Preliminary Results. 19 May 2015

Transcription

1 Preliminary Results 19 May 2015

2 Group returns to profit growth plus strong customer growth Adjusted profit before tax 1 ( m) Profit growth combined with significant extra investment in USA Group delivers strong customer growth, up 0.8m to 6.3m Customer growth of 26% in the USA UK business with 2.1m customers and profits of 56.4m USA added 2.5m utility households and 22m AARP households Momentum in France with announcement of new partner Strong customer and profit growth in Spain Special dividend of 30p per share ( 97m) to be paid in July UK Established International New Markets Net Interest Customer numbers (m) All references to adjusted profit or loss, adjusted profit before tax, adjusted EBITDA and adjusted earnings per share throughout the presentation are adjusted figures excluding acquisition intangibles and exceptional items UK customers International customers

3 Group financial summary million Revenue Adjusted EBITDA Adjusted profit before tax Net Debt Debt: Adjusted EBITDA 0.6x 0.4x Adjusted earnings per share 19.0p 18.6p Ordinary dividend per share 11.5p 11.3p Special dividend per share 30.0p n/a Revenue growth principally in the USA and Spain Group profit growth, in part offset by additional investment in the USA and the impact of a weak Euro Adjusted operating profit 1.5m higher at constant currency

4 Divisional financial performance Revenue Adjusted operating profit/(loss) million % % UK % % USA % % France % % Spain % % Established International % % New Markets % (5.9) (5.7) 4% Inter-division (6.2) (5.4) Group % % UK profits up 3m to 56.4m Additional marketing and business development investment ( 12m) in the USA reducing profit Continued good performance in France, despite weakening Euro in the last quarter Strong profit growth in Spain reflecting an increase in customer numbers Continued investment in New Markets

5 Cash flow performance Cash generated by operations 94.6m 22.8m 0.9m 64.1m 42.3m 109.4m 36.9m 57.6m 13.2m 4.4m 6.0m Net Debt 31 March 2014 Adjusted EBITDA Non-cash items Exceptional items Working Capital Capital Expenditure & investment Dividends Tax Other Net Debt 31 March 2015 Net debt at 64.1m, 0.6x Debt: Adjusted EBITDA ( x) Working capital investment across the businesses Capital expenditure and investments New 300m 5 year RCF in place at competitive rates

6 Capital expenditure and investments 2015 capital expenditure Core customer IT system Partner payments in Spain Underlying including technology Investment in connected homes Higher expected 2016 capital expenditure Core customer IT system Partner payments in Spain and France Technology investment Customer acquisition programme in Spain not agreed beyond 2016 Capital investment ( m) 70m 58m m 10 25m Underlying/Technology Partner Payments Capex to normalise in 2018 at around 25m

7 A more efficient capital structure 97m return of capital Year end leverage range 1-1.5x Debt: EBITDA (currently 0.6x) Special dividend of 30p per share - 97m Share consolidation Progressive dividend policy Increase ordinary dividend to 11.5p per share (2014: 11.3p) Adopt a progressive dividend policy Target a medium term dividend cover in the range 1.75x - 2x

8 Financial outlook good growth in 2016 UK Stable customers and retention International Reduced profits in France due to Increased customer acquisition Continued weaker Euro Strong growth in the USA and Spain Continued investment of around 6m in New Markets Group Continued strong cash generation Investment in technology and innovation

9 Based on 2,294 real reviews, from customers like you. UK delivering our plans with great products and service New customers acquired increased from 0.2m to 0.3m Retention rate increased to 83% up from 82% Enhanced products delivering increased customer use Customers stable at 2.1m Gross new customers (m) Retention % % 82% 83% 93 % of customers would buy again % by

10 UK investment in operations and service New vehicles, equipment and connectivity for engineers New customer-facing front end system Data warehouse and analysis tools Digital self-service enhancement continues

11 UK connected home In partnership with Nest and tadoº Nearly 20,000 smart thermostats installed Enabling proactive home assistance

