HomeServe : announces its interim results for the period ended 30 September 2017

Continued momentum in all businesses with outstanding performance in North America

• Growth in customer numbers in all established regions, supported by a Group retention rate of 82% (HY17: 82%) and a global focus on customer satisfaction

• Solid operational performance and customer service metrics in the UK, with second half weighting of profit increasing as expected: full year growth prospects remain unchanged

• Strong momentum in North America, to be supplemented by HomeServe's largest ever policy book acquisition announced 19 October 2017

• Continued profit growth in France and Spain

• Further progress on defining and testing the Home Experts model to deliver an on-demand home improvements platform

• Net debt of £304m, 1.9x last twelve months EBITDA at 30 September 2017 (HY17: £252.9m, 1.9x)

• Balance sheet strength retained with £125m equity placing on 19 October 2017

• Interim dividend up 15% to 4.7p

• Continued expectation of further strong growth in FY18.

• Announcement today that HomeServe has acquired the remaining 60% of Checkatrade for £54m in cash and shares, taking its total shareholding to 100%

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foothold in the attractive boiler installations market. France and Spain developed key partner relationships and we continued to explore other partnership-based opportunities for international expansion.

"I am excited by the potential for HomeServe to become a global online home repairs and improvements platform, delivered via Checkatrade and Habitissimo where we already have a majority holding. Today's announcement that we are buying the remaining 60% of Checkatrade brings the realisation of this vision substantially closer. Checkatrade is the market leader in the UK, and delivers a first class customer experience. In our core home assistance business and with an even bigger opportunity in Home Experts, the prospects for growth at HomeServe have never been so strong."

1. The HY18 Trading Update made on 19 October 2017 (the "Trading Update") presented results that were subject to further internal and external review and were rounded to the nearest million with year-on-year percentage changes calculated using those rounded figures. While no amendments have been necessary to the financial and operational metrics presented in the Trading Update as a result of those reviews, the figures provided in this Interim Results Statement are now rounded to the nearest hundred thousand with percentage changes now calculated off exact figures. There may therefore be differences between the year-on-year percentage changes presented in the Trading Update and those in this Interim Results Statement.

2. The Group uses adjusted operating profit, adjusted operating margin, 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 (HY18: £7.8m, HY17: £6.5m). 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.

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 +44 203 139 4830, pin code 95712794# and also an audio webcast with a facility to ask questions available via www.homeserveplc.com.

HomeServe is an international home repairs and improvements business, with 7.8 million customers in the UK, North America, France, Spain and Italy as at September 2017. Its comprehensive range of water, heating and electrical assistance and repair products provide customers with peace of mind. HomeServe is listed on the London Stock Exchange, with a market capitalisation of c. £2.7 billion.

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HomeServe made good progress in the first half of the financial year and remains on track to deliver further strong growth in FY18. Customer numbers rose in each established business to total 7.8m. Group policy retention remains high at 82%, reflecting the Group's focus on customer service. Affinity partner households rose to 105m, driven by the addition of 45 new partnerships in North America.

Revenue rose 16% to £366.0m, based on increased customer numbers and higher income per customer. Statutory operating profit rose 12% to £27.5m, including a £1.7m favourable foreign exchange movement, as the Group continued to invest in its marketing and growth initiatives and completed more repairs for customers. Statutory profit before tax was £21.2m versus £22.2m in the prior year, due to an increase in interest and amortisation charges as a result of investments and acquisitions in FY17.

Strategically, the Group made good progress on key initiatives. There continue to be opportunities to acquire policy books and other assets to supplement organic growth: the announcement to acquire the home assistance business of Dominion Products and Services, Inc (DPS) in North America on 19 October 2017 for a total enterprise value of $143m will be the Group's largest acquisition to date. HomeServe is developing a global heating strategy and acquired Help-Link in August 2017 in the UK to develop its boiler installations capability and create a full service heating business.

There has been substantial progress on defining the business model for an online, on-demand Home Experts platform. HomeServe announces today that it has acquired the remaining 60% of Checkatrade, to take its holding to 100%. Of the total consideration of £54m, £10m is being utilised by Checkatrade's founder to subscribe for the allotment and issue of 1,193,317 HomeServe plc shares at a price of £8.38 per share (being the closing price on 16 November 2017).

HomeServe's successful £125m equity placing on 19 October 2017 retained balance sheet strength and liquidity and provides flexibility for future inorganic investment opportunities, notably policy book acquisitions, heating installation capabilities and investment in Home Experts.

The Group targets leverage in the range of 1.0 to 1.5x at its natural seasonal low point of 31 March but is prepared to exceed this range from time to time to pursue appropriate investments. Net debt to EBITDA at 30 September 2017 was 1.9x (HY17: 1.9x). The Group remains highly cash generative and full year cash conversion¹ is expected to be in excess of 100% (FY17: 118%). Following the equity placing and investments in DPS and Checkatrade, HomeServe expects to be within its target leverage range at the year end, before any further inorganic investment.

¹Cash conversion is calculated as cash generated by operations divided by adjusted operating profit.

Financial performance for the six months ended 30 September

Inter-segment revenue principally includes royalty charges between the UK and international businesses.

Performance metrics for the six months ended 30 September

The Group has five operating segments: UK, North America, France, Spain and New Markets. The following sections report on the operational and financial performance of each operating segment.