Homeserve Plc (HSV), the U.K. repair- service provider being investigated by the Financial Services Authority, fell the most in seven months after saying it will cuts jobs in the U.K., where it’s losing customers.
Homeserve dropped as much as 16 percent in London trading, the biggest intraday drop since Aug. 22. It was the biggest decline on the FTSE 350 Index, and 1.79 million shares of the Walsall, England-based company were traded, more than four times the three-month daily average.
The company plans to cut 300 jobs at is U.K. business as the number of British customers is expected to fall to 1.9 million by March of next year from 2.25 million, Homeserve said today. The company will book a charge of about 4 million pounds ($6.1 million) in the year ending March 31 related to the job cuts and an additional 15 million-pound charge for a writedown on its French warranty business, Homeserve said.
“The revised guidance for the U.K. highlights the challenges of turning the business around,” Hugo Mills, an analyst at Citigroup Inc., said in a note today. “We remain cautious given uncertainty around the FSA investigation and weak trading conditions in U.K.”
Homeserve shares were down 7.9 percent at 205.4 pence as of 11:37 a.m., taking the decline to 13 percent this year and giving the company a market value of 678 million pounds.
The FSA’s investigation into “past issues is ongoing and is expected to continue for a number of months,” Homeserve said. The FSA began a formal inquiry into Homeserve’s former sales practices in May of last year, more than six months after the company suspended telephone sales.
Homeserve said in 2011 when it announced the suspension that it had been in regular touch with the regulator about issues uncovered in an internal review.
The company should return to “modest growth” in fiscal 2015, Chief Executive Officer Richard Harpin said in today’s statement.
Homeserve forecast adjusted pretax profit before exceptional costs for the current fiscal year in line with analyst estimates of 102.9 million pounds to 110 million pounds.
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