BulletinIssue 01: May 2019

HomeServe has its sights set on being the world’s most trusted provider of home repairs and improvements.

We have grown on solid partnerships, running successful programmes for over 600 partners across the world today. Through the creation of more strategic alliances across the globe, we aim to be present in 10 additional countries, adding to our footprint of an existing 14.

The International Business Development team is charged with leading this expansion. A small team

of 6, we have a cumulative 150+ years experience in international markets. We draw on the insights within HomeServe’s existing markets to apply the best practices our 25 years in operation brings.

With homeowners demanding more value from their Utility suppliers and the competitive landscape tightening, Home Services presents a unique opportunity to transform customer relationships.

We are poised to help interested parties understand what the size and shape of that opportunity looks like for them.

International expansion on the horizon.

What’s inside:

2 Industry news

6 Customer insights

7 HomeServe news

8 Secrets of partnership success

9

+

25 ways to be more relevant in customers’ homes

An interview with Richard Harpin

global@homeserveplc.com homeserveglobal.com

H Stephen Phillips CEO, International Business Development

Renewables

Relentless growth in renewables

In their Global Energy Perspective 2019, McKinsey and Company predict that post 2035 more than 50% of power generation will be renewable. The IEA predicts a rapid growth in wind and solar energy, becoming the main source of power generation around 2023 and achieving 40-44% market share by 2040. Bloomberg NEF reports that the cost of installing a megawatt of photovoltaic capacity fell 12% in 2018.

CNBC reports that India is expected to overtake China as the largest renewables market by 2020 with the Prime Minister Narendra Modi announcing a clean electricity policy with a goal of 175 Gw of renewable energy by March 2022, 40% of the country’s power.

Renewables

+50% 2035

WindpowerRenewable UK highlighted that Great Britain’s onshore and offshore wind farms are generating more electricity than any other source of power. According to data supplied by independent analysts Aurora Energy Research, March ’19, 35.6% of the country’s electricity was provided by wind, compared to 31.2% by gas, 21.3% by nuclear, 6.7% by biomass, 2.6% by coal, 1.8% by hydro and 0.8% from other sources.

Solar Power In the U.S. solar is set to outgrow wind power with prices dropping to make the technology more competitive. According to the federal U.S. Energy Information Administration solar is predicted to grow by the highest percentage of any U.S. generation source in 2020.

Shell continues on acquisition trail Shell is furthering its investments with the purchase of virtual power company, Limejump. This is following the recent acquisition of the German home battery storage business, Sonnen.

Government moves away from natural gas The BBC reports UK government advisors are recommending new homes should be banned from connecting to the gas grid by 2025. France has already banned oil and gas production from 2040 and the Netherlands by 2050.

Industry news

Predicted renewable

power generation

2

Homes set to get smarter

Top 5 Innovations

Forbes predicts the top device innovations for 2019:

1 'Sociable' personal robots

2 Wifi 6, capable of handling the bandwidth requirements modern houses demand when running as many as 15 devices simultaneously

3 Amazon Alexa and Google Assistant proliferation such as in hotel rooms

4 Effective wireless charging of devices

5 Facebook portal as a home video conferencing platform.

+ Korean giant, Samsung, has submitted a trademark application that indicates it intends to expand its ‘SmartThings’ solution soon, with a device which measures the air quality of the environment.

Growth to 2022 According to a report by Zion Market Research, the global smart home market was valued at around USD 24.10 billion in 2016 and is expected to reach approximately USD 53.45 billion by 2022, growing at a CAGR of slightly above 14.5% between 2017 and 2022.

Energy management U.K. energy company Centrica has confirmed it intends to bring new home energy management options to the U.S. market after making key investments this month.

Sam Salisbury, director of Centrica Innovations Labs, told Green Tech Media the company would look to test the packages in the U.S. later this year, with a view to commercial launch in 2020.

In a drive to reduce energy consumption, the Department for Business, Energy and Industrial Strategy (BEIS) in the UK has also issued funding to Pixie Energy, Powervault and Sustainable Venture Development Partners to implement a trial of demand management systems and battery storage. The pilot will assess the benefits of technology which allows homes to optimise power usage for water heating when prices are at their lowest.

