SERVE’S UK customer base has dwindled in the wake of a huge fine for mis-selling, the home insurer announced yesterday.
The company, which marketed itself as the fifth emergency service, was slapped with a £30m fine by the Financial Conduct Authority in February for selling people policies they did not need.
It also made a £19m provision for contacting customers to refund them. As a result, the group has had a difficult year in the UK with adjusted operating profit down to £53.4m compared to £78.3m in 2013 and customer numbers down to 2.1m, from 2.3m last year.
Adjusted operating profit for the group was down 19 per cent to £86.9m, while pre-tax profits slumped from £66.5m to £24.4m. Revenue was up four per cent to £568.3m, largely thanks to stronger sales in the US market.
Richard Harpin, chief executive of Homeserve, said the business is progressing in line with expectations but warned that growth in UK customer numbers could take time.
“Strong customer growth in the US and Spain has contributed to the growth in total customer numbers to 5.5m.... The US remains our greatest opportunity and during 2015 we intend to increase investment in marketing and business development to take advantage of this,” Harpin said.
Peel Hunt analyst Andrew Nussey kept his hold rating, adding in a note: “Management is making progress in getting the UK business back in shape. However, investors are likely to remain nervous until there are clearer signs that UK customer growth is responding to marketing initiatives.”