At the forefront
A national scale,
of the energy
focused presence
transition
Sureserve Group plc
Annual Report 2021
Sureserve Group plc
Annual Report 2021
AT THE FOREFRONT OF THE ENERGY TRANSITION
Our vision is to be the
supplier of choice for
Social Housing
energy services
Building energy efficiency into
the heart of our communities
Across the UK, the communities in which we work face the same
challenges and aspirations in combatting climate change, ensuring
everything is done to improve energy efficiency and reduce CO2
emissions. Working with partners, clients and their customers, we
are improving our operations, and through our building safety and
energy services our contribution to these communities will continue
to drive progress towards a net-zero future.
Our businesses
UN Sustainable Development Goals
Our businesses are committed to investing in
sustainable improvements which support the
goals and objectives of all our stakeholders,
ensuring we continue to improve our
environmental performance and safeguard the
wellbeing of our people and our communities.
Read about the way in which we engage
with stakeholders on page 14
Read about our ESG strategy
on page 25
Read about sustainable innovation in our
operations on pages 32 to 33
2021 highlights
Financial highlights
X Revenue: £244.0m (2020: £195.7m) a 24.7%
increase on 2020
X Profit before tax: £13.8m, representing 76.7%
growth on 2020 (2020: £7.8m)
X Basic Earnings per share 7.1p (2020: 4.0p)
X Operating profit before exceptional items and
amortisation of acquisition related intangibles:
£14.6m (2020: £10.4m, 40.3% growth)
X Year-end net cash excluding lease liabilities:
£16.5m (2020: £9.8m including deferred VAT
due of £6.1m)
Read the full Financial
Review on pages 38 and 39
Operational highlights
X Record of 167 contract wins in the year valued
at £417.0m
X ESG targets identified and delivery strategy
underway
X Acquisition and successful integration of Vinshire
Gas Services
X Post-period end acquisition of sustainable energy
solutions provider, CorEnergy Limited
Read about our activities in the year and the full range
of operational and energy related performances
across pages 31 to 37
Find more online at
www.sureservegroup.co.uk
Strategic report | Corporate governance | Financial statements
Contents
Strategic review
01
02
2021 highlights
Sureserve at a glance
06 Chairman’s statement
08 Market overview
10 Our strategy
12
14
20
25
Business model
Stakeholder engagement
Key Performance Indicators
Sustainability
34 Operational review
38
40
Financial review
Principal risks and uncertainties
Corporate governance
44
Board of Directors
46 Chairman’s corporate governance report
51
52
53
55
59
62
Board and Committee composition
Nomination Committee report
Audit Committee report
Directors’ remuneration report
Directors’ report
Statement of Directors’ responsibilities
Financial statements
63
Independent auditor’s report
68 Consolidated statement of comprehensive
income
69 Consolidated statement of
financial position
70 Consolidated statement of changes
in equity
71 Consolidated statement of cash flows
72
Notes to the consolidated
Financial Statements
93 Company balance sheet
94 Company statement of changes in equity
95
Notes to the Company
Financial Statements
100 Corporate directory
Sureserve Group plc
Annual Report 2021 01
Sureserve at a glance
Committed to becoming market
leaders through excellence
in delivery, training and
development, and innovation
Our key areas of focus
SERVICES
TRAINING
SUSTAINABILITY
Our businesses primarily serve
customers in the social housing market,
along with a broad mix of energy
services customers.
Key areas of our service delivery
X Asset management services to social
housing clients
X Energy efficiency measures for social
housing clients
X Energy services to energy companies,
businesses, landlords and homeowners
X Energy efficiency and heating system
solutions to healthcare bodies.
X Services to public buildings
X Maintenance in schools, colleges
and universities
X Services to clients in the industrial and
commercial sector
Appropriate training for our people at
all levels of the organisation is essential
to keeping pace with industry
developments and advancements in
technology. The Sureserve Academy
ensures our people are supported to
excel in their chosen profession,
prepare for the future, and realise
their full potential.
The Sureserve Academy
works across the Group
X Attracting and retaining talent
X Developing employee recognition initiatives
X Supporting and fostering a professional
environment
X Partnering in the delivery of appropriate
technologies and systems to deliver industry
leading training
X Creating mandatory and opportunities-focused
training modules
X Building relationships with educational and
industry bodies
X Working with businesses to deliver skills
training specific to their needs
We go to great lengths to do
business the right way, keeping
our promises to our stakeholders,
building positive relationships within
our marketplace and minimising
our impact on the environment.
Our communities
We deliver value through community
investment, and reduce the impact of fuel
poverty through charitable partnerships,
volunteering and fundraising activities.
Our people
We are committed to offering our people a
diverse and inclusive place to work, one which
provides them with the training opportunities
and support to realise their potential.
Our customers
Customer Excellence is at the heart of the
relationships we develop with our clients and
their customers, building trust and confidence
and in turn future growth.
Our environment
We are focused on investment and innovation
to ensure responsible action accompanies
knowledge in achieving our sustainable goals.
Read about the operational innovations
delivered by our businesses on pages 34
to 37
Read about the Sureserve Academy
Read about our four sustainability pillars
on page 28
on page 26
02
Sureserve Group plc Annual Report 2021 Strategic report | Corporate governance | Financial statements
The Group in numbers
Working predominantly with Social Housing
clients the Group has demonstrated a strong
performance in the delivery of its contracts.
Our investment case
Our investment case is focused on delivering
sustainable long term returns and creating
value for our stakeholders.
Gas Heating emergency
call-outs
Contract wins
250,178
(2020: 154,172)
£417m
(2020: £202.8m)
1 Differentiated through our service
offering in tightly regulated sectors
Our focus on quality differentiation and breadth
of service attracts and retains core clients,
positioning us for further growth in what is a
fragmented and regional market.
Number of employees
2,381
(2020: 2,162)
Total FY21 Revenue
Number of offices
27
(2020: 22)
£244.0m
£127m
Gas
Insulation
£25m
X Social Housing: 97%
X Other: 3%
X Social Housing: 65%
X Other: 35%
Smart Metering
£28m
X Other: 100%
Water
£8m
X Social Housing: 46%
X Other: 54%
Other
£58m
566,610
Number of domestic properties
serviced in the year
l Number of heating
systems installed
l of which were boilers
l of which were renewables
l Renewable technologies
installed
l Energy efficiency
measures installed
23,527
96%
4%
1,108
243,063
Read about our operational performance
on pages 34 to 37
2 Experienced leadership
Our management team has widespread
and extensive experience in delivering
successful results in our sector, and has
developed a streamlined and effective
organisational structure, strengthening
our operations with an ongoing focus on
operational efficiency and cost savings.
3 Strong market positions
Leadership positions in non-volatile markets
with recurring, predictable revenues, which in
turn ensure long term sustainable growth. We
hold long term contracts working with both the
Scottish and Welsh Governments.
4 Strong performance and
operational excellence
Overall Group performance was very
pleasing against the background of
Covid-19 and demonstrates the resilience
of the business model and the quality of
services delivered by our people.
5 Growing geographical footprint
We have built a Group that is focused on
delivering high quality services across the UK
from regional offices using local workforces
with continued expansion of our activities.
6
7
Strong brands and
established reputation
For more than 30 years the Group has
worked closely with clients, providing the
services necessary for communities to thrive.
Sustainability
The services the Group delivers are directly
linked to activities to mitigate and improve the
national response to climate change. We also act
to reduce our CO2 footprint with a clear goal to
become a net-zero business by 2030.
You can find out about our Corporate governance
framework and how we deliver value to shareholders
on pages 47 to 51
Sureserve Group plc
Annual Report 2021 03
AT THE FOREFRONT OF THE ENERGY TRANSITION
Taking our
fleet electric
During 2021 we have initiated the planned transition to a commercial
fleet of Electric Vehicles, replacing the current diesel equivalents.
The new EVs have been placed within a number of businesses,
with the drivers using them selected following analysis of telematics
data. The drivers of the new EV vehicles are a mix of engineers
and supervisory staff to enable us to better understand where the
efficiencies of the technology lay. This data will allow us to
optimise those efficiencies as we continue the transition to EVs,
with more vehicles on order and new courses in driver training
being created.
3.4%
of vehicles transitioned to EV
33,381kg
Carbon savings through fleet
improvements
To support our investment in zero emissions vehicles, we have
partnered with Octopus Energy to supply drivers with Ohme
intelligent home chargers and smart energy tariffs, further
leveraging our partner relationships to deliver on
our environmental commitments.
Currently 93% of our non-EV commercial vehicles meet Euro
6-compliant emission standards.
UN Sustainable
Development goals
All of our commercial vehicles are fitted with telematics, enabling us to
monitor and improve our drivers’ performances, with a positive effect on
fuel consumption, wear and tear on the vehicle and reducing the
possibility of being involved in a road traffic incident.
04
Sureserve Group plc Annual Report 2021 Strategic report | Corporate governance | Financial statements
Strategic report | Corporate governance | Financial statements
“ Every day our people are in homes
and communities across the UK,
much of the time installing or
maintaining energy efficiency
measures and making sure people
are warm and safe in their homes.
This is an exciting step towards
building zero emissions into
that service delivery, improving air
quality and delivering sustainable
improvements to our operational
commitments.”
Peter Smith
Chief Executive Officer
Part of our ESG strategy
Our Sustainability pillars
Carbon emissions from our commercial
and company fleet represent 82.4% of our
2021 total carbon emissions.
By transitioning to EVs the Group, on average,
will save 49kg of CO2 emissions per vehicle per
month, and benefit from a number of additional
efficiency related benefits such as less
requirement for servicing, maintenance and
repairs due to fewer moving parts.
Read more about improvements to our
fleet and the related carbon reductions
on pages 32 and 33
Sureserve Group plc
Annual Report 2021 0505
Chairman’s statement
Innovating to
drive growth
Nick Winks
Non-Executive
Chairman
Introduction
This is the first Chairman’s statement since my appointment in May 2021.
I am grateful to our Senior Independent Director, Robert Legget, for
stepping into the breach as Interim Chairman for the two months prior
to my arrival.
Strategy Review
The turnaround years are now behind us. Our thanks are due to my
predecessor, Bob Holt, who successfully led the Group out of the
loss-making years and into a position where we can now contemplate
the next few years from a position of relative success.
Upon appointment I set myself two immediate priorities, as well as
visiting all Group companies and getting to know the business. These
two, equally important, priorities were to oversee a formal process to
review and refresh our strategy; and to commence the search for a new
Chief Executive Officer.
Our strategy is to build upon our position as a heating, and heating
maintenance provider to the social housing sector in the UK. We estimate
that, with about 9% of this £2 billion annual market, we are already a
leading provider. Our ambition is to double our sales and significantly
improve our net margin and earnings per share within the next five years.
Leadership Team
Ironically, the five months of executive search gave me both the experience
of meeting a number of high-class CEO candidates as well as a close-up
opportunity to watch Peter Smith, our Interim Chief Operating Officer, as
he combined his historic responsibilities of Chief Financial Officer with
those of a Chief Executive Officer. I was particularly impressed by Peter’s
abilities with people and his strong work ethic. By late October 2021
I had no hesitation in recommending to our Board that Peter become
CEO to take Sureserve Group through the next phase of its growth.
The promotion of Peter Smith to Chief Executive Officer created a
vacancy for a Chief Financial Officer. The search began in November
2021 and we hope to conclude this in the next few months. However, we
were fortunate to find an excellent Interim CFO, Sameet Vohra, who
started working with us on 13th December 2021.
Trading performance
Although the early months of FY21 were still being impacted by Covid,
the Group results for the year ended 30 September 2021 represent a
creditable improvement on the previous year.
FY19 was the last year entirely unaffected by Covid and so a comparison
of FY21 with two years earlier is worthy of examination.
Sales
Profit before tax
Earnings per share
FY19
FY21
£212m
£5.3m
2.6p
£244m
£13.8m
7.1p
+15%
+160%
+173%
Our Group Order book at the start of FY22 was £527.1m. This compares
with an order book at the start of FY21 of £355.8m and at the start of
FY20 of £333.2m.
Achieving these ambitions will require a focus on the three key
deliverables below:
1.
2.
3.
Expanding our current footprint in gas heating and maintenance by
‘bolt-on’ acquisitions.
Continue to drive organic growth, building on the Group’s ongoing
FY21 contract win and order book momentum.
Enhancing the Group’s capabilities in social housing by ‘strategic’
acquisitions of businesses with experience of renewable
technologies for our sector.
4.
Driving our internal efficiencies to improve our current c. 6% EBITA
margin on sales.
To help with our focus on acquisitions, we have appointed an M&A
partner to identify, approach and make initial contact with potential
acquisitions on our behalf.
We have businesses which operate outside the social housing energy
markets. We will be reviewing the options for these businesses in the
light of their performance. One or two of these may ultimately be better
served by new owners, allowing their disposal to create cash for
acquisitions that further our strategy.
The acquisition of CorEnergy in December 2021 marks the first of our
strategic acquisitions and will enhance our positioning as the social
housing heating supplier that truly understands the realistic alternatives
to fossil fuels.
Our policy of making acquisitions of owner managed businesses, particularly
strategic acquisitions, is to choose businesses whose owners are
motivated to remain within our business and are committed to continue
to deliver success, both for their own satisfaction and also for the wider
stakeholders in Sureserve.
06
Sureserve Group plc Annual Report 2021 Our people
During my first 8 months I have visited each of our subsidiaries at least
twice. Two impressions were immediately apparent.
Without exception our management is customer-focused and very clear
on what is needed to retain customers. They are also very co-operative
with each other, being not at all competitive with each other. Group
companies will frequently help others with bids or with buying where
sensible economies are achievable.
Many of our subsidiary company management are previous owner-managers
and have been with Sureserve since their business was acquired, which is a
testament to the mutual respect which pervades the Group.
Dividend
As our strategy is to focus on acquisitions as well as organic growth, the
Board has decided that the Group’s capital would be better deployed
in driving our growth plans by retaining cash to invest in strategically
enhancing acquisitions. The Board is therefore recommending that no
dividend be paid in respect of FY21.
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.
Nick Winks
Non-Executive Chairman
24 January 2022
“ Our strategy is to build upon our strength
as a heating, and heating maintenance
provider to the social housing sector in
the UK. We estimate that, with about 9%
of this £2 billion annual market, we are
already a leading provider. Our ambition
is to double our sales and significantly
improve our net margin and earnings per
share within the next five years.”
Nick Winks
Non-Executive Chairman
Strategic report | Corporate governance | Financial statements
CONTRACT AWARDED FOR LARGEST
SOCIAL HOUSING RETROFIT SCHEME
OF ITS KIND IN THE UK
In October 2021 Everwarm was pleased to be appointed the
lead contractor on an energy retrofit scheme hailed as the
largest ever of its kind in the UK.
Everwarm will oversee the installation of state-of-the art
renewable energy generation, energy storage and smart energy
management technology in almost 650 homes in the Swansea
community of Penderi.
It is anticipated that the community will generate as much as
60% of their total electricity requirements, protecting against the
impact of future energy price increases, improving resident
comfort and well-being, as well as reducing carbon emissions by
as much 350 tonnes per year.
The homes are owned and managed by Pobl Group, Wales’
largest provider of affordable housing, who have partnered with
renewable energy tech and service supplier, Sero.
The innovative scheme is supported by £3.5m EU funds from
the European Regional Development Fund (ERDF) through the
Welsh Government, and is seen as a stepping-stone to a wider
investment into the Penderi area that will have a positive impact
across the entire community.
Scott Paton, Operations Director at Everwarm, said: “Here at
Everwarm, we’re delighted to have such a driving role in the
Penderi energy initiative. It’s a programme that’ll empower the
Penderi community and give residents a greater control over
their energy efficiency and household costs. We’re looking
forward to working alongside Pobl, Sero and local residents to
drive forward energy efficiency and develop the opportunities
within your community. Together we can make a brighter future
for Penderi.”
Solitaire Pritchard, Director of Regeneration at Pobl commented:
“More than ever, rising fuel prices is a very real issue, along with
climate change, and we must be innovative in how we tackle this
crisis. We are looking forward to Everwarm commencing work
on a scheme that will tackle the challenge head on, transforming
our homes in the community, making them more environmentally
and financially sustainable for the future.”
Electricity
requirements
produced on-site
60%
Reduction
of Carbon
emissions
350tpa
Sureserve Group plc
Annual Report 2021 07
Market overview
Opportunities in healthy markets
Under our streamlined and focused operational structure, our businesses serve
predominantly public sector clients in the social housing markets.
SOCIAL HOUSING
ENERGY
We have a wealth of experience, delivered over many years,
providing services to social housing clients, working with
their residents and improving their communities.
We work within the energy market delivering vital services to
social housing clients, energy companies, businesses,
landlords and homeowners.
Market drivers
X Mandatory building compliance driven by regulation or legislation
Market drivers
X Government and local authority commitment to decarbonisation targets
X UK Government commitment to achieve net zero emissions by 2050
X Fuel Poverty in the UK a focus for Governments
X Continued demand for social housing due to increasing unaffordability
X Energy providers remain obliged to fund energy efficiency and heating
of private housing
Working in tightly regulated markets, we help our clients to meet their legal
and regulatory obligations. Gas compliance services are usually mandatory
and driven by regulation or legislation. This creates predictable demand for
these services, which allows us to plan and invest.
measures under the Government’s Energy Company Obligation
(‘ECO’) policy
X The national smart meter roll-out to install 53 million meters in homes
and small businesses across Great Britain by the end of June 2025
Opportunities
Social housing stock has been reduced in recent years due to various
factors without replenishment through new development, meaning there
is a shortage of available housing against demand. Alongside this the
requirements of ageing housing stock with regards to health and safety
regulatory standards and improved energy efficiency add up to long-term
investment from social housing landlords. We also provide energy efficiency
and renewables solutions to clients making the transition away from
fossil fuels.
Market developments
Wave 1 of the Social Housing Decarbonisation Fund (SHDF) to support
the installation of energy performance measures in social homes in
England closed in October 2021. Up to £160 million was set aside to
improve the energy performance of selected social housing by January
2023. Taking into account subsequent funding waves the SHDF is set to
be worth £3.8bn over 10 years.
Opportunities
Global climate change, government targets and incentives that encourage
investment in renewable energy and declining renewable energy project
costs are key opportunities towards decarbonised systems, with further
opportunities in solar PV systems used in combination with battery energy
storage, fundamentally changing the energy system.
Market developments
Energy providers remain obliged to fund energy efficiency and heating
measures under the Government’s Energy Company Obligation (‘ECO’)
policy. The Government’s announcement of a £3.0bn plan to upgrade
buildings in England as an essential part of building back greener and
reaching net zero emissions by 2050 includes the Green Homes Grant,
Public Sector Decarbonisation Scheme and the Social Housing
Decarbonisation Fund. A number of other key funding schemes exist. The
Government and local authorities across the UK are committed to carbon
emissions savings targets, which we help to deliver for them through our
work for utility companies.
Outlook
Demand for social housing continues to grow, and the political significance
of fuel poverty remains high, with a Government requirement to continue
tackling this key social issue alongside a phased reduction in fossil fuel
reliant systems.
