TIDMSUR
RNS Number : 2598D
Sureserve Group PLC
25 June 2019
25 June 2019
Sureserve Group plc, the asset and support services group
Unaudited Interim Results for the six months ended 31 March 2019
(H1 FY19)
Transformed business positioned for growth
Bob Holt, Chairman of Sureserve Group commented:
"I am pleased to report an excellent set of results for the 6
months ended 31 March 2019, with the Group trading comfortably
ahead of the previous year.
Both our Compliance and Energy business groups showed a
significant improvement year on year. It should be remembered that
the first half of our year takes into account the winter months
where gas in particular incurs significantly higher costs than the
summer months. It was pleasing to see our smart meter installation
business achieve profitability and we look to the future with a
positive view on that business.
The results demonstrate that we were well ahead of the
comparable period last year and the Board look forward to achieving
a successful outcome for the year to September.
It would be remiss of me to not highlight the commitment from
Michael McMahon and the operational and support management teams. I
commend my colleagues for their hard work and desire to drive the
Group to market leading positions in the markets they serve. We
operate across both the public and private sector markets which
have seen difficult UK wide trading conditions, and our performance
against this is a further demonstration of our ability to win new
business on a profitable and cash generative basis.
I personally look forward to bringing you further good news in
the future."
Financial highlights
Ø Revenue from continuing operations grew by 13% to GBP102.5m
(H1 FY18: GBP91.1m)
Ø Underlying EBITA(1) from continuing operations grew by 17% to
GBP3.1m (H1 FY18: GBP2.7m)
Ø Underlying EBITA(1) margins from continuing operations were
3.0% (H1 FY18: 2.9%)
Ø Underlying pre-tax profit(2) of GBP2.5m (H1 FY18: GBP1.9m)
Ø Group profit before tax from continuing operations of GBP1.1m
(H1 FY18: Loss of GBP0.5m), after amortisation of acquisition
intangibles of GBP1.4m (H1 FY18: GBP2.2m) and finance expenses of
GBP0.6m (H1 FY18: GBP0.7m)
Ø Underlying cash conversion of 51% (H1 FY18: 25%)
Ø Losses from discontinued operations of GBPnil (FY18: losses of
GBP11.8m resulting from the impairment exercise undertaken in the
prior year as part of the preparation of these activities for
sale). Earnings per share from continuing operations of 0.6p (H1
FY18: loss per share of 0.2p)
Ø Earnings per share from continuing operations and discontinued
operations of 0.6p (H1 FY18: loss per share of 7.7p).
Ø Balance sheet remains robust, with net debt of GBP12.9m (31
March 2018: GBP14.2m) at the end of our peak seasonal working
capital period
Operational highlights
Ø Repositioning of the Group to focus on Compliance and Energy
Services and leveraging the strength of the Sureserve brand to
capture new business is bearing fruit
Ø High bidding success rate led to contract wins in the period
valued at GBP54.5m contributing to an order book of GBP350.5m,
representing a 11% fall on the comparative period mainly due to the
end of a number of long-term contracts (31 March 2018:
GBP395.9m)
Ø Our number of frameworks stood at 291 (31 March 2018: 258),
with a value of GBP1.2bn (31 March 2018: GBP1.1bn), representing a
9% rise on the comparative period
Ø Launched Sureserve Academy to provide skills training for
employees and sourcing future workforce
Ø New appointment of Chief Financial Officer Peter Smith,
formerly at MITIE
Outlook
Ø The de-risked and refocused Group is making excellent progress
and the underlying performance of Compliance and Energy Services is
strong
Ø Strong regulatory drivers continue to underpin demand
demonstrated by our strong order book and visibility of future
earnings
Ø The Group is trading comfortably ahead of the previous year
and we are well positioned for further growth
Enquiries
Sureserve Group
Bob Holt, Chairman 07778 798 816
Michael McMahon, Chief Operating Officer 07787 536 000
Shore Capital (Nominated Adviser and Broker) 020 7408 4090
Antonio Bossi / Andy Crossley
Camarco (Financial Public Relations)
Ginny Pulbrook 020 3757 4992
Tom Huddart
Ollie Head
Notes to editors
The Sureserve Group is a leading compliance and energy support
services group that performs critical functions in homes, public
and commercial buildings, with a focus on clients in the UK public
sector and regulated markets. Services are delivered through two
divisions: Compliance and Energy Services.
The Group was founded in 1988 and is headquartered in Basildon,
Essex. It currently employs some 2,000 staff from 23 offices across
the UK.
Definitions
1. EBITA is earnings before interest, tax and amortisation of
acquisition intangibles. Underlying EBITA is defined as operating
profit before deduction of exceptional and other items, as outlined
in Note 3 and on the face of the Condensed Consolidated Statement
of Comprehensive Income. Underlying EBITA is the same as "Operating
profit before exceptional and other items" on the face of the
Condensed Consolidated Statement of Comprehensive Income, but used
as terminology in light of being a key performance measurement for
management in the Group.
