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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Homeserve Plc | LSE:HSV | London | Ordinary Share | GB00BYYTFB60 | ORD 2 9/13P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 1,198.00 | 1,198.00 | 1,199.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From May 2019 to May 2024
TIDMHSV
RNS Number : 8891F
Homeserve Plc
23 May 2017
HomeServe plc
Preliminary results for the year ended 31 March 2017
Hot Features
Premium
2017 2016 Change
--------------------- ---------- ---------- -------
Revenue GBP785.0m GBP633.2m +24%
Statutory operating
profit GBP104.7m GBP86.9m +20%
Statutory profit
before tax GBP98.3m GBP82.6m +19%
Basic earnings
per share 24.0p 19.6p +22%
Adjusted operating
profit (1) GBP118.8m GBP97.3m +22%
Adjusted profit
before tax GBP112.4m GBP93.0m +21%
Adjusted earnings
per share 27.0p 21.8p +24%
EBITDA GBP154.2m GBP122.7m +26%
Ordinary dividend
per share 15.3p 12.7p +20%
Net debt GBP261.4m GBP169.5m +54%
Total number
of customers 7.8m 7.0m +11%
--------------------- ---------- ---------- -------
Strong momentum across the Group, with a record performance in North America
-- Statutory operating profit up 20% to GBP104.7m; Adjusted operating profit up 22% to GBP118.8m reflecting strong underlying performance -both included a GBP10.3m foreign exchange benefit.
-- Solid UK performance; 2.2m customers up 1%, launched Aviva Home Response product range -- Rapid expansion in North America - Record partner signings; 100 new partners and affinity partner households now at 50m
- Significant growth in customer numbers and adjusted operating profit - up 28% to 3.0m and 75% to GBP21.2m
-- France and Spain customer numbers up 4% and 7% respectively -- Our Italian business agreed a joint venture with Edison Energia, a major utility in Italy -- Investment in Checkatrade and acquisition of Habitissimo -- Strong cash generation - 118% cash conversion (2) -- Net debt 1.7x adjusted EBITDA, reflecting recent M&A activity -- Dividend up 20% to 15.3p
Richard Harpin, Chief Executive, HomeServe plc, commented:
"It has been a very good year for HomeServe with all of our businesses performing well. In North America we had a transformational year, achieving the 3m customer milestone and signing 100 new partners. The acquisition of Utility Service Partners (USP) has accelerated our progress in this large and important market.
The investments we have made in Checkatrade and Habitissimo are a major step forward and position HomeServe at the fore of the online revolution we are seeing in home services. We are focused on developing an online platform to connect a wider customer demographic to a broader range of expert tradespeople - "Home Experts".
With these opportunities, and the positive outlook for the rest of our business, HomeServe has an exciting future this coming year and beyond."
1. The Group uses adjusted operating profit, EBITDA, adjusted profit before tax and adjusted earnings per share as its primary performance measures. These are non-IFRS measures which exclude the impact of the amortisation of acquisition intangible assets (FY17: GBP14.1m, FY16: GBP10.4m). Acquisition intangible assets principally arise as a result of the past actions of the former owners of businesses in respect of marketing and business development activity. Therefore, the adjusted measures reflect the post acquisition revenue attributable to, and operating costs incurred by, the Group. A reconciliation between the adjusted and statutory equivalent is included in the Financial Review.
2. Cash conversion is calculated as cash generated by operations divided by adjusted operating profit.
Enquiries
A presentation for analysts and investors will take place at 9am this morning at UBS, 5 Broadgate, London EC2M 2QS.
There will be a listen-only conference call via +44 02031394830, pin code 41948608#, and also a live webcast available via www.homeserveplc.com.
HomeServe plc Tel: 01922 427997 Richard Harpin, Chief Executive Officer David Bower, Chief Financial Officer Linda Hardy, Finance Director Tulchan Group Tel: 0207 353 4200 Martin Robinson Siobhan Weaver
STRATEGIC AND BUSINESS REVIEW
This has been another very good year for HomeServe, delivering strong profit growth while implementing our customer focused growth strategy. Before focusing on the year's performance and financial results, set out below are our vision and strategic priorities.
HomeServe's vision is to be the world's most trusted provider of home repairs and improvements, expanding beyond plumbing, heating and electrics. This will be achieved through a clearly-defined strategy; focusing on increasing long-term affinity partnerships, investing to deliver great customer service, driving relentless innovation and expanding into new markets.
Extending our long-term affinity partnerships
HomeServe is built on developing long-term affinity partnerships with brands that complement our home assistance products. We work with over 500 affinity partners and invest in business development to establish and expand new partnerships. During FY17, rapid progress was made through signing 100 new partners in North America; renewing a significant partnership in the UK; and signing a joint venture with Edison Energia in Italy. As the Group enters FY18 we are well-placed for growth, with a strong pipeline of further partner prospects.
Investing to deliver great customer service
During FY17, HomeServe completed a job every 14 seconds, demonstrating our commitment to our customers when they need us most. Great customer service results in increased customer loyalty and higher levels of retention. Our market-leading customer service is delivered by the hard work and dedication of all our people. Globally, HomeServe has been recognised for customer service excellence and in FY17 won a number of customer service and employee engagement awards in the UK, North America and France.
HomeServe continues to invest in technology to ensure the delivery of efficiencies and to meet customer demand for seamless service. There is continued investment in the core customer management system in the UK, optimisation of website designs, and improvement of the claims handling and job deployment systems across the businesses to facilitate a better customer experience.
Driving relentless innovation
Demand for digital engagement at every stage of the customer journey continues to increase. In line with our ambition to offer a complete home repair and improvement service to a broader customer demographic, we have started to develop an online platform offering these services, which we call Home Experts. As part of this development, we purchased a 40% stake in Checkatrade (UK), and a 70% interest in Habitissimo (Spain). Combined, these businesses bring over 45,000 approved local tradesmen, who carry out an estimated GBP3.5bn of home repairs and improvements annually.
We continue to focus on innovation in our membership business and during the year we launched LeakBot, a smart home water leak detector that enables early leak detection preventing or limiting damage to customers' homes. We have continued with our heating strategy in the UK and are increasing our boiler and smart thermostat installations.
Expanding into new markets
Utilities around the world recognise that providing home assistance services is proven to increase customer loyalty and drive higher retention rates in their core energy businesses. During FY17, HomeServe's Italian business agreed a joint venture with Edison Energia, Italy's third-largest energy supplier and a member of the EDF Group. We are prospecting in a number of countries and intend to form joint ventures with utilities, replicating our success with South Staffordshire Water in the UK and Veolia in France.
BUSINESS REVIEW
We have had a very good year with strong underlying performance enhanced by foreign exchange tailwinds. Affinity partner households increased by 10m to 102m, with a significant increase in North America. This is in addition to 11% customer growth, with customer numbers now at 7.8m. Statutory operating profit increased 20% to GBP104.7m, and adjusted operating profit increased 22% to GBP118.8m; both included a GBP10.3m foreign exchange benefit.
A solid performance in the UK delivered over half of the Group's operating profit, while we also continued to invest in new partnerships, network capability, LeakBot and heating services.
The business in North America had a transformational year, completing the acquisition and integration of Utility Service Partners Inc. (USP) while continuing to sign new partners organically. As a result, we made rapid progress towards the targeted 80m affinity partner households, where 18m households were added during the year, taking total access to 50m households. Organic customer growth was 10% and, together with USP, customer numbers increased to 3.0m, up 28% on the prior year.
We have seen good customer growth and profit progression in our established businesses in France and Spain, while we invested GBP6.0m in the New Markets segment, as planned (FY16: GBP5.9m).
The Group retention rate was strong at 82% (FY16: 83%).
HomeServe has five operating segments: the UK; the three established international businesses of North America (previously named USA), France and Spain; and New Markets. The New Markets segment comprises our business in Italy, investment in innovation and digital initiatives, together with international development.
Financial performance for the year ended 31 March
GBPmillion Revenue Statutory operating Adjusted operating
profit/(loss) profit/(loss)
2017 2016 2017 2016 2017 2016
--------------- ------ ------ ------------ ------------ ------------ -----------
UK 326.5 291.8 62.0 57.4 63.2 58.0
North America 227.8 152.6 14.7 7.8 21.2 12.1
France 91.1 77.4 21.1 18.0 27.1 23.2
Spain 130.2 97.5 13.0 9.6 13.3 9.9
--------------- ------ ------ ------------ ------------ ------------ -----------
449.1 327.5 48.8 35.4 61.6 45.2
New Markets 16.6 20.1 (6.1) (5.9) (6.0) (5.9)
Inter-segment (7.2) (6.2) - - - -
--------------- ------ ------ ------------ ------------ ------------ -----------
Group 785.0 633.2 104.7 86.9 118.8 97.3
--------------- ------ ------ ------------ ------------ ------------ -----------
Adjusted operating profit/(loss) excludes the amortisation of acquisition intangibles as reconciled to the statutory equivalent in the Financial Review.
Performance metrics for the year ended 31 March
Affinity partner Customer numbers Policy retention
households (m) rate
(m)
2017 2016 2017 2016 2017 2016
--------------- --------- -------- ----------- ---------- ----------- ----------
UK 24 24 2.2 2.2 80% 82%
North America 50 32 3.0 2.3 82% 82%
France 15 15 1.0 1.0 89% 89%
Spain 12 15 1.3 1.2 78% 77%
--------------- --------- -------- ----------- ---------- ----------- ----------
77 62 5.3 4.5 83% 83%
New Markets 1 6 0.3 0.3 - -
--------------- --------- -------- ----------- ---------- ----------- ----------
Group 102 92 7.8 7.0 82% 83%
--------------- --------- -------- ----------- ---------- ----------- ----------
BUSINESS REVIEW (continued)
United Kingdom
-- Solid performance with 2.2m customers
-- Expanded partnership with Aviva, launched a range of new home assistance products
-- Strengthened heating capability with the acquisition of npower's service contracts business
-- Voted 3(rd) on Glassdoor's Best Places to Work, with a highly engaged and focused team
UK results GBPmillion 2017 2016 Change
------------------------------ -------- -------- -------
Revenue
Net policy income 213.4 200.2 +6%
Repair network 100.3 81.0 +23%
Other 12.8 10.6 +21%
------------------------------- -------- -------- -------
Total revenue 326.5 291.8 +12%
Adjusted operating costs (263.3) (233.8) +13%
------------------------------- -------- -------- -------
Adjusted operating profit 63.2 58.0 +9%
------------------------------- -------- -------- -------
Adjusted operating margin 19% 20% -1ppt
------------------------------- -------- -------- -------
Net policy income is defined as policy revenue net of sales taxes and underwriting.
UK performance metrics 2017 2016 Change ------------------------ ----- -------- -------- -------- ------------ Affinity partner households m m 24 24 - Customers m m 2.2 2.2 +1% Income per customer GBP GBP 96 94 +2% Policies m m 5.6 5.5 +2% Policy retention rate % % 80 82 -2ppts ------------------------ ----- -------- -------- -------- ------------
Income per customer is calculated by dividing the past twelve months' net policy income by the number of customers. The FY16 income per customer measure excluded Home Energy Services Limited (HESL), a business acquired in October 2015.
The strength of our affinity partnerships and continued investment in networks, heating services and product innovation, provided the base for a solid and profitable performance in FY17 and ensures good medium-term prospects. Staff engagement remains high and is continuing to drive high levels of customer service and satisfaction.
Operational performance
Through affinity partner relationships, HomeServe offers home assistance products, under a utility brand, to around 90% of the addressable UK market. One of our largest affinity partnerships was successfully renewed in the year and we were also pleased to sign a new partnership in July 2016 with Dee Valley Water, which provides water services to over 250,000 customers.
In February, our partnership with Aviva, the UK's largest general insurer, was expanded as we jointly launched Aviva Home Response, a range of products, powered by HomeServe and sold through Aviva's marketing channels, offering cover for heating, plumbing, electrics and security. This exciting opportunity enables HomeServe to market heating-led products under the widely-recognised Aviva brand.
Our multi-channel marketing activity added 0.4m gross new customers in the year (FY16: 0.4m) and we are pleased that new customers joining us do so on fuller products, enjoying the benefits of higher usage and increasing our average net income per customer.