We expect client demand for our services to continue growing. Such
demand is largely driven by regulation and legislation. Our strong position
in both the compliance and energy services sectors presents us with
significant growth opportunities across a range of adjacent services and
geographic markets.
We believe we have a sizeable and growing market share within an
extremely fragmented but growing sector, and that our scale and national
reach provide a strong base for further growth and effective client delivery.
Outlook
One of our core sources of funding is the ECO (‘ECO 3’) scheme, running
until March 2022 under the current version of the scheme applying from
October 2018. The Group has a wealth of experience in this area. We are
also on national and regional programmes with the Scottish Government’s
flagship HEEPS2 programme, which has now been extended to 2022.
The smart meter roll-out was originally due to be completed in 2020, this
has now been extended to mid-2025, which we believe is a positive for
our Group as we form part of the UK’s plans for a net-zero future and the
means to exchange approximately 30 million meters in that time. We are
confident in the future of our markets, as demand is there and funding is
in place.
08 Sureserve Group plc
Annual Report 2021
AT THE FOREFRONT OF THE ENERGY TRANSITION
Strategic report | Corporate governance | Financial statements
UN Sustainable
Development goals
Low carbon
emissions for
social housing
The UK government’s legislation to reach net zero carbon
emissions by 2050 means that social landlords’
decarbonisation plans for social housing stock will continue
to take shape. The Group is well positioned to offer
comprehensive low carbon solutions to our clients, with the
knowledge and experience in renewables required to build
in-line with future needs, and a focus on the structures,
systems and people essential to make this happen.
Air and Ground Source Heat
Pumps installed
816
Insulation measures fitted
4,374
Solar PV and Thermal measures
193
Battery Storage units fitted
136
Part of our ESG strategy
Our Sustainability pillars
Helping our clients achieve their carbon
reduction targets is essential for the UK to
achieve its green objectives.
Our carbon reduction activities extend to our supply
chain, and we continue to target carbon reductions
in Scope 2 operations. Where reductions are not
available due to operational requirements we are
working with NQA to offset these emissions through
PAS2060 accreditation.
Read more about our
community focused activities
on pages 27 to 32
Sureserve Group plc
Annual Report 2021 09
Our strategy
Innovation and value creation
supporting future growth
Operational excellence
Geography
Why is this a priority?
Continuing changes in the workplace, in the markets we serve and in
our clients’ needs require that we maintain operational excellence
through evolution and innovation to satisfy our customers and
continue to win work.
Progress in 2021
We have continued to ensure that the wellbeing of our people, our
clients and their customers is at the heart of how we work, developing
the protocols and cultural norms necessary to navigate ongoing challenges
with robust health & safety focused responses. Our commitment to
creating and maintaining strong relationships with our clients has
resulted in increases in our total contract wins and order book, as well
as a significant contract retention with the Guinness Partnership, all
clear indicators of the health of the business. The quality of our people
continues to be at the heart of our service delivery and a focus on
recruitment and retention remains key in supporting growth.
Why is this a priority?
Working in sectors which have traditionally been predominantly
regional we have achieved scale and geographical coverage.
Progress in 2021
The Group has grown both organically and through acquisition,
Vinshire having joined us in December 2020 and CorEnergy in
December 2021, and the Group’s strategy continues to support
our businesses’ ambitions to expand and develop where significant
opportunities present themselves. We were also pleased to
announce the appointment of Everwarm as lead contractor for
a Swansea based retrofit scheme, the largest energy efficiency
project of its kind in the UK.
Read more on pages 34 to 37
Read more about our new Swansea contract on page 07
Focused businesses
Working together
Why is this a priority?
We believe focus is the key in regulated growing markets. Our
specialist businesses are focused in the sectors we have targeted.
Why is this a priority?
Cross-selling has proved successful in the past and we have a strong
track record at delivering a number of services to the same client.
Progress in 2021
All of our businesses have performed well during the year, optimising
opportunities and investing in systems and infrastructure to specifically
support both quality and efficacy of tendering as well as contract
delivery. Identifying future opportunities is supported through skills
acquisitions within our workforce and continued investment in the
Sureserve Academy, delivering mandatory training and development to
our people. Across the Group businesses have shared and leveraged
efficiencies, extending advantages where present.
Progress in 2021
In the year we successfully bid for and won a number of contracts and
contract extensions, among them a long-term gas servicing, repair,
installation and electrical testing contract with a new client, PA
Housing, awarded to K&T Heating and Aaron Services. The eight year
contract is expected to generate a combined sales revenue of £36m
over the entirety of the contract term.
Read more about the Sureserve Academy on page 28
Read more about our businesses on page 36
10
Sureserve Group plc Annual Report 2021 Strategic report | Corporate governance | Financial statements
Enablers
Pricing and Cost Management
Data and IT
With wage inflation and the promise of inflation on energy costs, it is
crucial that we consider where we can make improvements to our
margins, through both competitive pricing and cost management.
Ambition
Achieve a blended margin of 10% across the Group by 2026.
To support growth in the future it is essential that our systems allow
scalability and the capacity for robust data collection and reporting.
Ambition
Build proprietary customer and energy data to generate
growth-driving insights.
Benefits
X Improved margins would be of benefit to all stakeholders
Benefits
X Improved profitability by generating a clearer understanding
How we achieve this
Protect margins of current business from inflationary pressure and
identify energy acquisitions with higher margins.
of cost to serve vs. client revenue
X Added service of monitoring energy usage data for our clients
X Increased market value by positioning ourselves as a
data-led business
How we achieve this
The purchase and development of IT solutions that create uniformity
across subsidiaries and Group, including CRM; field services system;
market leading customer portal; customer data and reporting
capability; as well as developing advanced analytics capabilities.
Read more on page 06
Renewables Expertise
Multi-Disciplined & Engaged Engineers
The appetite and need for renewables is increasing rapidly and is a
critical area in which we must build capability. We must stay close to
our clients to understand their needs and acquire and partner with
businesses that will help us stay ahead of the change.
Retention and attraction of quality labour (engineers) at current prices
is a major headwind currently. We need an engaged, quality
workforce of engineers, capable of adapting to renewables and
enabled by improved training.
Ambition
Drive a step-change in Sureserve renewables capability, expertise,
insight and data.
Benefits
X Reduce risk posed by the energy transition
Ambition
Train and develop a robust pipeline of versatile, skilled engineers.
Benefits
X Flexibility to deliver different solutions to different clients
X Improved attraction and retention through better remuneration
X Improved ability to advise and partner with associations on
and engagement
renewable installation
X Develop proprietary renewables data to improve efficiency
How we achieve this
X Develop and expand the Sureserve Academy engineer training
and retention
provision
How we achieve this
X Acquire businesses in a range of emerging renewables
X Increase engineer pool with multiple certifications across a
number of specialisations
technologies
X Ongoing benchmarking of Sureserve employee proposition
X Drive subsidiaries to develop and share renewables capability
including package, benefits and total proposition
X Stay close to clients to understand their needs and integrate
learnings into solutions
X Pilot energy efficiency and monitoring technology for new
renewables installations
Read more on page 43
Read more on page 35
Sureserve Group plc
Annual Report 2021 11
Business model
A business model
for the long-term
Our long-term approach is
reflected in the strength and
depth of our relationships, based
on the quality of our work with
our clients, their customers,
communities, financial partners,
our employees, shareholders
and suppliers.
With highly experienced
management and an
exceptionally skilled workforce,
we look to build our business
in regulated markets where
revenues are predictable.
How we
work
Predictable and recurring
revenue streams
Compliance services generate steady revenue streams
as such services are frequently mandatory for many of
our clients and driven by regulation. Local authorities
and social housing landlords have an obligation to
maintain housing stock and public buildings to
applicable safety standards and this, in turn, has led to
the growth and development of the gas, fire, air and
water, and lift safety industry from which our businesses
continue to benefit.
Relevant industry accreditations
and certifications
Our businesses across the Group hold relevant industry
accreditations and certifications which are either a
statutory requirement for tendering for, or carrying out,
work or may be helpful in securing new contracts.
These include: ISO 9001, 14001, 45001 and 50001,
NQA COVID-19 Secure Verification, Gas-Safe,
BAFE, EXOR, CHAS, Safe Contractor, NICEIC
and Green Deal.
Careful project selection
We carefully select projects on the basis of the value we
can generate through undertaking them, for ourselves,
our shareholders, our clients, their customers and other
stakeholders. Our strong customer relationships and
market intelligence are critical, as is the proper
assessment of risks, returns, strategic fit and our
ability to deliver against client expectations.
Helping Governments realise
their commitments
We support the Scottish and Welsh Governments
in the delivery of national fuel poverty and energy
efficiency schemes. We help to enhance the quality
of life of those in need and improve the energy
efficiency of properties, making a difference to them
financially and to a wider overall consumption as we
work towards Government net-zero carbon targets.
ESG
How we work is underpinned by our commitment to measuring our social value impact and delivering on the future targets we set.
Our activities and performance are set across four Sustainability pillars:
Our communities
Our people
Our customers
Our environment
Read more on our Sustainability
pillars, intentions and performance
on pages 25 to 33
12
Sureserve Group plc Annual Report 2021
Strategic report | Corporate governance | Financial statements
Target
outcomes
Sustainable growth
With a broad service offering and extensive
geographic coverage, we seek to grow
organically and through focused and target led
acquisition. We continue to invest in our bid
teams, our technology and our training and
development provision. We have acquired
businesses that reinforce our ability to grow by
improving our service offering, customer base,
geographic footprint or opportunities for
entering new markets. We only make
acquisitions when we can clearly improve
the business.
Client relationships
We aim to build ever better and deeper
relationships with our clients, leading to contract
renewals and extensions and a continuous flow
of attractive tender opportunities.
Enhanced reputation
It is important to us that our clients, their
customers and the communities where we work
regard us in a positive light, recognising us for
the quality of our work, our consideration as a
contractor, our status as an employer and our
role in promoting sustainable practices.
Number of employees
2,381
21
20
19
2,381
2,162
2,061
Average value for long-term
maintenance contracts
£5.5m
21
20
19
£2.4m
£5.5m
£4.0m
Customer satisfaction
83.8%
21
20
83.8%
95.8%
Our clients
We deliver high quality services with great efficiency,
enabling our clients to meet their legal, regulatory and
environmental obligations.
Our clients’ customers
We provide safe, warm and well-maintained homes and
buildings that improve their quality of life.
Communities
We deliver increased employment opportunities, skills and
better infrastructure and provide leadership for community
initiatives. We work with industry partners to create
opportunities to lessen the effects of fuel poverty in the
communities we work in.
Financial partners
Our responsible business management reflects our deep
understanding of risk versus returns.
People
We offer interesting, challenging careers in a well-managed
and growing business that provides the opportunity for
development and progression. We create and cultivate an
environment that ensures inclusion at all levels, celebrates
diversity and allows each and every one of our people to
participate fully and realise their potential.
Shareholders
We operate in non-volatile trading environments with
predictable recurring cash flows that should deliver growing
revenues and profits.
Suppliers
We provide opportunities for national and local suppliers to
grow their business by developing strong relationships
with an expanding group.
Value we
create
£16.5m
Year-end net cash
(2020: £9.8m)
13.6%
Group employees in
courses of training
(2020: 7.7%)
172,405
40.2%
Households receiving
energy efficiency
advice & guidance
Group-wide engagement
with employee survey
Sureserve Group plc
Annual Report 2021 13
Stakeholder engagement
Keeping stakeholders informed
It is vital to our success that we build and maintain a strong reputation
as a responsible business and trusted partner to all our stakeholders.
Our stakeholders:
OUR CLIENTS
We deliver high quality services with
great efficiency, enabling our clients to
meet their legal, regulatory and
environmental obligations.
Why we engage:
Strong client relationships through exceptional
contract delivery are essential for the Group’s
financial stability, continued growth and
long-term strategy. Our reputation as a service
provider of choice is also important in
developing new opportunities.
How we engage:
X Ongoing management of client relationships
by senior leadership
X Press releases
X Website and social media
X Collaborative awards submissions
X Meetings and briefings
X Charitable support via the Sureserve Foundation
X Local community-support projects in
collaboration with clients
Read more about our
clients on pages
OUR CLIENTS’ CUSTOMERS
We provide safe, warm and well-
maintained homes and buildings that
improve quality of life of residents,
employees and business owners across
the UK.
Why we engage:
It is essential the Group deliver operational
excellence and exceptional customer services
to our clients’ customers, thus ensuring their
wellbeing, health, safety, and peace of mind.
How we engage:
X Customer Journey programmes
X Sureserve Foundation
X Website and social media
X Community events
X Customer service
X Community assistance projects
X Social Value incorporated into
contract delivery
Areas of influence:
X Customer satisfaction is an important driver
in determining the quality of experience for
our clients and their customers
X Our operational and financial performance,
along with the brand reputation, are all
indicators to new and existing clients as to
how the Group operates and can determine
perceptions of the Group
X Strong working relationships and effective
leadership underpin aspects of trust and
confidence especially during challenging
periods of contract delivery
X The quality of our people across the Group,
their access to training and support as well
as the necessary resources and equipment
to fulfil their role, is ultimately responsible for
the successful delivery of our contracts and
influences our clients’ experience
X We can help our clients understand, plan for
and realise their carbon reduction targets
X Our delivery of social value during the
lifetime of a project is increasingly creating
added value in our relationships with
those clients
Outcomes in 2020/21:
X During the pandemic specific consideration
has been given to issues which may have
affected our clients and their customers
X Ongoing management of client relationships
by Senior Leadership continues to be
essential to maintain good working
relationships and respond quickly to local
challenges, thus in many cases continuing
services to our clients’ customers and
minimising the negative impact of the
Covid-19 pandemic on revenue
X Strong relationships with many of our clients
made it possible to collaborate on a range of
community assistance projects across the UK
X ISO 27001 accreditation awarded in
07
08
09
10
11
12
13
22
January 2022
24
26
27
28
30
31
36
37
40 47
14
Sureserve Group plc Annual Report 2021
Strategic report | Corporate governance | Financial statements
Section 172
Recognising and understanding our stakeholders enables the Groups
Directors to satisfy their duties under Section 172 of the Companies Act
2006, and to take into consideration the interests of stakeholders and
other matters in their decision making. When making decisions the
Directors consider the potential impact on these stakeholder groups,
on communities, the environment and the Group’s reputation, when
determining what is most likely to promote the success of the Group
and its members.
Areas of influence:
X Brand recognition and reputation are
important in the delivery of our contracts,
and trust and confidence in our services in
turn positively affect our community focused
opportunities in the scope of works
X Residents, home owners, businesses, and
public bodies benefit from the measures
we install and maintain through reduced fuel
poverty, improved safety and wellbeing,
and increased community cohesion through
improvements to homes and places of work
Outcomes in 2020/21:
X The Group has this year recorded a
Group-wide Customer Excellence KPI
of 83.8%
X The Sureserve Foundation has delivered
energy efficiency measures, and advice &
guidance to 2,084 households during
the year
X The benefits delivered through our contracts
have helped households across the UK
reduce fuel and energy consumption and
impacted carbon emissions, as well as
ensured safe systems and their users’
health and wellbeing
COMMUNITIES
We are determined to play our part in
making our communities sustainable
places to live and work, and we embrace
making a positive difference and aim
to leave behind a strong, lasting legacy.
Why we engage:
The communities in which we work are also our
communities, and the Group is committed to
building positive relationships and helping
support them at a local level, creating
opportunities for work and development,
combating fuel poverty and working with local
organisations to raise awareness and funds.
X Businesses across the Group engaged with
clients to identify and deliver assistance to
residents within many of the Group’s projects
How we engage:
X Website and social media
X Sureserve Foundation
X Sureserve Academy
X Social Value incorporated into contract delivery
X Local community-support projects in
collaboration with clients
X School and University information events
Read more about our clients’
customers on pages
Read more about our
communities on pages
09
10
12
13
24
25
26
27
03
08
12
13
25
26
27
28
30
31
41
47
28
30
33
47
Areas of influence:
X Fuel poverty is experienced by a large number
of households across the UK and the
economic challenges during the COVID-19
pandemic have worsened the situation for
many. Work undertaken by the Group, our
people independently volunteering, and the
Sureserve Foundation can all have a direct
effect on community health and wellbeing in
this regard
X Environmental considerations in the
delivery of projects as well as in the
Group’s overarching activities have a
direct, profound and long-lasting effect
on communities across the UK
X The delivery of social value projects during
the delivery of contracts benefits a variety
of groups in the communities we work
within, improving health and cohesion of
the community, and offering employment
opportunities to a local pool of job seekers
Outcomes in 2020/21:
X Together with the Board the Group Head
of Responsible Business has developed
a Responsible Business Strategy for
the Group
X The Group has invested in zero emission
vehicle additions to its fleet as well as
sustainable improvements to our offices,
emphasising our commitment to
environmental sustainability
X Many of our people have volunteered this
year in support of local, community focused
causes, with many seeking and receiving
financial or logistical support from
their businesses
X The Directors have continued to highlight
and encourage a range of fundraising and
volunteering work across the Group during
the year
Sureserve Group plc
Annual Report 2021 15
Stakeholder engagement continued
FINANCIAL PARTNERS
OUR PEOPLE
Our responsible business management
reflects our deep understanding of risk
versus returns.
Why we engage:
We rely on the continued support of our
financial partners to ensure we have the
necessary funds to trade on a day to day basis
and pursue the Group’s growth strategy.
How we engage:
X Ongoing management of client relationships
by senior leadership
X Annual Report and Accounts
X Annual General Meeting
X Investors section of the Group website
X Results presentations
Areas of influence:
X The Group’s financial performance,
Governance and transparency in its activities
influence the ongoing relationship with its
Financial Partners
Outcomes in 2020/21:
X We maintain excellent relationships with
our banking partners, maintaining regular
dialogue on matters pertaining to trading
and risk in the Group
We make sure that Sureserve is an
enjoyable and motivating place to work
and we work hard to engage with our
employees; listen and learn from the
opinions and insight that they provide
and help them to progress their careers
in line with our business goals. Our
investment in training and development
incorporates all types of professional
skills, and our employees are actively
encouraged to propose their own ideas
for personal development.
Why we engage:
The Directors recognise that the Group’s
employees are fundamental to the success of
the business and as such, are committed to
ensuring the alignment of the Group’s culture
and strategy. The future of the Group depends
on attracting, retaining and motivating our
people, ensuring we remain a responsible
employer, from pay, benefits, wellbeing and
ensuring a safe and diverse workplace.
