Trading Statement

HomeServe plc

Pre-close trading statement

HomeServe plc, the international home emergency business, today publishes the following trading update prior to entering its close period for the year ending 31 March 2012.

Summary and outlook

In the UK we are making progress in reinvigorating our customer focus and improving our controls and governance processes. Our International businesses are continuing to make good progress, with growth in the number of customers and policies and retention rates remaining high in all markets.

We continue to expect our adjusted profit before tax1 for the year ending 31 March 2012 to be in line with market expectations2.

UK

We expect the policy retention rate to be around 80% (FY11: 82.7%) and we estimate the one-off costs related to reinvigorating our customer focus will be around £20m in FY12 as previously announced.

Our new acquisition mailing campaigns, which were sent at the end of January, have seen a lower response rate than we had expected and therefore, over the coming months we will continue to review our marketing materials in order to improve their effectiveness while ensuring they remain appropriate from a customer perspective. As a result, it is now likely that customer numbers will reduce by around 9% in FY12, rather than around 8% as previously indicated.

The volume of calls received from our water and manufacturer warranty affinity partner customers via our inbound telephony channel has been gaining momentum and we have also restarted cross-sell direct mail activity with good initial results. Our preparations for an outbound telephony pilot, focusing on cross-selling to existing customers, are now almost complete and we hope to launch this in the near future.

New staff incentive schemes that give a better balance between customer and commercial outcomes are being piloted in our retention call centre. As with our marketing activity, we will monitor the effectiveness of these incentives in driving the appropriate outcomes for customers.

We have now received the formal written feedback from the FSA following the sales and marketing issues identified last October and are continuing the dialogue with them in this regard. The changes that we are currently making in order to reinvigorate our customer focus and improve our controls and governance procedures remain consistent with their feedback.

USA

We continue to expect customer numbers to increase by around 15% with policies increasing by a slightly higher rate reflecting growth in cross-selling. Gross new policy sales are now expected to increase by over 25% compared to FY11. Policy retention remains strong, with the rate now expected to be around 79% (FY11: 81.8%), reflecting the increased proportion of first year and own brand renewing policies, both of which have a lower than average retention rate.

The US adjusted operating margin is expected to remain at around 11% reflecting the ongoing investment in marketing and our US infrastructure.

France

We expect customer and policy growth to be around 5% with retention in Doméo remaining high at around 88% (FY11: 88%).

Spain

We expect both customer and policy numbers to have increased by over 50% during FY12.

Financial position

The business continues to be highly cash generative and we expect net debt at the year end to be around £70m (FY11: £11.8m). The higher net debt versus the prior year reflects the acquisition of Veolia's 51% shareholding in Doméo, our French business, in December 2011 for £83m.

We expect to announce our preliminary results for the year ending 31 March 2012 on 22 May 2012 and we will provide details on our priorities and objectives for the year ahead at that time.

Conference call

A conference call for analysts and investors will take place at 8.00 am this morning. The conference call can be accessed by dialling +44 (0)20 3140 0668 and pin code 891641#. A replay of this call can be heard by dialling +44 (0)20 3140 0698 and pin code 383522# later in the day for a period of 2 weeks.

Contacts

HomeServe plc

Richard Harpin, Chief Executive

David Bower, Interim Chief Financial Officer Tel: 01922 427902

Mark Jones, Head of Investor Relations

Tulchan Group

Christian Cowley Tel: 020 7353 4200

Martin Robinson

More information on HomeServe plc can be found on our corporate website: www.HomeServeplc.com

Notes

1. Adjusted profit before tax and adjusted operating margin exclude the amortisation of acquisition intangibles, joint venture taxation and exceptional items3.

2. The range of analyst forecasts for adjusted PBT for the year ending 31March 2012 is £116m to £128m based on forecasts as at 28 March 2012. The average of these forecasts is £124m.

3. Exceptional items include: a gain of at least £50m as a result of re-measuring the value of our 49% shareholding in Doméo following the acquisition of the remaining 51%; around £20m of one-off costs in the UK business relating to reinvigorating its customer focus; and one-off costs of around £3.5m relating to the acquisition and integration of the 51% shareholding in Doméo.