2. Underlying pre-tax profit is profit before tax from
continuing operations before the deduction of exceptional and other
items, as outlined in Note 3 and on the face of the Condensed
Consolidated Statement of Comprehensive Income. As set out in the
Condensed Consolidated Statement of Comprehensive Income, other
underlying numbers are stated before exceptional and other items
(discussed further in Note 3). Underlying profit after tax and
underlying earnings per share are, where relevant, stated net of an
imputed tax charge.
CHAIRMAN'S STATEMENT
I am pleased to report an excellent set of results for the 6
months ended 31 March 2019.
Both our Compliance and Energy Services business groups showed a
significant improvement year on year. It should be remembered that
the first half of our year takes into account the winter months
where gas in particular incurs significantly higher costs than the
summer months. It was pleasing to see our smart meter installation
business achieve profitability and we look to the future with a
positive view on that business.
The results demonstrate that we were well ahead of the
comparable period last year and the Board looks forward to
achieving a successful outcome for the year to September.
Revenues from continuing operations grew 13% to GBP102.5m (H1
FY18: GBP91.1m). Underlying EBITA grew by 17% to GBP3.1m (H1 FY18:
GBP2.7m) and operating profits were GBP1.7m (H1 FY18: GBP0.2m). Net
debt was GBP12.9m (31 March 2018: GBP14.2m) at the end of the
period, where our cash conversion is seasonally low.
Although the Group's order book fell 11% to GBP350.5m against
the comparative period, due mainly to a number of long-term
contracts coming to an end within the period, we have also seen an
encouraging 9% growth on the value of frameworks we are on,
compared to the previous year.
These results demonstrate a turnaround in the Group's fortunes
following a difficult period and the divestment of the construction
and property services business groups. The Board believe that all
legacy matters have now been provided for.
It would be remiss of me to not highlight the commitment from
Michael McMahon, our Chief Operating Officer, and the operational
and support management teams. I commend my colleagues for their
hard work and desire to drive the Group to market leading positions
in the markets they serve. We operate across both the public and
private sector markets which have seen difficult UK wide trading
conditions, and our performance against this is a further
demonstration of our ability to win new business on a profitable
and cash generative basis.
I am also pleased to announce that Peter Smith is joining the
Group as Chief Financial Officer effective 29 July 2019 following
an extensive search process. Peter has held senior finance roles at
companies such as MITIE, OCS Group, Balfour Beatty and DHL over the
past thirteen years and I look forward to working with him as we
roll out our growth strategy over the years ahead.
I personally look forward to bringing you further good news in
the future.
OPERATIONAL REVIEW
Compliance (63% of continuing Group revenue / H1 FY18: 61%)
Compliance: six months ended Unaudited Unaudited Change
31 March 6 months to 6 months
31 March 2019 to 31
March
2018
Revenue (GBPm) 65.7 56.1 17.2%
--------------- ---------- ---------
Underlying EBITA (GBPm) 2.6 2.4 11.6%
--------------- ---------- ---------
Underlying EBITA margin 4.0% 4.2% (0.2pts)
--------------- ---------- ---------
The Compliance division provides planned and responsive
maintenance, installation and repair services predominantly to
local authority and housing association clients, in the areas of
domestic and commercial gas, fire and electrical, water and air
hygiene, and lifts. These services cover clients' social housing
and public building assets, as well as industrial and commercial
properties. Gas services comprise around three quarters of the
division and we continue to represent the largest player in this
fragmented and typically localised market.
We are typically paid for service and repair work on a fixed
price basis evenly through the year. The gas businesses (which as
noted above make up the majority of the division's annual revenues)
have more call-outs during colder months, resulting in higher
labour and materials costs, meaning we are far more profitable and
cash generative in the warmer months when call-out rates are lower
and those same engineers can be deployed to jobs that yield further
income. As a result, a significant proportion of the division's
annual profit continues to arise during the second half of the
financial year.
The division showed strong period-on-period revenue growth of
17.2% to GBP65.7m (H1 FY18: GBP56.1m), driven by further new
contract wins and extensions in addition to increasing regulatory
demands in the sector, which saw a focus by some clients on
higher-than-expected installation works in the first half of the
year. Underlying EBITA increased by 11.6% to GBP2.6m (H1 FY18:
GBP2.4m). Ongoing operational improvements within the gas
businesses have seen a small improvement in EBITA performance
overall, however most of the additional profitability has been
driven by the increased revenues in comparison to the same period
last year.
