An Introduction to HomeServe plc June 2010 1 Contents - - PowerPoint PPT Presentation

1

An Introduction to HomeServe plc

June 2010

2

• Introduction; Our business model
• HomeServe today

–

Our UK Business

–

Our International Businesses

• Financials
• Summary
• Appendix
• Contacts

Contents

3

Introduction and our Business Model

4

An international home emergency and repairs membership business

• Home emergencies happen to everyone – 17.6m a year in the UK:

–

typically not covered by existing home insurance policies

–

typically not the responsibility of the Utility company

• Consumers want peace of mind, excellent customer service and guaranteed work

Our vision

• “To be the first place people turn to for home emergencies and repairs”

Our mission

• “To provide a membership service which frees our customers from the worry

and inconvenience of home emergencies and repairs”

Strong Affinity Partnerships Product Design Sales and Marketing Capability Claims and Network Management Customer Loyalty

Worldwide market need Attractive business model

5

Continental Europe

40.5 51.6 70.6 88.7 100.6 2006 2007 2008 2009 2010 Profit before tax* (£m)

• Offers a dedicated membership service, giving homeowners fast, 24 hour access

to expert engineers in an emergency

• “Business to Consumer” focussed
• Head office in Walsall with operations across the UK, France, Spain, Belgium

and the USA with 3,254 employees

• Strong track record of growth

5.7 7.1 8.1 9.2 10.3 2006 2007 2008 2009 2010 Policies (m)

HomeServe at a glance

Operating Profit* FY10 £104.4m Total Revenue* FY10 £369m

USA *Continuing operations - excluding amortisation of acquisition intangibles, joint venture taxation and exceptional operating items 7% 92% 16% 77% 7% 1% UK

6

HomeServe – our evolution

7

HomeServe today

HomeServe USA UK

CEO – Jon Florsheim

USA

CEO – Jonathan King

Continental Europe

CEO – Rachael Hughes

*Includes employees in Domeo joint venture ** Includes just HomeServe share of JV total revenue ***Includes just HomeServe share of the JV operating profit

1Includes 5.3m households from SoCalGas and 5m households from National Grid USA

France Spain Belgium Started

• perations

1993 2001 – Domeo 2009 – SFG 2006 2008 2003 Affinity partner households 23.4m 14.3m 10.0m

• 20.3m1

Customers 3.2m 769k 79k

• 580k

Policies 7.6m 1.9m 94k

• 756k

Repair network Employed, Subcontract Subcontract Subcontract Subcontract Subcontract Employees 2,726 541* 280 5 182 Revenues £287m £36.8m** £46.9m £2.8m £25.7m Operating profit £95.8m £6.4m*** £0.4m £0.4m £1.5m

8

Global Policy Retention Rate

2009 2010

2009 2010

Policies Customers

Strong Affinity Partnerships Product Design Sales and Marketing Capability Claims and Network Management Customer Loyalty Value Drivers

Affinity households Customer and policy growth Recurring Income

4.3m 9.2m 4.7m 10.3m 83.7%

Strong retention performance >83%

+ 8%

83.6%

Marketable Households

2009 2010 56m 68m*

+ 12% +23%

*Includes 5m households from National Grid and 5.3m households from Southern California Gas

Our business model’s value drivers

9

Value driver - Build strong long term affinity partnerships

Strong Affinity Partnerships

Customer Loyalty

• Strong affinity partnerships delivered through long-term, exclusive agreements with utilities and manufacturers
• Over 60 partnerships in 4 countries giving access to 68m households
• HomeServe owns the customer at the point of renewal
• Common goal in driving customer and policy numbers
• Partners get a risk-free fixed “%” commission (based on the retail premium)

Marketable households and brands

Delivering

10

Value driver – Create products people want to buy

Product design

• Create relevant home assistance products which stimulate demand
• All policies are fully underwritten by a third party insurer
• Drive income per customer by creating suites of complimentary products eg. Combined Policies in the UK

Customer demand with attractive product economics

Delivering

11

Value driver – Sales and marketing know-how

Sales and marketing capability

• Significant investment in marketing through direct mail and outbound telephony
• Highly effective use of data, contact strategy, proposition and promotion
• Sharing best practice across the different countries
• Close monitoring of the cost of acquisition / return on investment by campaign
• Increase policies per customer through cross sell

Delivering

Customer and policy growth

12

Value driver - Claims and network management skills

• Our approach to network management is influenced by volume density (throughput) in each trade
• Strategy is to use subcontract engineers unless there is sufficient volume to justify employing engineers directly (eg.

