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Domestic & General to Enhance its Product Offering

Galaxy Bidco Limited and Galaxy Finco Limited today announce that Domestic & General Services Limited will enhance its product offering by transitioning its discretionary service plan business to maintenance service plans and insurance-based warranties. Customers’ current plans will not be affected and will transfer on renewal (expected to start mid-2018).

Improving our customer proposition is key to our transformation strategy. These changes are designed to meet customers’ evolving needs for appliance care and to ensure that Domestic & General continues to provide products that are consistent with current and future regulation.

Ian Mason, CEO of Domestic & General, said: “This initiative is in line with our long-term strategy to improve our service for customers and will further enhance our product proposition. We’re confident it will help strengthen our position as the UK’s leading specialist provider of appliance care.”

We expect Domestic & General to continue its underlying growth trajectory, however these changes will require additional investment of both operating costs and capital. We have modelled this using several key assumptions and forecast the following changes to our financial profile:

  • We expect our Adjusted EBITDA for FY18 to be broadly the same as for FY17.  We anticipate that the impact of our investment in customer service and maintenance, coupled with VAT irrecoverability, will reduce our adjusted EBITDA margin by approximately two percentage points. Nevertheless, we expect our continued organic revenue growth to compensate for this and we anticipate driving absolute cash EBITDA above FY17 levels by FY21.

  • As our insurance book grows we anticipate a corresponding increase in regulatory capital and this impact will be seen until FY20. We then expect cash flow available for debt service (CFADS) to grow strongly from FY20 onwards.

  • There will be one-off costs incurred with the rollout of our new product range and we will report these as exceptional items, therefore excluding them from both Adjusted EBITDA and CFADS

  • As a result of the estimated trends summarised above, we anticipate our net leverage ratio (Net Debt/Adj. EBITDA) to remain at around our FY17 level (4.3x) to FY20. Subsequently, deleveraging is expected to resume. Throughout this period, we expect year-end cash reserves to remain at approximately £100m or higher.

The possible impact of these changes on future operating results, capital requirements, cashflow generation and leverage depends on a combination of multiple factors that are difficult to predict and assess with accuracy at this time.  The forward-looking statements above are based on assumptions we deem reasonable, but are subject to numerous risks and uncertainties and actual outcomes may differ materially from those estimated or implied in this press release.
For further information, please contact:

Domestic & General Group Limited
Swan Court
11 Worple Road
Wimbledon
London
SW19 4JS
United Kingdom

For Media Enquiries: Steve Marinker or Robbie Hynes at Maitland; 020 7379 5151


Forward Looking Statements
This press release contains “forward-looking” statements within the meaning of applicable securities laws. Any such statements reflect the current views of Galaxy Bidco Limited and Galaxy Finco Limited about further events and/or financial performance. Forward-looking statements include, but are not limited to, all statements other than statements of historical facts contained in this press release, including, without limitation, those regarding the impact of the new warranty offering on the Group’s customers, future sales of warranties, operating results, cash flow generation, capital requirements, net leverage ratio and ability to service their financial indebtedness. No assurances can be given that any such transaction, impact, event or performance will take place at all or as projected, and actual results may differ materially from these projections. Particular uncertainties that could cause our actual results to be materially different than those expressed in these forward-looking statements include risk factors described in the offering memorandum of Galaxy Bidco Limited and Galaxy Finco Limited dated October 24, 2013, as updated from time to time by our annual and quarterly financial statements and financial reports.

Non-GAAP Financial Measures
In this press release we present certain financial measures that are not required by or presented in accordance with IFRS, including “Adjusted EBITDA” and “Adjusted Cash Flow Available for Debt Service”, because we believe they provide investors with useful additional information to measure our performance (in the case of Adjusted EBITDA) or liquidity (in the case of Adjusted Cash Flow Available for Debt Service). Adjusted EBITDA and Adjusted Cash Flow Available for Debt Service should not be considered in isolation or as a substitute for measures of our operating performance reported in accordance with IFRS Our annual financial report for fiscal year 2017 will include the reconciliation of these non-GAAP financial measures to their most directly comparable financial measures presented in accordance with IFRS.

Important Regulatory Notice
This announcement contains information that prior to its disclosure may have constituted inside information under European Union Regulation 596/2014 on market abuse.

About Domestic & General
Domestic & General is the market-leading appliance care specialist in the UK and a growing provider in our international markets. D&G takes the worry out of appliance breakdowns for over 16 million customers, protecting over 22 million appliances and carried out over two million repairs last year alone.  Internationally, the business operates across a number of markets, most notably in Germany, Italy, France, Spain, Portugal and Australia. Find out more about us at www.domesticandgeneral.com