The division continued its excellent track record on new wins
during the period with particular success within our K&T
business, including an GBP8.6m five year (possible extension to
ten) gas service and repair contract with HARCA, an 18 month
extension with L&Q worth GBP4.5m and further gas contracts with
Hammersmith (GBP4m, one year), Optivo (GBP3m, 4 years), Red Kite
(GBP2.7m, 3 years) and Moat HA (GBP2m, 2 years). Other significant
wins in the division include GBP10m for Thurrock and GBP7.5m for
Welwyn Hatfied for gas service and maintenance works.
The outlook for our Compliance businesses remains strong,
underpinned by the continuing wins of long-term contracts and
levels of frameworks to which the division has been appointed. With
the trading environment pushing towards greater levels of
regulation, there is a growing stimulus in demand for our
compliance services expertise.
Energy Services (37% of continuing Group revenue / H1 FY18:
39%)
Energy Services: six months Unaudited Unaudited Change
ended 31 March 6 months 6 months
to 31 March to 31 March
2019 2018
Revenue (GBPm) 38.0 36.6 3.9%
------------- ------------- -------
Underlying EBITA (GBPm) 1.9 1.6 18.6%
------------- ------------- -------
Underlying EBITA margin 5.0% 4.4% 0.6pts
------------- ------------- -------
Energy Services provides a range of energy efficiency services
for social housing and private homes through two businesses:
-- Everwarm provides insulation and heating, and renewable
technologies including electrical vehicle charging points, battery
storage and solar PV. Everwarm also uses these services to deliver
carbon emissions savings for energy companies, enabling them to
meet their legislative targets. The insulation operations are
driven by seasonal influences, as we are unable to render or use
fixing glue necessary for insulation at temperatures below three
degrees. As a result, we typically experience a far larger number
of productive working days in summer, compared to winter months,
with the result that the business sees higher revenues and margins
in H2 each year.
-- Providor is a leading national installer of smart meters
(operating as a meter asset manager and meter operator), working
for several "big six" and challenger utilities, who are required to
install smart meters in every home in England, Wales and Scotland.
There are more than 26 million homes for the energy suppliers to
access, with the goal of every home being offered a smart meter by
2020. The national smart metering programme has been beset by
delays, not least the advent of next generation SMETS 2 meters, for
which the mandated implementation deadline has slipped a number of
times.
The division showed period on period revenue growth of 3.9% to
GBP38.0m (H1 FY18: GBP36.6m), reflecting increased activity within
all departments of the Everwarm business with the exception of
insulation, which has been impacted by ECO3 challenges, and further
offset by a decrease in meter installation work due to the
transitional period. EBITA improved 18.6% to GBP1.9m (H1 FY18:
GBP1.6m), due to a move to a breakeven H1 trading position in our
smart metering operations combined with an overall increase in
profitability of the Everwarm business largely due to revenue
increases.
As we have previously highlighted, there have been continued
delays to the national smart meter roll-out and indeed, there are
further derogations permitting the installation of older SMETS1
meters. This has adversely impacted anticipated installation
volumes, compounding the challenges we outlined in previous annual
reports and we are continuing to apply a range of approaches to
navigate this challenging time. As such, we continue to manage our
smart metering contracts responsibly and provide strong and secure
employment for our engineers. With this level of uncertainty
remaining in the smart metering market, costs are continuing to
rise and we repeat our previous belief that it is imperative all
stakeholders in the national smart meter roll out programme work
together to agree an achievable timetable with consistent volumes,
to avoid further cost increases.
Carbon prices remained largely stable during the period however
volumes were impacted by the transition to "ECO3" which has proven
challenging due to changes in measure types and qualifying
property. We continue to work through this period and believe we
are well-placed to deliver on behalf of our Utility partners
despite the initial difficulties.
The Scottish Government's flagship Home Energy Efficiency
Programme for Scotland ("HEEPS") continued to perform well in the
first half, bringing a diversified installation portfolio, focusing
on central heating, boiler improvements and other energy efficiency
installation measures. Our Warmworks joint venture delivering the
Warmer Homes Scotland initiative for the Scottish Government saw
continued strong performance and we were delighted that in April
our contract was extended to 2022.
We have now concluded the mobilisation of the Arbed 3 programme
for the Welsh Government via our joint venture with the Energy
Saving Trust, focused on improvements to households likely to be
living in severe fuel poverty. The contract is now seeing
consistent and growing monthly measure installation performance,
which we expect to continue into the second half of the year as we
focus on delivery.
Other notable successes further to the HEEPS extension above
during the period include follow on work for Glasgow City via a
GBP1.9m award for their 18/19 programme delivery and further EWI
work for Fife in Kirkcaldy (GBP1.7m), in addition to a significant
smart metering win with Octopus Energy for delivery of SMETS2
installations and asset management, estimated as worth up to
GBP9.4m over an initial 18 month term.
