4th Jun 2014 14:59
LONDON (Alliance News) - Servoca PLC Wednesday said its interim pretax profit more than doubled, buoyed by growth in its nursing and education recruitment businesses, although Chief Executive Andy Church warned that recent changes to UK government recruitment procedures are weighing on the profit margin in its police recruitment business.
In a statement, Servoca, which recruits in education, healthcare and police, as well as offering security outsourcing, said it made a GBP337,000 pretax profit in the six months ended March 31, compared with GBP151,000 in the corresponding period a year earlier. Revenue increased to GBP22.4 million from GBP21.5 million, more than offsetting growth in administrative expenses to GBP5.9 million from GBP5.6 million.
"Our education and nursing recruitment operations are performing well and carry good momentum into the second half of the year. Full year profitability is expected to significantly benefit from the pivotal September period for our education businesses," Chief Executive Andy Church said in a statement.
In police recruitment, Servoca said that revenue and operating profit improved over the same period in the prior year, but also said margins were under increased pressure. Church told Alliance News that the pressure was due to a push by the government to procure more labour through formal agreements, which have lower margins.
The outsourcing business had a mixed first half to the year, with the domiciliary care business showing improved profitability, but the security business seeing a reduction in both revenue and profitability due to pressure on gross margins in the manned guarding sector.
"Margins have been under pressure [in manned guarding] for a number of years. It's a business that relies on scale and volume. The core strategy is to take electronic security and event security forward. That's the focus of the group moving forward," Church said.
Servoca said the second half will benefit from "a significant volume of work" at the Commonwealth Games in Glasgow which begin in July. Church told Alliance News that Servoca is hoping for an "ad hoc upside as a result of manpower shortages" towards the end of the games. He said the sporting event will secure a performance for the security business at least on par with last year's.
The CEO told Alliance News that Servoca has no current plans to pay dividends to shareholders as it is actively looking for acquisitions, particularly within education recruitment, both due to the company's own capabilities within the area and because of favourable market conditions.
"Our competitiveness is greatest in education," Church told Alliance News.
Servoca shares were Wednesday quoted at 14.00 pence, down 16%, but have risen from a 6.625 pence closing price on December 31.
By Samuel Agini; [email protected]; @samuelagini
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