Plumbing & Drains in the UK)

Claims and network management

Customer satisfaction and cost effectiveness

Delivering

* US acquires directly employed service technicians following acquisition of National Grid

All trades via national network

• Belgium

All trades via national network > 100 across multiple trades

• Spain

All trades via local networks

• Heating & Cooling*

USA All trades via national network

• France

PEST, Locks, Glass and other trades Gas & Electrics Plumbing UK Subcontract Franchisee Directly Employed Category Where volume is sufficient Core strategy

13

83.7% 83.6%

Strong retention rates 2010 Customer loyalty 82.5% 88.3% 82.6%

Value driver - Retain customers to drive recurring income

• High proportion of annual recurring revenues
• New initiatives introduced in the UK in 2010 to improve retention

– personalised renewal letters – customer magazine

• USA retention rate increasing - as more utilities allowing us to bill the customer via the utility bill
• Trade off between pricing alongside product enhancements and retention

Recurring income

Delivering

14

Our UK Business

15

• Insurance minded, home owners, typically over 50 years old
• Product holdings:

–

average 2.32 products

–

generally recruited via a plumbing related policy and then cross-sold other products

–

17% of customers hold a ‘Combined Policy’ with an average of 5.8 products per customer

• Payment methods

Our customers

Continuous payments

• Eg. Direct Debit

Non Continuous

16

65 83.0 3.16 7.06

1.01 0.33 0.85 0.77 4.10

2009 74 82.5 3.26 7.55

1.37 0.39 0.84 0.78 4.18

2010 +14% Income per customer (£)

• 0.5ppts

Retention rate (%)

Manufacturer Warranties

+3% +7% Change Customers (m)

Gas and Gas Supply Pipe Other

Total Policies

Electrics Plumbing & Drains, Water Supply Pipe

Policies (m)

2007 2008 2009 2010 New Policies Sold (m) Policies (m) Policies Per Customer

1.92 2.08 2.23 2.32 6.0 1.7 6.6 1.7 1.8 7.6 1.8 7.1

A resilient and growing UK business

• 23.4m affinity partner households, 90% of UK

households

• Affinity partner household penetration up to

13.9% (2009: 13.5%) with 3.2m customers

• Continued growth in affinity relationships

– new deals with Dyson and GB Oils – good progress in renewing existing partners

• Achieved a 3% increase in customers in FY

2010

• Targeting 3-4% customer growth in 2011

17

Retention a key area of management focus

• Achieved 82.5% retention rate in 2010 ahead
• f our original expectations for the year
• Invested in new marketing initiatives and

improved operational management

–

Customer magazine introduced in FY 2010

–

Digital printing to personalise renewals mailings

–

Invested in call centre soft skills Mar-08 Mar-09 Mar-10 82.5% 84.5%

UK 12 month rolling retention rate (%)

18 Market Opportunity

UK annual repairs (insured and uninsured) 17.6m 0.5m Pest 0.9m Electrical wiring 2.4m Plumbing & Drainage/Water supply pipe 2.7m Break in/Lock, boarding up 4.5m Central heating breakdown 6.6m Electrical breakdown

Reasons for not purchasing cover:

• It won’t happen to me
• Cost/risk doesn’t stack up
• Covered by household insurance
• New home
• Haven’t got round to it

Rented Properties Owner Occupied Properties 7.5m 10.1m UK Households with NO home emergency cover

Company estimates and research

One Contact Oil Landlords Credit card IFA’s Travel Energy Flats

Customer Insights Growth Initiatives But it will happen to you:

Significant growth potential in the UK

Total UK Households 25.9m

70% of these repairs are uninsured

Water

19 One Contact Landlords

• New product launched for rental market
• Direct advertising in the national press
• Partner discussions underway to maximise

distribution and take up rates

Good progress on customer growth initiatives

• ‘One Contact’ – Our ‘Pay on Use’ service and conversion to membership
• Acquired ReactFast in 2009 - provides an excellent source of new

customer leads and emergency jobs

• Focused on maximising the number of emergency jobs and new

customer leads

• Increasing conversion rate from pay on use customers to members

20

• Almost 400,000 policies, up 18% in 2010, with 24 UK partner brands
• Warranties contribute around 10% of UK profits
• Successful cross-sell of core utility products to these customers
• Aim to replicate our UK manufacturer warranty business model in