The policy retention rate was good at 80% (FY16: 82%) with more Year 1 customers choosing to renew with us than in the prior year. New customers typically enrol on an introductory offer and so we expect our policy retention rate in year 1 to be lower than subsequent years. Customer retention also continues to perform well, with the overall rate maintained at 82% (FY16: 82%).
We continue to invest in our network of contractors and engineers and during December 2016 we extended the directly-employed heating network with the acquisition of npower's 'domestic care and maintenance' contracts business together with its 76 heating engineers. Combined with our plumbing engineers and the successful integration of the Home Energy Services Limited (HESL) business that was acquired in FY16, our network now comprises over 850 directly-employed engineers, up from 700 last year.
Our heating business previously focused on boiler repairs and services, but we have now expanded our services to include boiler and smart thermostat installations. Although early days, this installation business is growing month-on-month and we aim to expand it nationally, through both organic growth and further appropriate bolt-on opportunities.
During the year, we completed 0.9m jobs, up from 0.7m in the prior year while still retaining high levels of customer service. Internally we measure customer satisfaction at different contact points along the customer journey (e.g. when the customer buys the policy / when the customer makes a claim), and this increased in the year. Our ratings on TrustPilot (the leading third party review provider in the UK) and Reevoo (an independent customer ratings provider) remain high at 8.3 and 93% respectively (FY16: 8.3 and 93%).
In February 2017, we were recognised by the Institute of Customer Service as the only company to have consistently improved customer service since January 2014. Our satisfaction rating of 79.9 placed us in the top three UK "Services" companies for customer satisfaction in 2017. This great customer service is due to the hard work and dedication of our people across all areas of the business, so we were delighted to receive the accolade of 3(rd) on Glassdoor's Best Places to Work in 2017.
Our investment in innovation resulted in the launch of LeakBot, a smart home water leak detector that enables early leak detection, preventing or limiting damage to customers' homes. The product appeals to the home insurance market, with escape of water the biggest expense incurred by home insurers. We have launched tests with home insurers including Aviva and, more recently, RSA and its More Than brand. Results are encouraging and support our focus on innovation.
Technology plays an increasingly important role in how we operate and in our interaction with customers. We are investing in upgrading our technology and are pleased with the implementation of our new Customer Relationship Management (CRM) system, which will be rolled out during FY18. The system is in live test with a small number of customer records, where agents are now presented with a single view of the customer, a system generated "next best customer action" and more intuitive screens. This is leading to better conversations between our agents and customers, and is expected to drive sales and efficiency benefits in the medium term. We are also investing in our extended network of engineers and plan to upgrade our claims management and deployment systems to deliver further operational efficiencies.
Financial performance
Revenue in the year was 12% higher than the prior year at GBP326.5m (FY16: GBP291.8m), principally reflecting an increase in net policy income and repair network revenue. Net policy income benefited from a slightly higher number of customers and higher income from each customer. Net income per customer was up GBP2 to GBP96, reflecting the mix of customers holding fuller cover products, and we expect further progression in net income per customer in FY18.
Repair network revenue increased by 23% to GBP100.3m (FY16: GBP81.0m), reflecting an increase in the number of jobs completed. Other income of GBP12.8m (FY16: GBP10.6m) includes transactions with other Group companies, on demand repairs, smart thermostat and boiler installations.
Adjusted operating costs increased 13% to GBP263.3m (FY16: GBP233.8m), reflecting the first full year of ownership of HESL and the integration of the engineer network of npower's 'domestic care and maintenance' contracts business. Adjusted operating margin was 19% (FY16: 20%), principally due to the increase in repair revenue. With continued high levels of repair revenue, we expect margins to remain at this level going forward.
North America
-- Rapid progress adding 18m new affinity partner households to reach 50m
-- Record new partner signings adding 100 partners
-- Significant customer growth up 28% to 3.0m
-- Integration of USP on track to deliver $15m EBITDA in FY18
North America results
$million 2017 2016 Change
------------------------------- -------- -------- --------
Revenue
Net policy income 273.5 211.0 +30%
Other 19.5 17.4 +12%
------------------------------- -------- -------- --------
Total revenue 293.0 228.4 +28%
Adjusted operating
costs (266.8) (210.9) +26%
------------------------------- -------- -------- --------
Adjusted operating
profit 26.2 17.5 +50%
------------------------------- -------- -------- --------
Adjusted operating
margin 9% 8% +1ppt
------------------------------- -------- -------- --------
North America results 2017 2016 Change
GBPmillion
------------------------------ -------- -------- -------
Revenue
Net policy income 212.7 141.1 +51%
Other 15.1 11.5 +31%
------------------------------- -------- -------- -------
Total revenue 227.8 152.6 +49%
------------------------------- -------- -------- -------
Adjusted operating costs (206.6) (140.5) +47%
------------------------------- -------- -------- -------
Adjusted operating profit 21.2 12.1 +75%
------------------------------- -------- -------- -------
Adjusted operating margin 9% 8% +1ppt
------------------------------- -------- -------- -------
North America performance 2017 2016 Change
metrics
----------------------------- --- ----- ----- -------
Affinity partner households m 50 32 +54%
Customers m 3.0 2.3 +28%
Income per customer $ 97 91 +7%
Policies m 4.5 3.5 +28%
Policy retention rate % 82 82 -
----------------------------- --- ----- ----- -------
Income per customer is calculated by dividing the last twelve months' net policy income by the number of customers. The policy retention rate and income per customer performance measures exclude USP, a business acquired in July 2016. FY17 policy income includes $27.7m in respect of USP.
This was a transformational year for HomeServe in North America, with good underlying organic growth enhanced by the acquisition of Utility Service Partners Inc. (USP). We have achieved the milestone of 3.0m customers, added 100 new partners and reached 50m affinity partner households, making good progress towards our 80m household target.
Operational performance
North America achieved record partner signings, increase in households and gross new customers. We delivered a 50% increase in adjusted operating profit to $26.2m, driven by the continued success of our underlying business.
On 1 July 2016, we completed the acquisition of USP, a leading provider of home assistance services, for a net cash outflow of $72.6m (GBP54.5m). Like our existing business, USP operates an affinity partner model and it is also the exclusive home warranty partner of the National League of Cities (NLC), an organisation that advocates to around 19,000 towns and cities, covering 66m municipal households in the USA. The NLC relationship is a strong endorsement with smaller municipals. We have streamlined our approach for these prospects with a resulting increase in the number of municipals signed in the year. The operational integration of USP is largely complete and we are pleased to have retained the Canonsburg facility together with key personnel.
Our acquisition of USP advanced our expansion into Canada, a country with 13m households, and offers further good growth prospects for our business. USP made a strategic investment in Canada working with the Association of Municipalities of Ontario (AMO), an endorsing partner across Canada's largest province. We have started marketing in Ontario and now have 30 partnerships in this region.
We now offer our products to 50m utility households (FY16: 32m) and we are confident of reaching our stated goal of 80m utility households across North America. During the year, we signed 100 new utility partnerships and entered into a relationship with the American Public Gas Association (APGA) which is an endorsing body that works with 700 municipal gas distributors across the USA. Our strategic plan is focused on our core policy business - developing, marketing and selling policies in partnership with utilities, municipals and membership organisations. We have invested in building an experienced business development capability, focused on driving new partnership signings. Our pipeline of potential partner opportunities is strong, with negotiations at all stages of the process.
Customer numbers increased 28% to 3.0m customers (FY16: 2.3m), with 0.4m customers acquired with the USP acquisition and a further 0.8m gross new customers added during the year (FY16: 0.7m). Direct mail continues to be the most significant marketing channel, with continued progress in sales through our partner channels. We re-launched our website, enabling more effective digital marketing, with a 55% increase in the number of new customers joining online. Retention remained strong at 82% (FY16: 82%).
Good customer service is central to the business and we have invested in technology across the claims process to improve the customer journey. We now deploy over 80% of all contractor jobs directly to technician's mobile devices. Going forward we expect to make further investment in claims technology to enhance the customer experience and to drive operational efficiency.
Our network of 151 directly-employed engineers (FY16:152) and almost 1,100 sub-contractors (FY16: 1,000) carried out 0.4m jobs during the year (FY16: 0.4m). In line with our strategy, we have progressed our HVAC (heating, ventilation and air conditioning) installation business, with a 15% increase in the number of units installed in FY17 compared to the prior year.
We were delighted to win a recognised 'Top Places to Work' award for the third year in a row together with a Grand Stevie Award for our high levels of customer satisfaction.
Financial performance
Revenue was up 28% to $293.0m (FY16: $228.4m), driven by a 30% increase in policy income, reflecting an increase in renewal income and $27.7m post-acquisition revenue from USP. Our growing installation volumes are reflected in the 12% increase in other income to $19.5m (FY16: $17.4m).
Income per customer was up 7% to $97 (FY16: $91), principally reflecting the higher proportion of renewals and a reduced cost to serve as we realised operational efficiencies in our network. Income per customer excludes USP customers who have yet to go through a full renewal cycle with HomeServe. Typically income per customer is lower in USP, reflecting the product mix, and as a result we expect to see a small reduction in net income per customer in FY18.
Adjusted operating costs in North America were $266.8m (FY16: $210.9m), up 26% on the prior year, due principally to continued investment in business development, marketing and the impact of USP. USP incurred a loss of $0.9m in the period post acquisition reflecting related transaction and integration costs. We continue to expect USP to add $15m incremental EBITDA in FY18, our first full year of ownership. Adjusted operating profit increased 50% to $26.2m, resulting in an adjusted operating margin of 9%, up from 8% in FY16. We remain confident of a longer-term adjusted operating profit margin of 20%.
France
-- Good sales momentum delivered a 4% increase in customer numbers to 1.0m -- Outstanding customer loyalty reflected in 89% retention rate, the highest in the Group -- Maintained strong adjusted operating profit margin of 30% France results EURmillion 2017 2016 Change ---------------------------- ------- ------- -------- Total revenue 107.4 105.0 +2% Adjusted operating costs (75.9) (73.6) +3% ---------------------------- ------- ------- -------- Adjusted operating profit 31.5 31.4 - ---------------------------- ------- ------- -------- Adjusted operating margin 30% 30% - ---------------------------- ------- ------- -------- France results GBPmillion 2017 2016 Change --------------------------- ------- ------- ------- Total revenue 91.1 77.4 +18% Adjusted operating costs (64.0) (54.2) +18% ---------------------------- ------- ------- ------- Adjusted operating profit 27.1 23.2 +17% ---------------------------- ------- ------- ------- Adjusted operating margin 30% 30% - ---------------------------- ------- ------- ------- France performance metrics 2017 2016 Change ----------------------------- ----- ----- ----- ------- Affinity partner households m 15 15 - Customers m 1.0 1.0 +4% Income per customer EUR 101 101 - Policies m 2.3 2.3 +1% Policy retention rate % 89 89 - ----------------------------- ----- ----- ----- -------
HomeServe France demonstrated a solid performance this year via its two major partnerships with Veolia and Suez, while continuing to invest in business development, product development and digital initiatives.
Operational performance
Our strong partnership with Veolia, France's largest water provider, continues to deliver customer growth and during the year we saw an increase in the number of customers joining through Veolia's own sales channels. We continue to develop our relationship with Suez (formerly Lyonnaise des Eaux), which offers HomeServe products through its sales channels, and accounted for a third of all new sales during the year.
Across all of our marketing channels we added 0.2m gross new customers (FY16: 0.2m). This sales activity combined with a continued strong retention performance at 89% (FY16: 89%) resulted in a 4% increase in customer numbers to 1.0m (FY16: 1.0m).
Our business development team has a good pipeline of partner prospects, with some initial testing in progress. We have also signed a new partnership with SARP, part of the Veolia Group, to offer a new plumbing, drainage and septic tank product to its 0.6m customers.
We have enhanced the digital functionality across the customer journey from sale through to claim, which we believe has improved our relationship with both customers and contractors. We were proud to win a nationally-renowned award - Service Client de l'Annee 2017, Home Services sector - for the first time, reflecting our focus on delivering exceptional customer service.
All our repairs in France are completed by our network of over 900 contractors (FY16: 700). We now deploy over 50% of jobs direct to contractors' mobile devices, driving improved customer service, operational efficiencies and an enhanced relationship with these contractors.
