29th Jan 2014 07:00
Servoca plc
("Servoca" or "the Group")
Preliminary audited results
for the year ended 30 September 2013
Highlights
· Revenue £43.06 million (2012: £42.49 million)
· Gross profit £12.26 million (2012: £11.98 million)
· Administrative expenses (excluding amortisation and share based payments) £11.37 million (2012: £11.70 million)
· Profit before taxation (excluding amortisation and share based payments) £0.81 million (2012: £0.21 million)
· Net debt decreased to £3.07m (2012: £3.27m)
· Basic EPS of 0.56p before amortisation and share based payments (2012: 0.09p )
Commenting on the results, CEO Andy Church says:
"We are very pleased to have returned to growth after a challenging period. We now have a solid cash generative and profitable platform from which to drive the business forward, both organically and through suitable acquisitions"
The Annual General Meeting of Servoca Plc will be held at the Company's registered office on 25 February 2014. It is expected that the Notice of Meeting will be mailed to shareholders on 30 January 2014.
Enquiries:
Servoca 020 3031 4820
Andy Church
FinnCap 020 7220 0500
Geoff Nash
Ben Thompson
Simon Starr (Broking)
Media and analyst queries
Graham Herring/Robyn McConnachie
Newgate Threadneedle 020 7653 9850
Chairman / Chief Executive Officer Strategic Report
Introduction
We are pleased to report that the year ended 30 September 2013 has seen a significant improvement in the performance of the Group.
The greatest improvement to profitability came from our Education recruitment businesses where strong revenue growth fuelled a 50% uplift in their operating profits. This performance reflects an encouraging improvement in trading conditions and the benefits of the investment we have made in our internal capabilities.
Our Healthcare related businesses also benefitted from the action taken towards the end of the previous financial year to reduce their overhead base, this resulted in another substantial improvement to operating profitability. The performance in the second half of the year saw revenues and gross profits increase over the first half.
Our Police and Security related businesses also delivered increases in revenues and gross profits over prior year.
Financial review
For the year ended 30 September 2013, Group revenue was £43.06 million compared with £42.49 million (2012), an increase of 1.3%. Gross profit for the year was £12.26 million against £11.98 million (2012), an increase of 2.3%.
Operating profit for the year was £0.88 million (before share based payment charges and amortisation of intangibles of £0.14 million) compared with an operating profit in the prior year of £0.27 million (before share based payment charges and amortisation of intangibles of £0.16 million).
Profit before taxation (excluding share based payment charges and amortisation of intangibles) was
£0.81 million (2012: £0.21 million).
Profit after taxation (excluding share based payment charges and amortisation of intangibles) was
£0.71 million (2012: £0.11 million).
The basic earnings per share for the year was 0.45p compared with a loss per share of 0.04p (2012) based on profit after taxation, share based payment charges and amortisation of intangibles.
Net debt decreased from £3.27 million at September 2012 to £3.07 million at September 2013.
Cash generated from operations in the year was £0.68 million (2012: £0.07 million).
Operational highlights
Strategy and delivery
The focus in the period has remained the development of the Group's capabilities in those areas that afford good growth opportunities. We continued to manage overheads tightly and we thank all our employees for their contribution to the improved results for the year.
Outsourcing
Our Outsourcing activities are primarily based in two areas; Domiciliary Care and Security.
The action taken towards the end of the previous financial year to reduce our overheads delivered a substantial improvement in the performance of our Domiciliary Care business with profitability almost doubled over the prior year. In our Interim Statement we indicated that the reduction in revenues and gross profits we had experienced as a result of reduced NHS spending had stabilized. We are pleased to report that in the second half revenues and gross profits were up on the first half.
Our Security business has again delivered growth to its revenues and gross profits, a creditable performance given last year the business benefitted from one off demand related to the London Olympics. The business benefitted from the broader service offering developed over recent years. We also secured a substantial expansion to an existing contract with a major UK retailer for the exclusive supply of software and services designed to reduce retail shrinkage.
Recruitment
Our recruitment businesses supply into the Education, Healthcare and Police markets.
As signaled in our Interim Statement our Education businesses entered the year with positive momentum and enjoyed a good start to the period. We are pleased to report that this momentum continued in the second half and delivered a strong performance.. As well as delivering strong increases in revenues, gross profits and operating profits we continued to invest in increasing sales headcount and new branch openings.
Our Healthcare businesses were restructured to reduce overheads towards the end of the prior year in the face of challenging trading conditions. The strong action taken led to a material improvement to profitability in this area. Whilst some of these challenges remained during this year we are pleased to report that performance improved in the second half over the first. Trading conditions and performance also improved with demand increasing in our Nursing businesses.
Our Police business again delivered a solid performance over the prior year and is a leading supplier of retired police officers to private and public sector organisations.
Outlook
The Group has seen a transformation in its profitability and the progress made during the year positions the business for further significant improvement as we look ahead.
We will continue to drive organic growth through the opening of new branches and also seek appropriate bolt on acquisitions to further enhance our future prospects.
