17 May 2022

Sureserve Group plc

("Sureserve" or the "Group")

Unaudited Interim Results for the six months ended 31 March 2022 (H1 FY22)

Continued momentum, high revenue visibility and strong order book drives confident outlook for full year

Sureserve, the Social Housing Energy Services Group, is pleased to announce its unaudited interim results for the six-month period ended 31 March 2022.

Financial highlights

·      Revenue from continuing operations^*1: £126.2m (H1 2021: £101.8m), a 24.0% increase on H1 2021

·      Operating profit from continuing operations^*1,2: £5.1m (H1 2021: £3.6m), 41.7% growth on H1 2021

·      Profit before tax from continuing operations^*1: £4.3m, (H1 2021: £3.2m) representing 34.4% growth on H1 2021

·      Basic Earnings per share from continuing operations^*1: 2.2p (H1 2021: 1.6p), a 37.5% increase on H1 2021

·      Net cash^*3 (excluding lease liabilities): £11.8m (31 March 2021: £9.7m)

·      Order book from continuing operations^*1 of £512.1m (31 March 2021: £340.9m), a 50.2% increase on H1 2021

Operational overview

·      Integration of CorEnergy successfully completed, following acquisition in December 2021, expanding Sureserve Group's services in sustainable energy solutions

·      New contract wins and contract extensions in Social Housing Energy Services ("SHES") of £101.2m (H1 2021: £65.7m), a 54.0% increase

·      Board strengthened with appointment of Sam Vohra as CFO and Tania Songini as Non-Executive director

·      ESG actions underway across the Group with initiatives including an employee SAYE scheme offer, Employee Engagement Survey, Academy Awards, a partnership with the Armed Forces, and continued transition of fleet to electric vehicles.

Outlook 

·      Strategically positioned to deliver clear growth in our market-leading SHES businesses

·      Sureserve is cementing its position at the forefront of the energy transition in the UK with an established presence in growth markets of energy efficiency, solar PV, air source heat pumps and battery storage

·      96% of FY22 expected revenue covered by the order book^*1, providing visibility of revenue streams

·      Continued momentum into full year with high revenue visibility from long-term, regulatory-led local authority and housing association contracts

·      General economic headwinds in terms of cost increases may have an impact, but mitigating actions put in place to minimise these.

^*1 - Continuing operations comprises the Social Housing Energy Services division and Central costs segment. Two businesses, Sureserve Fire and Electrical Limited and Precision Lift Services Limited have been classified as businesses held for sale and are excluded from continuing operations.

^*2 - Operating profit before impairment of goodwill, amortisation of acquisition related intangibles and acquisition costs

^*3 - From continuing operations and businesses held for sale

Nick Winks, Non-Executive Chairman of Sureserve, commented:

"The performance during the first half of 2022 reflects Sureserve's market leading position and delivery of quality social housing energy services. We remain focused on pursuing the growth strategy which we announced earlier this year and continue to review potential acquisition targets, with the aim of purchasing businesses which are both services and earnings enhancing, whilst maintaining our price discipline.

The business continues to benefit from high revenue visibility gained from the long-term nature of our local authority and housing association contracts and the £512m order book covers 96% of our expected revenue for the FY22 financial year.

Although there are general economic headwinds in terms of cost increases, we have put in place mitigating actions to minimise the impact. Accordingly, we remain confident in the prospects for the second half of 2022

Enquiries:

Notes to editors

Sureserve is a leading UK Social Housing Energy Services Group. The Group was founded in 1988 and is headquartered in Dartford. It currently employs some 2,588 staff from 28 offices across the UK. Following the strategic review announced in January 2022, the Group now reports performance under a single "Social Housing Energy Services" division.

Chairman's statement

Introduction and trading performance

The first half of FY22 was encouraging, with both total Group and continuing operations showing strong sales growth and EBITA growth over the same six months in FY21 when we continued to experience the effect of some Covid restrictions.

Our cash position as at 31 March 2022 was £11.8m (£9.7m at 31 March 21) after having paid cash consideration of £4.3m to acquire CorEnergy in December 2021.

