1
Another excellent set of results Profit before tax* (£m) 100.6 88.7 • Double-digit growth in earnings: 70.6 - Revenue† up 21% to £369.0m - Profit before tax* up 13% to £100.6m 51.6 40.5 - Contribution from International operations up 72% to £8.7m - Dividend per share up 24% to 44.0p • Strong operational performance: 2006 2007 2008 2009 2010 - Global customer and policy growth of 8% and 12% respectively Policies (m) - Strong retention performance across all businesses 10.3 9.2 - 10 new affinity partners signed, including: 8.1 7.1 • Agbar in Spain 5.7 • National Grid USA • Southern California Gas 2006 2007 2008 2009 2010 *Continuing operations - excluding amortisation of acquisition intangibles, joint venture taxation and exceptional operating items †Including commissions but excluding exceptional operating income received during the period 2
How operational performance drives value Value Drivers Sales and Claims and Customer Product Strong Affinity Marketing Network Loyalty Design Partnerships Capability Management Customer Affinity Recurring and policy households Income growth + 12% Strong retention performance >83% +23% + 8% 10.3m 68m* 83.7% 83.6% 56m 9.2m 4.7m 4.3m Marketable Households Customers Policies Global Policy Retention Rate 2009 2010 2009 2010 2009 2010 3 *Includes 5m households from National Grid and 5.3m households from Southern California Gas
4
Group financial highlights £million FY 2010 FY 2009 Change Revenue † 369.0 304.3 21% Operating Profit* 104.4 92.3 13% Operating profit* margin 28.3% 30.3% -2.0%ppts Profit before Tax* 100.6 88.7 13% Earnings per share^ 110.9p 96.9p 14% Dividend per share 44.0p 35.5p 24% • Revenues† up 21% (15% excluding acquisitions and currency movements) with a 13% increase in profit before tax* • Strong performance across all membership divisions including 10% growth in UK operating profit* • Dividend and earnings per share^ growth of 24% and 14% respectively • Slight reduction in operating* margin as a result of the planned increase in customer acquisition marketing in the UK and continued investment in business development across all membership businesses • Exit from UK Emergency Services complete resulting in loss from discontinued operations of £42m † Including commissions but excluding exceptional operating income * Excluding amortisation of acquisition intangibles, joint venture taxation and exceptional operating items ^ Excluding amortisation of acquisition intangibles and exceptional operating items 5
Membership financial performance £million FY 2010 FY 2009 Revenue † Revenue † Operating Operating Margin % Profit* Profit* FY10 FY09 UK Membership 286.7 95.8 246.6 87.2 33.4% 35.4% -2.0ppts 16% 10% International Membership 112.2 38% 8.7 72% 81.3 5.1 7.7% 6.2% 1.5ppts Less JV/Inter-division revenues (29.8) - - - (23.7) - 28.3% 30.3% -2.0ppts Total Membership 369.0 21% 104.4 13% 304.3 92.3 • Continued strong growth in our UK business • Contribution from our International operations grew by 72% to £8.7m UK Membership • Revenue† growth of 16% driven by: - Increase in renewals income reflecting good retention performance - Continuing good levels of new policy sales including combined policies - Increase in network revenues (+£8.0m) reflecting higher proportion of jobs carried out by our own plumbers • Retention rate of 82.5% (2009: 83.0%) • Acquisition of Reactfast to accelerate One Contact rollout and a number of plumbing and drainage contractors † Including commissions but excluding exceptional operating income * Excluding amortisation of acquisition intangibles, joint venture taxation and exceptional operating items 6
