Home emergency broker says full-year results will be in line with expectations despite last month’s FCA fine
HomeServe says its adjusted profit before tax for the year ending 31 March will be about £84m – in line with market expectations.
The result follows last month’s £34.5m fine by the FCA over accusations of poor complaints handling in the winter of 2010 and possible policy mis-selling, and a consequent increase in the company’s provision for the fine to £30m.
The home emergency broker says it is making good progress in stabilising its UK business following FCA investigation and is continuing to invest in and increase its international businesses with new affinity partnerships and growing customer numbers and earnings.
It says it had 2.1 million UK customers at 31 December 2013 and it is confident that the UK business will stabilise “at a level of at least 2 million customers”.
The company said: “While currently in the peak renewal period, recent product enhancements and improved customer satisfaction are delivering a good retention performance and we expect full-year retention to increase from the 81% reported in the first half of the year.
“The increased cost of these product enhancements, a higher number of new customers and providing improved customer service are expected to result in net income per customer for the year to 31 March 2014 being lower than the prior year. Marketing activity has increased relative to the prior period and is performing in line with our expectations.”
Meanwhile, HomeServe says its businesses in other parts of the world are also doing well.
In the US, customer numbers at 31 March 2014 are expected to be up 15% on the year before (2013: 25%), with retention rates sticking at around 80%. The US operation has signed nine new affinity deals representing 600,000 partner households since 31 March 2013, and the company says it expects strong growth in full-year operating profit.
In France, the Doméo business continues to deliver a good financial performance, with the retention rate remaining around 89% (2013: 88%).
The Spanish property repair business Reparalia is growing customer numbers, with numbers at year-end expected to be around double that of 2013’s 400,000.
The claims handling side is delivering “operating profit progression”.
HomeServe says it is also making inroads in new markets in Italy and Germany, and expects its new markets segment to report a full-year adjusted operating loss of about £6m.