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Servcorp co-working space in Sydney. Source: Servcorp
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  • In FY21, workspace provider Servcorp (SRV) faced a challenging economic climate, as evidenced by a decrease in underlying net profit
  • The firm made a statutory profit of $22.1 million, up from $6.9 million the year before, a figure influenced by $20.9 million in write-offs in FY20
  • Despite the uplift, underlying net profit before tax was about 20 per cent lower in the most recent fiscal year, at $30 million
  • The directors of Servcorp have declared a final unfranked dividend of nine cents per share, bringing the total dividend for FY21 to 18 cents per share
  • Shares in SRV rounded off the day at $3.35, down 1.47 per cent.

Workplace provider Servcorp (SRV) encountered a difficult business climate in FY21, which has been underscored by a drop in underlying net profit.

The firm made a statutory profit of $22.1 million, up from $6.9 million the year before, a figure influenced by $20.9 million in write-offs in FY20.

Despite the uplift, underlying net profit before tax was about 20 per cent lower in the most recent fiscal year, at $30 million.

The COVID-19 pandemic continues to wreak havoc on trade conditions in every market where the company conducts business in Europe, South East Asia, Australia, New Zealand, North Asia and the US.

Through FY21, occupancy levels remained reasonably constant, with mature floor occupancy ending the year at 73 per cent.

While the COVID-19 pandemic originally had a big impact on coworking, the company said its pre-COVID investment in renovating reception spaces played a key role in its ability to maintain serviced office occupancy levels over 70 per cent.

Servcorp said across its worldwide presence, there is still downward pricing pressure while client numbers in virtual offices have nearly returned to pre-COVID levels.

In the last two months, coworking has seen a significant increase in areas that aren’t on lockdown or in a state of emergency, the company said. It also claimed it is seeing an increase in coworking inquiries in areas where vaccination rates are above 60 per cent.

Revenue and other income fell 22 per cent to $275.7 million, which the company said reflected tough trading conditions but was partly offset by consolidating its global footprint in FY20.

Free cash (net operating cash flow before tax) of $42.6 million for the 2021 financial year was down 41 per cent while underlying free cash of $49.9 million, fell by 25 per cent.

Cash balances of $97 million at June 30 2021, down $4.4 million were owing to a strong Australian dollar and $8 million in downward cash balance revaluations, with cash balances currently in excess of $110 million.

The company said it remains optimistic as the rollout of vaccines around the world, coupled with fiscal stimulus, will support a slow return to pre-COVID levels in some markets.

The directors of Servcorp declared a final unfranked dividend of nine cents per share, bringing the total dividend for FY21 to 18 cents per share.

Subject to COVID impacts, combined with increasing vaccination programs, the company’s guidance in the 2022 financial year for mature net profit before non-cash impairment of assets and tax is between $33 million and $36 million.

Shares in SRV rounded off the day at $3.35, down 1.47 per cent.

SRV by the numbers
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