Highlights Continuing Operations 2006 2005 Increase Revenue - - PowerPoint PPT Presentation

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Highlights Continuing Operations 2006 2005 Increase Revenue - - PowerPoint PPT Presentation

Nov 26, 2023 175 likes •483 views

Highlights Continuing Operations 2006 2005 Increase Revenue 367m 221m 66% Operating profit* 54.4m 42.2m 29% Profit before tax* 53.6m 41.9m 28% Earnings Per Share * 59.2p 47.2p 25% Dividend Per Share 20.0p 16.0p

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Highlights

25% 47.2p 59.2p Earnings Per Share * 28% £41.9m £53.6m Profit before tax* 25% 16.0p 20.0p Dividend Per Share 29% £42.2m £54.4m Operating profit* 66% £221m £367m Revenue Increase 2005 2006 Continuing Operations

* Excluding amortisation of acquisition intangibles and 2005 exceptional cost

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Record Year for Policy Membership and Emergency Repair

Policy Membership

  • UK policies increased by 30% in 12 months to 4.97m, 15% in 6 months
  • Customers increased 22% to 2.79m
  • International policies increased by 75% to 0.55m (31 March 2005: 0.32m)
  • Signed a 5 year marketing agreement in US with Cobb Energy and

extended existing territories with Aqua America

  • French operation delivering good returns
  • Agreement to test in Spain in September

Emergency Repair

  • Brought together comprehensive range of trades; acquisitions in

permanent repair, fire and flood and glazing

  • First outsource multi trade contract performing well
  • Turnaround programme for ‘Highway’ complete
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Profit and Loss – Continuing Operations

25% 47.2p 59.2p EPS 26% 29.2 37.0 Earnings (12.7) (16.6) Tax 28% 41.9 53.6 Profit Before Tax (0.3) (0.8) Interest 29% 42.2 54.4 Operating Profit 66% 220.7 367.0 Revenue ê% 2005 2006 £’million Year Ended 31 March 2006

All figures before exceptional items and amortisation of acquisition intangibles

  • Exceptional operating cost of £2.8m re Courts in 2005
  • Amortisation of acquisition intangibles of £3.6m (2005: £0.3m)
  • Proposed final dividend of 13.9p, bringing total for year to 20.0p, up 25%
  • Share scheme charges £2.1m (2005: £1.0m)
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Revenue and Operating Profit

29% 192% 9% ê% 42.2 220.7 54.4 66% 367.0

  • (7.7)
  • (12.5)

Inter-Division 4.5 100.2 13.1 118% 218.1 Emergency Repair 37.7 128.2 41.3 26% 161.4 Policy Membership Operating Profit Turnover Operating Profit ê% Revenue 2005 2006 £’million

  • Acquired profits contributed £3.8m, 9% of growth
  • Margin reflects international, retail warranties and greater mix of

repair revenue

19% 4% 29% 2005 15% Group 6% Repair 25% Policy 2006 Margins

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Policy Membership

9% ê% 37.7 128.2 41.3 26% 161.4 Policy Membership Operating Profit Turnover Operating Profit ê% Revenue 2005 2006 £’million

  • Underlying profit growth of 20% for Homeserve GB

­ Average cost of acquisition stable

  • International investment increased to £2.6m (2005: £1.1m)

­ French Joint Venture operating profit increased to £1.6m (our share £0.8m)

  • Retail Warranties loss £1.5m (2005: £1.4m profit)

­ Reduced cost base, focus on new customer accounts

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Emergency Repair

4.5 100.2 192% 13.1 118% 218.1 Emergency Repair ê% Operating Profit Turnover Operating Profit ê% Revenue 2005 2006 £’million

  • Organic growth of 106% including Homeserve Property Repairs
  • Chem-Dry and Improveline revenue and operating profits of £64m and £3.9m
  • ‘Highway’ recovery complete
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Cash Flow and Balance Sheet Extracts

(7.8) (15.7) Capex 176.9 201.1 Net Assets 2005 2006 Balance Sheet £’million (8.4) (8.2) Purchase of own shares 11.2 (16.3) Net (Debt)/Cash (1.2) (36.0) Acquisitions/Disposals 42.9 55.6 Cash generated by continuing operations (5.4) (4.2) Increase in working capital 2005 2006 Cash Flow £’million

