Preliminary results 22 May 2018 Highlights Record profjt growth - - PowerPoint PPT Presentation

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Preliminary results 22 May 2018 Highlights Record profjt growth - - PowerPoint PPT Presentation

Oct 23, 2022 230 likes •494 views

Preliminary results 22 May 2018 Highlights Record profjt growth adjusted operating profjt up 29% to 153.4m Customer numbers up 7% to 8.4m; retention strong at 82% Further step change in North America excellent organic and

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Preliminary results

22 May 2018

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homeserveplc.com

Highlights

  • Record profjt growth – adjusted operating profjt up 29% to £153.4m
  • Customer numbers up 7% to 8.4m; retention strong at 82%
  • Further step change in North America – excellent organic and acquired growth
  • £125m equity placing with DPS acquisition announcement in October 2017
  • Good strategic progress in the UK
  • Double digit profjt growth in France and Spain
  • Four global business lines to position us for future growth – Membership, Home Experts,

HVAC and Smart Home

  • 25% increase in dividend to 19.1p.
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SLIDE 3

homeserveplc.com

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£million FY18 FY17 Δ% Δ% CC 1

Total revenue 899.7 785.0 15% 15% Adjusted operating profjt 153.4 118.8 29% 30% Adjusted profjt before tax 141.7 112.4 26% 27% EBITDA 197.6 154.2 28% 29% Net debt 237.8 261.4 (9)% Net debt: EBITDA 1.2x 1.7x — Adjusted earnings per share 33.6p 27.0p 24% Ordinary dividend per share 19.1p 15.3p 25%

Group financial summary

1 Constant currency $1.31 : £1, €1.19 : £1

  • Strong second half to deliver a record-breaking full year
  • Increasing proportion of profjts earned overseas.
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homeserveplc.com

Divisional financial performance

Revenue Adjusted operating profjt/(loss) £million FY18 FY17

∆% ∆% CC1

FY18 FY17

∆% ∆% CC1 UK 365.6 326.5 12% 12% 61.1 63.2 (3)% (3)% North America 282.1 227.8 24% 28% 48.6 21.2 129% 146% France 100.0 91.1 10% 5% 31.5 27.1 16% 13% Spain 141.3 130.2 9% 4% 16.6 13.3 26% 20% New Markets 18.6 16.6 12% 9% (4.4) (6.0) (29)% (29)% Inter-segment (7.9) (7.2) 10% 10% — — — — Group 899.7 785.0 15% 15% 153.4 118.8 29% 30%

1 Constant currency $1.31 : £1, €1.19 : £1

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homeserveplc.com

Cash flow performance and capital structure

Net debt 31 March 2017 Adjusted EBITDA Non- cash items Working capital Capital expenditure Ordinary dividend Tax Net interest Foreign exchange Other Equity placing1 Underlying net debt M&A2 Net debt 31 March 2018

£197.6m £261.4m £9.0m £42.4m £71.1m £50.4m £27.2m £10.5m £2.9m £123.3m £107.8m £253.3m £237.8m £0.2m

Cash generated by operations £164.2m

1 Gross proceeds of £125m, net of issue costs 2 £53.6m DPS policy book acquisition shown within M&A. Statutory presentation is within Capex.

  • Cash conversion of 107%
  • Funding headroom of £270m+
  • Revised net debt: EBITDA range of 1.0x to 2.0x.
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homeserveplc.com

  • £71m ordinary capex, in line with our £70m guidance

– £16m partner payments – £55m investment principally to improve the customer journey and drive network effjciency

  • Continued investment, growth and technology related

– Modest reduction in capex in FY19 – Normalise at c. £35m from FY20.

Capital expenditure

  • Partner payments ● Underlying / Technology

FY17

14 45

FY19 FY16

20 40

FY18

16 55

5

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SLIDE 7

8.2

  • Customers at 2.2m with complementary M&A
  • 10% increase in net income per customer refm

ects richer product line

  • Key decisions impact profj

t in FY18 but make us leaner and more effj cient in FY19

  • New partner opportunities in energy – E.ON and Octopus

Energy.

