Homeserve (HSV) hit a milestone last year: it now generates more revenues from its international business than it does in the UK. The group, which began life in 1993 as an emergency-plumbing joint venture with South Staffordshire Water, is now just as likely to be repairing a burst pipe in Florida as the West Midlands.
The internationalisation of Homeserve has been driven by two factors. First, the UK business, which was hit by an investigation into mis-selling, has seen customer numbers drop to 2.1m - down from more than 3m three years ago. Management tells us customer numbers should stabilise around the current level this year, now that service has improved; the company's satisfaction ratings are now ahead of those of main rival British Gas.
Second, the international business has seen strong growth. In many respects the strategy has not changed since the company's inception; partnering with utility companies remains the key route to market. Homeserve signed up 12 new utility partners in the US during the year, while a tie-up with Endesa (Sp: ELE) drove a doubling of customer numbers in Spain.
JPMorgan Cazenove expects adjusted earnings per share of 18.9p this year (2013/14: 18.6p).
| HOMESERVE (HSV) | ||||
|---|---|---|---|---|
| ORD PRICE: | 341p | MARKET VALUE: | £ 1.1bn | |
| TOUCH: | 341-342p | 12-MONTH HIGH: | 352p | LOW:221 p |
| DIVIDEND YIELD: | 3.3% | PE RATIO: | 110 | |
| NET ASSET VALUE: | 107p* | NET DEBT: | 12% | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 369 | 102 | 115 | 44 |
| 2011 | 467 | 105 | 24 | 10.3 |
| 2012 | 535 | 138 | 35 | 11.3 |
| 2013 | 547 | 67 | 13 | 11.3 |
| 2014 | 568 | 24 | 3 | 11.3 |
| % change | +4 | -63 | -76 | - |
Ex-div: 02 Jul Payment: 01 Aug * Includes intangible assets of £403m, or 122p a share | ||||
