Servcorp (SRV) H1 2025 earnings summary

Executive summary

• Achieved record profits, underlying free cash, and dividends, with net profit after tax up 76% to $34.6m and underlying NPBIT up 19% to $34.4m, reflecting strong operational and financial performance.

• Maintained robust cash reserves, with unencumbered cash at $131.4m and a minimum cash balance of AUD 120 million, supporting organic growth and strategic expansion.

• Interim dividend of 14.0 cps (10% franked) declared, with total FY25 dividend expected to be at least 28.0 cps, marking a record payout and consistent dividend history.

• Continued global expansion with investment in new locations, technology, and AI initiatives, increasing office capacity and enhancing client services.

• Focus remains on organic growth, maintaining stability, and not overextending in a competitive market.

Financial highlights

• Statutory revenue rose 7% year-over-year to $168.1m; statutory NPBT up 70% to $38.3m; statutory NPAT up 76% to $34.6m.

• Underlying NPBIT grew 19% to $34.4m; underlying operating profit up 22% to $32.8m; underlying free cash reached $40.5m, up 13% year-over-year.

• Basic EPS increased 74% to 35.1 cps; underlying EPS up 21% to 31.5 cps.

• Return on net funds employed improved to 70%; net tangible asset backing per share increased to $2.10.

• Free cash generation and strong liquidity support ongoing expansion and dividend payments.

Outlook and guidance

• FY25 guidance reaffirmed: underlying NPBIT expected between $61.0m and $65.0m, with underlying free cash projected above $75.0m.

• Management expects to track toward the higher end of guidance, supported by strong cash generation and ongoing expansion.

• Dividend policy remains consistent, with future payments subject to cash position, profits, and currency stability.

• Focus remains on sustainable growth, revenue efficiency, and service conversion amid macroeconomic uncertainties.

• Expansion focus on Japan, Middle East, and potentially London; no new activity in Australia or China.