UK – most developed membership business, progress with growth initiatives

Customers (m) and retention rate

FY16 FY17 FY18

2.2 2.2 2.2 82% 80% 79%

Adjusted operating profj t (£m)

FY16 FY17 FY18

58.0 63.2 61.1

homeserveplc.com

6

by

95

  • f customers would
buy again.

%

B a s e d
  • n
8 6 4 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
.
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UK – tangible progress on LeakBot

homeserveplc.com

7

  • Transition from proof of concept to a genuine

commercial proposition – Revenue model defj ned – WiFi version developed – Nine live test partnerships – Two sizeable orders; IoT Denmark & Neos.

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  • Adjusted operating profj

t up 13% to €35.7m

  • Customers up 1% to 1.1m
  • Strong partnerships with Suez and Veolia with scope for further

development

  • Expanded relationship with Butagaz
  • Strategic move into HVAC.

France – strong utility partnerships with potential to expand

FY16 FY17 FY18

1.0 1.0 1.1 89% 89% 88%

FY16 FY17 FY18

31.4 31.5 35.7

Customers (m) and retention rate Adjusted operating profj t (€m)

homeserveplc.com

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  • Adjusted operating profi

t up 20% to €18.9m

  • Customers up 1% to 1.3m
  • Endesa relationship draws to a close in the coming weeks
  • New partner and product options including Tech Angel with

telecoms partners.

Spain – good profi t growth

FY16 FY17 FY18

1.2 1.3 1.3 77% 78% 78%

FY16 FY17 FY18

13.9 15.8 18.9

Customers (m) and retention rate Adjusted operating profi t (€m)

homeserveplc.com

9

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North America – a record year

FY16 FY17 Pro forma1

1 Pro forma includes DPS

FY18

2.3 3.0 3.6 3.8 82% 83%

Customers (m) and retention rate Adjusted operating profj t ($m)

  • 20% customer growth to 3.6m

– 11% organic growth – Successful policy book acquisition of Dominion Products & Services

  • Business development continues apace

– 103 new utility partners added in FY18

  • Scaling for growth

– 146% increase in adjusted operating profj t to $64.4m – Profj t margin up 8 ppts to 17%.

FY16 FY17 FY18

17.5 26.2 64.4

homeserveplc.com

10

82%

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North America – prospects for growth remain very strong

  • Further opportunities for policy book acquisitions

– 14 acquisitions in 10 years – 28 potential policy book opportunities remain

  • Proven acquisition and integration processes
  • New contact centre opened in April 2018 increases operational capacity.

homeserveplc.com

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Size Number Total Policies (m)

Large > 250,000 policies 7 5.7 Medium > 50,000 policies 7 0.8 Small < 50,000 policies 14 0.3 28 6.8

Future M&A opportunities

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homeserveplc.com

2016 1 Pro forma 2 Future

Households (m) 32 58 80 Customers (m) 2.3 3.8 8.0 Net income per customer ($) 91 91 100 Adjusted operating margin % 8% 17% 20% Adjusted operating profjt ($m) 17.5 64.4 160

North America – rapid progress

¹ HomeServe capital markets day (June 2016) ² Pro forma includes DPS Tranche 2, expected to complete autumn 2018

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homeserveplc.com

Membership

Subscription-based home assistance for homeowners covering plumbing, heating, electrical, locks, glazing, pest control and technology.

Home Experts

On demand, online marketplace to find vetted and reviewed local tradespeople for a broad range of home repairs and improvements.

Smart Home

Development and distribution of technology to enable home automation, including LeakBot, smart thermostats and connected boilers.

...new countries

Heating, Ventilation and Air Conditioning (HVAC)

A complete solution to the installation, repair, maintenance and financing of heating, ventilation and air conditioning.

Four global business lines and international opportunities

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  • An opportunity for all four territories
  • Replicating our installations success in North America
  • Acquisition of Help-Link in the UK and Electrogaz in France
  • Developing an innovative consumer proposition
  • Self-fj

x off ers synergies for our Membership businesses.

