[PPT] - Preliminary Results 24 May 2016 Good customer and profit growth PowerPoint Presentation

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Preliminary Results

24 May 2016

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homeserveplc.com 1

53.4 39.2 3.4 2.1 FY14 FY15 FY16 FY14 FY15 FY16 2.1 4.2 5.5 6.3 7.0 2.2 4.8 84.1 85.4 93.0 58.0 45.2

Adjusted profit before tax1(£m) Customer numbers (m)

56.4 37.3

UK customers International customers UK Established International New Markets Net Interest

Good customer and profit growth with step change in US expansion

Group profjt up 9% to £93.0m
Good customer growth across all territories, up 11% to 7m
Continued good retention at 83%
Agreement to acquire Utility Service Partners Inc. (USP) for $75m

adding 0.4m customers and 9.4m partner households

Continued investment in New Markets – positive signs on

international development

Adjusted earnings per share up 15% to 21.8p
Dividend up 10% to 12.7p

1 All references to adjusted EBITDA, adjusted operating profjt or loss, adjusted profjt before tax and adjusted earnings per share throughout the announcement exclude the amortisation of acquisition intangibles and exceptional items.

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homeserveplc.com 2

£million FY16 FY15

∆%

Total revenue 633.2 584.2

+8%

Adjusted EBITDA 122.7 109.4

+12%

Adjusted profit before tax 93.0 85.4

+9%

Adjusted earnings per share 21.8p 19.0p

+15%

Ordinary dividend per share 12.7p 11.5p

+10%

Net debt £169.5m £64.1m Debt : Adjusted EBITDA 1.4x 0.6x

Revenue up £49m to £633.2m with good growth in the USA and Spain
Good profjt progression, particularly in the USA
Adjusted operating profjt £2.2m higher at constant currency
Debt: Adjusted EBITDA at 1.4x refmecting special dividend payment in July 2015

Group financial summary

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Revenue Adjusted operating profit £million FY16 FY15

∆%

FY16 FY15

∆%

UK 291.8 285.5

+2%

58.0 56.4

+3%

USA 152.6 125.3

+22%

12.1 6.4

+89%

France 77.4 74.9

+3%

23.2 23.4

1%

Spain 97.5 90.9

+7%

9.9 7.5

+33%

Established International 327.5 291.1

+13%

45.2 37.3

+22%

New Markets 20.1 13.8

+46%

(5.9) (5.9)

–

Inter-segment (6.2) (6.2)

–

– –

–

Group 633.2 584.2

+8%

97.3 87.8

+11%

UK profjts up 3% to £58.0m
Increase in profjt in the USA refmecting higher customer numbers with continued investment in marketing

and business development

Good performance in France, up 7% in local currency but impacted by adverse currency movement
Profjt progression in Spain refmects an increase in renewals
Continued investment in New Markets

Divisional financial performance

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Net Debt 31 March 2015 Adjusted EBITDA Non-cash items Working capital Capital expenditure Special dividend Ordinary dividend Tax Acquisitions Interest/

ther

Net Debt 31 March 2016

£122.7m £64.1m £5.1m £6.1m £63.7m £99.4m £37.6m £17.3m £5.3m £169.5m £3.8m

Cash generated by operations £121.7m Total dividend £137m

Increased debt following payment of special dividend of £99.4m; total dividend £137m
Capital investment of £63.7m in technology and partner payments
Investment in working capital refmecting continued growth in the business
Strong cash conversion at 125% of adjusted operating profjt
Acquisition of a gas services business in the UK
Closing net debt at £169.5m, 1.4x Debt: EBITDA

Cash flow performance – strong cash generation

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18 40 44 20 20 10 35 20 15 10 £58m £64m £30m £55m £25m FY15 FY16 FY18 FY17 FY19

Capital investment (£m) Plan

Underlying/Technology Partner payments

FY16 capital expenditure

– Core customer IT system – Partner payments in Spain and France – Underlying technology

Benefjts from our new customer system

– Single view of the customer – Improve marketing effectiveness – Reduce cost to serve

Continued investment in FY17 and FY18

– Complete implementation of core customer system – Upgrade claims handling and deployment systems – Digital and technology investment – Continued partner payments

Normalised underlying capex of £25m (including £10m partner payments)

Capital investment – driving customer service and efficiency

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26.6 29.5 31.4 0.9 0.9 1.0 FY14 FY15 FY16

Profit (€m) Customers (m)

FY14 FY15 FY16

France

France – accelerating our customer growth

Renewed sales momentum following Lyonnaise des Eaux partnership
Strong customer growth up 7% to 1.0m
Strong retention at 89%
Profjt up 7% to €31.4m
Investment in business development with good pipeline of partner prospects

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4.8 9.5 13.9 0.8 1.1 1.2 FY14 FY15 FY16

Customers (m) Profit (€m)

FY14 FY15 FY16

Spain – strong profit growth

Strong profjt growth, up 46% to €13.9m
Customer numbers up 11% to 1.2m
Retention rate at 77% refmecting volume of fjrst year renewals
Strong relationship with Endesa – FY17 marketing activity agreed
Investment in business development with good pipeline of partner prospects

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homeserveplc.com 8

0.1 0.2 0.3 0.4 FY13 FY14 FY15 FY16

Gross new customers (m)

by

93

f customers would

buy again.

%

B a s e d

n

1 , 9 8 3 r e a l r e v i e w s , f r

m

c u s t

m

e r s l i k e y

u

.

