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Group financial highlights Core Group million 2009 2008 Change - PowerPoint PPT Presentation

Group financial highlights Core Group million 2009 2008 Change 2009 2008 Change Revenue 283.8m 263.2m 8% 517.4m 554.9m (7%) Profit before tax* 88.7m 70.6m 26% 96.1m 85.3m 13% Statutory profit/(loss) before


  1. Group financial highlights Core Group £million 2009 2008 Change 2009 2008 Change Revenue £283.8m £263.2m 8% £517.4m £554.9m (7%) Profit before tax* £88.7m £70.6m 26% £96.1m £85.3m 13% Statutory profit/(loss) before tax £80.8m £65.2m 24% (£21.7m) £71.8m (£93.5m) Earnings per shareˆ 96.9p 80.6p 20% 106.4p 93.0p 14% Dividend per share - - - 35.50p 31.25p 14% • Revenue down 7% with a 13% increase in profit before tax* • Core membership revenue up 8% and profit before tax* up 26% • UK profits up 14% and International now well into profit • UK reorganisation incurred costs of £5m out of total exceptional costs of £6.5m • Proposed disposal of Emergency Services results in £97m impairment charge * Excluding amortisation of acquisition intangibles, impairment charge, joint venture taxation and exceptional operating costs 1 ^ Excluding amortisation of acquisition intangibles, impairment charge and exceptional operating costs

  2. Operational highlights Policies (million) • 9.2m policies and access to 56m households worldwide 9.2 8.1 • Resilient UK Membership business with 1.83m gross new 7.1 policy sales and 83% retention 5.7 • Successful re-organisation of UK operations 4.2 • 3.1 Strong expansion of International businesses 2.4 - 1.9 Agreements signed with Utilities Inc and SEMCO in the US - Test marketing agreements signed with Agbar and 02 03 04 05 06 07 08 09 Acciona in Spain - Entry into Belgium through SPT acquisition Profit before tax* (million) 96.1 • Decision to focus exclusively on developing our 85.3 Membership businesses 67.7 - UK Emergency Services treated as non-core 53.6 - Non-core assets written down by £97m 41.9 32.5 - Progressing a number of approaches for UK 24.1 Emergency Services 14.2 02 03 04 05 06 07 08 09 2 * Excluding amortisation of acquisition intangibles, impairment charge, joint venture taxation and exceptional operating costs

  3. Understanding the reported results FY 2009 (£million) Core Non-core Total Profit before tax* 88.7 7.4 96.1 Amortisation of acquisition intangibles (3.7) (8.4) (12.1) Joint venture tax (1.9) - (1.9) Emergency Services impairment charge - (97.2) (97.2) Exceptional costs – 2 nd hub deal - (1.5) (1.5) Exceptional costs – UK re-organisation (2.3) (2.7) (5.0) Statutory profit/(loss) before tax 80.8 (102.5) (21.7) • Profit before tax* of £96.1m becomes a statutory loss before tax of £21.7m (2008: profit of £71.8m) due to: - Write down of UK Emergency Services assets by £97.2m - Aborted costs in relation to second hub deal of £1.5m - Exceptional UK reorganisation costs of £5.0m, of which £2.7m relate to Emergency Services - Normal adjustments for the amortisation of acquisition intangibles and joint venture taxes * Excluding amortisation of acquisition tangibles, impairment charge, joint venture taxation and exceptional operating costs 3

  4. Financial highlights (core and non-core) Core Non-core Total £million FY 2009 FY 2008 FY 2009 FY 2008 FY 2009 FY 2008 � � � Revenue 283.8 263.2 8% 233.6 291.7 (20%) 517.4 554.9 (7%) Operating profit* 92.3 75.8 22% 8.0 15.1 (47%) 100.3 91.0 10% Operating profit* margin 32.5% 28.8% 3.7ppt 3.4% 5.2% (1.8ppt) 19.4% 16.4% 3.0ppt Profit before tax* 88.7 70.6 26% 7.4 14.7 (50%) 96.1 85.3 13% Statutory profit/(loss) 80.8 65.2 24% (102.5) 6.7 (£109.2) (21.7) 71.8 (£93.5) before tax • Group revenues 7% lower than 2008 due to change in underwriting arrangements and lower volumes in Emergency Services • Strong performance from all 3 core membership businesses with revenues up 8% and profit before tax* up 26% • Group operating profit* margin increased by 3 percentage points to 19.4% • Group statutory loss before tax of £21.7m (2008: £71.8m profit) due to: - £97.2m impairment charge on non-core Emergency Services assets - Exceptional costs of £1.5m relating to aborted second hub deal and £5m from re-organisation of UK businesses • The effective underlying tax rate for the year was 29.9% (2008: 31.4%) 4 * Excluding amortisation of acquisition intangibles, impairment charge, joint venture taxation and exceptional operating costs

