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Servoca Interim Report Confident in Expectations

Servoca Interim Report – Confident in Expectations

For the six months ended 31 March 2013 - Highlights

• Revenue &pound21.47m (H1 2012: &pound22.25m)

• Gross profit &pound5.80m (H1 2012: &pound6.17m)

• Profit before taxation (excluding share based payments and amortisation) &pound0.22m (H1 2012: &pound0.10m)

• Outsourcing revenues &pound8.08m (H1 2012: &pound8.41m)

• Recruitment revenues &pound13.39m (H1 2012: &pound13.84m)

• Administrative expenses before share based payments and amortisation reduced by 8% to &pound5.54m (H1 2012:&pound6.03m)

• Net Debt &pound2.92m (March 2012: &pound2.87m, September 2012: &pound3.27m)

• Basic EPS of 0.14p before share based payment and amortisation charges (H1 2012: 0.08p)


For the six months ended 31 March 2013 the Group is pleased to report an increase in the profit before tax over the same period last year.

As indicated in our statement for the year ended 30 September 2012, strong action to reduce overheads in our Healthcare related activities last year has yielded an improvement in their profitability. Although revenues in this area have continued to come under pressure from a cut back in NHS spending, all other parts of the Group have seen an encouraging increase in turnover particularly in our Education recruitment business.

Financial review

During the six months to 31 March 2013, revenues were &pound21.47m (H1 2012: &pound22.25m) which resulted in a gross profit of &pound5.80m (&pound6.17m in the six months to 31 March 2012).

Administrative expenses (before amortisation and share based payments) for the current period were reduced to &pound5.54m (H1 2012: &pound6.02m).

The profit before tax, share based payments and amortisation increased to &pound0.22m (H1 2012: &pound0.10m).

Basic earnings per share for the period to 31 March 2012 were 0.14p (H1 2012: 0.08p).

Net debt at 31 March 2013 was &pound2.92m (March 2012: &pound2.87m).

Operational highlights

Strategy and delivery

The focus in the period has remained the development of the Group's capabilities in those areas that the Board believes will afford good growth opportunities. We continue to manage overheads tightly in those businesses faced with challenging trading conditions.


Our outsourcing activities are primarily based in two areas Domiciliary Care and Security.

The reduction in revenues and margin in our Domiciliary Care business as a result of reduced NHS spending has been stabilized during the current period. Several new contract wins with a number of local authorities, which started during the period, have increased our revenue. The measures taken to restructure overheads in the second half of last year have resulted in an improvement in profitability for the current period.

Our Security business has continued to grow its revenues over the period despite the benefit last year of one off demand related to the London Olympics. We continue to benefit from a broader service offering and sales have increased in our traditional manned guarding business. The less mature areas of event security and the supply of specialist security products to the retail industry have also grown over the period.


Our recruitment businesses supply into the Healthcare, Education and Police markets.

As discussed in our statement for the year ended 30 September 2012, our Healthcare businesses have been restructured to reduce overheads in the face of challenging trading conditions which have continued. The strong action taken last year has resulted in improved profitability during the current period.

In our Education operations we signaled a positive outlook at the end of the last financial year and this has been confirmed in the first half of this year. Revenues showed a healthy increase over the prior period, partly as a result of new branches opened in the thirteen months before the current period and partly from established offices. Unified management of our brands in this area has made a positive impact and we have continued to invest in improving our internal capabilities and sales headcount.

The Police business has delivered revenue growth in the period, despite a strong prior year which benefitted from Olympic related work. The business has successfully established new revenue streams from areas of the market that we had not previously supplied and continues to deliver a solid performance.


We are seeing encouraging improvement in both trading conditions and the internal capabilities for our Education recruitment businesses, which bode well for the future.

In Healthcare, strong action taken to reduce the overhead base last year, has delivered improved profitability this year. This should continue over the remainder of the current financial year.

We have seen stability established in our Domiciliary Care business with trading in the second half of the financial year showing an improvement in both volume of hours and margin.

As a result of performance in the first half of the year, the Board remains confident in its expectations of continuing improved performance for the current year.


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