Board

The composition of the Board has been strengthened by two recent appointments. Having undertaken a formal process, Sam Vohra was appointed as a director and Chief Financial Officer in April 2022. Sam brings considerable finance, commercial and M&A experience gained in previous senior finance leadership roles. Tania Songini was appointed as a Non-Executive director in May 2022 and joins the Audit Committee. Tania's familiarity with renewable energy as well as her extensive knowledge of M&A, and her skills in formulating strategy will be invaluable to the Group in the years ahead.

Outlook

In line with our previously announced growth strategy, we continue to look for bolt-on acquisitions as well as more strategic acquisitions. In terms of potential targets, we will be absolutely focused on our core Social Housing Energy Services market where we are continuing to develop a strong position with established clients and a growing number of long-term contracts.

Our two businesses, which are held for sale, Sureserve Fire and Electrical Limited and Precision Lift Services Limited, continue to perform well thereby giving the opportunity to achieve the right price and the right buyer for each business.

Although there are general economic headwinds in terms of cost increases, we have put in place mitigating actions to minimise the impact. With an order book of £512m, of which nearly £400m relates to FY23 and beyond, we remain confident in the prospects for the second half of 2022.

Chief Executive's review

Trading in the first half of the year has been positive. Despite the broader economic challenges the UK currently faces, we continue to provide services that are both essential to our clients and the communities we serve and form an important part of the energy transition currently underway. Our order book stood at a record £512m at 31 March 2022, from continuing operations, and contract wins for H1 2022 were £101m.

We are delighted with the acquisition of CorEnergy, which we completed in December 2021, and subsequent integration. The business has gone from strength to strength and being a part of a wider Group has enabled it to submit for opportunities which previously had not been available to it due to the size of the business. In return, the CorEnergy team brings a new dynamic to our existing business and has very quickly established itself as part of the Sureserve family. It is also encouraging to note the number of new hires and an imminent move into larger premises for CorEnergy, both required following recent contract win successes.

As we noted in our Preliminary Results announcement for FY21, we are focused on growth, both organic and through acquisition. We are working with corporate advisers on acquisition targets, a number of which we have identified with potential, but we are focused on acquiring businesses which will be services and earnings enhancing at the right price, so are being patient whilst undertaking the search process. Conversely, following the update to the Group's strategy as announced in our preliminary results for FY21, we have identified two of our businesses, Sureserve Fire and Electrical Limited and Precision Lift Services Limited, as being held for sale and are looking for suitable opportunities for disposal. Both businesses continue to trade strongly and are operating very much as business as usual in the meantime.

The recent appointment of Sam Vohra as CFO on a permanent basis is excellent news for the Group. From his arrival on an interim basis in December 2021, Sam has shown strong leadership qualities, excellent financial knowledge, and a good degree of commerciality. He is a great addition to an already strong leadership team.

At the full year FY21 results, our Chairman made note of the need to review our internal efficiencies. As part of this commitment, we recently completed a review of our central costs, as a result of which a small number of people have left the business. We thank them for their contribution to Sureserve and wish them well for the future.

As always ESG is at the heart of what we do as a Group. In recent months we have been immensely proud to receive the Armed Forces Covenant Silver Award for our commitment to employing and supporting ex-services personnel in the business and we see this as a partnership that will only expand over time. We launch our latest Employee Engagement Survey in May 2022, our first since November 2020 and we look forward to receiving feedback on both what we already do well and those things that we need to do better. Our recent Save As You Earn (SAYE) offer saw good take up from employees, who have the opportunity to buy shares at a discounted price over a period of time, but we know we can do more.

In terms of the environmental agenda, we remain as committed as ever to transitioning our vehicles to electric and whilst the worldwide shortage of component parts and vehicles has restricted our progress, our current fleet is 6% electric, up from 3% as at 30 September 2021, we would hope to be at least 10% at the end of this financial year.

We look forward to our Academy Awards Day on 19th May 2022. This is the perfect opportunity to celebrate the depth and breadth of talent we currently have undertaking training. Across the Group we have more than 300 people undertaking training, of whom over 100 are apprentices. The inaugural event was held in May 2019, and we are delighted to finally be able to hold our second event. The Sureserve Foundation, which does such great work to help those in fuel poverty, will also hold its second Fundraising Dinner in September 2022.

