LONDON (dpa-AFX) - Shares of British home insurance firm HomeServe Plc (HSV.L) dropped about 23 percent on Tuesday morning, as Financial Services Authority or FSA decided to investigate certain historic issues. The investigation is expected to take several months to complete. Further, the company said it would implement a reduction in its core business in UK.
HomeServe posted a decline in the UK revenues, however its profit for the fiscal increased on 14 percent growth in revenues benefited by its international businesses and the acquisition of Doméo in France.
During the year, the company's UK business identified a number of potential failings in its sales and marketing, complaints handling and associated governance and controls.
UK revenues declined to 353.5 million pounds from 358.9 million pounds a year ago, mainly due to temporary suspension of sales and marketing activity in October. Revenues in the U.S surged 56 percent from last year.
Richard Harpin, chief executive of the company said, 'It has been a challenging year for our UK business, however, we continue to make strong progress in developing our International businesses.'
Announcing its preliminary results for the fiscal ended March 31, the company said its profit before tax increased to 138 million pounds from 104.8 million pounds in the previous year. Excluding items, adjusted profit before tax improved to 126 million pounds from 117.1 million pounds in the preceding year.
On a per share basis, earnings increased to 34.6 pence from 23.3 pence per share in the prior year. Adjusted earnings were 28 pence, up from 25.9 pence per share a year earlier.
Annual revenues grew to 534.7 million pounds from 467.1 million pounds a year ago.
The board has also proposed a final dividend of 7.67 pence per share, bringing the total dividend for the year to 11.3 pence, an increase of 10 percent from last year. The final dividend will be paid on August 1, 2012, to shareholders on the register on June 29.
Commenting on the planned investigation by Financial Services Authority, the company said there is currently no certainty as to the nature or extent of the action and on conclusion of the investigation there can be a related financial effect, which could include a fine.
Separately, the company announced the forthcoming appointment of Johnathan Ford as chief financial officer. He is expected to join HomeServe on October 1, 2012. Ford is currently the Group Finance Director of NWF Group plc, an AIM listed specialist agricultural and distribution group.
HSV.L is currently trading at 174.8 pence, down 52.6 pence or 23.13 percent, on a volume of 3.3 million shares, against a three-month average volume of 1.62 million shares on the LSE.
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© 2012 AFX News
