Servoca

Shares in staffing specialist Servoca (SVCA) jumped by a third on relief that, despite tough market conditions, it has only suffered a 5% dip in pre-tax profits.

AIM-listed Servoca witnessed very changing fortunes in the year to September, following a 4% dip in sales to £47.9m, and pre-tax profits of £1.39m. In its healthcare arm, Servoca has continued to witness heavy pressure on demand and spend, particularly in doctor recruitment.

Nurse staffing sales fell 7% but it managed to maintain several key relationships. However, the doctors arm slumped 32% due to difficulties in its off-framework business. Meanwhile, in education, Servoca has witnessed a 24% slide in sales, largely as a result of public funding restrictions.

On the flip side, the outsourcing arm hoisted revenues 66% to £16.4m, with the domiciliary care arm doubling. Trading from ten branches, Servoca is keen to expand further, with notable demand for the provision of complex and continuing care for ongoing medical conditions. The security operation is also doing well, thanks to a broader offering and the award of several lucrative contracts.

Broker finnCap expects market conditions in recruitment to remain tough, so the challenge for Servoca is to keep winning work in outsourcing. Forecasts for 2012 are for pre-tax profits of £1m and EPS of 0.7p. Entrepreneur Bob Morton has a 57% stake, but given the outlook (and net debt of £2.8m) the shares are rated as a hold.