The rapid ascension of HomeServe’s (HSV) North American division continued in 2019, as the US leapfrogged the UK to become the group’s largest business. Regional adjusted operating profit surged by more than a third to £68m, compared with just 8 per cent growth in the UK to £66m.
With the absence of policy book acquisitions and a focus on returning customers, UK customer numbers dipped by 9 per cent to 2m. However, it is the largely unprofitable element of the customer base that has been removed – those who “dip in and drop out” to exploit low introductory offers – boosting income per customer by 15 per cent.
In the home experts division, the first year of full ownership of Checkatrade saw pro-forma revenue growth of a third to £30m, with a 23 per cent leap in trade members and an 11 per cent increase in consumer web visits. Although the adjusted operating loss widened to £7.4m, investment to drive trades and consumer growth should position the division for future growth. Of the estimated 600,000 traders in the UK who could benefit from the platform’s free-to-access directory, the group aims to recruit one-third.
Analysts at Peel Hunt forecast adjusted 2020 pre-tax profit of £175.5m and EPS of 40.1p, rising to £191.0m and 43.4p in the year to March 2021.
| HOMESERVE (HSV) | ||||
| ORD PRICE: | 1,136p | MARKET VALUE: | £3.78bn | |
| TOUCH: | 1,135-1,137p | 12-MONTH HIGH: | 1,171p | LOW: 794p |
| DIVIDEND YIELD: | 1.9% | PE RATIO: | 35 | |
| NET ASSET VALUE: | 185p* | NET DEBT: | 49.7% | |
| Year to 31 Mar | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2015 | 0.58 | 76.7 | 17.2 | 11.5 |
| 2016** | 0.63 | 82.6 | 19.6 | 12.7 |
| 2017 | 0.79 | 98.3 | 24.0 | 15.3 |
| 2018 | 0.90 | 123 | 30.2 | 19.1 |
| 2019 | 1.00 | 140 | 32.7 | 21.4 |
| % change | +12 | +13 | +8 | +12 |
| Ex-div: | 04 Jul | |||
| Payment: | 02 Aug | |||
| *Includes intangible assets of £827m, or 249p a share **Excludes special dividend of 30p a share paid in Jul 2015 | ||||
