News blog
Servoca
- BY: Andrew Hore |
- POSTED: 08/06/2011 |
Servoca has changed significantly over the past 12 months and the outsourcing operations have overtaken the recruitment businesses as the main focus of the business.
The purchase of home care services provider Phoenix Employment Services last August has proved a bargain and it has transformed the profitability of the outsourcing operations. Servoca paid just short of £1m for Phoenix’s trade and debtor book and that purchase price was covered by payments by debtors. Phoenix was a major contributor to group outsourcing revenues, which doubled to £8.03m, and operating profit before central costs of £413,000 in the six months to March 2011.
One of the reasons why Phoenix is successful is its speed of response to requests for care from primary care trusts, which is the main focus of the business.
The idea is to make add-on acquisitions to expand the home care business geographically in what is a highly fragmented market. Servoca has the management to run the overall business and it can cope with many more branches.
The performance of the security business was mixed with manned guarding tough but sales of security products and event security helping to boost revenues. Servoca is hopeful that more supermarkets will buy its security products and this will become a highly profitable part of the business.
Overall group revenues were flat at £25.2m, while underlying profit slipped from £950,000 to £800,000. This indicates the decline in contribution from the recruitment companies.
Interim recruitment revenues fell from £21.5m to £17.2m. Doctors supply, education recruitment and police recruitment all found trading tough. Nursing recruitment and the supply of English speaking teachers to the Middle East remained strong. The division’s profit contribution before central costs dived from £1.17m to £897,000.
Net debt was £2.58m at the end of March 2011 and this all related to invoice discounting.
House broker FinnCap forecasts flat full year profits of £2m.
At 8.25p a share, Servoca is valued at £10.4m. The shares are trading on five times prospective 2010-11 earnings.
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