How we engage:
X Sureserve Academy
X Sureserve Apprenticeship programme
X Employee upskilling
X Group-wide Staff Survey
X Graduate recruitment
X SHEQ forum
X Mental Health working group
X Employee Assistance Programme
X Website, newsletters, emails and social media
X Group-wide webinars
Areas of influence:
X Our people expect the Group to be
committed to their wellbeing in both their
professional and personal lives
X It is important that our people are valued in
the delivery of their work, with their efforts
being recognised and rewarded
X Training and development are essential
aspects of the Group’s ability to recruit and
retain talent, as well as important parts of
succession planning
X Open and honest communication is
important to workplace culture with
Leadership and Management offering clear
strategic direction, accountability and
accessibility should employees have issues
they want to bring forward
X The Group has a duty as a responsible
business to ensure our workplace is safe
and healthy for all our people, free from
discrimination and visibly working towards
improvements in equality, diversity
and inclusion
Outcomes in 2020/21:
X The Group’s Equality, Diversity & Inclusion
steering group has continued to deliver
against its strategy for Group-wide
improvements with the support of the two
E,D&I working groups
X The Group’s Health & Safety teams
delivered the first Group-wide Health &
Safety Week to promote best practice and
knowledge-sharing, resulting in 100%
completion of mandatory health & safety
courses in the week
X We maintain a strict internal review
process on covenant compliance to ensure
we remain in line with the requirements of
our banking arrangements
X Employee Representative Council (‘ERC’)
X Equality, Diversity & Inclusion steering and
working groups
X The Group reports a higher percentage of
our staff in training, and further development
of the Sureserve Academy underpins
continued improvements in the coming year
X Gender & Equality working group
X Sureserve Legends
X Star of Customer Excellence Awards
X Long Service Awards
X Visible leadership through a wide range
of communication tools has underpinned
improvements in peer-to-peer support
and an uptake in engagement with the
Employee Assistance Programme
(‘EAP’) and working groups
Read more about our
people on pages
02
03
04
05
07
10
11
13
18
22
25
26
27
28
30
31
32
35
41
42
Read more about our financial
partners on pages
10
11
38
39
40
16
Sureserve Group plc Annual Report 2021
SHAREHOLDERS
We operate in non-volatile
trading environments with predictable
recurring cash flows that should deliver
growing revenues and profits.
Why we engage:
It is important for our shareholders to
understand our strategy, and how through
it we aim to deliver sustainable growth and
create long-term sustainable value in line
with Group policies and standards.
How we engage:
X Investor meetings
X Annual Report and Accounts
X Annual General Meeting
X Investors section of the Group website
X Results presentations
X Stock exchange announcements and
press releases
Areas of influence:
X The Directors engage with senior
management at Group level, delivering
operational and performance updates to
committees and ensuring the Directors have
a clear understanding of their role and
contribution as part of the wider Group
X Key ongoing considerations concerning our
shareholders are the Group’s financial
performance, governance and transparency,
new contract wins, technological innovation
and its reputation
X Consistent and clear communication to
our shareholders throughout the year and
especially around key reporting periods
is essential
Outcomes in 2020/21:
X The Chairman and Chief Financial Officer
have delivered investor meetings throughout
the year and were also available at the
Annual General Meeting which provided
shareholders with an opportunity to directly
engage with the Board
X Directors have worked closely with our
advisers and brokers throughout the year,
ensuring they are aware of our investors’ views
X The Group has delivered publicly available
information to shareholders via the Group’s
website, Regulatory News updates, results
and presentations as well as a number of
other online resources
Read more about our
shareholders on pages
03
07
12
13
47
48
49
50
52
53
54
55
56
57
58
59
71
92
NATIONAL INCLUSION WEEK 2021
In September 2021 the Group participated in
National Inclusion Week, taking the opportunity
to deliver a range of activities focused on the health,
wellbeing, social connections and recognition of
our people. Activities in the week were created and
delivered through each business’ E,D&I representative,
in partnership with local management teams, and
were built around educating our people on the
inclusive initiatives across the Group; and opening
up opportunities for the exchange or experiences
and ideas for all our people.
Local webinars as well as office-based sessions
delivered a good level of engagement, and our
E,D&I groups will continue to look at opportunities
to improve inclusive practices in 2022.
Strategic report | Corporate governance | Financial statements
SUPPLIERS
We provide opportunities for national
and local suppliers to grow their business
by developing strong relationships with
an expanding group.
Why we engage:
In order to meet the needs of our clients and their
customers, we ensure we utilise high quality
materials and resources, delivered by suppliers
of choice who meet our ethical standards and are
compliant with our Code of Conduct, governance
policies and supply chain best practices.
How we engage:
X Supplier conferences and workshops
X Website
X Annual Report and Accounts
X The Sureserve Foundation
Areas of influence:
X Supply risk must be managed in relation to
data security, corporate responsibility and
the financial, operational, contractual and
reputational damage which may be caused
by failures in the supply chain
X The Group is committed to being a responsible
business and as such it is important that legal,
ethical and environmental business standards
are maintained, including fair payment terms
to our supply chain’s employees
Outcomes in 2020/21:
X During the COVID-19 pandemic the Group
has engaged with key suppliers to review and
further establish processes for the management
of supply chain risks and issues, with escalation
to Directors as and when was necessary
X The Directors have reviewed the actions
taken by the business to prevent modern
slavery at any stage of our supply chain and
approved our Modern Slavery Statement
Read more about our
suppliers on pages
01
02
13
22
26
31
40
49
Sureserve Group plc
Annual Report 2021 17
AT THE FOREFRONT OF THE ENERGY TRANSITION
Creating green
workplaces for
our people
In the year the Group initiated a process of environmental
auditing within our office environments. With the participation of
our Governance and Compliance Director and the Group Head
of Responsible Business, as well as the Board, we are investing
in the project to understand the range of opportunities to improve
our sustainable performance at a local level.
Upgrades to Providor’s head office in Newmarket currently
include fitting EV charge points in car parks; eliminating single
use plastic within the office; replacement of office lighting with
LED systems fitted with light sensors and dimmers; solar panel
installation; on-site battery storage; switching to a greener
energy supplier; water usage reduction systems and 100%
waste recycling.
In undertaking this work we ultimately seek to reduce the Group’s
carbon footprint, continuing to expand out to other offices and
businesses and further delivering on our commitment to
sustainability across our operations.
0.13t
Reduction of office-based
CO2 per employee
£9,644
saved per annum
through Newmarket
office improvements
UN Sustainable
Development goals
Across the Group our people feel
strongly about sustainable and
environmentally-conscious practices.
We are investing in ways to understand
and improve the places we work,
making them healthier for everyone.
18
Sureserve Group plc
Annual Report 2021
Strategic report | Corporate governance | Financial statements
Part of our ESG strategy
Our Sustainability pillars
We are committed to the reduction of
carbon consumption within our offices,
managing our resources more efficiently
and ensuring the design and use of our
infrastructures and systems are aligned
with the Group’s sustainability goals.
We will continue to use the data available to
drive improvements, and look forward to our
office-based employees having a hand in our
environmental and health related developments.
Read more about
improvements within
our offices on page 31
Sureserve Group plc
Annual Report 2021 19
Key performance indicators
Our chosen Key performance indicators allow us to demonstrate
how effectively we are achieving our key business objectives.
Both Financial and and Non-Financial
KPIs are included as there are multiple
areas through which we must evaluate
our success at achieving targets, and
continue to drive future improvements
against new targets. All of the following
KPIs are important in the continued
monitoring of the progression of the
Group’s strategy.
Financial indicators
Working capital
(accrued income)
£17.9m
Accrued income
(Group)
2021
2020
2019
Revenue growth
24.7%
Revenue increase
(Group)
£17.9m
2021
24.7%
£17.3m
2020
(7.7)%
£17.6m
2019 11.2%
The key elements of working capital are
trade receivables, accrued income trade
payables and accruals. Accrued income
is quoted above as a key indicator of the
Group’s overall working capital position.
Relevance to strategy
The level of working capital demonstrates
our ability both to grow and manage risk
within the Group.
Performance
Trade receivables increased by 10% to
£18.4m (2020: £16.7m), accrued income
increased by 3% to £17.9m (2020: £17.3m),
trade payables increased by 28% to £24.9m
(2020: £19.5m) and accruals rose by 18% to
£11.7m (2020: £9.9m).
We operate primarily under service contracts
and recognise revenue either at a point in time
or over a period of time depending on the
satisfaction of performance obligations.
Relevance to strategy
The level of revenue demonstrates our ability
both to grow and manage portfolio risk within
the Group, predominantly through organic
means, but where relevant through carefully
targeted acquisitions.
Performance
Group revenue increased by 24.7% to £244.0m
(2020: £195.7m), reflecting a strong performance
in our Energy Services, which increased its
revenues by 40.1% to £84.6m (2020: £60.4m)
and our building compliance services increasing
their collective revenues by 18.4% to £162.4m
(2020: £137.2m).
These divisional revenue figures include
revenue from intercompany trading which
accounts for a total of £3.0m (2020: £1.8m).
Further performance analysis
Further performance analysis
on pages 38 and 39
on pages 34 to 39
20
Sureserve Group plc Annual Report 2021
Strategic report | Corporate governance | Financial statements
EBITA
£14.6m
Order book
£527.1m
Net cash / (debt) excluding
lease liabilities
£16.5m
Group EBITA increase
Order book
Net cash/(debt)
2021
2020
2019
£14.6m
2021
£527.1m
2021
£16.5m
£10.4m
£9.4m
2020
2019
£355.8m
£333.2m
2020 £9.8m
2019
(£7.4m)
EBITA is earnings before amortisation of
acquisition related intangibles, interest and tax,
and is stated before exceptional items.
Relevance to strategy
The increase in EBITA demonstrates our
ability to grow our profitability, manage risk,
deliver operational improvement and
expand our margins.
Performance
Group EBITA increased by 40.3% to £14.6m
(2020: £10.4m), reflecting an increase in EBITA
across our building compliance businesses of
17.8% to £13.9m (2020: £11.8m) and an increase
in our energy services of 325.0% to £3.4m
(2020: £0.8m).
The order book comprises our contracted
revenues, together with prospective revenues
from the frameworks we are on, where our
experience of customers deploying their
confirmed budgets means our revenue from
the framework is foreseeable.
Relevance to strategy
The order book measures our success
at securing the long term contracts and
frameworks we bid for and makes our future
revenue more predictable.
Performance
The order book increased 48.1% to £527.1m
(2020: £355.8m).
We currently have 73% visibility for the year to
30 September 2022 (like for like prior year: 77%).
Net cash / (debt) excludes lease liabilities.
Relevance to strategy
A high level of cash demonstrates the quality
of the profits we earn, as well as our ability to
generate funds for reinvesting in our
acquisition strategy.
Performance
At 30 September 2021, the Group had net
cash excluding lease liabilities of £16.5m
(2020: £9.8m). However, this represents a
snapshot in time and the Group’s revolving
credit facility remained undrawn for the whole
financial year (2020: weighted average RCF
drawdown £6.4m).
The total net cash, including lease liabilities
of £12.0m (2020: £6.8m), was £4.4m
(2020: £3.0m).
Further performance analysis
Further performance analysis
Further performance analysis
on page 38
on pages 34 to 37
on page 39
Sureserve Group plc
Annual Report 2021 21
Key performance indicators continued
Non-financial indicators
Group accident
frequency rate (‘AFR’)
0.22
Carbon usage
Customer Excellence
10,017t CO2e
83.8%
Accident frequency
rate RIDDOR
Carbon usage
(tonnes)
Customer
Excellence
2021
2020
2019
0.22
2021
10,017t
2021
83.8%
0.20
2020
7,296t
2020
95.8%
0.22
2019
8,666t
We calculate our carbon footprint by
considering energy use across the Group,
including our vehicle fleet (both business and
privately owned).
We record and report on our performance and
the quality of works with our customers. The
KPI figure is now more accurate as we are
receiving data from all business units.
Relevance to strategy
We understand the need to protect our natural
environment and reduce our carbon footprint.
Our customers, particularly in the public sector,
want to engage responsible suppliers.
Managing our environmental impact is therefore
important for our ability to win work, as well as
being socially responsible and more cost
efficient for us.
Performance
The increase in carbon consumption is due to
increased activity this period following one of
reduced operations due to the effect of
Covid-19. We have also experienced growth in
a number of our businesses. Despite this, we
have delivered localised savings through the
transition to EV vehicles within our commercial
fleet, as well as improvements across a number
of our offices within the year.
Relevance to strategy
By monitoring the experience of our customers
we can understand and mitigate issues before
they become problematic and seek to improve
and excel in areas identified. This in turn will go
on to influence resident engagement, customer
retention and wider reputation.
Performance
Our Customer Excellence KPI performance
indicates a decrease on the previous year.
Whilst it remains high we are disappointed to
see a reduction against the previous year. We
are working hard to understand the challenges
faced in the year and to make the necessary
changes to deliver improvement in 2022.
Accident frequency
rate all accidents
2021
2020
2019
2.28
1.98
3.2
The Group’s accident and reporting data and
analysis includes near hits, accidents/incidents
and environmental incidents. This allows us to
set relevant and meaningful health and safety
targets and objectives. We also report on
weekly and monthly Coronavirus cases/
contacts to enable us to protect our workforce.
Relevance to strategy
The Sureserve Group has a Safety vision which
is supported by the Group-wide strategy.
Providing a safe and secure work environment
ensures that our colleagues go home safely at
the end of each day and this allows our people
to focus on delivering a great service to our
customers and key stakeholders. Protecting our
people also supports employee engagement
and retention.
Performance
The AFR for RIDDOR reportable incidents is
0.22 (2020: 0.20), the target for the Group for
this period was 0.25 so we have managed to
meet our target and not exceed this. The AFR
for all accidents stood at 2.28 (2020: 1.98),
substantially below the Group target of 5.0.
UN SDGs
UN SDGs
UN SDGs
Further performance analysis
Further performance analysis
Further performance analysis
on page 31
on pages 32 and 33
on page 31
22
Sureserve Group plc Annual Report 2021
Strategic report | Corporate governance | Financial statements
Training
324
Number of trainees across the Group
Gender diversity
19.4%
Percentage of female
employees
2021
2020
2019
166
142
324
2021
2020
2019
19.4%
19.8%
20.3%
Across the Group, training initiatives, including
apprenticeships, upskilling and management
development, are an essential platform to
further enable and progress our workforce.
Relevance to strategy
Training opportunities can have a significant
impact on retention and provide a great many
professionals the skills and capability to be ever
more effective and motivated in the workplace,
in turn having a dual positive impact on both an
employee and business result.
Performance
The number of learners across the Group within
the reporting period was 324, accounting for
13.6% of our workforce, up from 7.7% for the
previous year and achieving our target of at
least 10% each annum. This figure does not
include self-funded trainees. We also continued
the Sureserve Academy’s training provision to
incorporate the Groups Joint Venture partners
in the year.
This figure indicates the total number of
female employees in the Group.
Relevance to strategy
Recognising the value of diversity and
inclusion in the way we work benefits all of our
stakeholders, and in ensuring gender diversity
at all levels we can benefit significantly from
ensuring all team members have that opportunity
and fully contribute to the Groups success.
Performance
Overall the Group has a Gender Diversity
figure of 19.4%,indicating the Group has a
ratio of 19.4% of women and 80.6% men. We
can further break this down into four distinct
job-role bands. In the Executive Management
band we have 13.3% women holding
positions. We have 20.8% women holding job
roles in Senior Manager positions. There is a
53.5% figure for women working in Support
Services roles, and only 1.6% of those in
operational roles are women.
The focus of this KPI is diversity, and through
the work undertaken by our E,D&I steering
group and the Gender Equality working
group, we will look to make improvements to a
number of key areas in the year to improve
gender diversity.
UN SDGs
UN SDGs
Further performance analysis
Further performance analysis
on pages 31 to 33
on pages 28 and 29
OUR STRATEGY FOR CHANGE
The Group’s Equality, Diversity & Inclusion
steering group delivered their Strategy
document in the year, identifying key issues
to focus on and take forward to implement
meaningful change in our businesses. These
objectives are all equally important and will
contribute to achieving the changes needed
to advance our long-term commitments to
equality, diversity and inclusion.
X To identify opportunities and barriers
related to recruitment, progression and
management of a diverse body of staff,
and achieve greater diversity at senior
levels of the organisation
X To tackle gender inequality, addressing
particular barriers faced by women in
particular roles, supporting the career
progression of women across the Group
X To ensure an environment for work that is
culturally inclusive, supportive of individual
needs, encourages authenticity and
upholds the dignity and respect of all
X To increase engagement in equality, diversity
and inclusive best practice at all levels
across the Group through participation
in training, learning opportunities, joint
working and shared objectives
For further information on our E,D&I
steering group see page 28
For more on the Group’s E,D&I
strategy visit our website at
www.sureservegroup.co.uk/about/edi/
strategy
Sureserve Group plc
Annual Report 2021 23
The UK Government remains
committed to their smart
meter objective of reaching a
minimum smart coverage of
85% by the programme
deadline of 30 June 2025.
UN Sustainable
Development goals
AT THE FOREFRONT OF THE ENERGY TRANSITION
Helping
households
plan their
energy usage
Smart meters help households understand what, how and when
they use energy. This is an essential component in changing
behaviours, as well as supporting the advancements being made
in complementary and integrated technologies. Smart meters will
be able to link up to other domestic energy generation systems,
such as solar PV, and work in tandem with battery storage which
could also make use of time-of-use tariffs.
Smart meters will also be able to support energy companies to
create ‘smart grids’, able to predict when and where energy is
needed so that supply and demand can be planned for. Between
households optimising energy use and only paying for what they
use, and the wider scale benefits provided by integrated, these
technologies are an important step in domestic decarbonisation.
Smart meters
installed
236,035
Domestic charging
points installed
1,473
Part of our ESG strategy
Our Sustainability pillars
The decarbonisation of housing stock in the
UK is essential for the realisation of
government net-zero targets.
Our significant management experience and client
relationships give our business a market leading
proposition in domestic energy services and energy
transition. Delivering domestic energy efficiency
measures and helping our clients achieve their
carbon reduction targets is essential for the UK
to achieve its green objectives.
Read more about our
community focused activities
on page 27
24
Sureserve Group plc
Annual Report 2021
Sustainability
Strategic report | Corporate governance | Financial statements
Sustainable
strategies for
a better future
Peter Smith
Chief Executive Officer
A commitment to responsible business practice lies at the heart of the
Sureserve Group and our Responsible Business, and Safety, Health,
Environment & Quality (SHEQ) teams continue to ensure social value and
environmental improvements are delivered concurrently with contracted
work, as is expected by our clients, and that residents benefit from our
presence beyond the scope of works. We look forward to understanding
the impact of this delivery further in the future, and using KPIs we will
ensure our stakeholders have the means to measure our progress too.
As you can see within this Annual Report, we have begun to identify
areas which lie within the UN’s 17 Sustainable Development Goals
(SDGs), identifying opportunities to combine current practices and ways
of working with sustainable targets that have been set within the SDGs.
Environmental performance
The Group is committed to environmental sustainability and recognises
the importance of understanding and acting on environmental risks and
opportunities for the long-term future of our business. We have initiated a
number of important projects in 2021, all of which will continue to expand
in the coming years. We began the transition of our commercial fleet to
Electric Vehicles (EVs), from petrol or diesel equivalents. We have also
begun a series of sustainability audits on our offices, measuring the
carbon footprint of each workplace and identifying a range of
improvements to reduce our carbon consumption.
Through the ongoing process of PAS2060 accreditation we are working
with industry experts to more accurately measure and verify our scope 1,
2 and 3 emissions and develop strategies to reduce, replace or offset our
scope 1 and 2 emissions.