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Homeserve “The AA for Home Emergencies”

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A Record Year for Utility Branded Policy Growth

1000 2000 3000 4000 5000 6000 '01/02 '02/03 '03/04 '04/05 '05/06 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 1.8 2 New Policies sold in Year Year End Policies Policies per Customer

593 1844 858 2392 928 2926 1361 3816 1626 4973 1.22 1.4 1.5 1.65 1.78

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30% Annual Growth in UK Utility Branded Policies

65% 0.25m 0.42m Gas and Gas Supply 3.82m 0.21m 0.60m 2.76m March 2005 30% 4.97m Total 122% 0.44m Other including Housebuilders 27% 0.76m Electrics 21% 3.35m Plumbing and Drains, Water Supply Pipe Annual Increase March 2006 Policies – UK £’million

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The Plumbing and Drains Opportunity

  • 48% of homes suffer plumbing emergencies
  • 2.8 million plumbing and drains emergencies

predicted each year

  • 42% do not work evenings or weekends

†

  • Only 56% offer an emergency service †
  • Out of hours incurs substantial premiums †

† Hirst Research 2005

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Continued Market Growth Driven by Homeserve

Electrics

0% 5% 10% 15% 20% 25% 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Penetration of owner occupied households

British Gas Homeserve Total Market

Plumbing

0% 2% 4% 6% 8% 10% 12% 2002 2003 2004 2005 2006

British Gas Homeserve Total Market Examples of penetration by Water Company

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Understanding Customer Retention and Cross Selling Opportunity

* Full Plumbing and Drains product

0.00 0.50 1.00 1.50 2.00 2.50 3.00 1 2 3 4 5 6 7 8 9 10 11 Length of time a Homeserve Member (Years) Average Number of Policies 80.0% 82.0% 84.0% 86.0% 88.0% 90.0% 92.0% 94.0% 96.0% Retention Rate (P&D)

Average Number of Policies Retention Rate (P&D)*

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France is First International Country into Profit

280 11 198 71 March 2005 49% 416 Total 327% 47 Electrics and Other 27% 252 Water Supply Pipe 65% 117 Plumbing and Drains Annual Increase March 2006 Policies - France ‘000

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USA Progressing Well

33

  • 23

10 March 2005 297% 128 Total

  • 1

Electrics and Other 300% 94 Water Supply Pipe 230% 33 Plumbing and Drains Annual Increase March 2006 Policies - USA ‘000

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USA – Opportunity and Pipeline Development

3 (2.76m) 2 (0.87m) 1 (0.4m) 4 (1.0m) 5 (6.80m) 6 (1.88m) 31 (4.72m) 35 (5.31m) 40 (6.54m) 129 (8.7m) Utilities / Households: 39 (24.46m) 111 (56.62m) 186 (78.0m) 119 (64.9m) Utilities / Households:

Water Energy

Pipeline Snapshot

May 2006

Contacted Meeting Completed Proposal Submitted Advanced Negotiation Contract Signed Total Prospects

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International Development - Spain

11.6m Total Owner Occupied Homes 1.0m British Citizens Second Homes 12 Total Utility Prospects

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Retail and Manufacturer Warranties

Retail Warranties

  • Loss of £1.5m (2005: operating profit £1.4m)
  • Cost base reduced and focus on winning new accounts,

e.g. Reids May 2006, 32 stores Manufacturer Warranties

  • Extended warranties grown 60% to 144,000
  • Increased warranty registration rates through innovative

marketing

  • Significant cross sell opportunities
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The UK’s Largest Multi Trade Repair Service to Household Insurers

  • 50

100 150 200 250 2004 2005 2006

Permanent Repair Fire and Flood Furniture Gas IDE Plumbing and Drains Glass & Locks

Revenue and Operating Profit Growth - Emergency Repair

Revenue:

Profit: £2.7m Profit: £4.5m Profit: £13.1m

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Glass and Locks, Plumbing and Drains

  • Outstanding performance in the year
  • Fitter Package at all Glass and Locks branches,
  • Plumbing and Drains national coverage

