HomeServe's (HSV) adjusted half-year pre-tax profit was flat at £25.6m, but reported figures were hit by a £19m exceptional cost to cover reimbursing customers for alleged mis-selling. Together with the £6m set aside for a potential fine by the Financial Conduct Authority - its investigation is ongoing - the domestic repairs insurer believes it now has enough reserves to cover mis-selling costs.
Legacy issues aside, there was some better news from the UK business. Gross new customers doubled to 80,000, while the customer retention rate improved to 81 per cent from 78 per cent. So HomeServe now expects its overall UK customer base to settle at around 2m by next March, versus its original 1.9m expectation.
While the UK market story is one of stabilisation rather than growth, international customer numbers rose 25 per cent to 2.9m. Within that, the US is the largest market and customer numbers grew 21 per cent to 1.4m. Spain is another bright spot with customer numbers more than doubling during the half to 0.6m.
Overall, chief executive Richard Harpin says he's "pleased with the way things are going", with a return to growth expected in the next financial year. JP Morgan Cazenove expects adjusted full-year pre-tax profit of £84m, giving EPS of 17.07p (from £105m and 22.97p in 2013).
HOMESERVE (HSV) | ||||
|---|---|---|---|---|
| ORD PRICE: | 244p | MARKET VALUE: | £805m | |
| TOUCH: | 243p-244p | 12-MONTH HIGH: | 298p | LOW: 185p |
| DIVIDEND YIELD: | 4.6% | PE RATIO: | 28 | |
| NET ASSET VALUE: | 107p* | NET DEBT: | 12% | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 230 | 19.1 | 4.2 | 3.63 |
| 2013 | 241 | 0.60 | 0.1 | 3.63 |
| % change | +5 | -97 | -98 | - |
Ex-div: 4 Dec Payment: 3 Jan *Includes intangible assets of £397m, or 120p a share | ||||