HVAC – a buy and build model

homeserveplc.com

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Home Experts – our biggest opportunity

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Market size & opportunity Preferred model

Membership £14bn Home repairs and improvements £400bn

In our existing markets...

  • Membership; UK ONS survey + HomeServe estimate
  • Home repairs + improvement; HomeServe estimate

And...

  • Habitissimo’s other territories
  • Checkatrade ● Lead sales model ● No preference

Source: Independent online survey conducted April 2018. 62% 24% 14%

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Checkatrade – very good progress

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Consumer growth More benefi ts for tradesmen

  • Monthly charging
  • Based on work

volumes

  • from £69.99/month

Tradesmen recruitment Buying club Pricing model 23k 29k

  • Procurement

benefj ts

  • Developed

by Habitissimo

Tradesmen software

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  • A record year
  • Signifjcant progress and opportunity in North America
  • Step change in innovation

– A new online marketplace in Home Experts – A new way of operating in HVAC – A start-up technology success with LeakBot – Reinventing customer service for a digital world in Membership

  • Just the beginning...

Our vision is to be the world’s most trusted provider of home repairs and improvements.

Summary and outlook

homeserveplc.com

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Home Experts Smart Home Membership HVAC

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  • Divisional KPIs
  • Divisional results – local currency
  • Divisional results – sterling
  • Group balance sheet
  • Group cash fmow
  • Foreign exchange impact
  • Our home assistance fjnancial business model

Appendix

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Divisional KPIs

UK

FY18 FY17 Change

Affjnity partner households m 26 24 +12% Customers m 2.2 2.2

  • 1%

Income per customer £ 106 96 +10% Policies m 5.9 5.6 +6% Policies per customer 2.7 2.5 +8% Retention rate % 79 80

  • 1ppt

France

FY18 FY17 Change

Affjnity partner households m 15 15 — Customers m 1.1 1.0 +1% Income per customer € 106 101 +5% Policies m 2.3 2.3

  • 1%

Policies per customer 2.2 2.3 — Retention rate % 88 89

  • 1ppt

North America

FY18 FY17 Change

Affjnity partner households m 55 50 +10% Customers m 3.6 3.0 +20% Income per customer $ 91 97

  • 6%

Policies m 5.6 4.5 +25% Policies per customer 1.6 1.5 +5% Retention rate % 83 82 +1ppt Spain

FY18 FY17 Change

Affjnity partner households m 12 12 — Customers m 1.3 1.3 +1% Income per customer € 47 43 +11% Policies m 1.5 1.5 +2% Policies per customer 1.2 1.2 — Retention rate % 78 78 —

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homeserveplc.com

Divisional results – local currency

UK P&L

FY18 FY17 Change

Total revenue £m 365.6 326.5 +12% Operating costs £m (304.5) (263.3) +16% Adjusted operating profjt £m 61.1 63.2

  • 3%

Adjusted operating profjt margin % 17% 19%

  • 2ppts

North America P&L

FY18 FY17 Change

Total revenue $m 375.2 293.0 +28% Operating costs $m (310.8) (266.8) +17% Adjusted operating profjt $m 64.4 26.2 +146% Adjusted operating profjt margin % 17% 9% +8ppts France P&L

FY18 FY17 Change

Total revenue €m 113.2 107.4 +5% Operating costs €m (77.5) (75.9) +2% Adjusted operating profjt €m 35.7 31.5 +13% Adjusted operating profjt margin % 32% 30% +2ppts Spain P&L

FY18 FY17 Change

Total revenue €m 160.1 154.3 +4% Operating costs €m (141.2) (138.5) +2% Adjusted operating profjt €m 18.9 15.8 +20% Adjusted operating profjt margin % 12% 10% +2ppts

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homeserveplc.com

Divisional results – sterling

UK P&L

FY18 FY17 Change

Total revenue £m 365.6 326.5 +12% Operating costs £m (304.5) (263.3) +16% Adjusted operating profjt £m 61.1 63.2

