Interim Management Statement

HomeServe plc

Interim Management Statement

HomeServe plc, the international home emergency business, today publishes its Interim Management Statement for the period from 1 October 2012.

Summary and Outlook

HomeServe is continuing to grow and develop its established International businesses with new affinity partnerships and growing customer numbers and earnings. In the UK we are continuing our transition to a smaller more focused business.

HomeServe expects its adjusted profit before tax1 for the year ending 31 March 2013 to be in line with market expectations2.

UK

In the UK we continue to reshape our business and expect customer numbers in FY13 to be around 2.25m, which compares to our target range of 2.2 to 2.4m. Our retention rate has, as we expected, increased slightly from the 78% reported for the first half of the year.

Direct mail and outbound telephony sales channels have historically provided the majority of our new customers in the UK. Whilst direct mail will continue to be a key channel going forward, take up rates from current campaigns are still lower than historic levels and we are currently focusing outbound telephony channel on sales to existing customers only. We are therefore developing additional ways of acquiring new customers through a broader range of channels including the internet and sales through our partners' call centres. The effectiveness of our marketing campaigns and our retention rate will help to determine the future shape and size of the UK business.

Our winter plans have been successfully implemented and we have been able to handle an increased volume of calls and repairs and maintain a high standard of customer service during the recent cold weather. Customer complaints, which reduced by 42% in the first half of the year, have continued to reduce compared to the same period last year.

The FSA investigation into our past issues is ongoing and is expected to continue for a number of months. We have over the past few weeks commenced the roll out of the process for re-contacting customers who may have suffered detriment as a result of the way in which they were sold their policy.

USA

Our US business is today announcing two new affinity partnerships representing 224k affinity partner households. We are pleased to have agreed partnerships with SourceGas in Arkansas and City of Des Moines, a water utility in Iowa.

As well as increasing our marketable households we have also continued to increase our marketing activity in the second half of the year and this is expected to result in customer numbers at 31 March 2013 being over 20% higher than in FY12 (FY12: 16%). Retention remains high in the US with the rate expected to be around 79% for FY13 (FY12: 79%).

The strong growth in revenue, driven by the increase in customers and policies, will be partially offset by the cost of the increased marketing activity together with the ongoing investment in people and infrastructure. USA operating profit in FY13 is expected to be slightly higher than the £9m reported in FY12.

France

Doméo is delivering a good financial performance with the retention rate remaining strong at around 88% (FY12: 88%). We are increasing our marketing activity in the second half of the year, compared to the first half, with customer growth expected to be around 2% in FY13.

Spain

Reparalia, our Spanish business, is achieving strong growth in customer and policy numbers with both expected to increase by over 30% during FY13.

New Markets

We continue to invest in and develop our businesses in Italy and Germany and expect our New Markets segment to report an FY13 adjusted operating loss of around £5.5m (FY12: loss of £3.4m).

Financial position

Our net debt at 31 December 2012 was £60m (December 2011: £109.7m) and we expect this to reduce further by the year end (31 March 2013).

Conference call

A conference call for analysts and investors will take place at 8.45am this morning. The conference call can be accessed by dialling +44 (0)20 3 139 4830 and pin code 82562956#. A replay of this call can be heard by dialling +44 (0)20 3 426 2807 and pin code 636533# later in the day for a period of 2 weeks.

Enquiries

Notes

1. Adjusted profit before tax and adjusted operating margin exclude the amortisation of acquisition intangibles and exceptional items.

2. The range of analyst forecasts for adjusted PBT for the year ending 31 March 2013 is £102.9m to £109.4m based on forecasts as at 5 February 2013. The average of these forecasts is £106.0m.