Pilkingtons

  • Acquired glazing division in April 2006

­ Complementary Household Insurers ­ Additional 43 directly employed operatives

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Permanent Repair, Fire and Flood

Permanent Repair

  • Homeserve Property Repairs managing 6,000 claims per

month

  • Improveline acquired December 2005

­ Complementary Household Insurers ­ Pilot test with major insurer for property repairs

Fire and Flood

  • Launched trial of carpet inspection, cleaning and

replacement with 2 Household Insurers

Market Average Life Cycle

20 40 60 80 100 December 2004 March 2005 March 2006

Property Repairs

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Prospects

  • Each of our chosen markets has significant potential for organic

growth, complemented by acquisitions

  • Continued market penetration for UK utility branded policies
  • Further organic growth in US, testing in Spain to commence in

September 2006

  • Emergency Repair expects to extend proven outsourced multi

trade model to other Household Insurers

  • Increase the proportion of repairs by our employed operatives
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Appendices

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Balance Sheet

0.6 (3.5) Deferred Tax 0.9 1.2 Interests and Joint Ventures 18.7 30.7

  • Tangible

(2.6) (1.2) Pension Obligations 176.9 201.1 Net Assets 11.2 (16.3) Net (Debt)/Funds (15.1) (14.6) Deferred Income (5.3) (17.9) Deferred Consideration 1.5 3.9 Net Other Assets 7.7 31.8

  • Intangible

159.3 187.0

  • Goodwill

Fixed Assets 2005 2006 £’million 31 March 2006

Appendix I

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Cash Flow

  • (0.3)

Share of joint ventures (3.0) 1.4 Discontinued cash flow 9.3 (24.7) (Decrease)/Increase in Cash (8.4) (8.2) Purchase of own shares 19.0 (1.3) Disposals 0.2 (0.8) Net interest 11.2 (16.3) Net (Debt)/Cash 12.3 (26.1) Cash from continuing operations 6.2 3.5 Financing (9.3) (10.7) Equity Dividends (20.2) (34.7) Acquisitions (7.8) (15.7) Capital Expenditure (10.3) (13.8) Taxation 42.9 55.6 Cash generated by continuing operations (5.4) (4.2) Increase in working capital 6.1 5.7 Depreciation/Software amortisation, share schemes, pension schemes 42.2 54.4 Profit from operations* 2005 2006 £’million Year ended 31 March 2006 *Pre amortisation of acquisition intangibles and exceptional costs

Appendix II

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IFRS – Restated Profit and Loss

(0.5) (1.6) Share Scheme Charges – IFRS 2

  • Other

42.2 54.4 Profit from Operations ** - IFRS

  • (0.4)

Interests in Joint Ventures – IAS 31 0.4

  • Pension Accounting – IAS 19

42.3 56.4 Operating Profit* - UK GAAP Year ended 31 March 2005 Year ended 31 March 2006 £’million

* Pre goodwill amortisation and exceptional costs ** Pre amortisation of acquisition intangibles and exceptional costs

For illustration only

  • Amortisation of acquisition intangibles of 3.6m (2005: £0.3m)
  • Goodwill charge for Year ended March 2006 £10.4m, IFRS amortisation charge £0.3m

Appendix III

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Balance Sheet Restatement

0.5 Share Schemes – IFRS 2 (2.2) Pensions – IAS 19 9.0 Business Combinations – IFRS 3 0.3 Interests in Joint Ventures – IAS 31 176.9 Net Assets – IFRS 160.3 2.2 Tax Impact - IAS12 6.8 Proposed Dividends – IAS 10

  • Discontinued Operations

160.3 Net Assets – UK GAAP 31 March 2005 £’million

Appendix IV

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IFRS

  • IFRS 2 Share Based Payments

­

Charge expected to be in the region of 5% of operating profit

  • IFRS 3 Goodwill

­

No routine amortisation

­

Annual impairment test

­

Amortisation of intangibles

  • IAS 19 Pension Accounting

­

Actuarial gain/loss to reserves

­

Final Salary scheme not significant

  • IAS31 Interests in Joint Ventures

­

First £0.4m Doméo profits have not been recognised in 2005/06

  • IAS 18 Income Recognition

­

No effect Appendix V