Shares in FTSE 250 home repairs and improvements firm Homeserve (HSV) rallied 5.6% to a three-month high of £12.65 after it reported strong growth in revenues and earnings for the first half of the year.

In the six months to 30 September, turnover grew by 13% to £457.7m driven by a strong performance in the US and acquisitions in the heating, ventilation and air-conditioning (HVAC) business.

In addition the Checkatrade unit saw revenues grow by 34% as the number of visitors to its website increased by 28% to 11.5m.


Homeserve operates on a membership basis with customers taking out annual cover for their boiler, heating or plumbing and paying a regular premium much like an insurance policy.

Growth comes from extending its membership business to new markets such as the US, which chief executive Richard Harpin sees as the firm’s largest opportunity, and to new products like HVAC where Homeserve has made five acquisitions in the last year.

In the UK, membership shrank from 2.1m to 1.9m in the first half but revenue per customer jumped from £109 to £129, limiting the drop in revenues to 5%. On the plus side the UK business was more profitable, generating operating income of £14m against £10.2m last year.

Offsetting the fall in UK members, the number of US customers grew by 500,000 to 4.2m while at the same time revenue per customer increased from $93 to $98, lifting turnover by 38% to $179.6m and operating profits by 32% to $18.5m.


As part of its drive to appeal to more customers, Homeserve has expanded into the HVAC market and into web-based services connecting home-owners with trusted local businesses.

The ‘buy-and-build’ strategy in HVAC means the company can gain critical mass quickly, giving it the opportunity to grow installation revenue from existing and new customers and sell policies and services after installation.

There are over 100,000 HVAC providers in North America alone and HomeServe is selectively looking for acquisition targets. In the first half it bought two companies in North America and three in Spain.

The second leg of its diversification is in web-based services. Checkatrade is already well established in the south east of England and the objective is to roll out the service to the rest of the country. Its free trial period is proving attractive to customers and driving record numbers of inbound sales.

In Spain, the Habitissimo business is small but growing with 28,000 customers and average revenue per trade of EUR 35, a small improvement on the first half of last year.

However, as with the core business the biggest opportunity is in the US and the company announced today that it had acquired a majority stake in eLocal giving it an instant and already-profitable entry into the North American market.

The purchase wasn’t cheap at $140m for a 79% stake and expected earnings of just $5m in the year to March 2020, but Homeserve is confident that with further investment it can increase operating profits to $21m in the year to March 2021.


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Issue Date: 19 Nov 2019