We are also committed to applying the recommendations set out by the
Task Force on Climate-related Financial Disclosures (TCFD) and
reporting to our stakeholders information on climate-related risks and
opportunities.
Peter Smith
Chief Executive Officer
24 January 2022
By the very nature of the work we undertake for our clients, we have
always considered the mark we leave on both the communities in which
we work, and their surrounding environments. Their health in turn supports
the growth of those communities, the businesses, amenities and
infrastructure that support them, and allows us to continue to pursue our
ambition to be a delivery partner of choice for the services we provide.
We appreciate the changing landscape in the UK with respect to
sustainable business practice, from the Government’s green recovery,
to increased mandatory reporting on the Environmental, Social and
Governance (ESG), and that we have an important part to play. As well
as our governance and operational strategies, a culture which reflects
the values of the Group is essential moving forward, ensuring each of
our people has a hand in realising our goals as a leader in our sector
and a responsible custodian of the communities in which we work.
We have made good progress in 2021, building on strengthened structures
and teams and taking a step forward from mandatory expectations
towards an authentic engagement with ESG goals, reducing our carbon
usage and emissions and ensuring equality, diversity and inclusion
are improved.
Our pillars
In 2021 we introduced four sustainability pillars through which we will
understand and measure our social value impact. These pillars are our
communities, our people, our customers and our environment. Within
each pillar we have identified key targets for the future, against which we
can consistently measure our performance and drive improvements
across our operations. As well as framing the way in which we deliver
social value, these pillars will also serve to support a wider ESG strategy.
Our strategy
We have started the process of formalising our ESG strategy, working
with industry experts to understand our material concerns through
focused engagement with Group stakeholders, and identifying meaningful
targets against which we can measure future performance. Measuring
and recording our current position across a range of issues is essential in
this process, and the publication of the Group’s Responsible Business
Strategy early in 2021 created a strong building block for this work to
take place. We are heartened that many of our existing processes and
measures supporting long-term sustainability have aligned with those
identified within the scope of an ESG strategy.
Sureserve Group plc
Annual Report 2021 25
Sustainability continued
The four pillars of our
ESG approach guide us
in everything we do
OUR
COMMUNITIES
OUR
PEOPLE
OUR
CUSTOMERS
OUR
ENVIRONMENT
We place the communities in
which we work at the heart
of everything we do, and this
means being involved
beyond our immediate role
as an energy and compliance
services provider.
The Sureserve Group see it as
our top priority to ensure the
health, safety and well-being
of our employees, ensuring
they are able to participate
fully in our activities and
realise their full potential.
We continuously ensure that
client focus is at the heart of
everything we do, ensuring a
reputation for excellence as a
provider of compliance and
energy services, and supporting
our ability to deliver impact to
our clients and customers.
We believe that every
business should consider,
manage and measure the way
it uses and impacts upon the
environment, and it’s a key
part of our business strategy.
What it means
X Create a culture of learning
What it means
X Ensure that our clients and
What it means
X Measure performance to
What it means
X Assist with the alleviation of fuel
poverty and promote energy
efficiency for those living in fuel
poverty, across the UK
X Support the delivery of
apprenticeships, employment
opportunities, and skills
development in the communities
in which we work
X Develop a comprehensive
Social Value offer, that
champions and supports
community-led initiatives that
tackle key social issues
Our targets
X Help 1 million people living with
fuel poverty by 2030
across the Sureserve Group,
that promotes training and
development opportunities for
our employees
X Actively promote equality,
diversity and inclusion across
all levels of the business
X Ensure a safe and secure
working culture across the
Group, for our employees,
customers and communities
Our targets
X Group to reflect the diversity
of the communities where we
work by 2030
X Raise employee engagement
X Raise £1 million for the
to above 80% by 2030
Sureserve Foundation by 2030
X Educate one million households
on energy efficiency by 2030
X Deliver £10 million of economic
investment to our local
communities by 2030
X 100% employees to be paid
the real living wage by 2025
X 25% of workforce to have
undertaken accredited training
& development annually by 2025
26
customers feel that the services
we provide are good value for
money; achieving targets
around efficiency, effectiveness
and sustainability
X Ensure our purchasing
decisions have a positive
influence, by supporting our
supply chain partners and
helping small and local
businesses to thrive and grow
Our targets
X Deliver a positive Customer
Excellence Net Promoter Score
every year until 2030
X Ensure our top 10 suppliers
meet our responsible business
charter by 2030 – Sustainable
procurement, environment
& social value commitments
establish our corporate and
project footprint; championing
excellent sustainability
standards for the social
housing and public building
projects that we manage
X Continued Group-wide focus
on carbon neutral operations
X Measure project and office
waste, seeking to recycle,
minimise and divert from
landfill, where possible
X Delivery of environmental
awareness training to
all employees
Our targets
X Work towards 100% renewable
energy offices by 2030
X Work towards 100% zero
emissions fleet by 2025
X Work towards zero waste-to-
landfill by 2030
X 100% of workforce to complete
mandatory environmental
training annually
Sureserve Group plc Annual Report 2021
Strategic report | Corporate governance | Financial statements
Our communities
Our people
Funds raised for the
Sureserve Foundation
to fight fuel poverty
Households that received
energy efficiency advice
& guidance
£87,329
172,405
Number of individuals or
families receiving help to
combat fuel poverty
1,400
We place the communities in which we work at the heart of everything we
do, and this means being involved beyond our immediate role as an energy
and compliance services provider.
Skills Development
Armed Forces Covenant
The Group has achieved Silver status on the Employer Recognition Scheme,
awarded for demonstrating continued support for ex-service men and
women into places of work across our businesses, as well as encouraging
those who serve, or have served, into employment with the Group.
Working with Defence Relationship Management (DRM), we will continue
to ensure valuable knowledge and skills continue to be utilised and that
individuals and families are given every chance to support themselves and
contribute to their communities.
Fuel Poverty
Sureserve Foundation
For a number of years we have actively focused on utilising our knowledge,
operational experience and strong relationships to combat fuel poverty in
the UK, a growing concern in the current economical climate. We have
worked with the Sureserve Foundation, the Group’s charitable arm, which
is dedicated to eradicating fuel poverty by supporting individuals, families
and communities achieve fuel efficiency and in turn, lessen the financial
burden of high gas and electric bills. With the expertise of the Foundation
we have worked with 26 Housing Associations in the year, providing advice
and guidance, fuel efficiency measures, and food and fuel vouchers to
assist households identified as in need of help. These projects have utilised
our regional businesses who have mobilised employees to facilitate the
delivery of each project, often being active outside of work hours on a
volunteer basis. The impact of these projects is 1,400 households
receiving material assistance and advice on energy efficiency, all delivered
through the strength of our client relationships and relying on our people’s
volunteered time to make it happen.
In October 2020 the Foundation also worked with a number of businesses
within the Group, and in turn our social housing and local authority clients,
to identify households at risk of self-disconnection and who had been
adversely affected by the Covid-19 pandemic, either economically or
socially. Following funding from the Energy Redress Scheme the
Foundation delivered a project providing 937 emergency fuel vouchers
across 684 households in the months leading up to January 2021.
Employee engagement
40.2%
Employees undertaking
training in the year
13.6%
Voluntary employee turnover
(a reduction of 1%)
Employees being paid the
real living wage
7.6%
96.0%
The Sureserve Group is made up of 2,381 people, working in towns and
cities across the UK, and each contributing to improvements and changes
in over half a million homes this year. Our people, their abilities and talents
along with their effect on our customers’ lives is central to our ongoing
success and in realising our positive vision for the future of the Group.
Engagement
In early November 2021 we launched a Group-wide employee survey to
ask our employees important questions about their experiences of the
Group, their businesses, their teams, colleagues and work, and finally the
Group’s response to the COVID-19 pandemic. A collaborative project
between HR, Marketing and the Sureserve Academy, an engagement
figure of 40.2% was recorded. The results were used across a range of
targeted stakeholder groups, including Senior Management Teams within
each business, HR, our ERC and the Equality, Diversity & Inclusion
steering group. Noteworthy actions delivered within the year stemming
from our employee feedback include more inclusive performance review
systems, improvements to the onboarding process, significant investment
in sustainability measures within offices and more focused communications
to key employee groups. We are working to improve our engagement figure
by at least 10% overall in the next 12 months, ensuring we are on track to
meet our ESG targets for 2030.
Employees with Long Service
Awards (more than 5 years)
32.7%
Health and Wellbeing
We provide all our people with a free-to-use, confidential one-to-one help
and support service which is available at all times, day or night, online or on
the phone. Information as to how to access this system is provided during
onboarding, through our ERC and HR teams, and from line-managers
across our businesses. We further promote healthy behaviours and
knowledge sharing via employee wellbeing initiatives such as Mental
Health Awareness Week, and offer our Group-wide working groups
focused CPD on wellbeing support for employees.
Sureserve Legends
Every three months the Group celebrates the Sureserve Legends Awards,
during which our people nominate the exceptional colleagues that they
work with for making such a difference to their working day. The overall
winner is invited to attend working group meetings being held during that
quarter, allowing them an opportunity to have their voice heard and be at
the centre of decision making in the Group. During the year we broadened
the scope of the awards and added a second category, the Legends in the
To read an up-to-date review of the Sureserve
Foundations work to date follow this link:
Sureserve Group plc
Annual Report 2021 27
Sustainability continued
Our people continued
Sureserve Legends continued
Community award, for our people that go above and beyond for a resident
or customer whilst delivering their work. We often receive testimonials from
clients and residents when this happens and the impact of these stories on
both ourselves and our clients and partners is always significant, and for
this reason we believed it was important to do more to recognise
these individuals.
Sureserve Legends
nominated this year
123
Training and Development
The Sureserve Academy ties together all learning and development for the
Group with the aim to prepare the Company to meet both today’s training
demands and tomorrow’s operational challenges. We are committed to
developing and identifying potential within our Business, to generate
exciting career opportunities and a consistent quality talent pipeline to
meet the market’s growing demands and ensure the long term
sustainability of our Business.
Online courses completed
this year (2020: 8,685)
10,628
Apprentices
The Sureserve Group has a long and proud history of recruiting and
supporting apprentices into the Business. Many of our people now in
Senior Management began their careers as Apprentices and the
opportunity to learn whilst working alongside experienced professionals
ensures that colleagues have pertinent up to date industry experience as
soon as they pass the necessary qualifications.
Management training
Our Management Excellence Programme is a modular training course
created to support our Future Leaders initiative, identifying and encouraging
talent and potential in a variety of roles across the Business. A combination
of on-line and classroom-based training was specifically created to deliver
focused learning to participants in areas such as our legal risk, fraud
prevention, corporate strategy and influencing and communication. There
were 22 Future Leaders who finished the programme this year and we will
continue to expand in scope and engagement and provide our people with
a further route to advancement in their careers, as well as providing the
Group with a valuable talent pool in the development of our
Management teams.
Our working groups are made up of a diverse set of talented people from
across our businesses, each determined to create and improve our culture,
our policies and systems and ensure we provide better than best practice
for all our people. Their work in developing and implementing progression
in the areas of gender equality, diversity and inclusion across the Group is
sponsored by Senior Leaders and supported by our E,D&I steering group,
made up of members of our Executive Management Team. The steering
group has been active in the year measuring our progress against targets
set out in our E, D&I strategy and assisting the two working groups in
delivering results in key areas.
Ethnicity & Diversity working group
We understand how important it is to create and cultivate an environment
which ensures inclusion at all levels, celebrates diversity and allows each
and every one of our people to participate fully and realise their potential.
Recognising the value of diversity and inclusion in the way we work
benefits all of our stakeholders, and building on our structures of support
and engagement contributes to the wellbeing of all our people.
During the year our Ethnicity & Diversity working group has been active
with a range of internal and external partners, developing and delivering a
range of initiatives to promote and develop ethnicity and diversity within our
businesses. These have included:
X Race at Work Charter created to support the working groups activities
X Participation in National Inclusion Week with employee activities across
the Group
X Active partnership with Tpas, Disability Confident, and Mindful
Employer initiatives
X Non-biased recruitment training
X CPD training for all working group members
X Internal review of employee ethnic group classifications to ensure
proper representation is achieved
X In-house online ‘Equal opportunities and dignity at work’ training
module developed
X Improvements in appraisal process to ensure fair and thorough reviews
at all levels
Gender & Equality working group
Our people are the Group’s most valuable asset, and in a traditionally
male-dominated sector, improving gender equality and working towards
gender balance across all roles is that much more important. Across a
range of projects there was further progress made in building on long-term
opportunities for women in our industry, ensuring a Group-wide culture
exists from the top-down which supports and rewards those who choose
to develop a career with us. These have included:
X Gender Equality (Women in Business) Charter developed
X Non gender-biased recruitment
X Sector-leading maternity pay
Upskilling
Making training available to our people at all levels of the organisation
is essential to avoid skill shortages in the midst of industry developments
and advancements in technology. The Group is committed to remaining
competitive in challenging markets, and via the Sureserve Academy, we
have invested in creating bespoke training solutions for our businesses’
particular requirements, utilising educational institutions, external training
partners, mentors and online courses to fulfil those learning needs.
X Gender parity for all in-house training and development opportunities
X Workplace flexibility policy
X Celebration and recognition of Gender Equality awareness days
X Active partnership with the Women’s Trade Network
X Silver Award in the Armed Forces Covenant Employer
Recognition Scheme
X A variety of local internal and external initiatives encouraging women
Equality, Diversity & Inclusion
Our workforce reflects the communities in which we work, ensuring that
our commitment to equality and diversity is clear in the delivery of our
services to our partners, our clients, and their customers. Establishing an
environment in which all our people are supported to excel in their chosen
profession, and realise their full potential, is an essential part of the
Group’s strength and resilience.
into engineering roles
X Gender Pay Gap review
Digital accessibility
We are committed to ensuring that our websites and the resources made
available through them are as accessible as possible to users. We have
integrated an accessibility tools platform into the structure of our websites in
order to assist those with impairments or disabilities who often face barriers
when utilising online environments which are not designed for them.
28
Sureserve Group plc Annual Report 2021 Gender breakdown %
Overall
Male
80.6%
Female
19.4%
Operations
Male
80.8%
Female
19.2%
Senior Management
Male
79.2%
Female
20.8%
EMT
Male
86.7%
Female
13.3%
Board
Male
100%
8181+
8181+
7979+
8585+
100100+
Strategic report | Corporate governance | Financial statements
TALENTED GAS ENGINEER IS
AWARDED APPRENTICE OF THE YEAR
In November 2021 the Group was proud to celebrate the
achievements of Apprentice Gas Engineer Marcus Piper, of
K&T Heating, after he won Apprentice of the Year (under 21s)
at the H&V News Awards 2021.
Apprentices across the Sureserve Group are supported by
the Sureserve Academy, the central hub for all learning and
development activity across the Group. The Academy
delivers all training and upskilling undertaken within each of
our businesses, whether that’s apprenticeships, new
recruits, employee development opportunities, mandatory
training or our online learning management system.
Marcus is one of 61 trainees within the K&T Heating business
this year, with many more across the Group providing essential
long-term growth in our workforce and the necessary skills
to ensure operational excellence for our clients.
Marcus was a popular nomination amongst the team at K&T
for having consistently achieved excellent results in his studies
and in the delivery of his work, and had in fact already won
internal awards as well as being shortlisted for the Screwfix
Trade Apprentice Award in 2020.
David Greenfield, Managing Director of K&T Heating said of
the win “It comes as no surprise to see Marcus awarded an
achievement like this. For as long as he’s been with the
business through his Apprenticeship he’s shown his willingness
to learn and brilliant work ethic will take him as far as he
wants to go as a Gas Engineer. A well deserved win.”
The judges said of Marcus “Marcus is an inspirational young
man who has a secure and promising future in heating and
plumbing and could see clear evidence of the pride he takes
in each job.”
Training and development is a key part in the Group’s growth
strategy moving forward and further investment in the
Sureserve Academy will ensure Apprentice numbers
continue to rise in the future.
Number of trainees
across the Group
326
Sureserve Group plc
Annual Report 2021 29
19
19
+
T
21
21
+
T
15
15
+
T
T
19
19
+
T
AT THE FOREFRONT OF THE ENERGY TRANSITION
Making fuel
poverty a thing
of the past
The challenges faced by communities in the UK have
never been more varied, and our active partnerships
with the Sureserve Foundation and Housing Association
clients provides funding, advice and guidance, and
project delivery to homes and communities experiencing
fuel poverty across the UK.
In the year we have worked with these partners to
identify and assist those in need, easing the challenges
they face and reducing the burden of energy efficiency
and fuel poverty. Working with fuel poverty experts, we
offer residents a wide range of simple helpful solutions
to improve energy efficiency in their homes, as well as
offering advice and guidance to increase their
awareness and knowledge.
1,400
parcels delivered to
families in need
emergency vouchers delivered
937
2,084
households supported by
the Sureserve Foundation
UN Sustainable
Development goals
Part of our ESG strategy
Our Sustainability pillars
The challenges faced by communities in
the UK have never been more varied, and
it is crucial that we work to deliver
positive impacts to homes and
communities experiencing fuel poverty
across the UK.
Through our work with the Sureserve
Foundation, the Group will continue to
collaborate on projects, delivering assistance,
and fighting fuel poverty in the communities in
which our people, clients and customers live
and work.
Read more about the
Foundation’s work at www.
thesureservefoundation.org
30
Sureserve Group plc Annual Report 2021 Our customers
Customer Excellence KPI:
83.8%
Every year we serve hundreds of thousands of end customers when we are
contracted to deliver work schemes for Public Sector clients across the
UK. Providing our services means more than the installation and maintenance
work we do in homes, public buildings and businesses, and an large part
of our success is in the manner in which we interact with our customers
and clients and how their experience and perception is formed based on
the quality of support they receive.
We have continued to focus our attentions on effective leadership and
clear client communication during the year, and their confidence and trust
in our ability to deliver work successfully and safely has been essential in
the increase in new contract wins and extensions to existing contracts.
“ Moat have an excellent working
relationship with K&T Heating. Services
are provided to our customers at a very
high standard and are delivered with a true
partnership approach. Gas compliance has
been maintained at an exemplary level,
despite the challenges and uncertainty
faced during lockdown.”
Paul Martin
Head of Technical and Building Safety, Moat Housing
Star of Customer Excellence Awards
During National Customer Service Week we run the Sureserve Star of
Customer Excellence Awards which is an opportunity for people from
across the Group to nominate a colleague who has excelled in their
customer services during the year. Matthew Upson, a Gas Engineer with
Aaron Services, was chosen as this year’s winner. Becki Phillips, Install
Admin Team Leader at Aaron said, “Matt works extremely well with our
customers to make them at ease and very comfortable in their home.
We receive many PFM’s from our customers after Matt finishes his installs.
He goes the extra mile for our customers.” We continue to support a culture
of customer excellence, giving recognition to those to deliver it and presenting
learning opportunities for those progressing in their customer facing roles.
Supply chain
Ethical purchasing is a priority for the Group, and we seek always to take
social, environmental and economic factors into account when deciding
what, where and how to buy. Our procurement team is highly skilled at
achieving best value while positively discriminating in favour of suppliers
with policies that complement our beliefs.
