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UK — Servoca profit up despite reduced revenues

16 June 2010
Servoca Plc (SVCA:LSE), the provider of public sector resourcing and outsourced services, today publishes interim results for the six months ended 31 March 2010.

During the six months to 31 March 2010, revenues decreased by -14.8% to 25.64 million Pounds (March 2009: 30.10 million Pounds), which resulted in a reduction in gross profit from 8.46 million Pounds in the six months to 31 March 2009 to 6.92 million Pounds in the current period.

Profit before tax, share based payment and amortisation, increased by +10.5% to 0.95 million Pounds (March 2009: 0.86 million Pounds).

Net debt at 31 March 2010 was 1.90 million Pounds (March 2009: 2.50 million Pounds).

The group says in a statement "during the period the group retained its focus on developing our existing three principal markets of Education Recruitment, Healthcare Recruitment and Secure Solutions. The management team has remained focused on profit delivery. The Board will consider acquisition opportunities where it believes shareholder value can be enhanced."

"Despite a positive first half performance, it is increasingly clear that uncertainty regarding public sector spending and in particular a reduction on historically high levels of permanent recruitment fees in education, will mean that it is unlikely the group will deliver against its full year expectation."

"The current operation still offers considerable scope for internal improvement, with several new management appointments already starting to make a positive impact on the development of the group."

"These improvements will not make an immediate impact on profitability but will lead to a more sustainable business capable of substantial levels of growth in the longer term. Further strengthening of the management team and the internal operation is on-going."

"The group is cash generative and has made substantial strides in improving the levels of net debt in the business. This positions the group positively for the future and we look forward to developing the capabilities of the group. Despite the uncertainty surrounding public sector spending the board believes the key markets of Healthcare and Education still hold relatively resilient long term prospects and we also continue to pursue our activities in the private sector."
In early trading Servoca's shares were down -20% to 8 Pence.



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