Software firm Servelec Group, a former stock market darling, said it is positive about the outlook for the group despite the challenges it faces following timing setbacks.
The Sheffield-based firm said it is in a robust financial position with a strong balance sheet.
Last month, Servelec saw £71m wiped off its value after it issued a profits warning, saying that operating profits in 2016 will be significantly lower than market expectations. The firm blamed challenging markets and the timing of orders. It also said it would reduce costs, including redundancies of under 20 people out of a workforce of 700.
On Wednesday it said trading is in line with the revised board expectations following the trading update announced on June 15.
Servelec’s CEO Alan Stubbs said: “Conditions in some of our markets remain challenging but we continue to gain market share and the board is confident that we are taking the necessary corrective actions in both Health & Social Care and Automation, for the business to succeed. We remain confident that we will generate shareholder value going forward.”
The firm said that Servelec Health & Social Care has been strengthened by the acquisitions of Synergy and Abacus in 2016, with Synergy already delivering three significant contract wins since the acquisition.
It said the momentum in Social Care is continuing with Servelec winning five out of seven contracts that have been awarded so far in 2016, with further opportunities remaining in this year’s pipeline.
Mr Stubbs said that Healthcare has maintained a high win rate on available North New opportunities, winning three out of four recent tenders in the UK and winning one Mental Health system in the Republic of Ireland.
In the automation division, Servelec said there have been delays in the anticipated increase in demand in its markets. It has reallocated resources across Automation businesses to reduce the impact of project delays and focus available manpower into the areas where there is a demand.
In Servelec Controls, the group said order entry for Power & Nuclear has already surpassed the order entry achieved in 2015.
It added that a renewed drive for sales in the Oil & Gas market positions the division to benefit from an expanded client base.