Financial performance
Total revenue increased 2% to EUR107.4m (FY16: EUR105.0m), principally reflecting an increase in renewal income generated by Suez. Adjusted operating costs were up 3% to EUR75.9m (FY16: EUR73.6m), due to an increase in amortisation and further investment in business and product development. In line with the prior year, income per customer was EUR101 (FY16: EUR101).
In accordance with Group policy, where a partner originates customers on our behalf, the cost of acquisition is capitalised, held as an intangible asset and amortised as an operating expense. During FY17, we paid EUR3.0m (FY16: EUR4.2m) in respect of customers acquired by Suez, and, as at March 2017, the net book value of the intangible asset was EUR5.9m (FY16: EUR4.3m). The associated amortisation during the year was EUR1.0m (FY16: EUR0.4m).
Adjusted operating profit increased to EUR31.5m, (FY16: EUR31.4m), maintaining a strong adjusted operating margin of 30% (FY16: 30%), while continuing to support customer growth.
Spain
-- Continued customer growth, up 7% to 1.3m
-- Strong adjusted operating profit growth, up 13% to EUR15.8m
-- Record number of jobs completed - up 19% across the network
Spain results EURmillion 2017 2016 Change
---------------------------- -------- -------- ----------
Revenue
Membership 57.2 50.4 +13%
Claims handling 97.1 82.4 +18%
---------------------------- -------- -------- --------
Total revenue 154.3 132.8 +16%
Adjusted operating costs (138.5) (118.9) +16%
---------------------------- -------- -------- --------
Adjusted operating profit 15.8 13.9 +13%
---------------------------- -------- -------- --------
Adjusted operating margin 10% 10% -
---------------------------- -------- -------- --------
Spain results GBPmillion 2017 2016 Change
--------------------------- -------- ------- -------
Revenue
Membership 48.3 37.1 +31%
Claims handling 81.9 60.4 +35%
---------------------------- -------- ------- -------
Total revenue 130.2 97.5 +34%
Adjusted operating costs (116.9) (87.6) +33%
---------------------------- -------- ------- -------
Adjusted operating profit 13.3 9.9 +34%
---------------------------- -------- ------- -------
Adjusted operating margin 10% 10% -
---------------------------- -------- ------- -------
Spain performance 2017 2016 Change
metrics
--------------------- ----- ----- ----- -------
Affinity partner
households m 12 15 -20%
Customers m 1.3 1.2 +7%
Income per customer EUR 43 41 +4%
Policies m 1.5 1.4 +6%
Policy retention
rate % 78 77 +1ppt
------------------------- ---- ----- ----- -------
This year our Spanish business, Reparalia, rebranded as HomeServe Spain. We have achieved good growth in both our Membership and Claims businesses as we saw confidence returning to the Spanish market. Performance in the claims handling business was particularly strong, as we continued to gain market share and increased claims volumes across our third-party insurance network.
Operational performance
Endesa, our largest partner in Spain, continued to successfully offer our products through its sales channels and this will continue throughout FY18. We were unable to make the progress we wanted with Agbar, a water utility with 3m households and so, following a period of limited marketing activity, we agreed to end the partnership and removed it from our affinity partner household count. We have retained the 39,000 customers previously acquired and will look to renew them under our brand going forward. Our business development team is in active discussions with other potential partners.
Customer numbers increased 7% to 1.3m, reflecting continued good sales and retention. During the year, we developed new products to appeal to a broader market, including water products and "Tech Angel", a 24/7 home technology support product, which has been well received. Retention in the year was 78%, marginally higher than the prior year (FY16: 77%).
Our Claims business works with 16 Spanish insurance companies managing home insurance claims across 26 trades. During the year it completed 19% more jobs than in the prior year, closing a record 0.8m jobs (FY16: 0.7m), which reflects an increase in our market share together with our diversification into new channels. Our network comprises over 2,000 sub-contractors and 197 franchised engineers.
Financial performance
Revenue increased 16% to EUR154.3m (FY16: EUR132.8m) with increases in both Membership and Claims. Membership revenue was up 13% to EUR57.2m (FY16: EUR50.4m), reflecting the higher number of customers, while Claims revenue increased to EUR97.1m (FY16: EUR82.4m), benefitting from an increase in the number of completed jobs.
Income per customer (relating to the Membership business) was up 4% to EUR43 (FY16: EUR41), reflecting the increased maturity of the customer base.
In accordance with Group policy, where a partner originates customers on our behalf, the cost of acquisition is capitalised, held as an intangible asset and amortised as an operating expense. During FY17 we paid EUR13.5m (FY16: EUR20.2m), in respect of customers acquired by Endesa and, as at 31 March 2017, the intangible asset amounted to EUR46.0m (FY16: EUR42.1m). Amortisation in FY17 was EUR12.8m, EUR2.9m higher than the prior year (FY16: EUR9.9m).
Adjusted operating costs increased 16% to EUR138.5m (FY16: EUR118.9m), primarily reflecting the increase in direct costs to serve the higher job volumes in the Claims business and an increase in amortisation in the Membership business. Adjusted operating profit was up 13% to EUR15.8m (FY16: EUR13.9m) following good performance in both Membership and Claims.
New Markets
-- Our Italian business agreed a joint venture with Edison Energia, a major utility in Italy -- Positive discussions in new international markets -- Strategic investment in Checkatrade and acquisition of Habitissimo
Our New Markets segment comprises our business in Italy, investment in innovation and digital initiatives, together with international development.
In Italy, we have 0.3m customers acquired through a test agreement with Enel. There continues to be good customer demand for our products but due to a change in Enel's approach to home services, the test agreement was not extended. During March 2017, we established a joint venture with Edison Energia, Italy's third-largest energy supplier and a member of the EDF Group, through its purchase of 51% of our Italian business (we retain a 49% share). We have commenced marketing a range of home assistance products, principally through Edison Energia's sales channels, including television advertising.
We continue to progress our international development plans where we are targeting multiple countries under our preferred joint venture model.
We have invested in technology to drive enhanced performance across the Group. Consistent platforms across all of our businesses will deliver more effective product sales and efficiencies. During the year, we launched new customer-facing websites in the USA, France and Spain.
In line with our ambition to offer our services to more homeowners, we are developing a compelling online on demand service which we are calling Home Experts. This platform will connect customers to a range of expert tradespeople, enabling an end to end digital experience.
Our investment in Checkatrade, which is treated as an associate and acquisition of Habitissimo, which is fully consolidated, will accelerate the development of this proposition. Both businesses are established market leaders in home repairs and improvements. Combined, they have 45,000 local Home Experts carrying out an estimated GBP3.5 billion of home repairs and improvements annually.
Checkatrade is the UK's most recognised and trusted online directory of high-quality, customer-recommended tradespeople with nearly 1m unique customer visits a month, resulting in approximately 1.3m jobs per annum. Our recent research indicates that around 50% of consumers go online to find a tradesman and of these, around 47% go directly to Checkatrade, making it a market leader in online home services.
Based in Mallorca, Habitissimo receives more than 3.6 million unique customer visits a month, resulting in approximately 0.25 million jobs a year across four countries in Europe (Spain, Portugal, Italy and France), and also in Latin America.
Financial performance
Reported revenue was GBP16.6m, down GBP3.5m compared to the prior year (FY16: GBP20.1m), reflecting a reduction in customers due to the cessation of activity with Enel in June 2016. Following the formation of a joint venture with Edison Energia in March 2017, our business in Italy is treated as an associate and going forward we will not report annual revenue in respect of this business.
Our investment in New Markets resulted in a loss of GBP6.0m (FY16: GBP5.9m). We expect a similar level of investment in FY18, covering our continued investment in Italy, innovation and digital initiatives, together with international development.
Board Changes
During the year David Bower was appointed as Chief Financial Officer and Johnathan Ford as Chief Operating Officer. We have also strengthened the Board with the appointment of three new Directors with effect from 23 May 2017. Tom Rusin has been appointed as an Executive Director and Katrina Cliffe and Edward Fitzmaurice have both been appointed as Non-Executive Directors. Katrina will also join the Audit & Risk Committee. Tom has been Chief Executive Officer of HomeServe USA since July 2011 and is currently a member of the HomeServe plc Executive Committee.
Outlook
All our businesses are performing well and have good prospects. Looking ahead, we expect further strong growth in FY18, principally driven by our rapidly-expanding business in North America. This reflects the increase in customer numbers, combined with the benefit of the USP acquisition, which we expect to deliver around $15m EBITDA this coming year.
We are excited about the future for all of our businesses. We have a strong platform for growth over the years ahead and our strategic focus on home assistance, repairs and improvements will enable us to meet the needs of a wide range of customers.
Richard Harpin
Chief Executive
23 May 2017
FINANCIAL REVIEW
These financial results have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted for use by the European Union.
Group statutory results
The headline statutory financial results for the Group are presented below.
GBPmillion 2017 2016
----------------------------------------- ------- -------
Total revenue 785.0 633.2
Operating profit 104.7 86.9
Net finance costs (6.4) (4.3)
----------------------------------------- ------- -------
Adjusted profit before tax 112.4 93.0
Amortisation of acquisition intangibles (14.1) (10.4)
----------------------------------------- ------- -------
Statutory profit before tax 98.3 82.6
Tax (23.9) (21.0)
Profit for the year 74.4 61.6
----------------------------------------- ------- -------
Attributable to:
Equity holders of the parent 74.4 61.6
Non-controlling interests - -
74.4 61.6
------------------------------ ----- -----
The Group delivered 19% growth in profit before tax to GBP98.3m, an increase of GBP15.7m compared to FY16 (FY16: GBP82.6m). Statutory profit before tax is reported after the amortisation of acquisition intangibles. The individual financial performance of each business is considered in the business review.
Amortisation of acquisition intangibles
The amortisation of acquisition intangibles of GBP14.1m (FY16: GBP10.4m) relates to customer and other contracts held by businesses, which were acquired as part of business combinations and has increased this year principally due to the acquisition of USP in July 2016, where GBP34.8m acquired intangible assets were identified.
Tax strategy
The Group has a tax strategy that was approved by the Board during the year and which reflects our status as a plc, which requires strong governance and consideration of our reputation. Our tax strategy also reflects the regulated nature of our business which requires further compliance with local laws, regulations and guidance. We made the UK elements of our tax strategy document publicly available in April 2017 as required by UK legislation.
Our Group tax strategy covers the following matters: (i) how we maintain ongoing application of tax governance with strong internal controls in order to substantially reduce tax risk to materially acceptable levels; (ii) how we will not engage in artificial transactions the sole purpose of which is to reduce tax; (iii) our strategic aim to maintain the Group's low UK tax risk rating as determined by the UK Tax Authorities Business Risk Review process; and (iv) to continue to work with all tax authorities in an open, honest and transparent manner.
Tax charge and effective tax rate
The Group's tax charge in the financial year was GBP23.9m (FY16: GBP21.0m). The corporate income tax rates in the overseas countries in which we operate are currently higher than the UK corporate income tax rate of 20% (FY16: 20%), i.e. the US at 40% (FY16: 40%), France at 33% (FY16: 33%), Spain at 25% (FY16: 27%) and Italy at 28% (FY16: 28%). The UK corporation tax rate is 19% in FY18 and expected to remain at this level in FY19 and FY20, with a further reduction to 17% in FY21 onwards. To the extent our profits are more weighted towards our overseas countries we would expect the effective tax rate of 24% (FY16: 25%) to increase in future years.
Cash flow and financing
Our business model continues to be highly cash generative with cash generated by operations in FY17 amounting to GBP139.9m (FY16: GBP121.7m), representing a cash conversion ratio against adjusted operating profit of 118% (FY16: 125%).
GBPmillion 2017 2016 ----------------------------------------- -------- -------- Adjusted operating profit 118.8 97.3 Amortisation of acquisition intangibles (14.1) (10.4) ----------------------------------------- -------- -------- Operating profit 104.7 86.9 Depreciation and amortisation 49.5 35.8 Non-cash items 6.8 5.1 Increase in working capital (21.1) (6.1) ----------------------------------------- -------- -------- Cash generated by operations 139.9 121.7 Net interest (6.4) (3.0) Taxation (20.0) (17.3) Capital expenditure (58.5) (63.7) Repayment of finance leases (1.0) (0.5) ----------------------------------------- -------- -------- Free cash flow 54.0 37.2 Acquisition of associate (24.7) - Acquisition of available for sale investments - (0.5) Acquisitions of subsidiaries (74.2) (5.3) Disposal of subsidiary (1.7) - Equity dividends paid (40.3) (137.0) Issue of shares 0.9 1.8
----------------------------------------- -------- -------- Net movement in cash and bank borrowings (86.0) (103.8) Impact of foreign exchange (6.3) (0.7) Net debt acquired (0.4) - Finance leases 0.8 (0.9) Opening net debt (169.5) (64.1) ----------------------------------------- -------- -------- Closing net debt (261.4) (169.5) ----------------------------------------- -------- --------
Working capital increased by GBP21.1m in FY17 reflecting continued growth in all of our businesses. As the business grows further, we expect additional working capital absorption, though we continue to expect the cash conversion ratio to be in excess of 100%.