Europe through SFG

– SFG is the leading provider of warranties for domestic

appliances in France which we acquired in May 2009

– ongoing discussions with European manufacturers

Manufacturer warranties are a core part of our UK business

Maximise Registration Identify and market additional customers Post Breakdown Sales Retain and cross-sell

• Simple card
• Sticker on appliance
• Free guarantee
• External databases
• Manufacturer data
• Target non-

insurance minded customers

• Instant cover
• Increase value

per customer

• Cross sell core

policies Maximise Registration Identify and market additional customers Post Breakdown Sales Retain and cross-sell

• Simple card
• Sticker on appliance
• Free guarantee
• External databases
• Manufacturer data
• Target non-

insurance minded customers

• Instant cover
• Increase value

per customer

• Cross sell core

policies

21

Our repair network provides a high quality efficient service

% of Jobs Carried Out By Our UK Networks Split By Engineer Category UK Plumbing and Drainage Network by Engineer Category

P&D Gas Electrics

Manufacturer 20% Subcontractor 4% Franchise 76% Franchise 87% Subcontractor 13% Subcontractor 20% Directly employed 80%

22

Our International Businesses

23

International - rolling out our membership model

Build or acquire claims handling and sub-contract repair network Launch membership model via affinity agreements with utlilities Full home cover via Manufacturers Pay on Use service and conversion to membership Stage 1 Stage 4 Stage 2 Stage 3 Well developed utility and warranty business now building a ‘Pay on Use’ service through ‘One Contact’ Doméo – a growing utility business with significant penetration upside. Building an appliance warranties business through SFG Growing utility business. Doubling of the affinity partner households in 2010 provides significant penetration upside Network acquired and infrastructure now in place to enter stage 2 Growing utility business with marketing to Agbar, our water utility partner, starting in FY11

24

80 87.9 683 1,567 517 174 876 2009 88 88.3 769 1,928 640 228 1,060 2010 +10% Income per customer (€) +0.4ppts Retention rate (%) +13% +23% Change Customers (‘000) Other including Water Loss Total Policies Electrics Plumbing and Drains, Water Supply Pipe Policies (‘000)

France – strong retention, growth in customers and policies

• Joint venture with Veolia established in 2001
• Strength of Veolia brand enables us to market both

in and out of Veolia customer areas

• High retention rate driven by the proportion of

customers who pay by direct debit

• Expanding product range to cover all home

emergencies via manufacturers through SFG

2007 2008 2009 2010 New Policies Sold (000) Policies (000) Policies Per Customer

1,928 863 1,180 526 1,567

2.51

532

2.29 1.99 2.14

492 441

Ownership structure

25

2009 2010 Policies ('000) Policies per Customer

94 48 1.01 47 48 27 19 1 2009 +67% +98% Change 79 94 28 57 10 2010 Plumbing and Drains Total Policies Customers (‘000) Other Electrical Policies (‘000) 1.19

• Acquired Reparalia repair network in 2007
• Currently reinvesting the revenues from Reparalia into

growing our policy business

• Key affinity relationships with

–

Endesa

• Spain’s largest electric utility
• started marketing activity FY10

–

Agbar

• Spain’s largest water company with over 4

million domestic customers

• marketing activity to start in FY11

Spain - good progress in building our policy book

26

USA - growing policies, increasing retention and profitability

2007 2008 2009 2010 New Policies Sold ('000) Policies ('000) Policies Per Customer

65 80.0 442 9.4 549 70 60 419 March 2009 +8% +2.6ppts +31% +10.9m +38% Change 70 82.6 580 20.3* 756 156 82 518 March 2010 Income per customer ($) Retention rate (%) Affinity households (m) Customers (‘000) Other Total Policies Electrics Plumbing and Drains, Water Supply Pipe Policies (‘000)

• Entered organically in 2003
• Achieved its maiden operating profit in 2010
• Growing water and gas affinity footprint