  • 3%

Adjusted operating margin % 17% 19%

  • 2ppts

North America P&L

FY18 FY17 Change

Total revenue £m 282.1 227.8 +24% Operating costs £m (233.5) (206.6) +13% Adjusted operating profjt £m 48.6 21.2 +129% Adjusted operating margin % 17% 9% +8ppts France P&L

FY18 FY17 Change

Total revenue £m 100.0 91.1 +10% Operating costs £m (68.5) (64.0) +7% Adjusted operating profjt £m 31.5 27.1 +16% Adjusted operating margin % 32% 30% +2ppts Spain P&L

FY18 FY17 Change

Total revenue £m 141.3 130.2 +9% Operating costs £m (124.7) (116.9) +7% Adjusted operating profjt £m 16.6 13.3 +26% Adjusted operating margin % 12% 10% +2ppts

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homeserveplc.com

Group balance sheet

£million

FY18 FY17 Non-current assets Goodwill 386.6 301.9 Other intangible assets 384.8 288.6 Property, plant and equipment 39.9 37.0 Interests in associates 5.5 32.1 Other investments 8.7 8.5 Deferred tax assets 6.8 7.6 Retirement benefjt assets 4.7 0.7 837.0 676.4 Current assets Inventories 4.3 2.7 Trade and other receivables 515.7 455.1 Cash and cash equivalents 57.8 46.2 577.8 504.0 Total assets 1,414.8 1,180.4 Current liabilities Trade and other payables (508.5) (456.2) Current tax liabilities (10.4) (9.2) Obligations under fjnance leases (0.5) (0.6) Bank and other loans (38.0) (35.9) (557.4) (501.9) Net current assets 20.4 2.1 Non-current liabilities Bank and other loans (256.7) (270.1) Other fjnancial liabilities (23.4) (14.4) Deferred tax liabilities (25.5) (23.0) Obligations under fjnance leases (0.4) (1.0) (306.0) (308.5) Total liabilities (863.4) (810.4) Net assets 551.4 370.0

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homeserveplc.com

Group cash flow

£million FY18 FY17

Adjusted operating profjt 153.4 118.8 Amortisation of acquisition intangibles (18.4) (14.1) Operating profit 135.0 104.7 Depreciation and amortisation 62.6 49.5 Non cash items 9.0 6.8 Increase in working capital (42.4) (21.1) Cash generated by operations 164.2 139.9 Net interest (10.5) (6.4) Taxation (27.2) (20.0) Capital expenditure - ordinary (54.6) (44.4) Capital expenditure - partner payments (16.5) (14.1) Repayment of fjnance leases (0.6) (1.0) Free cash flow 54.8 54.0 Acquisition of associate — (24.7) Acquisitions of subsidiaries (54.2) (74.2) Acquisition of policy book (53.6) — Dividend from associate 0.4 — Disposal of subsidiary — (1.7) Equity dividends paid (50.4) (40.3) Issue of shares (net of associated issue costs) 123.3 0.9 Net movement in cash and bank borrowings 20.3 (86.0) Impact of foreign exchange 2.9 (6.3) Net debt acquired (0.1) (0.4) Finance leases 0.5 0.8 Opening net debt (261.4) (169.5) Closing net debt (237.8) (261.4)

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Foreign exchange

  • Strong underlying performance with unfavourable movement of £0.8m to adjusted operating profjt due to FX

movements

Efgect on (£m) Average exchange rate Revenue

  • Adj. operating profjt

FY18 FY17 Change FY18 FY18

North America $ 1.33 1.31 2% (9.1) (2.9) France € 1.13 1.19 (5)% 3.9 1.2 Spain € 1.13 1.19 (5)% 6.3 0.9 New Markets € 1.13 1.19 (5)% 0.5 — Total International 1.6 (0.8)

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Financial business model

Our UK business model FY18

Gross revenue IPT Underwriting Net revenue Other income Repair network revenue Reported revenue Repair network costs AP commissions Marketing costs Contact centres Overheads Adjusted

  • perating

profjt £222m £38m £106m £366m £61m