Homeserve revenue, adjusted profit grows in first half

Homeserve reported revenue growth of 17% to £536.7m in its first half on Tuesday, which it said was driven by strong growth in North America and the inclusion of revenue from eLocal, of which it acquired 79% in November 2019.

The FTSE 100 company said its statutory profit before tax fell 49% year-on-year, due to the absence of exceptional gains reflected in the prior period of £7.4m, and higher acquisition-related amortisation of £23.0m, compared to £16.3m in the first half of the 2020 financial year.

Its adjusted operating profit grew 17%, however, to £44.2m, despite continued net investment of £7.0m in its ‘Home Experts’ division and international business development.

The company said key drivers to that adjusted profit improvement were revenue growth, lower marketing costs during the first lockdowns, and the addition of eLocal profits in Home Experts

Adjusted profit before tax was up 16% at £33.1m, with growth in adjusted operating profit “slightly offset” by an increase in the interest expense, as expected, due to the impact of prior year mergers and acquisitions, and thus a higher net debt balance.

Homeserve said its financial position remained strong at the end of the first half on 30 September, with an increase in leverage to 2.0x net debt-to-EBITDA, from 1.9x year-on-year and within the group's target range of 1.0x to 2.0x.

It reported headroom of £480m, of its total debt facilities of £1.01bn.

The board declared a 7% rise in the interim dividend to 6.2p, reflecting the firm’s strong performance and its continued confidence in the group's growth prospects.

On the operational front, Homeserve reported strong growth in North America membership, as affinity partnerships exceeded 1,000 for the first time, and retention increased to 83% from 82% year-on-year.

European membership businesses were focussed on customer service and increasing the number of affinity partnerships during the period.

The company said it restarted its HVAC buy-and-build strategy, with nine acquisitions in the period across North America, France and Spain, while consumer demand on its ‘Checkatrade’, ‘Habitissimo’ and ‘eLocal’ operations recovered “strongly” after early lockdowns, reaching the highest ever level of website visits during the last four months of the period.

“"Against [a] challenging backdrop, I am really pleased that the business continues to perform well,” said founder and group chief executive officer Richard Harpin.

“As we go into the busy winter months, our focus continues to be on delivering great service for our customers and a secure livelihood to our teams and trades.”

Harpin said the latest wave of lockdowns had made “no fundamental difference” to the company’s operations, with engineers able to continue to work in homes.

“Based on what we see today, we are confident of delivering a healthy mix of organic and acquired revenue growth at the full year, with profits ahead of our prior expectations.”

At 0821 GMT, shares in Homeserve were up 3.07% at 1,275p.