HomeServe warns shareholders of two more years of pain as profits dip
TROUBLED home maintenance business HomeServe has warned shareholders that the company faces two years of upheaval as it looks to re-establish itself following a mis-selling scandal and a fall in customer numbers.
The Walsall-based business, which recently announced it was cutting 300 staff from its workforce, highlighted the current situation in its full year results statement today.
The results show that while there was a modest rise in turnover – up 2% to £547m (2012: £535m) – profits took a major hit with pre-tax levels falling from £138m to £67m. The situation has been partly blamed on a 400,000 fall in UK customer numbers, from 2.7m last year to 2.3m this year.
The performance would have been worse had it not been for the company’s international operations helping to bolster things.
In his statement, chief executive Richard Harpin said: “The financial impact of the reduction in UK customer numbers has unfortunately more than offset the strong growth in our International businesses in FY2013.
“We are however implementing plans to stabilise UK customer numbers at around 1.9m by the end of March 2014, which will then enable customer numbers across the group to grow again.
“UK earnings are expected to be negatively impacted in both FY2014 and FY2015, but we expect the growth in our International business to enable the group overall to return to modest growth in FY2015.”
He said he remained confident that the business could stabilise UK customer numbers as well as grow its established overseas businesses. It will continue to invest in the development of new businesses in Italy and Germany as well as implementing a new group-wide IT system.
“Our products and services continue to meet clear customer needs and we are confident that our business model can continue to deliver long-term value for all stakeholders,” he added.
It said its UK management team was maintaining a positive and constructive day to day relationship with the Financial Conduct Authority following an investigation into the company’s selling activities.
It said: “We are making good progress in completing the business improvement initiatives; with our customer re-contact exercise on track and in line with our expectations. The FCA’s investigation into our past issues is making progress and as a result we have now recorded exceptional expenditure of £6m, which is our estimate for the costs and fine arising from this investigation. We still expect the investigation to take a number of months to complete.”
