Preliminary Results 20 May 2014
2014 Summary Adjusted profit before tax £84.1m Adjusted profit before tax 1 (£m) 126.0 117.1 • UK profit of £53.4m, down from £78.3m in prior year 16.0 28.5 105.0 • Established International businesses profit up 15% to £39.2m 84.1 34.1 UK 39.2 • Customer numbers at 2.1m 104.3 103.1 78.3 53.4 • Investment in products and customer service • Full year retention of 82% up from 79% • FCA investigation concluded 2011 2012 2013 2014 UK Established International New Markets Net Interest International • International businesses now account for 62% of total customers Customer numbers (m) • Strong profit growth in the USA and Spain 5.5 4.9 4.9 4.9 • Signed 12 affinity partners in the USA including American Electric Power (AEP) – 3.7m households 3.0 2.7 2.3 2.1 • Signed a new water partner in Spain – 2.6m households • Continued strong retention in France • Continued investment in New Markets 1.9 2.2 2.6 3.4 Dividend per share maintained at 11.3p 2010 2011 2012 2013 UK customers International customers 1 All references to adjusted operating profit or loss, adjusted profit before tax and adjusted earnings per share throughout the announcement are adjusted figures excluding acquisition intangibles and exceptional expenditure.
Group financial summary 2014 2013 £million Total revenue 568.3 546.5 Adjusted EBITDA 106.9 127.1 Adjusted profit before tax 84.1 105.0 (13.0) Amortisation of acquisition intangibles (13.4) Exceptional expenditure (46.7) (25.1) 24.4 Statutory profit before tax 66.5 Adjusted earnings per share 18.6p 23.0p Dividend per share 11.3p 11.3p Net debt £42m £43m • Increased revenue as growth in International revenues offset the reduction in the UK • Lower UK profits partially offset by growth in International profits • Exceptional expenditure relates to resolution of UK matters • Strong cash generation
Divisional financial performance Revenue Adjusted operating profit/(loss) 2014 ∆ 2014 ∆ 2013 2013 £million UK 288.5 309.0 (20.5) 53.4 78.3 (24.9) USA 110.9 100.8 +10.1 12.9 9.5 +3.4 77.3 22.3 France 73.8 +3.5 21.5 +0.8 Spain 82.6 60.5 +22.1 4.0 3.1 +0.9 Established International 270.8 235.1 +35.7 39.2 34.1 +5.1 New Markets 14.4 9.4 +5.0 (5.7) (4.8) (0.9) Total International 285.2 33.5 244.5 +40.7 29.3 +4.2 Inter-division (5.4) (7.0) +1.6 — — — Group 568.3 86.9 546.5 +21.8 107.6 (20.7) • Lower UK profits due to a reduction in customer numbers and a higher cost to serve the customers • Strong growth in profit in the established International businesses.
Cash flow performance £59.1m £106.9m £6.2m £2.8m £21.6m £37.9m £33.6m £42.9m £42.3m £36.7m £3.4m Net Debt Adjusted Exceptional Working Non-cash Net Interest Taxation Capital Dividends Other Net Debt 31 March EBITDA costs & Capital items Expenditure 31 March 2013 provision 2014 movement • Strong cash generation with 2014 Debt: EBITDA 0.4x (2013: 0.4x) • Reduction in working capital reflecting: – Lower UK customer revenue – Timing of payments to partners • Capital expenditure of £33.6m principally reflecting: – Payments regarding the acquisition of customers originated by Endesa – Investment in a financial management system and upgrading our core customer IT system • Review of capital structure in FY15
Milestones achieved in FY14 KPIs • Resolution of FCA issues • Customers at the heart of our culture • Customer acquisition on track – 0.2m new customers • 82% retention rate 2.3m 2.1m £106 £101 79% 82% Customers Income per Retention customer (£) rate (%) (m) 2013 2014
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Continuing our customer focus • Improved products Our Charter Promises • Sold through a clearer process • Giving better claim and repair experiences Before a Customer joins We’ll make it clear what they’re buying – and what it will do for them When a Customer joins We’ll tell them how much they’re paying, what that buys them and how to claim When a Customer becomes a member We’ll make life easy for them When a Customer makes a claim We’ll solve their problem quickly and easily. Their emergency is our emergency If a Customer’s not happy We’ll listen, say sorry and put things right wherever we can, as soon as we can Visuals.indd 1 10/06/2013 19:25
What our customers are saying
Continued strong retention performance • Better products Retention rate • Improvement in customer service • Improved retention at 82% 2008 2009 2010 2011 2012 2013 2014
Summary • Continuing to embed customer focused culture • Sales and marketing momentum • Stabilise at at least 2.0m customers • A focused management team
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