HOMESERVE PLC 

Interim results for the six months ended 30 September 2019

 

  Six months ended Six months ended Change²
  30 September 2019¹ 30 September 2018
Revenue   £457.7m £404.3m +13%
Statutory operating profit   £28.8m £24.6m +17%
Statutory profit before tax   £19.7m £19.3m +2%
Basic earnings per share   5.0p 4.6p +9%
   
Adjusted EBITDA   £70.9m £60.5m +17%
Adjusted³ operating profit   £37.7m £37.1m +2%
Adjusted³ profit before tax   £28.6m £31.8m -10%
Adjusted³ earnings per share   6.5p 7.5p -13%
   
Ordinary dividend per share   5.8p 5.2p +12%
Net debt   £451.4m £291.9m +55%
Total customers   8.2m 8.3m -1%
   

Strong financial performance in Membership enables further investment in growth initiatives.

 

  • Revenue up 13% with strong organic growth and benefits from HVAC (Heating, Ventilation and Air Conditioning) M&A
  • Adjusted operating profit up 2% to £37.7m reflecting good operational performance in the seasonally quieter first half across Membership and a modest FX benefit, together with planned investment in Home Experts
  • Continued profitable growth in North America with customers up 13% to 4.2m and adjusted operating profit up 24% to $23.4m
  • Other Membership businesses performing well: efficiency driven growth in UK (adjusted operating profit up 38% to £14.0m);  strongest customer growth in France for four years (up 5%); promising business development and continuing co-operation with Endesa in Spain
  • Checkatrade revenue up 34%: trades up 21% to 38k; web visitors up 28% to 11.5m
  • Agreement to acquire 79% of eLocal for c.$140m on a “debt free, cash free” basis provides a profitable entry to Home Experts in the US: $5m uplift to adjusted operating profit expected in FY20; $16m in FY21.
  • Statutory operating profit up 17% to £28.8m reflecting exceptional gains of c.£7m on sale of Italian associate and acquisition of remaining 30% of Habitissimo, partially offset by increases in amortisation charges as a result of prior period M&A activity
  • Reductions in adjusted PBT and adjusted EPS due principally to expected increase in interest charges from fixed rate borrowings agreed in the prior period, together with higher net debt: net debt increase reflects inclusion of lease liabilities in accordance with IFRS 16 and investments in growth opportunities
  • Basic EPS up 9% to 5.0p with strong operating performance and exceptional items offsetting Home Experts investment and increased amortisation and interest charges
  • Strong financial position: within target leverage range at 1.9x Net Debt: Adjusted EBITDA
  • Interim dividend up 12% to 5.8p, reflecting continued confidence in the Group’s growth prospects.

 

Richard Harpin, Founder and Group Chief Executive, HomeServe plc, commented: “I am very pleased with our financial performance and strategic progress in the first half of this year. All of our Membership businesses performed well, with North America continuing to deliver strong growth, and interesting opportunities in all our European businesses to develop new partnerships, harness new technology and continue to improve customer service and efficiency. Our buy-and-build approach to HVAC added five profitable new acquisitions and will become a significant business line for us for the first time this year. In Home Experts, we have another business line with global appeal. Checkatrade and Habitissimo are both market leaders and in eLocal, we have agreed to acquire a majority stake in a high growth business which gives us a profitable entry into Home Experts in North America.”

                                                                                                                                          

Outlook

The Membership and HVAC businesses are performing at the top end of HomeServe’s expectations, giving scope to increase net P&L investment in New Markets and Home Experts in FY20 from £12-15m to around £19m. This additional investment will fund the new commercial plan for Habitissimo being developed by the incoming CEO, further testing of the Home Experts model in France, and continued international business development. Given the strong performance of Membership and HVAC, the only change to HomeServe’s overall outlook for FY20 is the addition of $5m of adjusted operating profit from eLocal.

  1. These are the first results which HomeServe has presented under IFRS 16. HomeServe has adopted IFRS 16 using the modified retrospective ‘Asset = Liability’ approach with a date of initial application of 1 April 2019. Comparative information provided in this announcement has not been restated.

2.Percentage movements throughout this announcement are based on full underlying results, not the rounded figures in the tables.

3.HomeServe uses a number of alternative performance measures (APMs) to assess the performance of the Group and its individual segments. APMs used in this announcement are non-GAAP measures which address profitability, leverage and liquidity and together with operational KPIs give an indication of the current health and future prospects of the Group. Definitions of APMs and the rationale for their usage are included in the Glossary at the end of this announcement with a reconciliation, where applicable, back to the equivalent statutory measure.

 

Results presentation

A presentation for analysts and investors took place at 9am on 19th November 2019 at UBS, 5 Broadgate, London EC2M 2QS. There will be an audio webcast with a facility to ask questions, available via www.homeserveplc.com.

 

Enquiries

HomeServe Tulchan Group

Miriam McKay – Group Communications and IR Director

Miriam.McKay@homeserve.com

+44 7795 062564

 

Simon Lewis – Head of Investor Relations

Simon.Lewis@homeserve.com

+44 7970 840694

Martin Robinson

Lisa Jarrett-Kerr

 

 

homeserve@tulchangroup.com

+44 207 353 4200

 

Forward Looking Statements

This report contains certain forward looking statements, which have been made in good faith, with respect to the financial condition, results of operations, and businesses of HomeServe plc. These statements involve risk and uncertainty because they relate to events and depend upon circumstances that will occur in the future. There are a number of factors which could cause actual results or developments to differ materially from those expressed or implied by these forward looking statements. The statements have been made with reference to forecast price changes, economic conditions, the current regulatory environment and the current interpretations of IFRS applicable to past, current and future periods. Nothing in this announcement should be construed as a profit forecast.

 

About HomeServe

HomeServe is an international home repairs and improvements business which provides homeowners with access to tradespeople and technology to make home repairs and improvements easy. HomeServe is listed on the London Stock Exchange, with a market capitalisation of c.£4.0 billion.

 

The full half year report is available at https://www.homeserveplc.com/~/media/Files/H/Homeserve-PLC-V2/documents/results/2019/interim-results-2019-announcement.pdf

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