Servcorp News 2012|Tables turn for office group

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Tables turn for office group

February 2012 | Servcorp

Listed serviced and virtual office group Servcorp has boosted its distribution by 50 per cent, amid stronger revenue and profit for the half-year.

It will pay a 7.5c interim distribution and is forecasting a 7.5c final distribution, up from a total of 10c last year.

Despite lifting its payout, the company flagged a slowing of its plans for expansion as global economic volatility took its toll.

It had previously hoped to open 15 new floors this financial year but said it planned to launch nine.

The company operates 119 floors of serviced office space in 21 countries.

Servcorp made a major push into the weak US office market during the 2011 financial year to take advantage of low rents.

Half year     2012       2011

Sales($m)     99.3         89.36
Pretax($m)    8.1          0.123
Net($m)        6.39         0.819
EPS               6.5c         0.8c
Int div           7.5c          5c

Payable        April 4
                   Close        Change
Shares (last) $2.80      steady

Chief operating officer Marcus Moufarrige, son of founder Alf, said there was a “muted excitement" about the second half of the financial year.

"We still think there's a lot of uncertainty out there in the market and we think there are still difficult times ahead," Mr. Moufarrige said.

"And while Australia has been strong it is showing signs of being a bit shakier.

"But ... the US, whilst it has been shaky, is starting to show signs of life. So we're pretty happy with the timing and the decision to go to the US."

Pre-tax mature floor profit (profit on fully operational floors) for the first half was $18.5 million, with a forecast full-year profit for the segment of $37 million.

For the half, Servcorp made a $10.36 million loss on immature floors (floors that are not yet fully operational) and is forecasting a full-year loss of $20 million on the segment.

Mr. Moufarrige's brother Taine stepped down from Servcorp's executive team during the year and is now a non-executive director. Mr. Moufarrige said the company was close to making executive appointments to help fill the role.

Source: Australian Financial Review