53.4 56.4 58.0

Profit (£m)

FY14 FY15 FY16

Solid business with 2.2m customers, up 100k on FY15
Marketing investment delivers 0.4m gross new customers
Retention performance at 82%, refmecting number of fjrst year renewals
Income per customer up to £94 driven by an increase in Year 2+ income
Strong affjnity partnerships, six renewed in the year
Continued investment in our people, delivering great customer service

UK – Customer and profit growth

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A growing heating services business

Acquired Home Energy Services Limited in October 2015
Directly employed network enhancing our service capability
Selling Tado smart thermostat with boiler services

Developing boiler installation business

Franchise model

– 14 established franchisees – National coverage during FY18

Smart thermostat at point of installation

UK – acquisition enhances gas delivery capability

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homeserveplc.com 10

UK – Leakbot: connecting the world’s plumbing

Smart water leak detector developed in house by HomeServe Labs
Detects leaks anywhere in the home
Solves high value problem for home insurance companies
Global patent-pending

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homeserveplc.com 11

26 29 32 FY14 FY15 FY16

1.6 2.0 2.3

FY14 FY15 FY16 42* 2.7*

Affinity partner households (m) Total customers (m)

Agreement to acquire Utility Service Partners for $75m
Customer numbers up 17% to 2.3m
Affjnity partner households at 42m with USP
Continued solid 82% retention
Delivered signifjcant increase in profjts to £12.1m
Established relationship with AARP

USA – step change in growth and gaining momentum

* Proforma post acquisition of USP

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CANADA USA

USP USP USP

HomeServe USA Utility Service Partners

A home assistance business with 0.4m customers
Over 300 affjnity partners covering 9.4m households in the USA
Exclusive arrangement with National League of Cities
Anticipate completion in fjrst half of FY17
Investment in marketing and integration in FY17
Incremental $15m EBITDA in FY18

USA – Agreement to acquire Utility Service Partners (USP)

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USA – 11 new utility partners and strong pipeline

42m

FY13 +0.8m households FY14 +4.4m households FY15 +2.5m households FY16 +2.8m households USP +9.4m households

Households 22m

26m 29m 32m

2.8m households added in the year
Excellent new partner pipeline

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New Markets – developing and extending into new territories

Italy

0.3m customer and into profjt
Focus on long term agreement and new partnerships

New territories

Open via a utility joint venture, replicating success

in UK and France

Prospecting will cover 13 countries:

Australia, Brazil, Chile, China, Czech Republic, India, Japan, Mexico, Netherlands, Poland, Turkey, South Korea, Taiwan

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Digital – consistent end to end customer experience

Appointed Chief Digital Offjcer
Established Digital Hub
Enabling self-serve and delivering effjciencies
Developed Trace – engineer job scheduling technology
Seed funding in digital start-up

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FY16

Strong growth in France, Spain and the USA
Step change in US expansion

Outlook

Expect continued good growth in FY17
USP to add $15m in FY18, the fjrst full year of ownership
Potential for further bolt-on acquisitions in the UK and USA
Continued investment in business development, international expansion and innovation

Capital Markets Day – 29 June 2016

Summary – a year of strong customer and profit growth

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Appendices

Divisional KPIs
Divisional results local currency
Group balance sheet
Group cash fmow
Target market in the USA
Our fjnancial business model

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Divisional KPIs

–

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Divisional results – local currency

13.9 9.5

+46% Adjusted operating profit margin %

10% 8%

+2ppts

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Group balance sheet

£ million 2016 2015 Non-current assets Goodwill 247.7 236.6 Other intangible assets 210.0 166.5 Property, plant and equipment 34.9 31.3 Investments 7.8 4.4 Deferred tax assets 6.8 9.5 Retirement benefit assets 2.1 0.1 509.3 448.4 Current assets Inventories 2.9 0.8 Trade and other receivables 367.7 318.8 Cash and cash equivalents 54.2 74.7 424.8 394.3 Total assets 934.1 842.7 Current liabilities Trade and other payables (360.7) (308.2) Current tax liabilities (7.0) (7.1) Obligations under finance leases (0.9) (0.6) Bank and other loans (25.0) – (393.6) (315.9) Net current assets 31.2 78.4 Non-current liabilities Bank and other loans (196.5) (137.6) Other financial liabilities (5.6) (2.1) Deferred tax liabilities (20.5) (18.0) Obligations under finance leases (1.3) (0.6) (223.9) (158.3) Total liabilities (617.5) (474.2) Net assets 316.6 368.5

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Group cash flow

£ million 2016 2015 Operating profit 86.9 79.1 Depreciation, amortisation and other non cash items 40.9 36.4 Decrease in exceptional provision – (7.7) Increase in working capital (6.1) (13.2) Cash generated by operations 121.7 94.6 Net interest (3.0) (4.1) Taxation (17.3) (22.8) Capital expenditure (63.7) (52.8) Repayment of finance leases (0.5) (0.3) Free cash flow 37.2 14.6 Purchase of investment (0.5) (4.8) Acquisitions (5.3) (1.1) Equity dividends paid (137.0) (36.9) Issue of shares 1.8 3.8 Net movement in cash and bank borrowings (103.8) (24.4) Impact of foreign exchange (0.7) 2.3 Movement on finance leases (0.9) 0.3 Opening net debt (64.1) (42.3) Closing net debt (169.5) (64.1)

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Households 38m Households 90m Households 65m Households 63m Energy utilities Water utilities 2,600 Serving < 50,000 households 145 Serving > 50,000 households 1,300 Serving > 20,000 households 52,700 Serving < 20,000 households Target Market

Target market USA

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£200m £10m £81m £292m £58m

Our financial business model

Our UK business model 2016 (graph not to scale)

Gross revenue IPT Underwriting Net revenue 3rd party claims handling and

ther income

Repair network revenue Reported revenue AP comms Marketing costs Call centres Overheads Repair network costs Adjusted

perating

profit

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This presentation contains certain forward-looking statements, which have been made in good faith, with respect to the fjnancial 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 profjt forecast.