Sureserve Group mulls return of dividend as growth continues

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Sureserve Group Plc (LON:SUR) has confirmed it is mulling a return to the dividend list after trading in the last month of its financial year remained in line with management targets.

The year to September 30, 2020, showed “resilient growth in revenue, earnings and cash flow”, the corporate compliance and energy services group said in a post-close season trading update.

With net cash of GBP3mln in the bank at the year-end, ongoing recurring cash flows and an order book of GBP375mln, the group said its board has the confidence to invest in the business and is considering reinstating its sustainable dividend policy.

The AIM-listed group said it was also “investing significantly” in staff as it sees “identifiable market opportunities to grow”.

Sureserve executive chairman Bob Holt noted: “I am happy to report that the group is delivering a consistently strong performance, which highlights the nature of the essential services we provide to homes and communities.

“This hard work has been achieved across the business and I would like therefore to thank each of the staff for their contribution.

“As ever, we are a business which wants to develop talent in house and so we have launched a number of new initiatives in terms of apprenticeships, training and in-job support to join us on this group’s future growth journey.”

Shares in Sureserve rose 5% to 54.5p on Tuesday morning, close to a year’s high.

Ahead of a conversation with management, broker Peel Hunt upped its target price to 60p from 50p and retained its ‘buy’ recommendation.

While “confidently maintaining” their forecast for GBP8.7mln of profit before tax, versus a City consensus for GBP9.2mln, the analysts said they see “upside risk” to their September 2022 PBT forecast of GBP10.4mln, which would give earnings per share of 5.3p.

The shares trading on 9.8 times next year’s earnings “look good value given the operating momentum and cash flow”, the analysts added.

–Adds shares and broker comment–

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