Consolidated statement of comprehensive income |
For the year ended 30 September 2013 |
Before amortisation and share based payments | 2013
Amortisation and share based payments |
Total |
Before amortisation and share based payments | 2012
Amortisation and share based payments |
Total | ||||
£'000 | £'000 | £'000 | £'000 | £'000 | £'000 | ||||
Continuing operations | |||||||||
Revenue | 43,058 | - | 43,058 | 42,485 | - | 42,485 | |||
Cost of sales | (30,803) | - | (30,803) | (30,508) | - | (30,508) | |||
Gross profit | 12,255 | - | 12,255 | 11,977 | - | 11,977 | |||
Administrative expenses | (11,373) | (137) | (11,510) | (11,704) | (162) | (11,866) | |||
Operating profit | 882 | (137) | 745 | 273 | (162) | 111 | |||
Finance costs | (73) | - | (73) | (65) | - | (65) | |||
Profit before taxation | 809 | (137) | 672 | 208 | (162) | 46 | |||
Tax charge | (100) | - | (100) | (96) | - | (96) | |||
Total comprehensive income/(loss) for the year, net of tax, attributable to equity holders of the parent |
|
709 |
(137) |
572 |
112 |
(162) |
(50) | ||
Earnings/(loss) per share: | Pence | Pence | Pence | Pence | Pence | Pence | |||
- Basic | 0.56 | (0.11) | 0.45 | 0.09 | (0.13) | (0.04) | |||
- Diluted | 0.56 | (0.11) | 0.45 | 0.09 | (0.13) | (0.04) |
Consolidated statement of financial position |
At 30 September 2013 |
30 September 2013 | 30 September 2012 | |||||
£'000 | £'000 | |||||
Assets | ||||||
Non-current assets | ||||||
Intangible assets | 6,739 | 6,791 | ||||
Property, plant and equipment | 603 | 364 | ||||
Deferred tax asset | 220 | 320 | ||||
Total non-current assets | 7,562 | 7,475 | ||||
Current assets | ||||||
Trade and other receivables | 7,698 | 7,265 | ||||
Inventories | 93 | 42 | ||||
Cash and cash equivalents | 177 | 223 | ||||
Total current assets | 7,968 | 7,530 | ||||
Total assets | 15,530 | 15,005 | ||||
Liabilities | ||||||
Current liabilities | ||||||
Trade and other payables | (3,819) | (3,685) | ||||
Other financial liabilities and provisions | (3,257) | (3,523) | ||||
Total liabilities | (7,076) | (7,208) | ||||
Total net assets | 8,454 | 7,797 |
Capital and reserves attributable to equity holders of the company | ||||||
Called up share capital | 1,256 | 1,256 | ||||
Share premium account | 202 | 202 | ||||
Merger reserve | 2,772 | 2,772 | ||||
Reverse acquisition reserve | (12,268) | (12,268) | ||||
Retained earnings | 16,492 | 15,835 | ||||
Total equity | 8,454 | 7,797 |
Consolidated statement of cash flows |
At 30 September 2013 |
30 September 2013 | 30 September 2012 | |||
£'000 | £'000 | |||
Operating activities | ||||
Profit before tax | 672 | 46 | ||
Non cash adjustments to reconcile profit before tax to net cash flows: | ||||
Depreciation and amortisation | 216 | 304 | ||
Share based payments | 85 | 104 | ||
Finance costs | 73 | 65 | ||
(Gain)/loss on sale of property, plant and equipment | (2) | (2) | ||
Decrease in provisions | (14) | (72) | ||
(Increase)/decrease in inventories | (51) | 34 | ||
(Increase)/decrease in trade and other receivables | (433) | 117 | ||
Decrease/(increase) in trade and other payables | 134 | (717) | ||
Other non cash movements | - | 189 | ||
Cash generated from operations | 680 | 68 | ||
Corporation tax paid | - | (11) | ||
Cash flows from operating activities | 680 | 57 | ||
Investing activities | ||||
Purchase of intangible assets | - | (270) | ||
Purchase of property, plant and equipment | (409) | (244) | ||
Proceeds of sale of property, plant and equipment | 8 | 29 | ||
Net cash flows from investing activities |
(401) |
(485) | ||
Cash flows from financing activities | ||||
Interest paid | (73) | (65) | ||
Repayment of finance lease obligations | - | (1) | ||
Net cash flows from financing activities |
(73) |
(66) | ||
Increase/(decrease) in cash and cash equivalents | 206 | (494) | ||
Cash and cash equivalents at beginning of the year |
(3,273) |
(2,779) | ||
Cash and cash equivalents at end of the year | (3,067) | (3,273) |
The financial information set out in this announcement does not constitute statutory accounts for the years ended 30 September 2013 or 2012 but is derived from those accounts. Full details of the Annual Report and Financial Statements for the year ended 30 September 2013 will be found on the Company's website: www.Servoca.com in the section headed "Investor Relations" on the "Shareholder Documents" page. The audit report is unqualified and does not contain any statement under S498 of the CA 2006.
The Annual General Meeting of Servoca Plc will be held at the Company's registered office on 25 February 2014. It is expected that the Notice of Meeting will be mailed to shareholders on 30 January 2014. The Financial Statements will be sent to the Registrar following the Annual General Meeting.
Related Shares:
Servoca