12 USA marketing investment delivers 26% customer growth New customers acquired increased from 0.5m to 0.7m Good retention performance at 82% up from 81% Customer numbers closed at 2m Gross new customers (m) Retention % Total customers (m) 79% 80% 81% 82%

13 USA 12 new utility partners and strong pipeline m households m households m households m households Households 21m 22m 26m 29m THE LANDIS SEWERAGE AUTHORITY Township of Ocean Sewerage Authority (including an extension with an existing partner)

14 USA Test marketing with AARP AARP helps people over 50 to improve the quality of their lives 22m households closely aligned to our customer demographic First mailing was delivered in January 2015 returns higher than from our own brand activity normal on going testing Full marketing roll out during 2016

15 USA Energy and water efficiency, an enabler to new partner signings Energy effi ciency annual spend of $6bn Top priority for energy company CEO s Strategic partnership with leading effi ciency specialist Enables access to decision makers Accelerate new partner signings

16 France fresh momentum with new partner Profit ( m) Good performance in 2015 Profi t up 5% to 23.4m Customers closed at 0.9m, up 3% Continued strong retention at 89% Signed new affinity partnership Long-term agreement with Lyonnaise des Eaux Second largest water utility provider in France with 5.3m households Multi channel marketing approach Expect a net investment cost of 2m in 2016

17 Spain strong customer and profit growth Profit up 87% to 7.5m Customer numbers up 37% to 1.1m Good customer acquisition with 0.5m gross new customers Retention rate up to 79% Further activity with Endesa planned for 2016 Customers (m) Retention % Profit ( m) 79% 75%

18 New Markets update Italy making good progress Closed the year with 0.2m customers Active business development Plan to exit Germany Tested using door step selling in 2015 Call transfer model not launched Plan to increase investment in innovation and digital

19 Growth over the next 5 years Richard Harpin

20 Our mission and strategies to win Our Mission To provide home assistance membership which frees our customers from the worry and inconvenience of emergencies, repairs and installations. Our strategies to win 1. Driving innovation: Creating a heating installation capability via franchising 2. Digital Hub and Spoke Model delivering online job booking and tracking and reducing our cost to serve 3. Accelerating growth in the USA by delivering energy efficiency and water conservation for our utility affinity partners and their customers

21 * Driving innovation: Creating a heating installation business via franchising Set up HomeServe Alliance as an Innovation business Hired an entrepreneurial MD to lead Recommendation to take HomeServe into the boiler installation market To become homeowners favourite boiler installer and repairer National network of Britain s best local heating companies as a franchise FALL SPECIAL INSTALLATION SAVINGS 10 % OFF CALL TODAY FOR THE MOST CONVENIENT APPOINTMENT Our skilled technicians have been working in your area since You can depend on us for professional installations. CALL MENTION CODE 10IS INSTALLS OF NEW HEATING & COOLING SYSTEMS AND WATER HEATERS * LIMITED TIME OFFER EXTENDED CALL BEFORE 11/18/14 * On benefits? You could save up to 310* per year on your energy bills with a new FREE boiler paid for by the government s ECO scheme. The government s new domestic energy efficiency programme means that energy companies have a legal obligation to improve the energy efficiency of households (ECO). This means that you could qualify for a free boiler, paid for by this programme. Turn over to see if you qualify! Or call us now on

22 Digital Hub and Spoke Model New Digital Hub set up in London A platform to accelerate self-serve globally Spokes are the digital resources in established countries 2016 focus: Enabling customers to access self-serve functions: Joining online Access policy documents and fulfilment Claiming online Tracking the progress of a job Customer feedback online UK Digital Spain Digital HomeServe Digital Hub Italy Digital USA Digital France Digital 2017 focus: Incremental customer growth via: Driving on demand repairs for conversion into membership Monetising free advice: content to conversion Freemium products offered online with upgrades to paid membership

23 Summary A strong business model Good performance in 2015 and a growing momentum 97m return to shareholders and a more effi cient capital structure An updated mission and strategies to win A committed, motivated and experienced management team

