When a group's chief executive announces they’ve just had their “best ever year”, it can be a little confusing to see the shares pull back when the market opens. This was the case for Homeserve (HSV), a provider of home emergency insurance cover and repairs, where investors may well have been spooked by a 2 per cent drop in UK operating profit (40 per cent of the group total) and the departure of the domestic business’s chief executive. Still, outperformance in North America, where customer numbers were up a fifth, meant adjusted operating profit for the group was up 29 per cent to £153m.
The strengthening performance across the pond was partly predicated on the successful integration of Utility Service Partners Inc (USP) and the policy book of Dominion Products and Services Inc (DPS). Although this resulted in slightly lower income per customer, and a 17 per cent increase in operating expenses, the underlying margin in North America rose by 8 percentage points to 17 per cent.
Management has been continuing to build on its “Home Experts” strategy, building out Checkatrade with the intention of creating a platform for connecting tradespeople with customers. Checkatrade, which was acquired in November 2017, is funded through a monthly fee, and is now used by 29,000 tradespeople, up a quarter year on year.
UBS is forecasting adjusted EPS of 36.7p in the year to March 2019 (from 33.5p in 2018).
| HOMESERVE (HSV) | ||||
| ORD PRICE: | 809p | MARKET VALUE: | £2.67bn | |
| TOUCH: | 808-810p | 12-MONTH HIGH: | 872p | LOW: 683p |
| DIVIDEND YIELD: | 2.4% | PE RATIO: | 27 | |
| NET ASSET VALUE: | 167p* | NET DEBT: | 43% | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2014 | 568 | 24.4 | 3.1 | 11.3 |
| 2015 | 584 | 76.7 | 17.2 | 11.5 |
| 2016** | 633 | 82.6 | 19.6 | 12.7 |
| 2017 | 785 | 98.3 | 24.0 | 15.3 |
| 2018 | 900 | 123 | 30.2 | 19.1 |
| % change | +15 | +25 | +26 | +25 |
| Ex-div: | 5 Jul | |||
| Payment: | 2 Aug | |||
| *Includes intangible assets of £771m, or 234p a share. **Excludes a special dividend of 30p a share paid in July 2015 | ||||
