Earnings momentum and tailwinds for Servcorp

Robert Frost

OC Funds Management

Executive service and virtual office provider, Servcorp (SRV), delivered an excellent FY15 result which highlighted the operating leverage in the business model with revenue up 15%, NPAT up 26% and operating cash flow up 49%. SRV continues to grow strongly in both its Europe & Middle Eastern division and its North Asian division, while its US division is on track to become profitable in the current financial year. We are forecasting continued earnings momentum in FY16 (company guidance is for at least 17% NPBT growth) as recently added floor capacity continues to mature and new leases begin to contribute to profitability. The falling Australian dollar will continue to provide a tailwind for earnings translation and the balance sheet is ‘net cash’ which will provide a buffer should global growth stagnate. (VIEW LINK)

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Robert Frost
Head of Investments
OC Funds Management

Robert was appointed Head of Investments in 2009 and has been a Portfolio Manager since joining OC Funds Management in 2001. Robert is also an Executive Director of parent company, Copia Investment Partners.

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