Whenever we can, we use our procurement activities to have a positive
influence on communities by enabling local businesses to grow. An
example of this is our Warmworks joint venture, which manages the
Scottish Government’s Home Energy Efficiency Programmes (HEEPs).
This includes fair payment terms and free or subsidised training for
suppliers, helping to ensure that local businesses can access our supply
chain and encouraging innovation among our suppliers. Every year, we
provide training to around 700 of our suppliers’ employees.
Strategic report | Corporate governance | Financial statements
Information security
In January 2022 we were proud to achieve ISO 27001 accreditation, the
international standard for information security management systems.
Ensuring our Information Security Management System is aligned with
best practice is vital to all our stakeholders, and this certification makes
certain that all legal, physical and technical controls involved in our
information risk management processes meet the highest standards.
Health and safety
Health & Safety Week 2021
The Sureserve Group’s safety vision is “To provide a safe and secure work
environment promoting a positive culture by continuously improving the
Health, Safety and Well-being of our people and the communities we serve.”
In July the Group delivered its first Health & Safety Week, a range of focused
activities and resources engaging our people in all our businesses across
a range of safety related subjects. Utilising a mix of digital and print supporting
material local SHEQ teams met with employees both physically and online
to discuss, record, share teach and empower proactive behaviours relating
to health and safety in the workplace. The Group plans to continue this
event on an annual basis, setting up a clear platform to further establish a
strong culture of health and safety across our businesses.
Health & Safety performance
HSQE data and statistics are reported monthly to the Plc Board, based
on the following criteria;
X Near Hits/Misses
X Accidents resulting in injury
X Incidents
X RIDDOR’s
X Gas RIDDOR’s
X Environmental Incidents
The Group AFR (‘Accident Frequency Rate’) is calculated monthly; this is
one of the standard safety measures used to identify and analyse the
number of occupational accidents which take place in the workplace.
The Group Health and Safety strategy underpins key aims and objectives
which focus on the following;
X Reducing the number of Accidents/Incidents across the Group
X Reviewing and updating our training providers both internally/externally
X Increasing engagement and awareness amongst our people to provide
a positive Safety culture
X Reviewing and researching technologies that will help enhance
performance and our internal systems
Across the Sureserve Group our highest priority is to protect the health,
safety and well-being of our employees, customers, suppliers and pertinent
members of the public. This is one of the core values that underpin our
culture as a Group.
We are committed to continual improvement and do everything we can to
ensure anybody affected by our work is kept safe, both during our
operations and into the future. We operate an Integrated Management
System which includes certification to ISO:9001, ISO:14001, ISO:45001
and ISO:50001 which underpins and supports core business values.
Sureserve Group plc
Annual Report 2021 31
Our customers continued
Health and safety continued
Health & Safety performance continued
When it comes to looking after our people, we have robust procedures in
place to ensure that our employees are competent and supported in their
roles. This is done via both internal and external industry specific training
and is tailored dependent on the type of role and business. Supporting this
is our Online Academy which provides a suite of mandatory Safety courses
tailored to suit our needs for Health & Safety essentials, which enables our
employees to undertake core training on the go.
The SHEQ Forum is well established and consists of our highly skilled and
trained Health & Safety professionals across the Group. We believe the
ongoing health and well-being of our people is as important as their on-site
safety and we are continually developing and delivering initiatives to
support this.
Every year we look for new ways to improve our Health and Safety
performance across the Group, and this is underpinned by the Health &
Safety Strategy. These improvements include a new accident and incident
reporting platform to promote effective reporting and prevent reoccurrences,
reward and incentive schemes, raising awareness, participation
and consultation.
Our environment
Zero emissions vehicles
in fleet
3.4%
Carbon savings through fleet
improvements (per month)
5,563kg
Waste diverted from landfill
95.6%
Reducing carbon emissions
When planning, undertaking and delivering our work, how best to protect
the natural environment and help sustain it for the future is always a key
consideration for Sureserve. We believe that every business should carefully
manage and measure its impacts and doing so is a key part of our own
Group strategy.
As part of this, we continuously monitor potential impacts, promote
awareness and do everything we can to reduce risks. Our Environmental
Management System, underpinned by our ISO 14001 accreditation,
ensures that we go further than simply meeting legal requirements and
ensures that we are consistently driving continual improvements.
As a Group we ensure that all environmental risks and opportunities are
taken into consideration and carefully managed. As part of this risk management,
the number of Environmental Incidents is reported the Plc board on a
monthly basis and in 2021 we had three incidents.
The Sureserve Group understands the importance of reducing our carbon
footprint, reducing our waste consumptions and conserving wildlife. The
key environmental areas on which we focus are energy efficiency, carbon
management and waste diversion. We monitor and analyse all these
aspects and set local targets to ensure continual improvement.
Our vehicles
Over the past few years we have continued to replace our existing fleet
with the most efficient Euro 6 vehicles available, which now account for
94% of the fleet. We have also begun the transition to a fully electric fleet
of vehicles, ensuring we make good progress in achieving our ESG targets
for 2030. All of our commercial vehicles are tracked, speed restricted and
fitted with start/stop technology to help reduce any idling time.
3232 Sureserve Group plc
Annual Report 2021
Driver behaviour
All of our commercial vehicles are fitted with telematics which enable us
to track our on-road driver behaviour through driver scorecards and
league tables. This identifies any High-Risk drivers through Speeding,
Harsh Braking and Cornering metrics. By monitoring and improving our
driver’s performance, this will have a positive effect on our fuel consumption,
the wear and tear on the vehicle and reduce the possibility of being
involved in a road traffic incident. The Sureserve Group’s average driver
score has improved to 94 (out of 100) since the adoption of the
telematics systems, with 95 being our group target.
Sustainability Audits
The Group are now looking to further enhance our ability to reduce our
carbon emissions in our office environments and have taken the first step in
doing so at Providor’s office in Newmarket, by undertaking an external
Carbon Audit during the year. This has enabled them to work with an
industry expert to identify the sources of emissions within the office
environment and create benchmarks for comparison. Areas of improvement
have been highlighted and practical solutions to improve the office’s operational
efficiency. The results of these improvements will form part of a proof of
concept to ultimately reduce the business and Group’s carbon footprint,
expanding out to other offices and businesses and further delivering on our
commitment to sustainability across our operations.
SECR
Achieving a substantial reduction in our use of energy is one of our core
priorities as we strive to reduce our carbon footprint, both at a local level
within each business unit and across the Group as a whole.
We hold the ISO 50001 accreditation and have a robust energy management
system which enables us to monitor energy performance and drive
continual improvements. We apply its guidance across the Group, not only
to ensure we comply with all legal and other requirements but also to help
us improve our performance and reduce our carbon consumption. We
collate energy data on a monthly basis focusing on our SEU’s (Significant
Energy Uses) which have been defined as;
X The Fleet for business use
X Electricity
X Gas
The Group has implemented the Streamlined Energy and Carbon Reporting
(SECR) requirements in the year and the results are shown below. Our
emissions are calculated using Carbon Trust conversion factors.
Total consumption of energy supplies
Utility and scope*
Grid-supplied electricity
(scope 2)
2020/21
consumption
2019/20
consumption
2,678,852 kWh
1,361,099 kWh
Natural gas (scope 1)
1,206,419 kWh
4,314,060 kWh
Transportation (scope 1)
38,409,137 kWh
31,208.791 kWh
Total
42,294,408 kWh
36,883,950 kWh
Total emissions from energy usage
Utility and scope*
Grid-supplied electricity
(scope 2)
Natural gas (scope 1)
Transportation (scope 1)
Total
2020/21
Consumption CO2e
2019/20
Consumption CO2e
645.5t
221.5t
9,150t
10,017t
567t
792t
5,937t
7,296t
Sureserve Group plc Annual Report 2021 Action taken to improve energy efficiency
Our Energy Management System underpins our core business values and
enables us to identify the required actions needed to improve our energy
consumption and efficiencies. This has included;
X Replacing 3.4% of existing fleet vehicles with EVs and others with the
most efficient Euro 6 vehicles available, which now account for 94% of
the fleet
X Utilising telematics to identify high-risk drivers through idling, speeding,
harsh braking and cornering metrics. This enables us to track fuel
consumption and look at driver behaviours to drive improvements
X Enhancing staff awareness with training modules on our internal Online
Training Academy
X Undertaking Energy Audits at each of our Head Office locations to look
at the SEU’s and what changes can be made to reduce electricity and
gas consumption.
Energy intensity metric
2021
Energy intensity metric
2020
41.1t
37.2t
of CO2e / per million
pounds revenue
of CO2e / per million
pounds revenue
Workings for your reference
Tonnes of CO2 /revenue
10,017/ 244.0 = 41.1 7,296 / 195.7 = 37.2
2021
2020
Revenue / Tonnes of CO2e
An energy intensity metric has been calculated using the number of tonnes
of CO2 emitted per million pound of revenue to provide a metric against
which the Group will measure current and future energy usage
performance. This measure takes account of the differing consumption
between divisions and the respective revenue of those divisions.
Carbon reduction target
X To reduce the Energy consumption of the office premises via electricity
and gas by 1%
X To reduce the Energy consumption of the fleet (business and grey) by 2%
We monitor energy consumption at all our offices and utilise a fuel card
system to monitor our fleet consumptions. By analysing data, we use it to
set stretching but realistic annual reduction targets. We report Group
consumption to the Plc Board each month and create annual energy
reviews and baseline reports to identify and highlight annual performance
and improvement opportunities.
Our carbon usage for this reporting year was of 10,017 CO2, which shows
an increase of 37.3% on the 7,296 tonnes usage in 2020.
Strategic report | Corporate governance | Financial statements
DEVELOPING OPPORTUNITIES FOR
SEND STUDENTS IN OUR
COMMUNITIES
Aaron Services are a member of the Special Education
Needs and Disability (SEND) Employer Forum and have
been working closely in the year with the young people of
the St.Francis School in Lincoln, a specialist school for
pupils between the ages of 2 to 19 with wide ranging
special educational needs including physical and medical
needs, Autistic Spectrum Disorders and social communication
difficulties and severe and profound learning difficulties.
Aaron have developed a selection of initiatives which aim to
inspire the school’s students into various workplace
settings. It’s an exciting journey their teams are proud to be
involved with.
They have recently helped the school along the way to
achieving the ‘Eco Schools Green Flag Award’, which
acknowledges, rewards and celebrates the ecological
achievements of young people. Aaron created a competition
for St. Francis School students to show off their creative
talents and design a piece of art that would be displayed on
their fleet of local electric commercial vehicles.
Aaron have also supported a daily placement once a week
over an eight week period for a number of students from St.
Francis’. Each student is provided a mentor who gives the
students an insight into a range of work related activities
including Quality Control checks, Health & Safety checks on
employees, along with tenant satisfaction processes and
enquiries regarding their new heating systems. The placement
has proven an engaging way to encourage learning on
both sides.
Following initial collaboration, visits and discussions, a
range of activities have been identified to support the
school’s vision. More recently the relationship between
Aaron Services and St Francis Special School has been
formalised following Aaron’s Head of Bids and Marketing
becoming an official Enterprise Advisor for the school,
which is a volunteering role. Now with the support of Great
Lincolnshire LEP this role supports activities based on their
Strategic Careers Plan.
Sureserve Group plc
Annual Report 2021 33
Operational review
Building a
resilient and
responsible
business
Peter Smith
Chief Executive
Officer
Group Summary
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 as well as developing organic growth
opportunities, there is an opportunity for substantial growth within the
Group in the years ahead.
The overall Group performance remains positive against the background
of Covid-19. We believe this continues to demonstrate the resilience of
the business model. Our basis of predictable and recurring incomes in
areas supported by non-discretionary and regulatory led spend has resulted
in growth. This is pleasing given revenues have also increased in comparison
to pre-pandemic levels. Despite this, we did continue to see significant
trading challenges from Covid-19 during the year, albeit largely restricted
to specific income streams, clients or geographies. These were
particularly prevalent in the first half of the financial year. The majority
were seen within, but not completely limited to, our Energy Services
division where specific Government pandemic response measures and
restrictions impacted more markedly.
Given these effects, the businesses in the Group have continued to apply
for and receive Government support where appropriate. This aligned to
the lower levels of restrictions witnessed, at a reduced level from that
seen in the prior financial year. As previously reported, following the
continued emphasis and delivery on cash conversion, we repaid the full
£6.1m of deferred VAT payments on 31 March 2021.
Financial Performance
X Revenue from operations: £244.0m (2020: £195.7m, 24.7% increase)
X Operating profit before exceptional items and amortisation
of acquisition related intangibles: £14.6m (2020: £10.4m,
40.3% growth)
X Profit before tax: £13.8m (2020: £7.8m, 76.7% growth)
X Year-end net cash (excluding IFRS 16 lease liabilities): £16.4m
(2020: £9.8m, including deferred VAT due of £6.1m)
We remain confident that the business model is proving resilient, despite
the challenges of the pandemic.
Covid-19 Update
As reported at the half year, the unprecedented situation presented by
the Covid-19 pandemic and ongoing Government response measures
continued to impact Group operations during the year. The safety of our
employees and customers has remained paramount throughout and will
continue to be our absolute priority. The national situation in terms of
lockdown restrictions has improved and is less severe in comparison to
the initial stages of the pandemic response. However, it remains fluid with
varying degrees of impact on our operations.
The positive results achieved were pleasing against the backdrop of the
significant impact from further Covid-19 pandemic restrictions. A number
of businesses delivering building compliance services experienced some
delays during the year, particularly in accessing residential and communal
properties to undertake work as a result of Government or other measures
in response to Covid-19. Some local authority customers, where work
was deemed non-essential, such as energy efficiency improvements and
smart meter installations, chose to defer certain elements. Everwarm, the
majority of whose operations are in Scotland, saw its revenues constrained
across the full year because of this. However, as Covid-19 restrictions
were reduced in the second half of 2021, Providor and Everwarm
experienced significant revenue increases from the comparable period
last year with Providor, in particular, also benefitting from significant
contract wins. These full year results are therefore still not considered
representative of our normal expected financial performance. The Group
received £1.7m (2020: £6.6m) of job retention scheme money from the
Government in the year, reflecting the reduction in work levels seen for
certain delivery teams.
Our focus has been serving our customers in the safest manner possible,
while protecting the wellbeing of colleagues and minimising virus spread
risk. This includes, but is not limited to, ensuring our ‘Covid-Secure’
status through NQA verification standards. Our detailed responses and
key protocols have been reported on during the period. These continue
to evolve while our focus remains on safe delivery as we continue to
refine our approach to effective operations.
While the pandemic continues to require navigation throughout Group
operations, we remain confident in our ability to proactively manage and
respond accordingly to any further developments. We believe that our
experiences throughout the pandemic to date have demonstrated it is
possible to continue to operate successfully. This includes the delivery of
sustained growth, despite any challenges presented. We will continue to
monitor restrictions as we move forward and will remain vigilant and
reactive to updates as they occur.
34
Sureserve Group plc Annual Report 2021 Strategic report | Corporate governance | Financial statements
Looking Forward
Implementing the refreshed Strategy
We remain optimistic around opportunities for continued growth within the
Group, which underpins our future strategy. Our energy services businesses
more than reversed the temporary revenue reduction seen during the initial
phases of the Covid-19 pandemic last year. We believe all of our businesses
have a positive outlook, with many opportunities for growth ahead. This view
is reinforced by the Government’s continued emphasis on a net zero target
for carbon emissions by 2050, and the momentum which continues to build
around that agenda.
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. As we previously noted,
acquisitions such as Vinshire in December 2020 are exactly the type of
strategic acquisition we wish to pursue. This addition to the Group was
followed in December 2021 by the acquisition of CorEnergy Limited, a
business focused on delivering sustainable energy solutions for public and
private sector organisations, supplementing our energy services and
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.
Our energy services businesses provide a range of energy efficiency
services such as insulation, heating and energy efficient technologies. The
latter includes electrical vehicle charging points, air source heat pumps,
battery storage and solar PV through the Everwarm subsidiary. Everwarm
provides these services for social housing, private homes and non-domestic
properties. Measures that are delivered support carbon emissions savings
for utility companies enabling them to meet their legislative targets. Our
Providor business continues to deliver domestic smart metering installation
and recurring asset management services to its utility client base. It is well
established as one of the market leaders and is experienced in the ongoing
UK-wide Government roll-out.
We believe that the division’s established presence in the installation of
electrical vehicle charging points, solar PV works, battery storage projects
and air source heat pumps all represent likely growth sectors that our
experienced management team is well placed to deliver. The backdrop of
climate change and ongoing Government initiatives, and future commitments,
is believed likely to provide ongoing opportunities to increase our delivery in
these, and associated, service areas.
The Board is delighted by the high bidding success rates continuing to be
achieved by the Group with the year-end order book significantly increased
at £527.1m (2020: £355.8m). This provides a predictability of future incomes
and allows longer-term planning to occur, which helps drive efficiency. The
order book is consistent with our previously stated view around our focus 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. With our previously strengthened bidding resource we are
well placed to capitalise on various opportunities going forward. We remain
confident in the growth and prospects for the Group.
We remain confident in our future with a significantly increased order book
value and good visibility on future earnings, underpinning our belief in a
robust financial outlook.
TRAINING & DEVELOPMENT
Like any business in a competitive market place, the
Sureserve Group is committed to investing in our people to
ensure we have a diverse, capable and motivated workforce
that represent us well in the markets where we operate and
that we have the capabilities to deliver our growth strategy.
The Sureserve Academy works with every businesses
across the Group to deliver a range of flexible training and
development solutions in a number of areas, including
Apprenticeships, upskilling, Management training, on-line
learning and in-house mandatory qualifications. Working
with partners in HR and Senior Management, the Academy
is able to support immediate business needs as well as
develop strategies to longer-term operational goals within
the workforce.
The ongoing requirements of our public sector clients
demand that as well as providing a rewarding, inclusive and
challenging work environment, that we identify opportunities
to best serve their operational needs. Developing our
engineers across multiple disciplines supports the Group’s
ability to deliver a number of services in to one client, and
draws on the substantial experience and knowledge
available to the Group, especially in energy services.
Emma Clarke, a Dual Fuel Engineer at Providor came to the
Group as an Apprentice. “I came to Providor as I was
looking for a career change. As an Apprentice, you’re
starting from scratch, but its great because you literally learn
everything you need to know. It’s good for the business too
because they know their engineers are being trained the
right way. For the future I’m looking to get into EV charging,
and I know the business will be there to help me progress
and develop in the direction I want to go.”
As well as developing the operational skills and knowledge
of our people, the Sureserve Academy delivers a range of
courses available to employees including Customer Service
Excellence, Ant-Bribery and Corruption, GDPR and
Cyber Security.
Increase in online
course completions
22.4%
Sureserve Group plc
Annual Report 2021 35
Operational review continued
Gas
Lifts
The three Gas Compliance businesses (Aaron Services, K&T Heating
and Sure Maintenance) make up 78% (2020: 74%) of the Compliance
division’s revenues. They delivered an excellent year of revenue growth
from recurring incomes and new works, further enhanced by the Vinshire
acquisition and integration into Aaron as discussed below. Following the
increase in size of Aaron, the three gas businesses are now very similar
in revenue size. This gives the Group a robust base of trading and allows
further internal benchmarking and comparability studies to
enhance performance.
