Slightly controversially, the board decided not to pay a dividend for the year in order to give it the fire power to keep investing for future returns.
Despite a year of on-off lockdown restrictions, group revenues rose 25% to £244 million with the compliance business seeing an 18% increase to £162 million and energy services turnover soaring 40% to £85 million.
As a result, pre-tax profits were £14.6 million against analysts’ forecast of around £13.5 million, while net cash from operations reached £16.5 million against less than £10 million the previous year.
During the period the firm secured a record 167 contracts worth more than £415 million including a £140 million extension to its contract with The Guinness Partnership for up to 10 years.
Customer confidence has risen in the past year with more longer contracts and extensions, so much so that more than 80% of current year revenues and close to half of next year’s revenues were covered by the beginning of January.
‘We have a proper pipeline of contracted work with an increasing number of 10-year contracts, providing good visibility of non-volatile revenue streams’ said chief executive Peter Smith.
In a bold move which surprised many retail investors, management decided to withhold the dividend in order to invest further in its business.
The firm said ‘the Board decided that the group's capital would be better deployed in driving our growth plans by retaining cash to invest in strategically enhancing acquisitions’.
While small shareholders and no doubt some family owners of businesses acquired by Sureserve in the past may have been dismayed, the reaction in the share price suggests institutional stakeholders were fully on board with the decision.
Chairman Nick Winks assured investors that ‘all our resources will be directed towards our strategic priorities which are designed to afford shareholders significantly improved capital growth within the next five years’.