Preliminary Results 2005 HighlightsoftheYear Earningspershare * - - PowerPoint PPT Presentation

SLIDE 1

Preliminary Results 2005

SLIDE 2

Highlights฀of฀the฀Year

1

Continuing฀Operations฀ 2005฀ 2004฀ Increase฀ ฀ ฀ ฀ ฀ ฀ ฀ Turnover฀ £223.1m฀ £169.2m฀ 31.8% Operating฀profit*฀ £42.4m฀ £32.4m฀ 30.8%฀ Profit฀before฀tax*฀ £42.0m฀ £32.5m฀ 29.3%฀ Earnings฀per฀share*฀ 46.7p ฀ 36.0p°฀ 29.7%฀

฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀

°Taking฀account฀of฀the฀share฀consolidation฀ ฀ ฀ *Excluding฀goodwill฀and฀exceptional฀costs฀

฀ ฀

SLIDE 3

Achievements฀in฀2005

2

• Completion of Water Company demerger
• Disposal of Commercial Outsourcing operations for £22m
• £34m invested in expanding core Home

Emergency businesses

• Investment in depth of management to support

growth plans

• Rebranding Emergency Repair business as Homeserve
• Developing fully integrated service to insurers

SLIDE 4

Highlights฀of฀2005

• 31% increase in operating profit to £42.4m

for continuing operations

• 32% UK policy growth to 3.88m
• France operating profitably
• Signed 3rd Partner in USA with 41,000 policies
• Efficiency gains in UK employed networks
• Downturn in retail furniture market

3

Operating฀Profit฀Growth

42.4 32.4 24.0 14.1 10.8 7.4 2000 2001 2002 2003 2004 2005

SLIDE 5

Profit฀and฀Loss฀-฀Continuing฀Operations

Year Ended 31 March 2005 £’million 2005 2004 % Turnover 223.1 169.2 31.8 Operating Profit 42.4 32.4 30.8 Interest (0.4) 0.1

• Profit Before Tax

42.0 32.5 29.3 Tax (13.0) (10.1) 28.6 Earnings 29.0 22.4 29.6 EPS* 46.7p 36.0p 29.7

4 All figures before goodwill and exceptional items *Taking account of share consolidation

• Exceptional operating cost of £2.8m re Courts
• Exceptional non-operating costs of £39.1m re loss on disposals
• Goodwill of £10.4m (2004: £7.2m)

SLIDE 6

Turnover฀and฀Operating฀Profit

£’million 2005 2004 Turnover % Operating % Turnover Operating Profit Profit Policy Membership 130.6 30.1 37.5 26.3 100.3 29.7 Emergency Repair 100.2 37.2 4.9 80.7 73.1 2.7 Inter-Division (7.7)

• (4.2)
• 223.1

31.8 42.4 30.8 169.2 32.4

5

SLIDE 7

Policy฀Membership

2005 2004 Operating Operating £’million Turnover % Profit % Turnover Profit Policy Membership 130.6 30.1 37.5 26.3 100.3 29.7

6

• Homeserve GB
• Cost of acquisition reduced
• Retention maintained at 88%
• International
• Losses of £1.1m
• Small profit in Doméo
• Retail Warranty
• Profit £1.6m including repair

SLIDE 8

Emergency฀Repair

2005 2004 Operating Operating £’million Turnover % Profit % Turnover Profit Emergency Repair 100.2 37.2 4.9 80.7 73.1 2.7

7

• Margins improved to 5%
• Highway
• Turnover £56m (2004: £48m), Profit £3.1m (2004: £0.3m)
• Conversion increased from 80% to 85%
• Sergon turnover £13m
• Good performance from Claims Management

SLIDE 9

Cash฀Flow฀-฀Continuing฀Operations

Year ended 31 March 2005 £’million 2005 2004 Operating Profit* 42.4 32.4 Depreciation and profit on disposal 4.7 3.2 (Increase)/Decrease in working capital and loss in JV (1.0) 1.1 Exceptional Costs (3.2) (1.0) Net Cash inflow from operating activities 42.9 35.7 Net interest/dividends to minority (1.6) (1.4) Taxation (10.2) (8.5) Capital Expenditure (7.8) (3.9) Acquisitions (20.2) (4.4) Disposals 19.0