Smart home

Industry news

3

An evolving role In the U.S., attendees of the Parks Associates’ February ‘19 Smart Energy Summit agreed that with the adoption of smart technologies, Utilities need to find new ways to expand their footprint beyond traditional energy services. With new technologies creating layers of competition and complexity for home services, grid operations and energy management, it’s not just about “customer engagement” but making everything easier for the customer, agreed a discussion panel.

Millennials At DistribuTECH 2019, Patty Durband, president of the Smart Energy Consumer Collaborative spoke about how Millennials view energy consumption. Key points were that Millennials are one of the most energy conscious consumer segments currently engaging with Utilities. Yet, they are also the group most comfortable with disruptors like Uber, Amazon and Google.

Smart metering Market intelligence firm Northeast Group forecast the global investment, excluding China, in smart gas metering to reach $3.2 billion in 2019, reports smart-energy.com.

According to the firm’s new study analysing the 2019-2028 smart gas metering industry, the smart gas metering market has long lagged behind electricity metering due to a smaller overall market and fewer business case drivers. Factors driving the increase in market revenue include large rollouts in Europe and by global Utilities to improve pressure monitoring, methane and gas quality sensing, and reduce lost and unaccounted for (LAUF) gas.

Industry news

Utilities

Utility Digital Experience StudyThe recent study highlights U.S. Utilities are struggling to get digital right. The 2019 survey commissioned by J.D. Power in conjunction with Smart-energy.com reports that Utilities lag behind other industries when it comes to delivering a satisfying experience in websites, mobile apps, social, email, chat and text.

Key findings include:When benchmarked against other consumer-facing industries, Utilities continue to offer one of the worst digital experiences, according to a Centric Digital IQ Score, which is used to benchmark digital intelligence.

The Utility industry scores 512 on a 1,000-point scale. The retail sector, in comparison, scores 694. The industry average for overall satisfaction is 844.

Apps have completely changed the way many companies interact with customers. Apps can provide a more tailored user experience with key functionality/design elements that increase the ease of use. However, only 29 of the 67 Utilities included in the study currently offer a mobile app.

Issue resolution of assisted online channels is high however usage of assisted online channels is low.

Compared with other industries, Utilities are updating their digital properties at a slower pace. Only 12 of the 67 Utilities questioned redesigned their website in the past year.

>50% of Utilities offer a mobile app

The 2019 Utility Digital Experience Study is based on evaluations from 15,894 customers of the 67 largest Electric, Natural Gas and Water Utilities. To be included in the study, Utilities must serve 540,000 or more customers. The study was fielded in November-December 2018.

4

Marketing Science A new free publication, the Frontiers of Marketing Data Science Journal, is now available as a bi-annual download.

The journal offers in-depth analysis, case studies and research on the practical application of data science to help with optimising marketing and advertising decisions.

Personalised videos Whilst not a new technology, personalised videos, which generate automatically using customer data, are emerging more and more as an effective communications tool. Specialist video agency 1to1video.com has proven that click through rates are three times higher with personalised video versus traditional video and that users stay 2.5 times longer to watch a personalised video.

Applications include acquisition emails, online re-targeting, welcome and renewal communication, up sell and cross sell, plus billing and statements.

Getting personal with customers

Innovation surveyIn advance of the Connected Insurance Europe summit in Amsterdam in May 2019, Insurance Nexus surveyed 300+ insurance executives to understand how they are innovating their products and services. Results show:

80% are establishing an innovation leadership set of principles

77% are examining the value proposition to innovate and identify key ROI

65% are identifying exactly what customers want

34% are taking inspiration from recent successful partnerships in the market

24% are doing all of the above.

Respondents were also asked which job roles should take ownership for the product development process. 50% felt it should be CEOs and Heads of Strategy.

In terms of the areas of improvement likely to have the greatest impact on product success, responses showed:

72% intelligent customer profiling

67% communication of value to the market

36% dynamic customer UX29% product overhaul 26% connected devices.

