Homeserve shares rally after strong interim update

Homeserve shares rally after strong interim update

Homeserve plc (LON: HSV) have seen their shares rally after the firm posted a bullish interim update on Tuesday.

The firm reported that revenue had risen on organic growth and contributions from mergers and acquisitions.

Shares of Homeserve rallied 7.35% to 1,286p. 19/11/19 11:18BST.

The FTSE250 (INDEXFTSE: MCX) listed firm is a home emergency repairs business, which has been trading since 1993.

Homeserve additionally announced the acquisition of a 79% stake in eLocal Holdings LLC for $140 million on debt and cash free terms.

The deal is expected to be formalized on Monday, subject to regulatory and competition clearance.

For Homeserve’s current financial year to the end of March, eLocal is expected to add around $5 million to adjusted operating profit, rising to $16 million in the 20201 financial year further investment.

Through the acquisition, Homeserve will have entry into the Home Experts market in North America, and the group holds the option to acquire the remaining 21% stake.

For the interim period ending September 30, Homeserve reported pretax profit of £19.7 million, showing a 2% climb from the £19.3 million figure one year ago.

On an adjusted basis pretax profit dropped by 10% to £28.6 million from £31.8 million, due to higher interest charges from fixed rate borrowings agreed the prior year.

“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,” said Chief Executive Richard Harpin.

Certainly, shareholders of Homeserve will be pleased with the update and should be optimistic for future outlook.

In the homebuilding sector, firms have been busy. A merger deal was reported between Galliford Try (LON: GFRD) and Bovis Homes Group plc (LON: BVS).

Additionally, Taylor Wimpey (LON: TW) reported strong second half demand in their most recent update.

Homeserve raised its interim dividend 12 per cent to 5.8p per share.