During the year, we invested capital expenditure of GBP58.5m (FY16: GBP63.7m), which was GBP6.5m lower than planned principally due to the timing of partner payments, which we now expect to incur in FY18. Expenditure during FY17 included partner payments of GBP14.1m (FY16: GBP17.9m) in respect of the acquisition of customers that Endesa and Suez originated and payments to certain US partners.
Technology plays an increasingly important role throughout our business. We have continued to invest in the replacement of our core customer system, together with normal investment, principally technology-related, across all the businesses. As we roll out the core customer system in FY18, we are also planning to replace the claims handling and job deployment systems in the UK, improve the claims management systems in Spain and North America, while also investing in the development of our Home Experts platform. We expect these investments will make us more efficient, improve our customer service and will be an 'enabler' for our online on demand business. As a result of these investments, together with ongoing partner payments, we expect capital expenditure to be around GBP70m in FY18. Going forward we expect capital expenditure to normalise at around GBP35m.
Investment in associates
On 13 December 2016 the Group acquired a 40% stake in Sherrington Mews Limited, the holding company of the Checkatrade Group, for cash consideration of GBP24.0m. There is further contingent consideration of GBP4.0m that is payable subject to financial performance conditions being met by the business, the present value of which is GBP2.7m. There were also legal costs associated with the transaction that were added to the cost of the investment amounting to GBP0.7m.
On 9 March 2017 the Group disposed of 51% of Assistenza Casa Srl, a wholly owned Group company. The remaining 49% has been accounted for as an associate using the equity method. The Group realised a gain of GBP0.1m as a result of this transaction.
Acquisitions
The Group has incurred a net cash outflow in respect of business combinations of GBP74.2m in the year.
There were three material acquisitions in the year ended 31 March 2017.
On 1 July 2016 Homeserve USA Corp, a Group company, acquired 100% of the issued share capital and obtained control of Utility Service Partners Inc (USP).
On 1 December 2016 HomeServe Membership Limited, a Group company, purchased npower's 'domestic care and maintenance' contracts business. The acquisition included 76 heating engineers.
On 27 January 2017 HomeServe International Limited, a Group company, acquired 70% of the issued share capital and obtained control of Habitissimo S.L., a specialist online lead generation business operating across Southern Europe and South America.
In addition to the net cash outflow on the acquisitions above of GBP71.8m, deferred consideration was paid relating to prior period business combinations of GBP3.1m (FY16 GBP1.1m) and net cash was acquired as part of an immaterial acquisition in Spain of GBP0.7m.
Earnings per share
Earnings per share for the year increased from 19.6p to 24.0p, an increase of 22%. On an adjusted basis, earnings per share increased 24% from 21.8p to 27.0p. The weighted average number of shares decreased from 313.9m to 309.9m due to the impact of the share consolidation in the prior year, offset in part by new shares issued in fulfilment of a number of share schemes in the year.
Dividends
Given the Group's good performance and the Board's confidence in its future prospects, the Board is proposing to increase the final dividend to 11.2p per share (FY16: 8.9p) to be paid on 3 August 2017 to shareholders on the register on 7 July 2017.
Together with the interim dividend declared in November 2016 of 4.1p (November 2015: 3.8p), this represents a 20% increase in the total ordinary dividend payment for the year of 15.3p (FY16: 12.7p), which is 1.76x covered by the FY17 adjusted earnings per share compared to 1.72x cover in FY16. As previously indicated, the Board intends to adopt a progressive dividend policy and targets a dividend cover in the range 1.75 - 2x over the medium term.
In the prior year, in July 2015, a special dividend of GBP99.4m was also paid to shareholders, which was followed by a share consolidation.
Net debt and finance costs
The Group targets net debt in the range of 1.0-1.5x EBITDA, measured at 31 March each year. With net debt of GBP261.4m and EBITDA of GBP154.2m, the Group was outside this range at 1.7x.
As previously stated, we are prepared to see leverage increase for reasonable periods of time if circumstances warrant this. The opportunity to acquire USP in North America in July 2016 together with our other investments, principally relating to the investment in Checkatrade and acquisition of Habitissimo, which we expect to accelerate our Home Experts proposition, represented such circumstances. Absent the M&A activity which took place in the year, we would have been at the lower end of our target range, while the range itself remains subject to periodic review.
During the year, the Group obtained EUR50m medium-term funding in the form of a term loan due for repayment by instalments through to 2020. In addition, during March 2017, the Group obtained a further GBP60m medium-term funding in the form of a Private Placement due for repayment in 2024.
The Group's net interest paid was GBP6.4m with an interest accrual of GBP1.1m as at 31 March 2017, of which GBP0.8m was subsequently paid in April 2017. Cash finance costs in the prior year were GBP3.0m with an interest accrual of GBP0.9m as at 31 March 2016.
Foreign exchange impact
HomeServe is well-positioned to meet the challenges of the UK's exit from the European Union and our growth prospects remain strong. Our businesses each operate in their own territories, buying goods and services from local businesses and supplying local consumers within those territories, almost exclusively in local currencies. Our businesses have also proved resilient to economic turmoil over a number of years.
The depreciation of sterling against the US Dollar and Euro following the UK's decision to leave the European Union has, however, had a significant impact on our reported results due to the impact of translating the results of our overseas businesses.
Specifically, changes in the US Dollar and Euro exchange rates between FY16 and FY17 have resulted in the reported revenue of our international businesses increasing by GBP63.3m and adjusted operating profit increasing by GBP10.3m as summarised in the table below.
Average exchange Effect on (GBPm)
rate
Revenue Adjusted operating
profit
2017 2016 Change 2017 2017
--------------------- ----- ----- ------ ------- -------- -------------------
North America $ 1.31 1.51 (13%) 32.3 3.6
France EUR 1.19 1.37 (13%) 12.0 3.7
Spain EUR 1.19 1.37 (13%) 16.9 2.2
New Markets EUR 1.19 1.37 (13%) 2.1 0.8
--------------------- ----- ----- ------ ------- -------- -------------------
Total International 63.3 10.3
---------------------------- ----- ------ ------- -------- -------------------
In addition, as the Group holds certain of its cash, bank and other loans in foreign currencies, the depreciation of sterling resulted in an increase in the reported net debt of the Group of GBP0.2m in relation to Euro-denominated net debt, and GBP6.5m in relation to US Dollar-denominated net debt.
Statutory and pro-forma reconciliations
The Group uses adjusted operating profit, EBITDA, adjusted profit before tax and adjusted earnings per share as its primary performance measures. These are non-IFRS measures which exclude the impact of the amortisation of acquisition intangible assets (FY17: GBP14.1m, FY16: GBP10.4m). Acquisition intangible assets principally arise as a result of the past actions of the former owners of businesses in respect of marketing and business development activity. Therefore, the adjusted measures reflect the post acquisition revenue attributable to, and operating costs incurred by, the Group.
As at 31 March 2017, the net book value of the acquisition intangible asset was GBP114.0m (FY16: GBP75.3m) and the related amortisation charge in FY17 was GBP14.1m (FY16:GBP10.4m)
The tables below provides a reconciliation between the statutory and adjusted items.
GBPmillion 2017 2016 ------------------------------- ------ ------ Operating profit (statutory) 104.7 86.9 Depreciation 6.9 5.4 Amortisation 28.5 20.0 Amortisation of acquisition intangibles 14.1 10.4 EBITDA 154.2 122.7 ------------------------------- ------ ------ Operating profit (statutory) 104.7 86.9 Amortisation of acquisition intangibles 14.1 10.4 Adjusted operating profit 118.8 97.3 ------------------------------- ------ ------ Profit before tax (statutory) 98.3 82.6 Amortisation of acquisition intangibles 14.1 10.4 Adjusted profit before tax 112.4 93.0 ------------------------------- ------ ------ Pence per share -------------------------------- ----- ----- Earnings per share (statutory) 24.0 19.6 Amortisation of acquisition intangibles 3.0 2.2 Adjusted earnings per share 27.0 21.8 -------------------------------- ----- -----
Principal risks and uncertainties
HomeServe has a risk management framework which provides a structured and consistent process for identifying, assessing and responding to risks. These risks are assessed in relation to the Group's strategy, business performance and financial condition and a formal risk mitigation plan is agreed with clear ownership and accountability. Risk management operates at all levels throughout the Group, across geographies and business lines.
Risks to HomeServe's business are either specific to HomeServe's business model, such as affinity partner relationships and underwriting, or more general, such as the impact of competition and regulatory compliance.
The table below sets out what the Board believes to be the principal risks and uncertainties facing the Group, the mitigating actions for each, and an update on any change in the profile of each risk during the past year. These should be read in conjunction with the Business Review and the Financial Review. Additional risks and uncertainties of which we are not currently aware or which we currently believe are not significant may also adversely affect our strategy, business performance or financial condition in the future.
The Board believes that all identified risks carry equal importance and weighting as in the prior year with updates to the nature of those risks detailed below.
Risk Mitigation Change since 2016
Description / Annual Report
Impact
Commercial relationships
Underpinning the We have regular contact We have continued
success in our and reviews with the to sign and renew
chosen markets senior management affinity partnerships
are close commercial of our affinity partners with utilities across
relationships to ensure we respond the businesses.
(affinity partner to their needs and
relationships) deliver the service In the UK, there
principally with that they expect. were no agreements
utility companies, due for renewal in
municipals and Across the Group we FY17. We renewed
financial institutions. are not dependent one utility partner
The loss of one on any one single agreement early,
of these relationships partnership, which due to renew in FY18,
could impact our mitigates, in part, on substantially
future customer the impact of losing similar terms. We
and policy growth any single relationship. signed an additional
plans and retention utility partner (Dee
rates. Valley Water) and
extended our relationship
While the majority with Aviva.
of these partnerships
are secured under In North America,
long-term contracts, we signed 100 new
which increase partners during the
the security of year and in France,
these relationships while continuing
over the medium-term, to work with the
they can be terminated two largest water
in certain circumstances. utilities we also
have a good pipeline
of opportunities.
In Spain, we continue
to work closely with
Endesa, though ceased
activity with Agbar,
a water utility.
In Italy, following
the cessation of
the test agreement
with Enel, we entered
a joint venture with
Edison Energia.
---------------------------- ------------------------------------------- ------------------------------
Competition
There are a number The market and the There has been no
of businesses activities of other significant change
that provide services participants are regularly in the competitive
that are similar reviewed to ensure landscape in any
to those of the that the strategies of the countries
Group and could and offerings of current in which we operate.
therefore compete and potential competitors
in one or more are fully understood. In North America,
of our chosen Both qualitative and we participate in
markets. Increased quantitative research RFPs ("requests for
competition could is undertaken to ensure proposal") that are
affect our ability that our products issued by utilities
to meet our expectations and services continue when they seek to
and objectives to meet the needs start a programme.
for the business of our customers whilst While we see some
in terms of the retaining a competitive other parties participating
number of customers, position in the market. in these tenders,
policies or the we win the majority
financial returns We believe we have and we believe that,
achieved. a compelling proposition, overall, the RFP
providing customers process is positive
with real value and for our business
helping reduce the as it demonstrates
impact of increased an increased awareness
competition. of our products and
services in the North
American market.
---------------------------- ------------------------------------------- ------------------------------
Risk Mitigation Change since 2016
Description / Annual Report
Impact
Customer loyalty
/ retention
A key element Policy retention rate Policy retention
of our business is one of our Key remains high in all
model is customer Performance Indicators. our countries.
loyalty. Any reduction Any significant movement
in the proportion is therefore carefully In the UK, the policy
of customers renewing investigated to assess retention rate decreased
their policies the change in customer by 2 percentage points
could significantly behaviour and to implement to 80% compared to
impact our revenue. corrective action the prior year, principally
where possible. due to the higher
number of customers
We have a wide range in early renewal
of tools available cycles. In the UK,
to manage retention we also closely monitor
rates, including specific the customer retention
retention propositions. rate, which has been
maintained at 82%.