Comparison serviceSpain’s leading buying and selling app, Wallapop, has partnered with the nation’s largest insurance provider, Mapfre. Users will now be able to compare and purchase car, home, motorcycle and bicycle insurance from Mapfre or its affiliate Verti.

Premium growth in emerging marketsEmerging markets to power next decade’s insurance premium growth – Swiss Re Sigma study. Swiss Re expects the emerging market share of global insurance premiums to increase by 50% in the next 10 years.

Industry news

Customer engagement

Home Insurance

5

What do homeowners worry about? Homeowners are worried about emergencies and repairs, which can happen at any moment, and their potential cost. They’re especially concerned about electric failures, gas leaks, and blocked drains.

They also have many concerns related to their interactions with tradespeople such as poor quality workmanship, being let down or unable to predict the cost, and having to waste time waiting for the supplier to show up.

Homeowners are interested in solutions which address these concerns. When shown a home assistance proposition, 65% find it appealing and 57% are likely to buy. The main appeal is the peace of mind this would bring. The issue is that many consumers are not aware of the existence of such a service. If Utility companies were to offer home assistance propositions to their customers, they would have an opportunity to become much more relevant in their lives.

The value of home assistance to consumers...What customers say...

Of Utility customers feel their Utility company would be a suitable provider of home emergency and repair cover

Of Utility customers are likely to buy home emergency and repair cover57%

64%

Homeowners feel finding a suitable tradesperson problematic.

Being over charged 79%

Electrics failure 69%

70%The expense involved

28%Broken toilet flush

79%Poor quality of workmanship

65%Gas leak

71%Not being able to find a suitable supplier quickly

35%HVAC breakdown

70%Not being able to predict the cost

24%Leaking Tap

66%The time involved in finding a reliable supplier

18%W. machine breakdown

75%Being let down by a supplier who fails to turn up

46%Blocked drain

63%Having to stay in for the supplier to arrive

7%Dish washer breakdown

Source:% Customers classing issue as a minor or major problem.

For more insights, download our white paper, the Engagement Opportunity for Utilities https://www.homeserveglobal.com/insights/

Customer Insights

Homeowners worry about electrics, gas and plumbing issues more than breakdown of appliances.

I like having peace of mind that if something goes wrong, it'll be fixed.

I’m not a handyman, so household technical needs are always a concern.

“ “

Source: HomeServe 3GEM research in 20 markets. N=20,000. August and October 2017.

+ Insights download available

6

Welcome to HomeServe Japan

Going for growth New partner launches

New partnership in the UK offering gas and electric cover to 700,000 households.

Early renewal of our partnership in France, taking us through to 2026.

New partnership with France’s third largest water provider.

Affinity partnership with this UK innovative challenger in the energy space.

Range of home services offerings launched for this UK green energy company.

Home Service cover for customers of Greenstar Energy, a challenger in the UK energy sector and subsidiary of Just Energy Group Inc.

Launch of boiler cover with free service and electrics cover for this UK green energy supplier's 85,000 customers.

“We’re always looking for ways we can help our customers manage their home energy needs and we’re excited we can now offer these additional services. HomeServe is the ideal partner for us to provide boiler and electrics cover, with the level of service our customers have grown to expect over the years.”

Simon Oscroft, So Energy co-founder

February 2019 marked the formation of a joint venture with Mitusbishi Corporation, one of Japan's largest companies. We will be working together to sign up affinity partnerships and offer our Membership products to the world’s third largest economy and its 53m homes.

HomeServe news

USA expansion North America is the fastest growing business within the HomeServe family. This is a mix of organic growth and acquisition, the largest of which was the acquisition of the 0.5m Dominion policy book in 2018.

We continue to launch several new partner programmes per month in North America however with current market penetration at 3% there is plenty of scope for continuing this fast upward trend.

Building global HVAC presence HomeServe continues to expand its HVAC capabilities with the acquisition of businesses known for their good reputation within their markets. Examples of recent purchases are Oscagas in Spain, plus Gregg Mechanical, Geisel and CroppMetcalfe, in North America.

