Sureserve Group PLC (AIM:SUR), the social housing energy services group, said it is well-positioned for further organic growth in a fragmented market.
The company said in its results statement covering the year to the end of September (FY21) that its momentum had continued into the new financial year.
Revenue in FY21 rose 24.7% to £244.0mln from £195.7mln the year before while profit before tax soared 76.7% to £13.8mln from £7.8mln.
Cash at the end of the financial year stood at £16.5mln, up from £9.8mln a year earlier.
No dividend has been proposed as the board has decided that the group's capital would be better deployed in driving its growth plans by retaining cash to invest in strategically enhancing acquisitions.
Sureserve said it is confident for the year ahead with 73% of FY22 revenue covered by an order book that was worth £527.1mln at the start of the financial year.
The group was participating in a total of 81 frameworks worth a total of £346.5mln at year end (2020: 94 frameworks worth £382.1mln).
"Sureserve is at an exciting stage of its corporate life, with a profitable and stable platform from which to grow. Our strong market position in the provision of energy services to the UK social housing sector provides the Group with excellent opportunities,” said Nick Winks, the non-executive chairman.
The company said it is on the look-out for bolt-on acquisitions that will grow each of its businesses in the gas heating and maintenance sector, and would seek to make strategic acquisitions of businesses with experience of renewable technology in the social housing sector.
Broker Peel Hunt said profit before tax of £13.6mln was ahead of the consensus estimate of £12.90mln.
Peel Hunt had expected a dividend of 1.5p but notes that the company has a handy pot of cash – equivalent to roughly one-eighth of the company’s market cap – to pursue both bolt-on and strategic acquisitions.
“The ambition is to double sales and significantly improve margins within the next five years,” Peel Hunt said.
The broker has increased its forecast for the current year’s earnings per share to 8.2p from 8.0p, leaving the shares on a projected earnings multiple of 10.5.
Peel Hunt rates the shares a ‘buy’, with a target price of 110p. The shares currently trade at 93p, up 7.5% today.
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