by providing all ### an energy company, a broadband their home services in one: ### company, a mobile company or ### an insurance company. We’re the ## One bill ### UK’s only multiservice provider. with a promise of great value. ## One number whatever their query. ## One account with a single password for all their services. So customers can switch to UW, be sure of great value, and never have to think about their utilities again. Telecom Plus Plc Report and Accounts 2022 / 3 Strategic Report Governance Report Financial Statements Shareholder Information ## Energy Consistently fair prices, which we guarantee will be lower than the Government’s price cap. ## Broadband Super-fast broadband with no in-contract price rises and outstanding technical support. ## Mobile Market-leading tariffs and no EU roaming fees, all on a 30-day rolling contract. ## Insurance Top-rated by Defaqto and Moneyfacts, and always the best premium from our panel of insurers. ## Winning awards ## year in, year out We’ve earned over 70 awards - and counting - in the last decade alone, for the service we provide, the products we offer and the environment we’ve created for our team. Most recently we were awarded, Best Customer Service, Most Likely to Recommend and Best Rewards in the Uswitch Energy Awards 2022. ### Best Customer Service ### Most Likely to Recommend ### Best Rewards Telecom Plus Plc Report and Accounts 2022 / 4 # Chairman's Statement 66 I am pleased to report a strong performance by the Company during a period of exceptional market turbulence, with turnover, profit, customer and service numbers all reaching record highs. Adjusted pre-tax profits increased by 10.3% to £61.9m (2021: £56.1m) mainly reflecting higher customer numbers during H2, on revenue up by 12.3% to £967.4m (2021: £861.2m) largely due to higher energy prices and a growing customer base. Adjusted earnings per share for the year rose by 10.1% to 63.2p (2021: 57.4p). Statutory pre-tax profits rose by 8.5% to £47.2m (2021: £43.5m), and statutory EPS rose by 8.7% to 45.1p (2021: 41.5p). Customer numbers for the year increased by 71,269 (2021: 5,174) to 728,680 and core service numbers grew by 191,112 (2021: 51,081) to 2,264,909, representing growth of 10.8% and 9.2% respectively. All this growth was achieved organically, and predominantly during H2, representing an annualised customer growth rate for H2 of slightly over 20%. This was achieved despite our decision not to participate in the multiple opportunities which arose to acquire customer bases from insolvent suppliers during the autumn. Churn within our energy customer base is continuing to run at an annualised rate of less than 3%, and in the absence of a return to heavily discounted introductory fixed tariffs from other suppliers - which now seems unlikely given the current regulatory focus on ensuring a sustainable retail energy marketplace - we would expect our churn rate to remain well below historical levels for the foreseeable future. Interest in our income opportunity for UW Partners accelerated over the course of the year, particularly during the second half, as people focussed on the impending cost of living crisis. We progressively improved both our customer and Partner propositions; of particular importance was the simplification of our bundling structure in March, enabling customers to lock-in guaranteed savings of up to 5% below the Government's energy price cap when they take any combination of our other core services. We received a number of awards during the year recognising both the value we offer and the quality of service provided by our UK-based support teams; these are testament to our customer-centric approach, our commitment to treating our customers fairly, and the significant efforts by our teams to deliver the best possible customer service. 99 Telecom Plus Plc Report and Accounts 2022 / 5 Strategic Report Governance Report Financial Statements Shareholder Information ### Dividend Corporate governance We are proposing a final dividend of 30p (2021: 30p), The UK Corporate Governance Code (the “Code”) bringing the total for the year to 57p (2021: 57p); this encourages the Chairman to report personally on how will be paid on 5 August 2022 to shareholders on the the principles in the Code relating to the role and register at the close of business on 15 July 2022 subject effectiveness of the Board have been applied. to approval by shareholders at the Company’s AGM which will be held on 26 July 2022. As a board we are responsible to the Company’s shareholders for delivering sustainable shareholder value We remain committed to a progressive dividend policy over the long term through effective management and consistent with the underlying strong cash generation good governance. A key role of mine, as Chairman, is to of our business, with a significant increase to at least provide strong leadership to enable the Board to operate 65p expected for the current year. effectively. We believe that open and rigorous debate around key ### Our ESG strategy strategic issues and risks faced by the Company is important in achieving our objectives and the Company As a Company, we remain focussed on delivering against is fortunate to have non-executive directors with our ESG strategy. Never before has sustainability been so diverse and extensive business experience who actively relevant. The challenges of collectively achieving net zero, contribute to these discussions. the energy crisis of last autumn - and now the sharply increasing cost of living faced by families throughout the Further detail of the Company’s governance processes UK - have brought into sharper focus the importance and compliance with the Code is set out in the Corporate of helping our communities thrive, supporting a more Governance Statement. sustainable future and doing business responsibly. These three pillars underpin our ESG strategy and I am pleased ### to report that we have made good progress over the last Board changes year, as set out in our ESG Report and in our Sustainability Report on pages 31 to 40 below. As previously announced, non-executive directors Julian Schild and Melvin Lawson will be retiring from the Board We recognise the importance of a low carbon future and after the AGM in July. Melvin and Julian have each made are actively developing a detailed Net Zero transition plan. significant contributions to the success of the business We are committed to implementing the recommendations and will leave with our sincere thanks. of the Task Force on Climate-related Financial Disclosures (“TCFD”) and our TCFD disclosures, consistent with the We are delighted to welcome Carla Stent to the Board TCFD framework, can be found on pages 43 to 46 of as a Non-Executive Director with effect from the AGM in this Report. July. Carla brings a broad range of skills and experience at large and fast growing businesses, and demonstrates Our ESG targets and goals for the year ahead are set the importance we place on meeting the highest possible out in our ESG Report and Sustainability Report and standards of corporate governance. She will immediately demonstrate the Company’s continued engagement and assume the role of chairing our Audit Committee. focus on its ESG agenda. Telecom Plus Plc Report and Accounts 2022 / 6 ## Chairman’s Statement ## continued ### Outlook Indeed, with 98 out of every 100 households in the UK taking their essential home services from suppliers other We have now entered what seems likely to be an than UW, our organic growth opportunity is, for all practical extended period of normal and sustainable competition purposes, unlimited. across the various essential household services we provide - an environment in which our clearly Our new medium-term goal is to sign-up at least 1,000,000 differentiated and effective route to market can additional customers over the next four to five years - a be expected to thrive. It is hugely exciting to see our target we believe is comfortably achievable against an community of Partners once again demonstrating their economic background where our ability to help families ability to deliver rapid and high quality organic growth. both save on their bills and earn a meaningful additional income have never been so needed or so valuable. In helping UK households to manage and reduce their bills, we are a business of its time. Consumer demand to In the absence of unforeseen circumstances, and with reduce bills has never been higher, and is likely to continue growing visibility over the level of the Government price to grow over the coming months. Our multiservice model cap for the coming winter period, we expect that full-year enables us to offer consumers some of the cheapest adjusted profit before tax for FY23 will be around £75m, energy tariffs in the market - with guaranteed savings of ahead of current consensus market expectations; this up to 5% below the Government energy price cap - in an would enable an increase in our dividend to not less than entirely sustainable way. 65p for the full year in line with our progressive dividend policy. And we are actively increasing our investment in staff and technology to further improve the already strong customer Once again, I would like to thank my boardroom colleagues experience and service levels that earned us top position for their support and all our staff and Partners for their in the May 2022 survey carried out by Uswitch. loyalty and hard work throughout a difficult and challenging few years, and the contribution they are making to the Whilst we expect our customer base to grow by around strong performance we are currently seeing. 20% during FY23, the fundamental strengths of our business model mean there is much more to aim for. Charles Wigoder Executive Chairman 21 June 2022 ## I am pleased to report a ## strong performance by the ## Company during a period ## of exceptional market ## turbulence. Telecom Plus Plc Report and Accounts 2022 / 7 ## Co-Chief Executives’ Review Strategic Report Governance Report Financial Statements Shareholder Information ### The year in summary An inflationary environment is one that has historically suited our business model, as we cater for both those The business has experienced a dramatic turnaround in looking to save money on their bills, and those seeking the past 12 months, delivering a very strong performance to earn an additional income. that exceeded our expectations at the start of the year. Households across the country are experiencing price We have regained our long term competitive edge, are rises for all their essential home services - be it energy, offering some of the best value services in the country, broadband or mobile - and are increasingly focussed on and starting to fire on all cylinders again. managing their monthly outgoings and interested in hearing about ways to save. A continuation of the long-running and value-destructive price war in the energy retail market, combined with the At the same time, more and more people are looking to after-effects of social distancing restrictions associated supplement their earnings, and turning to the near-term with the pandemic, led to a slow first six months until income opportunity we offer our Partners. It is hugely September 2021. rewarding to see record numbers of Partners joining UW and being active in recommending UW to their friends, Since then, our trading environment and long term outlook families and colleagues, helping them reduce their bills have significantly improved, as shown by the 10% growth whilst earning a meaningful additional income in the in both customers and service numbers in the second half process. After several years of challenging conditions, of the year - equal to the previous five years of growth the path ahead for us to deliver sustainable and profitable combined. double-digit annual growth is clear. The end of the energy price war was a huge contributor The strong performance of the business over the last six to this rapid improvement in performance: prior to months is exciting, but with the cost of living squeeze September 2021, our long term cost advantage and driving increased consumer demand for what we offer, and multiservice approach had struggled to compete against with 98 out of every 100 households across the UK using the irresponsible, below-cost pricing models of many suppliers other than UW, we believe there is much further now-failed energy competitors. As wholesale energy to go. The business is perfectly positioned to capitalise on prices rose last year, it exposed these short-termist, these very positive dynamics, and we continue to invest unsustainable business models, resetting the energy to ensure we maximise our growth prospects over the market and enabling the core strengths of our business years ahead. model to come back to the fore. ### Our disciplined refusal to engage in the value destructive A unique business fray of the energy price war, instead remaining focused on long term value creation, has paid off. Today, we are All your home services in one operating in a much smaller market with only ~15 remaining We supply households and small businesses throughout suppliers and ongoing regulatory intervention that will the UK with a wide range of essential services under the prevent any possible recurrence of unsustainable pricing UW brand - energy, broadband, mobile and insurance. practices. Our customers bundle together the services they want, and benefit from a unique multiservice proposition that But it is not simply the reset of the energy markets that offers them: has enabled the business to return to growth and deliver • Simplicity - just one, simple bill for all their home a strong second half. The macro-economic outlook for the services; UK is worsening, household budgets are coming under • Savings - compared with the prices they were previously increasing pressure, and demand for what we offer is paying; and clearly rising. • Service - an award-winning customer app backed up by UK-based support teams. Telecom Plus Plc Report and Accounts 2022 / 8 ## Co-Chief Executives’ Review ## continued We help our customers to get on with more important As the UK’s only genuine multiservice provider, we derive things in their lives than managing their bills, by delivering significant ongoing operating efficiencies relative to our consistently fair value and great service, ensuring they competitors by spreading a single set of overheads across never need to think about switching their utilities again. the multiple individual service-related revenue streams we receive from each of our customers. We believe that one supplier offering a single place to manage all your essential home services, and a single This creates a sustainable, structural cost monthly bill for all of them together, is logically the easiest advantage that enables us to consistently and most cost-effective way to deal with your bills. price competitively across each of the services we supply. Our ultimate objective is that by fully delivering on our ‘all your home services in one’ customer proposition, we This in turn creates a highly attractive and create something that is truly referable. referable customer proposition that enables us to harness the most powerful form of Word-of-mouth marketing - word-of-mouth. The power of a personal recommendation from someone you know and trust is as great today as it ever has been, Our Partner-led word-of-mouth route to and delivers real impact. This is increasingly apparent in market enables us to achieve high levels a world of ubiquitous online reviews and relentless digital of multiservice take-up by new customers, marketing campaigns hitting consumers from all angles. maintaining our sustainable cost advantage. Almost every one of our 729,000 customers has been ### introduced to us by word-of-mouth. Central to this Our focus differentiated marketing approach is our community of UW Partners: they are local, trusted brand advocates The energy, broadband, mobile and insurance markets are who spread the word about UW, one neighbour at a time. each individually significant; combined, they present us with a vast opportunity. Further, with a market share of In return for successfully recommending us to their friends around 2.5%, there are few practical constraints on the and family, and helping them switch their essential home size of business we can build organically. services to UW, we offer our Partners the opportunity to earn a meaningful additional income. However, we have never pursued growth at all costs. We take pride in building an ever more robust and sustainable Our sustainable cost advantage business that serves the interests of all our key audiences: It is the combination of our unique ‘all your home services our customers, Partners, employees and our shareholders. in one’ customer proposition with our powerful ‘word- of-mouth’ route to market (that in itself represents an The underlying strength of our business and the conviction attractive proposition to many consumers), that lies at in our approach is founded on two key areas of focus: the heart of our business model. These are underpinned by strong wholesale supply agreements for each of our services and a fully-integrated technology stack that we’ve built in-house. Telecom Plus Plc Report and Accounts 2022 / 9 Strategic Report Governance Report Financial Statements Shareholder Information Loyal customers creating long term value Word-of-mouth as a sustainable route to market We believe sustainable value can only come from We believe attracting multiservice customers at scale long term relationships with our customers. We must is best achieved through word-of-mouth. This is a core compete toe-to-toe in each of the competitive markets tenet of our business model and gives us a significant we operate in, but we’re not trying to persuade people competitive advantage, with a direct ability to communicate to buy something they don’t already have or may not the benefits of our unique multiservice retail proposition need. We simply offer a better solution for the essential to high quality customers, many of whom may never have household services they’re already using, and one that’s previously switched supplier. This is in stark contrast to recommended by a trusted friend or neighbour. the traditional and costly routes to market - billboards and digital banner ads to name a few - that are adopted We seek to generate loyalty amongst our customers in a by most other suppliers. number of key ways: • Incentivising them to take more services from UW Moreover, and also unlike other routes to market, this There’s a clear correlation between the number of word-of-mouth model creates a genuine alignment of services a customer takes and their lifetime as a UW interests. Our Partners can earn meaningful short-term customer, and so we offer incrementally better value financial rewards for introducing new customers to UW, with each additional service they take from us. as well as a long term residual income for as long as their • Providing outstanding service and treating them fairly customers remain with us. Above and beyond our award-winning customer app and telephone support, we offer a promise of great value As an opportunity to earn a meaningful additional income for as long as a customer stays with us, eschewing the it offers genuine flexibility, as Partners earn in their own short-term ‘tease and squeeze’ pricing tactics that time and on their own terms, and it’s highly accessible, as inevitably undermine customer trust and loyalty. anyone can become a UW Partner, recommend UW from • Encouraging homeowners to sign up to UW anywhere and no previous experience is needed. Changes in occupancy pose particular challenges to broadband and energy suppliers, leading to higher Almost all of our customers have signed up to UW following administrative costs and acting as a prime source of a recommendation from a UW Partner. In some cases both churn and bad debt. Our propositions are therefore this only generates a one-off income, but in most cases weighted towards homeowners as they tend to move Partners can generate real financial security for themselves less frequently. and their families - something that has once again started to strike a real chord around the country in recent years. Only a minority of UK consumers actively engage with the expensive advertising strategies of our competitors; these The pandemic reinforced the appeal of the UW Partner are typically serial switchers and are therefore unlikely to opportunity, with rising demand for an alternative, flexible generate long term returns. The majority of people are income stream to supplement earnings. More recently with considerably less engaged with switching, and it is this the inexorably rising cost of living, we’re experiencing a personal recommendation from someone they know that further surge in interest as UK consumers increasingly look overcomes this natural inertia and then leads to longer for additional ways to bolster their household finances. lifetimes with us once they’ve switched. Moreover, these ‘hard to reach’ customers are where our less formal ### ‘word-of-mouth’ route to market really comes to the fore, Our core services accessing people who are not actively considering switching. We help UK households to save time and money by Our unique multiservice proposition delivered through bundling together all their essential home services into our word-of-mouth route to market drives the ongoing one. Whilst a number of price comparison sites seek to acquisition of loyal customers, thereby building long-term provide an all-encompassing home services proposition value for all parties: on a brokerage basis, we are unique in doing this on a • Our customers benefit from consistently lower prices genuinely integrated basis, as the actual retail supplier in return for switching all their services, and stay with across each of our core services. We believe this is the us longer. only way to earn the trust and loyalty of our customers, • Our Partners receive a long term residual income stream as we can manage their end-to-end experience. from a longer-lasting customer. • Our shareholders receive a sustainable earnings stream from an inherently sustainable business. Telecom Plus Plc Report and Accounts 2022 / 10 ## Co-Chief Executives’ Review ## continued Yet we are essentially a virtual business. Instead of owning Our long term, sustainable approach to pricing giving any of the underlying infrastructure assets necessary to customers a guaranteed discount to the Government price provide our services, we rely on the investments made by cap, led to us being consistently the most competitively others, and resell their services. This approach is founded priced supplier since October. The combination of this on strong, long term commercial relationships with the attractive pricing and record low churn, resulted in our wholesale suppliers of the core services we supply. It is energy service base growing by 13% in the last year, heavily also capital-light, ensures access to emerging technologies, skewed towards the second half. avoids any obsolescence risk, whilst enabling us to retain full control of our retail proposition. We have continued to focus our growth in this period on high quality customers. We chose not to participate in the Our suppliers recognise the value of our unique approach to multiple opportunities to acquire customer bases from each of the markets we operate in, and the importance of insolvent suppliers during the autumn (through the Supplier ensuring we maintain a competitive and attractive customer of Last Resort (“SOLR”) process) and have maintained our proposition so our word-of-mouth model continues to focus on acquiring multiservice home-owners through our thrive. In return, they benefit from a complementary and unique word-of-mouth route to market. clearly differentiated route to market which increases their market share, whilst the proven sustainability of our Despite our rapid return to growth, our customer service business model, the strength of our balance sheet, and quality has remained market leading, and we were the longevity of our multiservice customers means we delighted to have won three awards in the Uswitch energy benefit from long term competitive terms. awards 2022 including ‘Best Customer Service’, ‘Most Likely to Recommend’ and ‘Best Rewards’ in addition to coming We believe these are genuinely mutually beneficial runner–up for ‘Best App’. More recently, we topped the relationships, and the average tenure for suppliers - Citizens Advice Bureau (“CAB”) rankings - a testament to typically over 15 years - is testament to their strength, our focus and investment in this area, and the exceptional and the value that both sides attribute to them. work of our teams providing the support. None of this would be possible without our in-house Ofgem continues to run multiple concurrent consultations technology platform, which is managed by a team of on interventions to prevent any recurrence of unsustainable engineers who are innovating daily to deliver seamless practices, including, but not restricted to pricing, hedging, customer and Partner experiences. By fully integrating all consumer credit balance management, direct debit the household services we supply into a single monthly management, price cap review timeframes etc. We welcome bill, supported by a single set of central overheads, our this increased scrutiny, and Ofgem’s desire to ensure a technology gives us the fundamental, long term cost sustainable energy market. Equally we are constantly advantage that enables us to sustainably compete with alert to the risk of unintended consequences of highly other suppliers in each of the markets we operate in. prescriptive regulatory intervention, not least the significant administrative burden that this puts on suppliers. Energy The energy market landscape has experienced an unprec- Consumer engagement with the transition to net zero edented upheaval since the energy crisis began in October may have waned somewhat in the face of rising bills, but last year. Unsustainable pricing and hedging practices remains on a longer term upward trend. Whilst we view have resulted in 30 companies supplying over four million ourselves as a multiservice provider, not simply an energy customers going into administration in the last year. supplier, we have both a direct role to play in the transition, and also an indirect role, by helping our customers to do The customer impact has gone well beyond a change of likewise. The key priority for the energy retail industry is supplier. The rapid inflation in wholesale prices have led to the smart meter roll-out programme. Not only is this vital two consecutive significant increases in the Government to the broader transition to net zero, it also improves price cap - a key driver of the cost of living crisis. And with billing accuracy and customer satisfaction, and critically, most suppliers not currently accepting new customers it helps customers actively monitor in real time how much unless onto a very expensive fixed deal, more than 22 energy they are using. million households are now on standard variable tariffs, priced at the Government price cap, and switching across the market has dramatically reduced. Telecom Plus Plc Report and Accounts 2022 / 11 Strategic Report Governance Report Financial Statements Shareholder Information We maintain our belief that Government intervention is Broadband required if the smart rollout is to achieve its full potential Consumer expectations for broadband services have - namely the introduction of legislation to remove the never been higher with demands for faster speeds and ability for customers to opt-out from the national rollout better in-home Wi-Fi coverage as a result of the pandemic programme by refusing to have a new smart meter continuing to impact consumer behaviour. installed. In H1 we saw a dip in our broadband service numbers We continue to move ahead of the wider market in our following a period of heavy re-contracting during the smart meter rollout programme, with penetration now pandemic as people sought faster speeds; this resulted at 65% (up from 57% at the start of the year) despite our in many of our prospects being locked into their existing recent acceleration in growth. In order to focus on our suppliers last summer with large termination fees and core multiservice customer proposition, and to ensure being cautious about disrupting their service. the continued cost-effective rollout of smart meters to our customers, we took the decision to divest UWHS, As the national full fibre roll-out gathers pace, the quality of our smart meter installation business, in March. The new the in-home Wi-Fi experience is increasingly the important owners will continue to fulfil our smart rollout obligations factor for customers, and a focus for us. In April last year in line with our growth. we launched our Whole Home Wi-Fi solution, powered by the Amazon eero mesh system, and we are pleased that Our boiler installation business (Glow Green) made a loss a significant number of new customers now benefit from of £1.9m during the year. This disappointing performance this chargeable option. In September we upgraded the resulted from a combination of labour and supply chain router we offer at no additional cost to all new customers issues, a more competitive post-pandemic environment, and we’re delighted that in February Which? awarded it and start-up costs associated with entering the solar Best Buy status. panel and battery installation market. In order to focus on our core multiservice proposition, we took the decision to This February, responding to increasing budgetary pressures divest the business in March to Charles Wigoder, Executive on household finances, and in stark contrast to the CPI+ Chairman of the Group, for cash consideration of £1. annual price increases forced on their customers by the majority of large broadband providers, we launched a Wholesale energy markets remain volatile. We have competitive pricing structure for new customers alongside just seen the Government price cap increase by 54% a guarantee that we will not increase prices mid-contract. from April, and it is now inevitable that prices will rise At the same time, we introduced a new, faster Full Fibre significantly again in October. In addition, the ramifications 500mb product to meet growing consumer demand at the of the additional SOLR processes are yet to be fully top of the market. Combined with faster overall customer seen, with costs still to be absorbed by the market and growth, these improvements have resulted in a return new requirements on existing and new market entrants to growth for our broadband service and we expect this expected. Energy prices are therefore likely to remain high improved trajectory to continue. for the foreseeable future. Mobile We have already seen early indications of customers The UK mobile market continues to be split between the actively taking steps to reduce their energy consumption big four Mobile Network Operators (“MNOs”) focussed on in response to higher prices, and it seems increasingly coupled airtime and handset contracts and tied closely to likely that additional Government support will be provided a handset refresh cycle, and the largely SIM-only Mobile for those most at risk of fuel poverty this winter. The Virtual Network Operators (“MVNOs”) offering more combination of these two factors suggest that any increase flexibility and more data at lower prices. SIM-only demand in bad debts across the energy industry this year will continues to grow and with more customers turning away be more manageable than had previously been feared, from expensive handset contracts, our focus remains on although uncertainty remains over the eventual impact. a SIM-first strategy. In any event, we expect to be sheltered to a degree We continue to improve the quality of service for our from these pressures by our customer demographic new and existing customers with the roll-out of 4G and which skews towards more mature, creditworthy, and Wi-Fi calling during the year. Additionally, we have been multiservice homeowners. proactively migrating some of our customers from legacy tariffs onto our current proposition to improve their experience at low or no additional cost. Telecom Plus Plc Report and Accounts 2022 / 12 ## Co-Chief Executives’ Review ## continued In September we launched a new tariff structure to reflect We are committed to taking significant market share the wider market demand for increased data allowances. in the insurance markets, and are continuing to invest At the same time we improved the pricing of our Unlimited significantly in order to achieve this aim. Over the coming data SIM - a change which has allowed us to offer one year we therefore will be focussed on further accelerating of the best value Unlimited tariffs in the market with our insurance service growth, securing and, where possible, additional value for households taking multiple SIMs. increasing our margins, and evaluating opportunities to expand our range of insurance products in the future. In the second half of the year, the majority of mobile providers began to charge again for EU roaming. Along with Cashback card a handful of other MVNOs we have continued to offer this Our unique Cashback card proposition enables our to our customers at no additional cost as a key customer customers to save up to 10% at a range of participating benefit and differentiator of our proposition. retailers, and 1% on all their other spend, applied automatically as a credit to their next UW bill. Our mobile base has grown by over 7% in the last year. We look forward to accelerating this rate of growth over the It materially increases the savings opportunity we offer year ahead on the back of the additional energy discounts our customers, from four essential household services customers can now receive by taking a UW mobile service to all their everyday spending - groceries, fuel, travel, in our new bundle structure, and as we continue to deliver clothing etc. feature improvements such as 5G. We launched the Cashback card in 2008 following the Insurance global financial crash and subsequent rise in cost of living. Insurance is increasingly proving itself a natural fit for our Petrol had just reached the £1/litre mark, and demand brand and business model, and we are pleased to have was high. As we enter a further period of considerably grown the number of insurance services by 36% over the greater pressure on household budgets, we believe the year, and with the pace of growth now accelerating. Cashback card has a significant role to play in supporting our customers and accelerating our growth. We have invested in building an insurance platform that can scale rapidly with high operating leverage, and are During the year we paid out £5.8m of cashback to our very excited by the growth opportunity that insurance customers, and spend on the programme has grown to represents for UW as our fourth core service: it is a key over £368m annually, making it one of the largest prepaid pillar of our future growth strategy. card programmes in the UK. In January we migrated over 300,000 cards to Mastercard, a move that, combined with We have been directly authorised by the FCA as an our investment in the full stack infrastructure, will enable insurance broker since October 2020. We welcome their us to accelerate our innovation-led product roadmap in intervention to ban dual pricing in the home and motor order to fully capitalise on the growth stimulus we believe insurance markets during the year, as well as the increased the Cashback card represents. scrutiny of pricing practices more broadly, which we believe improves customer outcomes and strengthens ### our competitive position. Operational performance ### and non-financial KPIs Across our Home Insurance and Boiler & Home Cover products, we continue to achieve very strong renewal The number of customers we supply increased during the retention rates of over 90%, demonstrating our focus on year by over 10% to 728,680, and the number of services delivering excellent value combined with a best-in-class they take to 2,264,909. All of this growth was achieved experience. organically, and predominantly during H2, in spite of our decision not to participate in the multiple opportunities In March 2022 we integrated insurance into our bundle which arose to acquire customer bases from insolvent proposition, which has resulted in an increased propensity suppliers during the autumn. amongst new customers to take an insurance service at sign-up, and is an important step towards further scaling Our primary focus is the residential market, and in this our insurance business. segment our customer base increased by over 11% during the year. With 29 million households across the UK, we have just 2.5% market share. Telecom Plus Plc Report and Accounts 2022 / 13 Strategic Report Governance Report Financial Statements Shareholder Information | Customers | 2022 | 2021 | | --- | --- | --- | | Residential | 705,634 | 633,613 | | Business | 23,046 | 23,798 | | **Total** | **728,680** | **657,411** | We offer our customers four core services: broadband, mobile, energy and insurance, with many also taking our Cashback card. Customers can take any combination of services they wish from us, but given the clear correlation between the number of services they take and their expected lifetime value to us, we encourage new customers to switch as many services to us as they can in order to secure our best prices. | Services | 2022 | 2021 | | --- | --- | --- | | **Core services** | | | | Energy | 1,219,836 | 1,079,044 | | Broadband | 323,623 | 324,499 | | Mobile | 324,773 | 302,654 | | Insurance | 44,834 | 32,928 | | **Other services** | | | | Cashback card | 327,949 | 308,439 | | Legacy telephony | 23,894 | 26,233 | | **Total** | **2,264,909** | **2,073,797** | Note: The table above sets out the individual services supplied to customers. Legacy telephony comprises non-geographic numbers (08xx) and landline only (no broadband) services provided. The average number of services taken by new residential customers signed up by Partners fell slightly during FY22 compared with the preceding year, mainly due to an influx of customers over the autumn who were only looking to replace their previous energy supplier who had ceased trading. This temporary bias towards new customers seeking to switch only their energy to UW was still visible, albeit less pronounced, in March 2022 on the back of 22 million households across the UK receiving price increase notifications from their energy suppliers in advance of the significant increase in the Government price cap on 1 April 2022. ### Average number of core service types taken by new residential customers signed up by Partners ![img-3.jpeg](img-3.jpeg) In late March we launched a simpler bundle proposition for our customers, in order to give them greater flexibility in accessing our lowest energy pricing. We expect this to have a positive impact on the average number of services taken per customer, whilst also reducing the proportion of new customers taking just energy from us, and leading to a greater proportion benefitting from a genuinely differentiated multiservice UW proposition: by taking two or more core services from us, customers are receiving a proposition that they cannot get from any other provider, rendering them less likely to leave us. We have long benefitted from market-leading customer loyalty, and use our electricity supply point churn (the percentage of supply points leaving during the period) as a proxy for overall churn. This important measure of customer value fell significantly during the year to around 6% (2021: 13%) for the full year, with churn continuing at historic levels of around 10% during H1 followed by a rapid reduction to an annualised rate of 3% during H2 as all the remaining energy suppliers withdrew their 'below cost' acquisition tariffs in October. Whilst we do not anticipate that churn will remain at this very subdued level indefinitely, the ending of the energy price war and the increasing regulatory scrutiny on the sustainability of suppliers and their pricing strategies should ensure our churn rate remains considerably below historical levels for the foreseeable future. Average revenue per customer from providing Core and Other services increased to £1,340 (2021: £1,254) primarily due to higher energy prices during the winter following the Government price cap increase in October. Telecom Plus Plc Report and Accounts 2022 / 14 ## Co-Chief Executives’ Review ## continued Supporting our customers Supporting our Partners In order to maximise the expected lifetimes of The significant acceleration in our organic growth which our customers, and to earn the trusted personal started during the autumn was driven by an enthusiastic recommendations of our Partners, we must deliver a response from our Partners to the improved competitive consistently high standard of service to our customers, landscape and the demand for a sustainable, secure and treat them fairly, and live up to our promise of letting good value energy supplier. them get on with their lives and forget about their utilities. As the energy market dynamics shifted in the autumn We rely on the efforts of our colleagues in our unified and our Partners began to understand how much more support centre to look after all the services that our referable the UW customer proposition had become, customers choose to take from us. Historically based and grow in confidence, we re-prioritised elements of in north London, these teams now increasingly support our product roadmap accordingly. our customers from their homes throughout the UK: in offering our colleagues a more flexible approach to Following the removal of social distancing restrictions, working hours, and through accessing a greater pool of Partners continued to consistently sign up around 40% talent nationwide, we believe we are well positioned to of new customers and Partners remotely, realising the meet the needs of our customers as we grow. During the ability to conduct their referrals nationally as opposed year we invested heavily in improving the support we offer to locally, accessing a broader range of their friends and our remote colleagues, providing them with improved family and in a more convenient and efficient fashion. home office systems and quicker and easier access to expert knowledge that is held within the business. We are pleased with the impact of the Customer Bonus that we launched last April, simplifying the structure, We continue to invest heavily in offering the digital and acting as a key driver of the high recruitment and experience that our customers increasingly expect from customer gathering levels we saw throughout the second us - enabling them to self-serve without having to speak half of the year. The Customer Bonus was originally to one of our team if they wish. We further improved our conceived in the aftermath of the last inflationary cycle UW customer app and online My Account functionality, in 2008-2010, during which we were unable to offer new increasing the range of self-service capabilities. We Partners a sufficient near-term income. We believe we continue to employ numerous qualitative and quantitative are now exceptionally well placed to meet increasing performance measurement tools to monitor all aspects demand for an additional near-term income, offering up of our customers’ interactions with us. to £300 in Customer Bonus for signing-up a home owner taking all four core services from us. We are pleased to have been recognised as providing the Best Customer Service in the Uswitch Energy Awards We are hugely encouraged by the number of new Partners 2022, and to have been identified as the supplier that who joined during the second half of the year, and believe customers are most likely to recommend. With numerous that we can play an important role in helping thousands energy suppliers collapsing in the autumn, inflationary of families more than offset the increased cost of living trends becoming apparent across all the markets in which they are facing, simply by recommending UW. we operate, and our growth rate accelerating, we have received significantly greater levels of contact from our Our community of Partners is in a very different mode customers in recent months; these endorsements are from 12 months ago. Confidence is returning, momentum vital to our word-of-mouth marketing model, and are is building, and whilst an informal word-of-mouth route a testament to the positive attitudes and hard work of to market will never respond instantaneously to improved our support teams. market conditions, there has been an encouraging uptick in activity. The number of Partners actively referring customers, the value of Customer Bonuses earned, and the number of new and existing Partners earning them, all reached record levels towards the end of FY22. Telecom Plus Plc Report and Accounts 2022 / 15 Strategic Report Governance Report Financial Statements Shareholder Information ### Our priorities for the year ahead We seek to reduce the need for customers joining UW to contact us directly by providing easier means to Having delivered 10% growth in customer and service help themselves faster; this includes streamlining our numbers in the second half of the year alone, and with onboarding processes and proactively providing them a high degree of confidence over our continued growth with timely information on each of the services they trajectory, we have set three key business priorities for take from us. the year ahead. We will continue to invest in delivering best in class Building a great culture and environment for service and support to all our customers, through our people growing our technology and customer support teams We aim to create a working environment - at home and and improving the systems they use to do so. in the office - that attracts great people, keeps great people and gets everyone talking proudly about UW. Maximising high-quality customer growth More and more people are turning to UW to earn an The acceleration in the number of customers joining additional income, and we see considerable value in UW, combined with the severe squeeze on household broadening the appeal of our Partner opportunity, making incomes leading to heightened concern from our it more accessible and easier to make a success of, but customers over their monthly outgoings, means our still highly rewarding. teams are extremely busy. With the aim of helping tens of thousands of people, This, set against relatively recent adoption of entirely from all backgrounds, to meet the challenges of the new ways of working, with the majority of our colleagues rising cost of living we will continue to invest in making it working from home all or most of the time, means we easier for our Partners to successfully refer UW and earn must redouble our efforts to create a working environment in the process - be it improving the competitiveness of and culture that enables our people to grow as we grow, our customer offer, or the support and tools we provide that values and respects the commitment and hard work to our Partners. of our teams, all of whom contribute to delivering our ‘all your home services in one’ proposition day in, day out. Ultimately we want all our customers to become genuine brand advocates, and to make additional savings on their Looking after our customers as we grow bills simply by recommending UW to people they know. We aim to deliver a multiservice customer experience that customers will increasingly refer to their friends and families, and view this as a key metric of our success. Stuart Burnett & Andrew Lindsay MBE Co-Chief Executive Officers 21 June 2022 Telecom Plus Plc Report and Accounts 2022 / 16 # Financial Review ## Overview of results | | Adjusted | | | Statutory | | | | --- | --- | --- | --- | --- | --- | --- | | | 2022 | 2021 | Change | 2022 | 2021 | Change | | Revenue | £967.4m | £861.2m | 12.3% | £967.4m | £861.2m | 12.3% | | Profit before tax | £61.9m | £56.1m | 10.3% | £47.2m | £43.5m | 8.5% | | Basic EPS | 63.2p | 57.4p | 10.1% | 45.1p | 41.5p | 8.7% | | Dividend per share | 57.0p | 57.0p | 0.0% | 57.0p | 57.0p | 0.0% | In order to provide a clearer presentation of the underlying performance of the group, adjusted profit before tax and adjusted basic EPS exclude share incentive scheme charges of £1.0m (2021: £1.4m) and the amortisation of the intangible asset of £11.2m (2021: £11.2m) arising from entering into the energy supply arrangements with npower in December 2013; this decision reflects both the relative size and non-cash nature of these charges. In FY22 adjusted profit before tax and adjusted basic EPS also exclude: (i) the loss on the disposal of UWHS (£1.1m), (ii) the write-off of goodwill associated with the conditional disposal of Glow Green of (£1.5m); and (iii) the profit on disposal of a freehold property of (£0.6m). The reconciliations for adjusted profit before tax and adjusted EPS are set out in notes 1 and 18 respectively of the financial statements. ## Summary Adjusted profit before tax increased by 10.3% to £61.9m (2021: £56.1m) on higher revenues of £967.4m (2021: £861.2m). Statutory profit before tax increased 8.5% to £47.2m (2021: £43.5m). These increases mainly reflect the impact of customer growth and higher retail energy prices from 1 October 2021 (in line with an increase in the Government price cap). Distribution expenses increased to £29.7m (2021: £27.8m), mainly reflecting increased Partner activity during the second half. Administrative expenses (excluding share incentive scheme charges and amortisation of the energy supply agreement intangible) increased during the year by £7.6m to £84.4m (2021: £76.8m), mainly as a result of higher staff, technology and infrastructure costs as we responded to the rapid increase in the rate of customer growth during the autumn. The bad debt charge for the year (separately identified on the income statement as impairment loss on trade receivables) increased to £11.6m (2021: £11.2m) representing 1.2% of revenues (2021: 1.3%). Adjusted earnings per share increased by 10.1% to 63.2p (2021: 57.4p), with statutory EPS increasing by 8.7% to 45.1p (2021: 41.5p). In accordance with previous guidance and our strong cash position, the Board is proposing to pay a final dividend of 30p per share (2021: 30p), making a total dividend of 57p per share (2021: 57p) for the year. ## Revenues The growth in the number of services we are supplying significantly accelerated, with an increase of 191,000 services (2021: 51,000) during the course of the year, taking the total number of services provided to our customers to a little under 2.3 million (2021: 2.1 million). The increase in revenues mainly reflects higher customer numbers and energy prices during the period: | Revenues £m | 2022 | 2021 | | --- | --- | --- | | Electricity | 450.5 | 391.8 | | Gas | 295.7 | 248.0 | | Landline and broadband | 129.7 | 132.2 | | Mobile | 44.7 | 40.6 | | Other | 46.8 | 48.6 | | | **967.4** | **861.2** | ## Margins Our overall gross margin for the year was 19.5% (2021: 20.1%) mainly reflecting the higher proportion of energy sales during the period resulting from higher customer growth and increased prices. Telecom Plus Plc Report and Accounts 2022 / 17 Strategic Report Governance Report Financial Statements Shareholder Information ## Distribution and administrative expenses Distribution expenses include the share of our revenues that we pay as commission to Partners, together with other direct costs associated with gathering new customers. These increased to £29.7m (2021: £27.8m), mainly reflecting higher Partner commissions and incentive costs associated with our rapid return to sustainable growth in the second half of the year. Administrative expenses (excluding share incentive scheme charges and amortisation of the energy supply agreement intangible) increased during the