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UK – Servoca profits and revenues down

26 January 2012

Servoca (LON:SVCA), a provider of specialist outsourced solutions, today reported its preliminary audited results for the year ended 30 September 2011. Group revenue was down to 47.9 million Pounds compared with 50.2 million Pounds in 2010, a reduction of -4.6%. Gross profit for the year was 13.4 million Pounds against 14.0 million Pounds in the previous year, a reduction of -4.3%.

The chairman, Bob Morton, commented “The trading environment in our public sector recruitment businesses remained tough and some of our recruitment businesses saw deterioration in conditions in the second half when compared to the first. Well documented cuts in public spending continue to impact on recruitment activities and the investment made in developing our outsourcing activities has proved pivotal to the Group's future prospects.”

The difficulty of the market has also had an impact of the operating profit, which for the year was 1.9 million Pounds compared with £2.1 million in the prior year, a reduction of -10%.

Profit before taxation (excluding amortisation and share based payments) was 1.8 million Pounds compared to 2.0 million in 2010 whereas profit after taxation was down to 1.7 million Pounds from 2.5. million Pounds in 2012. 

Net debt reduced from 3.0 million Pounds at September 2010 to 2.8 million Pounds at September 2011. Cash generated from operations in the year was 800,000 million Pounds compared to 2.4 million Pounds in 2010.

Outsourcing revenues, on the other hand, were up by +66% to 16.4 million Pounds from 9.9 million Pounds in 2010.

The company’s recruitment businesses, which supply into the healthcare, education and police markets, have had varied results. Particularly in healthcare, Servoca has “continued to see pressure on demand and spend with our Nursing supply business faring much better in relative terms than our Doctors recruitment operation.” Revenues for nursing were down by less than -7% whereas for the firm’s Doctors business, revenues were down -32% on the prior year. 

The education sector has also been hit by the spending cuts and has seen revenues reduced by -24% over the previous year. The company said, “Reduced budgets and funding for schools and increased levels of candidate availability placed downward pressure on demand. Although we saw more resilience in our supply focused on short-term periods of absence, the market as a whole remained under pressure.”

Finally for the company’s police business revenues were down by -19% on the prior year, and the net contribution towards central costs was down by less than 10%.

Servoca is a provider of staffing solutions and outsourced services with established operations across the UK. The company operates through a number of individual trading brands, each targeted towards specific niche markets and services which include the four primary sectors of education recruitment, healthcare recruitment, police recruitment and security.

Basic earnings per share for the year were 1.05p compared with 1.69p in 2010 (based on profit after taxation). The company has a market capitalisation of 5.3 million Pounds and in early trading, the share price decreased by -2.3% to 4.15 Pence, 56% lower than a year before. 

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