– excellent results marketing to our gas partners – SEMCO Energy and Piedmont Natural Gas

• National Grid and Southern California Gas deals in

April 2010 increased our affinity partner households to

• ver 20m
• Acquiring National Grid Energy Services’ service

contract business

• Strong retention supported by ‘on the bill ‘ payment

263 362 549 246 1.24 290 756 1.30 1.22 1.22 169 181

*Households includes 5.3m households from Southern California Gas deal signed in April 2010 and National Grid USA transaction due to complete in August 2010

27

USA – 20.3m affinity partner households

• Use our own ‘HomeService USA’ brand in states where we do not have an affinity partner
• Currently operating in a total of 37 states

28

• Over 50m households where no home assistance programme is offered
• Low penetration of the 60m households where an assistance programme is offered
• Continue to target partnerships with utilities including those with their own programmes (8.1m policies)
• Focus on organic growth, integration of National Grid and development of the utility pipeline which has a number of good,

well advanced opportunities

USA represents a tremendous opportunity

1.1m 1m 0.1m 59m 59m 60m

M arket Potential Energy Utility branded contracts - in house Energy Utility branded contracts - 3rd party Water In House contracts HomeService contracts No contracts

Households where nothing is offered

1.1m 1m 0.1m

119m Headroom 128m*

Graph not to scale Households served by a utility which offer some type of home assistance programme Households where the utility has no programme

60m 59m 59m 60m

Households where a programme is offered

7m

*Households (m) 2007 US Census Bureau

9m 59m

Note: HomeService contracts include policies acquired from National Grid – transaction due to complete in August 2010

29

Adding scale through policy book acquisitions

5m households. Expected to contribute additional £3m profit in FY11 Now has over 90,000 policies Now has over 90,000 policies Now has over 140,000 policies Acquiring Heating, Cooling and Water Heater policies Introduced Sewer Line, Internal Plumbing , Electrical Wiring Introduced new products including exterior wiring coverage Introduced Sewer Line, Internal Plumbing , Electrical Wiring, Heating and Cooling Signed a 10 year Marketing agreement Signed a 15 year Marketing agreement Signed a 5 year Marketing agreement Signed a 10 year Marketing agreement Acquiring 186,000 customers with 365,000 policies in August 2010 Purchased 26,000 Water Service Line policies – November 2007 Purchased 20,000 policies – October 2006 Purchased 41,000 Water Service Line policies – May 2005

• How do we acquire policies?

– offer a capital sum upfront for existing policies – execute a long term marketing agreement – seek to quickly, if not immediately, replace the utility’s profit with commission earnings

30

UK Continental Europe USA UK Continental Europe USA

A global opportunity – growth from existing and new countries

• There are a number of opportunities to:

– further increase the number of affinity partner households in Continental Europe and the US – increase the penetration of affinity partner households – particularly in the USA and Europe – increase the number of policies per customer

• Our business model is transferable globally

Affinity partner households (m) Policies Per Customer

UK Continental Europe USA

13.9 3.5 2.9 23.4 24.3 20.3 2.32 2.38 1.30 Notes: US affinity households includes National Grid and Southern California Gas

Affinity partner household penetration (%)

Total households per country HomeServe existing operations Potential future operations

31

Our Financial Business Model

32 Affinity Households Core Renewable Customers (CRCs) Income per CRC KPIs Value drivers

Customer penetration % Policies per customer

Which Key Performance Indicators drive our business?

Strong Affinity Partnerships Product Design Sales and Marketing Capability Claims and Network Management Customer Loyalty

33

• Policy sales, and therefore renewals, reflect the timing of our marketing activity which is focussed

towards the winter months (September – March)

• The full annual premium is recognised once the policy is sold or renewed
• Group’s revenue and profits are heavily weighted to the second half of the year

Seasonality

2010 Profit before tax*

*Continuing operations - excluding amortisation of acquisition intangibles, joint venture taxation and exceptional operating items

Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

• No. of policies due for renewal each month

H2 2010 81% H1 2010 19%

H2 - 60% H1 - 40%

34

Gross revenue IPT Underw riting Net Revenue

Gross revenue IPT Underwriting Net Revenue

£95.8m

What drives our Net Revenue?