New wins and order book
The Board is encouraged that high bidding success rates continue
to be achieved by the Group. Contract wins in the period totaled
GBP54.5m, contributing to a period-end order book of GBP350.5m.
This represented a 11% decrease on the comparative period (31 March
2018: GBP395.9m). The order book remains strong across our
continuing business lines as we continue to focus on securing
contracts with long term visibility and robust value.
Our number of frameworks stood at 291 (31 March 2018: 258), with
a value of GBP1.2bn (31 March 2018: GBP1.1bn), representing a 9%
rise on the comparative period.
FINANCIAL REVIEW
The Operational Review provides a detailed overview of our
trading performance during the period. This Financial Review
therefore covers other aspects of the financial results, cash flows
and financial position.
Trading overview
Revenues from continuing operations grew 13% to GBP102.5m (H1
FY18: GBP91.1m), driven by the impact of contracts secured and
mobilised by Compliance in 2018, in addition to higher installation
levels for clients and the stronger H1 revenue delivery within the
Everwarm business. Underlying EBITA grew by 17% to GBP3.1m (H1
FY18: GBP2.7m) and the Group generated operating profits of GBP1.7m
(H1 FY18: GBP0.2m), driven by performance improvements in the
current period.
Central costs marginally increased to GBP1.4m (H1 FY18:
GBP1.3m).
Underlying pre-tax profit was GBP2.5m (H1 FY18: GBP1.9m). Group
profit before tax from continuing operations was GBP1.1m (H1 FY18:
loss of GBP0.5m) and profits after tax from continuing operations
were GBP0.9m (H1 FY18: losses of GBP0.3m), resulting in earnings
per share from continuing operations of 0.6p (H1 FY18: loss per
share of 0.2p).
Exceptional items
Net exceptional items in the period amounted to GBPnil (H1 FY18:
costs of GBP0.2m). Further details are provided in note 3.
Amortisation of acquisition intangibles
When Sureserve Group acquires businesses, the estimated value of
their intangible assets (such as customer contracts and non-compete
undertakings from vendors) is recognised on the Group's Statement
of Financial Position. These acquisition intangibles are then
amortised over their expected useful lives, estimated at between
four and six years. We exclude this amortisation charge from our
calculation of adjusted EBITA as the Board believes the underlying
operating performance of our business is better understood before
such costs.
Amortisation of acquisition intangibles was GBP1.4m during the
period (H1 FY18: GBP2.2m) with the decrease of GBP0.8m reflecting
the fact that we have taken amortisation charges in prior periods,
meaning we are amortising a reduced base of intangible assets.
Finance expense
Finance expense is the interest charged on our debt facilities
and the unwinding of the discount applied to deferred consideration
on acquisitions. The expense in the first half was GBP0.6m (H1
FY18: GBP0.7m).
Tax
The effective tax rate for the period was 19%, compared with a
statutory rate of corporation tax of 19%. We expect a full year
effective tax rate of 19%.
Earnings per share
Profits from continuing operations for the period were GBP0.9m
(H1 FY18: loss of GBP0.3m). Based on the weighted average number of
shares in issue during the period of 157.5m, this resulted in basic
earnings per share from continuing operations of 0.6p (H1 FY18:
loss per share of 0.2p). Total earnings per share (including
discontinued operations) were 0.6p (H1 FY18: losses per share of
7.7p).
Cash conversion
Underlying operating cash conversion represented an inflow of
GBP1.6m (H1 FY18: GBP0.7m) as discussed in note 10 and reflected an
operating cash conversion from continuing operations of 51% (H1
FY18: 25%). We calculate underlying operating cash conversion as
cash generated from continuing operations excluding the cash impact
of exceptional items and amortisation of acquisition intangibles,
divided by underlying EBITA from continuing operations, to provide
a consistent comparison of underlying cash generation. Operating
cash outflow in the period was GBP1.8m (H1 FY17: GBP10.9m).
On a steady state basis, we expect to continue to target an
average stabilised annual underlying operating cash conversion of
80% over the long term.
Net debt and banking facilities
At 31 March 2019, the Group had net debt of GBP12.9m (31 March
2018: GBP14.2m), comprising cash and other items of GBP1.3m (31
March 2018: GBP3.6m), together with a GBP14.2m drawing (31 March
2018: GBP17.8m) under our revolving credit facility, out of a total
facility of GBP25m.
Statement of financial position
The principal items in our Balance Sheet are goodwill,
intangible assets, debt and working capital.
The principal movement in net assets from 31 March 2018 to 31
March 2019 reflected the disposal of Lakehouse Contracts and Foster
Property Maintenance, amortisation of acquisition intangibles, and
movements in working capital.