  5. Core divisions revenue and operating profit (post re-organisation) £million FY 2009 FY 2008 Revenue Operating Revenue Operating � � Profit* Profit* UK Membership 228.2 (3%) 87.2 14% 236.5 76.3 Continental Europe 63.4 100% 5.3 204% 31.7 1.8 USA 15.9 96% (0.3) 87% 8.1 (2.2) Less JV/inter-division (23.7) - - - (13.0) - revenues Total Membership 283.8 8% 92.3 22% 263.2 75.8 UK Membership financial performance • UK Membership revenue impacted by the new underwriting arrangement introduced last year - insurance captive revenue dropped from £39m in 2008 to £4m in 2009 • Underlying UK Membership revenue grew by 14% excluding underwriting impact • 14% growth in UK Membership profits - Continued organic growth in utility branded business - Increased value per policy and value per customer driven by successful pricing and cross-selling activity - Successful reorganisation resulting in an integrated and more efficient network to service our policy holders - Strong contribution from manufacturer warranties 5 * Excluding amortisation of acquisition intangibles, impairment charge, joint venture taxation and exceptional operating costs

  6. International financial performance £million FY 2009 FY 2008 Revenue Operating £m Revenue Operating � Profit* Profit* France 23.2 82% 4.8 +2.8 12.7 2.0 Spain 39.3 107% 0.1 +0.4 19.0 (0.3) Belgium 0.9 - 0.4 - - - Continental Europe 63.4 100% 5.3 +3.6 31.7 1.8 USA 15.9 96% (0.3) +2.0 8.1 (2.2) JV revenues (23.2) - - - (12.7) - 56.2 108% 5.1 +5.5 27.1 (0.5) International • Overall International businesses generated a £5.1m profit (2008: £0.5m loss), £1.1m of increase as a result of forex movements Continental Europe • Operating profit increased by £2.8m in France from strong policy growth and a more attractive underwriting deal • Spain made a small operating profit with a strong performance from Reparalia reinvested in policy development • Acquisition of SPT, Belgium's leading claims handling and subcontractor repair network, generated £0.4m contribution in final quarter USA • USA made a £0.5m profit in H2 and is now profitable on an ongoing basis 6 * Excluding amortisation of acquisition intangibles, impairment charge, joint venture taxation and exceptional operating costs

  7. Emergency Services financial performance (non-core) FY 2009 FY 2008 £million Revenue Operating Operating Revenue Operating Operating � � Profit* Margin* Profit* Margin* Emergency Services 233.6 (20%) 8.0 (47%) 3.4% 291.7 15.1 5.2% • Revenue down 20% - 2008 revenue included £41m of flood related work – underlying revenue down 7% - Lower volumes in 2009 with an increasingly competitive landscape - Continued pricing pressure in insurance sector • Operating profit margin objectives have not been met due to: - Significant drop in volume in Buildings business - Higher proportion of larger, more complex jobs • Ongoing performance challenges have led to decision to exit UK Emergency Services • Claims Management and Plumbing and Drains operations transferred to UK Membership are performing very well and improving margin 7 * Excluding amortisation of acquisition intangibles, impairment charge, joint venture taxation and exceptional operating costs

  8. Financial impact of reorganising our UK businesses Core (B2C) Non-Core (B2B) Emergency Services UK Membership Sub- Sales & Product Marketing One Claims Plumbing Glazing Property Trading Network contractor ChemDry Contents Service Dev. Services Contact Man. & Drains & Locks Repairs Network FY 2009 FY 2008 Transferred Revenue transferred to UK Membership 29.6 25.7 businesses Inter-division revenue eliminated 14.3 8.5 (£million) Total Revenue transferred out of ES 44.0 34.2 Operating Profit* 5.3 2.4 • £29.6m of FY09 revenue switches to UK Membership and £14.3m of inter-divisional revenue is eliminated (2008: £25.7m and £8.5m respectively) • Transferred operations result in £5.3m of operating profit switching to UK Membership (2008: £2.4m) • Continental Europe and USA are not affected 8

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