Graph not to scale

Net Revenue = Gross revenue - IPT - Underwriting

• Gross revenue = No. of customers*policies* selling price
• Insurance premium tax (IPT) = amount of customer’s premium paid in tax
• Underwriting – all policies fully underwritten

– rates = frequency*Average Job value – contracts set to give the underwriter a fixed margin

• Net revenue = Core renewable customers * income per customer

£267m

35

Gross revenue IPT Underwriting Net Revenue Retail/Other Claims handling P&D Reported revenue

Gross revenue IPT Underwriting Net revenue Reported Revenue Claims handling Retail /

• ther

Repair network revenue

What drives our Reported Revenue?

Graph not to scale

Reported Revenue = Net revenue + Retail/other + Claims handling + Repair network revenue

• Retail / other

– services provided for revenue customers (non-core renewable) including retailers – also includes revenue from ‘One Contact’

• Claims handling

– provision of 3rd party claims handling services to other UK insurance companies

• Repair network revenue

– revenue earned from our repair networks

£267m £369m

36

What drives our Cost Base?

Total costs = Affinity partner commission + Marketing + Call centres + Repair network costs + Overheads

Total costs

• Affinity partner commission

– commission payments to our affinity partners relating to new

policy sales and renewals

• Marketing costs

– majority of marketing costs relate to direct mail and outbound

call centre activities

– driven by the number of marketable households and number

• f contacts
• Sales and claims handling call centre costs

– driven by sales and marketing activity and the size of our

customer and policy base

• Repair network costs

– cost of our directly employed tradesmen and the costs of fixing

the emergencies

• Overheads

– Finance, Legal, Premises, IT etc.

Affinity partner commission Marketing costs Call centres Repair network costs Overheads

£265m

37

Gross revenue Underw riting Retail/Other P&D Marketing costs Operating profit

Gross revenue IPT Operating profit Under- writing Net revenue Reported revenue AP comms Claims handling Retail /

• ther

Repair Network Revenue

£95.8m £286.7m

Our financial business model

£236.4m

Over- heads Marketing Costs Call Centres Repair Network Costs

Our Financial Business Model

(graph not to scale)

100% of revenue booked on sale - majority of policies paid by monthly direct debit

Cash impact

£267m £369m £104.4m Payment aligned with revenue receipts

38

• Strong cash generative business
• Working capital outflow reflects growth in policy book and conversion of a greater proportion of customers to monthly direct debit
• Capital expenditure reflects investment in IT systems and information databases
• £150m debt facility in place until 2012 - significant headroom to support organic and acquisitive growth
• Effective rate of corporation tax 28.9% in 2010, joint venture adjusted tax rate 30.3% in 2010.
• Dividend policy is to grow future dividends in line with earnings per share^ growth (EPS excluding amortisation of acquisition

intangibles and exceptional operating items): 2010 EPS^: 110.9p (up 14%), DPS: 44.0p (up 24%)

Cash flow, debt, tax and dividends

£m FY10

Operating profit* from continuing operations 104.4 Exceptional items, tax on joint venture and amortisation of acquisition intangibles 1.7 Operating loss from discontinued operations (excl impairment) (27.6) Operating profit from continuing and discontinued operations 78.6 Depreciation, amortisation and other non-cash items 15.7 Increase in working capital (20.8) Cash generated by operations cash conversion % 73.4 93.4% Net interest (3.4) Taxation (21.5) Capital expenditure (25.5) Acquisitions/disposals (25.8) Equity dividends paid, Dividends from JV, Shares issued (15.8) Net movement in cash and bank borrowings (18.6) Impact of foreign exchange (0.3) Net debt (52.9)

39

Summary

40

• A clear and focused membership-only strategy with the membership model having

been robustly tested Focused strategy UK growth potential International development Financial flexibility