year by £7.6m to £84.4m (2021: £76.8m), mainly as a result of higher staff, technology and infrastructure costs. The increase in staff costs mainly reflects the investment in strengthening our customer service and management teams in order to ensure we continue to deliver outstanding service levels across all of our services as our growth accelerates. The bad debt charge for the year increased to £11.6m (2021: £11.2m) representing 1.2% of revenues (2021: 1.3%). The proportion of customers with at least two energy bills outstanding, fell marginally to 2.04% (2021: 2.08%). ## Disposals During the period the Group disposed of its shareholding in UW Home Services Limited ("UWHS") on 31 March 2022 for a consideration of £1 to Lowri Beck Holdings Limited, a specialist meter operator owned by the Calisen Group. The net assets of UWHS at the point of disposal were £1.1m and the loss on disposal for the Group was £1.1m. This has been shown separately on the face of the Consolidated Statement of Comprehensive Income. The Group also agreed to sell, subject to the necessary FCA change of control approval, its 75% shareholdings in Glow Green Limited and Cofield Limited ("Glow Green") for a cash consideration of £1 to Charles Wigoder, Executive Chairman of the Group. As a result, the goodwill associated with Glow Green of £1.5m has been impaired in the current period, and this has been reflected in the 'Goodwill impairment' line in the Consolidated Statement of Comprehensive Income. Since acquiring Glow Green in 2018, the business has been consistently loss-making; this has contributed to a cumulative funding requirement of over £6m that will remain with Glow Green as a debt to the Group and be repaid over time. The repayment of the loan has been personally guaranteed by Charles Wigoder. The Board believes that the disposal of Glow Green is in the best interests of the Group given the significant management resource it would otherwise require, particularly at a time when the growth opportunities within the core business are so exciting. As a smaller related party transaction, this disposal fell within the requirements of section 11.10R of the Listing Rules and the Board obtained written confirmation from its sponsor (Peel Hunt) that the terms of the proposed transaction were fair and reasonable as far as the shareholders of the Group are concerned. The Group also disposed of a freehold building during the period which realised a profit on disposal of £0.6m. This has been reflected in the Other income line in the Consolidated Statement of Comprehensive Income. In order to show the underlying performance of the business, the loss on disposal of UWHS, impairment of goodwill associated with the conditional disposal of Glow Green, and the profit on disposal of the freehold building, have been excluded in calculating the adjusted profit before tax of £61.9m. ## Cash, capital expenditure, working capital and borrowings We ended the period with a net debt position including lease liabilities of £70.4m (2021: £71.4m), comprising bank loans of £99.2m and lease liabilities of £0.8m, less cash of £29.6m. This slight decrease mainly reflects a reduction in lease liabilities due to the disposal of UWHS, offset by increases in working capital. The Group's Net Debt/adjusted EBITDA ratio remains low at around 1.0x (adjusted EBITDA of £73.7m used in this ratio represents operating profit of £50.9m plus impairment of goodwill of £1.5m, depreciation and amortisation of £20.3m and share incentive scheme charges of £1.0m). Our net working capital position showed a lower year-on-year cash outflow of £10.4m (2021: cash outflow of £12.5m); this reflects the ongoing investment we make in supplying broadband routers to customers and increased trade debtors. Capital expenditure of £9.9m (2021: £10.0m) related primarily to our continuing digital transformation programme. Telecom Plus Plc Report and Accounts 2022 / 18 # Financial Review ### Dividend The final dividend of 30p per share (2021: 30p) will be paid on 5 August 2022 to shareholders on the register at the close of business on 15 July 2022 and is subject to approval by shareholders at the Company's Annual General Meeting which will be held on 26 July 2022. This makes a total dividend payable for the year of 57p (2021: 57p). Our medium-term intention remains to gradually return to a dividend pay-out ratio of around 85% of adjusted EPS, whilst maintaining our long-standing progressive dividend policy with reference to profit evolution. ### Share incentive scheme charges Operating profit is stated after share incentive scheme charges of £1.0m (2021: £1.4m). These relate to an accounting charge under IFRS 2 Share Based Payments ('IFRS 2'). As a result of the relative size of share incentive scheme charges as a proportion of our pre-tax profits, and the fluctuations in the amount of this charge from one year to another, we are separately disclosing this amount within the Consolidated Statement of Comprehensive Income for the period (and excluding these charges from our calculation of adjusted profits and earnings) so that the underlying performance of the business can be clearly identified. Our current adjusted earnings per share have also therefore been adjusted to eliminate these share incentive scheme charges. ### Taxation A full analysis of the taxation charge for the year is set out in note 5 to the financial statements. The tax charge for the year is £12.2m (2021: £11.0m). The effective tax rate for the year was 25.9% (2021: 25.2%), this remains higher than the underlying rate of corporation tax due mainly to the ongoing amortisation charge on our energy supply contract intangible asset (which is not an allowable deduction for tax purposes). **Nick Schoenfeld** Chief Financial Officer 21 June 2022 ![img-4.jpeg](img-4.jpeg) Telecom Plus Plc Report and Accounts 2022 / 19 ## Principal Risks and Uncertainties Strategic Report Governance Report Financial Statements Shareholder Information ### Background the Group and its wholesale suppliers which means that it is in the interests of the suppliers to ensure The Group faces various risk factors, both internal and that the Group remains competitive, driving growth external, which could have a material impact on long term and maximising their benefit from our complementary performance. However, the Group’s underlying business route to market. Furthermore, the group benefits from model is considered relatively low-risk, with no need for a structural cost advantage, due to the multiple revenue management to take any disproportionate risks in order streams it receives from customers who take more than to preserve or generate shareholder value. one service-type, and only having one set of overheads. The Group has alternative sources of wholesale supply The Group continues to develop and operate a consistent should an existing supplier become uncompetitive or and systematic risk management process, which involves no longer available. risk ranking, prioritisation and subsequent evaluation, with a view to ensuring all significant risks have been In relation to energy specifically, the Group’s wholesale identified, prioritised and (where possible) eliminated, costs are calculated by reference to a discount to the and that systems of control are in place to manage any prevailing standard variable retail tariffs offered by remaining risks. the ‘Big 6’ to their domestic customers (effectively the Government price cap), which gives the Group The directors have carried out a robust assessment of considerable visibility over profit margins. the Company’s emerging and principal risks. A formal document is prepared by the executive directors and The Group’s services are promoted using ‘word-of-mouth’ senior management team on a regular basis detailing by a large network of independent Partners, who are paid the key risks faced by the Group and the operational predominantly on a commission basis. This means that the controls in place to mitigate those risks; this document is Group has limited fixed costs associated with acquiring then reviewed by the Audit Committee. A risk relating to new customers.The principal specific risks arising from climate change has been added during the period. Save the Group’s business model, and the measures taken to as set out below, the magnitude of any risks previously mitigate those risks, are set out below. identified has not significantly changed during the period. ### Reputational risk ### Business model The Group’s reputation amongst its customers, suppliers The principal risks outlined below should be viewed in and Partners is believed to be fundamental to the future the context of the Group’s business model as a reseller success of the Group. Failure to meet expectations in of utility services (gas, electricity, fixed line telephony, terms of the services provided by the Group, the way mobile telephony, broadband and insurance services) the Group does business or in the Group’s financial under the Utility Warehouse and TML brands. As a reseller, performance could have a material negative impact on the Group does not own any of the network infrastructure the Group’s performance. required to deliver these services to its customer base. This means that while the Group is heavily reliant on third In developing new services, and in enhancing current ones, party providers, it is insulated from all the direct risks careful consideration is given to the likely impact of such associated with owning and/or operating such capital- changes on existing customers. intensive infrastructure itself. In relation to the service provided to its customer base, The Group is able to secure the wholesale supply of reputational risk is principally mitigated through the Group’s all the services it offers at competitive rates, enabling recruitment processes, a focus on closely monitoring staff it to generate a consistently fair level of profitability performance, including the use of direct feedback surveys from delivering a great value bundled proposition to its from customers (Net Promoter Score), and through the customers. There is an alignment of interests between provision of rigorous staff training. Telecom Plus Plc Report and Accounts 2022 / 20 ## Principal Risks and Uncertainties ## continued ### Responsibility for maintaining effective relationships Data security risk with suppliers and Partners rests primarily with the appropriate member of the Group’s senior management The Group processes sensitive personal and commercial team with responsibility for the relevant area. Any material data and in doing so is required by law to protect changes to supplier agreements and Partner commission customer and corporate information and data, as well arrangements which could impact the Group’s relationships as to keep its infrastructure secure. A breach of security are generally negotiated by the executive directors and could result in the Group facing prosecution and fines ultimately approved by the full Board. as well as loss of business from damage to the Group’s reputation. Recovery could be hampered due to any extended period necessary to identify and recover a loss ### Information technology risk of sensitive information and financial losses could arise from fraud and theft. Unplanned costs could be incurred The Group is reliant on its in-house developed and to restore the Group’s security. supported systems for the successful operation of its business model. Any failure in the operation of these The Group has deployed a robust and industry-appropriate systems could negatively impact service to customers, Group-wide layered security strategy, providing effective undermine Partner confidence, and potentially be damaging control to mitigate the relevant threats and risks. The Group to the Group’s brand. Application software is developed is PCI compliant and external consultants conduct regular and maintained by the Group’s Technology team to support penetration testing of the Group’s internal and external the changing needs of the business using the best ’fit for systems and network infrastructure. purpose’ tools and infrastructure. The Technology team is made up of highly-skilled, motivated and experienced The Information Commissioner’s Office (‘ICO’) upholds individuals. information rights in the public interest and, where required, companies within the Group are registered as Changes made to the systems are prioritised by business, data controllers with the ICO. If the Group fails to comply Product Managers work with their stakeholders to refine with all the relevant legislation and industry specific application and systems requirements. They work with regulations concerning data protection and information the Technology teams undertaking the change to ensure a security, it could be subject to enforcement action, signif- proper understanding and successful outcome. Changes icant fines and the potential loss of its operating licence. are tested as extensively as reasonably practicable before deployment. Review and testing are carried out at various Information security risks are overseen by the Group’s stages of the development by both the Technology team Information Security and Legal & Compliance teams. and the operational department who ultimately take ownership of the system. ### Legislative and regulatory risk The Group has strategic control over the core customer and Partner platforms including the software development The Group is subject to various laws and regulations. frameworks and source code behind these key applica- The energy, communications and financial services tions. The Group also uses strategic third-party vendors markets in the UK are subject to comprehensive operating to deliver solutions outside of our core competency. This requirements as defined by the relevant sector regulators largely restricts our counterparty risks to services that and/or government departments. can be replaced with alternative vendors if required, albeit this could lead to temporary disruption to the day-to-day Amendments to the regulatory regime could have an operations of the business. impact on the Group’s ability to achieve its financial goals and any material failure to comply may result in the Monitoring, backing up and restoring of the software and Group being fined and lead to reputational damage which underlying data are made on a regular basis. Backups are could impact the Group’s brand and ability to attract and securely stored or replicated to different locations. Disaster retain customers. Furthermore, the Group is obliged to recovery facilities are either provided through cloud-based comply with retail supply procedures, amendments to infrastructure as a service, and in critical cases maintained which could have an impact on operating costs. in a warm standby or active-active state to mitigate risk in the event of a failure of the production systems. Telecom Plus Plc Report and Accounts 2022 / 21 Strategic Report Governance Report Financial Statements Shareholder Information The Group is a licensed gas and electricity supplier, and The Group is authorised and regulated as an insurance therefore has a direct regulatory relationship with Ofgem. broker for the purposes of providing insurance services If the Group fails to comply with its licence obligations, to customers by the Financial Conduct Authority (“FCA”). it could be subject to fines or to the removal of its In addition, the Group holds consumer credit permissions respective licences. related to the provision of staff and Partner loans and hire purchases. If the Group fails to comply with FCA The regulatory framework for the UK’s energy retail regulations, it could be exposed to fines and risk losing market, as overseen by Ofgem, is subject to continuous its authorised status, severely restricting its ability to development. Any regulatory change decision could offer insurance services to customers and consumer potentially lead to a significant impact on the sector, credit services to staff and Partners. and the net profit margins available to energy suppliers. The current pace and extent of regulatory change is more Recent regulatory changes relating to insurance pricing substantial than in previous years. In addition to the and future expected changes around increased consumer industry-wide programmes of work, such as the rollout protections could have a significant impact on the of smart meters, and a growing range of environmental financial services sector as a whole and will need to be and social obligations, Ofgem has been implementing implemented across the business. The Group is closely a special package of reform measures. These special monitoring and keeping abreast of these regulatory reforms have arisen in response to the ‘energy crisis’, developments in order to prepare the business for the which emerged in the autumn of 2021 and is associated upcoming changes in this sector. with high wholesale energy costs and a consolidation of competition, with many new-entrant suppliers having In general, the majority of the Group’s services are supplied ceased trading. The reforms cover the future of the to consumers in highly regulated markets, and this could price cap, assessing suppliers’ financial resilience and restrict the operational flexibility of the Group’s business. compliance performance, and temporary interventions, in In order to mitigate this risk, the Group seeks to maintain part, to protect suppliers from their financial exposures appropriate relations with both Ofgem and Ofcom (the UK to the wholesale market. The Group tracks this changing regulators for the energy and telecommunications markets landscape closely, to identify risks and opportunities, to respectively), the Department for Business, Energy and prepare for any subsequent operational changes, and Industrial Strategy (‘BEIS’), and the FCA. The Group engages also to input directly into Ofgem’s work. with officials from all these organisations on a periodic basis to ensure they are aware of the Group’s views when The Group is also a supplier of telecoms services and they are consulting on proposed regulatory changes. therefore has a direct regulatory relationship with Ofcom. If the Group fails to comply with its obligations, it could be Political and consumer concern over energy prices, subject to fines or lose its ability to operate. The imple- broadband availability and affordability, vulnerable mentation of the European Electronic Communications customers and fuel poverty may lead to further reviews Code will result in an increased regulatory burden and an of the energy and telecoms markets which could result in even stronger Ofcom focus on compliance monitoring. further consumer protection legislation being introduced. Regulatory changes to the fixed line and broadband Political and regulatory developments affecting the energy switching processes for next year are substantial and and telecoms markets within which the Group operates require cooperation from all fixed telecom providers. may have a material adverse effect on the Group’s business, The Group is closely engaged in the relevant forums results of operations and overall financial condition. and industry groups to both influence and prepare for the changes. Telecom Plus Plc Report and Accounts 2022 / 22 ## Principal Risks and Uncertainties ## continued The Group is also aware of and managing the impact of to supply domestic energy to everyone who submits a a developing regulatory landscape in relation to climate properly completed application form. Where customers change and the Net Zero transition. We have recently subsequently fail to pay for the energy they have used, appointed a new Head of Sustainability role to support there is likely to be a considerable delay before the Group is us in implementing developments in relation to the able to control its exposure to future bad debt from them environment and climate change. by either switching their smart meters to pre-payment mode, installing a pre-payment meter or disconnecting To mitigate the risks from failure to comply with legislative their supply, and the costs associated with preventing requirements in an increasingly active regulatory such customers from increasing their indebtedness are landscape, the Group’s Legal & Compliance team has not always fully recovered. developed and rolled out robust policies and procedures, undertakes regular training across the business, Bad debt within the telephony industry may arise from continually monitors legal and regulatory developments customers using the services, or being provided with a and has recently recruited additional members into the mobile handset, without intending to pay their supplier. Legal & Compliance team in order to increase available The amounts involved are generally relatively small as the capacity and expertise. Group has sophisticated call traffic monitoring systems to identify material occurrences of usage fraud. The Group is able to immediately eliminate any further usage bad ### Financing risk debt exposure by disconnecting any telephony service that demonstrates a suspicious usage profile, or falls into The Group has debt service obligations which may place arrears on payments. operating and financial restrictions on the Group. This debt could have adverse consequences insofar as it: (a) ### requires the Group to dedicate a proportion of its cash Wholesale price risk flows from operations to fund payments in respect of the debt, thereby reducing the flexibility of the Group Whilst the Group acts as principal in most of the services to utilise its cash to invest in and/or grow the business; it supplies to customers, the Group does not own or (b) increases the Group’s vulnerability to adverse general operate any utility network infrastructure itself, choosing economic and/or industry conditions; (c) may limit the instead to purchase the capacity needed from third Group’s flexibility in planning for, or reacting to, changes in parties. The advantage of this approach is that the Group its business or the industry in which it operates; (d) may is largely protected from technological risk, capacity limit the Group’s ability to raise additional debt in the long risk or the risk of obsolescence, as it can purchase the term; and (e) could restrict the Group from making larger precise amount of each service required to meet its strategic acquisitions or exploiting business opportunities. customers’ needs. Each of these prospective adverse consequences (or a Whilst there is a theoretical risk that in some of the areas combination of some or all of them) could result in the in which the Group operates it may be unable to secure potential growth of the Group being at a slower rate than access to the necessary infrastructure on commercially may otherwise be achieved. attractive terms, in practice the pricing of access to such infrastructure is typically either regulated (as in the energy market) or subject to significant competitive ### Bad debt risk pressures (as in telephony and broadband). The profile of the Group’s customers, the significant quantities of The Group has a universal supply obligation in relation each service they consume in aggregate, and the Group’s to the provision of energy to domestic customers. This clearly differentiated route to market has historically means that although the Group is entitled to request a proven attractive to infrastructure owners, who compete reasonable deposit from potential new customers who aggressively to secure a share of the Group’s growing are not considered creditworthy, the Group is obliged business. Telecom Plus Plc Report and Accounts 2022 / 23 Strategic Report Governance Report Financial Statements Shareholder Information The supply of energy has different risks associated with of the Group’s competitors. The existing approaches of the it. The wholesale price can be extremely volatile, and Group’s competitors or new approaches or technologies customer demand can be subject to considerable short- developed by such competitors may be more effective or term fluctuations depending on the weather. The Group affordable than those available to the Group. There can has a long-standing supply relationship with Eon (formerly be no assurance that the Group will be able to compete npower) under which the latter assumes the substantive successfully with existing or potential competitors or risks and rewards of buying and hedging energy for the that competitive factors will not have a material adverse Group’s customers, and where the price paid by the Group effect on the Group’s business, financial condition or to cover commodity, balancing, transportation, distribution, results of operations. However, as the Group’s customer agreed metering, regulatory and certain other associated base continues to rise, competition amongst suppliers supply costs is set by reference to the average of the of services to the Group is expected to increase. This standard variable tariffs charged by the ‘Big 6’ to their has already been evidenced by various volume-related domestic customers less an agreed discount, which is set growth incentives which have been agreed with some at the start of each quarter; this may not be competitive of the Group’s largest wholesale suppliers. This should against the equivalent supply costs incurred by new and/ also ensure that the Group has direct access to new or other independent suppliers. However, if the Group did technologies and services available to the market. not have the benefit of this long term supply agreement it would need to find alternative means of protecting itself ### from the pricing risk of securing access to the necessary Infrastructure risk energy on the open market and the costs of balancing. The provision of services to the Group’s customers is reliant on the efficient operation of third party physical ### Competitive risk infrastructure. There is a risk of disruption to the supply of services to customers through any failure in the The Group operates in highly competitive markets and infrastructure e.g. gas shortages, power cuts or damage to significant service innovations by others or increased price communications networks. However, as the infrastructure competition, could impact future profit margins and growth is generally shared with other suppliers, any material rates. In order to maintain its competitive position, there disruption to the supply of services is likely to impact a is a consistent focus on improving operational efficiency. large part of the market as a whole and it is unlikely that New service innovations are monitored closely by senior the Group would be disproportionately affected. In the management and the Group is generally able to respond event of any prolonged disruption isolated to the Group’s within an acceptable timeframe where it is considered principal supplier within a particular market, services desirable to do so, by sourcing comparable features and required by customers could in due course be sourced benefits using the infrastructure of its existing suppliers. from another provider. The increasing proportion of customers who are benefiting from the genuinely unique multi-utility solution that is The development of localised energy generation and offered by the Group, and which is unavailable from any distribution technology may lead to increased peer-to- other known supplier, further reduces any competitive peer energy trading, thereby reducing the volume of energy threat. provided by nationwide suppliers. As a nationwide retail supplier, the Group’s results from the sale of energy could The Directors anticipate that the Group will face continued therefore be adversely affected. competition in the future as new companies enter the market and alternative technologies and services Similarly, the construction of ‘local monopoly’ fibre become available. The Group’s services and expertise may telephony networks to which the Group’s access may be be rendered obsolete or uneconomic by technological limited as a reseller could restrict the Group’s ability to advances or novel approaches developed by one or more compete effectively for customers in certain areas. Telecom Plus Plc Report and Accounts 2022 / 24 ## Principal Risks and Uncertainties ## continued ### Smart meter rollout risk Acquisition risk The Group is in part reliant on third party suppliers to The Group may invest in other businesses, taking a fully deliver its smart meter rollout programme effectively. minority, majority or 100% equity shareholding, or through In the event that the Group suffers delays to its smart a joint venture partnership. Such investments may not meter rollout programme the Group may be in breach of deliver the anticipated returns, and may require additional its regulatory obligations and therefore become subject to funding in future. This risk is mitigated through conducting fines from Ofgem. In order to mitigate this risk the Group appropriate pre-acquisition due diligence where relevant. dual-sources (where practicable) the third party metering and related equipment they use. ### Virus outbreak risk The Group may also be indirectly exposed to reputational damage and litigation from the risk of technical compli- In the event of a disease or virus outbreak (or different cations arising from the installation of smart meters or variants of an existing disease or virus emerging) which other acts or omissions of meter operators, e.g. the escape are resistant to vaccinations and/or treatments, and which of gas in a customer’s property causing injury or death. causes serious incapacity amongst those infected, the The Group mitigates this risk through using established Company faces a number of risks including: (i) staff may reputable third party suppliers. be unable to attend their normal place of work and fulfil their normal duties due to falling ill or being required to self-isolate (either due to exposure to carriers of the virus/ ### Energy industry estimation risk disease, or to reduce the likelihood of being so exposed); (ii) the Company may be required to shut Network HQ to A significant degree of estimation is required in order to prevent transmission of the virus/disease in the workplace; determine the actual level of energy used by customers (iii) the efficiency of our operations may be reduced; (iv) and hence that should be recognised by the Group as we may be unable to recruit and train new members of sales. There is an inherent risk that the estimation routines staff; (v) customers may find it more difficult to contact used by the Group do not in all instances fully reflect the the company; (vi) we may be unable to resolve faults and actual usage of customers. However, this risk is mitigated challenges faced by customers which require a visit to by the relatively high proportion of customers who provide their home or other engineering works to be carried out; meter readings on a periodic basis, and the high level of (vii) customers may stop paying their bills, or we may be penetration the Group has achieved in its installed base required by the Government to offer payment holidays to of smart meters. customers in respect of their utilities (in a similar fashion to the mortgage payment provisions), putting pressure on the Company’s working capital; (viii) we may be restricted ### Gas leakage within the national gas from carrying out normal debt enforcement procedures ### distribution network including suspension of telephony services and installation of smart meters; (ix) the Company’s Partners may find it The operational management of the national gas more difficult to grow their businesses during a period distribution network is outside the control of the Group, when restrictions on movement are imposed by the and in common with all other licensed domestic gas Government; (x) we may be unable to visit customers’ suppliers the Group is responsible for meeting its pro-rata homes to install smart meters; (xi) the various providers share of the total leakage cost. There is a risk that the of third party infrastructure used to supply our services level of leakage in future could be higher than historically may be unable to cope with the increased demands placed experienced, and above the level currently expected. upon them; and (xii) churn could increase during periods when customers are isolated at home. Telecom Plus Plc Report and Accounts 2022 / 25 Strategic Report Governance Report Financial Statements Shareholder Information ### These are mitigated by: (i) the Company has proven Climate change risk technology to enable most employees to carry out their duties remotely; (ii) the demographic mix of our customer Climate change has the potential to significantly impact the base is heavily skewed towards homeowners and older/ future of our planet. Everyone has a role to play in reducing retired customers; this means we are significantly less the effects of harmful GHG emissions in our atmosphere exposed to payment issues than most other providers of and ensuring that we meet a 1.5°C target in line with the similar services; (iii) the Company has a strong balance Paris Agreement. No business is immune from the risks sheet with modest gearing, and access to significant, associated with climate change as it acts as a driver of recently refinanced, additional debt facilities (if required) other risks and affects government decision-making, to cover any temporary pressure on working capital; consumer demand and supply chains. In recognition of this, in extremis, these could be enhanced by a temporary the Group has designated climate change as a standalone suspension of the dividend; (iv) the Company has developed principal risk for our business and has assigned the Legal tools which are now in widespread use, enabling Partners & Compliance Director as the owner for managing climate to sign-up new customers, recruit new Partners, and to change risk. help existing Partners support new Partners remotely to teach them how to build their own successful UW We are committed to implementing the recommendations business; and (v) the wide range of services provided to of the Task Force on Climate-related Financial Disclosures customers gives us significant resilience from a revenue (TCFD) and this year, we have made our first set of and profit perspective against an external event which disclosures consistent with the TCFD framework. Our affects any individual revenue stream. TCFD disclosures can be found on pages 43 to 46 and includes our considerations of the specific risk implications to the Group arising from climate change. We are developing our metrics and planning our targets to achieve Net Zero by 2040 in line with SBTi. To assist with this, we are working with third parties and have invested in software to develop and manage progress against our targets. Telecom Plus Plc Report and Accounts 2022 / 26 ## People and Organisation ### Our people Onboarding Our 1,800 employees are at the heart of our business All of UW’s new employees attend welcome events on and vital to UW’s success, supporting our self-employed their first day to get excited about UW and our products. Partners and providing award winning customer service. They also have a dedicated IT support session to confirm their equipment and system set-up has gone to plan and Although we have 1,800 employees, we aim to treat to ensure any issues can be ironed out on their first day. everyone as an individual and as a valuable part of the These welcome events are now possible to join remotely UW community. We strive to create a sense of belonging or in person to support the varied base locations of and for everyone to feel welcome and included wherever our new colleagues. In future we hope to offer several they may work. locations across the UK that remote employees can travel to more easily than our Colindale office if they’d like an We offer fully remote working as well as smarter working in-person experience. (spending 2-3 days in the office and the rest at home) enabling our teams to work more flexibly and focus on The majority of UW’s new employees join our customer outcomes. service teams. They attend a structured onboarding programme, designed to help them better understand UW and their role with us, and to equip them with the ### Recruitment skills, knowledge and relationships they need to deliver a high standard of service to our customers and Partners. Recruitment is any potential candidate’s first ‘window’ into the company, so this is a critical focus for us. We ensure After meeting other new starters and participating in that we recruit, train and retain people who have the UW welcome events on day one, our Customer Service right skills, and care about making a positive contribution Advisors begin product and service specific learning to the business. We continue to recruit new employees with their trainers in their teams. This Academy style through our own in-house assessment process, which approach to job specific learning ‘in-role’ includes some provides a high level of control over recruitment and context and instruction on a topic upfront, observation quality, avoiding bias, and focusing on identifying the of established colleagues handling that task and then very best candidates for each available position. We also some practice with feedback. Activities might include call partner with external providers to ensure we can deal listening and pairing up with colleagues to ask questions. with the demand in hiring more customer service advisors and specialist roles to the business due to our increasing This approach has allowed us to craft more individual customer base and commercial growth ambitions. learning journeys and better accommodate a wider variety of hours / shifts than we had previously. Telecom Plus Plc Report and Accounts 2022 / 27 Strategic Report Governance Report Financial Statements Shareholder Information ### Learning and development Engagement We’re changing our Learning & Development (“L&D”) Engagement with our people includes formal and offering. Last year we implemented our learning informal meetings. We have an employee forum (“The management experience platform (“Looop”), giving us Purple Forum”) which was formalised into a workforce greater flexibility in developing learning products, running advisory panel in accordance with the requirements of campaigns and the ability to provide fully remote learning. the Corporate Governance Code. The Purple Forum is This year we have significantly increased our L&D team to sponsored by Co-CEO Stuart Burnett. The aim of The accelerate our ability to support the full breadth of the Purple Forum is to encourage transparent discussion, business in this phase of our growth. understand any challenges employees may face and identify areas for improvement. This forum is comprised We aim to offer a better holistic employee experience of twelve nominated employees from across the business. and help connect our people with who we are. We plan Minutes of the meetings are kept with any action points to launch a new L&D proposition designed to support followed up at the following meeting. everyone at UW and to help them connect, learn and grow. This is supplemented by a number of less formal channels of communication with our employees. During the year, ### Leadership and talent we hold monthly townhalls, quarterly all hands, breakfast sessions, listening groups and Q&As with members of We have recognised that with a significantly increased the executive leadership team. These are important workforce comes a much larger people leader community. vehicles for ensuring employees feel valued and listened We are investing in creating new development journeys to, whilst bridging the gap between employees and senior for all our leaders, with a focus on new leaders and the management. basics of leading a team. We continue celebrating, bringing people together and In order to be much more proactive in our employee recognising our achievements. This year we held summer/ experience we are working to define how we view ‘talent’ Christmas parties as well as birthday events, celebrating at UW. Reviewing where critical people and critical roles our Which? Awards and many more. In addition, each exist so we can mitigate the risk of losing these people. We team receives a ‘fun fund’ monthly allowance of £5 per are also working to define how we attract, retain and grow person to be used towards team bonding activities that talent faster, for people with very high levels of potential they can enjoy together. to progress. Telecom Plus Plc Report and Accounts 2022 / 28 ## People and Organisation ## continued ### Health and wellbeing The Company operates an HMRC-approved employee share option plan, under which employees are granted Our employees’ mental and physical wellbeing is equally options to purchase shares in the Company which are a key priority. Everyone has access to our Employee exercisable between three and ten years from the date of Assistance Helpline, offering them and their families grant. The exercise price is the market price at the time access to information, advice and professional counselling of granting the option. Our policy is to issue options to on a variety of personal and workplace issues. We provide all employees after the satisfactory completion of their mindfulness sessions, Pilates, yoga and meditation courses probationary period, and additional options when 10 years’ as well as keep-fit classes. We also offer appointments service has been completed and in other appropriate with our mental health nurses. We have three nurses circumstances (e.g. promotion). who have continued to provide remote appointments, a benefit that is highly valued by our workforce. Employees The Company also operates a Save As You Earn (“SAYE”) can book appointments with them anonymously for free share scheme. mental and physical health checks. We have added access to a Digital GP for all our employees as well as a health As at 31 March 2022, there were outstanding options and wellbeing tool on our new My Benefits platform. The over 2.6m shares which had been granted to employees, focus is to provide proactive, protective support for mental representing approximately 3.2% of the issued share health and wellbeing. capital of the Company. We encourage all employees to participate in a pension ### Pay and reward scheme operated by Scottish Widows. Participants can choose their own contribution level, which is matched We review pay and benefits annually and employees by the Company up to a limit which varies according to benefit from an annual bonus. We remain committed length of service. As a result of pension auto-enrolment, to paying the Real Living Wage and London Living Wage the Company is contributing to the pension funds of whilst also awarding a standard 5.5% pay increase on virtually all employees, on a monthly basis. the 1st April 2022. We actively facilitate ‘Access to Work’ grants for employees In April 2022 we implemented a new ‘My Benefits’ who have a disability, physical health or mental health platform with the aim to further promote our current condition, seeking to provide practical support which offer and add additional benefits. enables them to continue working effectively. Telecom Plus Plc Report and Accounts 2022 / 29 Strategic Report Governance Report Financial Statements Shareholder Information communities we operate in and which is free from any form of harassment, bullying and discrimination. The focus we have on creating an inclusive environment is also supported by our Diversity and Inclusion Forum. ## We encourage We’re proud to have signed up to the Race at Work charter and its commitments. We’ve appointed an Executive ## talented people of Sponsor to make sure we have visible leadership on diversity and inclusion and help drive our culture ## different backgrounds, and commitments forward. We have a board-level commitment to zero tolerance of harassment and ## beliefs or any form of bullying and we’re against all forms of unlawful and unfair discrimination, whether that is verbal or written. We’ll take ## personal identity to be appropriate action with those that don’t follow this policy. ## involved, respected We have updated our Diversity & Inclusion (“D&I”) policy and we’ve added a summary to our website. We’ll continue ## and inspired to to develop our D&I initiatives to support our goals over the coming year. ## develop to their full ## potential. The table below sets out a breakdown of the gender diversity at various levels within the Group: 2022 2021 Male Female Male Female ### Diversity and inclusion Board 8 2 8 2 Full and fair consideration is given to opportunities for Senior Managers 31 24 29 10 employment, training, career progression and promotion * * Employees 818 668 1,250 695 on the basis of each individual’s ability, attitude and track record, irrespective of their gender, ethnic origin, *includes UWHS & Glow Green, UWHS left the Group on 31 March 2022 nationality, age, religion, sexual orientation or disability. and Glow Green will be leaving once FCA change of control approval has been received We consider it important for us as a business to have a diverse and inclusive workforce. We take actions to The Board’s position in relation to the Corporate create an environment where we highlight, educate, Governance Code requirement to set out any existing inform, support and celebrate uniqueness – irrespective measurable objectives in relation to Board diversity is of our religious beliefs, cultural background, age, ethnicity, set out in the Corporate Governance Statement on pages gender, disabilities or sexual orientation. We encourage 52 to 53. talented people of different backgrounds, beliefs or any form of personal identity to be involved, respected The Company publishes its Gender Pay Gap report and inspired to develop to their full potential. We are each year in accordance with the requirements of committed to creating an inclusive environment where The Equality Act 2010 (Gender Pay Gap Information) everyone can bring their whole self to work, contribute Regulations 2017; a copy of the latest report available is their best work and develop to their full potential. We at: www.telecomplus.co.uk/legal/corporate-information/ want to maintain an environment that reflects the gender-pay-gap-report. diversity and characteristics of the customers and Telecom Plus Plc Report and Accounts 2022 / 30 ## Sustainability Report ### Introduction impact on our business - which is why we are focussed on moving towards a low carbon future and hitting our 1 Fulfilling our Environmental, Social and Goverance (ESG) target of Net Zero by 2040 with a credible transition responsibilities is integral to the Company. We do this by plan. We also want to support our customers in reducing being a responsible and resilient business that delivers their own carbon footprint whether that’s through our returns to investors over the long term, minimises negative green Renewable Energy Guarantees of Origin (“REGO”)- impact on the environment and has a positive impact on backed tariff, our new Smart Export Guarantee (“SEG”) the people we interact with. tariff or by helping them become more energy efficient by installing a smart meter. The last year has been unprecedented - particularly in the energy sector which saw the implosion of the retail energy The Board has ultimate responsibility for our ESG strategy market following the sustained and unforeseen increases and will be tracking our progress towards our goals. Our in wholesale gas prices with 30 energy suppliers exiting the Legal & Compliance Director has overall responsibility for market and energy regulator Ofgem having to step in to avoid ESG, including defining, managing and delivering on our further industry turmoil. However, with our differentiated ESG strategy and is supported closely by our new Head of business model, structural cost advantage and focus on Sustainability who has day-to-day ownership of the ESG long term sustainability, the Company has emerged from agenda and manages the cross-functional ESG Working the energy crisis stronger than ever. We continue to be a Group. The Company also has an ESG Strategy Committee trusted and reliable energy and home services provider for comprising the Executive Leadership Team, the Company our customers and the strength of our business means Secretary, Head of PR & Communications and Head of that we can offer a secure and sustainable income for our Sustainability. This group meets quarterly to discuss our Partners and continue to attract and retain talent. ESG strategy, goals, initiatives and progress thus ensuring a robust governance framework and tracking of progress We recognise that the current economic climate is causing against targets. a significant cost-of-living challenge for many people, including our customers, employees and Partners. To Our ESG strategy is underpinned by the views of our address this, we have increased our focus on financially stakeholders, namely our customers, employees, Partners, vulnerable customers and are looking at additional ways to investors, suppliers, Board and government/regulators. support them. For our employees, we remain committed to We seek to engage with all of these stakeholders on a paying above the Real National Living Wage and the London regular basis to better understand the issues which are Living Wage for those eligible and in March this year we important to them and that are relevant to our business. announced a salary increase of 5.5% (above inflation) for In doing so, we have refreshed our materiality assessment all permanent employees with effect from 1 April 2022. which has provided us with a clear understanding of We also continue to promote our Partner opportunity where our priorities should be and has informed our key which offers a unique way to earn a flexible and reliable ESG commitments for the year ahead. More detail on the income by recommending the Company’s multiservice materiality assessment and our overall approach can be proposition to others. found in our ESG Report, available at telecomplus.co.uk. We are also acutely aware of the harmful effects of For FY22, we have therefore evolved our ESG strategy to climate change on our environment and the potential focus on three key pillars: ### Helping our Supporting a more Doing business ### communities thrive sustainable future responsibly Telecom Plus Plc Report and Accounts 2022 / 31 Strategic Report Governance Report Financial Statements Shareholder Information ### Helping our communities thrive In terms of online security, we offer our fixed broadband customers eero routers which allow them to put in People are at the heart of our business, whether they place parental controls to keep their families safe. are our customers, employees or Partners. The past year Approximately 20% of our new fixed broadband customers has been a difficult one for many people who are part bundle eeros with their broadband service. of our wider community. The energy crisis, more recently the cost-of-living crisis and a second year of covid have To help inform our customers about security risks, we all had significant and varying impacts on people’s lives. have created a “Stay Safe Online” page on our website. As people try and cope with the difficult economic and This page is designed to help our customers recognise social climate, we have continued to provide support to scams; give tips on how to keep personal information the different communities within the Company, including safe whilst browsing online; and provide useful links to our customers, our employees, our Partners and our local further guidance on this topic. communities. Protecting our customers’ data and privacy is critical Our goals and progress to our business. We have robust information security Our customers and data privacy policies and have introduced more Our aim is to reliably serve our customers and provide controls around the appointment of authorised third them with high quality products and services. We help parties (individuals who have authority to deal with customers get on with life by providing all their essential certain aspects of an account on behalf of the customer). home services under the UW brand, in one single monthly In addition, we have made improvements to our ID bill. We achieve this by enabling our customers to bundle verification process, to ensure that customers are not together whichever services they want (energy, broadband, sending confidential documentation through the post. mobile and insurance), and benefit from a unique multiservice proposition that offers them simplicity, During the course of FY22, we have also made good savings and award-winning service. progress on supporting deaf or hard of hearing customers to engage and communicate with us. Last year we We recognise that cost-of-living pressures are increasing, implemented our SignVideo service, allowing customers and we have signed up to the Energy UK Vulnerability using British Sign Language to communicate with our Commitment and are continuing to invest in our dedicated advisors via a video interpreter. We have also made Ability to Pay team which provides specific and targeted content on our website available in a machine-readable support to customers who are struggling to pay their bills. format, allowing customers with sight issues to use screen readers. In addition, our partnership with Citizens Advice Plymouth helps customers by reviewing their income and expenditure, New targets for FY23: Increase our efforts to support offering advice on budgeting and available benefits, and our vulnerable customers through the cost-of-living helping them prioritise spending in order to maximise their crisis, including: income available to pay for important household bills. 