At its full-year results release in May, Homeserve (HSV) spooked investors by revealing a small drop in operating profits at its UK division. Six months on, the company has reported an improved performance on home soil, while the North America business has continued its rapid ascension, with adjusted operating profits up 28 per cent to $18.9m (£14.7m).
The strategy has been to focus on businesses with a high level of recurring revenue, including repairs and improvements platform Home Experts. That division saw a 17 per cent jump in both subscribers – those who list their services on the site – and website visits from customers looking for services. The group also appointed Mike Fairman – formerly chief executive at online mobile phone network giffgaff – to run Checkatrade, Home Experts' UK arm. Meanwhile, Leakbot, the leak detection technology brand that falls under the Smart Home division, has started small-scale testing in the US following a new agreement with general insurer Hiscox (HSX).
Amortisation charges on acquired intangible assets, specifically those relating to home repair business Dominion’s policy book, weighed on statutory pre-tax profits, although adjusted figures rose by a tenth. Operating cash conversion also strengthened to 119 per cent from 105 per cent on an adjusted basis.
Analysts at Peel Hunt forecast adjusted EPS of 37.5p in March 2019, rising to 41.8p in 2020 (up from 33.1p in 2018).
| HOMESERVE (HSV) | ||||
| ORD PRICE: | 933p | MARKET VALUE: | £3.09bn | |
| TOUCH: | 933-934p | 12-MONTH HIGH: | 1,066p | LOW: 700p |
| DIVIDEND YIELD: | 2.1% | PE RATIO: | 31 | |
| NET ASSET VALUE: | 162p* | NET DEBT: | 54% | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 366 | 21.2 | 5.10 | 4.70 |
| 2018 | 404 | 19.3 | 4.60 | 5.20 |
| % change | +10 | -9 | -10 | +11 |
| Ex-div: | 06 Dec | |||
| Payment: | 07 Jan | |||
| *Includes intangible assets of £752m, or 226p a share | ||||