There are dedicated
retention teams, trained In North America,
and experienced in the policy retention
talking to those customers rate has been maintained
who are considering at 82%, the same
not renewing their as the prior year.
policy.
We regularly review In France, we have
our products ensuring maintained a policy
they provide the coverage retention rate of
that our customers 89%.
demand and need. We
also regularly review In Spain, policy
the methods by which retention increased
we interact with our by 1 percentage point
customers ensuring to 78%.
their needs are met
and providing them
with updated tools
to purchase, renew
and review their policy
holdings for example
through our latest
digital initiatives.
---------------------------- ------------------------------------------- ------------------------------
Marketing effectiveness
A significant The performance of During the year,
reduction in the each marketing campaign our marketing channels
response rates and channel is regularly performed as we expected
on our marketing reviewed, with any with direct mail
could have a significant significant deviation response rates continuing
impact on customer to the expected response to perform well.
and policy numbers. rate quickly identified
and remedial action We continue to develop
taken for subsequent our digital channels
campaigns. We record and work with our
and review a number partners to offer
of telephone calls our products in their
across all of our call centres. Development
businesses. of these two channels
is serving to reduce
our reliance on direct
mail activity.
---------------------------- ------------------------------------------- ------------------------------
Exposure to legislation
or regulatory
requirements
We are subject
to a broad spectrum We have regulatory All of our businesses
of regulatory specialists, compliance have dedicated, experienced
requirements in teams and Non-Executive compliance specialists
each of the markets Directors in each including Non-Executive
in which we operate, of our businesses Directors to chair
particularly relating to help ensure that the compliance committees
to product design, all aspects of the in each of our businesses,
marketing materials, legislative regime with regular reporting
sales processes in each territory to the local company
and data protection. are fully understood Board of Directors.
and adopted as required.
Failure to comply We have maintained
with the regulatory Specifically in the appropriate dialogue
requirements in UK, we maintain regular with all relevant
any of our countries dialogue with the regulatory bodies
could result in FCA, while in the that govern or influence
us having to suspend, USA we have regular our businesses and
either temporarily dialogue with the have sought to engage,
or permanently, Attorneys General. where possible, in
certain activities. In our other businesses, regulatory and compliance
we maintain a dialogue discussions around
In addition, legislative with local regulators. the development of
changes related We keep up to date the markets in which
to our partners with changes in government we operate.
may change their and regulatory policy,
obligations with which ensures that In the UK, the primary
regard to the our products and services regulator, the Financial
infrastructure are designed, marketed Conduct Authority,
they currently and sold in accordance has recognised the
manage and hence with all relevant risk that we pose
the products and legal and regulatory to their objectives
services we can requirements and that has decreased and
offer to customers. their terms and conditions therefore they have
remain appropriate reduced the intensity
It is possible and meet the needs of their supervision.
such legislative of customers.
changes could
reduce, or even
remove, the need
for some of our
products and services.
---------------------------- ------------------------------------------- ------------------------------
Risk Mitigation Change since 2016
Description / Annual Report
Impact
---------------------------- ------------------------------------------- ------------------------------
Quality of customer
service We monitor customer In FY17, we continued
Our reputation service standards to monitor customer
is heavily dependent at a number of different satisfaction across
on the quality customer contact points all our operations
of our customer in each of our operations, at a number of different
service. using both internal customer contact
data and an independent points, with improvements
Any failure to third party. in all the businesses.
meet our service
standards or negative The results of these
media coverage are reviewed on a
of poor service regular basis and
could have a detrimental action plans produced
impact on customer to address the key
and policy numbers. issues.
Processes have been
established to ensure
that all directly
employed engineers
and sub-contractors
meet minimum standards.
These include criminal
record checks and
minimum qualification
requirements.
Reflecting the importance
of customer service
to our business, all
senior managers have
customer satisfaction
performance as a significant
component of their
annual bonus opportunity.
---------------------------- ------------------------------------------- ------------------------------
Availability of
underwriters We use a number of We continue to review
The policies that underwriters, with our underwriting
we market and the main provider relationships on
administer are in the UK separate a regular basis to
each individually to those in the rest ensure they provide
underwritten by of Europe and North the best returns
third party underwriters, America. for customers and
independent of shareholders.
HomeServe. We have regular contact
and reviews with the In the UK Aviva continues
We act as an insurance senior management to be our principal
intermediary and of the underwriters underwriter, and
do not take on to ensure that claims commenced underwriting
any material insurance frequencies, repair new business in November
risk. costs and service 2015.
standards are in line
If these underwriters with their expectations. Having secured a
were unable or second underwriter
unwilling to underwrite The principal underwriters in North America
these risks and are subject to medium-term last year, during
we were unable agreements, with the FY17 we agreed terms
to find alternative rates subject to regular with second underwriters
underwriters it review. in France and Spain.
would require
us to insure these In addition, we maintain
risks directly, relationships with
thereby exposing a number of underwriters
the business to who are willing and
material insurance able to underwrite
risk, which is our business and regularly
contrary to our review the market
preferred operating to ensure we understand
model. In addition, current market conditions,
it would take how these apply to
time to obtain our policies and how
the relevant regulatory we can mitigate the
approvals. loss of an existing
underwriter.
---------------------------- ------------------------------------------- ------------------------------
Dependence on
recruitment and
retention of skilled
personnel
Our ability to Our employment policies, A "People Committee",
meet growth expectations remuneration and benefits comprised of a number
and compete effectively packages, and long-term of the Non-Executive
is, in part, dependent incentives are regularly Directors and senior
on the skills, reviewed and designed management of the
experience and to be competitive Group, has been created
performance of with other companies. with a mandate to
our personnel. promote the development
The inability Employee surveys, and recruitment of
to attract, motivate performance reviews key talent.
or retain key and regular communication
talent could impact of business activities We have continued
on our overall are just some of the to strengthen our
business performance. methods used to understand management teams
and respond to employees' across all our operations
views and needs. - particularly in
the areas of IT,
Processes are in place Digital, Commercial
to identify high performing and M&A.
individuals and to
ensure that they have During the year we
fulfilling careers, completed the rollout
and we are managing of our People Promises
succession planning which are now live
effectively. in each of our businesses
and an integral part
of our recruitment,
selection and development
procedures.
---------------------------- ------------------------------------------- ------------------------------
Risk Change since 2016
Description / Mitigation Annual Report
Impact
Exposure to country
and regional risk
and Brexit risk
In line with other The criteria for entering We have recommenced
businesses we a new country include reviewing potential
are subject to a full assessment new territories and
economic, political of the stability of have appointed a
and other risks its economic and political dedicated team with
associated with situation, together significant experience
operating in overseas with a review of the of working in an
territories. manner and way in international environment
which business is to lead this activity.
A variety of factors, conducted.
including changes We continue to monitor
in a specific When entering a new the economic, political
country's political, country, we generally and regulatory environments
economic or regulatory do so on a small-scale where we operate.
requirements, test basis. This low
as well as the risk entry strategy
potential for minimises the likelihood
geographical turmoil of any significant
including terrorism loss. The Group is well
and war, could positioned to meet
result in the the challenges of
loss of service. Our businesses each the UK's exit from
operate in their own the European Union
Following the territories, buying and our growth prospects
UK's decision goods and services remain strong.
to leave the European from local businesses
Union there may and supplying local
be implications consumers within those
for how we operate territories, almost
with our overseas exclusively in local
businesses. currencies.
---------------------------- ------------------------------------------- ------------------------------
Our IT systems
become a constraint
to growth and
drive inefficiency The Group reviews We are replacing
instead of efficiency its systems and processes our core customer
improvements on a regular basis. IT system, the development
The Group's core As part of these reviews of which has progressed
IT system is used we look at the future well and is expected
in each of our plans of each of the to 'go-live' in the
businesses. The businesses in terms UK during FY18.
system is now of customer and policy
around 20 years growth, product and We have agreed plans
old and has had process design and to upgrade our claims
a number of 'in development requirements and deployment systems,
house' developments. and the potential enhancing the customer
The system is impact on IT systems. journey and improving
dependent on internal interactions with
development resource All system developments our network.
and knowledge. and enhancements undergo
a rigorous financial We have continued
review and the proposed to invest in other
benefits are monitored new technologies
and subject to post that will allow us
implementation reviews. to improve the products
and service we offer
Our IT developments our customers. These
are subject to a prioritisation have included an
process, which takes innovative leak detection
into account the availability device and initial
of both internal and funding of a platform-based
external resource home repairs and
and the proposed benefits improvement model.
of the project.
---------------------------- ------------------------------------------- ------------------------------
Information security
(including cyber
risk) We have a number of Following a detailed
In line with other defensive and proactive review of our information
businesses we practices across the policy, practices
are subject to Group to mitigate and procedures by
the increased this risk. a third party in
prevalence and We have a detailed FY16, we have now
sophistication information security engaged a Group Chief
of cyber-attacks policy, which is communicated Information Security
which could result across the Group and Officer to oversee
in unauthorised training is provided information security
access to customer as required. across the Group.
and other data We have a dedicated
that we hold or We continue to invest information security
cause business in IT security ensuring officer in each business
disruption to a secure configuration, and undertake regular
our services. access controls and reviews and penetration
This could result data centre security. testing at all of
in a loss of customers, our businesses. During
legal liability, the year, we continued
regulatory action to complete cyber
or harm to our audits as part of
reputation. our annual assurance
plan and will continue
to do so in FY18.
---------------------------- ------------------------------------------- ------------------------------
Risk Change since 2016
Description / Mitigation Annual Report
Impact
Financial strategy Interest rate risk
and treasury risk
The main financial Our policy is to manage During the year,
risks are the our interest cost we have obtained
availability of using a mix of fixed a four year EUR50m
short-term and and variable rate amortising term loan
long-term funding debts. Where necessary, repayable in 2020
to meet business this is achieved by and GBP60m of fixed
needs, the risk entering into interest rate medium-term
of policyholders rate swaps for certain funding repayable
not paying monies periods, in which in 2024. In addition,
owed, and fluctuations we agree to exchange, we have continued
in interest rates at specified intervals, to build relationships
and exchange rates. the difference between with a number of
fixed and variable financial institutions
Following the rate interest amounts that wish to provide
UK's decision calculated by reference debt finance to the
to leave the European to an agreed notional Group.
Union the Group principal amount.
could be subject These swaps are designated Following the increase
to higher exchange to economically hedge in the Group's leverage
rate fluctuations underlying debt obligations. we have continued
to monitor the need
to fix the interest
rate on some element
of our borrowings.
However, given the
relatively stable
interest rate environment,
combined with the
Credit risk fixed rate debt secured
The risk associated during the past two
with cash and cash years, we have not
equivalents is managed entered into any
by only depositing interest rate swaps
funds with reputable during FY17.
and creditworthy banking
institutions.
The risk of a policyholder Cash and cash equivalents
defaulting is mitigated continue to be deposited
as any policy cover with reputable and
will cease as and creditworthy banking
when any premium fails institutions.
to be paid.
There has been no
Liquidity risk significant change
We manage liquidity in the level of mid-term
risk by maintaining policy cancellations.
adequate reserves
and banking facilities
and continuously monitoring
forecast and actual
cash flows. Our banking facility
was renewed in July
2014. Our net debt
at 31 March 2017
was GBP261.4m, well
Foreign exchange risk within our committed
A clear treasury policy facilities and loans,
exists to address on which all conditions
short term risk and precedent have been
this works with the met.
natural hedging provided
by the geographical
spread of the businesses.
While this will protect
against some of the During the year,
transaction exposure, our adjusted operating
our reported results profit benefited
would still be impacted from the translation
by the translation benefit on Euro and
of our non-UK operations. USA Dollar profits
by GBP10.3m.
---------------------------- ------------------------------------------- ------------------------------
Viability statement
In accordance with provision C.2.2 of the UK Corporate Governance Code 2014, the Directors have assessed the viability of the Group over a three year period to 31 March 2020. The Directors believe that a three year forward looking period is appropriate as it is aligned to the timeframe that management focus upon, the performance period in respect of the long-term incentive scheme for senior management and it is the period of assessment for recoverable values of cash generating units.
