When the pipes burst, the profits gush out

Margareta Pagano talks to the man in red who has built Homeserve into a £1.2bn business by coming to the rescue of households in distress
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Tomorrow a FTSE 250 company called Homeserve will defy gravity and report a whopping 22 per cent rise in pre-tax profit for the year to March of about £85 million on revenues up to around £592 million.

It's not a business you are likely to have heard of but Homeserve makes its money by rescuing us from domestic nightmares. Whether its burst pipes or broken windows, Homeserve's 1,000 engineers are the angels in red who will come out to rescue you if have insurance cover.

Homeserve works like the AA for the home - you join the scheme, usually via a utility company such as Thames or Anglian Water, pay a fee and wait for the 1.6 domestic disasters which hit all of us on average each year.

Homeserve is the genius of Richard Harpin, chief executive and founder, who has turned his 'big idea' into a £1.2 billion company in 13 years. Investors and analysts love him as he's driven the share price from £6 four years ago, when it floated separately onto the stock market, to £20.47 last week. They reckon Harpin can triple the business over the next five years.

Harpin thinks so too. Infact, he declares Homeserve to be the "best stock in the market right now." He's says it as a statement of fact and not for effect. And he's put money behind his view, borrowing £12 million from the bank to increase his own stake to 17 per cent. A quarter of his 5,000 staff ( 4,000 of them work in call centres) have shares too.

But then Harpin is one of most singular entrepreneurs I have met. He reminds me of a marathon runner; lean and wiry with that intensity which goes with the pace. We meet in the oddest of places; a conference room at the Imperial War Museum in Duxford overlooking a Shackleton bomber in the aircraft hanger below us. He's flown in especially on his Twin Squirrel helicopter (owned by him personally and not the company) because it was the only time and place we could meet. Harpin doesn't waste time on fripperies; numbers, statistics, ambition and strategy are fired off with relentless energy and you can soon see why he's the stock market's darling. Nor is it any surprise to discover he's an extreme off-piste and heli-skier, who considers Tortin at Verbier 'easy-peasy;' that he gets up at 5 am each day to go to the gym and then flies two and half hours to work in at Homeserve's Walsall HQ and then back again to help bathe his young children ( three, six and seven) at home. New man as well?

Harpin makes a grimace: "Newish. I try to be home by six when I can - I like to be with my family." But he's eager to show a light side, admitting that if he didn't get up so early to travel he would probably stay in bed and skip the gym. I'm not sure I believe him, although what's clear is he prefers the long travel to disturbing his family where they live in the village of Nunmonckton near York.

But bath-time will be missed more. Harpin will be spending more time overseas, particularly in the US where Homeserve is pushing hard. Amercans like the concept, he says. People are more safety conscious than in the UK where 23 per cent of the population have some sort of insurance cover, mainly the retired who like the security.

He sees big growth in the US and recently signed up two big water utilities –California Water and Louisville Water – giving him access to nearly seven million customers. "It's an enormous market where we don't have a competitor. There is great potential," he says.

Tesco is a company Harpin admires and he's wants to learn from its success across the Atlantic. Organic growth with acquisitions is the key, so expect more deals in the US to get scale. More acquisitions are on the cards on the continent too, following its joint venture in France and an acquisition in Spain last year.

But it is in the UK where Harpin's big challenge lies. He wants his red vans to be 'ubiquitous' as they zip around the country doing the 400 or so different repair jobs there are in a home. Now that the company has a solid customer through the safety net of the utilities, Harpin is more confident about launching Homeserve as its own brand. A pilot scheme is being rolled out later this year in the Midlands via direct mail and possibly TV advertising. He should think about doing the ads himself – I can see him now flying in by helicopter, James Bond style, to fix your pipes.

If Harpin gets his way there will be red vans visiting every school in the country - not to fix the drains but for his engineers to persuade teenagers to become apprentices.

Harpin wants to encourage more, and brighter youngsters, to train as tradesman rather than the less academically able who are traditionally pushed into training.

"Too many youngsters are being pushed into further education which is not suitable for them and doesn't train them for a good career. We need to give apprenticeships a much higher status," he says, doing what he can through the National Committee of the Apprentice Ambassadors Network.

Harpin has a tip for the young: furniture upholsters are the new plumbers – in huge demand and short supply. There is a big skills gap as the UK furniture industry has more or less shrunk without trace, losing its craftsmen as the industry has moved overseas.

He has cornered the market himself, hiring 86 upholsters – just one of the 28 craftsmen out of the 37 different trades which exist in the UK and which are taught at its Towchester training centre. His tradesmen are also measured and paid by performance in a 'fit a package' scheme in which customers are asked to rate their service. Up to 15 per cent repair men have gone because they were not up to the job.

One of Harpin's own secrets is employing top businessmen to help him. The UK repair business is headed by Ian Carlisle, who joined from Autoglass, while Jon Florsheim, head of the UK, came from Sky where he ran marketing and will guide the Homeserve brand into public recognition.

Harpin always knew he would work for himself, starting a fly fishing tackle business in his teens with the tackle doubling up as jewellery. After York University, he worked for Proctor and Gamble and then Deloitte before setting up his own consultancy. His first client was South Staffordshire Water who asked to look at ways to insure plumbing services.

But his love of flying – he has light plane and helicopter licence – dates from even earlier. "When I was about four I used to love seeing a helicopter which often landed at the house opposite where I lived. It was Lord Hanson visiting his parents. I can remember thinking then I would love to have one," he says. It took 39 years but for now he's flying high.