1. Extending the scope of our Citizens Advice Plymouth initiative by increasing resource and committing more One of our other key priorities last year was protecting funding to the scheme. our customers’ safety both online and offline, through 2. Simplifying the process of identifying and tracking the delivery of safe products and services and protecting vulnerable customers, for example, by providing our customers’ data and privacy. Customer Services Advisors with a template to help them capture vulnerable customer data, as well as giving customers a new self-service option to make it easier for them to self-certify as vulnerable. 3. Exploring charitable initiatives to help provide financial support for those in fuel poverty. 1 "Net Zero" as used herein means the Science-Based Targets Initiative (“SBTi”) Net Zero definition, from the SBTi Net Zero Standard (https:// sciencebasedtargets.org/resources/files/Net-Zero-Standard.pdf) pursuant to which we are committed to (a) reducing our scope 1, 2 and 3 greenhouse gas (GHG) emissions to zero or a residual level consistent with a 1.5°C pathway and (b) will neutralise the impact of any residual emissions by permanently removing an equivalent volume of GHG emissions. Telecom Plus Plc Report and Accounts 2022 / 32 ## Sustainability Report ## continued Our employees Our Partners Our aim is to attract and retain the best talent and make We provide everyone across the UK, regardless of their UW a great place to work. Our top priority business objective education and experience, with the opportunity to earn a for FY23 is to build a great culture and environment for flexible income, as well as tools and learning to help them our people to grow. Inspiring and developing our people start and grow their own business by recommending UW’s is critical to our business and enabling future growth. multiservice proposition to others. Our Partner opportunity is accessible to all and supports people to develop Last year we set out a target to achieve a Glassdoor rating themselves professionally in a way that may not have of over 4 and a ‘recommended to a friend’ measure of been accessible to them before. Whilst earning an income 80% by the end of FY23. As of 31 March 2022, we had is important to Partners, the benefits and social impact achieved 3.8 and 67%. We hope to improve these ratings of being a Partner are much wider. For many Partners it during FY23 and will be rolling out at least two more increases their sense of self-worth, independence, and employee engagement surveys during the year to gain confidence. enhanced insights and feedback from employees and then respond with new initiatives that will further enhance our We want to transform the lives of more people than employee experience. ever before with the UW Partner opportunity. Our aim is for many more families across the UK to benefit from a Having a diverse employee community and creating an reliable UW Partner income in order to supplement their inclusive culture for all employees to thrive is a key focus household incomes. This is even more relevant as we see for UW. We have set targets for female and ethnically so many families struggle to make ends meet during the diverse representation. Our gender diversity target is that at cost-of-living crisis. least 40% of all management roles will be held by female employees by the end of FY25. As of 31 March 2022, 37.5% Throughout the covid pandemic and now during the cost- of all management roles were held by women, up from of-living crisis we have continued to support our Partners 30% the previous year. with the following events and tools: • Providing opportunities for Partner teams to collaborate On ethnicity, our target is that at least 30% of all and build their networks through online and in-person management roles will be held by ethnically diverse events such as our large-scale ‘Power Up’ and ‘Amplify’ employees by the end of FY25. We are taking the first events, Leading Lights events, Buzz events, Leadership step to achieve this by gathering data to understand where days and Head Office days; we are currently and the gap we need to fill. We have • Ensuring that Partners can continue to learn and increased the extent of data we have on ethnicity from 3% develop their expertise by offering targeted learning and to 40% and continue to build better insights. We still have development sessions such as Power Zones, Breakout work to do and aim to be in a position to track against Sessions, and Find Out More spaces at our Power Up and our target over the course of the year. Amplify events, as well as regular events with keynote speakers focused on learning and self-improvement; and We will continue to focus on improving diversity and • Improving our Partner Portal and App which contains inclusion and developing our people and culture to build tools that enable Partners to learn more and develop employee satisfaction and loyalty, thereby reducing their business. employee turnover. Over the last year we have seen a strong increase in the New target for FY23: In addition to the targets above, our number of Partners joining UW and continue to encourage new target for next year is to increase our Employee Net new Partners to join us with more tools to help them build Promoter Score (“eNPS”) from -3 to +10 by the end of FY23. and maintain their business, thus supporting sustainable growth and Partner engagement. Telecom Plus Plc Report and Accounts 2022 / 33 Strategic Report Governance Report Financial Statements Shareholder Information ### Our local communities Supporting local communities is very important to the Company. Through our UW Foundation, we encourage our employees and Partners to give back and raise money for charitable initiatives. We are pleased to have donated over £51,000 to charities during FY22 through the fundraising efforts of our employees and Partners, as well as through matched funding and charitable contributions from the UW Foundation. Examples of charities and local communities we have supported include: - Plastic Oceans (now Oceans Generation), our partner charity for FY22, which aims to reduce plastic pollution in our oceans and waterways. - The Childhood Trust which aims to support children in London who are living in poverty. - The Felix Project which collects and delivers surplus food to local charities and schools in London so they can provide healthy meals to those most vulnerable. - Great Ormond Street Hospital which treats seriously ill children and supports families through difficult times. - Domestic Violence UK which provides frontline support for those suffering from domestic abuse. - Alzheimer's Society which addresses the growing dementia crisis. - Unitas which supports young people to get back into the workplace. ![img-5.jpeg](img-5.jpeg) ### Supporting a more sustainable future We are committed to working towards a more sustainable, low-carbon future. Climate change is a challenge we all must face and we want to play our part in the UK's path to net zero. We remain focused on providing our customers with energy-saving technology and reducing our own emissions. ### Our goals and progress Last year, we committed to becoming a Net Zero business by 2040 and to developing detailed Net Zero carbon target plans by the end of FY23. We recognise that over the past year, especially with COP26, focus on Net Zero has increased. For example, the UK Government published its UK Net Zero strategy in which it sets out that the UK will fully decarbonise its power system by 2035 and will be powered entirely by clean electricity, subject to security of supply. We remain committed to Net Zero and during the year ahead we will develop our Net Zero transition plans including establishing science-based targets for emissions reductions. Our new Head of Sustainability (a new role created in recognition of our focus on climate change initiatives and sustainability) will take this forward, utilising the Achilles carbon management platform that we invested in earlier this year. Over the past year, we focused on initiatives which would directly reduce the carbon emissions of our operations. Last year we set out a target to switch the electricity supply of all Company operations (including our headquarters in Colindale) to 100% zero carbon renewable electricity and are pleased to report that this target has been achieved. From 1 April 2022, the Company's own electricity supply is 100% renewable through deep-green (wind, solar and hydro only) REGOs and will reduce our Scope 2 emissions by 1,086 tonnes of CO₂ per year. Last year we set out our commitment to electrify the majority of our fleet of vehicles by 2026. During the course of FY22, we sold our fleet of 61 vans that were being used to operate our historic LED light bulb installation service. On 1 April 2022, we announced that we had completed the sale of our wholly-owned meter operator, UW Home Services Ltd ("UWHS") and that we had also agreed to sell, subject to the necessary FCA change of control approval, our 75% shareholding in Glow Green Limited ("Glow Green"). The sale of UWHS and proposed sale of our stake in Glow Green mean that going forward we will only own a very small fleet, some of which are in the EV category. These changes will be reflected in our Scope 1 carbon footprint reporting for FY23. As part of our commitment to develop our Net Zero transition plan we will also consider where we can influence and support the transition to low carbon transportation beyond our direct control. We recognise the need to prioritise investment in de-carbonisation, and understand that while offsetting emissions is not a solution, in the short term it allows some contribution to the transition to Net Zero. With this in mind where it is not possible to reduce our scope 1 and 2 emissions we will continue to use appropriate, Verified Carbon Standard ("VCS") accredited, offsetting projects. To offset our FY22 Scope 1 and 2 emissions, we worked with our offsetting partner Abatable to purchase 2,840 tonnes of carbon credits from Rimba Raya, our preferred VCS-accredited carbon reduction project in Indonesia. Telecom Plus Plc Report and Accounts 2022 / 34 # Sustainability Report continued The Rimba Raya Project, on the island of Borneo, aims to preserve carbon-dense tropical peat swamp by halting the deforestation of roughly 47,000 hectares of forest which were originally due to be converted to palm oil plantations. The Project works with and supports local communities to protect biodiversity conservation. It focuses on both community development for the 2,500 households living in the area, and biodiversity conservation, particularly protection of 105,000 endangered Borneo Orangutans. It actively engages local communities to improve food security, income, healthcare, and education, all with the support of carbon finance. It is the first project to have been validated by SD VISta as contributing to all 17 SDGs. As a reseller of home services, the majority of our carbon emissions are Scope 3. Given that we do not make or generate the services we offer, our influencing of Scope 3 emissions depends on the choice of wholesale suppliers, the contracts we have with them and our continued engagement with them in order to seek to reduce Scope 3 emissions through a lower carbon product and service offering. Reducing Scope 3 emissions also depends on our ability to influence customer choice and behaviour. We recognise that we have a lot more to do in order to effect a meaningful reduction of our Scope 3 and will be committing to a roadmap for decarbonising our Scope 3 emissions in our Net Zero transition plan. We will also continue to work closely with our key suppliers, including E.ON - our wholesale energy supplier - to minimise our Scope 3 emissions wherever possible. We remained fully committed to offering our multiservice customers our Green (REGO-backed) Tariff. Our Green Tariffs are REGO (Renewable Energy Guarantees of Origin) backed, so for every unit of electricity our customers use, we buy a REGO certificate to match. Over the last year, the volume of REGO-backed tariffs we sold increased by 89%. To support low-carbon energy generation, our Smart Export Guarantee ("SEG") tariff pays self-generating households for any excess renewable electricity they don't use themselves and export to the grid. We recognise that we should do more to support self-generation and therefore we are committing to roll out a new and increased SEG tariff for multiservice customers during FY2023. We are pleased to report that from 1 May 2022, new and existing generators who take a three or four service bundle from us will benefit from one of the most competitive export rates available on the market today - at 5.6p/kWh compared to 2p/kWh for our current standard export tariff. By raising the SEG tariff rate we pay, self-generating households can increase the benefit they get from investing in renewable electricity. Last year we also committed to installing smart meters in 70% of our customers' homes by the end of FY2022 and 85% by the end of FY2023. While we have made good progress, we did not quite reach our target for this year and had a smart meter penetration of 64% at the end of FY22. This shortfall was partly driven by the challenges of the covid pandemic on home installation and partly due to the strong influx of new energy customers from other suppliers during H2 where there was lower smart meter penetration. We will continue to focus on rolling out smart meters, including encouraging new customers to take up smart meters. We have updated our target and are now aiming for 68% of our customers to be benefiting from smart meters in their home by the end of FY23. Last year we committed to providing our Partner with low carbon incentives. We already give Partners the option to select low carbon incentives, such as: a Tesla, electric Mini, electric bike, holiday break at an eco-hotel. We will continue to provide low carbon incentives to Partners in the future. ## UW Foundation We will continue to contribute 1% of our reported annual profits to the UW Foundation which will cover our ongoing commitment to tree planting at Bryn Arw (see below for more information on the UW Woodland), as well as our charitable giving initiatives. For FY23, we will support the following two charities that fulfil the UW Foundation's stated objectives of supporting disadvantaged groups and having a positive impact on the environment: - The UK's Disaster Emergency Committee Ukraine Humanitarian Appeal, supporting those in Ukraine in need of humanitarian aid due to the war. - The Wildlife Trust, our new partner charity of the year, which aims to save wildlife and wild places to ensure 30% of the UK's land and seas are protected for nature's recovery by 2030. In FY22, staff and Partners raised a total of £20,000 for charities and the UW Foundation paid out a total of £225,000, of which £193,500 went to support the UW Woodland at Bryn Arw and £31,500 was donated to charities. Telecom Plus Plc Report and Accounts 2022 / 35 Strategic Report Governance Report Financial Statements Shareholder Information ### UW Woodland undertaken to ensure the early growth of the trees. The species mix is designed to reflect the remnant ancient Since 2020, the UW Foundation has also been supporting semi-natural woods in the area. The saplings are all a tree planting project at Bryn Arw in the Brecon Beacons sustainably sourced and grown in Shropshire under the ‘UK National Park. Bryn Arw is the first significant tree-planting and Ireland Sourced and Grown’ (“UKISG”) scheme. As well project on common land in Wales. It lies on a steep eastern as future carbon capture, the UW Woodland will become slope which has become infested with bracken, greatly a valuable natural asset and vital habitat linkage between reducing its value for sheep farming and wildlife and other remnant woodlands in Bryn Arw. It is also creating preventing the regeneration of native trees. jobs and training opportunities for the local community. The project is working to the Woodland Carbon Code, A tree is planted in the UW Woodland every time a the quality assurance standard for woodland creation multiservice customer joins the Company and every projects in the UK. The Code ensures that high standards of time a member of staff achieves their 5-year anniversary sustainable forest management and carbon management with us. Since commencing the project in 2020, we have are followed alongside assurance of carbon units generated planted 117,400 trees and in November 2021, we agreed by the project. Extensive consultation was also carried with Stump Up for Trees to support the next phase of out involving the local community and environmental woodland planting. organisations including the South Wales Wildlife Trust, Buglife and the Reptile Society. We are proud of what we have achieved at Bryn Arw to date and remain committed to continuing to work through After initial bracken removal the woodland was planted the UW Foundation to plant additional native broadleaf with a mix of broadleaf native hardwood species, including woodlands in the UK. oak, birch, hazel, wild cherry and goat willow. An intensive 5-year annual bracken removal programme is being Telecom Plus Plc Report and Accounts 2022 / 36 ## Sustainability Report ## continued ### Carbon reporting - Greenhouse gas reduction was offset by the inclusion of the Glow Green ### (“GHG”) emissions statement fleet in reporting for the first time. Scope 2 emissions decreased by 4.6% overall, partly from a reduction in Our GHG reporting year is the same as our financial absolute electricity use in our offices and partly from year. Our reporting covers our UK-based Scope 1 (direct the reduction in carbon intensity of UK grid electricity emissions from our own operations), Scope 2 (indirect emissions factors. emissions from the generation of purchased energy), as well as several Scope 3 emission sources (primarily our Our Scope 3 emissions have increased 7.6%, due to the customers’ energy usage). We do not have any non-UK increase in volume of energy sold. Given our reseller operations. This year we were able to increase the scope business model and in particular, the nature of our of our reporting to include the operational electricity use wholesale energy supply arrangements, we will continue of 1p Mobile, UWHS, Glow Green Limited and Cofield to work closely with E.ON in order to seek to influence Limited, as well as Glow Green’s fleet emissions. We and reduce our Scope 3 emissions. Decarbonising our have not rebased the FY21 reported data due to data Scope 3 emissions will be included in the scope of our availability, and we plan to use FY22 as our baseline for Net Zero transition plan that will be developed over the any emissions targets we set as part of our Net Zero coming year. transition plan. Our Streamlined Energy & Carbon Report framework Overall GHG efficiency (Scopes 1, 2, and 3) per unit of has been prepared and verified in accordance with the revenue has improved by 4.2%. Absolute Scope 1 and requirements of the measure-step of the Toitū carbon 2 emissions decreased by 1.4%. Our Scope 1 reported marks, which is based on the Greenhouse Gas Protocol: emissions saw a small increase of 0.8%. This was due to A Corporate Accounting and Reporting Standard (2004) gas use for heating in our offices increasing from FY21 and ISO 14064-1:2018 Specification with Guidance at the due to increased office use following the covid pandemic. Organization Level for Quantification and Reporting of Whilst emissions from our fleet of vans decreased due Greenhouse Gas Emissions and Removals. to the sale of the fleet part way through the year, this Telecom Plus Plc Report and Accounts 2022 / 37 Strategic Report Governance Report Financial Statements Shareholder Information | | | | | FY22 | | | | | FY21 | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 1 April 2021 to 31 March 2022 | | | | | | 1 April 2020 to 31 March 2021 | | | | | | | | UK and | | | | Global | | UK and | | | Global | | | | offshore | | | (excluding UK | | | offshore | | (excluding UK | | | | | | | | and offshore) | | | | | and offshore) | | | Emissions from activities for which the company | | | 1,755 N/A 1,742 N/A | | | | | | | | | own or control including combustion of fuel & operation of facilities tCO e (Scope 1) 2 Emissions from purchase of electricity, heat, steam 1,086 N/A 1,138 N/A and cooling purchased for own use tCO e (Scope 2, 2 location-based) Total gross Scope 1 & Scope 2 emissions tCO e 2,840 N/A 2,880 N/A 2 Total gross Scope 1 & Scope 2 emissions tCO e (all) 2,840 2,880 2 Energy consumption used to calculate above 11,489,879 N/A 11,496,817 N/A emissions (kWh) Gas (kWh) 275,432 N/A 195,009 N/A Electricity (kWh) 5,112,893 N/A 4,882,710 N/A Transport fuels (kWh) 6,101,554 N/A 6,419,099 N/A Other energy sources (Scope 1 & 2) kWh N/A N/A N/A N/A Total gross Scope 1 & Scope 2 emissions by unit 2.94 3.34 turnover/revenue (tCO e/£M) 2 ISO14064 Part 1 2018 and Methodology GHG protocol Carbon Reduce Emissions from business travel in rental cars or employee-owned vehicles where company N/A N/A is responsible for purchasing of the fuel tCO e (Scope 3) 2 Emissions from other activities tCO e (Scope 3) 1,856,462 1,725,129 2 Total gross Scope 3 emissions tCO e 1,856,462 1,725,129 2 Total gross Scope 1, Scope 2 & Scope 3 emissions 1,859,302 1,728,009 tCO e 2 Total gross GHG emissions per unit turnover/ 1,921 2,007 revenue (tCO e/£M) 2 Scope 1 and 2 verified to Third Party verification ISO14064 Part 1 2018 and Data not third party verified Carbon Reduce Telecom Plus Plc Report and Accounts 2022 / 38 ## Sustainability Report ## continued ### Energy efficiency initiatives Doing business responsibly The building layout of our headquarters at Colindale allows for individual floors to be isolated when not in use. We aim to work with all our stakeholders in an ethical and This allows the zoning of the LED lighting control to mirror transparent way in order to inspire trust in our company. how teams use the space with local sensor control to Running our business in a fair, open and accountable avoid wastage. The Company has implemented a number manner is critical as we look to the future and our of the recommendations outlined in both the ESOS Phase growth prospects. Our systems and processes are built I & II audit reports, for example increasing the temperature and developed to ensure the highest standards of data set point in the large server rooms with monitoring of security and business continuity. temperature in the event of failure, upgrading warehouse lighting to LED, ensuring air conditioning units are time- Our goals and progress controlled with appropriate temperature set points, and A key focus over the last year has been on demonstrating dead band control strategy. During the course of FY22, the the strength and resilience of our business during the Company sold its fleet of 61 vans that were being used to energy crisis. Last year, we committed to ensuring reliability operate our historical LED light bulb installation service. of supply, service and product delivery through periods of uncertainty. That commitment has never been more New targets for FY23: As well as continuing to deliver relevant. To date, 30 energy suppliers have failed and on the existing targets set out above, and developing a others are fighting to stay in the business. Many of these detailed Net Zero transition plan by the end of FY23, we providers had been offering unsustainably cheap tariffs, will also look to support a more sustainable low-carbon were insufficiently hedged and were thus unable to absorb future by: the higher wholesale costs faced by all suppliers. However, 1. Rolling out a new Smart Export Guarantee tariff (for we are and always have been focussed on building a multiservice customers) that offers a much more sustainable business model that is underpinned by competitive rate for self-generating households. sustainable pricing for our customers. During H2, we saw 2. Installing smart meters in 68% of our customers’ homes an influx of customers from failed suppliers and were able by the end of FY23. to offer them a sustainably priced product below the price cap with guaranteed reliability of supply. We have bolstered our Energy Compliance & Regulatory team to ensure that we keep abreast of changes to energy regulation. This includes the numerous Government and Ofgem interventions being announced in order to ameliorate the impacts of the energy crisis on suppliers and consumers alike. We are now proactively sharing our views with BEIS, Ofgem and industry bodies whether through CEO round tables, technical working groups, industry forums, regulator bilateral meetings or consultation responses to advocate for a more fair and transparent industry regulation model that focuses on long term stability. Telecom Plus Plc Report and Accounts 2022 / 39 Strategic Report Governance Report Financial Statements Shareholder Information Last year, we also committed to introducing a new Supplier The Legal & Compliance Director also provides monthly Code of Conduct and ensuring that all new suppliers sign updates to the Board on ESG. up to it by the end of FY23. We are pleased to report that we have met this target. A new Supplier Code of Conduct Moreover, we have developed and improved our climate was introduced in July 2021. All new suppliers are now risk reporting consistent with TCFD recommendations. required to sign up to the Code and existing suppliers will Our TCFD disclosures can be found on pages 43 to 46 sign up when their contract is being renewed. of this report. We are committed to respecting Human Rights across New targets for FY23: our business and our supply chain and have a Human 1. Enhancing Board independence and effectiveness Rights Policy which covers human rights, modern slavery through changes to the composition of the Board. and forced labour. Our Board have approved a Modern 2. Having at least 33% female representation on the Board Slavery and Human Trafficking Statement in compliance by the end of FY23. with section 54 of the Modern Slavery Act 2015, which is available on our website. Progress has already been made in this regard with the Board changes announced on 14 March 2022, namely Last year we committed to further develop our ESG that in order to redress the historical imbalance in the governance structure to help us and our Board assess proportion of independent non-executive directors, with and manage ESG risks including supply chain and climate effect from the Company’s Annual General Meeting in risks. We have made excellent progress in this regard with July 2022, Charles Wigoder will become Non-Executive the hire earlier this year of our new Head of Sustainability. Chairman, and Melvin Lawson and Julian Schild will retire This new role demonstrates our commitment to ESG from the Board. and sustainability and further enhances our governance structure. The Head of Sustainability will have day-to-day We are also pleased to report that we have appointed a ownership of the ESG agenda, will manage the cross- new independent non-executive director, Carla Stent, who functional ESG Working Group and importantly will play a will join the Board with effect from the Annual General key role in developing, managing and driving forward our Meeting and will chair the Audit Committee. With Carla’s Net Zero transition plan. appointment, our female representation on the Board will be 37.5%. The Company also has an ESG Strategy Committee comprising the Executive Leadership Team, the Company Secretary, Head of PR & Communications, and Head of Sustainability. This group meets quarterly to discuss our ESG strategy, goals, initiatives and progress thus ensuring a robust governance framework and tracking of progress against targets. Telecom Plus Plc Report and Accounts 2022 / 40 ## Sustainability Report ## continued ### Section 172(1) statement all their duties, while having regard to these and other factors as they managed and governed the Company on Background behalf of its shareholders. The Companies Act 2006 (the “Companies Act”) sets out a number of general duties which directors owe Engaging with key stakeholders to the Company. New legislation has been introduced The success of the Company is dependent on building to help shareholders better understand how directors positive relationships with all of our key stakeholders to have discharged their duty to promote the success of deliver long term sustainable success. the Company, while having regard to the matters set out in section 172(1)(a) to (f) of the Companies Act. In the The table below sets out details of engagement with key current financial year, the directors continued to exercise stakeholders. Stakeholder Details Shareholders As owners of the Company we rely on the support of shareholders and their views are important to the Board. The executive directors have an open dialogue with our shareholders through one-to-one meetings, group presentations with analysts, and at the Annual General Meeting. Discussions with shareholders cover a wide range of topics including financial performance, strategy and outlook. The non-executive directors engage with institutional shareholders on matters of governance and remuneration. Shareholder feedback, along with details of significant movements in the shareholder base are regularly reported to and discussed by the Board and, where appropriate, their views are sought as part of certain decision-making processes. Partners The Company relies on the Partners within its independent distribution network for gathering new customers. Communication with our Partners is a key focus for the business and is conducted through various meetings, forums and large-scale conferences. Where appropriate, Partner feedback is sought when significant changes are being considered to the operation of the distribution network. People Employees are key to the Company delivering award-winning services to customers. There are many ways we engage with and listen to our employees including weekly email updates, employee surveys, forums, face-to-face briefings, and an internal company magazine. Key areas of focus include company development and strategy, health and well-being, development opportunities, pay and benefits. Regular reports about what is important to our employees are made to the Co-CEOs ensuring consideration is given to employee needs. Customers We build long-lasting relationships with our customers as evidenced by our low levels of churn. We devote considerable resources to understanding customer requirements and soliciting feedback from them on ways to improve our offer and services. We use this knowledge to inform our strategy of helping customers to “get on with their lives” by offering savings, simplicity and service across all the household services we are providing to them. Suppliers As a reseller we are required to work closely with our key suppliers to ensure that we are delivering the best possible combination of value and service to our customers; our success in achieving this is demonstrated by the numerous endorsements and consistent recommendations we receive from Which? The interests of our suppliers are strongly aligned to our own as the number of customers we are able to attract has a direct impact on their own financial performance and market share. This generates close and supportive relationships with our key suppliers which are fostered through regular interaction at a senior management level. Telecom Plus Plc Report and Accounts 2022 / 41 Strategic Report Governance Report Financial Statements Shareholder Information Community We are committed to building positive relationships within the communities where we operate. We are a significant employer in the local community around our head office and support a number of charitable activities. We have recently set up the UW Foundation to further these endeavours. Our Partner business opportunity allows a range of people from communities across the UK to advance their lives, driving our strategy to help Partners to “get on in life”. Regulators We operate in highly regulated markets and understand the importance of maintaining a constructive working relationship with Ofgem, Ofcom and the FCA, who between them are responsible for the regulation of the diverse range of services we offer. We engage with officials from these regulators as necessary to make them aware of the Company’s views when they are consulting on proposed regulatory changes, or if there are competition issues that need to be raised with them. Further s172 factors Further information as to how the Board has had regard to the s172 factors: Section 172 factor Key examples Page The likely consequences of any decisions in the long term Sustainability Report 31 The interests of the Company’s employees People & Organisation Report 27 Fostering business relationships with suppliers, customers and others Co-Chief Executives’ Review 8 The impact of the Company’s operations on the community Sustainability Report 31 and the environment Sustainability Report 31 Maintaining a reputation for high standards of business conduct Corporate Governance Statement 51 Corporate Governance Statement 51 The need to act fairly between members of the Company Directors’ Report 83 Telecom Plus Plc Report and Accounts 2022 / 42 ## Task Force on Climate-related ## Financial Disclosures ### Introduction services, we too must play our part and that is why we are committed to implementing the recommendations of We recognise that climate change is the single biggest the Task Force on Climate-related Financial Disclosures environmental threat to the future of our planet and that (“TCFD”). We acknowledge the importance of TCFD in companies have an important role to play in reducing helping us manage the impact of climate change on our the effects of harmful GHG emissions in our atmosphere operations and advance towards our Net Zero target. and ensuring that we meet a 1.5°C target in line with the This is our first year of disclosure consistent with the Paris Agreement. As a multiservice provider of home TCFD framework. ### Governance Board ESG Strategy Committee Strategic oversight Legal & Compliance Director ESG Working Head of Functional & compliance Group Sustainability Heads Implementation ### The Board has ultimate responsibility for climate-related Strategy risks and opportunities. The Legal & Compliance Director prepares regular board updates on ESG, including TCFD/ This year we engaged external climate experts from one of climate-related matters. the Big 4 consulting firms, alongside our ESG consultants, to assist us with conducting qualitative climate scenario The ESG Strategy Committee supports the Board in its analysis to identify the actual and potential impacts of strategic and operational oversight of climate change. climate-related risks and opportunities on our business The Committee considers and monitors climate-related and to understand the associated effects and mitigation goals and initiatives as well as associated risks. The measures. Committee is composed of the Executive Leadership Team, Company Secretary, Head of PR & Communications, Head Given the potential impact of climate change on our of Sustainability and is chaired by the Legal & Compliance future strategy, it was important that we achieved full Director who updates the Board. The Committee meets engagement from senior stakeholders across the business. quarterly and receives updates on TCFD and the wider Our Co-CEO, CFO, Vice President of Operations (Energy, ESG programme from the ESG Working Group. Sales & Service), Head of Product, Telecoms Director, Head of Insurance and Legal & Compliance Director were among The ESG Working Group manages the day-to-day climate- those who participated in and actively engaged with our related risks and issues on behalf of the ESG Strategy climate scenario analysis - including at a key collaborative Committee, meeting and reporting back regularly as part of workshop during which our risks and opportunities the broader ESG agenda. The Working Group is headed up were challenged, validated and prioritised. This multi- by our Head of Sustainability and is supported by external functional participation as well as inputs from Board and ESG consultants, as required. senior management level have helped us to build a solid Telecom Plus Plc Report and Accounts 2022 / 43 Strategic Report Governance Report Financial Statements Shareholder Information understanding and appreciation of how climate change can support for decarbonisation and focuses on several impact key aspects of our business and helped us to lay physical risks. The 1.5°C scenario focuses on a world which the foundation for our TCFD journey over the coming years. rises to the challenge of tackling climate change and limits global warming to below 1.5°C. This scenario focuses on The qualitative scenario analysis undertaken is intended transition risks associated with the rapid changes needed to provide us with credible examples of potential by 2030 to cut emissions in line with the Paris Agreement, exposure. We considered physical and transitional risks including: carbon pricing, increasing manufacturing and and opportunities which may arise in the short (less raw-material costs; and changes in consumer behaviour than five years), medium (five to 10 years) and long term and consumption patterns, leading to potentially significant (over 10 years). We used two plausible scenarios, one of a changes in demand for certain goods and services. world which warms by 1.5°C and one which warms by 4°C compared to pre-industrial levels. Each of these scenarios ### was rooted in the commonly used Shared Socio-economic Scenario analysis result and mitigation Pathway and Representative Concentration Pathway, in line with leading practice and in common with the methodology A comprehensive list of risks and opportunities, both used by the Intergovernmental Panel on Climate Change. physical and transitional, were identified through our scenario analysis. In the tables below, we have set out The 4°C scenario focuses on systematic failure to address risks and opportunities which we analysed in greater climate change. It assumes limited policy or regulatory detail as part of a deep dive into our most material issues. ### Risks Adverse impact of Failure to respond to shifting Failure to demonstrate climate-related policy and consumer sentiment for credible transitional action regulatory change green products and services on climate change Description The Company fails to The Company’s reseller model The Company transitions adequately prepare for and means that it may be less to a low carbon model adapt to the market-wide risk able to adequately respond more slowly than societal of climate-related policy and to the growing demand for expectations and is unable to regulatory changes. green products and services, demonstrate credible action stemming from shifting on climate change, including consumer sentiment, investor a comprehensive Net Zero pressure and regulatory changes, roadmap. potentially resulting in the Company’s offering becoming less competitive for the growing number of green-conscious customers. Risk priority High High High Risk type Transition Transition Transition Impacts Increase in costs, decrease in Decrease in revenue from non- Decrease in revenue from non- profitability. renewable energy tariffs which renewable energy tariffs (driven may impact upon the demand for by lower consumer demand), our multiservice bundle offering more difficult to attract and (driven by falling consumer retain employees (driven by demand, lower demand for lower employee demand and multiservice bundling if one higher attrition), and reduction or more services become less in access to some forms of attractive because of non-green financial capital (lower investor credentials, as well as churn of demand / divestment). existing customers due to their evolving expectations). Time period Medium term Short, medium and long term Medium term Telecom Plus Plc Report and Accounts 2022 / 44 ## Task Force on Climate-related ## Financial Disclosures continued | Management | Continue to perform horizon- | Conduct market research | Develop and implement a | | --- | --- | --- | --- | | response | scanning, compliance | and continue to engage with | credible climate transition plan | | | and regulatory monitoring | customers on a regular basis | over the course of FY23 to | | | and regularly engage with | through ESG surveys in order to | inform and plan our roadmap | | | government and regulators | monitor any changes in consumer | to Net Zero by 2040. | | | to keep ahead of upcoming | sentiment and expectation to | | | | developments in the regulatory | inform future strategy. | Continue to engage key | | | landscape. | | stakeholders on climate | | | | Engage with our current energy, | change to keep abreast of | | | Continue to participate in | telecommunications and | shifting sentiment and evolving | | | consultations and industry | financial services suppliers on | expectations. | | | forums. | climate-related issues, and green | | products and services. Embed climate considerations into decisions on strategic wholesale supply agreements. Continue to encourage customer take-up of green services such as our green REGO-backed tariffs and our Smart Export Guarantee tariff (recently increased to a more competitive rate). Continue to research and develop new greener products and services to increase green product offering. ### Opportunities Build a credible low carbon service Diversification of financial assets proposition Description The Company is able to support and harness the The Company is able to diversify its financial low carbon transition through product and service assets and take on new forms of financing diversification and in doing so becomes a credible linked to its sustainability performance. low-carbon multiservice provider. Opportunity priority High Medium Opportunity type Transition Transition Impacts Increase in revenue and profitability (through higher Increase in access to and diversification of customer demand, customer loyalty and lower financial capital. churn), enhanced reputation, increased ability to attract and retain employees, higher investor demand. Time period Short and medium term Short term Management Conduct market research and continue to engage Consider viability and impact of new forms response with customers on a regular basis through our of financing such as green bonds and / or ESG surveys to understand customer demand and sustainability-linked loans. importance of green utilities to them. Consider how our services and products can be further adapted to cater to an increasingly green conscious consumer. Demonstrate credible progress on climate change, including a comprehensive Net Zero roadmap. Telecom Plus Plc Report and Accounts 2022 / 45 Strategic Report Governance Report Financial Statements Shareholder Information ### Risk management Next steps Taking into account the impact of the climate scenarios As a priority for the year ahead, we will develop and we analysed, we consider that we are resilient to the risks implement a credible climate transition plan as part of assessed and the business is well placed to manage those our roadmap to achieving Net Zero by 2040. We will also risks and take advantage of the opportunities presented continue to engage our key stakeholders on climate change by climate change. to ensure that it is embedded into our wider strategy. The identification, assessment and management of As we continue to develop our approach, we will look to climate-related risks are considered as part of our conduct quantitative modelling to inform the financial wider risk management framework which is detailed on impacts of our climate-related risks and opportunities. page 20 of this Report. The Audit Committee has overall responsibility for management and oversight of our risk ### management framework. Listing Rule 9.8.6R(8) Compliance ### Statement Climate change risk has been identified, evaluated and designated as a standalone risk on our internal risk register By including the climate-related financial disclosures and our Legal & Compliance Director has been assigned set out above which are consistent with TCFD as the owner. Climate change risk is set out on page 26 recommendations, Telecom Plus PLC has complied with of this Report as one of our new principal risks. all of the requirements of LR 9.8.6R(8). This year we created a new Head of Sustainability role. Our ### recently appointed Head of Sustainability will play a key Strategic Report approval part in supporting our Legal & Compliance Director and the ESG Strategy Committee in integrating climate-related The Strategic Report set out on pages 2 to 46, which risks and opportunities into our overall strategy and risk incorporates the Financial and Operating Highlights, the management framework. Chairman’s Statement, the Co-Chief Executives’ Review, the Financial Review, Principal Risks and Uncertainties, People and Organisation, Sustainability Report and Task ### Metrics and targets Force on Climate Related Disclosures Report, has been duly approved by the Board. Last year we announced our target to be Net Zero by 2040. Over the coming financial year, we will set targets that align with the Science Based Targets Initiative’s Corporate Net By order of the Board Zero Standard. We have invested in software and engaged David Baxter a third-party to help us develop and set these targets. Company Secretary 21 June 2022 We used our greenhouse gas emissions as the key metric to identify and mitigate risks and assess our progress against our commitment to be Net Zero. Our carbon reporting follows the Greenhouse Gas Protocol and this year our Scope 1 and Scope 2 emissions have been externally verified through Achilles Information Limited’s Carbon Reduce Programme. Our greenhouse gas emissions statement is set out on page 37. Telecom Plus Plc Report and Accounts 2022 / 46 # Board of Directors ## The Hon. Charles Wigoder, Executive Chairman **Appointed: 13 February 1998** Charles qualified as a Chartered Accountant with KPMG in 1984 and was subsequently employed by Kleinwort Securities as an investment analyst in the media and communication sectors. Between 1985 and 1988, he was head of corporate finance and development at Carlton Communications PLC and then Quadrant Group PLC. In March 1988 he left Quadrant Group to set up The Peoples Phone Company PLC, where he served as CEO; it was subsequently purchased by Vodafone in December 1996. He joined the Company as CEO in February 1998, becoming Executive Chairman in 2010. **External appointments:** None. ![img-6.jpeg](img-6.jpeg) ## Beatrice Hollond, Senior Independent Non-Executive Director **Appointed: 26 September 2016** Beatrice spent 16 years at Credit Suisse Asset Management in Global Fixed Income and began her career as an equity analyst at Morgan Grenfell Asset Management. **External appointments:** Beatrice is a main board Director and Chair of Remco (US) and Chair of the International Advisory Board (UK) of Brown Advisory, senior independent non-executive director, member of the Management Engagement; Nomination & Remuneration and Audit & Risk Committees at Templeton Emerging Markets Investment Trust, Chair at Millbank Financial Services Limited, Chair of F & C Investment Trust PLC, and adviser to a private family office where Beatrice is also Chair of the Investment Advisory Committee and a member of Remuneration & Governance Committees. Beatrice is a main board director and Chair of Oldfield & Co and a director of Smedvig AS. ![img-7.jpeg](img-7.jpeg) ## Andrew Lindsay MBE, Co-Chief Executive Officer **Appointed: 25 November 2008** Andrew joined the Company in April 2007 and was appointed to the Board in November 2008. Before joining Telecom Plus, Andrew was Managing Director of Ryness, an electrical retail chain based in London in which he previously held a significant equity stake after performing a Management Buyout in 2006. Prior to buying Ryness, he spent three years as an analyst in the UK Mergers & Acquisitions team at Goldman Sachs. Andrew rowed for Great Britain at the Sydney Olympic Games in 2000, where he won a Gold medal. **External appointments:** Andrew is a non-executive director at Mixergy Limited. ![img-8.jpeg](img-8.jpeg) Telecom Plus Plc Report and Accounts 2022 / 47 Strategic Report Governance Report Financial Statements Shareholder Information ### Stuart Burnett, ### Co-Chief Executive Officer Appointed: 23 July 2020 Stuart was promoted to Co-CEO in 2021, after two years as COO, and is responsible for all operational activity across UW including day-to-day management of UW’s Energy, Telecoms and Financial Services businesses. He joined the Company in 2016 as Legal & Compliance Director and then moved on to become Commercial Director, managing all commercial activity, including our key commercial relationships and customer proposition, before becoming COO in 2019. Stuart began his career as a corporate lawyer at Slaughter & May after reading law at Oxford University. He then worked in senior roles at RSA Insurance Group PLC and TSB Banking Group PLC, prior to joining the Company. External appointments: None. ### Nick Schoenfeld, ### Chief Financial Officer Appointed: 7 January 2015 Nick joined the Company in January 2015 as Chief Financial Officer. Since 2006, Nick was Group Finance Director of Hanover Acceptances, a substantial diversified private company with holdings in the food manufacturing, real estate, and agribusiness sectors. He was previously employed at Kingfisher plc, where he was responsible for the group’s financial planning and analysis functions. Prior to this, he held senior strategic and development roles within Castorama and the Walt Disney Company, having started his career as a management consultant at the Boston Consulting Group. Nick also has an MBA from the Harvard Business School. External appointments: None. ### Andrew Blowers OBE, ### Non-Executive Director Appointed: 22 November 2016 Shareholder Information Andrew’s career spans over 30 years in the UK financial services industry. He was the founder and CEO of Swiftcover.com and Chairman of IIC NV from 2004 to 2009 and an executive director of Churchill Insurance before this. He was also the senior independent