Servoca Results In Full
Preliminary announcement of the results for the year ended 30 September 2008
For the year ended 30 September 2008
Group revenues of 42.1 million
Gross profit of 12.7 million with margins of 30.3%
Operating loss of 0.6 million before goodwill impairment and exceptional costs
Loss before tax of 7.2 million after goodwill impairment and exceptional costs of 6.1 million
Basic loss per share 16.1p, basic adjusted loss per share 2.3p
Major acquisitions in the year produced revenues of 11.5 million and net profit of 1.1 million
Loss making businesses terminated and major restructure programme completed
5 million placing announced for shareholder approval on 30 March 2009
The year ended 30 September 2008 is the first full reporting period of Servoca Plc ("the Group") following the change of the accounting period.
During the year the Group has made strategic acquisitions in the Security and Education markets.
There were several start up initiatives during the year. Some of these have not lived up to expectations and we have terminated all loss making businesses as part of the Group's restructuring programme. This included the revision of the Group's management structure and streamlining of the operational management, simplification of the Group's corporate structure, the continued rationalisation of the front and back office systems and a reduction of operational and administrative staff and general overheads. The restructuring also necessitated the placing of two of its subsidiaries into administration post year end.
The Group is raising 5 million via a placing to finance working capital and deferred consideration.
During the year ended 30 September 2008, Group revenue was 42.1 million, which produced a gross profit of 12.7 million. Comparison with previous periods is not considered meaningful given the reverse acquisition that took place in 2007 and the various acquisitions that have taken place in the business during this year.
In April 2008, the Company raised 1.9 million, before expenses, through a placing of 6,333,340 ordinary shares of 10p each at a price of 30p per share. The Balance sheet as at 30 September 2008 includes 2.65 million of share based deferred consideration under current liabilities.
On 7 November 2007 the Company obtained Court approval for a capital reduction by way of cancellation of the balance of 8.81 million on the share premium account and 6.04 million on the capital redemption reserve.
The operating loss, prior to the goodwill impairment charge of 3.1 million, was 3.6 million for the year after charging exceptional restructuring costs of 1.6 million.
Strategy and delivery
Following a number of acquisitions made by the Group, our strategy is to concentrate on organic growth in our existing three principal markets of Education, Healthcare, and Secure Solutions.
Resourcing Healthcare :
Within Healthcare we have combined three brands ( Windsor, Berry and Dream Medical ) under a new banner - Servoca Nursing and Care. This Company together with our existing brands TLP, Firstpoint and Triple West supplies a broad spectrum of skills providing allied health professionals, doctors, nurses, domiciliary care, social workers and other associated specialisations. We are now able to offer a complete service by having the ability to cover all major staffing disciplines within this sector. Servoca is one of only a handful of organisations who offer a one stop shop, and one of even fewer such organisations able to offer a national branch network attracting highly skilled healthcare professionals throughout the country. Servoca Healthcare is now in a position to bid for lucrative, long term, regional and national contracts which will help the Group to underpin plans to increase our visibility of earnings and recurring revenue streams within Healthcare. During the year this division secured major contracts in South Yorkshire and the West Midlands.
The Healthcare sector demands an up-to-date and complex skill set and we therefore invest heavily in providing training for new and existing staff. Servoca Healthcare now provides large scale training courses for the NHS, private care homes, local authorities and many other business types involved in the health arena.
We have three brands within our Education division and our strategy will be to continue to grow our market presence both in the UK and abroad.
Dream Education provides long term qualified teachers mostly within secondary schools.
Academics was acquired in March 2008 for an initial consideration of 3.1 million and an earn out of up to 5.8 million. Academics operates as an Education recruitment and training provider which supplies qualified teachers on a contract or permanent basis to clients in London and the Home Counties.
In May 2008, the Company acquired the business trade and assets of a business trading as Day to Day Teachers Limited from the administrators .The Company paid a cash consideration of 0.38 million. Day to Day Teachers operates from two branches and supplies qualified teachers and classroom assistants on a supply or temporary basis.
These acquisitions will enhance the Education resourcing division by enabling us to provide a wider service offering to our expanding client base. Opportunities exist for us to develop the Home Counties market and roll out the proven Academics model nationally. Academics also has a resourcing office in Melbourne which will allow international expansion from the existing infrastructure.
Servoca Secure Solutions
Our Security Division - Servoca Secure Solutions ("SSS"), - includes our acquisitions within security and our Criminal Justice Operation where both now enjoy significant cross-selling opportunities.
We have enjoyed particular success in the areas of criminal justice training, crime training, the outsourcing of cold case reviews, business process outsourcing and the provision of highly experienced teams into sensitive areas.
To strengthen our Security offering, in December 2007 we acquired both International Security & Surveillance Limited ("ISS") and ISS Special Projects Limited ("ISS (SP)") for an aggregate consideration of approximately 2.85 million which was paid in a combination of cash and ordinary shares. These two businesses have been combined under the Servoca Secure Solutions brand. This division continues to provide manned guarding, systems services, corporate investigations including close protection, risk management and surveillance.
The newly enlarged division is now able to offer a wide breadth of important and highly valued services to a variety of clients whose needs are often of a sensitive and high-profile nature. SSS provides confidential services to the majority of Police Constabularies throughout the UK . SSS is the only organisation of its type to have gained the "Skills for Justice Accreditation" for all of our policing training products. Over the past year SSS has run a number of specialist policing conferences and special interest days, further cementing our strategic relationship with the UK Police Service.
It is our intention to develop SSS into a unique specialist brand able to offer the full spectrum of security services. We are building this division to become a significant provider of high end specialist Security services.
Glenn Swaby became the new Chief Financial Officer on 28 March 2008 when Andrew Brundle stepped down. Tony Rogers resigned as a Director with effect from 3 October 2008. Darren Browne resigned as Chief Executive Officer on 3 November 2008. Andrew Church was appointed as Chief Executive Officer on 24 November 2008. Emma Sugarman , founder and Managing Director of Academics Limited, was appointed to the Board on 16 December 2008.
Summary and prospects
The 2008 results showed good underlying growth marred by several one off costs and loss making businesses which have now been closed. The cost base has been realigned and the restructuring completed. This has transformed the performance of the Group and each division of the Group is now delivering profits.
The Group will continue to serve many areas of public sector recruitment that suffer from manpower supply shortages. The underlying growth in public sector recruitment remains strong and there will be a greater focus on profit delivery by the new management team.
We have new additions to the Board and Servoca has a strong platform on which to build and deliver shareholder value and realise its full potential.