The most recent purchase of 40 year old home Washington based home services business, CroppMetcalfe, almost doubles the HomeServe USA HVAC workforce and provides the opportunity to significantly increase its customer base in and around the nation’s capital.

1m 2m 3m 4m 5m 6m

FY 2013

FY 2018

Policies

Customers

7

Customer and policy growth HomeServe USA

The secret to a successful partnershipPartnering is an effective way for energy providers to keep up with the frenetic pace of change, to transform their customer facing services and to extend their reach into customers’ homes.

77%

45%

More satisfied with their

Utility.*

More likely to rate the Utility

favourably.*

Top 6 secrets of success:

1. Culture There must be an alignment of cultures with both partners sharing the same values.

2. Vision Common vision and goals, supported by well documented KPIs.

3. Strategy A clear, documented and consistent strategy which both parties adhere to.

4. Funding A willingness to invest in a well funded venture.

5. Patience A period of learnings as the venture builds and strengthens.

6. Trust Relationships are important. Ultimately both parties must believe in each other.

Key benefits:

Competitive advantage

New products /services

Improved capabilities

Incremental revenue streams

Expand customer base

Better customer value

Benefit from brand equities

Capital injection

Cost savings

Innovation

Speed and agility

Feature

20%More likely to feel

Utility does a good job educating them.*

45%More likely to feel

the Utility is looking out for

their wellbeing.*

*Source: USA gas customer survey 2016

Incremental profits are more and more a result of successful partnerships. Collaborations have the potential to bring together the

best that each party has to offer for mutual gain. They are also a fast way to extend product reach. Traditional Utility companies can create new business models quickly and effectively through partnering. In turn this helps with sustainable competitive advantage and improving relationships with customers.

In the USA, HomeServe analysis found that gas customers enrolled

in partnership home services programmes were 77% more satisfied, 45% more likely to rate their Utility favourably and 45% more likely to feel that their Utility is looking out for their wellbeing.

It is important to choose partners carefully however. Through extensive experience with over 600 partners, HomeServe has compiled the top 6 secrets of success for winning partnerships.

8

CE L E B R A T I N

G

19

9 3 - 2 0 1 8

Y E A R S | A N N É E S | A Ñ O S | A N N I

Being more relevant– a 25 year reflectionHomeServe has been keeping customer homes running smoothly on behalf of partners for 25 years. To mark this momentous occasion, we’ve pooled our collective knowledge and experience to come up with 25 ways you can be even more relevant in your customers’ homes. We’d love to know what you think.

1. Align around a customer promise

2. Nurture a customer-centric culture

3. Get to know your customers

4. Get to know your competition

5. Keep an eye on the horizon

6. Don’t be afraid to innovate

7. Establish valued propositions

8. Don’t treat all customers equally

9. Get the whole picture

10. Go the extra mile, plus one

11. Be consistent

12. Focus on the sharp end

13. Leverage technology to

reduce customer effort

14. Tune in to the right channels

15. Lead customers along the way

16. Demonstrate the value

17. Give customers a voice

18. Be interesting

19. Be an expert

20. Make a connection

21. Be virtuous

22. Keep track of KPIs

23. Reward good behaviour

24. Keep improving

Work with HomeServe!

After all, for the past 25 years, we’ve been cementing customer relationships on behalf of our partners with valuable home services propositions.

Why not get in touch to find out more? global@homeserveplc.com

Read the full article on our website

25

Feature

9

We ask our CEO what makes HomeServe so special and why he is as passionate about it now, as he was 25 years ago…

What inspired you to form HomeServe in 1993? “I think I was a born entrepreneur. I was running a property letting business in Newcastle upon Tyne in the UK and the biggest issue we had was finding reliable tradespeople to sort out tenant issues such as broken boiler. I saw the opportunity and set up a business called Fast Fix Plumbing and Heating. That was the foundation for HomeServe.”