As ever the strength of Sureserve comes from the commitment, competence, and enthusiasm of those who work for us and serve our clients and communities so well. I want to record my personal thanks to all of them, both for what they have done to date and will continue to do in the future.

Operational review

Group summary

As we announced in our full year results reported in January, the Group's growth strategy will build on our expertise, experience, and leading position in the market as an energy services provider to social housing clients across the UK. We believe that by combining selective and targeted acquisitions alongside developing organic growth opportunities, there is an opportunity for significant growth for the Group in the years ahead.

The Group has had an encouraging start to the current financial year and is continuing the momentum seen in FY21. This demonstrates the resilience of the business model which is based on predictable and recurring revenues in areas supported by regulatory led spend. This growth is underpinned by high levels of long-term contracts and frameworks for which we have continued to see high appointment and retention levels. Our client base, largely of local authorities and housing associations, provides us with sustainable partnerships that we regard as blue chip.

As previously reported, our refreshed strategy is to drive growth from within our specialism of Social Housing Energy Services ("SHES"). We believe this focus plays to our core strengths and in identifying business areas where we have an established market position, we can maximise our growth potential. The results below have therefore been presented on a SHES basis and do not include our Fire and Electrical or Lift businesses as a result, as these businesses are classified as being held for sale (with the 2021 prior period comparatives being restated).

Financial performance

*¹ Revenue from continuing operations after inter-segment elimination of £0.6m in H1 2022 and £1.7m in H1 2021.

*² EBITA is defined as operating profit before amortisation of acquisition related intangibles, impairment of goodwill and acquisition costs.

The Group delivered period-on-period revenue growth of 24.0% to £126.2m (H1 FY21: £101.8m). This was driven by continued new contract wins, contract extensions and additional spending from certain clients. These effects were seen particularly across our Gas compliance businesses where we are witnessing sustained revenue growth. The Energy Efficiency, Renewables and Smart Metering businesses also saw significant growth compared to H1 FY21. Part of this was a return to more normalised trading levels where revenues had been impacted in the comparable prior period from the Covid-19 restrictions in place, particularly in the Energy Efficiency and Smart Metering businesses. However, we also saw increases from planned growth in smart metering from investments in engineer headcount and training. This increases our engineer numbers and improves opportunity through our partnership with our utility clients. We also saw a positive contribution from the CorEnergy acquisition.

EBITA increased by 24.1% to £6.7m (H1 FY21: £5.4m), with this additional profitability driven by a combination of factors. Improved EBITA performance within Gas was revenue-led, given the increases above. Everwarm energy efficiency work volumes and profitability have largely returned to pre-pandemic levels with both revenue and EBITA higher than the comparable period in H1 FY21 both in absolute terms and on a percentage point basis. The Providor headcount and training investments made in H1 did impact on EBITA, but this will result in future benefits as the business' scale continues to increase.

Looking forward

We remain optimistic around opportunities for continued growth within the Group, underpinned by our refreshed strategy. We believe our businesses have a positive outlook, with many opportunities for growth ahead reinforced by the Government's continued emphasis on a net zero target for carbon emissions by 2050. Momentum continues to build around that agenda. The Group and our experienced management teams are well placed to support our clients through the energy transition, and we will continue to monitor developments as opportunities arise.

Energy services and future energy transition is a core focus moving forward and we believe we have developed a successful basis for growth to be pursued both organically and through acquisition. Our established presence in the installation of energy efficiency measures, solar PV works, air source heat pumps, EV charging points and battery storage projects all represent attractive growth sectors which our experienced management teams are well placed to deliver. The backdrop of climate change and ongoing Government initiatives, and future commitments, is likely to provide ongoing opportunities to increase our delivery in these, and associated, service areas.

As we previously noted in December 2021, the acquisition of CorEnergy Limited is a key example of the type of strategic acquisition we wish to pursue. CorEnergy is a business focused on delivering sustainable energy solutions for public and private sector organisations, supplementing our energy services, and being immediately enhancing earnings for the Group. In line with our refreshed strategy, we will continue to review other appropriate acquisition opportunities as we expand our scale, service mix and geographical offering.