• Equity Dividends

(7.7) (11.7) Financing (2.1) (0.6) Increase in Cash 12.3 5.2 Net Funds 11.2 0.6

8 *Pre goodwill and exceptional costs

SLIDE 10

Balance฀Sheet

Year ended 31 March 2005 £’million 2005 2004 Fixed Assets

• Goodwill

154 108

• Tangible

23 186 Net Current Liabilities (7) (18) Deferred Consideration (5) (10) Deferred Income (15) (20) Net Funds/(Debt) 11 (93) Provisions for Liabilities and Charges (1) (10) Net฀Assets฀ ฀ ฀ 160฀ 143฀

9

SLIDE 11

Acquisitions

Acquisitions: Principal Disaster Doméo Total United Choice Restoration Sergon For Year Chem-Dry Water May 2004 Jul 2004 Nov 2004 Dec 2004* April 2005** May 2005 Consideration 1.5 0.8 0.9 11.4 14.6 18.9 1.0 Net Assets

• 0.5

(0.1) (0.2) 0.2 4.8

• Goodwill

1.5 0.3 1.0 11.6 14.4 14.1 1.0

Excluding acquisition of minority interests in April 2004 *Turnover £22m, operating profit £0.7m, six months ending June 2004 **Turnover £37m, operating profit £2.6m, year ending April 2004 10

9%

SLIDE 12

IFRS

• IFRS 2 Share Based Payments
• Charge expected to be in the region of 5% of operating profit
• IFRS 3 Business Combinations
• No routine amortisation
• Annual impairment test
• IAS 19 Pension Accounting
• Actuarial gain/loss to reserves
• Defined benefit scheme not significant
• IAS 31 Interests in Joint Ventures
• First £0.4m Doméo profits cannot be recognised in 2005/06
• IAS 18 Income Recognition
• No effect
• Impact on opening Balance Sheet not material

11

SLIDE 13

Vision฀-฀For฀Homeserve฀to฀be฀“Your฀Home฀Emergency฀Service”

12

The Home Emergency Market is worth c.£4.3 billion

• Affinity branded policy marketing
• Providing a Homeserve branded vehicle and engineer
• Market leader in carrying out a broad range of repairs

for Household Insurers

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Policy holder:

Mrs D M Ambrose The Brambles Hall Lane Wacton Norwich NR15 2UH

Policy number:

ST32812/37072284.PNN

Admin and enquiries:

0800 783 0951

• Monday-Friday, 8am-8pm
• Saturday, 8am-4pm

Emergency Claims Number:

To make a claim please contact the Emergency Hotline number. Please quote your policy number. (Your call may be recorded)

24 hour Emergency Hotline

0800 783 4997

SLIDE 14

An฀outstanding฀year฀for฀Utilities฀branded฀policies

13

• Turnover up 30% to £131m
• UK policies up 32% to 3.88m
• Supply Pipe policies up 0.5m, half are new

customers

• Average policies per customer 1.65
• Retention maintained at 88%
• Renewed 14 of 17 long term Water Company

contracts March March Annual Policies - UK 2004 2005 Increase Plumbing and Drains 2.10m 2.76m 31% Electrics 0.57m 0.60m 5% Other 0.26m 0.52m 100% Total 2.93m 3.88m 32%

SLIDE 15

UK฀Utilities฀Branded฀Policy฀Growth

24.0 14.1 10.8

14 14 79 136 93 220 474 825 1148 1458 1844 2392 2926 3884 276 413 458 457 593 858 928 1361 94/95 95/96 96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 500 1000 1500 2000 2500 3000 3500 4000

14

• Year end policies
• New policies sold in year

SLIDE 16

Water฀Company฀Branded฀Plumbing฀Policies฀-฀Market฀Penetration

15 Penetration of owner occupied households Year

SLIDE 17

International฀Development

16

• 82%฀growth฀in฀policies฀to฀310,000
• Turnover฀£3.3m฀(2004: £1.5m)฀฀฀Operating฀Loss฀£1.1m฀฀(2004: £0.6m)

France

• Achieved฀profit฀for฀first฀time
• Out฀of฀area฀mailings฀successful
• Electrics฀and฀full฀plumbing฀cross฀sell฀products฀introduced

USA฀

• High฀take฀up฀rates฀from฀direct฀marketing
• 10฀year฀marketing฀agreement฀with฀United฀Water฀
• Acquired฀its฀41,000฀Leakguard฀policies