The principal movements in working capital are notes below;
Unaudited Unaudited Audited
31 31 30 September
March March 2018
2019 2018
GBP'000 GBP'000 GBP'000
Trade receivables 23.3 20.9 19.0
Accrued income 15.1 13.3 15.7
Trade payables (23.7) (23.5) (24.6)
Accruals (7.8) (8.9) (7.9)
=========== =========== ==============
Net current assets excluding cash were GBP8.2m (31 March 2018:
GBP3.7m).
As at 31 March 2019, we held provisions of GBP5.4m (31 March
2018: GBP2.3m; 30 September 2018: GBP7.7m). Some GBP2.3m was
utilised in in the period in relation to resolving the ongoing
matters to which the provisions pertain. We have reviewed the
provision that was made at year end and the Board consider that all
legacy matters have been provided for.
Risks
The Board considers strategic, financial and operational risks
and identifies actions to mitigate those risks. Key risks and their
mitigation were disclosed on pages 22 to 25 of the Annual Report
for the year ended 30 September 2018.
We continue to manage a number of potential risks and
uncertainties, including claims and disputes - many of which are
common to other similar businesses - which could have a material
impact on short and longer-term performance.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 31 March 2019
Unaudited Unaudited Audited
six months six months year ended
ended ended 30 September
31 March 31 March 2018
2019 2018
Notes GBP'000 GBP'000 GBP'000
Revenue 2 102,476 91,058 190,750
Cost of sales (88,130) (79,038) (163,380)
Gross profit 14,346 12,020 27,370
Other operating expenses (11,622) (9,152) (19,558)
Share of results of joint venture 371 (213) 226
Operating profit before exceptional
and other items 3,095 2,655 8,038
Exceptional costs 3 - (616) (1,048)
Exceptional income 3 - 373 757
Amortisation of acquisition intangibles 3 (1,367) (2,186) (4,325)
---------------
Operating profit 2 1,728 226 3,422
Finance expense (609) (727) (1,475)
Profit / (loss) before tax from
continuing operations 2 1,119 (501) 1,947
Taxation 4 (218) 173 (782)
Profit / (loss) for the period
attributable to the equity holders
of the Group from continuing operations 901 (328) 1,165
------------- ------------- ---------------
Discontinued operations
Loss for the period from discontinued
operations - (11,826) (11,520)
------------- ------------- ---------------
Profit / (loss) for the period
attributable to the equity holders
of the Group 901 (12,154) (10,355)
============= ============= ===============
Earnings / (loss) per share from
continuing operations
Basic 6 0.6p (0.2)p 0.7p
Diluted 6 0.6p (0.2)p 0.7p
===== ======= =====
Earnings / (loss) per share from
continuing operations and discontinued
operations
Basic 6 0.6p (7.7)p (6.6)p
Diluted 6 0.6p (7.7)p (6.6)p
===== ======= =======
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 31 March 2019
Audited
Unaudited Unaudited As at
As at As at 30 September
31 31 2018
March March
2019 2018
Notes GBP'000 GBP'000 GBP'000
Non-current assets
Goodwill 42,406 42,169 42,923
Other intangible assets 3,701 7,093 4,927
Property, plant and equipment 1,483 1,271 1,474
Interest in joint venture 675 226 865
Deferred tax asset 195 - -
48,460 50,759 50,189
------------ ------------ --------------
Current assets
Inventories 3,034 4,296 4,222
Trade and other receivables 45,846 41,471 42,618
Corporation tax receivable - - 769
Assets held for sale - 24,138 -
Cash and cash equivalents 8 1,407 3,730 1,705
------------ ------------ --------------
50,287 73,635 49,314
------------ ------------ --------------
Total assets 98,747 124,394 99,503
------------ ------------ --------------
Current liabilities
Loans and borrowings 7,8 - - 12,926
Trade and other payables 38,902 41,434 39,334
Finance lease obligations 8 53 131 83
Provisions 9 1,549 218 5,102
Liabilities held for sale - 24,183 -
Income tax payable 192 256 -
------------ ------------ --------------
40,696 66,222 57,445
------------ ------------ --------------
Net current assets / (liabilities) 9,591 7,413 (8,131)
------------ ------------ --------------
Non-current liabilities
Trade and other payables - - 269
Loans and borrowings 7,8 14,199 17,750 -
Finance lease obligations 8 34 89 60
Deferred tax liability - 172 37
Provisions 9 3,813 2,073 2,593
18,046 20,084 2,959
------------ ------------ --------------
Total liabilities 58,742 86,306 60,404
------------ ------------ --------------
Net assets 40,005 38,088 39,099
============ ============ ==============
Equity
Called up share capital 15,754 15,753 15,753
Share premium account 25,318 25,314 25,314
Share-based payment reserve 776 776 776
Own shares (290) (290) (290)
Merger reserve 20,067 20,067 20,067
Retained earnings (21,620) (23,532) (22,521)
Equity attributable to equity
holders of the Company
Equity attributable to equity
holders of the Company 40,005 38,088 39,099
============ ============ ==============
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 31 March 2019
Share-based
Share payment
Share premium reserve Own shares Merger Retained Total
capital account reserve earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 October 2017
