Servelec decision on deals reaping rewards
SOFTWARE FIRM Servelec said its healthcare division is benefiting from the decision to pursue deals outside the North.
The Sheffield-based firm said 2016 results will be in line with its revised expectations. The group said it sees positive signs across its businesses and it is confident about the future.
Servelec said that measures taken last year to reduce the headcount at its Health & Social Care business whilst strengthening sales resources have contributed to its full year results.
The group said that following a positive first half, the division enjoyed a high win rate in the social care market, gaining contracts with Bournemouth County Council, States of Jersey, Dorset County Council and South Gloucestershire County Council.
Servelec’s CEO Alan Stubbs said these new contracts, together with a growing pipeline of opportunities, provide the social care business with good potential to grow in 2017.
“We are pleased to confirm that the full year results will be in line with the board’s revised expectations,” he said.
“During 2016 the business has made significant strides forward in terms of product development, acquisitions, market development and staff development.
“The board is pleased with the positive signs apparent across our businesses and, whilst challenges persist in some of our markets, we are confident in the future outlook for the group.”
Analyst Chris Glasper at N+1 Singer said: “An in-line trading update should further reassure that the business is back on track.
“Management has worked hard to rebalance and diversify the offering and this looks to be now paying off after the stumble last year.
“We see scope for a progressive re-rating of the shares as confidence improves. Servelec is one of our Best Ideas for 2017.”
Servelec faced a number of timing setbacks last year and in June it issued a profits warning, which wiped £71m off its value, after it said 2016 operating profits would be significantly lower than market expectations.
The firm blamed the timing of orders and said it would reduce costs, including redundancies of less than 20 people out of a workforce of 700.
Since then it has won a number of big orders in its Servelec Automation division.
The second of a series of contracts for Servelec Controls has been confirmed by Centrica, which provides a step towards full remote operations for a gas platform in the north east Irish Sea.
Servelec said that pent up demand in the UK water industry is now unlocking, albeit slowly, and it has won several framework contracts under AMP6.
Customers include Anglian Water and Affinity Water.
Outside the water industry, the company won a contract to upgrade Heathrow Airport’s SCADA system and provide support throughout a five-year contract.
Servelec said the pipeline of sales prospects via the company’s global distribution channel, which trades into overseas markets, have increased with significant orders received from various territories, including China and the Middle East.
Mr Stubbs said: “The scope presented by the global distribution channel of Servelec Technologies offers a considerable opportunity for our business over the next five years.”
£71M The amount that was wiped off Servelec’s value when it issued a profits warning in June last year.