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Homeserve - Shock fall in renewal rates

January 2009

Investing in shares may lose you all or some of your money. Past performance is no indication of future performance. Some of the shares recommended here may be small company shares, which can be relatively illiquid and hard to trade and this makes such shares more risky than other investments.

  • Epic Code:
  • HSV
  • Price:
  • 989p
Less than two months after noting that trading was in line, Homeserve shocked the market by announcing in its interim results that profits will fall £2m-£3m below expectation this year because of a fall in retention rates. For the six months to 30 September the company, which sells insurance policies covering home emergency repairs, reported a 12% rise in pretax profit, excluding £2.2m in one-off costs related to the aborted acquisition of Domestic & General. Turnover fell 7% to £230m, while eps increased 9.5% to 24.5p. In the UK, since September its membership business has increased total policies written by 0.53m to 6.66m while it has also increased gross new policies sold to 765,000 compared to 619,000 last time. There ...

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With small companies there is an above average degree of risk compared to buying blue chips. Please be aware that we have not assessed the suitability of any of these investments for you. The newsletter simply states a personal view and diarises the editor’s investment decisions. Please speak to your stockbroker or other qualified individual to ascertain whether any of these companies mentioned would form useful additions to your own portfolios. Past performance is no indication of future success.

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