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Homeserve reports profit rise but warns of year ahead

Emergency repair group Homeserve has reported higher profits but warned current conditions could reduce the full-year haul by up to £3 million.

Homeserve, which sells repair insurance and warranties, also announced an overhaul of its UK operations in an effort to improve efficiency and service.

The reorganisation will cost around £3 million, with Homeserve chief executive Richard Harpin expecting "a small reduction" in headcount.

Homeserve reported a 12 per cent rise in pre-tax profit to £21.7 million for the six months to 30 September, but revenue fell 7 per cent from £247.5 million to £230.2 million.

The profit rise was helped by further growth in its UK membership business after policy numbers rose 530,000 to 6.6 million.

The retention rate reduced by one percentage point to 84 per cent during the first half.

As the company moves into its busiest period of the year, it said it hoped its army of older, risk-averse customers would help protect the business from a consumer spending slowdown.

It added: "However, if the poor retail environment persists and the recent fall in retention is maintained through our final quarter, this could reduce full year operating profit by some £2 million to £3 million.”

Chairman Brian Whitty said: “The broader economic climate has deteriorated significantly over recent months.

“However, Homeserve has a strong business model that continues to generate high levels of recurring revenue and we believe that we are well placed to withstand the difficulties facing businesses in the UK and overseas markets.”