non-executive director of AA PLC, the UK’s leading provider of roadside assistance, and the Chairman of ATEC Group Limited, a specialist digital insurance group. External appointments: Andrew is the Chairman of AA’s Insurance holding company (AAIHL). Telecom Plus Plc Report and Accounts 2022 / 48 # Board of Directors ### Melvin Lawson, Non-Executive Director **Appointed: 27 September 2006** Melvin is an investor in a number of public and private companies in the real estate and technology sectors. He was previously the Managing Director of A Beckman PLC, a company formerly listed on the London Stock Exchange which was taken private in 1995. **External appointments:** Melvin is a non-executive director of Catalyst Media Group PLC and a number of other private companies. ![img-9.jpeg](img-9.jpeg) ### Julian Schild, Non-Executive Director **Appointed: 25 May 2010** Julian qualified as a Chartered Accountant in 1986. He joined Huntleigh Technology PLC in 1987 and was promoted to Group Finance Director that year, and to Chairman in 2003. Julian was Chairman of the Association of British Healthcare Industries from 2006 to 2007. Following the sale of Huntleigh in 2007, he set up a company investing in start-ups. Julian actively supports many charitable activities. **External appointments:** Julian is a Director of the Hospital of St. John & Elizabeth in London and is an Advisory Fellow of Pembroke College, Oxford. ![img-10.jpeg](img-10.jpeg) ### Suzi Williams, Non-Executive Director **Appointed: 23 July 2020** As Chief Brand & Marketing officer at BT, Suzi was part of the team who transformed the business, prior to which she held senior leadership roles at Capital Radio Group, Orange, the BBC, KPMG Consulting and Procter & Gamble Europe. Suzi was an independent non-executive director at the AA PLC until its successful sale to private equity in March 2021. **External appointments:** Suzi is a senior board advisor on brand and marketing. She is an independent non-executive at Zegona Communications where she is Chair of the Remuneration and Nomination Committee, and is also an independent non-executive director at JD Sports Fashion PLC. ![img-11.jpeg](img-11.jpeg) Telecom Plus Plc Report and Accounts 2022 / 49 ## Corporate Governance Statement Strategic Report Governance Report Financial Statements Shareholder Information The Board is pleased to report that during the year and as expense in the furtherance of their duties. Any question of at the date of this Annual Report the Company has applied the removal of the Company Secretary is a matter for the the main principles and complied with the provisions of Board as a whole. Whilst the members of the Board are all the UK Corporate Governance Code (“the Code”) issued experienced and well qualified, the opportunity to receive by the Financial Reporting Council in July 2018, save in further training at the Company’s expense is available to the limited instances explained below. Copies of the Code them. The non-executive directors attended such formal, are available at www.frc.org.uk. externally facilitated courses as they considered relevant to their roles and responsibilities during the year. This report, together with the Director’s Report on pages 83 to 86 and the Directors’ Remuneration Report on pages 60 ### to 82, provides details of how the Company has applied the Board duties principles and complied with the provisions of the Code and where required explains the rationale for instances The matters specifically reserved for decision by the Board where the Company has not been compliant, namely: (i) are fully documented and include the following principal the external facilitation of a Board evaluation exercise; (ii) areas: the extension of the term of the Chairman beyond nine • reviewing and agreeing the Company’s strategy and long years; and (iii) the requirement to formally consult with term objectives; employees regarding the determination of the directors’ • assessing performance in the light of the Company’s remuneration policy. Further detail in relation to the strategy and objectives; Company’s position on formally consulting with employees • ensuring an effective system of risk management and regarding the determination of the directors’ remuneration internal controls is in place; policy is set out in the Directors’ Remuneration Report. • approving changes to the structure, size and composition of the Board and reviewing its performance on an annual basis; ### The Board of Directors • reviewing the Company’s overall corporate governance arrangements; and The Board meets regularly to review the progress of the • approval of the Company’s financial statements prior Company and to discuss the measures required for its to publication. future development. Directors are provided in advance with a formal agenda of matters to be discussed at each Matters that are specifically delegated to the committees meeting, and with the detailed information needed to of the Board are documented in the various Terms of monitor the progress of the Company. Records of meetings Reference of each committee which are available on the and the decisions of the Board are maintained by the Company’s website (www.telecomplus.co.uk). Company Secretary and are approved by the Board at the following meeting. All directors have access to the advice All Board and Committee meetings during the year were and services of the Company Secretary and, if required, held virtually through video conferencing. are able to take independent advice at the Company’s Shareholder Information Telecom Plus Plc Report and Accounts 2022 / 50 ## Corporate Governance Statement ## continued Table of attendance at formal meetings during the year ended 31 March 2022 Name of Director Board Remuneration Audit Nomination Committee Committee Committee Number of meetings 11 4 3 1 Charles Wigoder 10 - - 1 Beatrice Hollond 11 4 3 1 Andrew Lindsay 11 - - - Stuart Burnett 11 - - - Nick Schoenfeld 11 - - - Andrew Blowers 11 4 3 - Julian Schild 11 - 3 - Melvin Lawson 11 - - - Suzi Williams 11 4 - 1 In accordance with provision 12 of the Code, led by the Senior Independent Non-Executive Director, the non-executive directors also met without the executives present during the year. ### Board evaluation • the Board’s approach to identifying and mitigating key business risks; The directors recognise that the Code requires an external • the quality of the Company’s communications with key evaluation of the boards of FTSE 350 companies to be stakeholders; carried out at least every three years. However, the • the Board’s consideration of diversity and succession directors considered the position in relation to the current planning; and year and concluded that an external evaluation was not • the induction and training of board members. necessary. In reaching this conclusion the directors were mindful of the effective operation of the Board during In accordance with provision 12 of the Code and building the year and the results of the internal Board evaluation on the results of the evaluation questionnaires, a separate exercise detailed below. The Board considers it unlikely evaluation of the performance of the Chairman was that an external evaluation will be conducted in the conducted. This evaluation principally comprised a review medium-term. of the Chairman’s leadership style and tone in promoting effective decision-making and ensuring constructive An internal evaluation of the Board for the current year and sufficient debate took place around key issues. The was conducted through the completion of formal detailed results of this evaluation were entirely satisfactory. The board, and board committee evaluation questionnaires by overall conclusion reached was that the Board and its each director. A review of the results, led by the Company Committees had operated satisfactorily during the year, Secretary, principally covered the following areas: specific with all directors making an effective contribution to matters of concern arising from the questionnaires, the Board commensurate with their experience and directors’ performances and any key objectives for the responsibilities. Nonetheless, as part of the evaluation coming year. it was duly noted that the Board changes described below would address the historical imbalance in the proportion The evaluation questionnaires were focussed on assessing of independent non-executive directors on the Board. effectiveness in the following key areas: • the size and balance of the Board; The process also highlighted that: (i) the terms of reference • the quality of board debates and its decision-making for the Board committees should be updated and processes; reviewed annually; (ii) driving diversity within management • the individual contributions made by each director; structures below Board level remained important; and | • the Chairman’s approach to leadership; | | (iii) a more formal review of the key business risks and | | --- | --- | --- | | • the non-executive directors’ challenge of the executive | | controls will be undertaken at Board level following the | | directors; | | regular evaluation by the Audit Committee. | | Telecom Plus Plc Report and Accounts 2022 / | 51 | | Strategic Report Governance Report Financial Statements Shareholder Information ### Board balance Director. Stuart Burnett was promoted from Chief Operating Officer to Co-CEO in November 2021. The Board comprised four executive directors and five non-executive directors at the year-end. Beatrice Hollond Membership of each committee of the Board is set out acted as the Company’s Senior Independent Non-Executive in the table below: Name of Director Remuneration Audit Nomination Committee Committee Committee Charles Wigoder - - Andrew Lindsay - - - Stuart Burnett - - - Nick Schoenfeld - - - 1 Andrew Blowers Chair - 1 Beatrice Hollond Chair 2 Melvin Lawson - - - 1 Julian Schild - Chair - 1 Suzi Williams - 1 indicates independent non-executive directors 2 Melvin Lawson is not considered independent due to his significant shareholding in the Company. The Code sets out circumstances which are likely to The Code also sets out that the Chair should not stay in post impair, or could appear to impair, a non-executive beyond nine years from the date of their first appointment director’s independence. These circumstances include to the Board. Charles Wigoder has been Executive Chairman serving on the board for more than nine years from the since 2010 and, as previously announced, will be moving date of appointment. Julian Schild was appointed to the to non-executive Chairman following the Company’s AGM Board in May 2010 and has therefore served over nine in July. The Board has considered the extension of Mr years as a director. Nonetheless, the Board considers that Wigoder’s term as Chairman, albeit in a non-executive the independence of Mr Schild has not been negatively capacity, and is satisfied that this is in the best interests impacted by his long service on the Board and that he of the Company given his extensive knowledge of the continues to provide robust and constructive challenges business and the markets within which it operates. The to the executive directors on a regular basis by using his directors also noted the steps recently taken to improve long-established knowledge of the Company and extensive the balance of independent non-executive directors on previous experience as an executive director of a listed the Board. company. Furthermore, none of the other circumstances listed in the Code as potentially impacting independence ### apply to Mr Schild. Board diversity Shareholder Information Nonetheless, during the period the Board decided to take The main objective of the Nomination Committee in action to redress the historical imbalance in the proportion considering the appointment of new directors to the of independent non-executive directors by announcing the Board remains to ensure that successful candidates are following boardroom changes which will apply from the of the highest calibre and demonstrate the best possible Company’s forthcoming AGM in July: (i) Charles Wigoder combination of skills and experience. The Committee’s will become Non-Executive Chairman; (ii) Julian Schild and Terms of Reference further stipulate that candidates from Melvin Lawson will retire from the Board; and (iii) Carla a wide range of backgrounds shall be considered and Stent will be appointed to the Board as a new independent that due regard will be given to the benefits of diversity non-executive director and Audit Committee Chair. on the Board. Telecom Plus Plc Report and Accounts 2022 / 52 ## Corporate Governance Statement ## continued The Code requires companies to set out any measurable re-election continue to make a valuable contribution to the objectives that exist in relation to board diversity. However, commercial success of the Company, with each bringing it remains the Committee’s strong view that it is not a complementary range of skills to the team. appropriate to stipulate the characteristics of any future directors, including gender, ahead of a full assessment ### of the particular requirements of each role at the time a Remuneration Committee candidate is being sought. The Committee will continue to adhere to the principles set out above in identifying The Board has a Remuneration Committee whose and recruiting the best candidates for any future Board responsibility is to ensure that the remuneration of roles in a non-discriminatory manner. executive directors is sufficient to attract, retain and motivate people of the highest calibre. The Remuneration Nonetheless, the Nomination Committee was mindful of Committee comprises three independent non-executive the increasing focus on Board diversity and the formal directors, namely Andrew Blowers (Chair of the Government-led targets for FTSE 350 companies during Committee), Beatrice Hollond and Suzi Williams. The the recent recruitment process which resulted in Carla Directors’ Remuneration Report, provides the details of Stent agreeing to join the Board following the AGM in July; the emoluments of each director, and this may be found following this, the Company will be compliant with the on pages 60 to 82. recommendations of the Hampton-Alexander Review to have at least 33% female representation on the Board. The Remuneration Committee has written terms of reference, available on the Company’s website (www. The Committee also notes the Parker Review of board telecomplus.co.uk), which describe the authority and ethnic diversity, and the target of at least one director from duties which have been delegated to it by the Board. a minority ethnic group on each FTSE 250 board by 2024. The Committee therefore intends to pay particular regard ### to ethnic diversity in any future recruitment to the Board. Audit Committee Further detail regarding the Company’s position in relation The Audit Committee comprises three independent to encouraging diversity within all layers of the organisation non-executive directors, Julian Schild (Chair of the is set out in the ‘People and Organisation’ section of the Committee), Andrew Blowers and Beatrice Hollond in Strategic Report on pages 27 to 30. compliance with the Code (provision 24). Julian Schild will be retiring from the Board at the Company’s forthcoming AGM in July and new non-executive director Carla Stent ### Supply of information will take on the Chair of the Audit Committee. The activities of the Audit Committee are set out on pages 57 to 59. Information is supplied to the Board in a timely manner with board papers and accounts being provided in The Audit Committee has written terms of reference, advance of meetings. When the Board requests additional available on the Company’s website (www.telecomplus. information it is provided. co.uk), which describe the authority and duties which have been delegated to it by the Board. ### Re-election ### Nomination Committee The Company’s Articles stipulate that one third of all directors are required to retire by rotation at each The Nomination Committee comprises Beatrice Hollond Annual General Meeting and all newly appointed (Chair of Committee), Suzi Williams and Charles Wigoder directors are required to offer themselves for election and therefore has a majority of independent non-executive by the shareholders at the next Annual General Meeting. directors in compliance with the Code (provision 17). Suzi However, the Code requires that all directors of FTSE Williams will take over from Beatrice Hollond as Chair of 350 companies be subject to annual re-election by the Committee from the Company’s forthcoming AGM in shareholders. Therefore, all the directors other than Julian July. The main purpose of the Nomination Committee is to Schild and Melvin Lawson, will be submitted for re-election make recommendations to the Board on the appointment at the forthcoming Annual General Meeting in July. The of new directors. Board has determined that all directors submitted for Telecom Plus Plc Report and Accounts 2022 / 53 Strategic Report Governance Report Financial Statements Shareholder Information The Nomination Committee has written terms of reference, Directors’ Remuneration Report and the appointment available on the Company’s website (www.telecomplus. of the Group’s external auditor. Proxy votes are counted co.uk) which describe the authority and duties which have and the meeting is advised of the number of proxies been delegated to it by the Board. lodged for and against each resolution. The chairs of the Audit, Remuneration and Nomination committees and the The activities of the Nomination Committee are set out remaining non-executive directors are normally available on pages 55 to 56. to answer questions. Shareholders who attend are invited to ask questions and take part in the meeting. ### Relations with shareholders ### Internal control It is the policy of the Company to maintain a dialogue with institutional shareholders and to keep them informed The Board acknowledges its responsibility for the Group’s about the objectives of the business. The Board considers systems of internal control and risk management. However, that it is appropriate for the executive directors to discuss it recognises that any system can only provide reasonable, any relevant matters regarding company performance and not absolute, assurance against material misstatement with major shareholders and this is undertaken primarily or loss. The principal risks faced by the Company and the by the Co-Chief Executives and Chief Financial Officer. measures taken to address these risks are set out in the The Co-Chief Executives provide feedback from major Strategic Report on pages 20 to 26. shareholders to the other directors, ensuring that Board members, and in particular non-executive directors, In conjunction with the Company’s senior management develop a balanced understanding of the views of major team, the executive directors regularly identify, review investors. The executive directors met with a number of and evaluate the key risks faced by the Group and the the Company’s main shareholders during the year. effectiveness of the internal controls in place to mitigate these risks. The results of these reviews are recorded in a The Co-Chief Executives and Chief Financial Officer also formal document which sets out a detailed evaluation of have periodic discussions with the Company’s brokers each risk and the associated internal control in place to and any issues are fed back to the Board as appropriate. mitigate that risk. The document is reported to the Audit When reports are received from the Company’s brokers Committee for review at least once per year. Following following investor presentations, these are submitted to review by the Audit Committee the document is reported the Board for review. Additionally, key representatives of to the full Board. the Company’s brokers are periodically invited to present at a full Board meeting. The Board of directors has continued to review the internal controls of the Company (including financial, operational Responsibility for communication with key shareholders in and compliance controls and risk management) and the relation to corporate governance and Board remuneration principal risks which the Company faces during the year. matters lies primarily with the Senior Independent No material weaknesses in internal controls were identified Non-Executive Director and the Chair of the Remuneration during the year by the directors. Committee who are assisted in this regard by the Company Secretary. Individual invitations to engage with Shareholder Information ### the Senior Independent Non-Executive Director and Chair Share capital and voting rights of the Remuneration Committee have previously been sent out to key shareholders. Details of the Company’s share capital and substantial shareholdings can be found in the Directors’ Report under the capital structure and substantial shareholders sections ### Annual General Meeting on pages 84 to 85. Notice of the Annual General Meeting and related papers are sent to all shareholders at least 20 working days before By Order of the Board the meeting. Separate resolutions are proposed for each David Baxter matter including the adoption of the Report and Accounts, Company Secretary the approval of the Company’s Remuneration Policy, the 21 June 2022 Telecom Plus Plc Report and Accounts 2022 / 54 ## Nomination Committee Report ### Introduction Appointment of new independent non- ### executive director The members of the Nomination Committee (“the Committee”) are Beatrice Hollond (Chair), Suzi Williams The Committee was mindful of the increasing focus on and Charles Wigoder; this means that the Committee Board diversity and the formal Government-led targets has a majority of independent non-executive directors for FTSE 350 companies. As such, an external search in compliance with the UK Corporate Governance Code consultancy, Nurole, was instructed to draw up a diverse (“the Code”) (provision 17). Suzi Williams will take over shortlist of suitable candidates for consideration by from Beatrice Hollond as the Chair of the Committee the Committee. From this shortlist, a small number of from the Company’s forthcoming AGM in July. candidates were invited to meet the members of the Committee, acting on behalf of the Board, to evaluate The key responsibilities of the Nomination Committee their suitability for this role. include: • making recommendations to the Board on the From the potential candidates interviewed, Carla Stent appointment of new non-executive and executive was identified as an extremely strong candidate by the directors, including making recommendations as to Committee and displayed a keen interest in joining the the composition of the Board generally and the balance Board. Carla has extensive executive and non-executive between executive and non-executive directors; international experience across financial services, • giving consideration to succession planning for directors principally banking and private equity, as well as retail and other senior executives; and travel. • reviewing on an annual basis the time required from non-executive directors and assessing whether the Her current Board roles include Marex Group, the Post non-executive directors are spending enough time to Office Limited, JP Morgan Elect plc, and the Tilney Smith fulfil their duties; and Williamson Group. She has also served on the boards • reviewing the re-election by shareholders of directors of Power to Change, Savernake Group, Change Alliance under the annual re-election provisions of the Code; and (India) Private Limited, Christian Aid, The Young Women’s • evaluating any matters relating to the continuation Trust, and various Virgin Group entity boards, amongst in office of any director including the suspension or others. From 2010 to 2013, Carla was Chief Operating termination of service of an executive director. Officer and Partner at Virgin Group. She was previously Deputy Chief Financial Officer and Chief Administrative The Committee’s general position in relation to diversity and Officer of the Global Retail and Commercial Bank arm of the Code requirement to set out any measurable objectives Barclays Bank. From 2000 to 2004, at Thomas Cook AG that exist in this regard is included in the Corporate Group, she held a variety of roles, including Operations Governance Statement on pages 52 to 53 of this document. Director, as well as Director of Group Strategy & Corporate Finance. ### The Committee’s activities for the year Carla is a qualified Chartered Accountant and has a Masters ### ended 31 March 2022 in Advanced Accounting, Taxation, Business Administration and Auditing from the University of South Africa, Cape The Committee met once formally during the year and Town. Carla is also a full member of the ICAEW. Committee matters were discussed as part of certain full Board meetings. The Committee’s principal activities The members of the Committee formally interviewed during the year related to the identification and evaluation Ms Stent, benchmarking her experience and capabilities of a new independent non-executive director and Audit against the key attributes previously discussed by the Committee Chair, and reviewing the proposal to promote Board. The Committee’s conclusions were reported to the Stuart Burnett from Chief Operating Officer to Co-CEO. Board and her appointment was put forward for approval. Telecom Plus Plc Report and Accounts 2022 / 55 Strategic Report Governance Report Financial Statements Shareholder Information Ms Stent’s extensive financial experience, including in The Committee noted that Stuart and Andrew had Chairing Audit and Risk Committees, was particularly been working in close partnership since the start of the attractive to the Committee. Ms Stent will formally join pandemic, with Andrew focusing on the Partner community the Board immediately after the forthcoming AGM in July and longer-term growth strategy, and Stuart on the and will become Chair of the Audit Committee. Customer proposition, the multiple regulated markets the Company operates in, and running the day-to-day Nurole does not have any other connection with the operations of the business. Company. Having worked together for over five years, they also share a united vision of how to deliver on the Board’s ambition ### Promotion of Stuart Burnett to Co-CEO to add 1 million customers over the next four years. The Committee therefore endorsed the proposal to promote In reviewing the proposal to promote Stuart Burnett Stuart to Co-CEO. to Co-CEO alongside Andrew Lindsay in November 2021, the Committee considered the acceleration in the Company’s growth rate, and the positive growth prospects for the business, in executing a Beatrice Hollond transition that had been planned for some time. Chair of the Nomination Committee On behalf of the Board 21 June 2022 Shareholder Information Telecom Plus Plc Report and Accounts 2022 / 56 ## Audit Committee Report In accordance with the UK Corporate Governance Code on objectivity resulting from the provision of non-audit (“the Code”) (provision 24) the Committee comprises services by the external auditor; three independent non-executive directors Julian Schild • monitoring the integrity of the financial statements of (Chairman), Beatrice Hollond and Andrew Blowers. Julian the Company and any formal announcements relating Schild is also identified as having recent and relevant to the Company’s performance; financial experience. • reviewing the impact of the application of new accounting standards; and • reviewing the Company’s internal financial controls and ### The Audit Committee other internal control and risk management processes. Attendance at Committee meetings during the current The senior management team and executive directors year by Committee members is set out in the Corporate periodically review the effectiveness of key internal control Governance Report on page 51 of this document. In and risk management processes within the Company accordance with best practice, the Committee has the and report any changes in such activities to the Audit opportunity to meet with the external auditor of the Committee and the external auditor for consideration. The Company without the presence of any executive directors review covers all material controls, including financial, and has done so during the current year. The Chairman operational and compliance controls. of the Committee has also had direct contact with the Audit Partner during the year. ### The Committee’s activities for the year ### The key responsibilities of the Committee include: ended 31 March 2022 • reviewing the appointment, re-appointment and removal of the external auditor and the direction of the external The Committee’s main activities during the year included auditor to investigate any matters of particular concern; a review of the financial statements involving a detailed • assessing the effectiveness of the Company’s external evaluation of the significant accounting issues therein. auditor, including considering the scope and results of the annual audit; The actions taken by the Committee in regard to these • reviewing the independence and objectivity of the issues are described in the table below: external auditor and assessing any potential impact Issue Action taken by the Committee Operational accuracy of Review of internal analysis. billing system Monitoring of regulator communications (Ofgem, BABT) and monthly monitoring of detailed call centre statistics which would indicate significant billing issues. Revenue recognition in relation to Monitoring of key assumptions underlying the recognition of energy revenues energy services based on internal analysis. Estimation related to Expected Review of key assumptions underlying the estimations related to Credit Losses Expected Credit Losses. Also, the Audit Committee has considered, amongst other In accordance with the Code (provision 25), the Audit matters, compliance with the provisions of the Code Committee has also considered the need for an internal and accounting developments, the effectiveness of the audit function at the Group. In the light of the simplicity of Company’s internal financial control environment and its the Group structure, its single country focus, its relatively risk management and control processes. As part of this straightforward financial model, the internal controls process the Audit Committee has also considered the in place and the fact that management and the Board need for any special projects or internal investigations conduct regular financial reviews, the Committee has and concluded that no such additional projects or recommended to the Board that a financial internal audit investigations have been required. function is not currently appropriate for the business. This decision will be kept under regular review and where appropriate extended assurance will also be sought in specific areas of concern. Telecom Plus Plc Report and Accounts 2022 / 57 Strategic Report Governance Report Financial Statements Shareholder Information During the year the Audit Committee reviewed and The Committee would prohibit the provision of the following approved the Company’s half year and annual financial types of non-audit related work by the Company’s external statements. The Committee has advised the Board that the auditor: annual report and accounts taken as a whole provide a fair, • tax services relating to: (i) preparation of tax forms; balanced and understandable picture of the Company’s (ii) payroll tax; (iii) customs duties; (iv) identification position and performance, business model and strategy. of public subsidies and tax incentives unless support from the external auditor in respect of such services is required by law; (v) support regarding tax inspections by ### External auditor effectiveness tax authorities unless support from the external auditor in respect of such inspections is required by law; (vi) The Company’s external auditor, KPMG, presented a calculation of direct and indirect tax and deferred tax; detailed audit report to the Audit Committee following a and (vii) provision of tax advice; review of the annual financial statements. Having regard • services that involve playing any part in the management to its review of the work performed by the external auditor or decision-making of the Company; during the year and its approach to key audit issues, the • bookkeeping and preparing accounting records and Audit Committee was satisfied with the effectiveness of financial statements; KPMG as external auditor. • payroll services; • designing and implementing internal control or risk In reaching this conclusion, the Committee assessed: management procedures related to the preparation • the efficiency with which the audit team was able to and/or control of financial information or designing and understand the Company and its systems and processes; implementing financial information technology systems; • the experience and expertise of the audit team; • valuation services, including valuations performed in • the scope and eventual fulfilment of the detailed audit connection with actuarial services or litigation support plan; services; • the robustness and perceptiveness of the audit team in • legal services, with respect to: (i) the provision of general their handling of key accounting and audit judgements; counsel; (ii) negotiating on behalf of the Company; and (iii) and acting in an advocacy role in the resolution of litigation; • the nature and quality of the content of the external • services linked to the financing, capital structure and auditor’s report. allocation, and investment strategy of the Company, except providing assurance services in relation to the The Committee has therefore recommended to the Board, financial statements, such as the issuing of comfort for approval by shareholders at the AGM, the reappointment letters in connection with prospectuses issued by the of KPMG as the Company’s external auditor for the coming Company; year. KPMG LLP was first appointed as the Group’s auditor • promoting, dealing in, or underwriting shares in the with effect from February 2015, following a competitive Company; and tender process. • human resources services, with respect to: (i) manage- ment in a position to exert significant influence over the preparation of the accounting records or financial ### External auditor independence statements which are the subject of the statutory audit, where such services involve: searching for or seeking out Shareholder Information In order to guard against the objectivity and independence candidates for such position; or undertaking reference of the external auditor being compromised, the provision checks of candidates for such positions; (ii) structuring of any significant additional services remains subject to the organisation design; and (iii) cost control. the prior approval of the Audit Committee. The Committee will also prohibit any other work where mutual interests exist that could impair the independence and objectivity of the external auditor. Telecom Plus Plc Report and Accounts 2022 / 58 ## Audit Committee Report ## continued ### Reporting of staff concerns Conclusion During the year the Company operated an independently- As set out in the Corporate Governance Statement, I will be facilitated whistleblowing system for staff of the Company retiring from the Board at the Company’s AGM in July and to raise, in confidence, concerns they may have over new independent non-executive director, Carla Stent, will possible improprieties, financial or otherwise. All employees be taking over as Chair of the Audit Committee. I should have been notified of this arrangement on the Company’s like to say how much I have enjoyed chairing the Audit intranet website (Code provision 6). No such matters were Committee and my time at Telecom Plus. I wish Carla raised by employees during the current year. every success as she takes up her new role. Julian Schild Chairman of the Audit Committee On behalf of the Board 21 June 2022 Telecom Plus Plc Report and Accounts 2022 / 59 # Directors' Remuneration Report ## Annual statement Dear Shareholder, As chair of the Remuneration Committee ("Committee") and on behalf of the Board, I am pleased to present our report on Directors' remuneration for the year ended 31 March 2022. The report comprises three sections: - This statement, which provides an overview of the key decisions made on Directors' remuneration during the year. - The Annual Report on Remuneration, which describes how our Directors' Remuneration Policy ("Policy") was applied for the year ended 31 March 2022. - A summary of the Policy (pages 63 to 73) being submitted for approval at the Company's Annual General Meeting ("AGM") in July. ## Policy approval The Remuneration Policy ("Policy") was originally approved by shareholders at the July 2019 AGM. However, the Committee were cognisant of concerns raised by some shareholders. After completing a review of executive remuneration during 2020, the current Policy was approved at the December 2020 General Meeting with over 95% of shareholders voting in favour of the resolution. In line with the UK Directors' remuneration regulations and best practice, the Committee is required to submit the Policy to shareholders for reapproval at the 2022 AGM, in line with the original triennial review timeline. However, the Committee is conscious that the existing share incentive scheme for senior management and executive directors is closed to new participants and is approaching maturity in 2023, whereby the majority of awards will have vested. The Committee intends to undergo a comprehensive review our long term incentive provision for senior management and executive directors during 2022/23. The Committee will consult with shareholders where appropriate on any new scheme and any new scheme will be subject to shareholder approval at the 2023 AGM, alongside any new Remuneration Policy. For the financial year ending 31 March 2023, the Committee is seeking approval for the continuation of the current Policy at the 2022 AGM – until the completion of our review and shareholder approval of any new Policy at the 2023 AGM. The only changes which have been made to the Policy for approval at the 2022 AGM are housekeeping changes to provide further alignment with best practice and allow sufficient flexibility in its application (as outlined on page 63). ## Board changes Stuart Burnett, the Group's COO, was appointed as Co-CEO in November 2021. On appointment, Stuart's annual salary was increased from £424,200 to £500,000 per annum. The Committee took into account his performance and experience, the enhanced role, and increased responsibilities as well as considering the salary packages of similar roles within peer companies when determining the increase. The Committee also increased the annual bonus opportunity to 150% from November, aligned to Andrew Lindsay's bonus opportunity as Co-CEO. The new roles and responsibilities and consequent positioning of the Co-CEO remuneration also reflects the changes to the board structure. As announced on 14 March 2022, effective from the July 2022 AGM, Charles Wigoder will become Non-Executive Chairman, and both Melvin Lawson and Julian Schild will retire from the Board. Details of Charles Wigoder's remuneration arrangements for the year ending 31 March 2023 are set out below. ## Performance outcomes for the year ended 31 March 2022 The Group has delivered adjusted pre-tax profits in line with expectations, showing strong growth in the second half, and the business is well positioned to build shareholder value over both the near and longer term. Andrew Lindsay (Co-CEO) and Nick Schoenfeld (CFO) were granted a maximum bonus opportunity equal to 150% and 67.5% of salary respectively for the year ended 31 March 2022. The CFO's maximum bonus opportunity was set at 67.5% of salary to reflect his salary positioning compared to other FTSE 250 companies of a similar size and scale to the Company. Telecom Plus Plc Report and Accounts 2022 / 60 Strategic Report Governance Report Financial Statements Shareholder Information # Directors' Remuneration Report continued Stuart Burnett was promoted from COO to Co-CEO in November 2021. Stuart's original maximum bonus opportunity of 135% for the current financial year to 31 March 2022 was increased to 140% (being the weighted average of 135% for 8 months as COO and 150% for 4 months as Co-CEO). Stuart's weighted average salary received of £449,467 (8 months at £424,200 per annum plus 4 months at £500,000 per annum) has also been used to determine the bonus. 70% of the bonus was subject to adjusted Profit Before Tax ('adjusted PBT') performance and the remaining 30% subject to certain strategic objectives. The Group delivered adjusted PBT of £61.9m which resulted in an outcome of 51.0% (against a maximum of 70%) for the adjusted PBT element. Performance against strategic objectives (which focussed on service growth, Partner activity and a strategic development in financial services) resulted in an outcome of 18.5% (against a maximum of 30%) for the strategic element. See pages 75 to 76 for further details. The executives therefore earned a bonus equal to 69.5% of the maximum opportunity. One-third of the bonus earned will be deferred into shares for two years. The Committee carefully considered the bonus outcome and determined it to be appropriate taking into account underlying business performance and the experience of shareholders and employees during the year. In particular, the following factors were noted: - The Group delivered strong growth in the second half and is well positioned to build shareholder value over both the near and longer term. - The final dividend for the year ended 31 March 2021 was paid, resulting in a total dividend of 57p per share for the year. A total dividend of 57p per share is also expected for the year ended 31 March 2022. No long term incentive growth shares awards were capable of vesting during the year ended 31 March 2022. ## Implementation of the Remuneration Policy for the year ending 31 March 2023 ### Base salaries and fees The Executive Chairman, Co-CEO Andrew Lindsay and CFO received salary increases of 5.5% effective from 1 April 2022 in line with the average cost of living increases for all employees. Stuart Burnett did not receive the standard 5.5% increase in the light of the increase in his salary in November 2021 following promotion to Co-CEO. Following Charles Wigoder's appointment as Non-Executive Chairman at the AGM in July 2022, his fees will be reduced from £501,494 to £200,000 per annum to reflect the change in his responsibilities. The Committee carried out a benchmarking exercise during March 2022 to determine the appropriate remuneration for the non-executive directors using the "Deloitte Your Guide – Directors' remuneration in FTSE 250 companies" report, October 2021. The exercise highlighted that fee levels had fallen significantly behind market rates. The Committee therefore determined that to appropriately reflect the time commitment and responsibilities being assumed by the non-executive directors, each of them should receive a base salary of £55,000 per annum, with an additional fee of £10,000 per annum for the Chairs of the Audit and Remuneration Committees, and an additional fee of £5,000 per annum for the Senior Non-Executive Director and for the Chair of the Nomination Committee. The new level of fees that will be received by the non-executive directors from 1 April 2022 is as follows (the variation in fees between non-executives reflecting the different roles and responsibilities): - Andrew Blowers £65,000 (2022: £45,450); - Beatrice Hollond £60,000 (2022: £45,450); and - Suzi Williams £60,000 (2022: £45,450). Non-executive directors Julian Schild and Melvin Lawson will be retiring from the Board at the AGM in July 2022 and therefore they did not receive an increase in fees. Telecom Plus Plc Report and Accounts 2022 / 61 Strategic Report Governance Report Financial Statements Shareholder Information Annual bonus LTIP awards The maximum bonus opportunity remains at 150% of salary No LTIP awards will be granted to executive directors during for both Andrew Lindsay (Co-CEO) and Stuart Burnett the year ended 31 March 2023. (Co-CEO) and 67.5% of salary for Nick Schoenfeld (CFO). 