24 Appendices Divisional KPIs Divisional results local currency Divisional results constant currency impact Group balance sheet Group cash flow Target market the USA USA Significant opportunity for further penetration Business Model

25 Divisional KPIs UK Change Customer metrics Customers m % Income per customer % Policy metrics Water m Electrical m HVAC m Manufacturer Warranties m Other m Total policies m % Retention rate % ppts France Change Customer metrics Customers m % Income per customer % Policy metrics Water m Electrical m Other m Total policies m % Retention rate % USA Change Customer metrics Customers m % Income per customer $ % Policy metrics Water m Electrical m HVAC* m Other m Total policies m % Retention rate % ppts Spain Change Customer metrics Customers m % Income per customer % Policy metrics Water m Electrical m Other m Total policies m % Retention rate % ppts * includes water heater and gas line policies.

26 Divisional results local currency UK P&L Change Total revenue m % Operating costs m (229.1) (235.1) -3% Adjusted operating profit m % Adjusted operating margin % 20% 19% +1 ppts USA P&L Change Total revenue $m % Operating costs $m (190.1) (156.1) +22% Adjusted operating profit $m % Adjusted operating margin % 5% 12% -7ppts France P&L Change Total revenue m % Operating costs m (66.6) (65.4) +2% Adjusted operating profit m % Adjusted operating margin % 31% 29% -2ppts Spain P&L Change Total revenue m % Operating costs m (106.4) (93.3) +14% Adjusted operating profit m % Adjusted operating margin % 8% 5% +3ppts

27 Divisional results constant currency impact Revenue Adjusted operating profit/(loss) million % %CC % %CC 1 UK % -1% % 6% USA % 13% % -54% France % 4% % 11% Spain % 18% % 96% Established International % 12% % n/a New Markets % 1% (5.9) (5.7) 4% 12% Inter-division (6.2) (5.4) Group % 5% % n/a 1 CC: Constant currency ( 1.19: 1; $1.60: 1)

28 Group balance sheet million Non-current assets Goodwill Other intangible assets Property, plant and equipment Deferred tax assets Other investments 4.4 Retirement benefit assets Current assets Inventories Trade and other receivables Cash and cash equivalents Total assets Current liabilities Trade and other payables (308.2) (297.2) Current tax liabilities (7.1) (7.9) Provisions 0.0 (7.7) Obligations under finance leases (0.6) (0.5) (315.9) (313.3) Net current assets Non-current liabilities Bank and other loans Other financial liabilities Deferred tax liabilities Obligations under finance leases (137.6) (137.1) (2.1) (2.7) (18.0) (22.2) (0.6) (0.9) (158.3) (162.9) Total liabilities (474.2) (476.2) Net assets

29 Group cash flow million Operating profit Depreciation, amortisation and other non-cash items (Decrease) in exceptional provision (7.7) (12.4) (Increase) / Decrease in working capital (13.2) 37.9 Cash generated by operations Net interest (4.1) (2.8) Taxation (22.8) (21.6) Capital expenditure (52.8) (33.6) Repayment of finance leases (0.3) (0.4) Free cash flow Purchase of investment (4.8) Acquisitions / disposals (1.1) (2.4) Equity dividends paid (36.9) (36.7) Issue of shares Net movement in cash and bank borrowings (24.4) (4.5) Impact of foreign exchange Movement in finance leases Opening net debt (42.3) (42.9) Closing net debt (64.1) (42.3)

30 Target market in the USA 1,445 utilities 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 Households 38m Households 90m Households 65m Households 63m Target Market

31 USA Significant opportunity for further penetration Energy Partner Water Partner

32 Our financial business model Our UK business model 2015 (Graph not to scale) 77m 10m 285m 198m 56m Gross revenue IPT Underwriting Net revenue 3rd party claims handling and other income Repair network revenue Reported revenue AP comms Marketing costs Call centres Overheads Repair network costs Adjusted operating profit

33 This presentation contains certain forward-looking statements, which have been made in good faith, with respect to the financial condition, results of operations, and businesses of 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 profit forecast.