(audited) 15,753 25,314 776 (290) 20,067 (11,378) 50,242
Loss for the period - - - - - (12,154) (12,154)
At 31 March 2018
(unaudited) 15,753 25,314 776 (290) 20,067 (23,532) 38,088
Profit for the period - - - - - 1,799 1,799
Dividends paid (note
5) - - - - - (788) (788)
At 30 September 2018
(audited) 15,753 25,314 776 (290) 20,067 (22,521) 39,099
========== ========== ============ ============= ========== =========== =========
Issue of shares 1 4 - - - - 5
Profit for the period - - - - - 901 901
At 31 March 2019
(unaudited) 15,754 25,318 776 (290) 20,067 (21,620) 40,005
======= ======= ==== ====== ======= ========= =======
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the six months ended 31 March 2019
Unaudited Unaudited Audited
six months six months year ended
ended ended 30 September
31 March 31 March 2018
2019 2018
Notes GBP'000 GBP'000 GBP'000
Cash flows from operating activities
Cash used in operations 10 (1,752) (10,892) (5,682)
Interest paid (467) (443) (1,058)
Interest received - 1 -
Taxation 511 132 (152)
Net cash used in operating activities (1,708) (11,202) (6,892)
------------- ------------- ---------------
Cash flows from investing activities
Payment of deferred consideration
on prior year acquisitions - (1,245) (1,245)
Receipt of deferred consideration 916 - -
on prior year disposals
Purchase of property, plant and
equipment (334) (236) (430)
Purchase of intangible assets (300) (150) (449)
Sale of property, plant and equipment 13 42 65
Net cash generated from / (used
in) investing activities 295 (1,589) (2,059)
------------- ------------- ---------------
Cash flows from financing activities
Dividend paid to shareholders - - (788)
Proceeds from bank borrowings 1,500 - -
Repayment of bank borrowings - (9,500) (14,500)
Repayments to finance lease creditors (57) (106) (183)
Finance issue costs (328) (2) (2)
Net cash generated from / (used
in) financing activities 1,115 (9,608) (15,473)
------------- ------------- ---------------
Net decrease in cash and cash
equivalents (298) (22,399) (24,424)
Cash and cash equivalents at beginning
of year 1,705 26,129 26,129
Cash and cash equivalents at end
of year 1,407 3,730 1,705
============= ============= ===============
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended 31 March 2019
1. Basis of preparation
The results presented in this report are unaudited and they have
been prepared in accordance with the recognition and measurement of
International Financial Reporting Standards (`IFRS') as adopted by
the EU that are expected to be applicable to the financial
statements for the year ending 30 September 2019 and on the basis
of the accounting policies to be used in those financial
statements. The figures for the year ended 30 September 2018 are
extracted from the statutory accounts of the group for that period
The condensed consolidated financial statements do not include all
the information and disclosures required in the annual financial
statements and should be read in conjunction with the Group's
annual financial statements, being the statutory financial
statements for Sureserve Group plc, as at 30 September 2018, which
have been prepared in accordance with IFRS as adopted by the
European Union.
The condensed consolidated financial statements for the six
months ended 31 March 2019 do not comprise statutory accounts
within the meaning of Section 434 of the Companies Act 2006.
Statutory accounts for the year ended 30 September 2018 have been
approved by the Board of Directors and delivered to the Registrar
of Companies. These accounts, which contained an unqualified audit
report under Section 495, did not include a reference to any
matters to which the auditor drew attention by way of emphasis of
matter and did not contain a statement under Section 498 (2) or (3)
of the Companies Act 2006.
Significant accounting policies
The accounting policies adopted in the preparation of the
condensed consolidated financial statements are consistent with
those followed in the preparation of the Group's annual financial
statements for the year ended 30 September 2018, with the exception
of those noted below;
IFRS 9
IFRS 9 Financial Instruments is effective for accounting periods
beginning on or after 1 January 2018 and has been applied by the
Group from 1 October 2018. The adoption of the standard has not had
a material impact on the amounts reported.
IFRS 15
IFRS 15 sets out the principles to be applied in revenue
recognition, replacing those in IAS 18 Revenue, IAS 11 Construction
Contracts and their related guidance.
IFRS 15 is effective for accounting periods beginning on or
after 1 January 2018 and has been applied by the Group from 1
October 2018. Upon transition to IFRS 15, the Group applied the
'Cumulative Catch-Up' method. Under this method, there was no
adjustment to equity on 1 October 2018 and the comparative figures
presented in the financial statements will not be restated.
IFRS 16
We will evaluate the potential impact of IFRS 16 on the FY19
accounts, which will form the comparative figure when the standard
is adopted in FY20 and will provide guidance to the market
accordingly.
