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HomeServe looks abroad for growth in repairs

The emergency insurance cover and domestic repairs group posted strong growth across the pond
November 24, 2016

Shrewd marketing, overseas alliances and acquisitions fuelled strong growth at HomeServe (HSV) in the reported period. The domestic repairs and emergency insurance cover specialist - which partners with utilities that are looking to improve their service and retention - grew adjusted cash profits by 21 per cent to £47.9m.

IC TIP: Hold at 591p

The main UK business grew its customer count by 2 per cent to 2.2m, lifting net policy income and pushing revenue up 9 per cent. It also partnered with Dee Valley Water, which supplies more than 250,000 customers. And it recently agreed to acquire npower's domestic care and maintenance contracts, strengthening its gas capabilities.

The US segment shone: it grew its customer base by nearly a third to 2.8m, driving sales up 29 per cent. Its acquisition of Utility Service Partners in July added 9.4m households, while management's signing of a record 60 partners secured a further 6.8m households, taking the total to 49m.

Elsewhere, both customer numbers and revenues rose in France and Spain, and management is eyeing expansion into 15 countries, including India, China and Mexico. Broker Liberum expects adjusted pre-tax profits of £103m in the year to March 2017, giving EPS of 24p, up from £93m and 21.4p in FY2016.

HOMESERVE (HSV)
ORD PRICE:591pMARKET VALUE:£1.8bn
TOUCH:590-591.5p12-MONTH HIGH:634pLOW: 356p
DIVIDEND YIELD:2.2%PE RATIO:30
NET ASSET VALUE:105p*NET DEBT:77%

Half-year to 30 SepTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)**
2015†26221.35.03.8
201631422.25.44.1
% change+20+4+8+8

Ex-div: 8 Dec

Payment: 6 Jan

*Includes intangible assets of £555m, or 179p a share **Excludes special dividend of 30p a share, paid in July 2015 †Adjusted to reflect a 13-to-14 share consolidation in July 2015