As previously communicated, the nature of our Group and particularly our Gas businesses remains a core service including vital emergency repair and testing services to properties. Our continued growth further strengthens our position in the gas sector, with a true national reach and market leading business. We are well positioned to grow further both organically and through further acquisition in the fragmented and regional market. The gas businesses are all showing strong revenue growth and we remain confident that our experienced leadership in this stable sector provides a strong platform to continue our aims of further growth and cash generation.

We are not exposed to fluctuations in wholesale gas prices given our position as an installer and maintainer of heating assets. Our role is to support our client base and the end user with compliant, safe, and effective heating. In addition to the gas heating services and products we more generally work with, we are seeing increased demand for alternative heat sources. This includes, but is not limited to, air source heat pumps. The Government has targeted 600,000 heat pump installations per year by 2028 as part of its 2050 net zero initiative. We therefore believe this will continue to be an area of focus and an opportunity for growth as we move forward. It is seen as largely supplementary to existing revenue streams.

The Board is encouraged that high bidding success rates continue to be achieved by the Group. The period end order book for SHES was £512.1m which represents a 50.2% increase on the comparative period (31 March 2021: £340.9m). This provides a predictability of future revenues and allows longer-term planning to occur, which helps drive efficiency. The order book is consistent with our previously stated view around our targeted efforts on long term contracts that provide opportunities to deliver profitably in our core areas. We continue to target securing contracts with long-term visibility and robust value. We remain confident in our future with a significantly increased order book value and high visibility on future revenues, underpinning our confidence in the prospects for the second half of 2022.

SHES operational summary

Gas

The Group's gas businesses provide planned and responsive maintenance, installation, and repair services predominantly to local authority and housing association clients, in the areas of domestic and commercial gas. Following the increase in size of Aaron Services, both organically and from the acquisition of Vinshire in the comparable period, the three gas businesses are now more similar in revenue size. This gives the Group a robust base of trading and allows further internal benchmarking and comparability studies to enhance performance.

Each of the three gas businesses, Sure Maintenance, K&T Heating and Aaron Services is delivering revenue growth compared to H1 FY21. This has led to increased profitability despite some of the cost pressures being experienced. We are predominantly paid on a fixed price basis for service and repair work evenly throughout the year. The gas businesses have more call-outs during colder months, resulting in higher labour and materials costs. This seasonality drives higher levels of profitability and cash generation in the warmer months when call-out rates are lower, and a proportion of our engineers can be redeployed to jobs that yield further revenue. As a result, historically a significant proportion of the division's annual profit arises during the second half of the financial year.

The gas businesses continued their track record of new wins during the period. The most significant of these was previously announced by the Group for securing £17.0m of work over a maximum of ten years for heating servicing, repairs, and installations on behalf of the London Borough of Tower Hamlets. Further significant awards include in excess of £20.0m with Metropolitan Thames Valley Housing for domestic, commercial heating and electrical works over a four-year term. A further significant award over ten years of £10.0m with Southend on Sea Borough Council, in addition to £0.8m of heating maintenance with First Choice Homes were supplemented by other smaller gas servicing and maintenance wins.

Water and air hygiene

H2O is our water and air risk assessment specialist provider across the UK. Performance of the business has continued to be positive with exceptional client service supporting consistent delivery. The business has again delivered several wins in the period, and we are also hopeful the trend to reduced Covid-19 related impacts from regular clients such as restaurants, hotels and gyms will continue. Wins include a number of individual awards for water testing and sampling including £0.7m with London Borough of Merton, £0.8m with Sanctuary Housing Group, £0.5m with Royal Borough of Kensington and Chelsea and in excess of £0.5m with Metropolitan Thames Valley Housing for water hygiene risk assessments and monitoring.

Smart metering

Providor is our leading national installer of smart meters (operating as a meter asset manager and meter operator), which undertakes work for both large and small utility suppliers, who are required to install smart meters in every home in England, Wales, and Scotland. The business is among the most experienced in the ongoing UK-wide government roll-out and remains focused on existing contract delivery through to the current Government smart meter deadline of 31 December 2025. While slightly more than half of the 55m total meters within the roll-out have now been installed as smart, a significant market opportunity remains.