The Group has a formalised process of budgeting, reporting and review along with procedures to forecast its profitability, capital position, funding requirement and cash flows. These plans provide information to the Directors which are used to ensure the adequacy of resources available for the Group to meet its business objectives, both on a short-term and strategic basis. The plans for the period commencing on 1 April 2017 were reviewed by the Executive Committee in February and then approved by the Board in March 2017.
In making this statement, the Board carried out a robust assessment of the principal risks facing the Group, including those that would threaten its business model, future performance, solvency or liquidity as set out in the Principal Risks and Uncertainties. The Group has an embedded risk management framework and all major risks are scored based on their significance and likelihood and these are reviewed regularly by the Audit & Risk Committee.
Various stress tests have also been performed on scenarios such as the impact of losing an affinity partnership or a lowering of retention in a given country.
The Directors' assessment has been made with reference to geographical spread of the Group operations and its strong financial position resulting from a combination of commercial partnerships and high customer retention.
The business is geographically spread across the UK, Continental Europe and North America; in each established territory, the business has long-term contractual relationships with utility businesses providing access to in excess of 102m households under Affinity Partner brands. Retention rates are high across all established businesses, resulting in stable and recurring cash flows from a large, diverse customer base.
Considering the Group's current position, the principal risks and the Board's assessment of the Group's future, the Directors have a reasonable expectation that the Group will be able to continue in operation and meet its liabilities as they fall due over a period of at least three years to 31 March 2020.
Going concern
The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the strategic report.
The Directors have reviewed the Group's budget, forecast and cash flows for 2018 and beyond, and concluded that they are in line with their expectations with regards to the Group's strategy and future growth plans. In addition, the Directors have reviewed the Group's position in respect of material uncertainties and have concluded that there are no items that would affect going concern or that should be separately disclosed.
The Directors have concluded that they have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the financial statements.
David Bower
Chief Financial Officer
23 May 2017
Group Income Statement
Year ended 31 March 2017
2017 2016
Notes GBPm GBPm
------------------------------------ ------ -------- --------
Continuing operations
Revenue 3 785.0 633.2
Operating costs (680.5) (546.3)
Share of results of associates 12 0.2 -
Operating profit 104.7 86.9
Investment income 0.3 0.3
Finance costs (6.7) (4.6)
Profit before tax and amortisation
of acquisition intangibles 112.4 93.0
Amortisation of acquisition
intangibles (14.1) (10.4)
Profit before tax 98.3 82.6
Tax 4 (23.9) (21.0)
------------------------------------ ------ -------- --------
Profit for the year 74.4 61.6
------------------------------------ ------ -------- --------
Attributable to:
Equity holders of the parent 74.4 61.6
Non-controlling interests - -
------------------------------------ ------ -------- --------
74.4 61.6
------------------------------------ ------ -------- --------
Dividends per share, paid
and proposed 5 15.3p 12.7p
Earnings per share
Basic 6 24.0p 19.6p
Diluted 6 23.6p 19.3p
------------------------------------ ------ -------- --------
Group Statement of Comprehensive Income
Year ended 31 March 2017
2017 2016
GBPm GBPm
--------------------------------------------- ------ --------
Profit for the year 74.4 61.6
Items that will not be classified
subsequently to profit and loss:
Actuarial (loss)/gain on defined
benefit pension scheme (3.4) 0.5
Deferred tax credit/(charge) relating
to components of other
comprehensive income 0.6 (0.1)
--------------------------------------------- ------ --------
(2.8) 0.4
Items that may be reclassified subsequently
to profit and loss:
Exchange movements on translation
of foreign operations 20.8 14.8
Gain on revaluation of available
for sale investments - 2.5
Deferred tax charge relating to
revaluation of available for sale
investments - (0.7)
--------------------------------------------- ------ --------
20.8 16.6
Total comprehensive income for the
year 92.4 78.6
--------------------------------------------- ------ --------
Attributable to:
Equity holders of the parent 92.4 78.6
Non-controlling interests - -
--------------------------------------------- ------ --------
92.4 78.6
--------------------------------------------- ------ --------
Group Balance Sheet
31 March 2017
2017 2016
Notes GBPm GBPm
---------------------------------- ------ -------- --------
Non-current assets
Goodwill 301.9 247.7
Other intangible assets 7 288.6 210.0
Property, plant and equipment 37.0 34.9
Interests in associates 12 32.1 -
Investments 8.5 7.8
Deferred tax assets 7.6 6.8
Retirement benefit assets 0.7 2.1
---------------------------------- ------ -------- --------
676.4 509.3
---------------------------------- ------ -------- --------
Current assets
Inventories 2.7 2.9
Trade and other receivables 455.1 367.7
Cash and cash equivalents 8 46.2 54.2
---------------------------------- ------ -------- --------
504.0 424.8
---------------------------------- ------ -------- --------
Total assets 1,180.4 934.1
---------------------------------- ------ -------- --------
Current liabilities
Trade and other payables (456.2) (360.7)
Current tax liabilities (9.2) (7.0)
Obligations under finance leases 8 (0.6) (0.9)
Bank and other loans 8 (35.9) (25.0)
(501.9) (393.6)
---------------------------------- ------ -------- --------
Net current assets 2.1 31.2
---------------------------------- ------ -------- --------
Non-current liabilities
Bank and other loans 8 (270.1) (196.5)
Other financial liabilities (14.4) (5.6)
Deferred tax liabilities (23.0) (20.5)
Obligations under finance leases 8 (1.0) (1.3)
---------------------------------- ------ -------- --------
(308.5) (223.9)
---------------------------------- ------ -------- --------
Total liabilities (810.4) (617.5)
---------------------------------- ------ -------- --------
Net assets 370.0 316.6
---------------------------------- ------ -------- --------
Equity
Share capital 9 8.4 8.3
Share premium account 45.7 41.1
Merger reserve 71.0 71.0
Own shares reserve - (0.1)
Share incentive reserve 18.3 16.0
Capital redemption reserve 1.2 1.2
Currency translation reserve 26.3 5.5
Available for sale reserve 1.8 1.8
Retained earnings 196.5 171.8
---------------------------------- ------ -------- --------
Attributable to equity holders
of the parent 369.2 316.6
---------------------------------- ------ -------- --------
Non-controlling interests 0.8 -
---------------------------------- ------ -------- --------
Total Equity 370.0 316.6
---------------------------------- ------ -------- --------
Group Statement of Changes in Equity
Year ended 31 March 2017
Available Attributable
Share Share Currency for to Non
Share premium Other incentive translation sale Retained equity controlling Total
capital account reserves reserve reserve reserve earnings holders interest Equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
----------------- -------- -------- --------- ---------- ------------ ---------- --------- ------------- ------------ -------
At 1 April
2016 8.3 41.1 72.1 16.0 5.5 1.8 171.8 316.6 - 316.6
Profit for
the year - - - - - - 74.4 74.4 - 74.4
Other
comprehensive
income for
the year - - - - 20.8 - (2.8) 18.0 - 18.0
Dividends
paid - - - - - - (40.3) (40.3) - (40.3)
Issue of
share capital 0.1 4.6 - - - - - 4.7 - 4.7
Issue of
trust shares - - 0.1 - - - (0.1) - - -
Share based
payments - - - 6.6 - - - 6.6 - 6.6
Share options
exercised - - - (4.3) - - 0.4 (3.9) - (3.9)
Changes
in
non-controlling
interest - - - - - - - - 0.8 0.8
Obligation
under put
option - - - - - - (9.3) (9.3) - (9.3)
Tax on exercised
share options - - - - - - 2.0 2.0 - 2.0
Deferred
tax on share
options - - - - - - 0.4 0.4 - 0.4
----------------- -------- -------- --------- ---------- ------------ ---------- --------- ------------- ------------ -------
At 31 March
2017 8.4 45.7 72.2 18.3 26.3 1.8 196.5 369.2 0.8 370.0
----------------- -------- -------- --------- ---------- ------------ ---------- --------- ------------- ------------ -------
Year ended 31 March 2016
Available Attributable Non
Share Share Currency for to controlling
Share premium Other incentive translation sale Retained equity interest Total
capital account reserves reserve reserve reserve earnings holders GBPm equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------- --------- --------- --------- ----------- ------------- ----------- --------- -------------- ------------- --------
Balance at
1 April 2015 8.3 40.5 61.1 15.7 (9.3) - 252.2 368.5 - 368.5
Profit for
the year - - - - - - 61.6 61.6 - 61.6
Other
comprehensive
income for
the year - - - - 14.8 1.8 0.4 17.0 - 17.0
Dividends
paid - - - - - - (137.0) (137.0) - (137.0)
Issue of share
capital - 0.6 - - - - - 0.6 - 0.6
Issue of trust
shares - - 11.0 - - - (9.8) 1.2 - 1.2
Share-based
payments - - - 2.6 - - - 2.6 - 2.6
Share options
exercised - - - (2.3) - - 2.3 - - -
Tax on
exercised
share options - - - - - - 2.3 2.3 - 2.3
Deferred tax
on share
options - - - - - - (0.2) (0.2) - (0.2)
Balance at
31 March 2016 8.3 41.1 72.1 16.0 5.5 1.8 171.8 316.6 - 316.6
--------------- --------- --------- --------- ----------- ------------- ----------- --------- -------------- ------------- --------
Other reserves comprise the Merger, Own shares and Capital redemption reserves that were shown separately in the Statement of Changes in Equity in last year's Annual Report. Full details of these reserves are included in Notes 27, 28 and 30 of the Annual Report and Accounts 2017.
Group Cash Flow Statement
Year ended 31 March 2017
2017 2016
Notes GBPm GBPm
------------------------------------ ------ -------- --------
Operating profit 104.7 86.9
Adjustments for:
Depreciation of property,
plant and equipment 6.9 5.4
Amortisation of intangible
assets 42.6 30.4
Share-based payments expense 7.4 5.1
Share of profit of associates (0.2) -
Loss on disposal of property, 0.4 -
plant, equipment and software
Bargain purchase on acquisition (0.7) -
Profit on disposal of subsidiary (0.1) -
------------------------------------ ------ -------- --------
Operating cash flows before
movements in working capital 161.0 127.8
Decrease/(increase) in inventories 0.4 (1.7)
Increase in receivables (75.5) (25.1)
Increase in payables 54.0 20.7
Net movement in working capital (21.1) (6.1)
Cash generated by operations 139.9 121.7
Income taxes paid (20.0) (17.3)
Interest paid (6.7) (3.3)
------------------------------------ ------ -------- --------
Net cash inflow from operating
activities 113.2 101.1
------------------------------------ ------ -------- --------
Investing activities
Interest received 0.3 0.3
Proceeds on disposal of property,
plant and equipment - 0.2
Disposal of subsidiary (1.7) -
Purchases of intangible assets (50.9) (56.8)
Purchases of property, plant
and equipment (7.6) (7.1)
Acquisition of investment
in associate 12 (24.7) -
Acquisition of available for
sale investments - (0.5)
Net cash outflow on acquisition
of subsidiaries 11 (74.2) (5.3)
Net cash used in investing
activities (158.8) (69.2)
------------------------------------ ------ -------- --------
Financing activities
Dividends paid 5 (40.3) (137.0)
Repayment of finance leases (1.0) (0.5)
Issue of shares from the employee
benefit trust 0.1 1.2
Proceeds on issue of share
capital 0.8 0.6
New bank and other loans raised 103.3 75.0
Movement in bank and other
loans (29.8) 7.7
------------------------------------ ------ -------- --------
Net cash generated by /(used
in) financing activities 33.1 (53.0)
------------------------------------ ------ -------- --------
Net decrease in cash and cash
equivalents (12.5) (21.1)
------------------------------------ ------ -------- --------
Cash and cash equivalents
at beginning of year 54.2 74.7
Effect of foreign exchange
rate changes 4.5 0.6
------------------------------------ ------ -------- --------
Cash and cash equivalents
at end of year 46.2 54.2
------------------------------------ ------ -------- --------
Notes to the condensed set of financial statements
1. Basis of preparation
While the financial information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRSs) adopted for use by the European Union and with those parts of the Companies Act 2006 applicable to companies reporting under IFRSs, this announcement does not itself contain sufficient information to comply with IFRSs. The Company will publish full financial statements that comply with IFRSs in June 2017.