Seasonality
The Group has seasonal influences in specific areas. The
Compliance division experiences higher activity levels in Gas and
Lift services in colder weather, leading to higher working capital
requirements and lower profitability in winter, and the opposite in
the summer. Within Energy Services it is not possible to render
walls or use fixing glue at temperatures below three degrees
centigrade, nor perform cladding work in high winds. As such,
weather has an influence on this business, meaning that the Group
has to plan to increase capacity during warmer and more settled
periods to compensate for time lost during colder ones.
2. Operating segments
The Board of Directors has determined an operating management
structure aligned around the two core activities of the Group, with
the following operating segments applicable:
-- Compliance
-- Energy Services
All revenue and profit is derived from operations in the United
Kingdom only.
The following is an analysis of the Group's revenue and
Underlying EBITA by reportable segment:
Unaudited Unaudited Audited
six months six months year ended
ended ended 30 September
31 March 31 March 2018
2019 2018
GBP'000 GBP'000 GBP'000
Revenue
Compliance 65,743 56,075 116,275
Energy Services 38,002 36,571 77,734
Total segment revenue 103,745 92,646 194,009
Inter-segment elimination (1,269) (1,588) (3,259)
------------- ------------- ---------------
Total underlying revenue 102,476 91,058 190,750
------------- ------------- ---------------
Inter-segment trading comprises services provided between group
companies charged at prevailing market prices.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(continued)
For the six months ended 31 March 2019
2. Operating segments (continued)
Reconciliation of Underlying EBITA to loss before taxation
Unaudited Unaudited Audited
six months six months year ended
ended ended 30 September
31 March 31 March 2018
2019 2018
GBP'000 GBP'000 GBP'000
Underlying EBITA by segment
Compliance 2,640 2,365 6,104
Energy Services 1,896 1,599 4,025
Central costs 1 (1,441) (1,309) (2,091)
------------- ------------- ---------------
Total underlying EBITA 3,095 2,655 8,038
Exceptional costs - (616) (1,048)
Exceptional income - 373 757
Amortisation of acquisition intangibles (1,367) (2,186) (4,325)
Operating profit 1,728 226 3,422
Finance costs (609) (727) (1,475)
Profit / (loss) before taxation 1,119 (501) 1,947
============= ============= ===============
1 Central costs are those costs that are not allocated directly
in support of a segment and comprise certain group service
functions.
3. Exceptional and other items, including amortisation of acquisition intangibles
Unaudited Unaudited Audited
six months six months year ended
ended 31 ended 31 30 September
March 2019 March 2018 2018
GBP'000 GBP'000 GBP'000
Total exceptional costs - (616) (1,048)
Total exceptional income - 373 757
Amortisation of acquisition intangible
assets (1,367) (2,186) (4,325)
============= ============= ===============
Exceptional costs and income
Exceptional costs related to restructuring costs during previous
periods.
Exceptional income mainly related to the settlement of deferred
consideration on previous acquisitions at sums lower than
expectations.
Amortisation of acquisition intangibles
Amortisation of acquisition intangibles was GBP1.4m for the
period (2018: GBP2.2m); with the GBP0.8m reduction reflecting the
fact that we have taken amortisation charges in prior periods,
meaning we are amortising a reduced base of intangible assets.
Accounting treatment
The costs discussed above are considered non-trading because
they are not part of the underlying trading of the Group and (aside
from amortisation of acquisition intangibles and unwinding discount
of deferred consideration) are not expected to recur year to
year.
4. Taxation
The income tax charge for the six months ended 31 March 2019 is
calculated based upon the effective tax rates expected to apply to
the Group for the period of 19%.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(continued)
For the six months ended 31 March 2019
5. Dividends
The proposed final dividend for the year ended 30 September 2018
of 0.25 pence per share amounting to GBP0.4m and representing a
total dividend of 0.25 pence for the full year (2017: 0.5 pence per
share), was paid on 6 April 2019 to the shareholders on the
register at the close of business on 2 March 2019. The Directors do
not propose an interim dividend at March 2019.