The business has delivered considerable growth in the period from previous contract wins and extensions, in addition to the engineer headcount growth as mentioned above. The business continues to review new contract opportunities, both from new clients and existing contractual relationships. The business did witness short-term challenges from the pandemic effects during the period, notably from employee absences in December and January from increased levels of Covid isolation and absences. Profitability reduced as compared to the comparable period last year largely due to the increased mobilisation investment into engineer recruitment and training as the business plans and builds for future growth in volumes.

Providor has extensive experience of the national smart meter roll-out and continues to apply careful management to the situation. We recognise that the recent volatility in gas prices has significantly impacted some of the smaller energy supplier businesses and their ability to trade. We are fortunate that our client base are the larger utility companies who are better placed to successfully navigate pricing volatility. In addition, these larger suppliers remain likely be appointed by Ofgem to take over the smaller suppliers and their smart meter obligations. This therefore may further increase our volume of future work with those customers. It may also give us access to more engineers, either directly or through subcontractor arrangements, where appropriate opportunities arise. The UK Government has confirmed that it remains committed to the smart meter rollout as it aligns with their net zero commitment.

Energy efficiency and renewables

Our energy services businesses provide a range of energy efficiency services such as insulation, heating, and energy efficient measures. The latter includes EV charging points, air source heat pumps, battery storage, energy efficient lighting and solar PV through the Everwarm and CorEnergy businesses. Everwarm provides these services predominantly for social housing and private homes with CorEnergy having a focus on non-domestic premises. The Everwarm business also includes our joint ventures, Warmworks and Arbed, which also focus on similar energy efficiency works in domestic properties.

Sureserve delivers energy efficiency measures that support carbon emissions savings for utility companies, which enables 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 certain lower temperatures. As a result, we typically experience a far larger number of productive working days in the summer, compared to the winter months, with the result that this business also sees higher revenues and margins in H2 each year. CorEnergy works are project-based and therefore not subject to the same seasonality.

Results across our Energy Efficiency businesses saw increased profitability in the Everwarm business together with a positive contribution from the newly acquired CorEnergy business. Everwarm's improved performance was principally due to the increase in revenues. We saw greater activity and performance in comparison to same period last year within the Scottish Warmworks joint venture. This was due to a mix of growth in the business with new workstreams added and Warmer Homes Scotland work for the Scottish Government largely returning to normal as compared to the prior period where Covid-19 restrictions had remained. The Arbed joint venture saw performance in line with expectations, given the scheme ended in November 2021. CorEnergy's contribution to the Group since acquisition has been positive and in line with our expectations given the investments being made within the business.

The Energy Efficiency and Renewables businesses continued to see several large wins and awards as reflected in the order book growth. The largest win for Everwarm was a £3.0m award with Moray Council, focusing on solar PV, battery, and air source heat pump works. A number of smaller wins and framework placements gives management confidence for future work opportunities, along with existing client contracts and opportunities supporting the Warmworks joint venture also. CorEnergy also saw a number of wins including works in excess of £1.5m with Dorset Council, approximately £0.9m with Gloucestershire NHS Trust and various other ongoing and associated works. We are already seeing additional opportunities from CorEnergy's involvement in the Group and access to frameworks and other tenders which would not have been available to them prior to acquisition. We believe the complementary services offered by CorEnergy represent a continued opportunity for growth in the Group.

Carbon prices remained largely stable during the period. We continue to believe that we are well placed to deliver on behalf of our utility partners based on our management team's extensive experience in this area. The new 'ECO4' scheme, which commenced on 1 April 2022 is set to increase in total size to £1bn per year from £640m. This should provide further opportunity for Everwarm to deliver increased volumes. Importantly ECO-4 is also expected to continue until 31 March 2026.

Our Warmworks joint venture which delivers the Warmer Homes Scotland initiative for the Scottish Government saw continued momentum in performance and client delivery. The Warmworks joint venture announced the acquisition of Connected Response Ltd in December 2021 which will allow a more diverse range of heating solutions to those in need and will continue to support the growth of the business.

