HomeServe grows revenues despite UK declines

19th Nov 2013 09:28

- UK revenues fall as expected- International growth compensating- PBT flat year-on-yearDespite reduced UK revenues after the mis-selling scandal, HomeServe lifted group sales and maintained flat profits in the first half of the year.UK revenues fell 5.4% to £127.2m, as expected, but international sales jumped 21.3% to £116.8m in the period.Customers in Spain more than doubled to 0.6m, with USA numbers up 21% to 1.4m, as total group customer numbers increased to 5.1m from 4.8m year-on-year.Group revenue climbed 5% to £241.3m and adjusted profit before tax was precisely flat year-on-year at £25.6m. Chief Executive Richard Harpin said: "Our UK business has made good operational progress, our retention rate is improving and we now expect customer numbers to stabilise at a slightly higher level during 2014 than previously anticipated. "Our International businesses continue to deliver good growth and our USA pipeline, in particular, is strong." The UK business increased its marketing activity and improved retention rates to 81% in the first half of the year, with marketing activity and policy renewal months expected to peak in the second half of the year.Management said the performance gave them increased confidence and now expect UK customer numbers will stabilise at around 2.0m in March 2014. The investigation by the Financial Conduct Authority, the UK regulator, into mis-selling is ongoing but is not expected to have a material effect on Homeserve's future numbers. The company admitted it had underestimated the compensation it would have to pay out, with to its previous balance sheet provision of £20.1m now has been added a further £19m during the period as a result of updating our assumptions for re-contacting affected customers to take the provision to £29.8m.Said Harpin: "We have made a good start to FY2014, however our peak marketing and renewal period lies ahead of us in the second half of the year and we expect our full year performance to be in line with our previous expectations."The company generated strong cash, enabling it to cut net debt by £37.4m to £40.7m year-on-year and it has proposed an unchanged interim dividend of 3.63p per share.Shares in HomeServe were down 0.9% at 241.9p. OH