Interim results 20 November 2018
Richard Harpin Founder and Chief Executive
Highlights Group revenue and profjt up 10% in seasonally quieter fjrst half • Good progress in all of our operating businesses • – North America customer growth of 19% and profjt growth of 28% to $18.9m – 11% profjt growth in the UK to £10.2m, and three challenger energy companies signed – In France, key partnership with Veolia extended until 2026 Excellent progress at Checkatrade: new leadership team, Trades recruitment, consumer visits and • revenue growth. Unless otherwise stated, all references to profjt refer to Adjusted Operating Profjt. homeserveplc.com 1
David Bower Chief Financial Offjcer
Group financial summary £million (unless stated) HY18 Δ% Δ% CC 1 HY19 Revenue 366.0 10% 11% 404.3 EBITDA 56.1 8% 9% 60.5 Adjusted operating profjt 35.3 5% 7% 37.1 Adjusted profjt before tax 29.0 10% 12% 31.8 Net debt 304.0 (4)% 291.9 Net debt: LTM EBITDA 1.9x (0.5)x 1.4x Adjusted earnings per share 6.8p 10% 7.5p Ordinary dividend per share 4.7p 11% 5.2p 1 Constant currency $1.30 : £1, €1.14 : £1 homeserveplc.com 2
Divisional financial performance Revenue Adjusted operating profjt/(loss) ∆% ∆% CC 1 ∆% ∆% CC 1 £million HY18 HY18 HY19 HY19 UK 142.8 9% 9% 9.1 11% 11% 155.7 10.2 North America 117.8 11% 14% 11.4 22% 28% 130.5 14.0 France 35.3 4% 4% 9.4 (20)% (17)% 36.8 7.5 Spain 67.6 (3)% (3)% 7.9 9% 9% 65.8 8.6 New Markets 5.4 238% 237% (2.5) 28% 28% 18.2 (3.2) Inter-segment (2.9) (5)% (5)% — — — (2.7) — Group 366.0 10% 11% 35.3 5% 7% 404.3 37.1 1 Constant currency $1.30 : £1, €1.14 : £1 homeserveplc.com 3
Cash flow performance and capital structure Cash generated by operations £17.6m £60.5m £2.7m £0.3m £5.1m £11.3m £47.8m £60.5m £30.4m £4.3m £4.3m £274.3m £291.9m £237.8m Net debt EBITDA Non- Working Capex Ordinary Tax Net Foreign Other Underlying M&A Net debt 31 March cash capital dividend interest exchange net debt 30 2018 items September 2018 Infmow Outfmow Full year cash conversion expected to exceed 100% • Funding headroom of £200m+ • • 1.4x leverage within target range of 1.0x to 2.0x net debt: EBITDA homeserveplc.com 4
Capital expenditure • £30m ordinary capex – £9m partner payments – £21m investment principally to improve the customer journey and 55 drive network effjciency Modest reduction expected in full year vs. £71m in FY18 • 29 21 • Further reduction in capex in FY20 16 9 9 HY18 FY18 HY19 FY19 FY20 ● Partner payments ● Underlying / Technology ● Guidance homeserveplc.com 5
Tom Rusin CEO Membership
UK – improved performance Customers (m) and retention rate 80% 80% 79% Adjusted operating profj t up 11% to £10.2m • Customer book stable at 2.1m ex acquisitions • Value of customer book increasing • 2.2 2.2 2.1 – Average policies per customer up 8% to 2.7 – £12 increase in net income per customer HY17 HY18 HY19 – Claims up 8% to 0.5m Adjusted operating profj t (£m) Three new challenger energy partners. • 21.2 10.2 9.1 HY17 HY18 HY19 homeserveplc.com 7
France – expanded Veolia partnership Customers (m) and retention rate 89% 89% 88% • Reduction in adjusted operating profj t due to increased business development activity Good progress on HVAC • 1.1 1.0 1.0 Veolia partnership extended to 2026 with scope for new • marketing channels • Strong new partner pipeline. HY17 HY18 HY19 Adjusted operating profj t (€m) 10.3 9.7 8.6 HY17 HY18 HY19 homeserveplc.com 8
Spain – laying foundations for new growth Customers (m) and retention rate 80% 78% Adjusted operating profjt up 9% to €9.8m 77% • Expected reduction in customers following end of Endesa partnership • Retention rate increasing • 1.3 1.2 1.2 First steps in HVAC with acquisition of Oscagas • HY17 HY18 HY19 • Good business development pipeline in both Membership & Claims. Adjusted operating profjt (€m) 9.8 9.0 5.9 HY17 HY18 HY19 homeserveplc.com 8
North America – further growth Customers (m) and retention rate 83% 82% Customers up 19% to 3.7m 81% • – 10% organic growth 3.7 – 9% growth from Tranche 1 of Dominion Products & Services (DPS) 3.1 (October 2017) 2.8 • 74 new partners taking total to over 600 HY17 HY18 HY19 Tranche 2 of DPS completed as planned on 26 October 2018 – adds • 200k customers and 3m households Adjusted operating profjt ($m) 28% increase in adjusted operating profjt to $18.9m • 18.9 14.7 (1.6) HY17 HY18 HY19 homeserveplc.com 9
