Servelec reports raft of first-half slides

Healthcare, local government, and energy technology company Servelec Group announced its results for the six months to 30 June on Wednesday, with revenue dropping 5% from a year earlier to £28.4m.

The London-listed firm reported underlying operating profit of £4.5m, down 28%, with operating profit from continuing operations plunging 63% to £1.8m.

Its profit before tax from continuing operations was £1.7m for the period, down 65%.

Servelec’s order entry for the period was £37.4m, a 15% drop, while its cash flow from operating activities was £1.6m, a whopping 86% below where it was a year ago.

Net debt stood at £13m at period end, a stark turnaround from the £5.7m net cash held previously.

Adjusted diluted earnings per share dropped 27% to 4.9p, and basic earnings per share slid 62% to 2p.

Despite the slides across the board, Servelec’s board declared a dividend per share of 1.65p, in line with last year.

“The board is positive about the long term prospects for Servelec Group,” said CEO Alan Stubbs.

“Swift action has been taken to strengthen our sales team and reduce implementation resources in healthcare and to reallocate resources across controls and technologies, whilst maintaining our ongoing focus on reducing costs.

“Coupled with recent contract wins we are confident in achieving the revised market expectations for the year,” Stubbs explained.

He said large contract wins in second half, which will be executed during 2016, 2017 and beyond together with a growing pipeline of opportunities mean that the company is on track to return to growth in 2017.

“The events which triggered the previous trading update are issues of timing,” Stubbs added.

“The long term structural demand for our technology, products and services remains.

“Our customers value our products, services and our people such that Servelec continues to be their first choice when opportunities come to market.”