6. Earnings / (losses) per share
The calculation of the basic and diluted earnings / (losses) per
share is based on the following data:
Unaudited Unaudited Audited
six months six months year ended
ended 31 ended 30 September
March 2019 31 March 2018
2018
Number Number Number
Weighted average number of ordinary
shares for the purposes of basic earnings
/ (loss) per share 157,541,890 157,527,103 157,527,103
Diluted
Effect of dilutive potential ordinary
shares:
Share options 189,136 6,803,308 7,316,715
------------- ------------- ---------------
Weighted average number of ordinary
shares for the purposes of diluted loss
/ earnings per share 157,731,026 163,330,411 164,843,818
============= ============= ===============
Earnings / (loss) for the purpose of
basic and diluted earnings per share
from continuing operations being net
earnings / (loss) attributable to the
owners of the Company from continuing
operations (GBP'000) 901 (328) 1,165
Basic earnings / (loss) per share from
continuing operations 0.6p (0.2)p 0.7p
Diluted earnings / (loss) per share
from continuing operations 0.6p (0.2)p 0.7p
Earnings / (loss) for the purpose of
earnings per share being underlying
net profit attributable to the owners
of the Company from continuing and discontinued
operations (GBP'000) 901 (12,154) (10,355)
Basic earnings / (loss) per share 0.6p (7.7)p (6.6)p
Diluted earnings / (loss) per share 0.6p (7.7)p (6.6)p
============= ============= ===============
The number of shares in issue at 31 March 2019 was
157,543,621.
The weighted average number of Ordinary shares in issue during
the year excludes those accounted for in the own shares
reserve.
7. Loans and borrowings
Unaudited Unaudited Audited
31 31 30 September
March March 2018
2019 2018
GBP'000 GBP'000 GBP'000
Bank loans and credit facilities at
amortised cost:
Current - - 12,926
Non-current 14,199 17,750 -
---------- ---------- --------------
14,199 17,750 12,926
Maturity analysis of bank loans and
credit facilities falling due:
In one year or less, or on demand - - 12,926
Between one and two years - 17,750 -
Between two and five years 14,199 - -
14,199 17,750 12,926
---------- ---------- --------------
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(continued)
For the six months ended 31 March 2019
8. Net debt
Unaudited Unaudited Audited
31 31 30 September
March March 2018
2019 2018
GBP'000 GBP'000 GBP'000
Cash and cash equivalents 1,407 3,730 1,705
Bank loans and credit facilities (14,199) (17,750) (12,926)
Finance lease obligations (87) (220) (143)
------------- ------------- --------------
(12,879) (14,240) (11,364)
============= ============= ==============
9. Provisions
Legal and
other
GBP'000
At 1 April 2018 (unaudited) 2,291
Identified on acquisition 27
Additional provision 5,490
Utilised in the period (102)
Disposal of Lakehouse Contracts Limited and Foster
Property Maintenance Limited (11)
---------
At 30 September 2018 (audited) 7,695
Utilised in the period (2,333)
---------
At 31 March 2019 (unaudited) 5,362
=========
Current provisions 1,549
=========
Non-current provisions 3,813
=========
Legal and other
Other costs relate to property dilapidation obligations,
potential contract settlement costs and other potential legal
settlement costs. These are expected to result in an outflow of
economic benefit over the next one to three years. GBP2.4m of the
provision has been settled in the period.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(continued)
For the six months ended 31 March 2019
10. Cash used in operations
Audited
Unaudited Unaudited year ended
six months six months 30 September
ended ended 2018
31 March 31 March
2019 2018
GBP'000 GBP'000 GBP'000
Operating profit 1,728 226 3,422
Adjustments for:
Depreciation 327 477 858
Amortisation of intangible assets 1,524 2,369 4,668
Profit on disposal of property, plant
and equipment (13) (38) (52)
Changes in working capital:
Inventories 1,188 (828) 305
Amounts owed by customers under construction
contracts - (2,660) 6,269
Amounts owed to customers under construction
contracts - (531) (1,786)
Trade and other receivables (3,976) (2,515) 18,010
Trade and other payables (197) (5,911) (29,185)
Provisions (2,333) (416) 3,638
Net change in working capital from
discontinued operations - (1,065) (11,829)
Cash used by operations (1,752) (10,892) (5,682)
------------- ------------- --------------
Underlying operating cash conversion
calculation
Cash used by operations (1,752) (10,892) (5,682)
Impact of exceptional and other costs
in the period 3,331 1,768 2,448
Cash impact of net change in working
capital from discontinued operations - 9,785 8,042
Underlying cash generated from operations 1,579 661 4,808
Operating profit before exceptional
items and amortisation of acquisition
intangibles 3,095 2,655 8,038
Underlying operating cash conversion
% 51% 25% 60%
------------- ------------- --------------
Impact of exceptional and other costs in the period relates to the
cash impact of Exceptional and other items as disclosed in Note
3.
11. Related party transactions
There have been no material changes to the related party
balances disclosed in the Group's Annual Report and Accounts 2018
and there have been no related party transactions that have
materially affected the financial position or performance of the
Group in the six months to 31 March 2019.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR PGUGUQUPBGRC
(END) Dow Jones Newswires
June 25, 2019 02:00 ET (06:00 GMT)
Grafico Azioni Sureserve (LSE:SUR)
Storico
Da Mar 2024 a Apr 2024
Grafico Azioni Sureserve (LSE:SUR)
Storico
Da Apr 2023 a Apr 2024