70% of the bonus is subject to adjusted PBT performance ### and the remaining 30% subject to strategic objectives (based Conclusion on employee satisfaction, customer services performance and customer growth). These objectives are directly aligned I trust the information presented in this report enables our with the FY23 strategic priorities set for the whole business. shareholders to understand both how we have operated our Policy over the year and the rationale for our decision The Committee has discretion to adjust the payment making. We believe that the Policy operated as intended and outcome if it is not deemed to reflect the underlying we consider that the remuneration received by executive financial or non-financial performance of the business, directors during the year was appropriate taking into account the performance of the individual or the experience of Group and personal performance, and the experience of shareholders and other stakeholders over the performance shareholders and employees. period. In any case, the strategic element of the bonus will only pay-out if a threshold level of adjusted PBT is I look forward to receiving your support at the July 2022 achieved. Full disclosure of the adjusted PBT targets Annual General Meeting, where I will be available to respond and strategic metrics will be included in next year’s to any questions shareholders may have on this report or Directors’ Remuneration Report. One-third of any in relation to any of the Committee’s activities. bonus earned is deferred into shares for two years. Andrew Blowers OBE Chairman of the Remuneration Committee 21 June 2022 Shareholder Information Telecom Plus Plc Report and Accounts 2022 / 62 ## Remuneration Policy ### Remuneration Committee Remuneration Policy introduction The Committee is responsible for reviewing and making The Company’s overall remuneration policy is to ensure recommendations to the Board regarding the policy relating that the executive directors and other senior managers to the total remuneration paid to the executive directors and are fairly and responsibly rewarded for their individual senior management of the Company. It meets regularly to contribution to the overall long term performance of the review and set all elements of the remuneration paid to the Company, in a manner that ensures that the Company executive directors of the Company and monitors the level is able to attract, motivate, and retain executives of and structure of remuneration for other senior management the quality necessary to ensure the successful long of the Company. It also exercises all the powers of the term performance of the Company. The remuneration Board in relation to the operation of the Company’s share policy continues to be based on the principle that the incentive schemes, including the grant of options and the fortunes of the directors and senior management should terms of those grants. be aligned with those of external shareholders. The remuneration policy also takes into account the principles The Committee met formally four times during the year and of clarity, simplicity, risk, predictability, proportionality details of attendance at these meetings are provided in the and alignment to culture as set out in Provision 40 of Corporate Governance Statement on page 51. the UK Corporate Governance Code. The Committee’s principal activities during the year included: The Directors Remuneration Policy was originally approved • reviewing and approving executive director remuneration by the Company’s shareholders at the AGM on 25 July packages; 2019, with amendments approved by shareholders at a • monitoring senior management remuneration packages; general meeting on 16 December 2020. As detailed on page and 60, shareholder approval will be sought for the continuing • reviewing and approving the issue of share options to application of the existing Directors’ Remuneration Policy certain employees. until the 2023 AGM. The only changes which have been made to the Policy for approval at the 2022 AGM are housekeeping changes to provide further alignment with best practice and allow sufficient flexibility in its application. The Directors’ Remuneration Policy is set out in full below on pages 63 to 73. ### Remuneration policy table How component Operation of Maximum potential Performance metrics supports strategic component value of component used, weighting and objectives time periods Base salary | To recognise status and | Base salary is paid in 12 | Whilst there is not a set | None, although overall | | --- | --- | --- | --- | | responsibility to deliver | equal monthly instalments | maximum, increases will | performance of the | | operational strategy on a | during the year. | normally be in line with the | individual is considered by | | day-to-day basis. | | range of increases awarded | the Committee when setting | | | Base salaries are reviewed | to other employees. | and reviewing salaries. | annually with any changes | effective from 1 April each | Salary increases above this | | --- | --- | | year, and also (where | level may be awarded in | | relevant) to reflect changes | appropriate circumstances | | in the responsibilities of | including but not limited to: | | each individual. | • reflect any change in the | level of responsibility of the individual (whether through a change in role or an increase in the scale and/or scope of the activities carried out by the Company); or • an increase in experience and knowledge of the Company and its markets. Telecom Plus Plc Report and Accounts 2022 / 63 Strategic Report Governance Report Financial Statements Shareholder Information How component Operation of Maximum potential Performance metrics supports strategic component value of component used, weighting and objectives time periods Benefits To provide benefits Executive Directors Whilst the Committee None. commensurate with the role receive benefits set at an has not set an absolute and market practice. appropriate level taking into maximum on the level account total remuneration, of benefits Executive market practice, the benefits Directors may receive, provided to other employees the value of benefits is in the Group and individual set at a level which the circumstances. Committee considers to be appropriately positioned The Company pays for taking into account relevant private healthcare for each market levels based on director and their immediate the nature and location family. of the role, the level of benefits provided for other The Company provides employees in the Group and company cars for executive individual circumstances. directors where appropriate. The Company provides death in service benefits up to a maximum of four times annual base salary (subject to prevailing policy caps). The Committee reserves the right to introduce other benefits should this be necessary to attract and/ or retain key executive directors. In relation to new directors the Company will pay for reasonable relocation expenses where required. Shareholder Information Telecom Plus Plc Report and Accounts 2022 / 64 ## Remuneration Policy ## continued How component Operation of Maximum potential Performance metrics supports strategic component value of component used, weighting and objectives time periods Annual bonus | To incentivise the annual | Bonus payment is | Maximum opportunity of up | Targets are set annually | | --- | --- | --- | --- | | delivery of financial and | dependent on the | to 150% of base salary may | reflecting the Company’s | | strategic priorities. | achievement of performance | be awarded in respect of a | financial and strategic | | | measures. | financial year. | priorities. | | | One-third of any bonus | | At least 70% of the annual | | | earned is deferred into | | bonus is assessed against | | | shares for two years subject | | financial performance | | | to continued employment. | | metrics. The balance is | assessed against non- The Committee may decide financial strategic/personal to pay the entire bonus in objectives. cash where the amount | to be deferred into shares | Financial metrics | | --- | --- | | would, in the opinion of the | Up to 25% of each bonus | | Committee, be so small it is | element will vest for | | administratively burdensome | threshold performance, with | | to apply deferral. | full vesting for maximum | performance. Dividends will not accrue on deferred shares prior to Non-financial metrics vesting. Non-financial metrics vesting will apply on a scale | The Committee has | between 0% and 100% | | --- | --- | | discretion to adjust the | based on the Committee’s | | payment outcome if it is | assessment of performance | | not deemed to reflect the | against objectives. | underlying financial or non- financial performance of the Company, the performance of the individual or the experience of shareholders or other stakeholders over the performance period. Annual bonus payments are subject to clawback provisions for up to two years following payment. Deferred share awards are subject to clawback provisions during the two-year deferral period. Clawback may apply in the following circumstances: gross misconduct of the participant; material error or misstatement in the accounts; grant or vesting of annual bonus awards being found to be incorrect due to misleading or inaccurate information; serious reputational damage; material corporate failure. Telecom Plus Plc Report and Accounts 2022 / 65 Strategic Report Governance Report Financial Statements Shareholder Information How component Operation of Maximum potential Performance metrics supports strategic component value of component used, weighting and objectives time periods Share incentive schemes | To directly align the | Issue of share incentives at | Maximum grant value | Share Incentive Schemes | | --- | --- | --- | --- | | directors’ interests | market price on the date of | equivalent to 200% of salary | Service and performance | | with those of all other | grant which provide direct | per annum, assuming that no | conditions must be met over | | shareholders. | and transparent exposure | annual cash bonus has been | the vesting period, | | | to the Company share price | awarded during that year. | weighted average of three | | | for the director (“Share | | performance measures | | | Incentive Schemes”). | Share Incentive Schemes | typically used for Chief | | | | Grants made periodically, | Executive and Chief | | | Share Incentive Schemes | with awards vesting over 3 | Financial Officer: | | | include HMRC approved | to 7 years. | • Adjusted EPS growth | | | share option awards, and | | • TSR growth | | | unapproved share option | Grant value of share | • Service number growth | | | awards. | incentives to be determined | | | | | in accordance with FRC | Weighting of each measure | | | | Reporting Lab guidance | to be determined by the | | | | issued in March 2013, i.e. | Committee and dependent | | | | share options to be valued | on each director’s role and | | | | at one third of the market | strategic responsibility. | value of the shares under option. The Committee also retains the ability to amend the Vesting is dependent on performance conditions for service and the achievement future grants to ensure that of performance conditions. they appropriately reflect the strategic responsibilities 30% vests at threshold of the director concerned. performance. The Committee may require forfeiture of shares comprised in an award in the event of a material error or mis-statement in the accounts, or a material failure in risk management (“Malus and Clawback”). The Company has the right to reduce or withhold the value that would otherwise accrue under the Share Incentive Schemes prior to exercise/ conversion (malus) or after exercise/conversion (clawback) in certain circumstances including: (i) Gross misconduct of the Shareholder Information participant; (ii) Material error or misstatement in the accounts; or (iii) Grant or vesting of awards being found to be incorrect due to misleading or inaccurate information. Telecom Plus Plc Report and Accounts 2022 / 66 ## Remuneration Policy ## continued How component Operation of Maximum potential Performance metrics supports strategic component value of component used, weighting and objectives time periods Pension To provide funding for Defined contribution The percentage level of None. retirement. pension scheme is open to pension provision (or cash all employees and executive allowance equivalent) for directors. executive directors will not exceed the highest In appropriate percentage contribution rate circumstances, such as available to a majority of where contributions exceed employees. the annual or lifetime allowance, Executive Directors may take a taxable cash supplement instead of contributions to a pension plan. Shareholding requirement | To strengthen the long | Shareholding requirement | Executive directors are | N/A | | --- | --- | --- | --- | | term alignment of directors’ | policy is primarily derived | expected to progressively | | | interests with those of all | from the issue of shares | build and retain a | | | shareholders. | resulting from the exercise | shareholding in the Company | | | | of awards made under the | worth 200% of basic salary | | | | Share Incentive Schemes, | over a maximum of 10 years; | | | | the Deferred Share Bonus | until such time as they have | | | | Plan and existing awards | achieved this level, they | | | | made under the LTIP 2016. | are required to: (i) retain all | | the shares vesting to them under the Deferred Bonus Plan (other than to settle associated tax liabilities on vesting); and (ii) retain not less than 25% of any shares issued to them under the LTIP 2016 or any other long term incentive plan operated by the Company from time to time. Under LTIP 2016, in relation to the 25% blocks of their award which vest after 3, 5 or 7 years, participants are required to retain 50% of any shares they choose to convert for at least 12 months. In relation to the final 25% block which vests after 10 years, they are obliged to retain 75% for 12 months, 50% for 18 months, and 25% for 24 months. The above holding periods continue to apply to participants after they cease to be employed by the Company; shares issued in future under any other long term incentive plan will be subject to similar restrictions. Telecom Plus Plc Report and Accounts 2022 / 67 Strategic Report Governance Report Financial Statements Shareholder Information How component Operation of Maximum potential Performance metrics supports strategic component value of component used, weighting and objectives time periods Shareholding requirement (continued) Future share awards to directors will be made subject to a post-vest holding period. Post-employment Executive directors who step down from the Board following 16 December 2020 are required to retain a holding in ‘guideline shares’ equal to: • 200% of salary (or their actual shareholding at the point of departure if lower) for the first 12 months following stepping down as executive director. • 100% of salary (or their actual shareholding at the point of departure if lower) for the subsequent 12 months. ‘Guideline shares’ do not include shares that the executive director has purchased or which have been acquired pursuant to share awards which vested before 16 December 2020. Unless the Committee determines otherwise, an executive director or former executive director shall be deemed to have disposed of shares which are not ‘guideline shares’ before ‘guideline shares’. ### Choice of performance measures for maximum performance. In relation to non-financial metrics, vesting will apply on a scale between 0% and 100% The Committee chose the performance measures based on the Committee’s assessment of performance Shareholder Information described in the table above as they are deemed to directly against objectives. align the executive directors’ interests with those of all shareholders in an easily understood and transparent Share incentive schemes manner. The performance measures comprise a combination of relative total shareholder return (‘TSR’), Adjusted Annual bonus EPS (excluding share incentive scheme charges and The performance measures are set annually reflecting amortisation of intangible assets) and service number the Company’s financial and strategic priorities. At least growth measures. Adjusted EPS is considered appropriate 70% of the annual bonus is assessed against financial as a key strategic objective of the Company if it is to performance metrics. The balance is assessed against drive profitable growth in each year. It also provides a non-financial strategic/personal objectives. In relation balance to relative TSR, which considers shareholder to financial metrics, up to 25% of each bonus element value creation and reflects market expectations of future will vest for threshold performance, with full vesting performance, and absolute service number growth which, Telecom Plus Plc Report and Accounts 2022 / 68 ## Remuneration Policy ## continued when achieved responsibly, will also drive long term value concerned or if it considers it would be more likely to creation. The use of relative TSR and Adjusted EPS growth more appropriately drive long term value creation within measures provides a combined focus on the Company’s the Company. financial performance and shareholder value creation. Targets for Adjusted EPS are set by reference to internal ### budgeting plans and external market expectations. TSR Illustrative application of ### targets are set on a standard practice, median to upper remuneration policy quartile ranking range. Only 30% of share incentive awards vest for threshold levels of performance. The Committee The bar charts below seek to illustrate the potential wishes to retain the ability to change the composition rewards available under the proposed remuneration of performance conditions for future grants to directors policy for the coming financial year under varying levels should this be required in-order to reflect appropriately of performance. the strategic responsibilities of the particular director £1,562,987 £1,562,987 £1.6m 60% 60% Fixed pay £1.4m £1,259,000 £1,259,000 £1.2m £1,097,091 £1,050,502 £1,050,502 42% £1.0m £884,000 £840,848 £0.8m £631,195 £631,195 £0.6m 100% 58% 40% 40% 100% 58%42% 40%60% 40%60% £509,000 100% 58%42% 40%60% 40%60% £0.4m £0.2m £0 | Minimum MinimumMinimumOn-target On-targetOn-targetMaximum MaximumMaximumMaximum | | Maximum | Maximum | | --- | --- | --- | --- | | | with 50% | with 50% | with 50% | | | share price | share price | share price | | Andrew Lindsay Stuart Burnett Nick Schoenfeld | increase | increase | increase | The bar charts have been prepared based on the following assumptions: Minimum performance Fixed remuneration On-target performance Fixed remuneration 50% of maximum annual bonus opportunity is earned Maximum performance Fixed remuneration Maximum annual bonus opportunity is earned Executive directors will not be granted a long term The scenario ‘maximum with 50% share price increase’ incentive award during the year ending 31 March 2023. has been included in the bar charts for completeness. Telecom Plus Plc Report and Accounts 2022 / 69 Strategic Report Governance Report Financial Statements Shareholder Information ### Non-executive directors’ fees policy | How component | Operation of | Maximum potential | Performance metrics | | --- | --- | --- | --- | | supports strategic | component | value of component | used, weighting and time | | objectives | | | periods | | To attract non-executive | Non-executive directors’ | Non-executive directors’ | Non-executive directors are | | directors who have | fees are set by the Board | remuneration will not be | not eligible to participate | | a broad range of | as a whole and aligned | set outside the parameters | in any performance-related | | experience and skills to | with the responsibilities of | of prevailing market | arrangements or share incentive | | support and oversee the | each director. | rates for similarly-sized | schemes. | | implementation of strategy | | companies of equal | | | and ensure good corporate | Annual fees are paid in 12 | complexity. | | | governance. | equal monthly instalments | | | during the year. Non-executive directors’ fees are periodically reviewed by the Board in the light of any changes in role and prevailing market rates for Non-executive directors in other listed companies of similar size and with similar characteristics. ### Service contracts and policy for may be terminated on either side on three months’ notice. ### payment for loss of office The dates of each non-executive director’s appointment are as follows: The executive directors are each engaged under a rolling contract of service requiring 12 months’ notice of Date of service Expiry of termination on either side for Mr Wigoder and 6 months’ agreement current term notice of termination on either side for Messrs Lindsay, Beatrice Hollond 26 September 2016 2022 AGM Schoenfeld and Burnett. The dates of the executive Andrew Blowers 2 November 2016 2022 AGM directors’ service agreements are as follows: 1 Melvin Lawson 27 September 2006 2022 AGM Date of service 1 Julian Schild 25 May 2010 2022 AGM agreement Suzi Williams 23 July 2020 2022 AGM Charles Wigoder 5 May 2011 Andrew Lindsay 5 May 2011 1. Non-executive directors Julian Schild and Melvin Lawson will be retiring from the Board at the AGM in July 2022. Nick Schoenfeld 9 October 2014 Shareholder Information Copies of the service contracts and letters of appointment Stuart Burnett 23 July 2020 are held at the Company’s Registered Office and will be available for inspection within normal business hours / at All non-executive directors are subject to re-election at the Annual General Meeting, subject to any covid-related each AGM. The appointment of the non-executive directors restrictions. Telecom Plus Plc Report and Accounts 2022 / 70 ## Remuneration Policy ## continued The table below sets out the Company’s policy regarding service contracts and payments for loss of office. Standard provision Policy Details Other provisions in service contracts | Notice periods in executive | 6 - 12 months’ notice from | Executive directors may be required | N/A | | --- | --- | --- | --- | | directors’ service | the Company. | to work during notice period or may | | | contracts. | | be provided with pay in lieu of notice | | | | 6 - 12 months’ notice from | if not required to work full notice. | | the executive director. All executive directors are subject to annual re-election by shareholders. Compensation for loss of No more than base salary, Any statutory entitlements or sums N/A office in service contracts. benefits and pension to settle or compromise claims in contributions for the connection with any termination period of the executive of office would need to be paid as director’s notice. necessary, subject to the fulfilment of the director’s duty to mitigate No contractual their loss. provision for additional compensation in the event of loss of office resulting from poor performance. Treatment of unvested The payment of a bonus Unless the Committee determines N/A annual bonus awards will be at the discretion otherwise, any bonus payment will of the Committee on an be paid at the usual time following individual basis and will be the determination of performance dependent on a number metrics and be subject to a pro rata of factors, including the reduction for time served during the circumstances of the performance period. individual’s departure and contribution to the business during the financial year. Treatment of unvested The extent to which any For a “good leaver”, awards will N/A deferred share bonus unvested award will vest ordinarily vest at the normal vesting awards will be determined in date. In exceptional circumstances, accordance with the rules the Committee may decide that of the Deferred Bonus the executive director’s deferred Plan. share awards will vest at the date of cessation of employment. Unvested awards will normally lapse on In either case, the extent of cessation of employment. vesting will be determined by the However, if an executive Committee taking into account, director leaves under unless the Committee determines “good leaver” provisions otherwise, the period of time the awards will remain elapsed from the grant date to the capable of vesting. date of cessation of employment relative to the deferral period. Telecom Plus Plc Report and Accounts 2022 / 71 Strategic Report Governance Report Financial Statements Shareholder Information | Treatment of unvested | Share Incentive Schemes | Share Incentive Schemes | N/A | | --- | --- | --- | --- | | Share Incentive Scheme | All awards lapse except | A “good leaver” may exercise any | | | and LTIP 2016. | for “good leavers”: i.e. | subsisting share options within the | | | | death, injury, disability, | period of 6 months from the date of | | | | redundancy, retirement | cessation of employment. | | or where the employing | company or the company | If a participant ceases to be employed | | --- | --- | | with which the office | within the Group otherwise than as | | is held ceases to be a | a “good leaver”, no unvested share | | member of the Group or | options held shall be exercisable after | | the transfer of employment | the date of such cessation unless the | | out of the Group by | Committee in its absolute discretion | | reason of the Transfer of | (provided that such discretion must | | Undertakings (Protection of | be exercised fairly and reasonably) so | | Employment) Regulations | decides but for a period of not more | | 2006. | than 12 months from the date of | cessation. The Committee considers | Legacy arrangement: LTIP | it unlikely that such discretion would | | --- | --- | | 2016 | be used in the event of a participant | | All awards lapse except for | ceasing to be employed by the | | “good leavers”: i.e. death, | Company as a “bad leaver”. | or where the employing | company or the company | Legacy arrangement: LTIP 2016 | | --- | --- | | with which the office | If a participant in the LTIP 2016 ceases | | is held ceases to be a | to be employed within the Group | | member of the Group or | otherwise than as a “good leaver”, any | | the transfer of employment | unvested awards will be forfeited. | | out of the Group by | Any growth shares which have vested | | reason of the Transfer of | but not been converted, must be | | Undertakings (Protection of | converted within 14 days of the end | | Employment) Regulations | of their employment otherwise they | | 2006. | will be forfeited; the conversion | ratio shall be based on the average | In the event of injury, | share price for the 30 working days | | --- | --- | | disability, retirement or | immediately preceding the date on | | redundancy, the Committee | which conversion takes place. | may exercise its discretion to classify the participant If a participant in the LTIP 2016 is a as a “good leaver”. “good leaver”, then he shall be entitled to the benefit of any shares that have become convertible prior to the date of leaving, and such shares shall be converted (at the option of the employee) either within 14 days of the termination of their employment (in which case the conversion ratio shall be based on the average share price for the 30 working days immediately preceding the date on which conversion takes place), or during the next annual vesting period using the Shareholder Information criteria which apply on that date. Exercise of discretion. Discretion to be used The Committee will take into N/A only in exceptional account the recent performance of circumstances. the director and the Company, and the nature of the circumstances around the executive director’s departure. Non-executive Directors. Non-executive directors Non-executive directors are all Non-executive directors are appointed for an initial subject to annual re-election by have the right to term of one year which shareholders at the Company’s AGM seek independent is then reviewed by the each year. professional advice Board on annual basis at the expense of thereafter. Non-executive directors have a three the Company in the month notice period and there is pursuance of their no provision for compensation if duties. required to stand down. Telecom Plus Plc Report and Accounts 2022 / 72 ## Remuneration Policy ## continued ### Approach to recruitment remuneration Statement of consideration of employ- ### ment conditions elsewhere in the group The Committee’s approach is to pay the amount necessary to recruit the best candidate to each particular role. The Committee considers pay levels across the In determining these amounts the Committee will be organisation when setting remuneration for all directors mindful of, inter alia, prevailing market rates, the chosen (both executives and non-executives). However, this candidate’s skills, knowledge and experience, and their review is undertaken against a background of ensuring existing location and position. that the prevailing market rates for all levels of employee in the organisation are taken into account in order to Where the candidate has variable remuneration attract, retain and motivate the best employees at each arrangements with a previous employer that will be lost level. In relation to directors, specific account is taken of on leaving employment, the Company will consider offering any change in the level of responsibility of the director a sign-on award in compensation for the value foregone, (whether through a change in role or the increased either as an award under an existing share incentive scheme size of the Company) or an increase in experience and or a bespoke award under the Listing Rules exemption knowledge of the Company and its markets which may available for this purpose. The face and/or expected values not be relevant to roles elsewhere in the Company. of the award(s) offered will not materially exceed the value ascribed to the award(s) foregone, and where practicable The Company does not deem it appropriate to formally would follow the same vesting timing and form (i.e. cash consult with employees regarding the determination of or shares) save that the Committee may award the whole the directors’ remuneration policy. However, employees of the value in shares, at its discretion. The application have the opportunity to make comments on any aspect of performance conditions would be considered and, of the Company’s activities through an employee survey where appropriate, the awards could be made subject to and any comments made which are relevant to directors’ claw-back in certain circumstances. For material amounts remuneration would be considered by the Committee. the Committee would, where practicable, consult with key institutional shareholders ahead of committing to ### make any such sign-on awards, and in any event a full Legacy arrangements explanation of any amounts awarded, an explanation of why it was necessary and a breakdown of the awards to The Committee reserves the right to make remuneration be made will be announced to the markets at the time payments and payments for loss of office, to exercise any of granting. For the avoidance of doubt, should a new discretion in relation to such payment, notwithstanding director be internally promoted from the Company’s senior that they are not in line with the Remuneration Policy management team they will not be expected to give up set out above where the terms of payment were agreed: or amend any element of remuneration granted to them • Before this Policy came into effect (provided that the prior to becoming a director which is inconsistent with terms of the payment were consistent with shareholder the remuneration policy set out above. approved Policy in force at the time they were agreed or were agreed before the Company’s first shareholder Any new executive director’s remuneration package would approved Policy came into force). include similar elements, and be subject to the same • At a time when the relevant individual was not a director constraints, as those of the existing executive directors of the Company and, in the opinion of the Committee, as outlined in the above policy table. the payment was not in consideration of the individual becoming a director of the Company. ### Statement of consideration of For these purposes, ‘payments’ includes the satisfaction ### shareholder views of variable remuneration and, in relation to an award over shares, the terms of the payment are ‘agreed’ no later The Chairman of the Committee engages with than the time the award is granted. certain of the Company’s largest shareholders who have expressed an interest in being consulted in relation to remuneration matters to understand their expectations and monitor any changes in their views. Telecom Plus Plc Report and Accounts 2022 / 73 # Annual Report on Remuneration ## Single total figure of remuneration ### Year ended 31 March 2022 (audited) Audited details of directors' remuneration for the year are as follows: | Director | Salary & fees £'000 | Annual bonus^{1} £'000 | Taxable benefits £'000 | Pension contributions £'000 | Total £'000 | Total fixed £'000 | Total variable £'000 | | --- | --- | --- | --- | --- | --- | --- | --- | | Charles Wigoder | 475 | - | - | - | 475 | 475 | - | | Andrew Lindsay | 589 | 614 | 7 | 4 | 1,214 | 600 | 614 | | Stuart Burnett^{2} | 449 | 438 | 5 | 4 | 896 | 458 | 438 | | Nick Schoenfeld | 589 | 276 | 6 | 4 | 875 | 599 | 276 | | Andrew Blowers | 45 | - | - | - | 45 | 45 | - | | Beatrice Hollond | 45 | - | - | - | 45 | 45 | - | | Melvin Lawson | 12 | - | - | - | 12 | 12 | - | | Julian Schild | 45 | - | - | - | 45 | 45 | - | | Suzi Williams | 45 | - | - | - | 45 | 45 | - | | **Total** | **2,294** | **1,328** | **18** | **12** | **3,652** | **2,324** | **1,328** | 1. One third of the bonus is deferred into shares in accordance with the rules of the DBP (see page 65) 2. As detailed on page 60, Stuart Burnett was appointed as Co-CEO in November 2021. ### Year ended 31 March 2021 (audited) Audited details of directors' remuneration for the year are as follows: | Director | Salary & fees £'000 | Annual bonus^{2} £'000 | Taxable benefits £'000 | Pension contributions £'000 | Total £'000 | Total fixed £'000 | Total variable £'000 | | --- | --- | --- | --- | --- | --- | --- | --- | | Charles Wigoder | 471 | - | - | - | 471 | 471 | - | | Andrew Lindsay | 583 | 548 | 6 | 4 | 1,141 | 593 | 548 | | Nick Schoenfeld | 583 | 246 | 6 | 4 | 839 | 593 | 246 | | Stuart Burnett^{1} | 288 | 355 | 5 | 3 | 651 | 296 | 355 | | Andrew Blowers | 45 | - | 2 | - | 47 | 47 | - | | Beatrice Hollond | 45 | - | - | - | 45 | 45 | - | | Melvin Lawson | 12 | - | - | - | 12 | 12 | - | | Julian Schild | 45 | - | - | - | 45 | 45 | - | | Suzi Williams^{1} | 31 | - | - | - | 31 | 31 | - | | **Total** | **2,103** | **1,149** | **19** | **11** | **3,282** | **2,133** | **1,149** | 1. Appointed to the Board on 23 July 2020. 2. One third of the bonus is deferred into shares in accordance with the rules of the DBP (see page 65) Strategic Report Governance Report Financial Statements Shareholder Information Telecom Plus Plc Report and Accounts 2022 / 74 ## Annual Report on Remuneration ## continued ### Salary and benefits (audited) Annual bonus (audited) The Committee awarded increases to the annual base The maximum bonus opportunities for each executive salaries of the Executive Chairman, Chief Executive and director for the year ended 31 March 2022 were as follows: | Chief Financial Officer with effect from 1 April 2021 as | Andrew Lindsay 150% of base salary | | --- | --- | | follows: | Stuart Burnett 140% of base salary | | • Charles Wigoder - increased from £470,644 to £475,350; | Nick Schoenfeld 67.5% of base salary | • Andrew Lindsay - increased from £582,980 to £588,810; • Stuart Burnett – increased from £420,000 to £424,200 Stuart Burnett’s bonus entitlement for the current financial from 1 April 2021 and then to £500,000 from November year to 31 March 2022 has been calculated based on the 2021 following promotion to Co-CEO; and weighted average salary received of £449,467 (8 months • Nick Schoenfeld - increased from £582,980 to £588,810. at £424,200 per annum plus 4 months at £500,000 per annum) and a maximum bonus entitlement of 140% (being The underlying increases were set taking into account the the weighted average of 135% for 8 months and 150% for Company’s average cost of living increase for all employees 4 months). of 1.0%. The maximum opportunity for Nick Schoenfeld was set The amounts relating to taxable benefits received mainly at 67.5% to reflect his salary positioning compared to include the provision of private health insurance and motor other FTSE 250 companies of a similar size and scale to vehicles to the directors. the Company. Telecom Plus Plc Report and Accounts 2022 / 75 Strategic Report Governance Report Financial Statements Shareholder Information The awards were granted subject to financial and internal budgeting and broker forecasts. The threshold non-financial strategic objectives. 70% of the bonus was and maximum targets are set out in the table below, with based on adjusted PBT performance. The PBT targets vesting on a sliding scale between these targets: were set by reference to multiple factors, including Weighting Threshold (20% Payable (% of % of bonus of maximum) Maximum Actual maximum) FY22 Adjusted PBT 70% £50.0m £70.0m £62.9m 51.0% The Company’s headline adjusted profit before tax of The remaining 30% of the bonus was subject to strategic £61.9m has been adjusted to £62.9m for the purposes objectives and any pay-out under this element was subject of determining the payable percentage. This reflects to achieving the threshold PBT target. the structure of the calculation of adjusted PBT for the purposes of the bonus after adjusting for a certain pre-agreed commercially sensitive item. Strategic Weighting Payable objective Detail % of bonus Threshold Maximum Actual (% of maximum) | Service | Annual growth in core | 10% 1% 12% 9.2% 8.5% | | | | | | --- | --- | --- | --- | --- | --- | --- | | number growth | services | | | | | | | Partner | Monthly number | 5% | <4,472 | >5,000 | <4,472 | 0.0% | | productivity | of active Partners | | | | | | (average) % Partners getting 6+ 5% <7.4% >10% <7.4% customers in 90 days | Strategic | Application to the | 10% N/A Submitted | | | Submitted | | 10% | | --- | --- | --- | --- | --- | --- | --- | --- | | development | Gibraltar Financial | | by 31 March | | by 31 March | | | | of financial | Services Commission | | | 2022 | | 2022 | | | services | to set up an insurance | | | | | | | captive corporate vehicle to have been formally submitted by 31 March 2022 Tot al 18.5% The executives therefore earned a bonus equal to 69.5% One-third of the bonuses earned will be deferred into of the maximum opportunity. The Committee carefully shares for two years under the rules of the Deferred Share Shareholder Information considered the bonus outcome and determined it to Bonus Plan. be appropriate taking into account underlying business performance and the experience of shareholders and employees during the year (as noted in the Annual Statement on page 61). Telecom Plus Plc Report and Accounts 2022 / 76 # Annual Report on Remuneration ### Long term incentives (audited) #### Vesting of long term incentive awards No long term incentive awards were capable of vesting during the year ended 31 March 2022. #### Long term incentive awards granted during the year (audited) No long term incentive awards were granted during the year ended 31 March 2022. ### SAYE awards (audited) During the year Charles Wigoder was granted an SAYE award on 18 August 2021, of 1,737 options at an option price of 1,036 pence per share. The awards are exercisable on 1 November 2024. ### Statement of Directors' Shareholding and Share Interests (audited) The interests of the directors and their connected persons in the Company's ordinary shares as at 31 March 2022 were as set out below. There have been no changes to those interests between 31 March 2022 and the date of this report. | | Beneficially held | LTIP 2016 – growth shares | Deferred Shares Bonus Plan | SAYE Scheme | Share options | Shareholding (as a % of salary)^{1} | | --- | --- | --- | --- | --- | --- | --- | | Charles Wigoder | 7,421,486 | - | - | 1,737 | - | 23,905% | | Andrew Lindsay | 359,149 | 15,000 | 17,383 | - | - | 933% | | Nick Schoenfeld | 7,951 | 15,000 | 7,822 | - | - | 21% | | Stuart Burnett | - | 7,500 | 11,271 | - | 75,000 | 0% | | Andrew Blowers | - | - | - | - | - | N/A | | Beatrice Hollond | 1,800 | - | - | - | - | N/A | | Melvin Lawson | 1,436,744 | - | - | - | - | N/A | | Julian Schild | 38,698 | - | - | - | - | N/A | | Suzi Williams | - | - | - | - | - | N/A | 1. Based on a share price of 1,530p being the closing mid-market share price on 31 March 2022. The Committee has adopted a shareholding guideline which requires the executive directors to build up and maintain a shareholding of at least 200% of salary. See page 67 for further details. On 23 November 2021, Charles Wigoder exercised his SAYE award of 1,727 shares granted on 23 August 2018 at an exercise price of 1,042 pence per share. The gain on the day of exercise was £7,875 although Mr Wigoder retained the shares acquired. ### Payments to past directors (audited) There were no payments to past directors during the year. ### Payment for loss of office (audited) There were no payments for loss of office made to directors during the year. Telecom Plus Plc Report and Accounts 2022 / 77 Strategic Report Governance Report Financial Statements Shareholder Information Financial Statements ## Share interests (audited) Details of the share awards held by or granted to directors during the year are set out in the table below (further details on the estimated cost of these awards are set out in note 21 to the financial statements): | | 1 April 2021 | Granted | Lapsed | Exercised | 31 March 2022 | Exercise price per share | Exercisable from | Expiry date | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | **Charles Wigoder** | | | | | | | | | | SAYE Scheme | | | | | | | | | | 23 August 2018 | 1,727 | - | - | (1,727) | - | 1042p | 1 Nov 21 | 30 Apr 22 | | 18 August 2021 | - | 1,737 | - | - | - | 1036p | 1 Nov 24 | 30 Apr 25 | | **Andrew Lindsay** | | | | | | | | | | LTIP 2016 – growth shares | | | | | | | | | | 4 April 2017 | 3,750 | - | - | - | 3,750 | n/a | 1 Aug 19 | 31 Aug 26 | | 4 April 2017 | 3,750 | - | - | - | 3,750 | n/a | 1 Aug 21 | 31 Aug 26 | | 4 April 2017 | 3,750 | - | - | - | 3,750 | n/a | 1 Aug 23 | 31 Aug 26 | | 4 April 2017 | 3,750 | - | - | - | 3,750 | n/a | 1 Aug 26 | 31 Aug 26 | | Deferred Shares Bonus Plan | | | | | | | | | | 22 Jul 2021 | - | 17,383 | - | - | 17,383 | 5p | 22 Jul 23 | 22 Jul 31 | | **Nick Schoenfeld** | | | | | | | | | | LTIP 2016 – growth shares | | | | | | | | | | 4 April 2017 | 3,750 | - | - | - | 3,750 | n/a | 1 Aug 19 | 31 Aug 26 | | 4 April 2017 | 3,750 | - | - | - | 3,750 | n/a | 1 Aug 21 | 31 Aug 26 | | 4 April 2017 | 3,750 | - | - | - | 3,750 | n/a | 1 Aug 23 | 31 Aug 26 | | 4 April 2017 | 3,750 | - | - | - | 3,750 | n/a | 1 Aug 26 | 31 Aug 26 | | Deferred Shares Bonus Plan | | | | | | | | | | 22 Jul 2021 | - | 7,822 | - | - | 7,822 | 5p | 22 Jul 23 | 22 Jul 31 | | **Stuart Burnett** | | | | | | | | | | LTIP 2016 – growth shares | | | | | | | | | | 4 April 2017 | 1,875 | - | - | - | 1,875 | n/a | 1 Aug 19 | 31 Aug 26 | | 4 April 2017 | 1,875 | - | - | - | 1,875 | n/a | 1 Aug 21 | 31 Aug 26 | | 4 April 2017 | 1,875 | - | - | - | 1,875 | n/a | 1 Aug 23 | 31 Aug 26 | | 4 April 2017 | 1,875 | - | - | - | 1,875 | n/a | 1 Aug 26 | 31 Aug 26 | | Deferred Shares Bonus Plan | | | | | | | | | | 22 Jul 2021 | - | 11,271 | - | - | 11,271 | 5p | 22 Jul 23 | 22 Jul 31 | | Share options | | | | | | | | | | 22 July 2016 | 50,000 | - | - | - | 50,000 | 1047p | 22 Jul 19 | 21 Jul 26 | | 25 July 2019 | 8,334 | - | - | - | 8,334 | 1342p | 25 Jul 22 | 24 Jul 29 | | 25 July 2019 | 8,333 | - | - | - | 8,333 | 1342p | 25 Jul 24 | 24 Jul 29 | | 25 July 2019 | 8,333 | - | - | - | 8,333 | 1342p | 25 Jul 26 | 24 Jul 29 | Telecom Plus Plc Report and Accounts 2022 / 78 # Annual Report on Remuneration continued ## LTIP 2016 Performance measures and targets for the LTIP 2016 Award are detailed in the 2019 Annual Report and Accounts on page 69. ### Performance Graph showing Total Shareholder Return The following graph shows the Company's performance measured by total shareholder return compared with the FTSE 350 Index for the period 1 April 2012 to 31 March 2022. The FTSE 350 Index has been chosen as the Company is a comparator of this Index. ![img-12.jpeg](img-12.jpeg) Source: Thompson Reuters Datastream ### Table of historical data The following table sets out the total remuneration and the amount vesting under the annual bonus and share incentive schemes as a percentage of the maximum that could have been achieved, in respect of the Chief Executive. The Chief Executive was Mr Andrew Lindsay in all years shown in the table. | Year ended 31 March | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Single figure of total remuneration £'000 | 399 | 432 | 2,175 | 2,017 | 523 | 555 | 581 | 594 | 1,141 | 1,214 | | Annual bonus (%) | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | 62.6 | 69.5 | | Share incentives vesting (%) | N/A | N/A | 100% | N/A | N/A | N/A | N/A | N/A^{1} | N/A | N/A | 1. Although 3,750 growth shares under the LTIP 2016 vested to the Chief Executive during 2020 and a further 3,750 in 2021, the minimum share price at which these are convertible into ordinary shares in the Company is £20 and this was not achieved during the period. Telecom Plus Plc Report and Accounts 2022 / 79 Strategic Report Governance Report Financial Statements Shareholder Information ### Annual Percentage Change in Remuneration of directors and employees The table below sets out the percentage change in each director’s salary/fees, benefits and bonus between the years ended 31 March 2020 and 31 March 2021, and 31 March 2021 and 31 March 2022 compared to the average employee remuneration of the Company for each of these elements of pay, calculated on a full-time equivalent basis. The average employee change has been calculated by reference to the mean of employee pay. Year Salary & fees Benefits Bonus | Charles Wigoder 2021/2022 | | 1.0% | | N/A | N/A | | --- | --- | --- | --- | --- | --- | | | 2020/2021 | 2.0% | | N/A | N/A | | Andrew Lindsay 2021/2022 | | 1.0% | 16.7% | | 12.0% | | | 2020/2021 | 3.1% | (66.7)% | | N/A | | Nick Schoenfeld 2021/2022 | | 1.0% | | 0.0% | 12.2% | | | 2020/2021 | 3.1% | | 0.0% | N/A | 1 | Stuart Burnett 2021/2022 | | 19.0% | | 0.0% | 23.4% | | | --- | --- | --- | --- | --- | --- | --- | | | 2020/2021 | | N/A | N/A | | N/A | | Andrew Blowers 2021/2022 | | | 1.0% | N/A | | N/A | | | 2020/2021 | 0.0% | | 0.0% | | N/A | | Beatrice Holland 2021/2022 | | | 1.0% | N/A | | N/A | | | 2020/2021 | 0.0% | | N/A | | N/A | | Melvin Lawson 2021/2022 | | | 1.0% | N/A | | N/A | | | 2020/2021 | 0.0% | | N/A | | N/A | | Julian Schild 2021/2022 | | | 1.0% | N/A | | N/A | | | 2020/2021 | 0.0% | | N/A | | N/A | 2 | Suzi Williams | 2021/2022 | | 1.0% | | N/A | | N/A | | --- | --- | --- | --- | --- | --- | --- | --- | | | 2020/2021 | | N/A | | N/A | | N/A | | | 2021/2022 | (9.0)% | | (24.6)% | | 41.2% | | Average employee 2020/2021 4.5% (0.1)% (1.5)% 1. Increases due to his promotion to Co-CEO in November 2021 and subsequent changes to his remuneration package as detailed on page 60. 2. For comparative purposes Suzi Williams’ remuneration for the year ended 31 March 2021 has been annualised. The fall in average employee salary in 2021/2022 shown in growth. Employees who were employed by the Company as the table above is mainly due to the increase in the number at 31 March 2021 received the same 1.0% annual increase of entry-level employees taken on by the Company during as the directors. the year to manage the significant increase in customer Shareholder Information Telecom Plus Plc Report and Accounts 2022 / 80 ## Annual Report on Remuneration ## continued ### Chief Executive pay ratio Relative importance of the spend on pay The table below sets out the Chief Executive pay ratio, using Set out below is a summary of the Company’s levels of the Chief Executive’s single total remuneration as disclosed expenditure on pay and other significant cash outflows to on page 74 to the comparable full-time equivalent total key stakeholders. No share buybacks were made during remuneration of the UK employees whose pay is ranked the years ended 31 March 2021 or 31 March 2022. at the 25th percentile, median and 75th percentile. Year ended 31 2022 2021 Change The Company used Option A to calculate the ratios as this March £’000 £’000 % is the approach typically preferred by shareholders and Wages and 75,294 69,860 7.8% proxy voting agencies. The remuneration figures for the salaries employee at each quartile were calculated as at that the Dividends 44,787 44,708 0.2% last day of the relevant financial year. Sensitivity analysis has been performed to ensure that the median and quartile employees are reasonably representative. ### Statement of Implementation of ### Remuneration Policy for the financial | Year Method 25th | | Median | | | 75th | | | --- | --- | --- | --- | --- | --- | --- | | | percentile | | pay | percentile | | year commencing 1 April 2022 | | | pay ratio | | ratio | pay ratio | | | Information on how the Company intends to implement 2020 A 38:1 22:1 16:1 the Remuneration Policy for the financial year commencing 2021 A 59:1 41:1 33:1 1 April 2022 is set out in the Annual Statement on page 61. 2022 A 79:1 44:1 35:1 ### Pay details for the individuals in 2022 are set out below: Advisers to the Committee Wholly independent and objective advice on executive | | CEO 25th | | | | 50th | | | 75th | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | percentile | | percentile | | percentile | | | remuneration is received from the Committee’s external | | | | | (lower | (median) | | | (upper | | advisers. | | | | quartile) | | | | quartile) | | | | | Salary £589,000 £15,125 £26,916 £32,790 | | | | | | | | | Deloitte were appointed as Remuneration Committee | advisors in October 2020. Deloitte is one of the founding Total members of the Remuneration Consultants Group and is remun- £1,214,000 £15,305 £27,752 £35,029 eration a signatory to its Code of Conduct. th The significant increase in the 25 percentile pay ratio Fees paid to Deloitte for their services to the Remuneration shown in the table above is mainly due to the increase Committee during the year, based on time and expenses, in the number of entry-level employees taken on by amounted to £10,750 (excluding VAT) Deloitte also provided the Company during the year to manage the significant advice to the Company during the year in relation to increase in customer growth. taxation, climate-related financial disclosures and employee share plan matters. The result of the median pay ratio is in line with the Company’s general policy to provide a competitive remuneration package so as to enable the attraction and retention of high calibre individuals at each level. Telecom Plus Plc Report and Accounts 2022 / 81 ## Shareholder vote and shareholder engagement Details of the votes cast in relation to the main remuneration resolutions the 2021 AGM and 2020 General Meeting are set out below: | | 2021 AGM | % | | --- | --- | --- | | **To approve the 2021 Remuneration Report** | | | | Votes cast in favour & Chairman discretion | 42,309,735 | 76.50 | | Votes cast against | 12,999,838 | 23.50 | | **Total** | **55,309,573** | **100.00** | | **Withheld** | **338,078** | | | | 2020 GM | % | | --- | --- | --- | | **To approve the Directors' Remuneration Policy** | | | | Votes cast in favour & Chairman discretion | 51,620,500 | 95.56 | | Votes cast against | 2,398,981 | 4.44 | | **Total** | **54,019,481** | **100.00** | | **Withheld** | **8,558** | | The Board of the Company notes that the level of votes against the 2021 Directors' Remuneration Report put to the 2021 AGM exceeded 20%. The Company understands that this has been driven mainly by concerns raised by certain shareholders around Board diversity and historical directors' remuneration policy issues. The Board engaged with its shareholders and used the feedback from this engagement to amend the Policy in a way that achieved better alignment with shareholders. The Board is committed to continuing its dialogue with shareholders on remuneration matters. As disclosed on page 60 the Committee intends to undergo a comprehensive review of our long term incentive provision for senior management and executive directors during 2022/23. The Committee will consult with shareholders where appropriate on any new scheme and any new scheme will be subject to shareholder approval at the 2023 AGM, alongside any new Remuneration Policy. **Andrew Blowers OBE** Chairman of the Remuneration Committee On behalf of the Board 21 June 2022 Telecom Plus Plc Report and Accounts 2022 / 82 Strategic Report Governance Report Financial Statements Shareholder Information ## Directors’ Report The directors have pleasure in presenting their report Director Ordinary 5p shares held at and the audited financial statements for the year to 31 31 March 2022 31 March 2021 March 2022. Charles Wigoder 11,014,169 13,512,442 * Julian Schild 38,698 189,932 ### Principal activities and business review Andrew Lindsay 359,149 359,149 The Company’s principal activity is to act as a holding Nick Schoenfeld 7,951 7,951 company. The Company is incorporated and domiciled in Stuart Burnett - - England and Wales. The list of its subsidiaries is set out on * Andrew Blowers - - page 118. A full review of the development of the business * | is contained in the Strategic Report on pages 2 to 46. A | Beatrice Hollond | | | 1,800 1,800 | | --- | --- | --- | --- | --- | | summary of the financial risk management objectives and | | * | | | | | Melvin Lawson | | 1,436,744 1,436,744 | | policies is contained in note 22 to the financial statements. * Suzi Williams - - Environmental matters, including greenhouse house gas emissions are set out in the Sustainability Report on pages * indicates non-executive directors 31 to 42. In respect of the above shareholdings, Mr Wigoder has This Directors’ Report, together with the information in a non-beneficial interest in 3,592,683 shares (2021: the Strategic Report forms the management report for 4,092,683). the purposes of DTR 4.1.8R. The powers of directors are set out in the Company’s Articles of Association (the “Articles”). The Articles may be ### Results and dividends amended by way of a special resolution of the members of the Company. The Board may exercise all powers conferred The profit for the year after tax of £35,003,000 (2021: on it by the Articles and in accordance with the Companies £32,559,000) has been transferred to reserves. An interim Act 2006, and other applicable legislation. dividend of 27p per share (2021: 27p) was paid during the year. A final dividend of 30p per share (2021: 30p per The Board has established a formal, rigorous and share) is proposed. The adjusted profit before tax for the transparent process for the selection and subsequent year ended 31 March 2022 was £61.9 million (see Financial appointment of new directors to the Board. The rules Review page 17). relating to the appointment and replacement of directors are contained within the Articles. The Articles provide that Directors may be appointed by an ordinary resolution of ### Directors the members or by a resolution of the Directors, provided that, in the latter instance, a director appointed in that The names of directors who served during the year and way retires at the first Annual General Meeting following their interests, including those of their connected persons, their appointment. In addition, shareholders with in excess in the share capital of the Company at the start and end of 20% of the shares in the Company are entitled under of the year are set out in the table below. Details of the the Articles to appoint a director and remove any such directors’ share incentive awards are disclosed in the director appointed. Directors’ Remuneration Report on page 78. In accordance with current best practice, all Board directors will be retiring at the forthcoming AGM and will then offer themselves for re-election. Telecom Plus Plc Report and Accounts 2022 / 83 Strategic Report Governance Report Financial Statements Shareholder Information Financial Statements ## Directors' conflicts of interest The Directors have a statutory duty to avoid situations where they have, or could have, a direct or indirect interest that conflicts, or possibly may conflict, with the Company's interests. The Companies Act 2006 and the Company's Articles allow the Board to authorise such conflicts of interest should this be deemed to be appropriate. The Board has put in place effective procedures for managing and, where appropriate, approving conflicts or potential conflicts of interest. Under these procedures, the Directors are required to declare all directorships or other appointments to companies which are not part of the Group, as well as other situations which could give rise to a potential conflict. The Board will, where appropriate, authorise a conflict or potential conflict, and will impose all necessary restrictions and/or conditions where it sees fit. The Company maintains a register of directors' interests which is reviewed regularly by the Board. ## Political donations The Company did not contribute in cash or in kind to any political party, whether by gift or loan. It will, however, ensure that the Group continues to act within the provisions of the Companies Act 2006 requiring companies to obtain shareholder authority before they make donations to political parties and/or political organisations as defined in the Companies Act 2006. ## Directors' and officers' liability insurance The Company maintains appropriate insurance to cover directors' and officers' liability and has provided an indemnity, as permitted by the Companies Act 2006, in respect of all of the Company's directors which was in force throughout the financial year and remains in force. Neither the insurance nor the indemnity provides cover where a director has acted fraudulently or dishonestly. ## Employees The requirements of the Companies Act 2006 in respect of employees are set out in the Strategic Report on pages 27 to 30. ## Stakeholder engagement More information on stakeholder engagement, including our relationships with our Partners, suppliers, customers and our community can be found in the Strategic Report on pages 41 to 42. ## Substantial shareholders As at 21 June 2022, in addition to the directors, the following have notified the Company of their substantial shareholdings as detailed below: | Shareholder | Number of shares | Percentage of issued share capital | | --- | --- | --- | | Abdrn PLC | 10,339,634 | 13.0% | | Schroders Investment Management PLC | 3,173,693 | 4.0% | | Primestone Capital | 2,708,539 | 3.4% | | JP Morgan Asset Management | 2,466,268 | 3.1% | ## Capital structure ### Restrictions on the transfer of shares The Company only has ordinary shares in issue. Other than as set out below, there are no restrictions on the transfer of the ordinary shares, except where a holder refuses to comply with a statutory notice requesting details of those who have an interest and the extent of their interest in a particular holding of shares. In such cases, where the identified shares make up 0.25% or more of the ordinary shares in issue, the directors may refuse to register a transfer of any of the identified shares in certificated form and, so far as permitted by the Uncertificated Securities Regulations 2001, a transfer of any of the