Company continues to refocus on growing overseas and continues to review its operations at home
Homeserve, the repair and insurance group being investigated by the financial services authority, is on track to shrink its UK business in favour of overseas expansion.
The company, which sells cover and repairs boilers and pipes, is being probed by the regulator for how it sold some of its policies, and said it would cut its UK operations in favour of growing in the US and Spain.
As it announced an 8% rise in half year revenues and a 5% increase in profits to £19.1m, it said UK customer numbers had fallen from 3m a year ago to 2.5m. Customer numbers in the US grew by 20% and in Spain by 42%. Chief executive Richard Harpin said:
Homeserve is making progress in transitioning its UK business to a smaller, more customer focused operation and has delivered good growth in its international businesses in the first half of the year.
In the UK we are currently testing a number of new marketing and product propositions, the effectiveness of which will determine the future shape and size of our UK business.
Homeserve said its full year results would be in line with expectations, but admitted the FSA investigation was still going on. Its shares have jumped 4.4p to 227.4p, and David Brockton at Espirito Santo said:
Homeserve's first half the results as positive in the context of recent uncertainty, but the group is still subject to an FSA
review and the effectiveness of its UK marketing remains untested and this will continue to limit performance.
Andy Brown at Panmure Gordon remained cautious, with a 145p target price:
The share price has had a spike up mid-year due to speculation around private equity interest. It retains a decent dividend yield which provides some support to the share price although for us to go positive we would want better yield support.
Elsewhere leading shares have slipped back after Monday's surge, in the wake of Moody's cutting its Triple A rating on France and ahead of the EU finance ministers' meeting to determine Greece's fate. The FTSE 100 is currently 22.10 points lower at 5715.56.
InterContinental Hotels is the biggest riser in the leading index, up 36p at £16.26 after Barclays moved its recommendation from equal weight to overweight and its price target from £17.30 to £18.25. It said the group was expected to sell around $800m worth of hotel assets with the proceeds set to be returned to shareholders in 2013. On top of that, the bank said the group could announce the sale of further hotels in Paris and Hong Kong by 2014. This could be worth another $1.1bn. It expects an update on strategy alongside February's results.
International Airlines Group has climbed 3.2p to 166.6p after bumper results from Easyjet, up 39.5p at 692p.
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