Brisk sales of healthcare software fuelled strong growth at Servelec (SERV) in 2015, even as oil and gas clients delayed upgrading their controls systems and water utilities deferred investment. The upshot was a 32 per cent rise in underlying operating profit to £16.2m; investors celebrated by sending the shares up 8 per cent.
Organic sales rose 22 per cent in the health & social care segment, which provides patient-administration and case-management software. It inked 21 contracts under a technology refresh programme in London, and secured its first major win for acute solution Oceano. Moreover, management recently struck a £20.3m deal with Tribal (TRB) to buy Synergy; more than 100 local authorities use its information management systems to support the education and safety of children.
Both sales and underlying operating profit fell in the automation division. That reflected belt-tightening among oil and gas clients and a slow start to AMP 6, the national water investment programme. The controls subdivision limited the fallout by targeting power and nuclear markets. But the technologies business has won up to £10m-worth of water contracts, including an exclusive deal with Southern Water to supply up to 2,000 remote telemetry units.
Broker Investec expects to raise its pre-tax profit forecasts for 2016 by 7 per cent. It previously predicted adjusted pre-tax profit of £18.1m, giving EPS of 21.1p (from £16.1m and 19.8p in 2015).
| SERVELEC (SERV) | ||||
|---|---|---|---|---|
| ORD PRICE: | 345p | MARKET VALUE: | £239m | |
| TOUCH: | 336-345p | 12-MONTH HIGH: | 345p | LOW: 272p |
| DIVIDEND YIELD: | 1.5% | PE RATIO: | 20 | |
| NET ASSET VALUE: | 93p* | NET CASH: | £9.9m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 42.5 | 9.6 | 158 | na |
| 2012 | 39.4 | 10.9 | 33 | na |
| 2013† | 42.0 | 10.9 | 26 | nil |
| 2014 | 51.8 | 10.6 | 13 | 4.50 |
| 2015 | 63.1 | 13.4 | 17 | 5.15 |
| % change | +22 | +26 | +35 | +14 |
Ex-div: 30 Apr Payment: 27 May *Includes intangible assets of £47.7m, or 69p a share †Servelec floated in December 2013 | ||||