• Delivery of further customer growth in FY11 and beyond
• Growth from existing as well as new products and channels
• Focus on increased penetration in international markets by maximising potential of

household footprint

• Look to enter new markets in Europe
• Low levels of debt and strong cash generation provide capacity to make selective

acquisitions to either boost core business or enter new markets

Future prospects

41

Appendix Useful additional information

42

Who’s who in the business

JM Barry Gibson – Chairman Appointed to the Board in April 2004 and appointed as Chairman on 1 April 2010 following a year as Senior Non- Executive Director. Currently senior non-executive director of William Hill plc. Previously group retailing director at BAA plc, group chief executive of Littlewoods plc and non-executive director of Somerfield plc and National Express plc. Richard Harpin, BA (Hons) CdipAF - Chief Executive Set up HomeServe as a joint venture with South Staffordshire Water in 1993. Appointed to the Board in May 2001. Previously a brand manager with Procter & Gamble, followed by management consultancy with Deloitte and his own company. Martin Bennett - Chief Financial Officer Joined HomeServe in 2003. Appointed to the board in June 2009. Previously Finance Director of UK Membership having been Finance Director of the Warranties business and Group Commercial Director. Prior to joining HomeServe he spent three years as finance director of Clarity Group and 10 years at Arthur Andersen where he qualified as a chartered accountant. Jon Florsheim - Chief Executive Officer, HomeServe Membership (UK) Joined HomeServe in 2007. Appointed to the board as in March 2007. Previously he was Chief Marketing Officer and Managing Director, Customer Group, of British Sky Broadcasting. Prior to joining BskyB in 1994, Jon was Marketing Director of Dixons Stores Group (now DSG International plc) and has held marketing posts with Tesco. Rachael Hughes, BA (Hons) Chief Executive of HomeServe Europe Joined HomeServe in 2001. Appointed in 2005 having been Managing Director of Doméo, HomeServe's joint venture with Generale des Eaux Services in France, since its launch in June 2001. Previously Managing Director of CHEP Argentina SA following a total of seven years with CHEP Equipment Pooling Systems in North and South America and GKN Group in the UK. Jonathan King, BSc (Hons) Chief Executive Officer of Home Service USA Joined HomeServe in 2000. Appointed as in 2005 following 4 years as Managing Director of HomeServe Membership Ltd and a year as Business Development Director. He previously worked in retail marketing with the Boots Company as Group Brand Manager for No.7 Cosmetics.

43

HomeServe’s shareholders

Top 25 shareholders

1 17.36 Invesco Ltd 11,408,845 17.36 2 34.13 Harpin R Retail 11,023,161 16.77 3 41.28 Standard Life Investments Ltd SC Multiple 4,702,252 7.15 4 48.15 Baillie Gifford & Co Ltd SC Growth 4,514,029 6.87 5 54.42 Schroder Investment Mgmt Ltd UK Growth 4,121,603 6.27 6 58.11 Legal & General Investment Mgmt Ltd UK Index 2,426,981 3.69 7 61.39 Middleton J P Retail 2,159,150 3.28 8 64.15 Employee Share Scheme Trustees UK Retail 1,813,382 2.76 9 66.33 Franklin Templeton Investments US Value 1,434,365 2.18 10 68.33 Old Mutual Asset Managers UK Value 1,316,544 2.00 11 70.21 Wesleyan Assurance Society UK Value 1,236,649 1.88 12 72.01 Allianz Global Investors 1,184,419 1.80 13 73.64 BlackRock Inc 1,071,905 1.63 14 75.06 F & C Asset Management Plc UK Growth 931,117 1.42 15 76.42 Marathon Asset Management Ltd UK Value 896,728 1.36 16 77.73 Halbis Capital Management UK Multiple 864,415 1.31 17 78.77 Goldman Sachs Asset Management UK Growth 686,023 1.04 18 79.69 Aegon Asset Management SC Growth 606,506 0.92 19 80.60 USS Ltd UK Value 601,018 0.91 20 81.37 Aviva Investors UK Value 505,060 0.77 21 82.07 Banque Federative Credit Mutuel FR Custody 461,507 0.70 22 82.76 Artemis Investment Management SC GARP 454,473 0.69 23 83.37 Threadneedle Asset Management Ltd UK Growth 399,461 0.61 24 83.96 Brewin Dolphin Ltd UK Retail Broker 388,270 0.59 25 84.54 Comgest SA FR Growth 383,350 0.58

Cumulative % Manager Origin Investment Style Holding 10 June 2010 Holding % 10 June 2010

44

How do our membership businesses compare?

