Growth for Homeserve's (HSV) UK business remained subdued last year, as the group continues to recover from the domestic mis-selling scandal of 2014. UK customer numbers were flat, while net policy income dropped 7 per cent to £198m, partly due to low-margin introductory offers. But it was Homeserve's international business, which now accounts for 67 per cent of the overall customer base, which underpinned a 2 per cent rise in group cash profits to £109m.
Homeserve, which provides emergency insurance cover and repair services, expanded its presence in the US last year. Homeserve struck 12 new utility partnerships and now has affinity partner relationships with utilities that provide services to 29m households. The group grew its US customer numbers by just over a quarter to 2m. Though revenues in the US were on the rise during the year, increased investment in marketing and staff numbers reduced adjusted cash profits by just over half to £9.7m.
Homeserve's partnership with Endesa in Spain, which offers the group's products through one of its sales channels, helped boost customer numbers by more than a third last year to 1.1m. Coupled with a higher number of customer renewals, this meant that adjusted cash profits nearly doubled during the period.
Broker Peel Hunt expects adjusted EPS of 19.8p in 2016, along with pre-tax profits of £93.5m (consensus £92.8m).
Homeserve (HSV) | ||||
|---|---|---|---|---|
| ORD PRICE: | 419p | MARKET VALUE: | £1.4bn | |
| TOUCH: | 419-420p | 12-MONTH HIGH: | 420p | LOW: 294p |
| DIVIDEND YIELD: | 3%* | PE RATIO: | 24 | |
| NET ASSET VALUE: | 111p** | NET DEBT: | 17% | |
| Year to 31 March | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 467 | 105 | 24.0 | 10.3 |
| 2012 | 535 | 138 | 35.4 | 11.3 |
| 2013 | 547 | 67 | 12.9 | 11.3 |
| 2014 | 568 | 24.4 | 3.1 | 11.3 |
| 2015 | 584 | 76.7 | 17.2 | 11.5 |
| % change | +3 | +214 | +455 | +2 |
Ex-div: 2 Jul Payment: 3 Aug *Includes 30p special dividend **Includes intangible assets of £403m, or 122p per share | ||||