Australia฀and฀Additional฀Countries

SLIDE 18

Homeserve฀Warranties

17

• New฀combined฀operation฀under฀Edward฀Fitzmaurice

Retail

• New฀retailer฀wins฀progressing
• Development฀of฀existing฀retail฀partners
• Development฀of฀new฀warranty฀products฀e.g.฀Kitchen฀Cabinets฀

and฀appliances,฀floor฀coverings

• Network฀of฀employed฀upholsterers฀performing฀well

Manufacturer฀Warranties

• Superior฀marketing
• Registered฀Customers฀360,000฀(2004:฀140,000)
• Year฀two฀extended฀warranty฀customers฀66,000฀(2004฀:฀Nil)
• Added฀Vaillant฀Group฀and฀Rangemaster

SLIDE 19

Glazing,฀Locks,฀Plumbing฀and฀Drains

18

• Turnover฀£55.6m฀(2004:฀£47.7m)
• Operating฀profit฀£3.1m฀(2004:฀£0.3m)฀
• Reduction฀in฀insurance฀lead฀volumes฀across฀market
• Operational฀Improvements
• Directly฀employed฀Plumbing฀and฀Drains฀is฀No.฀2฀in฀market฀

after฀2฀years

• New฀glazing฀contracts฀RBSI,฀RSA
• New฀Plumbing฀and฀Drains฀contracts฀RBSI,฀Zurich
• ‘Fitter฀package’

Basic Pay Variable Pay Total Weekly Pay

SLIDE 20

Development฀of฀Additional฀Trades฀via฀Acquisitions

19

Sergon

• Acquired฀in฀December฀2004
• Working฀for฀7฀Household฀Insurers
• ‘Water฀Ingress’/Building฀Repairs
• 280฀Contractors฀nationwide
• Potential฀to฀develop฀directly฀employed
• Major฀trade฀not฀previously฀covered

Chem-Dry

• Acquired฀in฀April฀2005
• Market฀Leader฀with฀30%฀of฀£100m฀market
• Working฀for฀8฀Household฀Insurers
• Fire฀and฀Flood฀means฀first฀on฀the฀scene
• Nationwide฀coverage฀with฀500฀operatives
• Potential฀for฀directly฀employed฀

SLIDE 21

Emergency฀Repair฀Model

20

Customer฀Claim Validated฀by฀Insurer Homeserve฀Sergon Chem-Dry

• Developing฀a฀unique฀local฀model
• Full฀range฀of฀trades
• Performing฀nearly฀one฀million฀repairs฀per฀year

Electronic฀Notification Homeserve฀Local฀Depot

SLIDE 22

Investment฀in฀People

21

Examples฀of฀new฀senior฀management฀ ฀ ฀Ian฀Carlisle฀ (Autoglass)฀ Plc฀Board,฀Emergency฀Repair ฀Edward฀Fitzmaurice฀ (Dixon฀Stores฀Group)฀฀ Manufacturer฀and฀Retail฀Warranty ฀Richard฀Lawson฀ (Domestic฀&฀General)฀ Manufacturer฀Warranty ฀Joel฀Barnett฀ (Caudwell)฀ Senior฀Executive฀Recruitment ฀Andrew฀Ground฀ (Sainsburys)฀ Managing฀Director฀UK฀Policies ฀Derek฀Hill฀ (Moben/Sharps)฀ Managing฀Director,฀Sergon ฀Andy฀Kirton฀ (HFC)฀ Group฀Sales฀Director,฀Retail฀Warranty

SLIDE 23

Prospects

22

• Fully฀focused฀on฀home฀emergencies
• Continued฀market฀penetration฀for฀utility฀branded฀

policies฀in฀the฀UK

• Increasing฀levels฀of฀recurring฀revenue
• Improving฀efficiency฀from฀employed฀networks฀

targeting฀double฀digit฀returns

• Market฀leading฀repair฀solution฀for฀household฀

insurers

• Developing฀International฀particularly฀in฀USA฀where฀

significant฀potential฀exists

SLIDE 24

Profit฀and฀Loss฀

Year Ended 31 March 2005 £’million 2005 2004 Turnover 283.3 323.0 Operating Profit 44.2 58.7 Interest (0.5) (7.0) Profit Before Tax 43.7 51.7 Tax (13.5) (15.2) Minority Interest

• (4.2)

Earnings 30.2 32.3 EPS 48.7p 51.0p DPS 16.0p 20.0p

All figures before goodwill and exceptional items

• Exceptional operating costs of £2.8m re Courts
• Exceptional non-operating costs of £39.1m re loss on disposals
• Goodwill of £10.4m (2004: £7.2m)

23

Appendix฀1