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Why Homerserve Shares Barely Moved On Upbeat Half-Year Results

Simon Mugo trader
Updated 22 Nov 2022

The Homeserve plc (LON: HSV) share price barely moved after releasing an upbeat half-year report for the six months ended 30 September 2022. The company revenues grew 10% in constant currency, while its adjusted operating profits rose 14% in the same period.

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The home repairs and improvements business revealed that its HomeServe policies remained popular with homeowners as customer numbers remained at 8.3 million, while 83% of customers retained their policies despite the challenging economic environment. ‘

However, the market’s muted reaction to the news was driven mainly by the impending acquisition of HomeServe by Hestia Bidco Limited (an indirect subsidiary of funds advised or managed by Brookfield Infrastructure Partners L.P. affiliates). 

The acquisition was announced on 19 May 2022, with Brookfield offering a premium of £12 per share, valuing the entire company at £4.1 billion. The offer was approved by Homeserve shareholders on 22 July 2022 and is set to be completed later this year or early 2023. 

Homeserve noted a significant improvement in its U.K. operations due to a reduction of its cost base as engineers directly employed by the company completed most jobs. The company’s EMEA Membership & HVAC registered a 29% jump in profits due to improved U.K. operations. 

The Home Experts business also recorded 8% growth in its adjusted operating profits in constant currency. Its Checkatrade business also reported a decent improvement in the average revenues generated per trade to £1,358 from £1,125 in a similar period last year. 

Richard Harpin,  HomeServe’s Founder and Group CEO, commented: “Up to and including the last six months, our business has proved resilient in good times and bad because of the value our people deliver every day to our customers. We complete over 340 jobs every hour for homeowners worldwide. I want to take this opportunity to pay tribute to everyone at HomeServe who has served our customers with dedication and expertise over the last thirty years.”

Homeserve shares are trading at levels very close to the price offered by Brookfield Infrastructure; hence, I wouldn’t buy them.

*This is not investment advice. 

Homeserve share price.

The Homeserve share price traded sideways on improved half-year performance ahead of the acquisition.

Simon has over six years of professional trading experience across FX, commodities and equities. He has a strong passion for financial markets and is particularly focused on price action trading