Affinity Partner Households

5 10 15 20 25 30 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Years Households (m) UKM France USA Spain

Policies per Customer

0.0 0.5 1.0 1.5 2.0 2.5 3.0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Years Policies per customer (x) UKM France USA Spain

Total Policies 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Years

Policies '000 UKM France USA Spain

45

How do our membership businesses compare?

Income per Customer

10 20 30 40 50 60 70 80 90 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Years £

UKM France USA Spain

Operating Profit

(10,000) 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 100,000 110,000 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

Year

Operating Profit, £'000

UKM France USA Spain

46

• Core Renewable Customers (“CRCs”) are those customers that we have recruited under an affinity partner brand or
• ur own brand and where we have a direct ongoing relationship with the customer including the right to renew
• Revenue Customers are those customers where we receive income for providing a policy or service but where we do

not have a direct ongoing customer relationship or renewal rights

• Change in approach only impacts the UK as all of our international businesses already report KPIs on this basis

UK KPI information

UK Membership 2010 2009 Change % 2010 2009 Change % Affinity partner households (m) 23.4 23.4

• 23.4

23.4

• Core Renewable Customers ('000)

2,876 2,807 2.4% 2,876 2,807 2.4% Revenue Customers ('000)

• 379

352 7.7% Total Customers ('000) 2,876 2,807 2.4% 3,255 3,159 3.0% Affinity partner penetration (%) 12.3% 12.0% 0.3ppts 13.9% 13.5% 0.4ppts Income per customer (£) 82.20 71.74 14.6% 73.63 64.77 13.7% Total policies ('000) 7,097 6,645 6.8% 7,552 7,054 7.1% Retention rate (%) 83.0% 83.2%

• 0.2ppts

82.5% 83.0%

• 0.5ppts

Policies per customer (x) 2.47 2.37 4.2% 2.32 2.23 3.9% Gross new policies ('000) 1,581 1,619

• 2.4%

1,834 1,826 0.5% Old basis including Revenue Core Renewable Basis

• UK KPIs will be reported on a ’Core Renewable Basis only from the start of the 2011 financial year

47

• We believe the best indicators of the Group’s financial performance are:

– Profit before tax* - Profit before tax excluding the amortisation of acquisition intangibles, exceptional operating items and joint venture taxation – Earnings per share^ –EPS excluding amortisation of acquisition intangibles and exceptional operating items

• EPS^ is calculated as follows:

Financial performance measures

(29.5) Reported tax charge Basic adjusted EPS 110.9p Earnings per share^ 63.4 Basic weighted average no. of shares 70.3 Adjusted Profit for the period Reported in Note 7 of 2010 Results announcement 1.3 Add back tax impact arising on amortisation of acquisition intangibles and exceptional operating income Tax on our French JV (2.0) Tax on joint venture 100.6 Profit before tax* (3.9) Net interest 104.4 Operating profit*

2010 £m

*Continuing operations - excluding amortisation of acquisition intangibles, joint venture taxation and exceptional operating items

48 All dates provisional

• 30 July 2010

–

AGM and Interim Management Statement IMS

• 2 August 2010

–

5:1 stock split to take effect (subject to approval at AGM)

• End of March 2010 there were 65,740,907 shares in issue (including share options)
• End of May 2010 there were 65,748,412 shares in issues (including share options)
• September 2010

–

Pre-close trading statement

• 23 November 2010

–

Interim Results announcement

• May 2011

–

Preliminary Results for 12 months ending 31 March 2011

Key future dates

49

This presentation has been prepared solely to provide additional information to shareholders as a body to assess the Company’s strategies and the potential for those strategies to

• succeed. This presentation contains certain forward-looking statements, which have been made in good faith, with respect to the financial condition, results of operations, and businesses
• f HomeServe plc. These statements and forecasts involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There are a

number of factors which could cause actual results or developments to differ materially from those expressed or implied by these forward looking statements and forecasts. The statements have been made with reference to forecast price changes, economic conditions, the current regulatory environment and the current interpretations of IFRS applicable to past, current and future periods. Nothing in this presentation should be construed as a profit forecast.

For Investor Relations queries: Mark Jones Head of IR 01922 427979 07872 411333 mark.jones@homeserve.com Mathew Wootton Director of Finance 01922 655332 07768 022707 mathew.wootton@homeserve.com

www.HomeServeplc.com