Serviced Office Group (SVO) describes itself as a mini Regus. But, following the recent acquisition of Avanta, it's now a little bit bigger. That £15m deal, completed in July 2013, has propelled the company into the second spot behind Regus in the UK serviced office market in terms of number of workstations.
The group now has 37 centres providing 11,550 work stations and chairman Dan Taylor would like to see that grow to 50 centres over the next two to three years. Other key strategic aims are a focus on the central London office market and the sale of freehold properties.
The opening of the new King William Street site meant a £1m profit hit, which had been expected. Strip that out and another loss on a new Euston site, as well as profits on the sale of freehold properties, and adjusted cash profit was £0.82m against £0.93m last year. New sites tend to be lossmaking for the first nine to 15 months, reflecting start-up costs and the time it takes to raise occupancy levels. Management accepts that this will mean volatility in the financial results until new site openings slow, or the older centres start contributing enough for the hit from new sites to be more easily absorbed.
Broker Shore Capital expects a full-year pre-tax loss of £0.2m, with pre-tax profit of £4.5m forecast for 2014, giving EPS of 11.5p.
SERVICED OFFICE GROUP (SVO) | ||||
|---|---|---|---|---|
| ORD PRICE: | 140p | MARKET VALUE: | £45.4m | |
| TOUCH: | 137-142p | 12-MONTH HIGH: | 140p | LOW: 60p |
| DIVIDEND YIELD: | NIL | PE RATIO: | 2 | |
| NET ASSET VALUE: | 32p* | NET CASH: | £1.8m | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p)** | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 7.26 | -0.12 | -2.41 | nil |
| 2013 | 7.68 | -1.16 | -5.79 | nil |
| % change | +6 | - | - | - |
*Includes intangible assets of £1.3m, or 4p a share **Adjusted end-August 2013's one-for-30 share consolidation | ||||