The financial information set out above does not constitute the Group's statutory financial statements for the years ended 31 March 2017 or 31 March 2016, but is derived from those financial statements. Statutory financial statements for FY16 prepared under IFRSs have been delivered to the Registrar of Companies and those for FY17 will be delivered following the Company's Annual General Meeting. The auditor, Deloitte LLP, has reported on those financial statements; its reports were unqualified, did not draw attention to any matters by way of emphasis and did not contain statements under s498 (2) or (3) Companies Act 2006. These financial statements were approved by the Board of Directors on 23 May 2017.
2. Accounting policies
The same accounting policies, presentation and methods of computation are followed in the condensed set of financial statements as applied in the Group's 31 March 2016 audited financial statements, except as described below.
Adoption of new or revised standards and accounting policies
The following accounting standards have been adopted in the year:
Amendments to IFRS10, IFRS12
and IAS28 Investment Entities - Applying the Consolidation Exception
Amendments to IAS1 Disclosure Initiative
None of the accounting standards listed above have had any material impact on the amounts reported in this consolidated, condensed set of financial statements.
Standards in issue but not yet effective
At the date of authorisation of these financial statements the following Standards and Interpretations, which have not been applied in these financial statements, were in issue but not yet effective (not all of which have been endorsed by the EU):
IFRS9 Financial Instruments IFRS14 Regulatory Deferral Accounts IFRS15 Revenue from Contracts with Customers IFRS16 Leases Amendments to IFRS2 Classification and Measurement of Share-based payment Transactions
Amendments to IFRS4 Applying IFRS9 Financial Instruments with IFRS4 Insurance Contracts
Amendments to IAS12 Recognition of Deferred Tax Assets for Unrealised Losses Amendments to IAS7 Disclosure Initiative Amendments to IAS40 Transfers of Investment Property Improvements to IFRS 2014-2016 Cycle IFRIC Interpretation 22 Foreign Currency Transactions and Advance Consideration 2. Accounting policies (continued)
Standards in issue but not yet effective (continued)
The implementation of IFRS9 may impact both the measurement and disclosures of financial instruments. The implementation of IFRS15 may have an impact on revenue recognition and related disclosures. IFRS16 will impact both the measurement and disclosures of leases. Beyond the information above, it is not practicable to provide a reasonable estimate of the effect of IFRS9, IFRS15 and IFRS16 until a detailed review has been performed. We have established a review team and are assessing the impact in all of our businesses and expect this to be completed in the coming year. The Directors do not expect that the adoption of the other Standards and Interpretations listed above will have a material impact on the financial statements of the Group in future years.
3. Segmental analysis
IFRS8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision maker, who is considered to be the Chief Executive, to allocate resources to the segments and to assess their performance.
Segment profit/(loss) represents the result of each segment including allocating costs associated with head office and shared functions, but before allocating investment income, finance costs, and tax. This is the measure reported to the Chief Executive for the purposes of resource allocation and assessment of segment performance.
The accounting policies of the operating segments are the same as those described in Significant Accounting Policies. Group cost allocations are deducted in arriving at segmental operating profit. Inter-segment revenue is charged at prevailing market prices.
During the year the USA segment has been renamed "North America" reflecting the increased presence that the Group has in Canada, which is managed and considered together with our business in the United States of America. Other than the change in name of the USA segment, no other changes have been made to the operating segments.
North New
UK America France Spain Markets Total
2017 GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------ ------ --------- ------- ------ --------- -------
Revenue
Total revenue 326.5 227.8 91.1 130.2 16.6 792.2
Inter-segment (7.2) - - - - (7.2)
External revenue 319.3 227.8 91.1 130.2 16.6 785.0
------------------------------ ------ --------- ------- ------ --------- -------
Result
Segment operating
profit/(loss) pre
amortisation of acquisition
intangibles 63.2 21.2 27.1 13.3 (6.0) 118.8
Amortisation of acquisition
intangibles (1.2) (6.5) (6.0) (0.3) (0.1) (14.1)
Operating profit/(loss) 62.0 14.7 21.1 13.0 (6.1) 104.7
------------------------------ ------ --------- ------- ------ --------- -------
Investment income 0.3
Finance costs (6.7)
Profit before tax 98.3
Tax (23.9)
------------------------------ ------ --------- ------- ------ --------- -------
Profit for the year 74.4
------------------------------ ------ --------- ------- ------ --------- -------
3. Segmental analysis (continued)
North New
UK America France Spain Markets Total
2016 GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------ ------- --------- ------- ------ --------- -------
Revenue
Total revenue 291.8 152.6 77.4 97.5 20.1 639.4
Inter-segment (5.8) - - - (0.4) (6.2)
External revenue 286.0 152.6 77.4 97.5 19.7 633.2
------------------------------ ------- --------- ------- ------ --------- -------
Result
Segment operating
profit/(loss) pre
amortisation of acquisition
intangibles 58.0 12.1 23.2 9.9 (5.9) 97.3
Amortisation of acquisition
intangibles (0.6) (4.3) (5.2) (0.3) - (10.4)
Operating profit/(loss) 57.4 7.8 18.0 9.6 (5.9) 86.9
------------------------------ ------- --------- ------- ------ --------- -------
Investment income 0.3
Finance costs (4.6)
Profit before tax 82.6
Tax (21.0)
------------------------------ ------- --------- ------- ------ --------- -------
Profit for the year 61.6
------------------------------ ------- --------- ------- ------ --------- -------
Depreciation,
Capital Amortisation,
Assets Liabilities Additions Impairment
2017 2016 2017 2016 2017 2016 2017 2016
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------- -------- -------- -------- --------- ------ ----- --------------- -----
UK 817.8 719.4 472.5 365.5 36.1 34.1 16.1 12.0
North America 279.8 160.6 317.2 256.7 11.7 10.2 13.1 8.5
France 208.8 194.3 153.4 130.5 3.9 5.4 7.8 6.3
Spain 137.0 110.2 108.2 90.3 17.5 13.8 12.3 8.6
New Markets 15.6 17.8 37.7 42.7 0.2 1.7 0.2 0.4
Inter-segment (278.6) (268.2) (278.6) (268.2) - - - -
--------------- -------- -------- -------- --------- ------ ----- --------------- -----
Total 1,180.4 934.1 810.4 617.5 69.4 65.2 49.5 35.8
--------------- -------- -------- -------- --------- ------ ----- --------------- -----
All assets and liabilities including inter-segment loans and trading balances are allocated to reportable segments.
4. Tax
2017 2016
GBPm GBPm
------------------------ ------ ------
Current tax
Current year 23.6 20.1
Adjustments in respect
of prior years 1.3 (0.4)
Total current
tax charge 24.9 19.7
-------------------------- ------ ------
Deferred tax (1.0) 1.3
Total tax charge 23.9 21.0
------------------------- ------ ------
4. Tax (continued)
UK corporation tax is calculated at 20% (FY16: 20%) of the estimated assessable profit for the year. Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions, these being 40% in the USA (FY16: 40%), 33% in France (FY16: 33%), 25% in Spain (FY16: 27%) and 28% in Italy (FY16: 28%), which explains the 'Overseas tax rate differences' below.
The charge for the year can be reconciled to the profit per the income statement as follows:
2017 2016
GBPm GBPm
--------------------------------------- ------ ------
Profit before tax on continuing
operations 98.3 82.6
------------------------------------------ ------ ------
Tax at the UK corporation tax rate
of 20% 19.7 16.5
Tax effect of items that are not
(taxable)/deductible in determining
taxable profit (0.2) 2.3
Adjustments in respect of prior years
- current tax 1.3 (0.4)
Overseas tax rate
differences 2.7 2.4
Movement in deferred tax
liability 0.4 0.1
Effect of overseas
losses - 0.1
Tax expense for the
year 23.9 21.0
----------------------------------------- ------ ------
Given the UK parented nature of the Group, the majority of financing that the overseas businesses require is provided from the UK, and as such the UK has provided a number of intra-group loans to its overseas operations in order to fund their growth plans. In light of the different tax rates applicable in each of the markets in which the Group operates, as noted above, these loans result in a reduction in the Group's effective tax rate, which is included in 'Overseas tax rate differences' in the table above.
A retirement benefit tax credit amounting to GBP0.6m (FY16: GBP0.1m charge) has been recognised directly in other comprehensive income. In addition to the amounts credited/(charged) to the income statement and other comprehensive income, the following amounts relating to tax have been recognised directly in equity:
2017 2016
GBPm GBPm
------------------------------------------- ----- ------
Current tax
Excess tax deductions related to
share-based payments on exercised
options 2.0 2.3
Deferred
tax
Change in estimated excess tax deductions
related to share-based payments 0.4 (0.2)
Total tax recognised
directly in equity 2.4 2.1
---------------------------------------------- ----- ------
5. Dividends
2017 2016
GBPm GBPm
----------------------------------------- ----- ------
Amounts recognised as distributions
to equity holders in the year:
Special dividend of 30p per share paid
in July 2015 - 99.4
Final dividend for the year ended 31
March 2016 of 8.9p (2015: 7.87p) per
share 27.6 25.9
Interim dividend for the year ended
31 March 2017 of 4.1p (2016: 3.8p) per
share 12.7 11.7
40.3 137.0
----------------------------------------- ----- ------
The proposed final dividend for the year ended 31 March 2017 is 11.2p per share amounting to GBP34.8m (FY16: 8.9p per share amounting to GBP27.6m). The proposed final dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these financial statements.
6. Earnings per share
Basic and diluted earnings per ordinary share have been calculated in accordance with IAS33 Earnings Per Share. Basic earnings per share is calculated by dividing the profit or loss in the financial year by the weighted average number of ordinary shares in issue during the period. Adjusted earnings per share is calculated excluding amortisation of acquisition intangibles. The Group uses adjusted operating profit, EBITDA, adjusted profit before tax and adjusted earnings per share as its primary performance measures. These are non-IFRS measures which exclude the impact of the amortisation of acquisition intangible assets (FY17: GBP14.1m, FY16: GBP10.4m). Acquisition intangible assets principally arise as a result of the past actions of the former owners of businesses in respect of marketing and business development activity. Therefore, the adjusted measures reflect the post acquisition revenue attributable to, and operating costs incurred by, the Group. Diluted earnings per share includes the impact of dilutive share options in
issue throughout the period.
2017 2016
pence pence
------------------ ------ ------
Basic 24.0 19.6
Diluted 23.6 19.3
------------------ ------ ------
Adjusted basic 27.0 21.8
Adjusted diluted 26.5 21.4
------------------ ------ ------
The calculation of the basic and diluted earnings per share is based on the following data:
Number of shares 2017 2016
m m
----------------------------------- ------ ------
Weighted average number of shares
Basic 309.9 313.9
Dilutive impact of share options 5.4 6.1
Diluted 315.3 320.0
----------------------------------- ------ ------
Earnings 2017 2016
GBPm GBPm
----------------------------------------- ------ ------
Profit for the year 74.4 61.6
Amortisation of acquisition intangibles 14.1 10.4
Tax impact arising on amortisation
of acquisition intangibles (4.9) (3.6)
----------------------------------------- ------ ------
Adjusted profit for the year 83.6 68.4
----------------------------------------- ------ ------
7. Other intangible assets
Acquisition intangibles represent non-monetary assets, arising on business combinations, and include acquired access rights and acquired customer databases. Other intangibles include trademarks, access rights, customer databases and software.