As previously reported, the Arbed 3 programme for the Welsh Government has now concluded with details yet to be finalised for any successor scheme. We will monitor this alongside other appropriate opportunities. The joint venture has concluded the installation programme and is currently undertaking remaining post installation obligations. The Group continues to work elsewhere in Wales, particularly in relation to the energy retrofit scheme with Pobl Group in Swansea.

Outlook

The continuity and support of key individuals and consistent growth have provided us with a stable platform to deliver quality services for our client base. Like many others, due to a combination of factors we are currently experiencing some upward cost pressures on certain materials, fuel, and labour supply. However, we believe we are well placed to address these challenges through the experience of our management teams and workforce, and the business model. Our long-term partnership approach with clients and key supply chain relationships will also enable us to mitigate inflationary pressures where possible.

Our mix of customer proposition and service offering based on established contractual relationships underpins our future prospects. Although carbon pricing remains important, we believe that the Government will remain committed to addressing funding for fuel poverty in this highly regulated sector. Our view remains that the Group's significant wealth of management experience and client relationships gives our business a market leading proposition in energy services and energy transition. We believe our ECO credentials will allow us to continue to service our large utility clients as well as others. This means we are well placed to provide a quality service to our customers and deliver effectively for all our stakeholders.

We believe our financial performance and order book growth supports our progress in FY22, continuing the momentum seen in FY21, and remain confident in the prospects for our SHES businesses for FY22. This is underpinned by high levels of long-term contracts and frameworks for which we have continued to see high appointment and retention levels. Our client base, consisting largely of local authorities and housing associations, provides us with continuity moving forward with clients whom we regard as blue chip. Our ambition and plan is to be a leading social housing energy services provider in the UK such that we are at the forefront of the energy transition.

Chief Financial Officer's review

Following the update to the Group's strategy during the period, the Board of Directors has changed the basis of segmental reporting to move away from the previously reported two segments (Compliance and Energy Services) to a single business segment of "Social Housing Energy Services".  As part of the updated strategy, the Group is looking to dispose of the Sureserve Fire and Electrical Limited and Precision Lift Services Limited entities and so these have been classified as assets held for sale. The Social Housing Energy Services operating segment and central costs are shown as continuing operations and exclude these two businesses that are held for sale.

Group revenue from continuing operations, increased by 24.0% to £126.2m (H1 2021: £101.8m), reflecting strong revenue growth across the gas and energy efficiency businesses, recognising that the prior period comparatives were impacted by the Covid-19 restrictions in place at the time. CorEnergy, which was acquired in December 2021, reported revenue of £1.8 million and EBITA of £0.2 million post-acquisition.

Group EBITA from continuing operations, increased by 41.7% to £5.1m (H1 2021: £3.6m) reflecting revenue growth offset by investments made in headcount and training in the smart metering business, the inflationary backdrop and costs incurred on efficiency measures in the period. Central costs were £1.6m (H1 2021: £1.8m).

The Group reported an operating profit of £4.7m (H1 2021: £3.6m), after £0.3m of amortisation charges for acquisition intangibles (H1 2021: £nil) and exceptional costs of £0.1m (H1 2021: £nil) relating to acquisition costs for CorEnergy.

The net finance expense was £0.4m (H1 2021: £0.4m), and taxation was £0.8m (H1 2021: £0.6m). The profit after tax, from continuing operations, was £3.5m (H1 2021: £2.6m).

Profit after tax for businesses held for sale increased by 11% to £1.0m (H1 2021: £0.9m).

Tax

The effective tax rate for the period was 19%, which was in line with the statutory rate of corporation tax, and we expect the full year effective tax rate to be at this level.

Earnings per share

Basic earnings per share from continuing operations were 2.2 pence (H1 2021: 1.6 pence), based on profit after tax from continuing operations of £3.5m (H1 2021: £2.6m).

Our statutory profit for the half year was £4.5m (H1 2021: £3.5m). Based on the weighted average number of shares in issue during the year of 162.9m, this resulted in basic earnings per share of 2.8 pence (H1 2021: 2.2 pence) from continuing operations and businesses held for sale.

