Busy lives and tight belts drive HomeServe growth

HOMESERVE founder Richard Harpin (pictured) yesterday said penny wise homeowners keen to avoid costly disasters such as boiler breakdowns helped it grow last year.

Revenues at HomeServe, which repairs and protects systems such as plumbing and heating, increased by 27 per cent to £467.1m in the year to March 2011 compared with 2010, as it sold 15 per cent more insurance policies.

That pushed pre-tax profit at the Midlands-based firm up 16 per cent to £117.1m, while earnings per share rose 17 per cent to 25.9p.

“It’s reinforcing the fact that people are living busier and busier lives,” said Harpin. “And particularly in difficult economic conditions when people are feeling a bit hard up it’s so they can avoid the cost of a big repair bill.”

He is no exception: his house dates from 1660 and he’s had “more than my fair share” of HomeServe claims. “I think on average I’ve had at least a claim a year,” he sighs.

Harpin has grown HomeServe to a multi-country giant with access to 68m households, but says there is still vast room for growth. Only 22-23 per cent of UK homes have plumbing and drainage protection while just 30 per cent have boiler cover – compared with 65 per cent of people that have vehicle breakdown cover, he said.

Harpin says HomeServe has “older customers that have older properties, they worry about things going wrong, and they want to have somebody to sort it out.” They are also loyal – more than 80 per cent are repeat customers.

While UK new customers were up four per cent to 3m, it is expanding far faster in its international markets such as the US, France and Spain. In the US new policies rose by 55 per cent to 450,000 and it delivered £6.1m operating profit, up from 1.5m in 2010.

HomeServe’s next steps will be to use its high cash generation – up to £86.1m in 2011, from £26.3m the previous year – to buy the in-house service books of established utility companies in new and existing markets. Harpin says it is currently negotiating deals in Belgium, Germany, and Canada and will target more, at up to £20m, this year.