What did you learn in the early days to prepare you for running a large business? “It is very difficult to set up a business from scratch, the business plan you write before setting up a business may bear little resemblance to what eventually occurs in practice. You have to be resilient however to find the ideal business model.“

What is the high point of your HomeServe journey?“Probably the first mail shot we sent out as HomeServe where 38 people, from the 1000 who received our mailing, filled in the application form to buy plumbing cover. That was the moment I got on my office desk and cheered in front of the 15 staff who thought they may be made redundant. That was our big breakthrough when we knew the business was going to work. Also, proving that HomeServe was going to work internationally, when we opened in France 2 years after signing a deal with Generale Des Eaux. That gave us the confidence to open businesses in Spain, Italy and USA.“

The USA is currently the fastest growing market, what has driven that success?“We opened in the USA in 2003.

Richard Harpin

An interview withA

Q

10

Our success came from sticking to more than 80% of the original business model, but adapting to suit the local market. One of the key learnings I made was that to be taken seriously we needed to be based on the North East coast and have an American as a Chief Exec. At the time we were based in Miami and had a Brit running the business. We relocated and put a talented American in place to run the business and we grew quickly from then on. The take up rate we get from direct marketing in the U.S. is higher than any other market as Americans are insurance minded and they trust an offer marketed under the Utility brand which is our magic business model. The U.S. still has plenty of room for growth with 57,000 Utilities. We are only working with around 550 of those today but we would like to be working with 1000-1500. There is no reason why we can’t be marketing to all 135m households in the future.” You are a big believer in customer service. Why is this important to you? “Businesses that are the most successful focus on the customer. If you focus on doing the right thing for customers first and foremost, then profit and shareholder value will follow. We develop products with direct customer input, and incentivise everyone within the business on customer satisfaction to drive a culture of customer focus. We even have one of our buildings in Walsall named after a customer.”

You want HomeServe to be the world’s most trusted provider of home repairs and improvements, how are you going to achieve this? “By continuing to grow our home assistance business particularly in

the USA and in new international markets, and also with the Home Experts model. So far we have focused on the 30% of homeowners who buy home assistance cover. With Home Experts, our online local tradesperson platform, we can engage the next 50% of homeowners who are younger and less insurance minded, but still need to find somebody when they have a repair need or want to renovate their home. That is the Checkatrade model in the UK and the Habitissimo model in Spain and other markets. The global online repairs market is relatively under penetrated. Only 15% of people find a tradesperson online however 35% of people book travel online. There is no reason why our market place can’t reach the same level. We have learned a lot from other online travel businesses such as Trip Advisor and we intend to improve the Checkatrade model, prove it and roll it out into new marketplaces.”

What advice you would give to a young entrepreneur? “That persistence pays. One of the best examples of where I learned this was in 2006 when I went to visit Dominion in the U.S., as a Brit trying to persuade a large American company to sell their home services business to us. They gave me 45 minutes before they kicked me out. I went back in 2010 when they gave me about an hour, but it took until 2016 for my American team to go and see them again and on that occasion, we were successful in negotiating a sale. This was the biggest acquisition in the 25 year history of HomeServe. $143m bought us 0.4m customers with 1.1m policies and was a step change in our growth in the U.S.. Also to be resilient. I’m a great believer in saying that every

problem is an even bigger opportunity.

An example is in 1997 when the UK government insisted on a free water supply pipe repair service. That could have spelled disaster for HomeServe as that was a key part of our plumbing policy at the time. What we did was give the free repair but build a product around added value, such as re-instating a customer’s garden and covering the rising main within their kitchen. That became one of the fastest periods of growth in HomeServe’s history.”

What is your vision for HomeServe?“I would like to see 50 million members worldwide compared to the 8.3m we have today and be a global brand. To continue to have strong and successful Utility partner relationships and have 1 million trades signed up across 15+ countries where we are operating a global home improvements and repair platform.

Ultimately we want to make homeowners lives easy by taking away the worries of rogue tradesmen, big repair bills and an easy way of doing home improvements.

That’s what I want to see when I look back with my team in 7 or 8 years. The business is worth over £3b with almost 6,000 staff operating in 14 countries today, but I really feel it is just the beginning.”

11

Interview

For more information, visit homeserveglobal.com or get in touch at global@homeserveplc.com