Shares in compliance and energy services firm Sureserve (SUR) gained 7% to 45p after it announced significant contract wins during lockdown and hinted it would pay a ‘sustainable’ dividend this year.
After a strong first half to the end of March, when it generated a 28% increase in operating earnings per share, Sureserve has been awarded 21 new contracts with an annualised value of £16 million, adding £40 million to its order book and taking it to a seasonal high.
ESSENTIAL WORK
Due to the essential nature of its work, the firm was able to continue operating during the pandemic while adhering to government guidelines, which allowed it to continue generating healthy cash flows.
It has also identified ‘increased market opportunities’ in the last few months and has strengthened its bidding teams in both divisions in order to keep building its order book.
Two thirds of Sureserve’s revenues come from compliance, which consists of planning, installing and repairing essential services like gas, electricity, water, fire prevention and lifts to local authorities and housing associations. It covers social housing as well as commercial and industrial properties.
The energy services business makes up the remaining third of revenues and provides energy efficiency services to social housing and private homes, ranging from smart meters, insulation, solar panels and battery storage to electric vehicle charging points.
‘SUSTAINABLE’ PAYOUT
Thanks to the strong trading performance of the last 12 months, the board is considering a ‘sustainable dividend policy which is more than adequately covered by significant earnings per share and regular recurring cash flows’.
Although it paid a final dividend for 2019, the company omitted any mention of a 2020 interim dividend when it published its first half results.
In a further sign of confidence in its ability to self-fund, the firm paid off all its borrowings at the end of July. At the end of the first half, net debt was just £3.5 million compared with £12.9 million the previous year.