Aaron Services, delivering gas compliance, alternate fuel and renewable
solutions across East Anglia and the Midlands, reported an extremely
successful year. This was due to a range of factors. It experienced
a significantly reduced Covid-19 impact compared to the prior year
and saw improved delivery performance building on previous wins.
The successful integration of the Vinshire business in the final quarter
of the year also contributed positively, along with significant growth from
a number of contract awards. The business saw major wins in the year
with the largest being electrical testing and associated works for £31m
with Thurrock Council over ten years. Further significant awards were for
domestic heating, servicing and maintenance works worth over £14m
with PA Housing for an initial term in excess of five years, and £5.0m
with Stevenage Borough Council over eight years. A further £11m was
won with Babergh District Council for heating and electrical works over
seven years.
K&T Heating’s trading performance has been strong, with annual
revenues growing and now approaching £44m. The business delivers
gas compliance services across London and the South- East. The
highest single value gas contract win in the year was the successful
tender for existing client Guinness Partnership, for up to ten years of gas
servicing, repairs and installations. This is expected to be worth £70m
each for K&T and Sure, or £140m of total value to the Group combined.
The retention of this key Group client is very pleasing given the long-term
relationship. The business was also delighted to be awarded a £22m
contract with PA Housing for domestic heating, servicing, maintenance
and installation works over an initial term in excess of five years.
Numerous other wins and extensions were seen within the year.
Sure Maintenance, which delivers gas compliance services across the
UK, also delivered significant growth in the year. In addition to its £70m
award with Guinness Partnership as noted above, the business saw further
key wins to add to the order book position. These included £10.5m with
Sandwell Metropolitan Borough Council for replacement of domestic gas
appliances and associated works in addition to £5.7m with Cobalt
Housing for gas servicing and heating maintenance services.
Our continued growth further strengthens our position in the compliance
sector, with a true national reach and market leading Gas Compliance
business. We continue to believe we are the strongest compliance business
of our type. We are well positioned to grow further both organically and
through further acquisition in the fragmented and regional market. The
division is 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 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 divisional revenue streams.
36 Sureserve Group plc
Annual Report 2021
Precision delivers lift installation and maintenance services to local
authorities and social housing associations across the UK. The current year
has shown further positive progress and increased profitability, despite a
reduction in revenues due to a decrease in project work. The reduced levels
are due to client timing requirements with some project works impacted or
delayed by Covid-19 in addition to our focus on efficiency and delivery of
projects that we believe will drive profitability growth. We have also
experienced a shift in mix of work towards higher margin service and repair
contracts. As we have detailed previously, the current management team had
undertaken a range of actions to positively impact performance. We are
delighted that, despite revenue decreases, the business has exceeded
profitability expectations and delivered a record year of trading performance
under Group ownership. Significant wins during the year were a five-year lift
modernisation contract worth £1.9m with Optivo and £1.2m for lift service
and maintenance with PA Housing. The business also saw a number of other
awards. Following year end we were delighted to be win a further award with
Optivo, for £3.9m of lift modification work to further strengthen
the order book.
Fire & Electrical
Sureserve Fire & Electrical is the Group’s specialist provider of fire,
electrical and sprinkler compliance services. It has followed up a
successful 2020 with further revenue and profitability growth. The largest
wins in the year were £2.0m of fire door repair work for London Borough
of Newham and a £2.0m contract with VIVID Housing for fire alarm
servicing and maintenance works, both as noted in our interim reporting.
Other smaller wins have followed during the remainder
of the year.
Water & Air hygiene
H2O is our water and air risk assessment specialist provider across the
UK. Performance of the business has continued to be strong with
exceptional client service supporting consistent delivery. The business
has again driven efforts to grow and has delivered a number of wins in
the period. The business has experienced reduced Covid-19 related
impacts from regular clients such as restaurants, hotels and gyms not
trading, and we are hopeful this trend will continue. The largest individual
win was a £1.2m contract for water hygiene and risk assessments with
Southern Housing Group as previously reported. We have also seen a
number of other smaller awards which will continue to support the
growth aspirations of the business.
Smart Metering
Providor remains focused on existing contract delivery through to the
current Government smart meter deadline of 30 June 2025. The business
has delivered considerable growth in the year from previous wins and
extensions. The business continues to review new contract opportunities,
both from new clients and existing contractual relationships. This
represents an ongoing opportunity to strengthen further with confidence
over future delivery despite the short-term challenges, particularly in
Scotland, from the pandemic restrictions during the year.
Providor has extensive experience of the national smart meter roll-out and
continues to apply careful management to the situation. We consider our
contractual positions while seeking to provide strong and secure employment
for our engineers. We recognise that the gas prices mentioned above
have 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 are 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 via
either direct employment or our subcontractor arrangements, where
appropriate opportunities present. The UK Government has confirmed
that it remains committed to the smart meter rollout and it aligns with
their net zero commitment mentioned above.
Energy efficiency and Renewables
Results from the Warmworks and Arbed joint ventures are reported
within the Everwarm statutory position. However, they are operated
autonomously by local management teams with group and joint venture
partner support as necessary.
Warmworks delivers the flagship Warmer Homes Scotland scheme for
the Scottish Government. The business saw increased delivery and
performance due to a combination of growth both from increased
Warmer Homes Scotland volumes and new workstreams. We also
experienced less of a negative impact from Covid-19 with a lower number
of installations being restricted in the first half of this year.
The business continues to bring a diversified installation portfolio for
Everwarm, focusing on central heating, renewable energy installations
and other energy efficiency improvement measures. On Monday
6 December 2021, Warmworks Scotland LLP announced the acquisition
of Connected Response Ltd. This will allow Warmworks to deliver a more
diverse range of heating solutions to homes in need. The Arbed 3 programme
for the Welsh Government is delivered via our joint venture with the
Energy Saving Trust. The scheme focused on improvements to households
often living in severe fuel poverty and has now reached a natural conclusion.
As previously reported, the original three-year contract term had seen a
six-month extension to November 2021. While we are disappointed the
scheme has now concluded, we were satisfied with the delivery volumes
achieved despite the challenges Covid-19 has presented during the term.
The Welsh Government has not yet announced details of any successor
scheme. We will monitor this alongside other appropriate opportunities.
The joint venture has now concluded the installation programme and is
currently undertaking remaining post installation obligations.
We are delighted the Group continues to install energy efficiency
measures in Wales through our recently awarded energy retrofit scheme
with Pobl Group in Swansea. Other Group works in Wales include our
fire business Sureserve Fire & Electrical who are undertaking ongoing
sprinkler installations in Newport.
As we reported in our half year results, carbon prices remained largely
stable during the year. We continue to believe we are well placed to
support our utility partners based on our management team’s extensive
experience in this area. The new ‘ECO4’ scheme planned to commence
from 1 April 2022 is to be increased in size to £1bn per year from
£640m. This should provide further opportunity for Everwarm to deliver
increased volumes.
Everwarm continues to deliver a strong record of contract wins, with
revenues for the year increasing to £55m. While this was pleasing, it has
not returned to pre-pandemic levels given the Covid-19 impacts which
continued during the earlier part of the year. We believe this increase in
revenue despite setbacks demonstrates an opportunity for growth,
alongside the wider sector prospects. The business supports a range of
clients in various energy efficiency projects.
Our largest new win was a £5.5m award for the supply of solar PV and
home battery storage for Pobl Group in Swansea. We saw a further win
of £2.5m for energy efficiency measures with North Ayrshire, plus the
LAD (Local Authority Delivery) works with Ealing, East Lindsey and
Doncaster. These previously reported projects total nearly £10m and are
part of the further development into England. These, along with other
smaller wins and framework appointments, support our ongoing ECO
delivery and longer-term contract work.
The business continues to seek and explore new prospects as the sector
evolves to develop more efficient and newer forms of energy efficiency
technology. We believe our Energy business remains strong and has a
positive future outlook based on recent wins. Everwarm is at the forefront
of this and is well placed to deliver additional work where appropriate
opportunities arise. The UK Government’s commitment to create a net
zero carbon economy by 2050 is expected to drive further focus on
energy efficiency with announcements and commitments on this being
seen regularly. We will continue to monitor developments and believe the
group is well placed to take advantage.
Strategic report | Corporate governance | Financial statements
Outlook
The continuity of key individuals and consistent growth have provided us
with a stable platform to deliver for our client base. We believe we have
demonstrated our resilience in navigating the temporary uncertainty
caused by the Covid-19 pandemic and will continue to assess its impact
and how to best mitigate as we move forward. Like many others, due to a
combination of factors we are currently experiencing some upward cost
pressures on certain materials and labour supply. However, we believe
we are well placed to address these challenges through the strength of
our existing workforce and business model. Our partnership approach
with clients and key supply chain relationships will also positively impact.
We continue to believe our mix of customer proposition and services
remains strong. The demand for these works and underlying
fundamentals will underpin 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 our
stakeholders. This will be delivered both through the remainder of the
current ‘ECO3’ scheme to 31 March 2022 and ‘ECO4’ scheme to follow
from 1 April 2022 to 31 March 2026.
We have started FY22 strongly, continuing the momentum from FY21
and we believe the future outlook for our businesses remains strong. This
is underpinned by high levels of long-term contracts and frameworks for
which we have continued to see high appointment levels. We are also
witnessing an ongoing trend towards regulatory services. Our client
base, largely of local authorities and housing associations, provides us
continuity moving forward with clients whom we regard as blue chip.
It is from this solid foundation that the Board and management team are
launching the refreshed strategy to drive growth from within our Social
Housing Energy services. Our focus is on playing to our strengths and
identifying business areas where we have an established market position,
from which we can provide the maximum growth potential. We have
identified the route to being the leading social housing energy services
provider and our ambitions are endorsed by a strategy to grow
organically and by acquisition.
Peter Smith
Chief Executive Officer
24 January 2022
Sureserve Group plc
Annual Report 2021 37
Financial review
Strong
performance
and growth
Peter Smith
Chief Executive Officer
The Group had a strong year posting an EBITA1 of £14.6m
(2020: £10.4m).
Group revenue increased by 24.7% to £244.0m (2020: £195.7m), reflecting
a strong performance in both divisions with Energy Services increasing
its revenues by 40.1% to £84.6m (2020: £60.4m) and Compliance
increasing its revenues by 18.4% to £162.4m (2020: £137.2m). These
divisional revenue figures include revenue from intercompany trading
which accounts for a total of £3.0m (2020: £1.8m).
Group EBITA increased by 40.3% to £14.6m (2020: £10.4m), reflecting
an increase in EBITA in the Compliance division of 17.8% to £13.9m
(2020: £11.8m) and an increase in EBITA in Energy Services of 325.0%
to £3.4m (2020: £0.8m). Central costs were £2.7m (2020: £2.2m), with
the movement primarily relating to an increase in share option charges
and bonuses, as well as certain one-off items.
We reported an operating profit of £14.8m (2020: £8.8m), after £0.4m
(2020: £nil) exceptional credit, £0.2m (2020: £nil) of goodwill impairment
and £nil amortisation charges for acquisition related intangibles
(2020: £1.6m).
The net finance expense was £1.0m (2020: £1.0m), taxation was £2.4m
(2020: £1.5m), with profit after tax of £11.4m (2020: £6.3m).
Finance expense
Net finance expense was £1.0m (2020: £1.0m), which represented the
interest charged on our debt facilities (net of finance income), together
with the amortisation of debt issue costs and other interest, which
totalled £0.5m (2020: £0.8m). The 2021 figure also includes £0.5m
interest on lease agreements (2020: £0.3m).
Tax
The tax charge on the profit before tax was £2.4m (2020: £1.5m),
representing an effective rate of 17.6%, which compares with the
statutory corporation tax rate of 19%.
Our net cash tax payment for the year was £2.4m (2020: £0.7m). During
the year, the Group has received the anticipated cash tax refund of £0.2m
from HMRC which formed part of the corporation tax liability as at 30
September 2020. The Group has also made tax payments on account of
£2.6m during the year.
1. EBITA is defined as operating profit before exceptional items, impairment of goodwill and
amortisation of acquisition related intangibles.
The net deferred tax asset as at 30 September 2021 was £0.3m
(2020: £0.5m). The movement primarily related to a reduction in the
deferred tax on accelerated capital allowances being offset by additional
deferred tax on short term timing differences and share based payments.
Further details are set out in note 25.
Earnings per share
The statutory profit for the year was £11.4m (2020: £6.3m). Based on
the weighted average number of shares in issue during the year of 160.3m,
this resulted in basic earnings per share of 7.1 pence (2020: 4.0 pence).
Adjusted earnings per share excluding amortisation of acquisition related
intangibles and share based payments were 7.2 pence (2020: 4.9 pence),
based on adjusted profit after tax from continuing operations excluding
amortisation of acquisition intangibles and share based payments of
£11.6m (2020: £7.7m).
Dividend
As our strategy is focused on both organic and acquisitive growth, the
Board has decided that the Group’s capital would be better deployed in
driving our growth plans by retaining cash to invest in strategically
enhancing acquisitions.
The Board believes that all of the Group’s resources should be directed
towards our strategic priorities which are designed to afford shareholders
significantly improved capital growth within the next five years.
Cash flow performance
Our operating cash flow for the period was an inflow of £17.5m (2020:
£23.9m), the cash inflow mainly relates to the EBITA in the year. The
2021 figure includes the repayment of £6.1m to HMRC in relation to the
deferred VAT payment scheme.
The management of working capital is a continued focus for the Group.
This includes accrued income, debtors and creditors. We manage these
balances within our banking facilities. However, we recognise the
importance of supporting our supply chain and have ensured that we
have continued to pay our suppliers to terms.
38 Sureserve Group plc
Annual Report 2021
Net cash
At 30 September 2021, the Group had net cash, excluding IFRS 16
lease liabilities, of £16.5m (2020: £9.8m including deferred VAT due of
£6.1m). However, this represents a snapshot in time and the revolving
credit facility remained undrawn for the whole period (2020: weighted
average RCF drawdown £6.4m).
The total net cash, including lease liabilities of £12.0m (2020: £6.8m),
was £4.4m (2020: £3.0m).
Banking arrangements
We had drawn £nil as at 30 September 2021 (2020: £nil) under our
revolving credit facility (excluding borrowing costs). At the date of issuing
this report we had drawn £nil (excluding borrowing costs); National
Westminster Bank (‘NatWest’) continues to be an excellent and
supportive partner.
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 are confident that our banking facilities provide sufficient support in
managing our corporate affairs and provides sufficient capacity to plan
for future growth.
Statement of financial position
The principal items in our balance sheet are goodwill, right of use assets
and working capital.
There was a net increase of £0.1m in goodwill, mainly due to £0.3m of
additional goodwill in relation to the acquisition of Vinshire Gas Services
Limited, offset by an impairment of goodwill in relation to Just Energy
Services Limited.
Right of use assets has increased by £4.8m to £11.6m (2020: £6.8m)
which primarily relates to investment in a new office for our K&T Heating
business as well as an increased fleet size.
Net current liabilities (excluding cash, borrowings and lease liabilities)
stood at £1.4m (2020: £1.6m). Net current assets stood at £11.0m
(2020: £4.9m).
The principal balances in working capital are noted below and reflect a
continued focus on working capital management:
Trade receivables
Accrued income
Trade payables
Accruals
September
2021
£m
September
2020
£m
18.4
17.9
(24.9)
(11.7)
16.7
17.3
(19.5)
(9.9)
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 £17.9m at the reporting date (2020: £17.3m). As
a Group we review regularly for impairment. Accrued income 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 have
standardised the accrued income provision policy with our bad debt
policy in the current year.
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.
Strategic report | Corporate governance | Financial statements
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
The Directors acknowledge the Financial Reporting Council’s ‘Guidance
on going concern, risk and viability’ issued in June 2020. The Group’s
business activities, together with factors likely to affect its future
development, performance and position, are set out in the Strategic
Report within the 2021 Annual Report. The financial position of the
Group, its cash flows, liquidity position and borrowing facilities are
described in the Financial Review, as part of the Strategic Report of the
2021 Annual Report. In addition, note 31 to the consolidated Financial
Statements within the 2021 Annual Report includes details of the
Group’s approach to financial risk management, its financial instruments
and hedging activities, and its exposure to credit risk and liquidity risk.
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, taking into account possible sensitivities in
trading performance including the potential impact of Covid-19, 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 Annual report.
Peter Smith
Chief Executive Officer
24 January 2022
Sureserve Group plc
Annual Report 2021 39
Principal risks and uncertainties
Principal
risks and
uncertainties
We have a detailed and
comprehensive risk management
process, covering all aspects of
business and operational risk.
A key focus of our strategy is to reduce risk and build a
sustainable and profitable business, with predictable revenues
and increasing margins. We constantly review our control and
monitoring processes and our systems and work closely with
our clients to understand how our marketplace is changing and
how it is likely to change in the future. The table herewith details
the main risks we currently face, their potential impact on our
business and how we mitigate them. The schematic sets out to
the potential impact of each risk on our business prior to
mitigation and its likelihood of occurring.
Key
B Business risks
G General corporate risks
Existing risks
h
g
H
i
t
c
a
p
m
I
w
o
L
G1
B5
B2
B4
B3
G2
B1
More information about how we manage risk can be found
in the Corporate Governance Report on pages 46 to 51.
Low
Likelihood
High
B1
Changes in Government policy
The public sector and regulated industries
provide some 98% of our revenue, so our
business is heavily dependent on policies
and programmes adopted by the UK, devolved
national and local Governments.
40
Mitigation
Our diverse business has enabled us to
manage the risks and focus our efforts on those
markets where we feel there is the opportunity
of earning a more predictable return.
We recognise the importance of operational
delivery in giving confidence to clients and
maintain high standards of service that allow
us to set ourselves apart whilst generating a
reasonable return on capital. We are proactive
in seeking affordable solutions to budget
challenges that enable us to work with clients
to help them deliver the services expected of
them. We have also continued to invest in
business development, through talented senior
managers and experienced local leaders, aimed
at building sustainable relationships with clients
and securing long term contracts.
Explanation of risk
Significant changes to policy, particularly in
energy services around carbon pricing, could
have a material impact on our results. Policy,
however, extends beyond legislation into client
procurement methods; this includes the sudden
withdrawal of confirmed budgets, changes in
client staffing leading to alterations in priorities
and difficulties in settling disputes and accounts
for payment. There is also governmental focus
on housebuilding and a post-Grenfell prioritisation
of budgets on infrastructure and remedial
works. As a UK-focused business, we are not
exposed to the trade risks of international
businesses, but there is a potential Brexit
impact around the increases in commodity
prices as suppliers pass on the costs of a
weakened Pound and distraction within
Government from core domestic policy.
There is a risk to the organisation if there is not
quality, consistent and accurate information
received from the Government with regards
to COVID-19 and associated statutory bodies.
This needs to be appropriately disseminated
to the Group.