North America – more growth to come CMD 2016 ¹ Pro forma 2 Future Households (m) 32 58 80 Partners <100 600+ n/a Customers (m) 2.3 3.8 8.0 Net income per customer ($) 91 93 100 Adjusted operating margin 8% n/a 20% Adjusted operating profj t ($m) 17.5 n/a 160 Partnership signings - success breeds success • • 55,000 potential partners - utilities, municipalities and retail energy providers Continuous improvement to customer service • $160m adjusted operating profj t a key milestone, not the end point... • ¹ Capital Markets Day June 2016 ² Pro forma refm ects post half-year movements including DPS and new household additions homeserveplc.com 10
Membership - substantial opportunity to expand Addressable market – 250m households in 5 markets 75m 30% 97m households 50% 153m 20% Existing Target Insurance-minded On Demand DIY Partnerships Partnerships 514 customer reviews AS OF 24/Sep/2018 homeserveplc.com 11
HVAC – attractive adjacent market Relevant to 100% of homeowners • HVAC Virtuous Circle Aim to replicate our success in North America • Disciplined buy and build strategy • Installations – Well-established, trusted local business – Profj table – Focused on residential properties Policy On demand – Portfolio of contracted customers Membership repair – Balance of maintenance and installation – Good management team • Virtuous circle accessed by installations Service Clear synergies with our Membership business. • homeserveplc.com 12
Richard Harpin Founder and Chief Executive
Strong leadership and organisation structure International Home Experts Smart Home Development Richard Harpin David Bower Mike Fairman Jordi Ber Craig Foster H Stephen Philips CEO International Founder & CEO CFO CEO Checkatrade CEO Habitissimo LeakBot Internal promotion Membership External hire Tom Rusin Guillaume Huser John Kitzie Fernando Prieto Greg Reed Global CEO Membership CEO France CEO North America CEO Spain CEO UK HVAC Deb Dulsky Frederique Torres Vacancy Pedro Fernandez-Olano John Hunter MD Global HVAC HVAC France HVAC North America HVAC Spain HVAC UK homeserveplc.com 14
Checkatrade: Increasing Trades supply and monetisation 200k Target 200,000 trades 1 trade for every 2,000 homes 31k 24k 2.4k <500 1 trade for every 150 homes Sep 98 Sep 08 Dec 16 Sep 18 Future @ Acquisition homeserveplc.com 15
Checkatrade: Increasing Trades supply and monetisation Average subscription per year £ Buying club - - - - - - £770 - £867 £500 - <£250 - - - Sep 98 Sep 08 Dec 16 Sep 18 Future @ Acquisition homeserveplc.com 16
Growing consumer demand TV advertising increased Leaflet coverage 30% to 80% 4m reviews posted New pilot territory in Lyon, powered by Habitissimo homeserveplc.com 17
Smart Home LeakBot Further progress on creating a subscription-based commercial model • Customers are home insurers • – Costs associated with water damage are a £25bn p.a. global problem • 75,000 units sold 10 active insurer partnerships, which we are looking to expand into • larger deals Testing now live in the US. • BoilerBot Pro-active fault diagnosis and appointment scheduling. • homeserveplc.com 18
Summary and outlook A good six months, inspiring confjdence for the full year • Strengthened and experienced management team • Four attractive, recurring income businesses • Strong fjnancial position Our vision is to be the • world’s most trusted • Exciting opportunities provider of home repairs – Strong affjnity partner pipeline across Membership and improvements. – HVAC buy and build taking shape – Step change at Checkatrade – Commercial traction with LeakBot – Good progress on new country openings. Membership HVAC Smart Home Home Experts Every Job. Every Home. homeserveplc.com 19 19
Appendix • Divisional KPIs • Divisional results – local currency • Divisional results – sterling • Group balance sheet • Group cash fmow • Foreign exchange impact • Our home assistance fjnancial business model Percentage movements throughout this Appendix are based on full underlying results, not the rounded fjgures in the tables. The Group’s results are being reported under IFRS9 and IFRS15 for the fjrst time in 2018 following the mandatory adoption of the standards from 1 April 2018. In accordance with the transitional provisions of the standards, comparatives have not been restated. homeserveplc.com 18
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