HOMESERVE PLC HomeServe plc
Major New US Affinity Agreement
HomeServe plc ("HomeServe"), the international home emergency business, today announces the signing of a US affinity agreement.
HomeServe's US subsidiary, HomeServe USA, signs an agreement with AARP
We are pleased to announce the further development of our US operation, HomeServe USA, with the signing of an affinity agreement with AARP. AARP is a nonprofit, non partisan organisation that helps people fifty and older to improve the quality of their lives. AARP has up to 37 million members across 22 million households and is one of the largest social welfare organisations in the USA. AARP helps people turn their goals and dreams into real possibilities, strengthens communities and fights for the issues that matter most to families such as healthcare, employment and income security, retirement planning, affordable utilities and protection from financial abuse. It makes products and services available to its members, advocating for consumers in the marketplace by selecting products and services of high quality to carry the AARP name.
HomeServe USA plans to offer home emergency cover to the proportion of AARP's members who are most insurance minded. Initial test marketing is due to commence in December 2014 with rollout during FY16 and into FY17. Marketing returns are expected to be within our normal payback periods.
In the USA, in addition to the signing of the new affinity agreement with AARP, we continue to see good momentum in business development. During the first six months of the financial year we signed five new partnerships and extended our relationship with an existing partner, increasing our affinity partner households by 1.6 million in total, bringing our total number of affinity partner households, excluding AARP, to 28 million. Furthermore, our pipeline of potential partnerships in the USA remains strong.
As at 31 March 2014, our business in the USA had 1.6m customers, a 19% increase in the year and reported adjusted operating profit of £12.9m. In light of our confidence in our US business, we plan to invest an incremental £5 million in marketing and additional business development resource in the USA in FY15, helping drive customer growth and incremental affinity partner signings. The net impact of this incremental investment in FY15 is expected to be fully offset by positive trading performance in other markets.
The results of our initial testing with AARP over the next six months will help determine the amount we ultimately invest in marketing and the level of profitability from this agreement. In FY16, we expect a net investment cost of around £6 million as we invest in marketing to the AARP customer base. This additional expenditure is expected to be financed in part by a combination of reduced own brand marketing in the USA and savings across the Group as a whole. By FY17, the investment in AARP is expected to be accretive to our US business.
HomeServe will announce its interim results for the 6 months ended 30 September 2014 on 18 November 2014.
Richard Harpin, Group Chief Executive of HomeServe commented:
"I am very pleased with the progress of our business in the USA and particularly with the signing of our newest and largest affinity relationship with AARP, an organisation with one of the most reputable brands in the USA. Our home emergency products complement the range of products offered to AARP's members. The investment in marketing over the next two years will deliver additional customer growth in the medium term."
Conference Call
A conference call for analysts and investors will take place at 8.00am this morning. The conference call can be accessed by dialling +44 (0) 203 139 4830 and pin code 88407673#. A recording can be accessed on 0044 (0) 20 3426 2807, pin 651852#
Enquiries
HomeServe plc
Richard Harpin, Group Chief Executive
Johnathan Ford, Chief Financial Officer
Linda Hardy, Investor Relations Director Tel: 01922 427 997
Tulchan Group
Christian Cowley Tel: 0207 353 4200
Martin Robinson
This information is provided by RNS
|
distributed by
|