Sureserve Group plc Annual Report 2021 B2
Tendering for new
work
We compete for work by tendering
or negotiating directly with our
clients. We are reliant upon our
credibility as an organisation, so
our reputation, experience,
accreditations, pricing and
relationships all affect our ability to
win work. We compete with local
and international companies, some
of which could have greater
resources and capabilities.
B3
Poor operational
delivery
Poor operational delivery could
lead to a local loss in trust and
reputation with a client
or customer, or financial loss in the
event of a disputed contract
settlement. A material loss
of service or event could result in
the loss of a framework.
B4
People
The success of our business
depends on recruiting, retaining,
motivating and developing the right
people at all levels of our
organisation.
Strategic report | Corporate governance | Financial statements
Explanation of risk
This is an inherent business risk and if we do
not compete effectively we may not be able to
win enough work or retain existing contracts,
affecting our revenues, profits and cash.
Mitigation
Our commitment to health and safety and a responsible
business model and our focus on operational delivery are
key to ensuring we submit high quality scores in our bid
submissions. We have an experienced internal bidding
function, so we can submit the best possible bids and
maximise our chance of success. We listen to our clients
and offer solutions that suit their needs, meaning we can be
directly selected under existing frameworks or we can
negotiate work that they are not required to put out
to tender.
Explanation of risk
Poor operational performance leads to
reputational damage and weaker
financial performance.
Explanation of risk
If we do not have enough suitably skilled,
experienced and engaged people we may not
be able to deliver the service quality we have
promised to our clients and customers or grow
our business as quickly as we had planned.
There has been a potential risk of a different
nature this year through the emergence of the
coronavirus pandemic which, if we had not
swiftly implemented appropriate action through
guidance, controls, measures, communication
and practical support where needed, we may
have experienced a depleted workforce within
the Business which may have rendered us
unable to appropriately serve our clients. However,
through expediting clear and transparent
communication and appropriate measures to
ensure the health, safety and well-being of all
our people, we are thankful to have largely
remained robust and enabled to serve our clients
well and will continue in this proactive approach.
Mitigation
We mitigate this risk by having qualified, trained managers
and operatives who are experienced in their roles. We closely
monitor quality, progress and service using industry standard
products and divisional KPIs to benchmark similar services.
We have accredited processes and systems which are
audited both internally and externally and reported to the
accountable management teams. We have a robust
approach to risk management from project level to Board,
providing support and scrutiny to mitigate the risk. We have
regular project audits and support visits by trained staff.
Where we use supply chain partners, we work with the
teams, monitoring performance and ensuring rapid
resolution of issues as they arise.
Mitigation
We invest significant resources in developing our managers
and training our employees including through the Sureserve
Academy. We have an Employee Representative Council
with members elected from all parts of the Group, ensuring
that all of our people have a voice. We work hard to make
Sureserve a group that people want to be part of, with a
positive culture and opportunities to develop and learn. We
are constantly assessing our training needs, listening to staff
and developing innovative solutions such as our in-house
online training products. We actively seek out rising stars in
the business and recognise and celebrate achievement.
Sureserve Group plc
Annual Report 2021 41
Principal risks and uncertainties continued
B5
Major health and
safety incident
We provide our services in a range
of potentially high risk
environments: in homes, in public
buildings, at height, with water, in
lifts, with electrical and gas
services and as lone operatives
in vans.
G1
Financial liquidity
We rely on the continued support
of our financial partners to ensure
we have the necessary funds to
trade on a day to day basis and
pursue the Group’s growth
strategy. We have periods in the
year where there is a peak in
working capital needs, typically in
the winter and around the timing of
work instructed by our clients and/
or arising from the circumstances
of our contracts, which require
short term funding.
G2
Explanation of risk
There is potential for a major health and safety
incident within the environment in which we
work which could have significant impact on
a person or people either directly, indirectly or
not involved with the works we are undertaking.
A significant health and safety incident could
cause a serious injury or potential loss to our
people, incur reputational loss or civil and
criminal costs. We are also faced with a
significant rise in the perceived risk of the
sector, with an increased nervousness of
the insurance market around social
housing contracting.
In light of the COVID-19 pandemic, the
Group are faced with a new risk which poses
potential ill-health to employees and key
stakeholders if not managed in accordance
with Government Guidance.
Mitigation
As a business we continually review our investment in high
quality staff and our performance in health and safety. This is
underpinned by internal auditing and accident incident
analysis. The AFR is an important Group KPI, and all
accidents and incident statistics are reported to the Board
on a monthly basis. We have a health and safety culture
which is owned by the Managing Directors of the divisions
and driven by our skilled health and safety team. Each
business has a dedicated health and safety resource which
has an open remit to attend any site at any time to offer
support or audit. We have a robust UKAS-accredited health
and safety management system which is administered by an
independent centralised team with support provided at all
stages. We adhere to strict internal mandatory training
standards driven by job roles with persons in place to
monitor and maintain training standards. This is supported
by our Online Learning Academy which acts as a base for
our core mandatory health and safety training courses.
The SHEQ Forum is well established across the Group and
meets annually to review overall business performance and
drive new safety initiatives, all of which are supported by our
senior management team. The response to COVID-19 is led by
the HR/SHEQ teams and includes external COVID-19
Secure verification alongside comprehensive risk assessments
and safety protocols across all of our businesses.
Explanation of risk
Were funding support to be withdrawn, we
could face cash shortfalls and a limitation of our
ability to grow in the immediate term and,
ultimately, an inability to settle our liabilities as
they fell due if we could not secure funding
from alternative sources. This risk would be
exacerbated by poor financial performance of
the Group. If we were unable to provide
financial bonds, we would be limited in our
ability to tender for new work.
Mitigation
We maintain excellent relationships with our banking
partners, maintaining regular dialogue on matters pertaining
to trading and risk in the Group. We maintain a strict internal
review process on covenant compliance to ensure we remain
in line with the requirements of our banking documents. 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 continue to maintain contact with a
number of bonds providers to ensure we are in a position to
satisfy the contractual needs of clients. Working capital is a
key focus for senior management.
ICT failure
Our business is 24/7 and relies on
a robust ICT infrastructure
and service.
Explanation of risk
An ICT failure could cause business
interruption or loss of services which could
impact local delivery and our reputation and
ultimately have financial consequences.
Mitigation
We maintain a Group ICT strategy which is designed to
support the existing business needs and provide an ICT
infrastructure which is fit for purpose and supports the
business’ strategic direction.
We invest in resource and technology to ensure that the
Group is protected, such as back-up and disaster recovery
processes to ensure minimum disruption. The systems are
reviewed continually and processes audited on a regular
basis. We have a dedicated security team in place to not
only prevent the potential loss or misuse of data, but also to
ensure compliance with the General Data Protection Regulation.
42
Sureserve Group plc Annual Report 2021 AT THE FOREFRONT OF THE ENERGY TRANSITION
Strategic report | Corporate governance | Financial statements
Training a new
generation of
green leaders
The Group is committed to developing our businesses with
sustainable performance as a core driver, and as well as
bringing in the renewables expertise the Group requires,
we’re also dedicated to developing and training our people
to move into an ever growing area of service.
Leigh Murray, Projects Manager for Everwarm’s Electrical
and Renewables division, trained up into renewables after
working as an Electrican for 15 years. In March 2021
Leigh was invited by the Government’s Secretary of State
for Business, Energy & Industrial Strategy to take part in
a panel discussion on the theme of green jobs and the
role businesses can play in tackling climate change. Leigh
represents one of the many professionals across the Group
accessing the support and investment available to those
wanting a future in renewables.
UN Sustainable
Development goals
Part of our ESG strategy
Our Sustainability pillars
The Group is committed to promote a culture
of learning that promotes futurefacing training
and development opportunities for our
employees.
Ensuring our people have the necessary knowledge
and accredited training and development means that
they can continue to play a vital part in delivering the
essential services to the communities we work in
across the UK.
Read more about our
development and training
activities on pages 28 and 33
Sureserve Group plc
Annual Report 2021 43
Board of Directors
The Board have the experience and expertise to effectively manage
the Group’s business, strategy and development.
NICK WINKS
PETER SMITH
ROBERT LEGGET
Non-Executive Chairman
Chief Executive Officer
Senior Independent Director
Appointment
Nick was appointed as Non-Executive
Chairman in May 2021.
Key strengths
Nick’s early career saw him hold a variety of
senior management roles including as MD or
CEO of a number of businesses, both private
and public. Since then, he has been focused
on leading business change projects and
has worked with many businesses to drive
improvements in operating performance,
cash generation and debt structures.
Experience, skills and qualifications
X Nick is currently Chairman of Virtua Group,
a Non-Executive Director at Rainham
Industrial Services and Executive Chairman
and CEO at John Charcol Group. He has
held previous key management or board
roles, increasing value at a range of public
and private companies including Claimar
Care plc, Eleco plc, PCFG plc, Connect
Group plc, Escher Group plc and Inspecs
Holdings plc. Nick is a Fellow and past
Director of the Institute for Turnaround.
Appointment
Peter was appointed to the Board in July 2019
as Chief Financial Officer. Post financial year
end he was appointed as Chief Executive Officer.
Key strengths
Peter has more than 15 years’ experience in
finance at Director level with widespread and
successful experience in delivering results in
areas such as facilities management, services,
third party logistics, specialist recruitment,
procurement, food service and manufacturing.
Experience, skills and qualifications
X Some recent (non-board level) roles have
included Finance Director of the Cleaning &
Environmental Services division of Mitie Group,
interim Finance Director of the Specialist
Services division at OCS Group, interim
Commercial Finance Director at the Post
Office and interim Chief Financial Officer of
Support Services at Balfour Beatty as well
as Head of Finance Shared Services,
Finance Systems and Process Improvement
at British Gas.
Appointment
Robert was appointed to the Board in April 2016.
Key strengths
Robert has extensive business and finance
experience.
Experience, skills and qualifications
X Robert co-founded Progressive Value
Management Limited in 2000 and is Chairman.
Progressive Value Management specialises
in creating value and liquidity for institutional
investors from illiquid holdings in
underperforming companies. In this role he
has had significant engagement with public
company boards. Robert was formerly a
Director of Quayle Munro Holdings plc and
Foreign & Colonial Private Equity Trust plc
and is currently a Director of Downing
Strategic Micro-cap Investment trust plc.
Robert is a member of the Institute of
Chartered Accountants of Scotland.
Committee membership
A N R
44 Sureserve Group plc
Annual Report 2021
Committee membership
A N R
Strategic report | Corporate governance | Financial statements
Key
A Audit committee member
N Nomination committee member
R Remuneration committee member
Committee Chair
Diversity, independence
and experience
Gender
Tenure
60%
100%
3-6 years
40%
T Male
100100+
T 1-3 years
6060+
T Executive
2020+
T Finance
6060+
Services
20%
Board composition
Sector experience
60%
20%
Senior
Independent
20%
Compliance
20%
Non-Executive
60%
Sureserve Group plc
Annual Report 2021
45
DEREK ZISSMAN
CHRISTOPHER MILLS
Non-Executive Director
Non-Executive Director
Appointment
Derek was appointed to the Board in
November 2017.
Appointment
Christopher was appointed to the Board
in March 2019.
Key strengths
Derek has extensive business and finance
experience.
Key strengths
Christopher has extensive business and
finance experience.
Experience, skills and qualifications
Experience, skills and qualifications
X Derek is currently a Director of three AIM
X Christopher is Chief Executive and
listed companies and one fully listed on the
Frankfurt Stock Exchange. He spent many
years with KPMG, where he was a
co-founder of the firm’s Private Equity
Groups in the UK and USA, and was Vice
Chairman of KPMG UK. Derek is a Fellow of
the Institute of Chartered Accountants in
England and Wales.
Investment Manager of North Atlantic
Smaller Companies Investment Trust
(‘NASCIT’), appointed in 1984. He is
currently a member and Chief Executive of
Harwood Capital Management. In addition
he is a Non-Executive Director of numerous
UK companies which are either now or have
in the past five years been publicly quoted.
Committee membership
RNA
40
40
+
20
20
+
60
60
+
20
20
+
20
20
+
Chairman’s corporate governance report
An introduction to
Group governance
Nick Winks
Non-Executive Chairman
“ Whilst 2021 has continued to be impacted
by the effects of the Covid-19 pandemic, I
am happy to report that the Company has
ended the financial year again in robust
good health, both financially and with the
full engagement of our employees,
communities and other stakeholders.”
Nick Winks
Non-Executive Chairman
2021 has been a year of change for the business by way of
Board composition.
After a period of fundamental restructuring for the Group, led by
Bob Holt, Bob handed over the business in March 2021, and I was
appointed as Chairman in May 2021. This enabled the Board to adopt
the more conventional approach of separating the roles of Chairman
and Chief Executive.
The extensive search for a Chief Executive Officer, which I initiated,
concluded in November 2021 with the appointment of Peter Smith, the
then Chief Financial Officer as Chief Executive Officer. The search for a
new CFO began in November 2021 and we hope to conclude this in the
next few months.
Whilst 2021 has continued to be impacted by the effects of the Covid-19
pandemic, I am happy to report that the Company has ended the financial
year again in robust good health, both financially and with the full
engagement of our employees, communities and other stakeholders.
The Company applies the governance principles of the Quoted
Companies Alliance Corporate Governance Code 2018 (“QCA Code”),
on the basis that it is the most appropriate governance code for the Group,
having regard to its strategy, size, stage of development and resources.
The QCA Code is based around 10 principles and a set of disclosures.
Details of how the Group complies with each of the 10 principles of the
QCA Code may be found in the explanations below, within the Board
Committee reports, throughout this Report and on the Company’s website
at www.sureservegroup.co.uk/investors/corporate-governance.
Sound Corporate Governance remains fundamental to effective
management of the business, delivery of long term shareholder value and
engagement with all stakeholders. It forms a core part of Group strategy
and enables and supports the continued growth and future success of
the business.
Stakeholder engagement remains a priority and further details as to how
we engage with stakeholders can be found on pages 14 to 17 and
engagement with shareholders on page 47.
The coming year will be one of development for the Group in terms of
strategy and focus on our key markets.
Nick Winks
Chairman
24 January 2022
46 Sureserve Group plc
Annual Report 2021
Strategic report | Corporate governance | Financial statements
Statement of compliance with the
QCA Corporate Governance Code
The Board has adopted the QCA Corporate Governance Code and in the
table below we set out how we comply with the principles of the Code.
The Board remains conscious of the impact that the Company’s business
activities may have on the environment and society more generally. The
Company acknowledges its responsibilities to all stakeholders and
encourages all feedback via the Contact Us section of the Company
website at www.sureservegroup.co.uk.
Deliver growth
Principle 1
Establish a strategy and business model which promote
long term value for shareholders
Pages 10 – 11 and 12 – 13
www.sureservegroup.co.uk
Sureserve is a leading UK social housing energy services Group,
delivering heating and energy efficiency measures to Housing
Associations, Local Authorities and landlords across the UK. With our
substantial experience and success working in this sector, future growth,
both organically and through acquisition, will be underpinned by focused
investment on systems and infrastructure as well as an expanded training
provision. Details of the Group’s strategy, business model and principal
risks and uncertainties to the business, together with mitigating factors
that the Board has identified, can be found in the Strategic Report.
Principle 2
Seek to understand and meet shareholder needs
and expectations
Page 17
www.sureservegroup.co.uk/investors/corporate-governance
Active shareholder dialogue remains a focus for the Company, and this
has been increased during the year, given the Board changes that have
taken place. Dialogue with both institutional and private shareholders is
led by the Chairman and the Chief Financial Officer, who during the year
also fulfilled the role of Interim Chief Operating officer pending the
appointment of a Chief Executive Officer.
Following both the annual and interim results announcements, meetings
are held with analysts, private investors and institutional investors of the
Company, in London, Edinburgh and regionally. The Company’s website
also has details of all public announcements, Annual and Interim Reports
and investor presentations.
Whilst last year’s Annual General Meeting of the Company had to be
held as a closed meeting due to Covid-19, the AGM in March 2022 will
once again be held as an open event. Full details will be sent out with this
Annual Report document.
To further enhance shareholder engagement, it is the Company’s intention
to host an online presentation through the Investormeetcompany portal
following the Annual Results announcement, which will be available for
shareholders to attend.
Principle 3
Take into account wider stakeholder and social responsibilities
and their implications for long term success
Pages 25 – 33
www.sureservegroup.co.uk/sustainability
www.sureservegroup.co.uk/plc/media/press-releases
Further detail of the Company’s engagement with the wider stakeholder
community and of our ESG policy can be found on pages 25 to 33.
During the year great strides have been made within our sustainability
agenda, including a growing investment in our fleet to transition to an all
electric fleet of vehicles.
Employee engagement at all levels remains a strong focus for the Company.
There is regular Group-wide communication with all employees and enhanced
by the work of the ERC, which meets on a regular basis throughout the
year. A full Employee survey was undertaken during the year.
After the work undertaken in the previous year a formal steering group
was established to oversee the Company’s work on Equality, Diversity
and Inclusion policies. This has 2 working groups reporting to it. In
addition, given the societal impacts of the Covid-19 pandemic a Mental
Health working Group and an Employee Assistance Programme were
established. The long established Women in Business Group continues
to go from strength to strength.
The Sureserve Academy continues as a central hub for all learning
and development activities across the Group, including for the 324
trainees which are in place across the Group.
The Company continually strives to add social value in our contract
delivery and regular dialogue is maintained with clients and clients’
customers to drive this forward. Compliance with all central legislation
around Bribery and Corruption and Modern Slavery is maintained.
The Sureserve Foundation, which focuses on alleviating fuel poverty, has
continued to support communities and individuals with the provision of
937 Fuel poverty vouchers and 1,400 Easter and Winter Warmer parcels
to vulnerable individuals along with making a number of one off grants.
The annual review for the Sureserve Foundation may be found at
www.thesureservefoundation.org.
Principle 4
Embed effective risk management, considering both
opportunities and threats, throughout the organisation
Pages 40 – 42
Details of the risks and uncertainties faced by the Group, and their
mitigation, can be found in the Principal Risks and Uncertainties section
of this Report and Accounts on pages 40 to 42.
The Board has responsibility for ensuring that effective risk management
is in place across the Group. Clear strategic goals are set and risks to
the achievement of these objectives are monitored through regular
dialogue with operational management in each of the businesses.
Risk management reporting forms a key aspect of Board discussion,
supported by input from relevant external and regulatory bodies.
At each Board meeting a detailed report is tabled from the Group
SHEQ team which consolidates Groupwide Health and Safety reporting,
including in the current year additional reporting relating to details around
Covid-19 exposure or cases in the workforce. During the height of the
restrictions placed on businesses and individuals as a result of the
pandemic, the then Chairman and Chief Financial Officer held weekly
calls, available for all staff to access, in order to support colleagues and
address any operational concerns during the period.
Formal risk registers are in place at plc and operating company level and
are reviewed and monitored by the Audit Committee at each meeting.
Reviews of the individual operating companies’ risk registers have been
undertaken remotely due to pandemic restrictions, but since the year end
these have returned to being face to face.
