This article is from the Australian Property Journal archive
THE COVID-19 pandemic has had a severe impact on flexible workspace and the recovery, particularly for coworking, will take significantly longer than serviced and virtual office, Servcorp warns.
Servcorp reported a net profit of $6.9 million for the year to 30 June, an increase of 28.9% from the previous corresponding period. Revenue grew 4.6% to $352.9 million – a new record for the company. The company announced a final dividend of 9.00 cents per share, taking the full year dividend to 20 cents unfranked, down from 23 cents in the pcp.
Servcorp said the first three quarters were solid, however the COVID-19 significantly impacted trading conditions from late March.
“Leading up to the COVID-19 pandemic, management had already committed to, and executed a global footprint consolidation. The pandemic forced some further footprint reduction, particularly in the USA where we closed 12 locations in June. We believe our consolidated global footprint will allow us to better navigate the current and future economic uncertainty stemming from the COVID-19 pandemic as well as capitalise on the recovery,”
Occupancy of like for like floors was 69% at 30 June, down from a record high of 73% in 2019. All floor occupancy was 69%.
“The consequences of the COVID-19 pandemic for the flexible workspace industry have been unprecedented. In response, Servcorp has rapidly adapted to the present environment across our global footprint, with the first priority being to protect the health and safety of our team and clients.
“Virtual office clients were also impacted however this client base has now somewhat stabilised. There has been a severe impact to coworking and we expect the recovery to take significantly longer than our serviced and virtual office offerings,”
Despite the COVID-19 challenges, Servcorp is cautiously optimistic.
“While it remains unclear how long global COVID-19 restrictions will continue, and the recovery profiles as restrictions are eased, Servcorp’s operations are likely to remain adversely impacted at least in the short term.
“The focus for the next 12 months is on controllable measures; continued focus on controlling operating expenditure, including finalising the rental relief programs with each landlord; ensuring we maintain strong liquidity; making clients feel safe through full, unwavering adherence to any government requirements; preparing for recovery in each market in which we operate; and looking for opportunities for growth in mature markets with proven management performance.
“We have undertaken a detailed review of our business. For the 2021 financial year we anticipate that, even at a low case, Servcorp will remain profitable; consequently, we expect the underlying business to continue to generate substantial underlying free cash.”
