There’s been some judicious pruning at Walsall-based home maintenance and insurance firm HomeServe.
The company which Richard Harpin launched has shut its two loss-making property repair divisions in Nottingham and Dyserth, North Wales, with the loss of 400 jobs.
HomeServe has also made some small headcount reductions to cut costs in its core business, while HomeServe Emergency Services’ three trading businesses have gone to management buyout backed by an £11 million investment by private equity firm LDC. Meanwhile HomeServe is sticking to its knitting, developing its central business at home and abroad.
Richard Harpin has turned an emergency plumbing business backed by South Staffordshire Water into a multinational company turning over more than half a billion pounds a year. It’s a story that has made Richard Harpin’s fortune and won him the prestigious Ernst & Young Entrepreneur of the Year Award.
Richard Harpin, aged 44, graduated from the University of York and joined Procter & Gamble’s marketing department. He became a brand manager but left after three and half years to become a management consultant with Deloitte. He stayed there a year before setting up his own management consultancy.
It was when he saw how difficult it was to get a reliable plumber in an emergency that he formulated his business model; an insurance product which would ensure a fast and efficient plumbing emergency service.
After several let-downs, he managed to sell the idea to South Staffordshire Water who gave him £100,000 for 52 per cent of the company. In 1993 HomeServe was born, offering plumbing and drains insurance to water company customers.
Within two years HomeServe was turning in profits, and Richard Harpin successfully marketed the idea to other water companies, giving him total UK coverage. Having access to a large customer base through the water companies, he was able to offer other services. HomeServe now covers electrical wiring, pest control, home decorating, central heating boilers, and glazing.
As well as its Walsall headquarters, HomeServe, which employs more than 1,000 engineers and is the biggest employer in the town, has operations in Weston-super-Mare, Norwich, Nottingham, High Wycombe, Preston and Beverley.
Richard Harpin has taken his business model into international markets with a joint venture in France, based in Lyons, an office in Australia and an operation in the Florida called Home Service. Worldwide, HomeServe employs around 5,500 people.
Last year the company moved deeper into the French market with the £24 million acquisition of Societe Francaise de Garantie, a leading provider of extended warranty services for domestic appliance.
In the US, HomeServe has signed a marketing agreement with Georgia-based Piedmont Natural Gas which will give it access to 850,000 American households. In July last year HomeServe concluded a similar agreement with Semco Energy, giving it access to households in the state of Michigan.
HomeServe revenue was seven per cent down in the year to May 2009 at £517 million, but operating profits were 13 per cent up on the previous year at £96.1m.
Exceptional costs of disposing of the emergency services division were recorded at £97 million in impairment charges. That, plus £5 million to re-organise it’s UK business pulled it into a one-off statutory loss of £21.7 million.
