Servcorp exceeds guidance, reports 24% rise in mature floor net profit before tax - News | Servcorp

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Servcorp exceeds guidance, reports 24% rise in mature floor net profit before tax

2012 | Servcorp

Solid FY11 revenue and profit growth delivered by strong technology investment and biggest expansion year in Servcorp's history

Positive FY12 business outlook, revenue and margins expected to continue to improve

Sydney, Wednesday August 24, 2011 - Servcorp, the world's leading provider of executive serviced offices, virtual offices and superior IT and business infrastructure solutions, has increased its full-year mature-floor net profit before tax by 24 per cent. The result comes as clients continue to reduce their risks in new markets via flexible workplace solutions and cloud-based mobile applications.

Servcorp posted a better-than-guidance mature floor net profit before tax of $31.19 million for the twelve months ended 30 June 2011, up 24 per cent on the previous year. Net profit before tax increased 6 per cent on FY 2010 to $3.04 million and net profit after tax was $2.49 million.

Operating revenue increased 8 per cent to $182.06 million and was up 13 per cent in constant currency terms. Cash balances also remained strong at $99.99 million as at 30 June 2011.

In encouraging news, immature floor losses were better than February 2011 guidance, coming in at $27.98 million for FY2011, and not $30 million as originally estimated.

Key highlights for FY2011 include the largest expansion in Servcorp history, three large floors in Hong Kong, Abu Dhabi and Singapore moving to the mature floor line ahead of expectation; the continued strong performance of Australia and South East Asia markets; average mature-floor occupancy increasing to 79%; and technology investment which has been important in clearly differentiating Servcorp's offering by delivering the very latest in cloud-based computing to support clients' growth.

Servcorp's Sales Director and Chief Information Officer, Marcus Moufarrige said that despite volatile global trading conditions, natural disasters in several of the company's trading markets, and the strong Australian dollar headwind, the company grew earnings and market share – recording better than expected revenues and margins in several geographic locations.

“These full year 2011 results were achieved through the biggest expansion year in the history of the company and we are seeing encouraging growth signs and traction across the globe,” said Moufarrige.

The company opened 40 floors across 29 cities in 12 countries. Available offices increased by 10% to 3,280 offices.

"Australia and Southeast Asia continue to be strong markets for us and the most important new market for us, the USA, is now getting traction with their marketing of a premium product and showing very encouraging signs in office sales.”

Moufarrige said Servcorp was now looking to slow the pace of expansion with no more than 15 floors expected to open in FY 2012. The focus will now be consolidating operations in new and existing markets to build additional strength and profitability.

“In light of the current market volatility, we feel confident that our commitment to helping our customers reduce their risks in new markets via flexible workplace solutions and cloud-based mobile applications positions us for good growth in FY 2012,” Mr. Moufarrige said.

The company expects revenue and margins across the mature business to continue to improve during FY 2012. Mature floor net profit before tax guidance for FY 2012 is approximately $37 million. Immature floor losses will be approximately $20 million for FY 2012.

These forecasts assume currencies remain constant, global financial markets remain stable and no unforeseen circumstances occur.

Servcorp declared a final fully franked dividend of 5 cents per share.