Cash flow performance

Our operating cash flow for the period was an inflow of £3.0m (H1 2021: £4.4m) and the management of working capital remains an area of continued focus. This includes accrued income, receivables and payables, and we manage these balances within our existing banking facilities. However, we recognise the importance of supporting our supply chain and have ensured that we have continued to pay our suppliers as normal.

Acquisition of CorEnergy Limited

On 7 December 2021, the Group acquired the entire issued share capital of CorEnergy Limited.  The consideration paid for CorEnergy was £6.6 million, plus a working capital adjustment of £1m (paid in cash), taking the total consideration paid to £7.6m.  £3.3m was satisfied through cash and a further £3.3m in the issue of 3,704,811 new ordinary shares of 10p each in Sureserve which were issued at an effective share price of 89.4p each.

Net cash / (debt)

At 31 March 2022, the Group had net cash (including cash balances in assets held for sale) excluding lease liabilities of £11.8m (31 March 2021: £9.7m).

The total net cash including lease liabilities was £0.1m (31 March 2021: net debt of £1.2m).

Banking arrangements

In December 2021, the Group renewed its bank facilities to provide an overdraft facility of £5,000,000 together with a revolving credit facility of £15,000,000 which runs to 31 January 2025. We had drawn £nil as at 31 March 2022 (31 March 2021: £nil) under the revolving credit facility, and as at the date of this report the facility remained undrawn. National Westminster Bank ('NatWest') continues to be a highly supportive banking partner.

We are confident that our banking facilities provide sufficient support in managing our corporate affairs and provides capacity to plan for future growth, particularly in bidding with confidence on new contracts, and funding strategic organic and acquisitve growth.

Statement of financial position

The principal items in our balance sheet are goodwill and working capital.

There was a decrease in goodwill of £1.4m from 30 September 2021, due to the reallocation of goodwill relating to assets held for sale of £7.6m offset by an increase of £6.2m in relation to the acquisition of CorEnergy. As at 31 March 2022, there are £nil acquisition intangibles remaining on the statement of financial position as these have been fully amortised.

As at 31 March 2022, net current assets stood at £19.6m (31 March 2021: £6.0m). 

The principal items of working capital are noted below and reflect the continued focus on working capital:

Risks

The Board considers strategic, financial, and operational risks and identifies actions to mitigate those risks.

Our year-end review included an assessment of accrued income, of which the balance was £16.8m at the reporting date (31 March 2021: £12.5m). Accrued income is reviewed regularly for impairment and represents a balance sheet risk in our industry and we continue to ensure a balanced approach between risk and possible outcome on final invoicing.

We continue to manage a number of potential risks and uncertainties, including claims and disputes which are common to other similar businesses which could have a material impact on short- and longer-term performance. The Board remains focused on the outcome of a number of contract settlements on which there is a range of outcomes for the Group in terms of both cash flow and impact on the consolidated statement of comprehensive income.

In preparing our annual accounts, we have taken a view on the financial risk of pending claims and disputes and seek to provide in full for potential shortfalls, whilst taking account of potential counter-claims, such that we have a collectively balanced position of risk across all such matters.

Going concern statement

In assessing the Group and Company's ability to continue as a going concern, the Board reviews and approves the annual budget, three-year plan, and a rolling 12 month forecast, including forecasts of cash flows, borrowing requirements and covenant headroom. The Board reviews the Group's sources of available funds and the level of headroom available against its committed borrowing facilities and associated covenants. The Group's financial forecasts, considering reasonable sensitivities in forecast trading, indicate that the Group will be able to operate within the level of its committed borrowing facilities and within the requirements of the associated covenants for the foreseeable future. NatWest remains very supportive of the Group and in December 2021, the Group renewed its bank facilities to provide an overdraft facility of £5,000,000 together with a revolving credit facility of £15,000,000 which runs to 31 January 2025. The Directors have a reasonable expectation that the Group and Company have adequate resources to continue their operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis of accounting in preparing the unaudited interim financial statements.

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the six months ended 31 March 2022

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

At 31 March 2022

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six months ended 31 March 2022

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

For the six months ended 31 March 2022