office buildings with a cloudy background
Image – Henry Thai.
  • Net profit after tax quoted as $15.4M, underlying net profit however $16.1M after tax.
  • Revenue and other income down 20% to $142M.
  • No external net debt, with interim dividend at 9.0 cents per share, 0% franked.

In yet another half-yearly results announcement, the commercial property sector shows signs of exceptional resilience, with Servcorp posting profits in the latest half-yearly released today.

Revenue for the ASX listed company was down 20% from the first half of FY2020, with much of the underlying net profit (before tax) of $19M coming from strong overseas figures in European, Middle Eastern and North Asian markets.

Servcorp performed poorly, however, in Australia, New Zealand and South-East Asia.

The impact of COVID left Servcorp with reduced cash balances, down $11.3M from 30 June 2020 to $90.1M, however, in a statement, Servcorp said underlying free cash provided some buffer against the impact of the pandemic.

Across hard-hit cities like New York City, Servcorp had to close a number of offices, seeing occupancies slump.

New openings were rare, with the only ones in Manila and Parramatta.

The outlook for the remainder of FY2021 is a cautious one, as the vaccine roll-out occurs and restrictions around the world start to ease.

Servcorp said the short term focus is on controlling expenditure and maintaining strong liquidity, and remain “cautiously optimistic” about the future.

In the statement to the ASX, Servcorp also said that:

“For the remainder of the 2021 financial year, we anticipate sustained difficult trading conditions however, even at a low case, the underlying business will remain profitable and cash generating. In those circumstances, we would expect to continue to make dividend payments consistent with the 2021 financial year interim dividend, and our long-term history and commitment to shareholders.”

It’s by no means an ace, but has a strong whiff of a Dominic Thiem two-sets-down comeback.

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