identified shares which are held in the electronic share dealing system CREST, unless the directors are satisfied that they have been sold outright to an independent third party. Telecom Plus Plc Report and Accounts 2022 / 84 # Directors' Report Other than as set out below and so far as the directors are aware, there were no arrangements at 31 March 2022 by which, with the Company's co-operation, financial rights carried by securities are held by a person other than a holder of securities, or any arrangements between holders of securities that are known to the Company and which may result in restrictions on the transfer of securities or on voting rights. Executive Chairman Charles Wigoder entered into an agreement to charge 325,000 of his shares in the Company as security for a loan from Barclays Bank Plc ("Barclays") on 3 December 2013. The loan enabled him to apply for 57,142 ordinary shares as part of his open offer entitlement which resulted from funding the Company's entering into of the new energy supply arrangements with npower on 20 December 2013. Under the terms of the charge, title to the 325,000 shares can be transferred, sold or otherwise dealt with by Barclays following the occurrence of a failure to pay any amount due and payable under the loan. On 22 March 2018 Charles Wigoder notified the Company that he had entered into an agreement to charge 1,404,000 of his shares in the Company as security for a loan from the Julius Baer Group ("Julius Baer"). Under the terms of the charge, title to the 1,404,000 shares can be transferred, sold or otherwise dealt with by Julius Baer following an event of default under the security agreement. On 23 March 2018 Charles Wigoder notified the Company that he had deposited a further 350,000 of his shares in the Company into a collateral account at Barclays as partial security for an increase to his existing loan facility. Under the terms of his agreement with Barclays, title to the 350,000 shares can be transferred, sold or otherwise dealt with by them following an event of default under the security agreement. The Company established a Joint Share Ownership Plan ("the JSOP") on 30 March 2011. As part of the JSOP an employee benefit trust was established to jointly hold shares with the participants in the plan ("the JSOP Share Trust"). As at 31 March 2022 the JSOP Share Trust held 252,638 shares. All voting and dividend rights attached to these shares have been waived. ## Takeovers There are no significant arrangements to which the Company is party that take effect, alter or terminate upon a change of control of the Company following a takeover bid, save in relation to the arrangements with E.ON (formerly npower) and EE/BT for the supply of energy and mobile telephony respectively, or any agreements between the Company and its directors or employees providing for compensation for loss of office or employment (whether through resignation, purported redundancy or otherwise) that occurs because of a takeover bid. ## Authority for purchase of own shares At the last AGM held on 22 July 2021, the Company obtained authority to purchase up to 7,877,831 ordinary shares representing approximately 10% of the issued ordinary share capital (excluding treasury shares) as at 18 June 2021. The Company intends to renew this authority at this year's AGM. ## Treasury shares The Company held 482,276 ordinary shares in treasury as at 31 March 2022 (2021: 482,276). ## Disclosure of information Each of the directors has confirmed that so far as they are aware, there is no relevant audit information of which the Company's auditor is unaware, and that they have taken all the steps that they ought to have taken as a director in order to make themselves aware of any relevant audit information and to establish that the Company's auditor is aware of that information. ## Corporate governance The Company's position in relation to compliance with the requirements of the UK Corporate Governance Code issued by the Financial Reporting Council is set out mainly in the Corporate Governance Statement on pages 51 to 54. Telecom Plus Plc Report and Accounts 2022 / 85 Strategic Report Governance Report Financial Statements Shareholder Information Financial Statements ## Risk, control and viability In accordance with the UK Corporate Governance Code, the Directors have assessed the viability of the Group over a three year period, taking into account the Group's current position and the potential impact of the principal risks and uncertainties set out on pages 20 to 26. Based on this assessment, the Directors confirm that they have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the period to March 2025. The directors have determined that a three-year period to 31 March 2025 constitutes an appropriate period over which to provide its viability statement. This is the period focussed on by the Board during the strategic planning process. Whilst the directors have no reason to believe the Group will not be viable over a longer period, given the inherent uncertainty involved we believe this presents users of the Annual Report with a reasonable degree of confidence while still providing a longer-term perspective. In making this statement, the Board carried out a robust assessment of the principal risks facing the Group, including those that would threaten its business model, future performance, solvency or liquidity. The Board considers at least annually, a three-year strategic plan. The output of this plan is used to perform central debt and headroom profile analysis, which includes a review of sensitivity to 'business as usual' risks, such as bad debt in severe but plausible events. The Board also considers the ability of the Group to raise finance and deploy capital. The results take account of the availability and likely effectiveness of the mitigating actions that could be taken to avoid or reduce the impact or occurrence of the underlying risks. Under the revised energy supply arrangements which were effective from 1 December 2013, EON continues to be responsible for funding the principal working capital requirements relating to the supply of energy to the Company's customers. This includes funding the Budget Plans of customers who pay for their energy in equal monthly instalments. The Group has from Barclays Bank PLC, Lloyds Bank PLC and Bank of Ireland total revolving credit facilities of £175.0 million for the period to 30 June 2024, of which only £100 million was drawn down as at 31 March 2022, with cash balances of £29.6m on deposit. In light of the track record of the Company and its continued prospects, successful refinancing beyond 2024 is anticipated by the directors. The Company has considerable financial resources together with a large and diverse retail and small business customer base and long term contracts with a number of key suppliers. As a consequence, the directors believe that the Company is well placed to manage its business risks. Whilst this review does not consider all of the risks that the Group may face, the directors consider that this stress-testing based assessment of the Group's prospects is reasonable in the circumstances of the inherent uncertainty involved. For and on behalf of the Board **David Baxter** Company Secretary 21 June 2022 Telecom Plus Plc Report and Accounts 2022 / 86 ## Statement of Directors’ Responsibilities in Respect of ## the Report and Accounts and the Financial Statements The directors are responsible for preparing the Report Under applicable law and regulations, the directors are and Accounts and the Group and parent Company also responsible for preparing a Strategic Report, Directors’ financial statements in accordance with applicable law Report, Directors’ Remuneration Report and Corporate and regulations. Governance Statement that complies with that law and those regulations. Company law requires the directors to prepare Group and parent Company financial statements for each The directors are responsible for the maintenance and financial year. Under that law they are required to integrity of the corporate and financial information included prepare the Group financial statements in accordance on the company’s website. Legislation in the UK governing with UK-adopted international accounting standards and the preparation and dissemination of financial statements applicable law and have elected to prepare the parent may differ from legislation in other jurisdictions. Company financial statements on the same basis. In accordance with Disclosure Guidance and Transparency Under company law the directors must not approve the Rule 4.1.14R, the financial statements will form part of the financial statements unless they are satisfied that they annual financial report prepared using the single electronic give a true and fair view of the state of affairs of the reporting format under the TD ESEF Regulation. The auditor’s Group and parent Company and of the Group’s profit or report on these financial statements provides no assurance loss for that period. In preparing each of the Group and over the ESEF format. parent Company financial statements, the directors are required to: ### • select suitable accounting policies and then apply Responsibility statement of the ### them consistently; directors in respect of the annual ### • make judgements and estimates that are reasonable, financial report relevant, reliable and prudent; • whether they have been prepared in accordance with We confirm that to the best of our knowledge: international accounting standards in conformity with • the financial statements, prepared in accordance with the requirements of the Companies Act 2006 and, as the applicable set of accounting standards, give a true regards the Group financial statements, UK-adopted and fair view of the assets, liabilities, financial position international accounting standards; and profit or loss of the company and the undertakings • assess the Group and parent Company’s ability to included in the consolidation taken as a whole; and continue as a going concern, disclosing, as applicable, • the strategic report includes a fair review of the matters related to going concern; and development and performance of the business and • use the going concern basis of accounting unless they the position of the issuer and the undertakings included either intend to liquidate the Group or the parent in the consolidation taken as a whole, together with Company or to cease operations, or have no realistic a description of the principal risks and uncertainties alternative but to do so. that they face. The directors are responsible for keeping adequate We consider the annual report and accounts, taken as a accounting records that are sufficient to show and explain whole, is fair, balanced and understandable and provides the parent Company’s transactions and disclose with the information necessary for shareholders to assess reasonable accuracy at any time the financial position of the the Group’s position and performance, business model parent Company and enable them to ensure that its financial and strategy. statements comply with the Companies Act 2006. They are responsible for such internal control as they determine is necessary to enable the preparation of financial statements Charles Wigoder that are free from material misstatement, whether due to Executive Chairman fraud or error, and have general responsibility for taking 21 June 2022 such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud Nick Schoenfeld and other irregularities. Chief Financial Officer 21 June 2022 Telecom Plus Plc Report and Accounts 2022 / 87 # Independent Auditor's Report to the Members of Telecom Plus PLC ## 1. Our opinion is unmodified We have audited the financial statements of Telecom Plus PLC ("the Company") for the year ended 31 March 2022 which comprise the Consolidated Statement of Comprehensive Income, Consolidated Balance Sheet, Company Balance Sheet, Consolidated and Company Cashflow Statements and Consolidated Statement of Changes in Equity, Company Statement of Changes in Equity and the related notes, including the accounting policies in note 1. In our opinion: - the financial statements give a true and fair view of the state of the Group's and of the parent Company's affairs as at 31 March 2022 and of the Group's profit for the year then ended; - the Group financial statements have been properly prepared in accordance with UK – adopted international accounting standards; - the parent Company financial statements have been properly prepared in accordance with UK – adopted international accounting standards and as applied in accordance with the provisions of the Companies Act 2006; and - the financial statements have been prepared in accordance with the requirements of the Companies Act 2006. ## Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (UK) ("ISAs (UK)") and applicable law. Our responsibilities are described below. We believe that the audit evidence we have obtained is a sufficient and appropriate basis for our opinion. Our audit opinion is consistent with our report to the audit committee. We were first appointed as auditor by the directors on 15 February 2015. The period of total uninterrupted engagement is for the eight financial years ended 31 March 2022. We have fulfilled our ethical responsibilities under, and we remain independent of the Group in accordance with, UK ethical requirements including the FRC Ethical Standard as applied to listed public interest entities. No non-audit services prohibited by that standard were provided. ### overview | **Materiality:** group financial statements as a whole | £2.36m (2021: £2.2m) 4.7% (2021: 5.0%) of profit before tax | | --- | --- | | **Coverage** | 98% (2021: 100%) of group profit before tax | ### Key audit matters vs 2021 #### Recurring risks Expected Credit Losses on Trade Receivables and Accrued Income Non-Smart Meter Energy revenue recognition Recoverability of parent company's investment in subsidiaries (Parent) Telecom Plus Plc Report and Accounts 2022 / 88 Strategic Report Governance Report Financial Statements Shareholder Information ## Independent Auditor’s Report ## to the Members of Telecom Plus PLC continued ### 2. Key audit matters: our assessment below the key audit matters (unchanged from 2021), in ### of risks of material misstatement decreasing order of significance, in arriving at our audit opinion above, together with our key audit procedures to Key audit matters are those matters that, in our professional address those matters and, as required for public interest judgment, were of most significance in the audit of the entities, our results from those procedures. These matters financial statements and include the most significant were addressed, and our results are based on procedures assessed risks of material misstatement (whether or undertaken, in the context of, and solely for the purpose not due to fraud) identified by us, including those which of, our audit of the financial statements as a whole, and had the greatest effect on: the overall audit strategy; in forming our opinion thereon, and consequently are the allocation of resources in the audit; and directing incidental to that opinion, and we do not provide a separate the efforts of the engagement team. We summarise opinion on these matters. The risk Our response Expected Credit Losses on Subjective Estimate Our procedures included: Accrued Income and Trade Receivables | (Loss allowance £25.0m; 2021: | Significant estimation uncertainty | • Test of Detail, Re-calculation: Validate the | | --- | --- | --- | | £23.2m) | is associated with the expected | segmentation of debt (principally by age, and | | | credit loss provision over trade | between live and closed accounts), by selecting a | | Refer to page 57 | receivables and accrued income | sample of receivables and agreeing to supporting | | (Audit Committee Report), | at each reporting date. In the | documents. Assess whether the expected credit | | page 108 (accounting policy) | current period this uncertainty is | loss was accurately and consistently calculated in | | and page 123 (financial | heightened by the impact of the | accordance with the Group’s methodology. | | disclosures). | ongoing cost of living crisis. | | • Historical comparisons: Evaluate the The allowance for expected credit appropriateness of the Group’s estimate based on loss is recognised based on an historical cash collections and write off information estimate of future cashflows. In to the actual outcome. arriving at this estimate, the Group considers whether the customer • Sector experience: Evaluate the assessment of is live or closed (live being an how current and future economic scenarios are ongoing customer; closed being incorporated into the expected credit loss, based a former customer), the current on our knowledge of the entity and experience of ageing profile of debt, historical the industry in which it operates. collections experience by payment plan, and an assessment of • Assessing transparency: Considering whether current economic conditions. the disclosures properly reflect the expected credit loss accounting policy and related The effect of these matters is that, critical accounting estimates, judgements and as part of our risk assessment, assumptions therein. we determined that the expected credit losses for trade receivables We performed the tests above rather than seeking has a high degree of estimation to rely on any of the Group’s controls because the uncertainty, with a potential nature of the balance is such that we would expect range of reasonable outcomes to obtain audit evidence primarily through the greater than our materiality for the detailed procedures described. financial statements as a whole, the financial statements disclose Our results the sensitivity estimated by the • We found the group’s assessment of the expected Group. credit losses on trade receivables and accrued income to be acceptable (2021: acceptable). Telecom Plus Plc Report and Accounts 2022 / 89 Strategic Report Governance Report Financial Statements Shareholder Information The risk Our response Non-Smart Meter Energy Use of estimates Our procedures included: revenue recognition | (£94.7m; 2021: £110.1m) | A significant element of Revenue | • Test of detail: Obtaining all meter readings | | --- | --- | --- | | | recognised in relation to the supply | received within a period two days either side of | | Refer to page 57 | of gas and electricity includes | the year end and comparing against the estimated | | (Audit Committee Report), | making an estimate of the volume | usage derived from the billing system. A sample | | page 103 (accounting policy), | of energy supplied to customers | of the actual meter readings were validated to | | and page 110 (financial | between the date of the last meter | source documentation. The accuracy of non-smart | | disclosures). | reading and the year end for non- | meter energy revenue for which no meter readings | | | smart meters. | were received at year end, was then assessed by | utilising the average difference between actual The method of estimating usage and estimated meter readings, applied across the is reliant on historical data, and non-smart meter population. is subject to volatility in weather | patterns. The risk of misstatement | • Test of detail: Assessing the volume and nature | | --- | --- | | is that the estimated non-smart | of customer complaints received in relation to | | meter energy revenue does not | estimated meter readings in order to identify | | reflect the gas and electricity | whether any indicators exist of an underlying issue | | actually delivered as at 31 March | with the Group’s estimation of energy usage; and | 2022. The quantum of the revenue subject to an estimate is such that • Assessing transparency: Considering whether the even a relatively small percentage critical accounting estimates, judgements and error could result in a materially assumptions, and accounting policy disclosures misstated outcome. properly reflect the judgements and estimates inherent in recognising non-smart meter revenue. The effect of these matters is that, as part of our risk assessment, We performed the tests above rather than seeking we determined that non-smart to rely on any of the group’s controls because the meter energy revenue has a high nature of the balance is such that we would expect degree of estimation uncertainty, to obtain audit evidence primarily through the with a potential range of detailed procedures described. reasonable outcomes greater than | our materiality for the financial | Our results | | --- | --- | | statements as a whole. The | • We found the resulting estimate of non-smart | | financial statements disclose the | meter energy revenue to be acceptable (2021 | | sensitivity estimated by the Group. | result: acceptable). | Recoverability of parent Low risk, high value Our procedures included: Company’s investment in subsidiaries | (£262.0m; 2021: £262.0m) | The carrying amount of the | • Tests of detail: Comparing the carrying amount | | --- | --- | --- | | | parent company’s investment | of the investment value within the subsidiary’s | | Refer to page 108 | in subsidiary represents 99% | draft balance sheet to identify whether the net | | (accounting policy), | (2021: 99%) of the company’s | assets, being an approximation of their minimum | | and page 118 (financial | total assets. Their recoverability | recoverable amount, were in excess of their | Shareholder Information disclosures). is not at a high risk of significant carrying amount and assessing whether the misstatement or subject to subsidiary has historically been profit-making. significant judgement. However, due to their materiality in the • Assessing subsidiary audit: Assessing the work context of the parent company performed by the Group audit team on that financial statements, this is subsidiary and considering the results of that considered to be the area that work on that subsidiary’s profits and net assets. had the greatest effect on our overall parent company audit. We performed the tests above rather than seeking to rely on the Group’s controls because the nature of the balance is such that we would expect to obtain audit evidence primarily through the detailed procedures described. Our results • We found the group’s assessment of the recoverability of the investment in its subsidiary to be acceptable. (2021 result: acceptable). Telecom Plus Plc Report and Accounts 2022 / 90 ## Independent Auditor’s Report ## to the Members of Telecom Plus PLC continued ### 3. Our application of materiality and an We agreed to report to the Audit Committee any corrected ### overview of the scope of our audit or uncorrected identified misstatements exceeding £118,000 (2021: £110,000), in addition to other identified Materiality for the group financial statements as a whole misstatements that warranted reporting on qualitative was set at £2.36m (2021: £2.2m), determined with reference grounds. to a benchmark of Group profit before tax of £49.8m (2021: £43.5m) of which it represents 4.7% (2021: 5%). Of the Group’s 9 (2021: 9) reporting components, we subjected 4 (2021: 4) to full scope audits for group Materiality for the parent company financial statements purposes. All audits, including the audit of the parent as a whole was set at £2.0m (2021: £1.4m), determined company, were conducted by the group team, with a with reference to a benchmark of Company total assets, component materiality ranging from £0.93m to £2m (2021: of which it represents 0.8% (2021: 0.5%). £0.77m to £1.4m). In line with our audit methodology, our procedures The components within the scope of our work accounted on individual account balances and disclosures were for the percentages illustrated opposite. performed to a lower threshold, performance materiality, so as to reduce to an acceptable level the risk that For these residual components, we performed analysis at an individually immaterial misstatements in individual account aggregated group level to re-examine our assessment that balances add up to a material amount across the financial there were no significant risks of material misstatement statements as a whole. within these. Performance materiality was set at 75% (2021: 75%) of The scope of the audit work performed was predominantly materiality for the financial statements as a whole, which substantive as we placed limited reliance upon the Group’s equates to £1.77m (2021: £1.65m) for the group and £1.5m internal control over financial reporting. (2021: £1.05m) for the parent Company. We applied this percentage in our determination of performance materiality because we did not identify any factors indicating an elevated level of risk. ### Group Profit before tax Group materiality £49.8m (2021: £43.5m) £2.36m (2021: £2.2m) £2.36m Whole financial statements materiality (2021: £2.2m) £1.77m Whole financial statements performance materiality (2021: £1.65m) Profit before tax Group materiality £2.0m Range of materiality at 4 components (£0.93m to £1.65m) (2021: £0.8m to £1.4m) £0.1m Misstatements reported to the audit committee (2021: £0.1m) ### Group Group profit Group total ### revenue before tax assets Full scope for group audit purposes 2021 ### 98% 98% 98% Full scope for group audit purposes 2020 | (2021: 98%) | | (2021: 100%) | | (2021: 96%) | | | | --- | --- | --- | --- | --- | --- | --- | | | 98 | | | | | Residual components | | | 98 | | 100 | | 96 | | | | | | 9898 | | 98 | | Telecom Plus Plc Report and Accounts 2022 / 91 Strategic Report Governance Report Financial Statements Shareholder Information ### 4. Going concern basis of accounting with no material uncertainties that may cast significant doubt over the Group and Company’s The Directors have prepared the financial statements on use of that basis for the going concern period, and we the going concern basis as they do not intend to liquidate found the going concern disclosure in note 1 to be the Group or the Company or to cease their operations, acceptable; and and as they have concluded that the Group’s and the • the related statement under the Listing Rules set out Company’s financial position means that this is realistic. on page 86 is materially consistent with the financial They have also concluded that there are no material statements and our audit knowledge. uncertainties that could have cast significant doubt over their ability to continue as a going concern for at least a However, as we cannot predict all future events or year from the date of approval of the financial statements conditions and as subsequent events may result in (“the going concern period”). outcomes that are inconsistent with judgements that were reasonable at the time they were made, the above We used our knowledge of the Group, its industry, and conclusions are not a guarantee that the Group or the the general economic environment to identify the inherent Company will continue in operation. risks to its business model and analysed how those risks might affect the Group’s and Company’s financial ### resources or ability to continue operations over the going 5. The impact of climate change on our ### concern period. The risks that we considered most likely audit to adversely affect the Group’s and Company’s available financial resources over this period were: We have considered the potential impacts of climate • The ability of the customer base to pay for the services change on the financial statements as part of the planning they are using as a result of impacts from the “cost of and risk assessment of our audit, and we held discussions living crisis”. with our climate change professionals to challenge our risk assessment. The key factor relevant to this consideration We considered whether these risks could plausibly being that the principal activity of the company is as a affect the liquidity and covenant compliance in the resell of utility services as opposed to power generation going concern period by comparing severe, but plausible within the energy sector. This limits any direct short term downside scenarios that could arise from these risks impacts and therefore no specific areas of focus were individually and collectively against the level of available identified. We have read the disclosure of climate related financial resources and covenants indicated by the information in the front half of the annual report and Group’s financial forecasts. considered consistency with the financial statements and our audit knowledge. We considered whether the going concern disclosure in note 1 to the financial statements gives a full and | accurate description of the Directors’ assessment of | 6. Fraud and breaches of laws and | | --- | --- | | going concern. | regulations – ability to detect | | Our conclusions based on this work: | Identifying and responding to risks of material | | • we consider that the directors’ use of the going concern | misstatement due to fraud | Shareholder Information basis of accounting in the preparation of the financial To identify risks of material misstatement due to fraud statements is appropriate; (“fraud risks”) we assessed events or conditions that • we have not identified, and concur with the directors’ could indicate an incentive or pressure to commit fraud assessment that there is not, a material uncertainty or provide an opportunity to commit fraud. Our risk related to events or conditions that, individually or assessment procedures included: collectively, may cast significant doubt on the Group’s • Enquiring of directors, the audit committee, and or Company’s ability to continue as a going concern for inspection of policy documentation as to the Group’s the going concern period; high-level policies and procedures to prevent and detect • we have nothing material to add or draw attention to in fraud, including the Group’s channel for “whistleblowing”, relation to the directors’ statement on page 102 to the as well as whether they have knowledge of any actual, financial statements on the use of the going concern suspected or alleged fraud. Telecom Plus Plc Report and Accounts 2022 / 92 ## Independent Auditor’s Report ## to the Members of Telecom Plus PLC continued • Reading Board and audit committee meeting minutes. We communicated identified laws and regulations • Considering remuneration incentive schemes and throughout our team and remained alert to any indications performance targets for management and directors. of non-compliance throughout the audit. • Using analytical procedures to identify any unusual or unexpected relationships. The potential effect of these laws and regulations on the financial statements varies considerably. We communicated identified fraud risks throughout the audit team and remained alert to any indications of fraud Firstly, the Group is subject to laws and regulations throughout the audit. that directly affect the financial statements including financial reporting legislation (including related companies As required by auditing standards, and taking into account legislation), distributable profits legislation and taxation possible pressures to meet profit targets we perform legislation and we assessed the extent of compliance with procedures to address the risk of management override these laws and regulations as part of our procedures on of controls, in particular the risk that Group management the related financial statement items. may be in a position to make inappropriate accounting entries and the risk of bias in accounting estimates such Secondly, the Group is subject to many other laws and as energy estimation and expected credit loss provisions. regulations where the consequences of non-compliance On this audit we do not believe there is a fraud risk related could have a material effect on amounts or disclosures to revenue recognition because revenue constitutes a in the financial statements, for instance through the high volume of individually small transactions with little imposition of fines or litigation. We identified the following complexity or judgement, and estimates are based on areas as those most likely to have such an effect: data obtained from third parties, with limited opportunity compliance with its licence obligations set by Ofgem, for bias. Ofcom, FCA and certain aspects of company legislation recognising the regulated nature of the Group’s activities We identified a fraud risk related to expected credit losses and its legal form. Auditing standards limit the required on trade receivables and accrued income because of audit procedures to identify non-compliance with these the significant estimates and judgements required and laws and regulations to enquiry of the directors and potential pressures to meet profit targets. Further details other management and inspection of regulatory and legal are set out in the key audit matter discussion disclosure correspondence, if any. Therefore if a breach of operational in section 2 of this report. regulations is not disclosed to us or evident from relevant correspondence, an audit will not detect that breach. We also performed procedures including: • Identifying journal entries to test for all full scope We discussed with the audit committee matters related components based on risk criteria and comparing the to actual or suspected breaches of laws or regulations, identified entries to supporting documentation. These for which disclosure is not necessary, and considered any included revenue and cash entries posted to unusual implications for our audit. accounts. Context of the ability of the audit to detect Identifying and responding to risks of material fraud or breaches of law or regulation misstatement related to compliance with laws Owing to the inherent limitations of an audit, there is an and regulations unavoidable risk that we may not have detected some We identified areas of laws and regulations that could material misstatements in the financial statements, even reasonably be expected to have a material effect on the though we have properly planned and performed our audit financial statements from our general commercial and in accordance with auditing standards. For example, the sector experience, through discussion with the directors further removed non-compliance with laws and regulations and other management (as required by auditing standards), is from the events and transactions reflected in the and from inspection of the Group’s regulatory and legal financial statements, the less likely the inherently limited correspondence and discussed with the directors and procedures required by auditing standards would identify it. other management the policies and procedures regarding compliance with laws and regulations. Telecom Plus Plc Report and Accounts 2022 / 93 Strategic Report Governance Report Financial Statements Shareholder Information In addition, as with any audit, there remained a higher risk • the directors’ confirmation within the Risk, Control and of non-detection of fraud, as these may involve collusion, Viability Statement, page 86 that they have carried out a forgery, intentional omissions, misrepresentations, or the robust assessment of the principal risks and uncertainties override of internal controls. Our audit procedures are facing the Group, including those that would threaten designed to detect material misstatement. We are not its business model, future performance, solvency and responsible for preventing non-compliance or fraud and liquidity; cannot be expected to detect non-compliance with all • the Principal Risks and Uncertainties disclosures laws and regulations. describing these risks and how emerging risks are identified, and explaining how they are being managed and mitigated; and ### 7. We have nothing to report on the • the directors’ explanation in the Risk, Control and Viability ### other information in the Annual Report Statement how they have assessed the prospects of the Group, over what period they have done so and The directors are responsible for the other information why they considered that period to be appropriate, and presented in the Annual Report together with the financial their statement as to whether they have a reasonable statements. Our opinion on the financial statements does expectation that the Group will be able to continue not cover the other information and, accordingly, we do in operation and meet its liabilities as they fall due not express an audit opinion or, except as explicitly stated over the period of their assessment, including any below, any form of assurance conclusion thereon. related disclosures drawing attention to any necessary qualifications or assumptions. Our responsibility is to read the other information and, in doing so, consider whether, based on our financial We are also required to review the Risk, Control and statements audit work, the information therein is materially Viability Statement, set out on page 86 under the Listing misstated or inconsistent with the financial statements Rules. Based on the above procedures, we have concluded or our audit knowledge. Based solely on that work we that the above disclosures are materially consistent with have not identified material misstatements in the other the financial statements and our audit knowledge. information. Our work is limited to assessing these matters in the Strategic report and directors’ report context of only the knowledge acquired during our financial Based solely on our work on the other information: statements audit. As we cannot predict all future events • we have not identified material misstatements in the or conditions and as subsequent events may result in strategic report and the directors’ report; outcomes that are inconsistent with judgements that were • in our opinion the information given in those reports reasonable at the time they were made, the absence of for the financial year is consistent with the financial anything to report on these statements is not a guarantee statements; and as to the Group’s and Company’s longer-term viability. • in our opinion those reports have been prepared in accordance with the Companies Act 2006. Corporate governance disclosures We are required to perform procedures to identify whether Directors’ remuneration report there is a material inconsistency between the directors’ In our opinion the part of the Directors’ Remuneration corporate governance disclosures and the financial Shareholder Information Report to be audited has been properly prepared in statements and our audit knowledge. accordance with the Companies Act 2006. Based on those procedures, we have concluded that each Disclosures of principal risks and uncertainties of the following is materially consistent with the financial and longer-term viability statements and our audit knowledge: We are required to perform procedures to identify whether • the directors’ statement that they consider that the there is a material inconsistency between the directors’ annual report and financial statements taken as a whole disclosures in respect of emerging and principal risks and is fair, balanced and understandable, and provides the the viability statement, and the financial statements and information necessary for shareholders to assess the our audit knowledge. Group’s position and performance, business model and strategy; Based on those procedures, we have nothing material to • the section of the annual report describing the work of add or draw attention to in relation to: the Audit Committee, including the significant issues Telecom Plus Plc Report and Accounts 2022 / 94 ## Independent Auditor’s Report ## to the Members of Telecom Plus PLC continued that the audit committee considered in relation to Auditor’s responsibilities the financial statements, and how these issues were Our objectives are to obtain reasonable assurance about addressed; and whether the financial statements as a whole are free • the section of the annual report that describes the review from material misstatement, whether due to fraud or of the effectiveness of the Group’s risk management and error, and to issue our opinion in an auditor’s report. internal control systems. Reasonable assurance is a high level of assurance, but does not guarantee that an audit conducted in accordance We are required to review the part of the Corporate with ISAs (UK) will always detect a material misstatement Governance Statement relating to the Group’s compliance when it exists. Misstatements can arise from fraud or with the provisions of the UK Corporate Governance Code error and are considered material if, individually or in specified by the Listing Rules for our review. aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the We have nothing to report in this respect. financial statements. A fuller description of our responsibilities is provided on the ### 8. We have nothing to report on the FRC’s website at www.frc.org.uk/auditorsresponsibilities. ### other matters on which we are required ### to report by exception The Company is required to include these financial statements in an annual financial report prepared using Under the Companies Act 2006, we are required to report the single electronic reporting format specified in the to you if, in our opinion: TD ESEF Regulation. The auditor’s report provides no • adequate accounting records have not been kept by the assurance over whether the annual financial report has parent Company, or returns adequate for our audit have been prepared in accordance with that format. not been received from branches not visited by us; or • the parent Company financial statements and the part ### of the Directors’ Remuneration Report to be audited 10. The purpose of our audit work and ### are not in agreement with the accounting records and to whom we owe our responsibilities returns; or • certain disclosures of directors’ remuneration specified This report is made solely to the Company’s members, by law are not made; or as a body, in accordance with Chapter 3 of Part 16 of the • we have not received all the information and explanations Companies Act 2006. Our audit work has been undertaken we require for our audit. so that we might state to the Company’s members those matters we are required to state to them in an We have nothing to report in these respects. auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the ### 9. Respective responsibilities Company’s members, as a body, for our audit work, for this report, or for the opinions we have formed. Directors’ responsibilities As explained more fully in their statement set out on page 87, the directors are responsible for: the preparation of Robert Seale (Senior Statutory Auditor) the financial statements including being satisfied that for and on behalf of KPMG LLP, Statutory Auditor they give a true and fair view; such internal control as Chartered Accountants they determine is necessary to enable the preparation 15 Canada Square of financial statements that are free from material London E14 5GL misstatement, whether due to fraud or error; assessing 21 June 2022 the Group and parent Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and using the going concern basis of accounting unless they either intend to liquidate the Group or the parent Company or to cease operations, or have no realistic alternative but to do so. Telecom Plus Plc Report and Accounts 2022 / 95 # Consolidated Statement of Comprehensive Income for the year ended 31 March 2022 | | Note | 2022 £'000 | 2021 £'000 | | --- | --- | --- | --- | | Revenue | 1 | 967,433 | 861,204 | | Cost of sales | | (778,958) | (688,104) | | **Gross profit** | | **188,475** | **173,100** | | Distribution expenses | | (29,686) | (27,849) | | Administrative expenses | | (84,423) | (76,820) | | Share incentive scheme charges | | (960) | (1,377) | | Amortisation of energy supply contract intangible | | (11,228) | (11,228) | | Total administrative expenses | | (96,611) | (89,425) | | Impairment loss on trade receivables | 13 | (11,566) | (11,213) | | Impairment of goodwill | 8 | (1,536) | - | | Other income | 1 | 1,844 | 1,175 | | **Operating profit** | 2 | **50,920** | **45,788** | | Financial income | | 136 | 84 | | Financial expenses | 3 | (2,709) | (2,358) | | **Net financial expense** | | **(2,573)** | **(2,274)** | | Loss on disposal of subsidiary | | (1,139) | - | | **Profit before taxation** | | **47,208** | **43,514** | | Taxation | 5 | (12,205) | (10,955) | | **Profit for the period** | | **35,003** | **32,559** | | Profit and other comprehensive income for the year attributable to owners of the parent | | 35,467 | 32,577 | | Loss for the year attributable to non-controlling interest | | (464) | (18) | | **Profit for the period** | | **35,003** | **32,559** | | Basic earnings per share | 19 | 45.1p | 41.5p | | Diluted earnings per share | 19 | 45.0p | 41.4p | The accompanying notes form part of these financial statements. Strategic Report Governance Report Financial Statements Shareholder Information Financial Statements Telecom Plus Plc Report and Accounts 2022 / 96 # Consolidated Balance Sheet as at 31 March 2022 | | Note | 2022 £'000 | 2021* £'000 | | --- | --- | --- | --- | | **Assets** | | | | | **Non-current assets** | | | | | Property, plant and equipment | 6 | 26,180 | 34,865 | | Investment property | 6 | 8,345 | 8,575 | | Intangible assets | 7 | 152,418 | 160,626 | | Goodwill | 8 | 3,742 | 5,324 | | Other non-current assets | 12 | 32,855 | 28,595 | | **Total non-current assets** | | **223,540** | **237,985** | | **Current assets** | | | | | Inventories | | 4,152 | 6,325 | | Trade and other receivables | 13 | 50,463 | 51,666 | | Current tax receivable | | - | 726 | | Accrued income | 13 | 134,917 | 120,395 | | Prepayments | | 4,077 | 4,809 | | Costs to obtain contracts | 14 | 15,151 | 15,702 | | Cash | | 29,647 | 25,056 | | Assets classified as held for sale | | 3,838 | - | | **Total current assets** | | **242,245** | **224,679** | | **Total assets** | | **465,785** | **462,664** | | **Current liabilities** | | | | | Trade and other payables | 16 | (38,101) | (30,374) | | Accrued expenses and deferred income | 17 | (113,493) | (122,295) | | Current tax payable | | (8) | - | | Liabilities classified as held for sale | | (7,551) | - | | **Total current liabilities** | | **(159,153)** | **(152,669)** | | **Non-current liabilities** | | | | | Long term borrowings | 15 | (99,215) | (89,376) | | Lease liabilities | 15 | (766) | (7,096) | | Deferred tax | 10 | (1,078) | (1,145) | | **Total non-current liabilities** | | **(101,059)** | **(97,617)** | | **Total assets less total liabilities** | | **205,573** | **212,378** | | **Equity attributable to equity holders of the parent** | | | | | Share capital | 18 | 3,982 | 3,970 | | Share premium | | 147,112 | 145,094 | | Capital redemption reserve | | 107 | 107 | | Treasury shares | 18 | (5,502) | (5,502) | | JSOP reserve | | (1,150) | (1,150) | | Retained earnings | | 61,935 | 70,306 | | | | 206,484 | 212,825 | | Non-controlling interest | | (911) | (447) | | **Total equity** | | **205,573** | **212,378** | *The presentation of the Consolidated Balance Sheet has been re-stated to reclassify the Costs to obtain contracts on the face of the statement, previously these were included in Trade and other receivables and Prepayments (refer to the Presentation of financial statements section of the Notes to the consolidated financial statements). The accompanying notes form part of these financial statements. These accounts were approved and authorised for issue by the Board on 21 June 2022 **Andrew Lindsay, Director** **Nick Schoenfeld, Director** Telecom Plus Plc Report and Accounts 2022 / 97 # Company Balance Sheet as at 31 March 2022 | | Note | 2022 £'000 | 2021 £'000 | | --- | --- | --- | --- | | **Assets** | | | | | **Non-current assets** | | | | | Investments in subsidiary undertakings | 9 | 262,037 | 262,037 | | Other non-current assets | 12 | 2,956 | 2,956 | | **Total non-current assets** | | **264,993** | **264,993** | | **Current assets** | | | | | Trade and other receivables | 13 | 50 | 30 | | Prepayments and accrued income | | 207 | 203 | | Cash | | 678 | 297 | | **Total current assets** | | **935** | **530** | | **Total assets** | | **265,928** | **265,523** | | **Current liabilities** | | | | | Trade and other payables | 16 | (55,325) | (61,227) | | Accrued expenses and deferred income | 17 | (68) | (64) | | **Total current liabilities** | | **(55,393)** | **(61,291)** | | Non-current liabilities | | - | - | | **Total assets less total liabilities** | | **210,535** | **204,232** | | **Equity** | | | | | Share capital | 18 | 3,976 | 3,962 | | Share premium | | 147,112 | 145,094 | | Capital redemption reserve | | 107 | 107 | | Treasury shares | 18 | (5,502) | (5,502) | | Retained earnings | | 64,842 | 60,571 | | **Total equity** | | **210,535** | **204,232** | By virtue of section 408 of the Companies Act 2006 the Company is exempt from presenting a statement of comprehensive income. The Company made a loss for the year of £942,000 before the receipt of distributions from subsidiary companies of £50,000,000 (2021: loss of £827,000 before receipt of distributions from subsidiary companies of £50,000,000). These accounts were approved and authorised for issue by the Board on 21 June 2022 **Andrew Lindsay, Director** **Nick Schoenfeld, Director** The accompanying notes form part of these financial statements. Strategic Report Governance Report Financial Statements Shareholder Information Telecom Plus Plc Report and Accounts 2022 / 98 # Consolidated and Company Cash Flow Statements for the year ended 31 March 2022 | | Group | | Company | | | --- | --- | --- | --- | --- | | | 2022 £'000 | 2021 £'000 | 2022 £'000 | 2021 £'000 | | **Operating activities** | | | | | | Profit before taxation | 47,208 | 43,514 | 49,058 | 49,173 | | Adjustments for: | | | | | | Distributions from subsidiary companies | - | - | (50,000) | (50,000) | | Net financial expense | 2,573 | 2,274 | - | - | | Impairment of goodwill | 1,536 | - | - | - | | Loss on disposal of subsidiary | 1,139 | - | - | - | | Depreciation of property, plant and equipment | 4,558 | 4,731 | - | - | | Profit on disposal of fixed assets | (940) | (47) | - | - | | Amortisation of intangible assets | 15,786 | 14,550 | - | - | | Amortisation of debt arrangement fees | 436 | 356 | - | - | | Decrease/(increase) in inventories | 2,173 | (1,694) | - | - | | Increase in trade and other receivables (including Costs to obtain contracts) | (18,750) | (6,713) | (24) | (140) | | (Decrease)/increase in trade and other payables | 6,144 | (4,046) | 48 | 22 | | Decrease in inter-company payable | - | - | (5,946) | (6,144) | | Share incentive scheme charges | 960 | 1,377 | - | - | | Corporation tax paid | (11,528) | (10,945) | - | - | | **Net cash flow from operating activities** | **51,295** | **43,357** | **(6,864)** | **(7,089)** | | **Investing activities** | | | | | | Purchase of property, plant and equipment | (2,196) | (2,582) | - | - | | Purchase of intangible assets | (7,747) | (7,457) | - | - | | Disposal of property, plant and equipment | 1,567 | 100 | - | - | | Distributions from subsidiary companies | - | - | 50,000 | 50,000 | | Interest received | 136 | 98 | - | - | | **Cash flow from investing activities** | **(8,240)** | **(9,841)** | **50,000** | **50,000** | | **Financing activities** | | | | | | Dividends paid | (44,787) | (44,708) | (44,787) | (44,708) | | Interest paid | (2,630) | (2,002) | - | - | | Interest paid on lease liabilities | (238) | (246) | - | - | | Drawdown of long term borrowing facilities | 65,000 | 30,000 | - | - | | Repayment of long term borrowing facilities | (55,000) | (35,000) | - | - | | Fees associated with borrowing facilities | (597) | - | - | - | | Repayment of lease liabilities | (1,530) | (1,321) | - | - | | Issue of new ordinary shares | 2,032 | 1,206 | 2,032 | 1,206 | | Cancellation of B shares in subsidiary | (2) | - | - | - | | **Cash flow from financing activities** | **(37,752)** | **(52,071)** | **(42,755)** | **(43,502)** | | (Decrease)/increase in cash and cash equivalents | 5,303 | (18,555) | 381 | (591) | | Net cash and cash equivalents at the beginning of the year | 25,056 | 43,611 | 297 | 888 | | **Net cash and cash equivalents at the year end** | **30,359** | **25,056** | **678** | **297** | | Cash and cash equivalents per balance sheet | 29,647 | 25,056 | 678 | 297 | | Cash and cash equivalents included within assets classified as held for sale | 712 | - | - | - | | **Net cash and cash equivalents at the year end** | **30,359** | **25,056** | **678** | **297** | The accompanying notes form part of these financial statements. Telecom Plus Plc Report and Accounts 2022 / 99 ## Consolidated Statement of Changes in Equity ## for the year ended 31 March 2022 Strategic Report Governance Report Financial Statements Shareholder Information | Consolidated Share | | | Share | | Capital | Treasury | | | JSOP | Retained | | | | Non- | Tot al | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | capital | premium | | redemption | | | shares | reserve | | earnings | | controlling | | | | | | | | | | reserve | | | | | | | | interest | | | | | £’000 | | £’000 | | £’000 | | £’000 | | £’000 | | £’000 | | | £’000 | £’000 | Balance at 3,962 143,896 1 07 (5,502) (1, 150) 81,068 (429) 221,952 1 April 2020 Profit and total - - - - - comprehensive 32,577 (1 8) 32,559 income Dividends - - - - - (44, 708) - (44, 708) Credit arising on - - - - - 1,377 - 1,3 77 share options Deferred tax on - - - - - (8) - (8) share options Issue of new 8 1, 198 - - - - - 1,206 ordinary shares Balance at 3, 970 145, 094 1 07 (5,502) (1, 150) 70 ,306 (44 7) 212,3 78 31 March 2021 Balance at 3, 970 145, 094 1 07 (5,502) (1, 150) 70 ,306 (44 7) 212,3 78 1 April 2021 Profit and total comprehensive - - - - - 35,467 (464) 35,003 income Dividends - - - - - (44, 787) - (44, 787) Credit arising on - - - - - 960 - 960 share options Deferred tax on - - - - - (11) - (11) share options Issue of new 14 2,018 - - - - - 2,032 ordinary shares Cancellation of B shares in (2) - - - - - - (2) subsidiary Balance at 3,982 147 , 112 107 (5,502) (1, 150) 61,935 (911) 205,573 31 March 2022 The accompanying notes form part of these financial statements. Shareholder Information Telecom Plus Plc Report and Accounts 2022 / 100 # Company Statement of Changes in Equity for the year ended 31 March 2022 | Company | Share capital £'000 | Share premium £'000 | Capital redemption reserve £'000 | Treasury shares £'000 | Retained earnings £'000 | Total £'000 | | --- | --- | --- | --- | --- | --- | --- | | Balance at 1 April 2020 | 3,954 | 143,896 | 107 | (5,502) | 56,106 | 198,561 | | Profit and total comprehensive income/(loss) | - | - | - | - | (827) | (827) | | Distributions from subsidiary companies | - | - | - | - | 50,000 | 50,000 | | Dividends | - | - | - | - | (44,708) | (44,708) | | Issue of new ordinary shares | 8 | 1,198 | - | - | - | 1,206 | | **Balance at 31 March 2021** | **3,962** | **145,094** | **107** | **(5,502)** | **60,571** | **204,232** | | Profit and total comprehensive income/(loss) | - | - | - | - | (942) | (942) | | Distributions from subsidiary companies | - | - | - | - | 50,000 | 50,000 | | Dividends | - | - | - | - | (44,787) | (44,787) | | Issue of new ordinary shares | 14 | 2,018 | - | - | - | 2,032 | | **Balance at 31 March 2022** | **3,976** | **147,112** | **107** | **(5,502)** | **64,842** | **210,535** | The accompanying notes form part of these financial statements. Telecom Plus Plc Report and Accounts 2022 / 101 # Notes to the Consolidated Financial Statements ## General information Telecom Plus PLC (the 'Company') is a company domiciled in the United Kingdom. The consolidated financial statements of the Company for the year ended 31 March 2022 comprise the Company and its subsidiaries (together referred to as the 'Group') and the Group's interest in associates. The financial statements were authorised for issue by the directors on 21 June 2022. ## Presentation of financial statements As a result of the relative size and historical volatility of share incentive scheme charges it has been decided to separately disclose the amounts on the face of the Consolidated Statement of Comprehensive Income. In view of the size and nature of the charge as a non-cash item, the amortisation of energy supply contract intangible asset has also been separately disclosed on the face of the Consolidated Statement of Comprehensive Income for the period. More information regarding the intangible asset is set out in note 7 of these financial statements. ## Prior year reclassification In order to provide greater clarity, the presentation of the Balance Sheet as at 31 March 2021 has been changed to reclassify the costs to obtain contracts with customers. Previously the elements comprising the costs to obtain contracts with customers were included in Trade and other receivables (£10,040,000) and Prepayments (£5,662,000), which have now decreased by the corresponding amounts to £51,666,000 and £4,809,000 respectively. There has been no impact on the income statement or net assets for the prior year or on the opening balances as at 1 April 2020. See note 14 to the financial statements. ## Significant accounting policies ### (a) Statement of compliance These Group and parent company financial statements were prepared in accordance with UK-adopted international accounting standards in conformity with the requirements of the Companies Act 2006. ### (b) Basis of preparation The Company's business activities, together with the factors likely to affect its future development, performance and position are set out in the Strategic Report on pages 2 to 46. The financial position of the Company, its cash flows, liquidity position and borrowing facilities are described in the Financial Review on pages 17 to 19 and within notes 15 and 22 to the financial statements. In addition, notes 15 and 22 include the Company's objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments; and its exposures to credit risk and liquidity risk. Under the revised energy supply arrangements which were effective from 1 December 2013, E.ON (formerly npower) continues to be responsible for funding the principal working capital requirements relating to the supply of energy to the Company's customers. This includes funding the Budget Plans of customers who pay for their energy in equal monthly instalments. ### Going concern Since September 2021, increases in wholesale costs have resulted in suppliers across the energy retail market collapsing. However, as a result of its wholesale supply agreement with E.ON the Group is not directly exposed to short-term fluctuations in the energy wholesale markets with E.ON undertaking the required hedging. The Group has total revolving credit facilities of £175.0 million with Barclays Bank PLC, Lloyds Bank PLC and Bank of Ireland Group PLC for the period to 30 June 2024, of which £100 million was drawn down as at 31 March 2022 (2021: £90m drawn down). Further detail regarding the maturity and applicable covenants is disclosed in note 15. The directors have prepared base and sensitised forecasts for a period of at least 12 months from the date of authorisation of these financial statements, including the effect of severe, but plausible, downside scenarios (including reductions in the collectability of customer debts). Those forecasts indicate that the Group can continue to operate within the terms of its existing bank facilities. Furthermore, the directors have considered the possibility of taking mitigating action, such as the temporary reduction or cancellation of the annual dividend, in the event of any extreme scenarios. Strategic Report Governance Report Financial Statements Shareholder Information Telecom Plus Plc Report and Accounts 2022 / 102 # Notes to the Consolidated Financial Statements Consequently, the directors have a reasonable expectation that the Group and Company will have sufficient funds to continue to meet its liabilities as they fall due for at least twelve months from the date of approval of the financial statements and therefore have prepared the financial statements on a going concern basis. The accounting policies set out below have been consistently applied to both years presented, unless otherwise stated. The financial statements have been prepared on a historical costs basis. ### **Critical accounting estimates, judgements and assumptions** In the process of applying the Group's accounting policies, which are described below, the Directors have made judgements, estimations and assumptions regarding the future. The judgements, estimations, and assumptions that have the most significant impact on the amounts recognised in the financial statements are detailed below. Estimates and judgements are evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In future, actual results may differ from these estimates and assumptions. ### **Significant estimates** Estimates and underlying assumptions are reviewed on an ongoing basis, with revisions recognised in the year in which the estimates are revised and in any future years affected. The areas involving significant risk resulting in a material adjustment to the carrying amounts of assets and liabilities within the next financial year are as follows: #### **(i) Revenue recognition** The Group recognises energy revenues on an individual meter-by-meter basis. These revenues are recognised on the basis of actual meter readings where these are available at each month end, and estimation for each meter where meter readings are not available. Each month customers are sent a bill setting out the amount of energy that they have used, based either on actual or estimated meter readings. These amounts of individual customer billed usage form the basis of the recognition of energy revenues. The Group is among the leaders in the energy industry for smart meter installations and has a very high penetration of smart meters within its customer base of approximately 65% at the year end. Smart meters are able to remotely feedback actual meter readings at period ends to suppliers. Actual meter readings received from smart meters at each period end are therefore used to recognise a large portion of energy revenues. In relation to the estimation of revenues from non-smart meter customers, where meter readings have not been communicated through a manual meter reading, the Group estimates the amount of energy consumed by each meter. These estimations are based on observed historical seasonal meter-by-meter consumption patterns which are adjusted for the actual impact on usage of weather (using third-party information provided by the energy industry and information from smart meters). Whilst these estimation routines are currently considered appropriate, a significant change in historical consumption patterns and/or a failure to maintain the accuracy of the estimation routines could materially impact the amount of revenue recognised for non-smart meters. However, the Group's estimation routines are predominantly driven by empirical meter-by-meter industry data and monitored for accuracy on a monthly basis. The amount of estimated energy revenue recognised from non-smart meters in the year ended 31 March 2022 was £94.7m (2021: £110.1m). The range of reasonable outcomes for the estimated energy revenue is considered to be significant, if the estimation routines used were impacted by an indicative sensitivity of +/-1.0% accuracy overall, the difference in energy revenues recognised in the period would be +/-£0.9m (2021: £1.1m). #### **(ii) Recoverability of trade receivables** At each reporting date, the Group evaluates the estimated recoverability of trade receivables and records allowances for expected credit losses based on experience. Estimates associated with these allowances are based on, among other things, the historical collection experience of those categories (principally whether the indebted customer remains with the Group or not, and the age of the debt). The Group also makes an assessment of the expected future losses where appropriate. The actual level of trade receivables collected may differ from the estimated levels of recovery, which could impact operating results positively or negatively. At 31 March 2022, the allowance for expected credit losses relating to customer invoicing was £25.0m. If the collection experience was to improve/decline by an indicative sensitivity of +/- 5% this would increase / decrease the provision by +/- £1.5m accordingly. Telecom Plus Plc Report and Accounts 2022 / 103 Strategic Report Governance Report Financial Statements Shareholder Information Significant judgements Any loans made by the Company to employee benefit There are no key judgements made by management in trusts are accounted for as loans in accordance with the process of applying the Group’s accounting policies. the relevant terms. When the trust transfers shares to employees to satisfy share incentive scheme awards, (c) Basis of consolidation this is considered to be, in substance, two transactions: (i) Subsidiaries a distribution of the shares from the employee benefit The Group’s financial statements consolidate the financial trust back to the Company as treasury shares, followed statements of Telecom Plus PLC and its subsidiaries. by a distribution of those shares to the employees. Subsidiaries are consolidated from the date on which control transfers to the Group and are included until (d) Revenue the date on which the Group ceases to control them. Overview Revenue is the value of goods and services supplied to Control is recognised where an investor is expected to external customers and Partners excluding value added receive, or has rights to, variable returns from its investment tax and other sales related taxes. For each of the Group’s in the investee and has the ability to affect these returns main income streams from the provision of fixed line through its power over the relevant activities of the investee. telephony, broadband, mobile telephony, gas and electricity Transactions between Group companies are eliminated on services, transactions are recorded as sales in the month consolidation. when the transfer of those services or the supply of goods takes place. The Group’s customers are invoiced in the (ii) Assets and liabilities classified as held for sale month following that in which the services are provided. A non-current asset or a group of assets containing a Tariffs are set by customer, by service, and these can non-current asset (a disposal group) is classified as held vary depending on the number of services provided. Each for sale if its carrying amount will be recovered principally element of any package is considered independently for through sale rather than through continuing use, it is the purposes of a performance obligation to determine available for immediate sale and sale is highly probable how the price is derived. within one year. The Group also generates revenue as a result of providing On initial classification as held for sale, non-current assets bill payment protection and accidental death cover to and disposal groups are measured at the lower of previous customers for a monthly fee. The Group also offers home carrying amount and fair value less costs to sell with any insurance and boiler cover services to customers. The adjustments taken to profit or loss. The same applies to Group does not retain the insurance risk for these services. gains and losses on subsequent remeasurement although gains are not recognised in excess of any cumulative Revenue recognition - agent versus principal impairment loss. Any impairment loss on a disposal group Management assesses the revenue recognition of each first is allocated to goodwill, and then to remaining assets of the Group’s service offerings on either an agent or and liabilities on pro rata basis, except that no loss is principal basis. The identification of the principal in the allocated to inventories, financial assets, deferred tax contract is not always clear, specifically whether the Group assets, employee benefit assets and investment property, controls the service prior to transfer to the customer. The which continue to be measured in accordance with the determination of whether the Group is a principal or an Group’s accounting policies. Intangible assets and property, agent for each service offering is evaluated by establishing Shareholder Information plant and equipment once classified as held for sale or which entity is responsible for providing the specified distribution are not amortised or depreciated. goods or services against a list of indicators that could indicate an agency relationship. These include: (iii) Employee benefit trusts (i) Evaluating which entity is primarily responsible for In accordance with IFRS 10 Consolidated Financial providing the specified goods or services. Statements, the assets and liabilities of employee benefit (ii) Evaluating whether the Group has inventory risk. trusts are consolidated in the Group financial statements. (iii) Evaluating whether the Group has the discretion to Employee benefit trusts are treated as a legal entity establish the pricing structure. separate from the Company but as subsidiaries of the Company. Telecom Plus Plc Report and Accounts 2022 / 104 ## Notes to the Consolidated Financial Statements ## continued The Group primarily acts as a reseller of utilities and in In the provision of broadband services, the Group provides supplying the majority of these services to customers customers with a broadband router at the start of their the Group is considered to be primarily responsible for contract. The terms and conditions under which broadband fulfilment of the service and has the discretion to establish routers are supplied to customers mean that routers are pricing and key terms. Revenue for these services is accounted for as finance leases. The Group therefore therefore recognised as a principal. recognises the sale of the router at the retail price and creates a finance lease asset on the balance sheet for For services where the Group offers home insurance, boiler the routers shipped to customers at the point in time in and home emergency cover, and bill protection, revenue a given month. Over the average customer lifetime of 7 is recognised on an agency basis as the Group does not years, the Group accrues finance income on the asset at retain any underwriting risk and acts as an agent to the the rate of interest that causes the present value of the underlying insurer. During the period the Group recognised future lease payments to equal the sum of the fair value of £5.3m (2021: £5.9m) of revenue on an agency basis. the asset. Part of the receipts under the service contract are then allocated between reducing the net asset and Revenue recognition – Energy services recognising finance income, resulting in the derecognition The recognition of revenue associated with the provision of the asset at the end of the 7 year life. of gas and electricity services to customers on non-smart meters by the Group relies on estimates of usage where Revenue recognition – Cashback card services meter readings are not available. These estimations are In relation to Cashback cards, the following revenue streams based on observed historical seasonal meter-by-meter are recognised by the Group at the time the services are consumption patterns which are adjusted for the actual supplied and charged to customers: (i) a small fixed monthly impact on usage of weather (using third-party information fee to cover provision of card management services; and provided by the energy industry and information from (ii) transaction fees to cover the facilitation of the top-up smart meters). Revenue is recognised over time during of customer cards. The majority of the Cashback received the period in which the Group transfers control of the from the Cashback card programme manager is passed services to the customer as the customer simultaneously to customers to reduce the payment they are required receives and consumes the benefits provided by the entity to make to the Group for their monthly utilities. Revenue performance. Any unbilled revenue is accrued at each is recognised over time during the period in which the period end. Group transfers control of the services to the customer as the customer simultaneously receives and consumes the Revenue recognition – Telephony services benefits provided by the entity performance. Any unbilled The Group principally generates revenue from providing revenue is accrued at each period end. the following telecommunications services where it is responsible to the customer for rendering the underlying In addition, the Group charges a small administrative fee services: (i) fixed telephony line rental, call and broadband for facilitating the issue of each Cashback card. Under data charges; (ii) mobile telephony call and data charges; IFRS 15, as the initial application fee is considered to be and (iii) mobile handset sales. Both the handset and service a non-refundable upfront fee that does not relate to the are priced on the relative standalone selling prices of each transfer of a promised good or services, the associated fee is distinct performance obligation. The contract terms for therefore recognised over the expected life of the customer. certain fibre broadband services are 18 months and for mobile handsets 24 months. In relation to items (i) and (ii), Revenue recognition – Bill protection and life cover, revenue is recognised over time during the period in which home insurance and boiler cover services the Group transfers control of the services to the customer The Group charges customers a small monthly fee for as the customer simultaneously receives and consumes bill payment protection in the event of redundancy and the benefits provided by the entity performance. Any for a small amount of monthly life insurance cover. The unbilled revenue is accrued at each period end. Revenue Group also offers home insurance services to customers. for mobile handset sales are considered a separate In relation to the provision of bill protection and life cover, performance obligation recognised at the point in time home insurance and boiler cover the Group does not retain when the Group transfers control of the devices to the any underwriting risk and therefore acts as an agent of end user. the underlying insurer. The Group therefore recognises revenues on a commission income basis over time each month as the services are supplied and billed. Telecom Plus Plc Report and Accounts 2022 / 105 Strategic Report Governance Report Financial Statements Shareholder Information Revenue recognition – Other services (f) Financial income and expenses The Group also generates revenues from providing Financial income comprises interest income and is customers with paper bills and from charging customers recognised in the Statement of Comprehensive Income as it late payment fees. In addition, the Group generates accrues, using the effective interest rate method. Financial revenues from providing services to its network of Partners. expenses comprise bank interest and non-utilisation fees Revenue is recognised over time during the period in associates with the Company’s debt facilities. which the Group transfers control of the services to the customer, or the late payment fees are incurred, and any (g) Leases unbilled revenue is accrued at each period end. As a lessee Recognition of a lease In marketing the sale of bundled services, the Group The contracts are assessed by the Group to determine formerly offered most “Double Gold” and certain “Gold” whether a contract is, or contains, a lease. In general customers the provision and installation of LED light contracts are deemed to contain a lease when the bulbs throughout their homes (the ‘Daffodil’ scheme). following apply: The provision of Daffodil light bulbs was distinct from the • Conveys the right to control the use of an identified provision of the other bundled goods and services. This asset for a certain period in exchange for consideration; resulted in an allocation of revenue to the light bulbs, • The Group has substantially all economic benefits from which was being recognised at the point in time that the use of the asset; and control of the light bulbs was passed to the customer – i.e. • The Group can direct the use of the identified asset. at the point of installation by a Utility Warehouse fitter. There was a corresponding reduction in revenues from This policy is applied to contracts entered into, or changed, services over the remaining contractual term. The Group on or after 1 April 2019. ceased these activities during the current year. At commencement or on modification of a contract The Group also recognises revenue from the installation that contains a lease component, the Group recognises of central heating boilers. Revenue is recognised at the a right-of-use asset and a lease liability at the lease point in time when the Group transfers control of the commencement date. boiler to the customer. As a lessor (e) Distributor commissions Where the Group is a lessor, it determines at inception The Group’s Partners earn commissions mainly on the whether the lease is a finance or an operating lease. When introduction of new customers to the Group (‘upfront a lease transfers substantially all the risks and rewards commissions’) and on the ongoing monthly use of the of ownership of the underlying asset then the lease is a Group’s services by the customers they have introduced finance lease; otherwise the lease is an operating lease. (‘trailing commissions’). Trailing commissions are recognised in the Statement of Comprehensive Income as they are Income from operating leases is recognised on a straight- earned by distributors on an accruals basis. Under IFRS line basis over the lease term. Income from finance leases 15, upfront commissions are capitalised and amortised is recognised at lease commencement with interest over the expected life of the customer. income recognised over the lease term. Shareholder Information In relation to certain multiservice customers, distributors Right-of-use asset are able to bring forward the payment of a limited number The right-of-use asset is initially measured at cost, of future monthly trailing commission payments expected which comprises the initial amount of the lease liability to be due on the usage of customers they have introduced. adjusted for any lease payments made at or before the These advanced commission payments are held on the commencement date, plus any initial direct costs incurred, Balance Sheet and are amortised on a straight-line basis less any lease incentives received. The right-of-use asset is through the Statement of Comprehensive Income over the subsequently depreciated using the straight-line method period during which they are earned and would otherwise from the commencement date to the end of the lease term, have been paid had the payment not been brought forward. unless the lease transfers ownership of the underlying asset to the Group by the end of the lease term, or the cost of Telecom Plus Plc Report and Accounts 2022 / 106 ## Notes to the Consolidated Financial Statements ## continued the right-of-use asset reflects that the Group will exercise a purchase option. In that case the right-of-use asset A deferred tax asset is recognised only to the extent that will be depreciated over the useful life of the underlying it is probable that future taxable profits will be available asset, which is determined on the same basis as those of against which the asset can be utilised. Deferred tax assets property and equipment. In addition, the right-of-use asset are reduced to the extent that it is no longer probable is periodically reduced by impairment losses, if any, and that the related tax benefit will be realised. adjusted for certain remeasurements of the lease liability. (j) Property, plant and equipment Lease Liability Property, plant and equipment is stated at cost less a The lease liability is initially measured at the present provision for depreciation. Depreciation is calculated value of the lease payments that are not paid at the so as to write off the cost less estimated residual value commencement date, discounted using the interest of the assets in equal instalments over their expected rate implicit in the lease or, if that rate cannot be readily useful lives. No depreciation is provided on freehold determined, the Group’s incremental borrowing rate. land. Depreciation is provided on other assets at the following rates: The Group includes right-of-use assets within property, plant and equipment and the corresponding lease liabilities Freehold buildings 50 years in ‘lease liabilities’ on the balance sheet. Freehold and leasehold improvements 3 to 25 years Plant and machinery 15 years Short-term leases and leases of low-value assets Fixtures, fittings and office equipment The Group has elected not to recognise right-of-use - Fixtures and fittings 7 to 10 years assets and lease liabilities for lease of low-value assets - Computer and office equipment 3 to 5 years and short-term leases. The Group recognises the lease Motor vehicles 3 to 4 years payments associated with these leases as an expense on The carrying amounts of property, plant and equipment a straight-line basis over the lease term. are reviewed for impairment when there is an indication that they may be impaired. (h) Hire purchase agreements Hire purchase agreements relate to leases of assets where (k) Investment properties the Group has passed on substantially all the risks and Investment properties are properties which are held either rewards of ownership and are therefore classified as to earn rental income or for capital appreciation or for both. finance leases. When assets are leased out under finance Investment properties are stated at cost less accumulated leases, the present value of the minimum lease payments depreciation. Rental income from investment properties is recognised as a receivable. is accounted for on an accruals basis. (i) Taxation (l) Intangible assets The tax charge for the year comprises current and Intangible assets which arise (e.g. on the entering into deferred tax. Taxation is recognised in the Statement of of significant commercial contractual arrangements) are Comprehensive Income except to the extent that it relates capitalised and amortised over the shorter of their useful to items recognised directly in equity, in which case it is life and the term of any contractual arrangement. recognised in equity. IT, software and web development costs are capitalised Current tax is the expected tax payable on the taxable as intangible assets to the extent that certain projects income for the year, using tax rates enacted or substantially can be separately identified and involve the production enacted at the balance sheet date, and any adjustment of new and/or enhanced systems that the Company will to tax payable in respect of previous years. use over the medium-term. It must also be considered probable that the asset will generate future economic Deferred tax is recognised, based on the balance sheet benefits, and the development cost can be measured liability method, on temporary differences between the reliably. Where these conditions are not met, development carrying amounts of assets and liabilities for financial expenditure is recognised as an expense in the year in reporting purposes and the amounts used for taxation which it is incurred. purposes. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date. Telecom Plus Plc Report and Accounts 2022 / 107 Strategic Report Governance Report Financial Statements Shareholder Information Directly attributable costs that are capitalised include (p) Inventories employee and external costs specifically incurred in the Inventories principally include mobile telephones, LED development of the intangible asset. These costs are light bulbs and other electronic equipment and are valued amortised on a straight-line basis over their estimated at the lower of cost and net realisable value. Cost is useful economic lives of up to 10 years when each system measured on a first in, first out basis. Net realisable value is brought into use by the Company. represents the estimated selling price less all costs to be incurred in marketing, selling and distribution. (m) Goodwill Goodwill arising on the acquisition of a business, (q) Financial instruments representing the difference between the fair value of The Group classifies financial instruments, or their consideration and the fair value of the separable net assets component parts, on initial recognition as a financial asset, acquired is capitalised and is subject to impairment review, a financial liability or an equity instrument in accordance both annually and when there are indications that the with the substance of the contractual arrangement. carrying amount may not be recoverable. Financial instruments are recognised on the trade date (n) Impairment when the Group becomes a party to the contractual The carrying amounts of the Group’s assets, other than provisions of the instrument. Financial instruments are inventories, are reviewed at each balance sheet date to recognised initially at fair value plus, in the case of a determine whether there is any indication of impairment. financial instrument not at fair value through profit and If any such indication exists, the asset’s recoverable loss, transactions costs that are directly attributable to amount is estimated. The recoverable amount of assets the acquisition or issue of the financial instrument. is the greater of their fair value less costs to sell and value in use. Financial instruments are derecognised on the trade date when the Group is no longer a party to the contractual An impairment loss is recognised whenever the carrying provisions of the instrument. amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised (r) Trade receivables in the Statement of Comprehensive Income. Trade receivables are stated at their nominal value as reduced by expected lifetime credit losses in accordance An impairment loss is reversed if there has been a change with IFRS 9. Trade receivables are not considered to in the estimates used to determine the recoverable contain a significant financing component and therefore amount. An impairment loss is reversed only to the extent the simplified approach for Expected Credit Losses is that the asset’s carrying amount does not exceed the applied. carrying amount that would have been determined, net of depreciation, if no impairment loss had been recognised. (s) Cash and cash equivalents Cash and cash equivalents comprise cash in hand and (o) Investments deposits with banks and, for the purposes of the Cash In the Company’s accounts, investments in subsidiary Flow Statement, short term revolving credit facilities. and associated undertakings are initially stated at cost. Shareholder Information Provision is made for any impairment in the value of (t) Borrowings these investments. In the Group accounts investments Short and long term borrowings comprise revolving credit in associated undertakings are shown at cost plus facilities and bank loans. The fees associated with entering accumulated profits less any dividends received from into borrowing facilities are capitalised and netted off the associated undertakings. against borrowings and amortised over the term of the borrowings. Telecom Plus Plc Report and Accounts 2022 / 108 ## Notes to the Consolidated Financial Statements ## continued (u) Trade payables (x) Provisions Trade payables are stated at their nominal value, as the Provisions are recognised when the Group has a present interest that would be recognised from discounting future obligation as a result of a past event, and it is probable cash payments over the short payment period is not that the Group will be required to settle that obligation. considered to be material. Provisions are measured at the directors’ best estimate of the expenditure required to settle the obligation at the (v) Share based payments balance sheet date, and are discounted to present value The fair value at the date of grant of share-based where the effect is material. remuneration, principally share options, is calculated using a binomial pricing model (LTIP 2016: Monte-Carlo (y) Pensions model) and is charged to the Statement of Comprehensive The Group makes contributions to certain employees’ Income on a straight-line basis over the vesting period of personal pension plans. These are charged to the the award. The charge to the Statement of Comprehensive Statement of Comprehensive Income in the year in which Income takes account of the estimated number of shares they become payable. that will vest. All share option-based remuneration is equity settled. (z) Dividends Final dividend distributions to the Company’s shareholders (w) Segmental reporting are recognised as a liability in the Group’s financial During the period, following a review of the financial statements in the period in which the dividends are information regularly reviewed by the chief operating approved by the Company’s shareholders. Interim dividends decision makers, the executive directors of the Board, are recognised when paid. it was decided to present the Group as one operating segment. This reflects the fact that the chief operating (aa) New standards issued but not yet effective decision makers consider the performance of the Group No new standards, interpretations and amendments not as a whole, particularly given the nature of the Group’s yet effective are expected to have a material effect on bundled service offering. the Group’s future financial statements. Telecom Plus Plc Report and Accounts 2022 / 109 # 1. Revenue and Alternative Performance Measures disclosure ## Revenue by service | | 2022 £'000 | 2021 £'000 | | --- | --- | --- | | Electricity | 450,544 | 391,813 | | Gas | 295,696 | 248,008 | | Landline and broadband | 129,703 | 132,241 | | Mobile | 44,673 | 40,580 | | Other | 46,817 | 48,562 | | | 967,433 | 861,204 | The Group operates solely in the United Kingdom. Other income in the Consolidated Statement of Comprehensive Income primarily relates to rental income from the Group's former head office building (see note 11) and the profit on disposal of a property during the current period. ## Contract balances The following table provides the information about contract assets and contract liabilities from contracts with customers. | Group | 2022 £'000 | 2021 £'000 | | --- | --- | --- | | Contract assets, which are included in accrued income | - | - | | Contract liabilities, which are included in deferred income | 561 | 1,612 | The Group has implemented an expected credit loss impairment model with respect to contract assets. This and any significant changes in contract assets and liabilities are disclosed in note 13. There are no contract balances from contracts with customers in the Company. ## Alternative Performance Measures disclosure In order to provide a clearer presentation of the underlying performance of the group, adjusted profit before tax and adjusted basic EPS exclude share incentive scheme charges and the amortisation of the intangible asset arising from entering into the energy supply arrangements with npower in December 2013; this decision reflects both the relative size and non-cash nature of these charges. The loss for the period attributable to the non-controlling interest is excluded as these losses are not attributable to shareholders of the Company. In FY22 adjusted profit before tax also excludes: (i) the loss on the disposal of UWHS, (ii) the write-off of goodwill associated with the conditional disposal of Glow Green; and (iii) the profit on disposal of a freehold property; this decision reflects the one-off non-operating nature of these items. Strategic Report Governance Report Financial Statements Shareholder Information Telecom Plus Plc Report and Accounts 2022 / 110 # Notes to the Consolidated Financial Statements | Group | 2022 £'000 | 2021 £'000 | | --- | --- | --- | | Statutory profit before tax | 47,208 | 43,514 | | Adjusted for: | | | | Loss for period attributable to non-controlling interest | 464 | 18 | | Amortisation of energy supply contract intangible assets | 11,228 | 11,228 | | Share incentive scheme charges | 960 | 1,377 | | Loss on disposal of subsidiary – UWHS | 1,139 | - | | Impairment of goodwill – Glow Green | 1,536 | - | | Profit on sale of freehold property | (603) | - | | Adjusted profit before tax | 61,932 | 56,137 | ## 2. Operating profit Operating profit is stated after charging/(crediting): | | 2022 £'000 | 2021 £'000 | | --- | --- | --- | | Depreciation and amortisation | 20,344 | 19,281 | | Profit on disposal of fixed assets | (940) | (47) | | Auditor's remuneration | | | | - audit of Company and consolidated accounts | 231 | 215 | | - audit of subsidiaries of the Company | 83 | 77 | | - audit related assurance services | 31 | 38 | | Inventories expensed | 15,313 | 17,585 | | Trade receivables and accrued income impairment loss | 11,566 | 11,213 | | Rental income | (864) | (1,045) | Total fees paid to the auditor KPMG LLP during the year were £345,000 (2021: £330,000), including non-audit services of £31,000 (2021: £38,000). ## 3. Financial expenses An analysis of financial expenses included in the Statement of Comprehensive Income is set out below: | | 2022 £'000 | 2021 £'000 | | --- | --- | --- | | Interest costs on bank loans and overdrafts | 2,187 | 1,644 | | Interest costs on lease liabilities | 238 | 246 | | Other financial expenses | 284 | 468 | | Total financial expenses | 2,709 | 2,358 | Telecom Plus Plc Report and Accounts 2022 / 111 ## 4. Personnel expenses The total charge in the Statement of Comprehensive Income comprised the following: | | 2022 £'000 | 2021 £'000 | | --- | --- | --- | | Wages and salaries | 75,294 | 69,860 | | Social security costs | 7,649 | 6,694 | | Pension contributions | 2,577 | 2,373 | | | 85,520 | 78,927 | | Share incentive scheme charges | 960 | 1,377 | | | 86,480 | 80,304 | Average number employed by the Group during the year (excluding directors): | | 2022 | 2021 | | --- | --- | --- | | Employees | 1,987 | 2,058 | ## 5. Taxation ### (i) Recognised in the Income Statement | | 2022 £'000 | 2021 £'000 | | --- | --- | --- | | **Current tax charge** | | | | Current year | 12,354 | 10,913 | | Adjustments in respect of prior years | (104) | 9 | | | 12,250 | 10,922 | | **Deferred tax charge** | | | | Decelerated capital allowances | 87 | 202 | | Other timing differences | (480) | 58 | | Effect of tax rate change on opening balance | 376 | 17 | | Adjustment in respect of prior years | (28) | (244) | | | (45) | 33 | | **Total tax charge** | **12,205** | **10,955** | Strategic Report Governance Report Financial Statements Shareholder Information Telecom Plus Plc Report and Accounts 2022 / 112 # Notes to the Consolidated Financial Statements ### (ii) Reconciliation of total tax charge | | 2022 £'000 | 2021 £'000 | | --- | --- | --- | | **Profit before tax** | **47,208** | 43,514 | | Impairment of goodwill | 1,536 | - | | Loss on disposal of subsidiary | 1,139 | - | | Profit subject to corporation tax | **49,883** | 43,514 | | Corporation tax using the UK corporation tax rate of 19% (2021: 19%) | **9,478** | 8,268 | | Expenses not deductible for taxation purposes | **2,680** | 2,944 | | Assets ineligible for capital allowances | **264** | - | | Adjustment in respect of share options | **(394)** | (59) | | Adjustments in respect of prior years - current tax | **(104)** | 9 | | - deferred tax | **(28)** | (244) | | Remeasurement of deferred tax for changes in rates | **285** | - | | Deferred tax not recognised | **402** | - | | Other deferred tax adjustments | **(378)** | 37 | | **Total tax charge** | **12,205** | 10,955 | The UK corporation tax rate is currently 19%. Section 6 of the Finance Act 2021 (FA 2021) increases the main rate of corporation tax by six percentage points, from 19 per cent to 25 per cent, with effect from the financial year beginning 1 April 2023. The Company's future current tax charge will therefore increase accordingly. The deferred tax balance at 31 March 2022 has been calculated at 25%, (2021: 19%) which reflects that the rate increase from 1 April 2023. ![img-13.jpeg](img-13.jpeg) Telecom Plus Plc Report and Accounts 2022 / 113 Strategic Report Governance Report Financial Statements Shareholder Information Financial Statements ## 6. Property, plant and equipment | Group 2022 | Investment property £'000 | Freehold land & buildings £'000 | Leasehold land & buildings £'000 | Freehold & leasehold improvements £'000 | Plant & machinery £'000 | Fixtures, fittings & office equipment £'000 | Motor vehicles £'000 | Total £'000 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | **Cost** | | | | | | | | | | At 1 April 2021 | 13,862 | 27,383 | 3,817 | 1,420 | 1,205 | 16,925 | 7,522 | 72,134 | | Additions | 61 | 190 | - | 31 | 28 | 1,716 | 170 | 2,196 | | Disposals | - | (426) | - | (498) | - | - | (991) | (1,915) | | Disposals - UWHS | - | - | (2,057) | (679) | (475) | (244) | (5,475) | (8,930) | | Transfer to current assets held for sale | - | - | (674) | (8) | (17) | (219) | (247) | (1,165) | | **At 31 March 2022** | **13,923** | **27,147** | **1,086** | **266** | **741** | **18,178** | **979** | **62,320** | | **Depreciation** | | | | | | | | | | At 1 April 2021 | (5,287) | (5,259) | (869) | (873) | (566) | (13,087) | (2,753) | (28,694) | | Charge for the year | (291) | (862) | (427) | (82) | (187) | (1,665) | (1,044) | (4,558) | | Disposals | - | 103 | - | 498 | - | 3 | 686 | 1,290 | | Disposals - UWHS | - | - | 644 | 183 | 415 | 125 | 2,310 | 3,677 | | Transfer to current assets held for sale | - | - | 308 | 8 | 6 | 120 | 48 | 490 | | **At 31 March 2022** | **(5,578)** | **(6,018)** | **(344)** | **(266)** | **(332)** | **(14,504)** | **(753)** | **(27,795)** | | **Net book amounts** | | | | | | | | | | At 31 March 2022 | 8,345 | 21,129 | 742 | - | 409 | 3,674 | 226 | 34,525 | Motor vehicles include right of use assets held under finance leases with a net book value as at 31 March 2022 of £Nil (2021: £4.0m). The balances in leasehold land & buildings comprise right of use assets with a net book value of £0.7m (2021: £2.9m). The Company no longer holds any property, plant and equipment following the Group reorganisation in April 2017. Disposals – UWHS relate to the fixed assets of UW Home Services Limited which was disposed by the Group on 31 March 2022. Telecom Plus Plc Report and Accounts 2022 / 114 # Notes to the Consolidated Financial Statements | Group 2021 | Investment property £'000 | Freehold land & buildings £'000 | Leasehold land & buildings £'000 | Freehold & leasehold improvements £'000 | Plant & machinery £'000 | Fixtures, fittings & office equipment £'000 | Motor vehicles £'000 | Total £'000 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | **Cost** | | | | | | | | | | At 1 April 2020 | 13,425 | 27,383 | 3,817 | 1,361 | 1,168 | 15,102 | 8,582 | 70,838 | | Additions | 437 | - | - | 59 | 37 | 1,853 | 196 | 2,582 | | Disposals | - | - | - | - | - | (30) | (1,256) | (1,286) | | **At 31 March 2021** | **13,862** | **27,383** | **3,817** | **1,420** | **1,205** | **16,925** | **7,522** | **72,134** | | **Depreciation** | | | | | | | | | | At 1 April 2020 | (4,993) | (4,404) | (442) | (794) | (313) | (11,449) | (2,244) | (24,639) | | Charge for the year | (294) | (855) | (427) | (79) | (253) | (1,638) | (1,185) | (4,731) | | Disposals | - | - | - | - | - | - | 676 | 676 | | **At 31 March 2021** | **(5,287)** | **(5,259)** | **(869)** | **(873)** | **(566)** | **(13,087)** | **(2,753)** | **(28,694)** | | **Net book amounts** | | | | | | | | | | At 31 March 2021 | 8,575 | 22,124 | 2,948 | 547 | 639 | 3,838 | 4,769 | 43,440 | | At 31 March 2020 | 8,432 | 22,979 | 3,375 | 567 | 855 | 3,653 | 6,338 | 46,199 | The operations of the Company were transferred into new head offices at Merit House in 2015 and the former head office building, Southon House, was vacated. Southon House is held as an investment property and separately disclosed on the balance sheet of the Company. An independent valuation of Southon House was conducted on 4 June 2021 in accordance with RICS Valuation – Professional Standards UK January 2014 (revised April 2015) guidelines. The independent market value of Southon House was determined to be £11.9 million and has been categorised as a Level 3 fair value based on the inputs to the valuation technique used. The valuation was prepared on a Market Value basis as defined in the Valuation Standards and was primarily derived from using comparable market transactions carried out on an arm's length basis. These inputs are deemed unobservable. The directors believe that there have not been any material changes in circumstances that would lead to a significant reduction in the market valuation of Southon House from £11.9m. Telecom Plus Plc Report and Accounts 2022 / 115 Strategic Report Governance Report Financial Statements Shareholder Information ### 7. Intangible assets | Group | Energy Supply | | | | IT Software & | | Tot al | | --- | --- | --- | --- | --- | --- | --- | --- | | 2022 | | Contract | | Web Development | | | | | | | | £’000 | | | £’000 | £’000 | Cost At 1 April 2021 224,563 28,270 252,833 Additions - 7,747 7,747 Disposals - UWHS - (273) (273) At 31 March 2022 224,563 35,744 260,307 Amortisation At 1 April 2021 (82,339) (9,868) (92,207) Charge for the period (11,228) (4,558) (15,786) Disposals - UWHS - 104 104 At 31 March 2022 (93,567) (14,322) (107,889) Net book amounts At 31 March 2022 130,996 21,422 152,418 | Group | Energy Supply | | | | IT Software & | | Tot al | | --- | --- | --- | --- | --- | --- | --- | --- | | 2021 | | Contract | | Web Development | | | | | | | | £’000 | | | £’000 | £’000 | Cost At 1 April 2020 224,563 20,813 245,376 Additions - 7,457 7,457 At 31 March 2021 224,563 28,270 252,833 Amortisation At 1 April 2020 (71,111) (6,546) (77,657) Charge for the period (11,228) (3,322) (14,550) At 31 March 2021 (82,339) (9,868) (92,207) Shareholder Information Net book amounts At 31 March 2021 142,224 18,402 160,626 At 31 March 2020 153,452 14,267 167,719 The Energy Supply Contract intangible asset relates to Limited and Gas Plus Supply Limited (‘the Companies’) the entering into of the energy supply arrangements from npower Limited having effect from 1 December 2013 with npower on improved commercial terms through (‘the Transaction’). the acquisition by the Company of Electricity Plus Supply Telecom Plus Plc Report and Accounts 2022 / 116 # Notes to the Consolidated Financial Statements The total consideration for the Transaction comprised a payment to npower of £196.5 million on 20 December 2013, a deferred amount of £21.5 million paid in December 2016 and a payment of £2.5 million made in January 2014 for the net assets acquired in the Companies which comprised cash and short term working capital balances. The addition to intangible assets of £221.6 million in 2014 therefore represented the total consideration paid and payable to npower, excluding the payment for net assets acquired in the Companies, plus certain transaction costs of £3.6 million which in accordance with the relevant accounting standards were recognised as a cost of acquisition. The intangible asset is being amortised evenly over the 20-year life of the new energy supply agreement reflecting the period over which the Company will benefit from the agreement. The IT Software and Web Development intangible asset relates to the capitalisation of certain costs associated with the development of new IT and web systems. Approximately £2.0 million (2021: £7.1m) of the additions during the year relate to IT systems which remain under construction. Following the Group re-organisation there are no intangible assets held by the Company. ## 8. Goodwill | Group 2022 | £'000 | | --- | --- | | **Cost** | | | At 1 April 2021 | 6,140 | | Disposals - UWHS | (46) | | At 31 March 2022 | 6,094 | | **Impairment** | | | At 1 April 2021 | (816) | | Impairment | (1,536) | | At 31 March 2022 | (2,352) | | **Carrying amounts** | | | At 31 March 2022 | 3,742 | | Group 2021 | £'000 | | --- | --- | | **Cost** | | | At 1 April 2020 and 31 March 2021 | 