Shares in the Group are down c.12% in early trading today as Management announces deferment in customer demand.
Companies: Servelec Group
Servelec (LON: SERV) have today released their interims to 30 June which reports a return to growth and profit for the group in H1 17, but management warns Full Year results are likely to be impacted by a reduction in customer demand.
The news today has seen shares fall around 12%.
Servelec provides software, hardware, and services globally to the healthcare, social care and education, oil and gas, energy and utility sectors.
Revenue was up 11% compared to H1 16 and underlying profit was up 44% versus the same period last year. Net debt also more than halved to £6m and a dividend of 2p/share will be issued, up from 1.65p per share in H1 16.
However, the Group's order book has fallen 7%, which is expected to impact Full year figures. This due to a fall in demand for Servelec's "Technologies" operations, which focus on utility markets.
Management also noted an outstanding debt from 2015 of £2.6m from a client is yet to be paid.
Group Chief Executive Alan Stubbs had this to say regarding the drop in customer demand:
"Servelec HSC and Servelec Controls Oil & Gas are trading well and whilst the deferment of customer spend in Servelec Technologies is disappointing, we have market-leading products in Servelec Technologies and its global business is developing."
Servelec currently trades at a PE ratio of 14x versus the industry median of 18x, with a market cap of around £202m. Revenues grew steadily in the five years to 2016, whilst roperating margins fluctuated in the same period, with reported margins falling from 21% in 2015 to 16% in 2016. Today's results show a further deterioration in the reported operating margin to 14% for the first half of 2017.