Sureserve’s order book powers profits
Social housing energy services group Sureserve has reported rising revenues and a healthy uptick in profits, fuelled by an expanding order book.
Its half-year trading update reveals revenues have spiked 24 per cent from £101.8m to £126.2m, while earnings have climbed from £3.2m to £4.3m over the same six month period.
Net cash has also increased from £9.7m to £11.8m.
This follows its order book growing from £340.9m to £512.1m, a 50.2 per cent increase on this time last year.
It also revealed its integration of CorEnergy has been completed, following its acquisition in 2021, expanding its sustainable energy offering.
The group’s results were also buoyed by a 10-year £20m agreement with Tower Hamlets Homes to provide domestic gas services for its council houses.
On a boardroom level, it has been further bolstered by the appointment of Sam Vohra as chief financial officer and Tania Songini as a non-executive director.
Sureserve provides solutions to social housing, including insulation and heating devices alongside tips to make buildings more energy efficient.
Currently, it employs over 2,500 staff across 28 offices in the UK.
Its services for social housing groups have become increasingly important amid an escalating cost of living crisis, which has seen household energy bills spike to nearly £2,000 per year alongside spiralling food and fuel costs.
Chief executive Peter Smith told Morning Wire: “It only reinforces the importance of having proper insulation in your property, and making sure you have an efficient boiler.”
The energy market is also facing a transition to renewable power sources, with Sureserve offering heat pumps and solar battery technologies.
However, Smith warned there higher entry costs for green alternatives for boilers which meant councils were still largely opting for gas.
He explained: “The problem is at the moment that to put in a heat pump costs almost three times the cost of bringing in a gas boiler. So whilst we can do both, the local authority which under cost pressure is not naturally going to move to heat pumps at this stage.”
As for potential headwinds, Smith recognised that issues such as inflation, labour costs and shortages in microchips and semiconductors would continue to affect the market.
Peel Hunt noted that Sureserve has consolidated its position as the leading supplier to housing associations and local authorities
This provides them with a lot more purchasing power than the rest of the market.
Commenting on the company’s performance, analyst Andrew Nussey said: “The outlook remains positive. The 50 per cent increase in the order book to a record £512m provides a high degree of long-term revenue visibility.”
“Management believes it can continue to address the challenges of material, fuel and labour supply given experience and the long-term, client-facing business model.”
It has maintained its buy position with a target price of 85p per share.
Looking ahead, Sureserve’s next results will include its £68m eight-year extension with L&Q, which was announced last week.