Servelec (SERV), which provides software, hardware and services to the healthcare and energy sectors, delivered a mixed set of maiden results, with gains at its automation business offset by healthcare issues.
Sales and adjusted operating profits at Servelec’s healthcare business slumped 11 and 13 per cent respectively, largely because of aggressive competition, says chief executive Alan Stubbs. However, its fortunes may improve with the end of the NHS's National Programme for IT late next year, which Mr Stubbs calls “a huge inflection point in the market". New regulations will require many healthcare providers in London and the South to replace their systems.
Its automation business, composed of 'controls' and 'technologies', performed better, with operating profits up 27 per cent. Servelec’s controls business provides systems to energy players such as Shell and EDF, while its technologies arm produces remote telemetry units (RTUs) that collect data in hard-to-reach areas, then transmit and analyse it. Both businesses delivered operating-profit growth in the double digits, and its technologies segment could benefit further as UK regulator Ofwat pressures big water companies to improve their efficiency.
Broker Investec expects adjusted pre-tax profits of £12.2m this year, giving EPS of 14.5p (up from £11.2m and 13.6p in 2013).
| SERVELEC (SERV) | ||||
|---|---|---|---|---|
| ORD PRICE: | 270p | MARKET VALUE: | £184m | |
| TOUCH: | 268-272p | 12-MONTH HIGH: | 276p | LOW: 179p |
| DIVIDEND YIELD: | NIL | PE RATIO: | 10 | |
| NET ASSET VALUE: | 66p* | NET CASH: | £7.5m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 39.4 | 10.9 | 33 | nil |
| 2013 | 42.0 | 10.9 | 26 | nil |
| % change | +7 | +0 | -21 | - |
*Includes intangible assets of £21.1m, or 31p a share | ||||
