31st Jul 2009 07:00
AGM STATEMENT
HomeServe which is holding its Annual General Meeting today publishes its Interim Management Statement for the period 1 April 2009 to date.
The year has started well with continuing policy growth and high renewals rates across our three core membership businesses. As in previous years, the phasing of profits and policy growth will be weighted towards the second half reflecting the seasonality of our marketing activity and associated renewals profile.
UK Membership
Our UK Membership business continues to perform well with good levels of new customer and policy sales, where combined policies now represent 15% of our customer base. In addition, we are pleased to report continuing strong performance in policy renewals.
As a result of a successful Appeal to the High Court on 18 June in relation to Insurance Premium Tax, there will be a one off exceptional gain this financial year of £8m in respect of prior years. This also results in additional income of £2m per year, which we intend to reinvest in new customer acquisition and cross-sell marketing activity across our membership businesses.
Continental Europe
Our French joint venture, Domeo, continues to grow its policy base and the retention rate remains high. As in previous years, the phasing of marketing investment and renewals will result in the business reporting a loss in the first half. SFG, our recently acquired French appliance warranty business, is making good progress and is in discussions with a number of potential new partners.
In Spain, take up rates for electrics policies with our major partner Endesa are in line with our expectations and results from testing with Agbar and Acciona continue to be encouraging.
In Belgium, SPT is performing well and making the necessary preparations to develop a policy business in the region, including instigating discussions with potential utility partners.
USA
New policy sales for the period were in line with the same period last year and the retention rate remains high. Whilst we expect the US business to report a profit for the full year, the phasing of marketing investment will result in a loss in the first half.
We continue to make good progress with a number of potential affinity partners as we look to expand our footprint of marketable households in the US. UK Emergency Services
Our non-core UK Emergency Services business, particularly Property Repairs, continues to encounter challenging market conditions which will be reflected in the half-year results for this division.
Since the announcement of our preliminary results on 19 May, we have continued to make progress on a number of options for UK Emergency Services. We will provide a further update on the process in due course.
Financial Position
At the end of March 2009, our net debt was £34.0m. Since then we have completed the acquisition of SFG for net cash consideration of £17.1m. HomeServe remains well funded with low levels of debt and significant headroom on our banking facilities.
Outlook
Our expectations for the full year remain unchanged. Our core membership businesses continue to perform well, with good levels of policy sales, high renewals rates and a strong pipeline of business development opportunities.
31 July 2009
A conference call for analysts will take place at 8am this morning, dial-in details for which can be obtained from Tulchan.
Enquiries:
Homeserve plc
Richard Harpin, CEO
Martin Bennett, CFO
Mathew Wootton, Investor Relations Director
Tel: 01922 655332
TulchanAndrew HonnorStephen MalthouseTel: 0207 353 4200
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