Acquired Acquired Total Trademarks
access customer acquisition & access Customer Total
rights databases intangibles rights databases Software intangibles
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Cost
At 1 April 2015 25.5 102.0 127.5 30.2 35.6 90.6 283.9
Additions - 1.0 1.0 1.3 15.3 38.9 56.5
Acquisition of a subsidiary - 9.2 9.2 - - - 9.2
Disposals - - - (0.3) - (4.9) (5.2)
Exchange movements 1.7 6.6 8.3 0.4 4.1 1.1 13.9
At 1 April 2016 27.2 118.8 146.0 31.6 55.0 125.7 358.3
Additions - - - 0.3 16.7 44.4 61.4
Acquisition of subsidiaries 16.3 28.0 44.3 - - 1.3 45.6
Disposals - - - - - (0.2) (0.2)
Exchange movements 4.0 12.3 16.3 1.3 4.9 3.2 25.7
At 31 March 2017 47.5 159.1 206.6 33.2 76.6 174.4 490.8
Accumulated amortisation and impairment
At 1 April 2015 15.1 41.5 56.6 15.2 9.4 36.2 117.4
Charge for the year 2.4 8.0 10.4 4.4 7.6 8.0 30.4
Disposals - - - (0.3) - (4.9) (5.2)
Exchange movements 1.1 2.6 3.7 0.2 1.3 0.5 5.7
At 1 April 2016 18.6 52.1 70.7 19.5 18.3 39.8 148.3
Charge for the year 2.8 11.3 14.1 4.5 11.6 12.4 42.6
Disposals - - - - - (0.2) (0.2)
Exchange movements 2.1 5.7 7.8 0.6 1.9 1.2 11.5
At 31 March 2017 23.5 69.1 92.6 24.6 31.8 53.2 202.2
Carrying amount
At 31 March 2017 24.0 90.0 114.0 8.6 44.8 121.2 288.6
At 31 March 2016 8.6 66.7 75.3 12.1 36.7 85.9 210.0
8. Analysis of net debt
2017 2016
GBPm GBPm
---------------------------------- ------- -------
Cash and cash equivalents (46.2) (54.2)
Bank and other loans due within
1 year 35.9 25.0
Bank and other loans due after 1
year 270.1 196.5
Obligations under finance leases 1.6 2.2
Net debt 261.4 169.5
---------------------------------- ------- -------
9. Share capital
2017 2016
GBPm GBPm
----------------------------------- ----- -----
Issued and fully paid 310,689,548
ordinary shares of 2 9/13p each
(FY16:307,892,426) 8.4 8.3
----------------------------------- ----- -----
The Company has one class of ordinary shares which carry no right to fixed income. Share capital represents consideration received or amounts, based on fair value, allocated to LTIP and One Plan participants on exercise. The nominal value was 2 9/13p per share on all issued and fully paid shares.
During the period from 1 April 2016 to 31 March 2017 the Company issued 2,797,122 shares with a nominal value of 2 9/13p creating share capital of GBP75,307 and share premium of GBP4,696,129.
During the period from 1 April 2015 to 20 July 2015 the Company issued 90,856 shares with a nominal value of 2.5p creating share capital of GBP2,271 and share premium of GBP166,370. Following payment of a special dividend in July 2015, the Company completed a share consolidation of existing ordinary shares on the basis of 13 new ordinary shares for every 14 existing ordinary shares.
During the period from 21 July 2015 to 31 March 2016 the Company issued 219,592 shares with a nominal value of 2 9/13p creating share capital of GBP5,912 and share premium of GBP436,918.
10. Related party transactions
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note. Related party transactions during FY17 were similar in nature to those in FY16 and amounted to GBP0.5m (FY16: GBP0.4m). Full details of the Group's related party transactions are included in the Annual Report and Accounts 2017.
11. Business combinations and disposals
The Group has incurred a net cash outflow in respect of business combinations of GBP74.2m in the year (FY16: GBP5.3m).
There were three material acquisitions in the year ended 31 March 2017.
On 1 July 2016 Homeserve USA Corp, a Group company, acquired 100% of the issued share capital and obtained control of Utility Service Partners Inc (USP). USP is a leading provider of home assistance services. Like our existing business, USP operates an affinity partner model and is the exclusive home warranty partner of the National League of Cities (NLC), an organisation that advocates to around 19,000 towns and cities, covering 66m municipal households in the USA.
On 1 December 2016 HomeServe Membership Limited, a Group company, purchased npower's 'domestic care and maintenance' contracts business. The acquisition included 76 heating engineers.
On 27 January 2017 HomeServe International Limited, a Group company, acquired 70% of the issued share capital and obtained control of Habitissimo S.L., a specialist online lead generation business operating across Southern Europe and South America.
11. Business combinations and disposals (continued)
The recognised amounts of identifiable assets acquired and liabilities assumed are set out in the table below:
npower
USP services Habitissimo TOTAL
At fair value GBPm GBPm GBPm GBPm
Property, plant and
equipment 0.3 - 0.1 0.4
Intangible assets 0.1 - 1.2 1.3
Deferred tax assets 11.4 - 0.2 11.6
Cash and cash equivalents 5.8 - 0.8 6.6
Trade and other receivables 1.8 0.7 0.1 2.6
Trade and other payables (12.9) (0.3) (1.1) (14.3)
Other loans - - (0.4) (0.4)
Intangible assets identified
on acquisition 34.8 7.0 2.4 44.2
Deferred tax on acquisition
intangibles (13.6) (1.4) (0.6) (15.6)
------------------------------- ------- ---------- ------------ -------
Total identifiable net
assets 27.7 6.0 2.7 36.4
Less non-controlling
interests - - (0.8) (0.8)
Net assets acquired 27.7 6.0 1.9 35.6
Bargain purchase - (0.7) - (0.7)
Goodwill 33.2 - 10.9 44.1
------------------------------- ------- ---------- ------------ -------
Total consideration 60.9 5.3 12.8 79.0
------------------------------- ------- ---------- ------------ -------
Satisfied by:
Cash 60.3 5.3 12.8 78.4
Deferred consideration 0.6 - - 0.6
60.9 5.3 12.8 79.0
------------------------------ ------- ---------- ------------ -------
Net cash outflow arising
on acquisition:
Cash consideration 60.3 5.3 12.8 78.4
Less: cash and cash
equivalent balances
acquired (5.8) - (0.8) (6.6)
------------------------------- ------- ---------- ------------ -------
54.5 5.3 12.0 71.8
------------------------------ ------- ---------- ------------ -------
The goodwill arising on the excess of consideration over the fair value of the assets and liabilities acquired represents the expectation of synergy savings and efficiencies. None of the goodwill is expected to be deducted for tax purposes. The gross contracted amounts due are equal to the fair value amounts stated above for trade and other receivables.
The provisional fair values for USP Inc disclosed as part of the Group's interim results in November 2016 have been updated, resulting in a reduction to goodwill of GBP0.5m.
The post-acquisition revenue, operating profit and acquisition-related costs (included in administrative expenses) from these acquisitions in the year ended 31 March 2017 was as follows:
npower
USP services Habitissimo Total
GBPm GBPm GBPm GBPm
--------------------------- ------ ---------- ------------ ------
Revenue 21.1 2.0 1.8 24.9
Operating profit / (loss) (0.7) 1.4 (0.2) 0.5
Acquisition-related
costs 0.4 0.2 0.3 0.9
---------------------------- ------ ---------- ------------ ------
If all of the acquisitions had been completed on the first day of the financial year, Group revenues for the period would have been GBP802.0m and Group profit before taxation would have been GBP100.1m.
11. Business combinations and disposals (continued)
In addition to the net cash outflow on the acquisitions above of GBP71.8m, deferred consideration was paid relating to prior year business combinations of GBP3.1m (FY16 GBP1.1m) and net cash was acquired as part of an immaterial acquisition in Spain of GBP0.7m.
Through a call option the Group has the means to acquire the remaining 30% of the shares in Habitissimo S.L. which can be exercised in either 2020 or 2021. In addition, the non-controlling shareholders have a put option requiring the Group to acquire the remaining 30% of their shareholding. There is no market value defined in the shareholder agreement but a floor of EUR6.4m, based on the current price of the remaining 30%, and a cap of EUR30m. The fair market value of the company will be mutually agreed by HomeServe and the founders at the point at which the options become exercisable.
The potential cash payment relating to the put option issued by the Group over the equity of Habitissimo S.L. has been accounted for as a financial liability. This has been recognised at the present value of the expected gross obligation of GBP9.3m with the corresponding entry being recognised in retained earnings. The option will be subsequently measured at amortised cost, using the effective interest rate method, in order to accrete the liability up to the amount payable under the option at the date at which it first becomes exercisable.
Disposal of a subsidiary
On 9 March 2017 the Group disposed of 51% of its 100% interest in Assistenza Casa Srl, the fair value of the consideration was GBP6.8m, of which GBP4.4m was received during the year. The Group realised a net profit on disposal as a result of this transaction of GBP0.1m.The net assets of the Group's interest in the business at the date of disposal were as follows:
At fair value GBPm
----------------------------------------- -------
Non current assets 0.1
Cash and cash equivalents 6.1
Trade and other receivables 19.2
Current liabilities (13.4)
------------------------------------------ -------
Total identifiable net assets 12.0
Release of currency revaluation reserve (0.4)
Gain on disposal (0.1)
------------------------------------------ -------
Total consideration 11.5
------------------------------------------ -------
Satisfied by:
Cash 4.4
Deferred consideration 2.4
Interest in associate 4.7
------------------------------------------ -------
11.5
----------------------------------------- -------
Net cash outflow arising on disposal
Consideration received in cash and
cash equivalents 4.4
Less: cash and cash equivalent balances
disposed (6.1)
------------------------------------------ -------
(1.7)
----------------------------------------- -------
12. Interests in associates
On 13 December 2016 the Group acquired a 40% stake in Sherrington Mews Limited, the holding company of the Checkatrade Group, for cash consideration of GBP24.0m. There is further contingent consideration of GBP4.0m that is payable subject to financial performance conditions being met by the business, the present value of which is GBP2.7m. Legal costs of GBP0.7m associated with the transaction were added to the cost of the investment.
As stated in Note 11, on 9 March 2017 the Group disposed of 51% of Assistenza Casa Srl, a wholly owned Group company. The remaining 49% has been accounted for as an associate using the equity method. The Group realised a gain of GBP0.1m as a result of this transaction.
The following amounts relate to the results of associates:
Sherrington Assistenza
Mews Limited Casa Total
GBPm Srl GBPm
GBPm
----------------------------------- -------------- ----------- --------
Current assets 9.4 21.4 30.8
Non-current assets 2.2 4.2 6.4
Current liabilities (13.6) (15.4) (29.0)
Non-current liabilities (0.7) - (0.7)
----------------------------------- -------------- ----------- --------
Equity attributable to owners
of the company (2.7) 10.2 7.5
Controlling interest 1.6 (5.5) (3.9)
----------------------------------- -------------- ----------- --------
Proportion of the Group's
ownership interest in the
associates (1.1) 4.7 3.6
----------------------------------- -------------- ----------- --------
Summary Income Statement
Revenue 4.7 1.2 5.9
Profit after tax - 0.4 0.4
----------------------------------- -------------- ----------- --------
Amounts recognisable - 0.2 0.2
----------------------------------- -------------- ----------- --------
Reconciliation of the above summarised financial
information to the carrying amount of the interest
in associates recognised in the consolidated financial
statements:
Sherrington Assistenza
Mews Limited Casa Total
GBPm Srl GBPm
GBPm
----------------------------------- -------------- ----------- --------
Proportion of the Group's
ownership interest in associates (1.1) 4.7 3.6
Intangible asset 3.4 - 3.4
Deferred tax (0.6) - (0.6)
Goodwill 25.7 - 25.7
----------------------------------- -------------- ----------- --------
Carrying amount of the Group's
interest in associates 27.4 4.7 32.1
----------------------------------- -------------- ----------- --------
Through a call option the Group has the means to acquire a further 35% of the shares in Sherrington Mews Limited at a valuation which is the higher of a) the pro-rata of the amount payable for the initial 40% investment and b) 10 times adjusted EBITDA for the year ending 31 March 2019 multiplied by 35%, subject to a cap of GBP35m. In accordance with IAS39 the valuation of this call option has been considered and it is not deemed to have any material value at 31 March 2017 as it would not currently allow the Group to acquire an additional stake at less than market value.
In addition, the current controlling shareholders of Sherrington Mews Limited have a put option requiring the Group to acquire a further 35% of their shareholdings at the same price as that determined above in respect of the call option, though subject to additional financial performance conditions also being met by the business. Again, the valuation of this put option has been considered in accordance with IAS39 and it is not deemed to have any material value at 31 March 2017.
13. Events after the balance sheet date
There were no post balance sheet events between the balance sheet date and the signing of the financial statements.
14. Other information
The Annual Report and Accounts for the year ended 31 March 2017 was approved by the Board on 23 May 2017 and will be made available on the Company's website and posted to those shareholders who have requested it in June 2017. Copies will be available from the registered office at Cable Drive, Walsall, WS2 7BN.
Forward Looking Statements
This report 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 upon 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 announcement should be construed as a profit forecast.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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May 23, 2017 02:00 ET (06:00 GMT)
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