Continental Europe £million FY 2010 FY 2009 Revenue † Revenue † Operating Operating Margin % FY10 FY09 Profit* Profit* France - Doméo 29.8 29% 5.7 17% 23.2 4.8 19.0% 20.9% -1.9ppts - SFG 7.0 - 0.7 - 0.0 0.0 10.4% - - 0.8% 0.3% 0.5ppts Spain 46.9 19% 0.4 +£0.3m 39.3 0.1 15.1% - - Belgium 2.8 +£1.9m 0.4 2% 0.9 0.4 Continental Europe 86.5 36% 7.2 35% 63.4 5.3 8.3% 8.4% -0.1ppts 5.8% -1.6% 7.4ppts USA 25.7 43% 1.5 +£1.8m 17.9 (0.3) International before JV elimination 112.2 38% 8.7 72% 81.3 5.1 7.7% 6.2% 1.5ppts JV revenues (29.8) - - - (23.2) - International Membership 10.6% 8.7% 1.9ppts 82.3 42% 8.7 72% 58.2 5.1 Continental Europe • Revenues grew by 29% in Doméo (24% in local currency) and operating profits* by 17% as a result of high retention and policy sales • SFG contributed revenue of £7m and operating profit* of £0.7m with investment in developing our European manufacturer warranty business • Spain delivered revenue growth of 19% (14% in local currency) and a contribution of £0.4m, with profits from the claims handling operation reinvested in our policy business • In Belgium, SPT continues to perform well, generating £2.8m of revenue and £0.4m of operating profit* with investment in infrastructure and systems required to build a policy business in the region † Including commissions but excluding exceptional operating income * Excluding amortisation of acquisition intangibles, joint venture taxation and exceptional operating items 7
USA £million FY 2010 FY 2009 Revenue † Revenue † Operating Operating Margin % FY10 FY09 Profit* Profit* Continental Europe 86.5 36% 7.2 35% 63.4 5.3 8.3% 8.4% -0.1ppts 5.8% -1.6% 7.4ppts USA 25.7 43% 1.5 +£1.8m 17.9 (0.3) International before JV elimination 112.2 38% 8.7 72% 81.3 5.1 7.7% 6.2% 1.5ppts JV revenues (29.8) - - - (23.2) - 10.6% 8.7% 1.9ppts International Membership 82.3 42% 8.7 72% 58.2 5.1 USA • US business delivered revenue growth of 43% (41% in local currency) and a maiden operating profit* of £1.5m driven by a 31% increase in customer numbers and high levels of retention • Significant increase in our household footprint with affinity partner households increasing to over 20m on the back of long term agreements with National Grid USA and Southern California Gas • Acquisition of National Grid Energy Services contract business for net consideration of $14m • Step change in household numbers and continued momentum makes US business well placed to deliver profit growth in the future † Including commissions but excluding exceptional operating income * Excluding amortisation of acquisition intangibles, joint venture taxation and exceptional operating items 8
Cash flow (£million) FY10 FY09 Operating profit* from continuing operations 104.4 92.3 Exceptional items, tax on joint venture and amortisation of acquisition intangibles 1.7 (7.9) Operating loss from discontinued operations (excl impairment) (27.6) (4.7) Operating profit from continuing and discontinued operations 78.6 79.7 Depreciation, amortisation and other non-cash items 15.7 23.3 Increase in working capital (20.8) (10.8) Cash generated by operations cash conversion % 73.4 93.4% 92.2 115.7% Net interest (3.4) (4.4) Taxation (21.5) (21.0) Capital expenditure (25.5) (16.9) Acquisitions/disposals (25.8) (23.4) Equity dividends paid (23.2) (20.4) Dividend from joint venture 3.3 Issue of shares 4.1 3.0 Net movement in cash and bank borrowings (18.6) 9.1 Impact of foreign exchange (0.3) Net debt (52.9) (34.0) Non cash items includes depreciation, amortisation of other intangibles, share based payments and share of results of joint venture (before tax) and loss/(gain) on disposal of assets • Strong performance with cash conversion of 93% and closing net debt of £52.9m with significant headroom on borrowing facilities • Increase in working capital of £20.8m reflects growth in our membership businesses, with a greater proportion of customers moving to combined policies and paying by monthly direct debit • Increase in capital expenditure as we continue to invest in IT systems and information databases • Acquisition expenditure includes SFG, Reactfast and a number of plumbing and drainage businesses in the UK 9 * Excluding amortisation of acquisition intangibles, joint venture taxation and exceptional operating items
Which Key Performance Indicators drive our business? Value drivers Sales and Claims and Customer Product Strong Affinity Marketing Network Loyalty Design Partnerships Capability Management KPIs Affinity Core Renewable Income per CRC Households Customers (CRCs) Customer penetration % Policies per customer 10
Recommend
More recommend