6,140 | | **Impairment** | | | At 1 April 2020 and 31 March 2021 | (816) | | **Carrying amounts** | | | At 31 March 2021 | 5,324 | | At 31 March 2020 | 5,324 | Goodwill now relates to the Company's subsidiary Telecommunications Management Limited ('TML') cash generating unit. In the light of the transaction detailed in note 24, the goodwill associated with Glow Green Limited and Cofield Limited ('Glow Green') of £1.5m has been fully impaired during the period. The Group's interest in Glow Green was sold, subject to the necessary FCA change of control approval, for cash consideration of £1. The disposal amount relates to goodwill previously held in UW Home Services Limited which was disposed of by the Group prior to the year end. The Group regularly monitors the carrying amount of its goodwill. A review was undertaken at 31 March 2022, to assess whether the carrying amount of assets was supported by their value in use determined by the net present value of the future cash flows derived from the assets using cash flow projections based on current levels of profitability. In relation to TML, a pre-tax discount rate of 12.1% into perpetuity was used based on a premium to the Group WACC of 8.4%. This was considered appropriate given the relatively small size and maturity of the business, offset by the growth opportunity in mobile telephony, and the expectation that, for the foreseeable future, TML will continue to operate as a going concern. A growth rate of 2.0% (2021: 2.0%) into perpetuity was also used. The result of the review undertaken at 31 March 2022 indicated that no impairment was necessary. No reasonably possible change in the assumptions used in the impairment calculation would give rise to an impairment of goodwill. Telecom Plus Plc Report and Accounts 2022 / 117 Strategic Report Governance Report Financial Statements Shareholder Information Financial Statements ## 9. Investments ### Investment in subsidiary companies On 1 April 2017 the trading activities, the majority of the assets and liabilities, and the employees of Telecom Plus PLC, as well as all its subsidiaries, were transferred to Utility Warehouse Limited a 100% subsidiary of Telecom Plus PLC under a group reorganisation. The reorganisation was designed to provide the Group with a more conventional legal structure in line with other large publicly-listed entities. The reorganisation has not had any impact on the consolidated trading results of the Group. The cost of investment in subsidiary undertakings on the Company balance sheet of £262.0 million as at 31 March 2022 represents the transfer of the majority of the assets, liabilities and subsidiaries of Telecom Plus PLC to Utility Warehouse Limited in exchange for shares in Utility Warehouse Limited under the group reorganisation on 1 April 2017. Following the group reorganisation the Company retained its investment in the JSOP Share Trust. Included within Company Trade and other receivables is a loan receivable from the JSOP Share Trust of £2,275,000 (2021: £2,275,000), which represents the maximum exposure to loss from its interest in the JSOP Share Trust. Utility Warehouse Limited owns 100% of the ordinary share capital of Telecommunications Management Limited ('TML'), being two £1 shares. The principal activity of TML is the supply of fixed wire and mobile telecommunication services to business and public sector customers. Utility Warehouse Limited also owns 100% of the ordinary share capital of Utilities Plus Limited ('Utilities Plus'), being two £1 shares. Utilities Plus is an FCA Consumer Credit Act licensed entity which provides loans and hire purchase agreements to employees and Partners. Utility Warehouse Limited also owns 100% of the ordinary share capital of Electricity Plus Supply Limited ('Electricity Plus') and Gas Plus Supply Limited ('Gas Plus'), being one £1 share in each company. The principal activity of Electricity Plus and Gas Plus is to hold the licences for the supply of energy services to residential and business customers in the UK. Utility Warehouse Limited owns 75% of the share capital of Glow Green Limited, being 2,502 £0.001 shares, and 75% of the share capital of Cofield Limited, being 6,000 £0.001 shares. Glow Green Limited is a small supplier/installer of domestic gas boilers and warranty/care plans. Cofield Limited is a small online retailer of central heating equipment to the plumbing industry. As at 31 March 2022, Utility Warehouse Limited also owned 100% of the ordinary share capital of eight dormant non-trading subsidiaries as listed below: | Freetalk Limited | Utility House Limited | | --- | --- | | Mobile Xtra Limited | Value Group Limited | | Savings Plus Limited | Value Plus Limited | | The Peoples Champion Limited | Utility Debt Collectors Limited | As at 31 March 2022, TML owned 100% of the ordinary share capital of the following eight dormant non-trading subsidiaries: | 1p Mobile Limited | Penny Telecom Limited | | --- | --- | | One Penny Mobile Limited | 1p Broadband Limited | | One Penny Telecoms Limited | One Penny Broadband Limited | | Penny Mobile Limited | Penny Broadband Limited | The registered office of each company referred to in this note (other than Glow Green Limited and Cofield Limited) is: Network HQ, 508 Edgware Road, London, NW9 5AB. The registered office of Glow Green Limited is: 26-32 Oxford Road, Avalon, Bournemouth, England, BH8 8EZ, and the registered office of Cofield Limited is: Unit 5 20 Airfield Way, Christchurch, England, BH23 3PE. All companies referred to above are registered in England and Wales. Telecom Plus Plc Report and Accounts 2022 / 118 ## Notes to the Consolidated Financial Statements ## continued ### 10. Deferred tax The deferred tax liability recognised in the financial statements is as follows: Group Company 2022 2021 2022 2021 £’000 £’000 £’000 £’000 Tax effect of temporary differences: Accelerated capital allowances (2,222) (1,625) - - Other short term temporary differences 35 104 - - Transitional tax adjustments relating to IFRS 9 65 - - - Employee benefits expected in excess of amount vested 1,051 404 - - Transfers from acquisitions (37) (28) - - Transfers to liabilities classified as held for sale 30 - - - (1,078) (1,145) - - Group Company 2022 2021 2022 2021 £’000 £’000 £’000 £’000 At 1 April (1,145) (1,104) - - Transfers to liabilities classified as held for sale 30 - - - Charged to the Statement of Comprehensive Income 45 (33) - - Taken to equity (11) (8) - - Other differences 3 - - - At 31 March (1,078) (1,145) - - Telecom Plus Plc Report and Accounts 2022 / 119 Strategic Report Governance Report Financial Statements Shareholder Information Financial Statements ## 11. Leases as lessor ### Finance leases In the provision of broadband services, the Group provides customers with a broadband router at the start of their contract. The terms and conditions under which broadband routers are supplied to customers mean that routers are accounted for as finance leases. Interest income of £1.5m (2021: £0.9m) has been recognised in profit or loss in respect of finance leases. The following table sets out a maturity analysis of lease receivables, showing the undiscounted lease payments to be received after the reporting date: | | 2022 £'000 | 2021 £'000 | | --- | --- | --- | | Less than one year | 3,962 | 3,066 | | Between one and two years | 3,962 | 3,066 | | Between two and three years | 3,962 | 3,066 | | Between three and four years | 3,962 | 3,066 | | Between four and five years | 3,149 | 2,922 | | More than five years | 2,547 | 2,616 | | **Total undiscounted lease receivable** | **21,544** | **17,802** | | Unearned finance lease income | (6,201) | (6,381) | | **Net investment in finance leases** | **15,343** | **11,421** | ### Hire purchase agreements The following table sets out a maturity analysis of hire purchase agreements receivables, showing the undiscounted payments to be received after the reporting date: | | 2022 £'000 | 2021 £'000 | | --- | --- | --- | | Less than one year | 1,356 | 1,132 | | Between one and two years | 982 | 1,274 | | Between two and three years | 766 | 906 | | Between three and four years | 548 | 714 | | Between four and five years | 522 | 391 | | More than five years | 171 | 249 | | **Total undiscounted hire purchase agreement receivable** | **4,345** | **4,666** | ### Operating leases The operations of the Company were transferred into newly refurbished head offices at Merit House in 2015 and the former head office building, Southon House, was vacated. Southon House is therefore now held as an investment property and rented to third-party tenants. During the year £0.9m (2021: £1.0m) was recognised as rental income by the Group. The following table sets out a maturity analysis of the lease payments due to be received from the tenants of Southon House, showing the undiscounted lease payments to be received after the reporting date. Telecom Plus Plc Report and Accounts 2022 / 120 # Notes to the Consolidated Financial Statements | | 2022 £'000 | 2021 £'000 | | --- | --- | --- | | Less than one year | 878 | 852 | | Between one and two years | 878 | 852 | | Between two and three years | 878 | 852 | | Between three and four years | 878 | 852 | | Between four and five years | 878 | 852 | | More than five years | 3,283 | 3,257 | | | 7,673 | 7,517 | ## 12. Other non-current assets | | Group | | Company | | | --- | --- | --- | --- | --- | | | 2022 £'000 | 2021 £'000 | 2022 £'000 | 2021 £'000 | | Hire purchase agreements receivable | 2,989 | 3,534 | - | - | | Finance lease assets | 14,875 | 11,286 | - | - | | Loan to JSOP Share Trust | - | - | 2,275 | 2,275 | | Trade receivables | 11,303 | 9,609 | - | - | | Other non-current receivables | 3,688 | 4,166 | 681 | 681 | | Total other non-current assets | 32,855 | 28,595 | 2,956 | 2,956 | The loan receivable from the JSOP Share Trust does not bear interest and is repayable on demand. There is no current expectation that the loan will be recalled by the Company within the next 12 months. Finance lease assets represent assets where the Company is the lessor. Non-current assets include Expected Credit Losses of £5.7m against trade receivables. The Expected Credit Losses on all other non-current assets are not material. ## 13. Receivables and accrued income | | Group | | Company | | | --- | --- | --- | --- | --- | | | 2022 £'000 | 2021* £'000 | 2022 £'000 | 2021 £'000 | | Trade receivables | 31,103 | 26,826 | - | - | | Other receivables | 18,004 | 23,708 | 50 | 30 | | Hire purchase agreements receivable | 1,356 | 1,132 | - | - | | Trade and other receivables | 50,463 | 51,666 | 50 | 30 | | Accrued income | 134,917 | 120,395 | - | - | | Trade and other receivables | 50,463 | 51,666 | 50 | 30 | | Accrued income | 134,917 | 120,395 | - | - | | Receivables and accrued income (net) | 185,380 | 172,061 | 50 | 30 | *The presentation of this note has been changed to remove the Costs to obtain contracts from Other receivables (refer to the Presentation of financial statements section of the Notes to the consolidated financial statements). Telecom Plus Plc Report and Accounts 2022 / 121 Accrued income represents unbilled receivables. Gross accrued income of £136,439,000 (2021: £121,707,000) includes March revenue invoiced in April of £82,724,000 (2021: £62,923,000) and unbilled energy debtors of £53,715,000 (2021: £58,784,000). Offset against this figure is an allowance for bad debts of £1,522,000 (2021: £1,312,000). The hire purchase agreements receivable shown separately in the above table relates to the provision of branded vehicles to Partners. The majority of the vehicles are supplied on interest-free hire purchase agreements and therefore there are no reconciling items to disclose between the present value of the minimum lease payments and gross investment in the leases. #### **Allowance for credit losses on trade receivables and accrued income from customer invoicing** In accordance with note (r) of the Significant Accounting Policies, trade receivables are stated at their nominal value as reduced by the expected lifetime credit losses. The Expected Credit Loss model is applied to trade receivables from customer invoicing with credit losses measured using a provisioning metric, adjusted where required, to take into account current macro-economic factors. The Group do not consider any current or non-current assets to contain a significant financing component and therefore have applied the simplified approach for Expected Credit Losses. The Group assesses the expected recoverability of trade receivables based on a categorisation matrix and applies a provision against such trade receivables based on the historical collection experience of those categories (principally whether the indebted customer remains with the Group or not, and the age of the debt). The Group also assesses the latest information it has available on customer collections post the balance sheet date in order to evaluate whether there has been any impact on its customers from changes in the prevailing macroeconomic situation. | | Group | | Company | | | --- | --- | --- | --- | --- | | | 2022 £'000 | 2021 £'000 | 2022 £'000 | 2021 £'000 | | Allowances as at 1 April | 23,152 | 20,964 | - | - | | Additions – charged to consolidated income statement | 11,566 | 11,213 | - | - | | Allowances used on fully written down receivables | (9,692) | (9,025) | - | - | | Allowances as at 31 March | 25,026 | 23,152 | - | - | Telecom Plus Plc Report and Accounts 2022 / 122 Strategic Report Governance Report Financial Statements Shareholder Information # Notes to the Consolidated Financial Statements ### Analysis of trade receivables and accrued income from customer invoicing The tables below show an aged debt analysis between debts owed by customers who are still supplied by the Group ("Live") and customers who are no longer supplied by the group ("Closed"). | As at 31 March 2022 | Live | | Closed | | Total | | | | --- | --- | --- | --- | --- | --- | --- | --- | | | Gross £'000 | Allowance £'000 | Gross £'000 | Allowance £'000 | Gross £'000 | Allowance £'000 | Net £'000 | | Accrued income - not past due | 136,439 | (1,522) | - | - | 136,439 | (1,522) | 134,917 | | Trade receivables - past due | | | | | | | | | 0-30 days | 4,523 | (879) | 441 | (300) | 4,964 | (1,179) | 3,785 | | 31-90 days | 7,516 | (1,654) | 1,049 | (912) | 8,565 | (2,566) | 6,000 | | >91 days | 30,049 | (9,194) | 5,362 | (4,900) | 35,412 | (14,094) | 21,318 | | **Total past due** | **42,088** | **(11,727)** | **6,852** | **(6,112)** | **48,941** | **(17,839)** | **31,103** | | Trade receivables | | | | | | | | | Total due in over 1 year | 16,969 | (5,665) | - | - | 16,969 | (5,665) | 11,303 | | Total trade receivables | 59,057 | (17,392) | 6,852 | (6,112) | 65,910 | (23,504) | 42,406 | | **Total** | **195,496** | **(18,914)** | **6,852** | **(6,112)** | **202,349** | **(25,026)** | **177,323** | | As at 31 March 2021 | Live | | Closed | | Total | | | | --- | --- | --- | --- | --- | --- | --- | --- | | | Gross £'000 | Allowance £'000 | Gross £'000 | Allowance £'000 | Gross £'000 | Allowance £'000 | Net £'000 | | Accrued income - not past due | 121,707 | (1,312) | - | - | 121,707 | (1,312) | 120,395 | | Trade receivables - past due | | | | | | | | | 0-30 days | 4,321 | (696) | 584 | (384) | 4,905 | (1,080) | 3,825 | | 31-90 days | 5,803 | (1,218) | 1,224 | (1,042) | 7,027 | (2,260) | 4,767 | | >91 days | 26,392 | (8,594) | 5,022 | (4,586) | 31,414 | (13,180) | 18,234 | | **Total past due** | **36,516** | **(10,508)** | **6,830** | **(6,012)** | **43,346** | **(16,520)** | **26,826** | | Trade receivables | | | | | | | | | Total due in over 1 year | 14,928 | (5,319) | - | - | 14,928 | (5,319) | 9,609 | | Total trade receivables | 51,444 | (15,827) | 6,830 | (6,012) | 58,274 | (21,839) | 36,435 | | **Total** | **173,151** | **(17,139)** | **6,830** | **(6,012)** | **179,982** | **(23,152)** | **156,830** | As at 31 March 2022 and 31 March 2021 the Group had made provision for past due debts and therefore has no material exposure to trade receivables that were passed due and not individually impaired. Telecom Plus Plc Report and Accounts 2022 / 123 ## 14. Costs to obtain contracts The Group has the following assets at the reporting date in relation to contract costs: | | 2022 £'000 | 2021 £'000 | | --- | --- | --- | | Commissions paid to acquire contracts | 4,350 | 5,662 | | Commissions paid in advance | 10,801 | 10,040 | | | 15,151 | 15,702 | Commissions paid to acquire contracts represent up-front commissions paid to Partners for introducing customers to the Group and are amortised when the related revenues are recognised over the average lifetime of the Group's customers. In the current period the amount of amortisation was £1.4m (2021: £1.5m). Partners also earn commission on the ongoing monthly use of the Group's services by customers they have introduced ("trailing commissions"). Trailing commissions are recognised in the Statement of Comprehensive Income as they are earned by Partners on an accruals basis. In the current period the amount of trailing commissions was £16.2m (2021: £16.7m). Commissions paid in advance represent the bringing forward of certain future trailing commission payments expected to be due on customers Partners have introduced. These advance commission payments are amortised on a straight-line basis through the Statement of Comprehensive Income over the period during which they are earned and would otherwise have been paid had the payment not been brought forward. In the current period the amount of amortisation was £4.1m (2021: £3.6m). See accounting policies note (e). ## 15. Interest bearing loans and borrowings ### Bank loans – changes in liabilities from financing activities | Group | 2022 £'000 | 2021 £'000 | | --- | --- | --- | | As at 1 April | 89,376 | 94,020 | | **Changes from financing cashflows** | | | | Drawdown of bank loans | 65,000 | 30,000 | | Repayment of bank loans | (55,000) | (35,000) | | Total changes from financing cashflows | 10,000 | (5,000) | | **Other changes – arrangement fees** | | | | Additions | (597) | - | | Amortisation | 436 | 356 | | Total other changes | (161) | 356 | | Total long term borrowings as at 31 March | 99,215 | 89,376 | | Due within one year | - | - | | Due after one year | 100,000 | 90,000 | | | 100,000 | 90,000 | Telecom Plus Plc Report and Accounts 2022 / 124 Strategic Report Governance Report Financial Statements Shareholder Information # Notes to the Consolidated Financial Statements The bank loans, when drawn down, are stated net of unamortised arrangement fees of £785,000 (2021: £624,000) on the face of the Balance sheet. These costs have been capitalised and are being amortised over the term of the bank loans. In November 2021 the Group agreed to extend its revolving debt facilities to £175,000,000 with Barclays Bank PLC, Lloyds Bank PLC and Bank of Ireland Group PLC ('the Revolving Debt Facilities') for the period to 30 June 2024. The Revolving Debt Facilities are subject to two financial covenants: (i) Net debt/EBITDA of not more than 3.0:1; and (ii) EBITDA/net finance charges of not less than 3.0:1. The covenants are tested twice per year and the Group has significant headroom to the covenant limits under both these measures. The Group draws down on the Revolving Debt Facilities in tranches as funds are required. The interest period on the drawn tranches is typically one month and the tranches automatically rollover at the end of each interest period unless the Group, at its discretion, decides to repay the tranche. In addition, as at 31 March 2022 the Group had letters of credit in place relating to certain energy distribution charges with a total value covered of £2,800,000 (2021: £18,030,500). All bank loans are secured through a floating charge on the assets of the Group. ### Maturity analysis | Group | 2022 £'000 | 2021 £'000 | | --- | --- | --- | | Due in one year or less | - | - | | Due in more than one year but not more than two years | - | 92,178 | | Due in more than two years but not more than five years | 107,046 | - | | | 107,046 | 92,178 | The analysis of maturity above includes interest to be paid during the term of the loans in accordance with IFRS 7 Financial Instruments: Disclosures. ### Lease liabilities - changes in liabilities from financing activities | Group | 2022 £'000 | 2021 £'000 | | --- | --- | --- | | As at 1 April | 7,096 | 8,969 | ### Changes from financing cashflows | Payment of lease liabilities | (1,768) | (1,567) | | --- | --- | --- | | Interest relating to lease liabilities | 238 | 246 | | Total changes from financing cashflows | (1,530) | (1,321) | ### Other changes | Disposals | (280) | (552) | | --- | --- | --- | | Disposals - UWHS | (4,133) | - | | Transfers to liabilities classified as held for sale | (387) | - | | Total other changes | (4,800) | (552) | | As at 31 March | 766 | 7,096 | Telecom Plus Plc Report and Accounts 2022 / 125 Strategic Report Governance Report Financial Statements Shareholder Information Maturity analysis Group 2022 2021 £’000 £’000 Due in one year or less 121 1,760 Due in more than one year but not more than two years 506 4,894 Due in more than two years but not more than five years 201 677 828 7,331 The analysis of maturity above shows the contractual undiscounted cashflows associated with lease liabilities. There are no lease liabilities in the Company. ### 16. Trade and other payables Group Company 2022 2021 2022 2021 £’000 £’000 £’000 £’000 Current Trade payables 28,644 22,944 68 23 Inter-company payables - - 55,257 61,204 Other taxation and social security 9,457 7,430 - - 38,101 30,374 55,325 61,227 The contractual maturities for trade payables fall within one year. ### 17. Accrued expenses and deferred income Group Company 2022 2021 2022 2021 £’000 £’000 £’000 £’000 Accrued expenses 112,932 120,683 68 64 Deferred income 561 1,612 - - 113,493 122,295 68 64 The contractual maturities of accrued expenses fall within one year. Shareholder Information Telecom Plus Plc Report and Accounts 2022 / 126 # Notes to the Consolidated Financial Statements ## 18. Capital and reserves | Issued share capital | 2022 | | 2021 | | | --- | --- | --- | --- | --- | | | Number ('000) | £'000 | Number ('000) | £'000 | | Authorised ordinary shares of 5p each in the Company | 160,000 | 8,000 | 160,000 | 8,000 | | **Allotted, called up and fully paid ordinary share capital:** | | | | | | At 1 April | 79,236 | 3,962 | 79,070 | 3,954 | | Issue of new ordinary shares | 272 | 14 | 166 | 8 | | At 31 March | 79,508 | 3,976 | 79,236 | 3,962 | | Authorised 'B' shares of 2p each in subsidiary | 650 | 13 | 650 | 13 | | **Allotted and fully paid 'B' share capital:** | | | | | | At 1 April | 405 | 8 | 405 | 8 | | Issue of new 'B' shares | - | - | - | - | | Cancellation of 'B' shares | (75) | (2) | - | - | | At 31 March | 330 | 6 | 405 | 8 | | **Total Group share capital at 31 March** | | **3,982** | | **3,970** | At the year end the Company's share price was 1,520p and the range during the financial year was 1,010p to 1,612p. At 31 March 2022, the Company had 79,508,132 (2021: 79,236,568) shares in issue. The total number of voting rights of 5p ordinary shares in the Company was 79,025,856 (2021: 78,754,292), excluding shares held in treasury. Since the year end, a further 47,890 shares have been issued to satisfy the exercise of employee and distributor share options, increasing the total number of voting rights of 5p ordinary shares in the Company to 79,073,746. As at 31 March 2022 there were 482,276 ordinary shares held in treasury (2021: 482,276). There are 252,638 ordinary shares held in the JSOP Share Trust, representing approximately 0.3% of issued share capital, on which voting and dividend rights have been waived. These shares are included in the above total voting rights figure of 79,025,856. The JSOP reserve in the Group accounts represents ordinary shares in the Company held by the JSOP Share Trust. As at 31 March 2022, the total 'B' share capital in Utility Warehouse Limited was £6,500 (2021: £8,090) and therefore the total Group share capital is £3,982,000 (2021: £3,970,000). ### Capital management The Group's overall objective when managing capital is to continue to provide attractive returns to shareholders. Total shareholder equity at 31 March 2022 was £205.6 million (2021: £212.4 million). The Group's current capital management strategy is to retain sufficient working capital for day-to-day operating requirements. The Group's capital management strategy is also to ensure that interest costs are minimised. Under the Group's energy supply arrangements, E.ON (formerly npower) is responsible for funding the principal working capital requirements relating to the supply of energy to the Company's customers. This includes funding the Budget Plans of customers who pay for their energy in equal monthly instalments. Telecom Plus Plc Report and Accounts 2022 / 127 ## Dividends | | 2022 £'000 | 2021 £'000 | | --- | --- | --- | | Prior year final paid 30p (2021: 30p) per share | 23,559 | 23,524 | | Interim paid 27p (2021: 27p) per share | 21,228 | 21,184 | The Directors have proposed a final dividend of 30p per ordinary share totalling approximately £23.6 million, payable on 5 August 2022, to shareholders on the register at the close of business on 15 July 2022. In accordance with the Group's accounting policies the dividend has not been included as a liability as at 31 March 2022. This dividend will be subject to income tax at each recipient's individual marginal income tax rate. ## 19. Earnings per share The calculation of basic and diluted earnings per share ("EPS") is based on the following data: | | 2022 £'000 | 2021 £'000 | | --- | --- | --- | | Earnings for the purpose of basic and diluted EPS | 35,467 | 32,577 | | Share incentive scheme charges (net of tax) | 793 | 1,194 | | Amortisation of energy supply contract intangible assets | 11,228 | 11,228 | | Loss on disposal of subsidiary - UWHS | 1,139 | - | | Impairment of goodwill - Glow Green | 1,536 | - | | Profit on disposal of freehold office building (net of tax) | (488) | - | | Earnings excluding share incentive scheme charges and amortisation of intangibles for the purpose of adjusted basic and diluted EPS | 49,675 | 44,999 | | | Number ('000s) | Number ('000s) | | --- | --- | --- | | Weighted average number of ordinary shares for the purpose of basic EPS | 78,601 | 78,433 | | Effect of dilutive potential ordinary shares (share incentive awards) | 286 | 273 | | Weighted average number of ordinary shares for the purpose of diluted EPS | 78,887 | 78,706 | | Adjusted basic EPS^{1} | 63.2p | 57.4p | | Basic EPS | 45.1p | 41.5p | | Adjusted diluted EPS^{1} | 63.0p | 57.2p | | Diluted EPS | 45.0p | 41.4p | 1. Adjusted basic and diluted EPS exclude share incentive scheme charges and the amortisation of the intangible asset recognised as a result of the new energy supply arrangements entered into with npower in December 2013. Strategic Report Governance Report Financial Statements Shareholder Information Financial Statements Telecom Plus Plc Report and Accounts 2022 / 128 # Notes to the Consolidated Financial Statements It has been deemed appropriate to present the analysis of adjusted EPS excluding share incentive scheme charges due to the relative size and historical volatility of the charges. In view of the size and nature of the charge as a non-cash item the amortisation of intangible assets arising from the energy supply agreement with npower has also been adjusted. It has also been deemed appropriate to exclude the impact of the disposal of UW Home Services Limited ("UWHS"), the impairment of the goodwill associated with Glow Green Limited and Cofield Limited ("Glow Green") and the profit on the disposal of a freehold office building due to the one-off non-operational nature of these items. The amortisation of the energy supply contract intangible assets, the loss on the disposal of UWHS and the impairment of goodwill relating to Glow Green have not been adjusted for taxation as these items do not impact the amount of corporation tax paid by the Group. ## 20. Commitments ### Capital commitments At 31 March 2022 the Company had no significant capital commitments (2021: £Nil). ### Energy supply arrangements The Group entered into a 20-year energy supply agreement with npower ('the SSA') on 20 December 2013. Following the merger between npower and E.ON's UK operations the supply contract was novated to E.ON in 2021. The terms of the supply agreement were not changed as a result of this novation. In the event that the SSA is terminated by E.ON in certain circumstances, including on a material breach by the Group or on the insolvency of the Company, additional consideration of up to £154 million may become payable by the Company to E.ON. Full details of the termination provisions of the SSA were set out in paragraph 4 of Part VIII on page 38 of the prospectus issued to shareholders on 20 November 2013. However, given the energy supply agreement termination rights are either, in the directors' view, very unlikely to occur or entirely within the control of the Group, the directors believe the likelihood of this type of termination event is remote. The amount of the additional consideration reduces from £154 million to £11 million over the remaining life of the supply agreement. Furthermore, depending on the circumstances giving rise to a termination event, the additional consideration (if payable) may be spread over the unexpired term of the supply agreement. Following any such termination event, the Group would have direct access to the wholesale energy markets and the opportunity to earn additional margin from sourcing energy directly for the Group's customer base. ## 21. Share-based payments ### Share options The Company has two share option plans, one of which is available to employees, the other to distributors of the Company. The Company also has a Save As You Earn share option plan ('the 2015 Employee SAYE Share Option Plan') for employees. As set out in the previous year's Directors' Remuneration Report a new Deferred Share Bonus Plan was put in place for the executive directors. The first awards under this scheme were made in July 2021. All new employees who have passed the requisite probationary period are issued with market price options over shares in the Company, further options are also granted to existing employees depending on their seniority and length of service ('The Telecom Plus PLC 2017 Employee Share Option Plan'). The 2015 Employee SAYE Share Option Plan enables employees of the group to acquire shares in the Company in a tax efficient manner using monies saved from salary over a three or five-year period. The distributor scheme ('The Telecom Plus PLC 2017 Networkers and Consultants Share Option Plan') exists to provide incentives to the people who are most successful in gathering new customers for the Company. As it is not possible to measure directly the benefit received from these activities, the fair value of the benefit received has been measured by reference to the fair value of the equity instruments granted. Telecom Plus Plc Report and Accounts 2022 / 129 A reconciliation of movements in the numbers of share options for the Group can be summarised as follows: | | 2022 | | 2021 | | | --- | --- | --- | --- | --- | | | Number | Weighted average exercise price | Number | Weighted average exercise price | | At 1 April | 2,662,415 | 1,240p | 2,267,881 | 1,125p | | Options granted | 1,157,927 | 1,277p | 890,299 | 1,420p | | Options exercised | (450,988) | 1,039p | (203,211) | 846p | | Options lapsed/expired | (729,853) | 1,348p | (292,554) | 1,170p | | At 31 March | 2,639,501 | 1,261p | 2,662,415 | 1,240p | The weighted average share price at the date of exercise for the options exercised during the year was 1,474.8p (2021: 1,425.5p). During the current year ended 31 March 2022 and prior year ended 31 March 2021, the Group issued share options to employees on the occasions set out below. No share options were issued to distributors during these periods. | Grant date | Share price at grant date (pence) | Exercise price (pence) | Expected volatility (%) | option life (years) | Risk free rate (%) | Dividend yield (%) | Fair value per option (pence) | | --- | --- | --- | --- | --- | --- | --- | --- | | **2017 Employee Share Option Plan** | | | | | | | | | 23/07/2020 | 1,394 | 1,382 | 43.69 | 10 | (0.08) | 4.12 | 372 | | 16/12/2020 | 1,480 | 1,474 | 41.77 | 10 | 0.05 | 3.87 | 396 | | 22/07/2021 | 1,030 | 1,045 | 30.12 | 10 | 0.18 | 5.45 | 128 | | 16/12/2021 | 1,520 | 1,526 | 33.64 | 10 | 1.73 | 3.75 | 361 | | **Deferred Shares Bonus Plan** | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | 22/07/2021 | 1,030 | 5 | n/a | 10 | n/a | n/a | n/a | | **2015 Employee SAYE Share Option Plan** | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | 19/08/2020 | 1,400 | 1,382 | 43.77 | 3.5 | (0.08) | 4.12 | 326 | | 18/08/2021 | 1,036 | 1,040 | 29.72 | 2.5 | 0.18 | 5.50 | 123 | The Group has used a binomial model to value its share options, with account being taken of vesting conditions where these were considered material. The expected volatility for the share option arrangements is based on historical volatility determined by the analysis of daily share price movements over the previous 12 months. There was no significant incremental cost of issuing the nil cost options on 22 July 2021 under the Deferred Shares Bonus Plan given the reduction in existing share incentives held by the directors as a result of the implementation of the new plan (further detail on these reductions was set out in the Directors' Remuneration Report in the 2021 annual report). Strategic Report Governance Report Financial Statements Shareholder Information Telecom Plus Plc Report and Accounts 2022 / 130 ## Notes to the Consolidated Financial Statements ## continued The options outstanding at the end of the year relating to employees are as follows: | Number | | Number | | Exercise | | Exercisable | | Expiry date | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 1 April | 31 March | | price per | | | from | | | | 2021 | | 2022 | | share | | | | 2007 Employee Share Option Plan 14 Jun 2011 18,710 - 603p 14 Jun 2014 11 Jun 2021 15 Dec 2011 5,750 - 774p 15 Dec 2014 14 Dec 2021 26 Jun 2012 33,000 22,800 828p 26 Jun 2015 25 Jun 2022 10 Dec 2012 15,600 9,200 878p 10 Dec 2015 9 Dec 2022 17 Jun 2013 5,947 5,147 1,219p 17 Jun 2016 16 Jun 2023 16 Dec 2013 6,500 6,000 1,739p 16 Dec 2016 15 Dec 2023 1 Jul 2014 4,450 4,450 1,337p 1 Jul 2017 30 Jun 2024 16 Dec 2014 2,350 2,350 1,254p 16 Dec 2017 15 Dec 2024 13 Jul 2015 291,090 221,705 985p 13 Jul 2018 12 Jul 2025 10 Dec 2015 14,800 5,850 1,074p 10 Dec 2018 9 Dec 2025 22 Jul 2016 209,150 68,764 1,047p 22 Jul 2019 21 Jul 2026 8 Dec 2016 90,570 47,738 1,209p 8 Dec 2019 7 Dec 2026 20 Jul 2017 100,190 65,755 1,117p 20 Jul 2020 19 Jul 2027 2017 Employee Share Option Plan 12 Dec 2017 76,252 43,449 1,181p 12 Dec 2020 11 Dec 2027 26 Jul 2018 164,750 86,119 1,057p 26 Jul 2021 25 Jul 2028 13 Dec 2018 93,000 68,000 1,370p 13 Dec 2021 12 Dec 2028 25 Jul 2019 354,200 202,450 1,342p 25 Jul 2022 24 Jul 2029 16 Dec 2019 237,000 160,500 1,383p 16 Dec 2022 15 Dec 2029 23 Jul 2020 390,373 287,950 1,382p 23 Jul 2023 22 Jul 2030 16 Dec 2020 347,960 230,710 1,474p 16 Dec 2023 15 Dec 2030 22 Jul 2021 - 311,500 1,045p 22 Jul 2024 21 Jul 2031 16 Dec 2021 - 555,000 1,520p 16 Dec 2024 15 Dec 2031 Deferred Shares Bonus Plan 22 Jul 2021 - 42,437 5p 22 Jul 2023 22 Jul 2031 2015 Employee SAYE Share Option Plan 14 Aug 2017 3,106 - 1,128p 1 Nov 2020 30 Apr 2021 23 Aug 2018 26,533 2,072 1,042p 1 Nov 2021 30 Apr 2022 21 Aug 2019 28,187 17,325 1,349p 1 Nov 2022 30 Apr 2023 19 Aug 2020 49,197 31,415 1,382p 1 Nov 2023 30 Apr 2024 18 Aug 2021 - 59,815 1,036p 1 Nov 2024 30 Apr 2025 Total employees 2,568,665 2,558,501 Weighted average 1,250.3p 1,269.4p exercise price Telecom Plus Plc Report and Accounts 2022 / 131 Strategic Report Governance Report Financial Statements Shareholder Information The options outstanding at the end of the year relating to distributors are as follows: | Number | | Number | | Exercise | | Exercisable from Expiry date | | --- | --- | --- | --- | --- | --- | --- | | | 1 April | 31 March | | price per | | | | | 2021 | | 2022 | | share | | 2007 Networkers and Consultants Share Option Plan 14 Jun 2011 2,000 - 603p 14 Jun 2014 11 Jun 2021 15 Dec 2011 4,000 - 774p 15 Dec 2014 14 Dec 2021 1 Jun 2012 20,000 16,000 721p 1 Jun 2015 31 May 2022 26 Jun 2012 5,000 5,000 828p 26 Jun 2015 25 Jun 2022 20 Nov 2012 16,000 14,000 854.5p 20 Nov 2015 19 Nov 2022 10 Dec 2012 1,000 1,000 878p 10 Dec 2015 9 Dec 2022 17 Jun 2013 4,000 4,000 1,219p 17 Jun 2016 16 Jun 2023 16 Dec 2013 2,000 2,000 1,739p 16 Dec 2016 15 Dec 2023 1 Jul 2014 7,900 7,900 1,337p 1 Jul 2017 30 Jun 2024 16 Dec 2014 4,500 4,500 1,254p 16 Dec 2017 15 Dec 2024 13 Jul 2015 22,100 22,100 985p 13 Jul 2018 12 Jul 2025 10 Dec 2015 1,500 1,500 1,074p 10 Dec 2018 9 Dec 2025 22 Jul 2016 3,750 3,000 1,047p 22 Jul 2019 21 Jul 2026 20 Jul 2017 - - 1,117p 20 Jul 2020 19 Jul 2027 Total distributors 93,750 81,000 Weighted average 952.3p 982.7p exercise price At 31 March 2022, a total of 738,327 share options were exercisable (2021: 971,215) at a weighted average exercise price of 1,055.5p (2021: 1,040.0p). The average remaining contractual life of the outstanding options was 7.3 years (2021: 7.0 years). LTIP 2016 – growth shares year ended 31 March 2021, a further 37,500 held by directors The LTIP 2016 comprises the issue to participants of a have lapsed due to the introduction of the new Deferred class of ‘growth’ shares in Utility Warehouse Limited Share Bonus Plan. (“B shares”), which potentially become convertible into ordinary shares in the Company over a period of typically On 30 July 2018 and 20 November 2018, further awards 3-10 years following the achievement of stretching targets. of growth shares were made to certain senior employees If these targets are not achieved, then the growth shares (“B2 shares”). In total 61,500 and 18,000 growth shares lapse with no value to participants. were issued respectively on these dates, of those issued on 30 July 2018 38,500 have lapsed due to leavers and The first awards of growth shares (“B1 shares”) were made of those issued on 20 November 2018 8,000 have lapsed. Shareholder Information to initial participants in the scheme on 4 April 2017; these included the Chief Executive Officer and Chief Financial No further awards will be made under the LTIP 2016. Officer of the Company. In total 325,000 growth shares were issued to the directors and certain senior employees The fair value of the growth shares issued for the purposes on 4 April 2017, of which 115,000 have lapsed due to leavers. of IFRS 2 has been based on a Monte-Carlo model and As set out in the Directors’ Remuneration Report for the the key assumptions are set out below: B1 shares – April 2017 Tranche 1 Tranche 2 Tranche 3 Tranche 4 Fair value (per share granted) £16.51 £17.71 £18.07 £17.08 Number of awards granted 81,250 81,250 81,250 81,250 Telecom Plus Plc Report and Accounts 2022 / 132 # Notes to the Consolidated Financial Statements ### Key assumptions | Share price at grant | £12.10 | | --- | --- | | Exercise price | Nil | | Dividend yield | 4.5% | | Expected term | 2.3 to 9.3 years | | Risk free rate | 0.11% to 0.99% | | Share price volatility of the Company | 33.2% | | Discount for post vesting transfer restrictions for Tranches 1, 2 and 3 awards | 6.3% | | Discount for post vesting transfer restrictions for Tranche 4 awards | 11.2% | ### B2 shares – July 2018 | | Tranche 1 | Tranche 2 | Tranche 3 | Tranche 4 | | --- | --- | --- | --- | --- | | Fair value (per share granted) | £10.14 | £10.70 | £10.79 | £9.68 | | Number of awards granted | 15,375 | 15,375 | 15,375 | 15,375 | ### Key assumptions | Share price at grant | £10.36 | | --- | --- | | Exercise price | Nil | | Dividend yield | 4.9% | | Expected term | 3 to 10 years | | Risk free rate | 0.86% to 1.48% | | Share price volatility of the Company | 30.9% | | Discount for post vesting transfer restrictions for Tranches 1, 2 and 3 awards | 5.9% | | Discount for post vesting transfer restrictions for Tranche 4 awards | 10.3% | ### B2 shares – November 2018 | | Tranche 1 | Tranche 2 | Tranche 3 | Tranche 4 | | --- | --- | --- | --- | --- | | Fair value (per share granted) | £18.23 | £19.39 | £19.17 | £17.39 | | Number of awards granted | 4,500 | 4,500 | 4,500 | 4,500 | ### Key assumptions | Share price at grant | £13.24 | | --- | --- | | Exercise price | Nil | | Dividend yield | 4.5% | | Expected term | 2.7 to 9.7 years | | Risk free rate | 0.78% to 1.35% | | Share price volatility of the Company | 29.9% | | Discount for post vesting transfer restrictions for Tranches 1, 2 and 3 awards | 5.7% | | Discount for post vesting transfer restrictions for Tranche 4 awards | 10.1% | Telecom Plus Plc Report and Accounts 2022 / 133 Strategic Report Governance Report Financial Statements Shareholder Information Financial Statements ## 22. Financial instruments Treasury activities take place under procedures and policies approved and monitored by the Board. They are designed to minimise the financial risks faced by the Group which primarily arise from credit, interest rate and liquidity risks. ### Carrying amounts of financial instruments All financial assets, which include cash, trade and other receivables and accrued income, are classified as loans and receivables with a total value for the Group of £258,682,000 (2021: £234,204,000) and for the Company of £3,684,000 (2021: £3,283,000). All financial liabilities, which include trade and other payables and accrued expenditure, are held at amortised cost with a total value for the Group of £250,580,000 (2021: £234,245,000) and for the Company £55,420,000 (2021: £61,299,000). ### Credit risk All customers are invoiced monthly and approximately 90% pay by direct debit; accordingly credit risk in respect of trade receivables is considered relatively low due to the large number of customers supplied, each of whom represents an insignificant proportion of total revenue. The Company has a universal supply obligation in relation to the provision of energy to domestic customers. This means that although the Company is entitled to request a reasonable deposit from a potential new customer who is not considered creditworthy, the Company is obliged to supply domestic energy to anyone who submits a properly completed application form. Where such customers subsequently fail to pay for the energy they have used, there is likely to be a delay before the Company is able to eliminate its exposure to future bad debt from them by either installing a pre-payment meter or disconnecting their supply, and the costs associated with preventing such customers from increasing their indebtedness are not always fully recoverable. Trade receivables are stated at their nominal value as reduced by the expected lifetime credit losses. The Expected Credit Loss model is applied to trade receivables from customer invoicing with credit losses measured using a provisioning metric, adjusted where required, to take into account current macro-economic factors. The Group applies judgement to assess the expected credit loss, taking into account historical collection patterns. The maximum credit risk for the Group is £258,682,000 (2021: £234,204,000) and for the Company £3,684,000 (2021: £3,283,000). ### Interest rate risk The Group finances its day-to-day operations primarily through cash generated within the business. Cash surpluses are placed on deposit with Barclays Bank PLC and Lloyds Bank PLC at money market rates to maximise returns. As set out in note 15, the interest charged on the Group's borrowing facilities varies according to the prevailing 3-month SONIA rate. The Group's profit and equity for the current year will not be significantly affected by changes in the UK base rate of +/- 1% from current levels. ### Commodity price risk The Group is not materially exposed to any fluctuations in commodity prices due to the nature of the agreements with wholesale providers of telephony and energy services and its ability to pass the effect of any such fluctuations through to its customers. ### Liquidity risk The Group's treasury management policies are designed to ensure continuity of funding. ### Foreign currency risk The Group does not have any significant foreign currency exposure. ### Interest rate and currency profile of financial assets and liabilities All financial assets and liabilities are denominated in Sterling. Receivables due after one year include £3,297,000 (2021: £3,861,000) due mainly from distributors, elements of which earn interest at varying rates above Base Rate. ### Borrowing facilities At 31 March 2022, the Group had total revolving credit facilities of £175,000,000 (2021: £150,000,000). These facilities are available to the Group until 30 June 2024. As at 31 March 2022 £100,000,000 of the facilities was drawn down (2021: £90,000,000 drawn down). As at 31 March 2022 the Group also had letters of credit in place relating to certain energy distribution charges with a total value covered of £2,800,000 (2021: £18,030,500). Telecom Plus Plc Report and Accounts 2022 / 134 # Notes to the Consolidated Financial Statements The facilities are secured by fixed and floating charges over the assets of the Group and through cross guarantees with the subsidiaries Utility Warehouse Limited, Electricity Plus Supply Limited, Gas Plus Supply Limited, Utilities Plus Limited and Telecommunications Management Limited. Further details of the facilities are set out in note 15 of these financial statements. ### Fair values There is not considered to be any material difference between the fair value of any financial instruments and their net book amount due to the short-term maturity of the instruments. ## 23. Related parties ### Identity of related parties The Company has related party relationships with its subsidiaries (see note 9) and with its directors and executive officers. Related party transactions are conducted on an arm's length basis. ### Transactions with key management personnel Directors of the Company and their immediate relatives control approximately 16.3% of the voting shares of the Company. No other employees are considered to meet the definition of key management personnel other than those disclosed in the Directors' Remuneration Report. Details of the total remuneration paid to the directors of the Company as key management personnel for qualifying services are set out below: | | 2022 £'000 | 2021 £'000 | | --- | --- | --- | | Short-term employee benefits | 3,200 | 2,882 | | Deferred shares bonus | 443 | 383 | | Social security costs | 428 | 386 | | Post-employment benefits | 12 | 11 | | | 4,083 | 3,662 | | Share incentive scheme charges | 42 | 139 | | | 4,125 | 3,801 | During the year, the Group acquired goods and services worth £Nil (2021: £Nil) from companies in which directors have a beneficial interest. No amounts were owed to these companies by the Group as at 31 March 2022. During the year, the Group sold goods and services worth £Nil (2021: £Nil) to companies in which directors have a beneficial interest. During the year directors purchased goods and services on behalf of the Group worth £306,000 (2021: £145,000). The directors were fully reimbursed for the purchases and no amounts were owing to the directors by the Group as at 31 March 2022. During the year the directors purchased goods and services from the Group worth approximately £28,000 (2021: £27,000) and persons closely connected with the directors earned commissions as Partners for the Group of approximately £6,000 (2021: £7,000). As set out in note 24, the Group has agreed to sell, subject to the necessary FCA change of control approval, its 75% interests in Glow Green Limited and Cofield Limited to Executive Chairman Charles Wigoder. ### Subsidiary companies During the year ended 31 March 2022, the Company purchased goods and services from the subsidiaries in the amount of £96,000 (2021: £153,000 purchased by the Company from the subsidiaries). During the year ended 31 March 2022 the Company also received distributions from subsidiaries of £50,000,000 (2021: £50,000,000). At 31 March 2022 the Company owed the subsidiaries £55,257,000 which is recognised within trade payables (2021: £61,204,000 owed by the Company to the subsidiaries). Telecom Plus Plc Report and Accounts 2022 / 135 Strategic Report Governance Report Financial Statements Shareholder Information Financial Statements ## 24. Disposals The Group disposed of its shareholding in UW Home Services Limited (“UWHS”) on 31 March 2022 for consideration of £1 to Lowri Beck Holdings Limited, a specialist meter operator owned by the Calisen Group. The net assets of UWHS at the point of disposal were £11m and the loss on disposal for the Group was £11m. This has been shown in a separate line on the face of the Consolidated Statement of Comprehensive Income. The Group has also agreed to sell, subject to the necessary FCA change of control approval, its 75% shareholdings in Glow Green Limited and Cofield Limited (“Glow Green”) for cash consideration of £1 to Charles Wigoder, Executive Chairman of the Group. Since acquiring Glow Green in 2018, the business has been consistently loss-making; this has contributed to a cumulative funding requirement of over £6m that will remain with Glow Green as a debt to the Group and be repaid over time. The repayment of the loan has been personally guaranteed by Charles Wigoder. The Board believe that the disposal of Glow Green is in the best interests of the Group given the significant management resource it would otherwise require, particularly at a time when the growth opportunities within the core business are so exciting. As a smaller related party transaction, this disposal fell within the requirements of section 11.10R of the Listing Rules and the Board obtained written confirmation from its sponsor that the terms of the proposed transaction were fair and reasonable as far as the shareholders of the Group are concerned. In the light of the consideration level the goodwill associated with Glow Green of £1.5m has been impaired in the current period. This has been reflected in the goodwill impairment line in the Consolidated Statement of Comprehensive Income. The assets and liabilities of Glow Green have been reclassified as held for sale on the balance sheet. A summary of these assets and liabilities is shown below: | | 2022 £'000 | 2021 £'000 | | --- | --- | --- | | **Assets classified as held for sale** | | | | Property, plant and equipment | 673 | - | | Inventories | 934 | - | | Trade and other receivables | 1,519 | - | | Cash and cash equivalents | 712 | - | | | **3,838** | **-** | | **Liabilities classified as held for sale** | | | | Trade and other payables | (7,064) | - | | Accrued expenses and deferred income | (101) | - | | Finance lease liabilities | (386) | - | | | **(7,551)** | **-** | Telecom Plus Plc Report and Accounts 2022 / 136 ## Shareholder Information Strategic Report Governance Report Financial Statements Shareholder Information ## Telecom Plus Plc is a public Company Secretary ## listed company incorporated David Baxter ## and domiciled in the United Email: shareholders@uw.co.uk ## Kingdom. It has a primary ### Stockbrokers ## listing on the London Stock ## Exchange. Peel Hunt Ltd Moor House 120 London Wall ### Corporate website London EC2Y 5ET The Company’s corporate website telecomplus.co.uk provides shareholders Numis Securities Limited with financial and governance information. The London Stock Exchange Building 10 Paternoster Square London ### Registrar EC4M 7LT Link Asset Services ### 10th Floor, Central Square Auditors 29 Wellington Street Leeds KPMG LLP LS1 4DL 15 Canada Square Canary Wharf London ### Registered office E14 5GL 508 Edgware Road ### The Hyde, London Bankers NW9 5AB Barclays Bank PLC 1 Churchill Place London E14 5HP Bank of Ireland Group Plc Bow Bells House 1 Bread Street EC4M 9BE Lloyds Bank PLC 25 Gresham Street London EC2V 7HN Telecom Plus Plc Report and Accounts 2022 / 138 508 Edgware Road The Hyde, London NW9 5AB 020 8955 5000 shareholders@uw.co.uk