Homeserve buoyed by international growth

Strong growth internationally saw home emergency repairs group HomeServe achieve a decent increase in revenue and profit in the first half despite a slight fall in customer numbers over the period, as it continues to refocus its UK business.

Revenue during the six months to September 30th totalled £229.6m, up 8% on the £213.1m reported last year. Meanwhile, adjusted profit before tax rose 9% from £23.5m to £25.6m.

Customer numbers were 2.5m at the end of the period, down from 3.0m at the half-year stage last year, while policy numbers fell from 7.5m to 6.0m.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

The company, which is still subject to a Financial Services Authority (FSA) investigation into so-called "certain historic issues", said that it is making progress in transitioning its UK business to a "smaller, more customer-focused operation".

Chief Executive Officer Richard Harpin said: "In the UK we are currently testing a number of new marketing and product propositions, the effectiveness of which will determine the future shape and size of our UK business.Our business improvement initiatives are delivering increased customer satisfaction, significantly reduced complaint numbers and strengthened governance and control processes in the UK."

Nevertheless, in the International business customers numbers have grown rapidly, up 20% and 42% in the US and Spain, respectively.

As for the FSA issue, the regulator is continuing to gather and review information and HomeServe does not yet know of any findings.

"Therefore, at this stage no provisions have been made for a fine, should one arise, or the costs of the FSA investigation.We expect the costs of the actions we are taking to address the sales and marketing, controls and governance and complaints handling issues in our UK business to remain in line with our previous expectations."

The company reported free cash flow of £10.3m for the period, up from just £2.3m last year. Net debt increased from £66.0m at the end of the previous year to £78.1m.

The interim dividend was maintained at 3.63p per share.