Sureserve Group plc
Annual Report 2021
47
Chairman’s corporate governance report continued
Deliver growth continued
Principle 4 continued
The Group Risk Committee met 4 times during the year. This Committee
reports to the Audit Committee as does the Internal Audit function which has
also undertaken 5 specific subsidiary company reviews during the year at the
request of the Committee, as well as additional reports into specific areas:
X Levels of accrued income across the Group.
X Review of furlough claims submitted by the businesses.
The Group maintains appropriate levels of insurance cover and regular
reviews were undertaken during the year with regards to any claims or
areas of potential new risk for the business.
Maintain a dynamic
management framework
Principle 5
Maintain the Board as a well functioning, balanced team
led by the Chair
Pages 44 – 45
www.sureservegroup.co.uk/about/board-directors
Composition of the Board changed during the year, following the
departure of Bob Holt in March 2021. Bob had latterly held the joint roles
of both Chairman and Chief Executive. The Board felt, following Bob’s
departure, that it was appropriate to follow the standard convention of
separating the two roles of Chairman and Chief Executive.
During the period before the appointment of a new Chairman, Robert
Legget, Senior Independent Director, took the role of Interim Chairman
and Peter Smith, the Chief Financial Officer took the joint roles of Interim
Chief Operating Officer and Chief Financial Officer.
Nick Winks was appointed as Chairman in May 2021 and then led the search
for a Chief Executive Officer. This was concluded, post year end, in
November 2021 with the appointment of Peter Smith as Chief Executive
Officer. From 4 November 2021 Peter Smith also held the role of Chief
Financial Officer until the appointment of Sameet Vohra as Interim Chief
Financial Officer on 13 December 2021. The search for a permanent Chief
Financial Officer is underway.
The Board currently comprises of four Non-Executive Directors, including
the Chairman, and one Executive Director. A new Chief Financial Officer
will be appointed in due course. The Board does however retain a strong
sector and financial experience base.
The Chairman is responsible for the overall management of the Group
including the approval and implementation of the Group’s objectives and
strategy, budgets and operational performance along with the maintenance
of sound internal control, corporate governance and risk management
procedures. The Board continually reviews these responsibilities. Whilst
the Board may delegate day to day management to the Executive Director,
subject to formal delegated authority limits, certain matters are reserved
for full Board approval. Details of matters reserved for the Board may be
found at www.sureservegroup.co.uk/investors/corporate-governance.
Details of the Directors, including brief biographies, Committee
membership, key strengths and experience, skills and qualifications, can
be found on pages 44 and 45 of this Report and Accounts.
All Directors are subject to re-election at each Annual General Meeting
of the Company.
Nick Winks, Robert Legget and Derek Zissman are all considered to be
Independent Non-Executive Directors of the Group.
Because of his management responsibility for Harwood Capital Management,
the Group’s largest shareholder (19.2%), Christopher Mills is not
considered to be independent as a Non-Executive Director of the Group.
Directors
during the year
Bob Holt1
Nick Winks2
Peter Smith3
Robert Legget
Derek Zissman
Christopher Mills
Independent/
non-
independent
Role
Chairman and Chief
Executive
Not
independent
Date of
appointment
July 2016
Chairman
Independent
May 2021
Chief Executive
Officer
Not
independent
July 2019
Non-Executive
Director
Senior Independent
Director
Non-Executive
Director
Independent
April 2016
Independent November 2017
Non-Executive
Director
Not
independent
March 2019
Notes
1. Bob Holt resigned with effect from 18 March 2021.
2. Nick Winks was appointed with effect from 26 May 2021.
3. Peter Smith held the roles of Chief Financial Officer until March 2021, when in addition he
was appointed Interim Chief Operating Officer. He held this latter role until 4 November 2021
when he was appointed as Chief Executive Officer.
The Board is supported in its work by Audit, Remuneration and Nomination
Committees which are chaired by the Independent Non-Executive Directors.
All Non-Executive Directors are required to commit sufficient time to their
roles in order to adequately discharge their duties.
The table below summarises the membership of the Board, the Board
Committees and the attendance record of the Directors:
Director
Executive Directors
Bob Holt1
Peter Smith
Non-Executive
Directors
Nick Winks2
Robert Legget
Derek Zissman
Christopher Mills
Notes
Board scheduled
meetings
Audit Remuneration
Nomination
8/8
13/13
2/2
13/13
13/13
12/13
1/1
4/4
4/4
1/1
4/4
4/4
1/1
–
2/2
2/2
1. Bob Holt resigned with effect from 18 March 2021.
2. Nick Winks was appointed with effect from 26 May 2021.
Principle 6
Ensure that between them the Directors have the necessary up
to date experience, skills and capabilities
Pages 44 – 45
www.sureservegroup.co.uk/about-us/board-directors
The Board of Directors has substantial and relevant experience – both
in terms of the sectors in which the Company operates and in financial,
operational and public company experience. Details of each Director,
including a brief biography, Committee membership, key strengths and
experience, skills and qualifications, are detailed on pages 44 and 45 of
the Report and Accounts.
48 Sureserve Group plc
Annual Report 2021
Strategic report | Corporate governance | Financial statements
The Directors are mindful of the importance of diversity within the
workforce and at Board level and have set this as a focus in the
Nomination Committee’s action plan for 2021/22.
Principle 8
Promote a corporate culture that is based on ethical values
and behaviours
All Directors are required to commit sufficient time to their roles in order
to adequately discharge their duties. Training is maintained through
regular business updates from the Executive Directors and briefings from
external advisers.
Pages 01 – 43
www.sureservegroup.co.uk
Supporting the work of the Board are three Board Committees, all with
formally delegated powers – an Audit Committee, a Remuneration
Committee and a Nomination Committee. All are chaired by and
comprise the Non-Executive Directors.
Each of the Directors is subject to either an Executive Service Agreement
or a letter of appointment. The Company’s Articles of Association require
all of the Directors to retire at every Annual General Meeting.
Non-Executive Directors are appointed for terms of three years, which may be
renewed, subject to the particular Director being re-elected by shareholders.
During the year advice was received from external professional
advisers regarding legacy matters from the former construction division
and establishment of a new Company Share Option Scheme
(Remuneration Committee). In addition advice was taken regarding the
establishment of a further SAYE Scheme for employees.
Principle 7
Evaluate Board performance based on clear and relevant
objectives, seeking continuous improvement
Pages 44 – 62
As previously reported in order to ensure the effective operation of
the Board and the Committees, and in line with QCA Code Guidelines,
an evaluation of the Board was undertaken by an external, independent
consultant. The process of appointing an external consultant was overseen
by the Senior Independent Director and the Company Secretary.
The initial evaluation and the results of the Board evaluation were presented
to the Board on 10 January 2019. The Board evaluation process included
an observed Board meeting, confidential questionnaires and individual
interviews of Board members. The questionnaire included sections relating
to the compliance principles of the Quoted Companies Alliance Code.
The Board undertook to implement the recommendations and invited the
evaluator to return in late 2019 to form a view on progress. The Follow Up
Review was concluded in December 2019. Again, a process of an observed
Board meeting and individual interviews of Board members was undertaken.
The evaluator concluded that most of the recommendations had been
successfully implemented. The Follow Up review identified further areas for
development and the Board has agreed to implement them. The conclusions
of the Follow Up Review were presented to the Board in January 2020.
In summary, these were:
X The business was seen to have transitioned well following the disposal
of its construction activities and had recovered well to growth;
The Company maintains regular dialogue with our employees, clients,
clients’ customers, communities, financial partners, shareholders and
suppliers all in furtherance of our shared value of driving performance
and engagement. Our Group Responsible Business Lead is key to
delivering this agenda, which is driven by the Board.
Employee engagement is supported by the ERC, regular staff
communications and an annual staff survey. Up until March 2021 the then
Chairman and Chief Executive held regular, weekly calls available to all
employees to address any employee concerns regarding the Covid-19
pandemic, and to provide updates on Government guidance and support
measures. After March 2021 these calls were held by the then acting
Chief Operating Officer.
The Sureserve Foundation, which is focused on the alleviation of fuel
poverty, has distributed grants to 26 organisations during the financial
year, and has distributed 937 fuel poverty vouchers and 1,000 Winter
Warmer parcels to vulnerable and needy tenants of our Housing
Association clients.
Whistleblowing
The Company has established procedures by which employees may,
in confidence, raise concerns relating to danger, fraud, or other illegal
or unethical conduct in the workplace. The whistleblowing policy applies
to all employees of the Group, and also consultants, casual workers and
agency workers. The Audit Committee is responsible for monitoring the
Group’s whistleblowing arrangements and the policy is reviewed
periodically by the Board.
Compliance with laws
The Group has systems in place designed to ensure compliance with
all relevant laws, new regulations and all relevant codes of business
practice. This includes:
X Taking all appropriate steps to comply with the provisions of the
Market Abuse Regulation;
X A copy of the Group’s anti-slavery and human trafficking policy
statement in relation to the Modern Slavery Act 2015, which can be
found on the Company website;
X The Company’s Code of Conduct – available on the Company website;
X An anti-corruption policy and Group whistleblowing policy, both of
which relate to compliance with the Bribery Act 2010, can also be
found on the Company website;
X The Group has complied with the provision of statutory information
relating to the gender pay gap legislation and payment practices regime;
X The Energy Savings Opportunity Scheme (‘ESOS’), offering full
X Board members are entirely focused on driving shareholder value;
cooperation during audits of the Group’s energy use;
X Corporate Governance was healthy.
The Board was unanimous in its agreement with the evaluation
assessment that the Board, its Committees and individuals continue
to be effective. The Board valued the independence of the external
evaluator and the approach taken.
The Board will consider a further evaluation once the current outstanding
Board changes have been completed.
X The Company has adopted a share dealing code for the Directors and
applicable employees of the Group for the purpose of ensuring
compliance by such persons with the provisions of the AIM Rules
relating to dealings in the Company’s securities (including, in
particular, Rule 21 of the AIM Rules). The Directors consider that this
share dealing code is appropriate for a company whose shares are
admitted to trading on AIM.
Sureserve Group plc
Annual Report 2021
49
Chairman’s corporate governance report continued
All Directors have access to the support and advice of the Company
Secretary as required. Directors are also able to take independent
professional advice at the Company’s expense in the furtherance of their
duties where considered necessary.
Position
Name
Responsibilities
Group Company
Secretary
John Charlton
Provides guidance on
all matters of Corporate
Governance.
Ensures a good flow of
information within the Board and
its Committees.
Board Committees
The Board has established three Board Committees, all with formally
delegated powers – an Audit Committee, a Remuneration Committee
and a Nomination Committee. All are chaired by and comprise the
Non-Executive Directors.
The terms of reference for all Board Committees are reviewed regularly
and can be found on the Company website at www.sureservegroup.co.uk/
investors/corporate-governance.
Committee Chairmen attend the Company AGM and are available to answer
any questions from shareholders regarding the activities of the Committees.
Build trust
Principle 10
Communicate how the Company is governed and is performing
by maintaining a dialogue with shareholders and other relevant
stakeholders
Pages 01 – 62
www.sureservegroup.co.uk/investors/regulatory-news and
www.sureservegroup.co.uk/investors/results-and-presentations
In the year to 30 September 2021 the Executive Directors and members
of the Board met and had dialogue with a large number of shareholders
and investors.
The Company aims to maintain an active dialogue with key stakeholders,
including institutional investors, to discuss issues relating to the performance
of the Group, including strategy and new developments. The Senior
Independent Director is available to discuss any matter shareholders
might wish to raise and attends meetings with investors as required.
The Company’s website includes an investor relations section containing all
RNS announcements, share price information, annual documents available
for download and similar materials at www.sureservegroup.co.uk/investors.
The website also provides details for contacting the Company on any issues.
The AGM remains a valuable opportunity for the Board to engage with
shareholders and to answer any questions which shareholders may have.
This year’s AGM will be held on 22 March 2022 and full details of the
venue and resolutions proposed may be found in the Notice of Meeting
enclosed with these accounts or on the Company website. Attendance
will require pre-registration and there will be an opportunity to put
forward questions to be asked at the meeting in lieu of attendance.
Approved by order of the Board.
Nick Winks
Chairman
24 January 2022
Maintain a dynamic management
framework continued
Principle 9
Maintain governance structures and processes that are fit for
purpose and support good decision making by the Board
Pages 44 – 62
www.sureservegroup.co.uk/investors/corporate-governance
Details of how the Board and its Committees’ structure operates can be
found at page 51.
The PLC Board held 13 meetings during the year.
Within the annual calendar of Board meetings there is normally an annual
budget presentation at which the Executive team presents its budget for
the forthcoming year. The Non-Executive Directors are encouraged to
attend visits to the individual operating businesses to discuss
performance and other issues with the management teams.
The Company Secretary works closely with the Chairman and the Chairmen
of the Board Committees to ensure that Board procedures, including setting
agendas and the timely distribution of papers, are complied with and that
there are good communication flows between the Board and its Committees,
and between senior management and Non-Executive Directors.
There is a formal agenda at each Board meeting which includes an
operational update from the Chief Executive and financial updates from
the Chief Financial Officer. Both reports cover all business units within
the Group and also cover new business opportunities.
Health and Safety and strategic issues are dealt with at each Board
meeting by the Chairman and Chief Executive.
During the course of the year, other matters considered by the Board
include annual and half-year results announcements, principal risks
and uncertainties, corporate social responsibility, AGM resolutions,
shareholder communications and management incentivisation.
Board papers are circulated to the Directors at least three clear business
days in advance of meetings to enable proper consideration of the content
of the papers.
The Chairman maintains regular contact with the Non-Executive
Directors outside of formal Board meetings.
The roles of all Board members during the year were as detailed below:
Position
Name
Responsibilities
Chairman and
Chief Executive1
Bob Holt/
Nick Winks
Chief Financial
Officer2
Peter Smith
Leads the Board and sets
Company strategy. Ensures
an effective link between
shareholders and the Board.
Implements policies and
strategies agreed by the Board
and manages the business.
Develops, implements and
monitors financial strategy of
the business.
Non-Executive
Directors
Robert Legget,
Derek Zissman and
Christopher Mills
Provide constructive challenge to
the Executive Directors.
Monitor delivery of agreed
strategy.
Notes
1. Bob Holt held the Joint roles of Chairman and Chief Executive until his resignation on
18 March 2021. Thereafter these roles were separated and Nick Winks was appointed as
Chairman on 26 May 2021.
2. Peter Smith was additionally appointed as Interim Chief Operating Officer on 18 March 2021,
a role which he fulfilled until 4 November 2021 when he was appointed as Chief Executive
Officer in addition to that of Chief Financial Officer. The latter role is currently the subject of
a market exercise to find a suitable candidate.
50 Sureserve Group plc
Annual Report 2021
Strategic report | Corporate governance | Financial statements
Non-executive
Directors
Executive
Directors
The Non-Executive Directors provide
independent oversight and constructive
challenge to the Executive Directors.
The Board
Executive Management Team
Key responsibilities
Assist the Chairman in the performance of his duties,
including development and implementation of the
strategic plan. Deal with all executive business of the
Group not specifically reserved to the Board or its
Committees, including operational management of the
business and the implementation of appropriate
systems and controls.
Members
X Chief Executive
Officer
X Group Commercial
Director
X Chief Financial Officer
X Group Financial
X Managing Directors
of Compliance and
Energy Services
businesses
X Company Secretary
X Group Human
Resources Director
Controller
X Group Commercial
Finance Director
X Group Governance
and Compliance
Director
Committees
The Board has delegated specific responsibilities to the Nomination, Audit and Remuneration Committees. Each Committee has written
terms of reference setting out its duties, authority and reporting responsibilities. Copies of the Committee terms of reference are available
in the Group’s website. These terms of reference are kept under review to ensure they remain appropriate and reflect any changes
in legislation, regulation or best practice.
Nomination Committee
Key responsibilities
X Providing a formal, rigorous and
transparent procedure in respect of
appointments to the Board
X Evaluating the structure, size and
composition of the Board
X Reviewing leadership of the Group
and giving consideration to
succession planning
Audit Committee
Key responsibilities
X Reviewing and monitoring the integrity
of the Financial Statements
X Ensuring an effective system of
internal controls is maintained
X Monitoring accounting policies
X Liaison/oversight of internal and
external auditors.
Remuneration Committee
Key responsibilities
X Proposing the overarching principles,
parameters and governance
framework of the Group’s
remuneration policy
X Determining the remuneration and
benefits packages of the
Executive Directors
Nomination Committee Report
page 52
Audit Committee Report
page 53 – 54
Remuneration Committee Report
page 55 – 58
Sureserve Group plc
Annual Report 2021
51
Nomination Committee report
ROBERT LEGGET
Senior Independent Director
Chairman of the Nomination Committee
Committee members
Robert Legget
Senior Independent Director
Nick Winks
Independent Non-Executive Chairman
Derek Zissman
Independent Non-Executive Director
Chair
Member
Member
Key responsibilities
The key responsibilities of the Nomination Committee are to:
X Review the structure, size and composition of the Board, including
the skills, knowledge, experience and diversity of Directors
X Give full consideration to succession planning for Directors and
other senior Executives
X Keep under review the leadership needs of the organisation
X Identify and nominate for the approval of the Board candidates to
fill Board vacancies
The terms of reference of the Nomination Committee
are available to view at
www.sureservegroup.co.uk/investors/corporate-governance
52 Sureserve Group plc
Annual Report 2021
This is the Nomination Committee Report for the year to
30 September 2021.
Membership of the Nomination Committee
and attendance during the year
The Nomination Committee comprises the independent Non-Executives
of the Company and the Chairman. Robert Legget, Derek Zissman, Bob
Holt and Nick Winks were the members of the Committee during the
year. Bob Holt resigned as Chairman on 18 March 2021 and Nick Winks
was appointed as Chairman on 26 May 2021. Details of attendance
records during the period can be found on page 48.
Following the resignation of Bob Holt as Chairman and Chief Executive
of Sureserve Group plc on 18 March 2021, Robert Legget was appointed
by the Board as Interim Chairman to lead the search for a new
Non-Executive Chairman, who would in turn lead the search for a new
Chief Executive Officer. This to reflect the separation of roles between
Chairman and Chief Executive. Derek Zissman supported the appointment
process. The Committee also appointed Peter Smith, Chief Financial
Officer of the Group to the combined role of Interim Chief Operating
Officer and Chief Financial Officer to assist with management of the
Group during the Board transition process.
The Committee’s primary focus during the financial year has been the
review of candidates for the appointment of Chairman, and subsequently
candidates for the role of Chief Executive Officer. This latter process was
concluded post financial year end with the appointment of Peter Smith,
the Interim Chief Operating Officer and Chief Financial Officer to the role
on 4 November 2021. A search for a new Chief Financial Officer is ongoing.
The Board remains conscious that diversity extends beyond the boardroom
and supports the management efforts to build a diverse organisation. The
Group continues to embed a strong Equality and Diversity Policy within
the business. When considering the optimum composition of the Board,
it is believed all appointments should be made on merit, whilst ensuring
an appropriate balance of skills and experience within the Board. The
Committee keeps Board structure under continual review.
Despite the recent Board changes the Committee remains of the view
that the output of the follow up Independent Board review adopted by the
Board in early 2020 remains relevant, namely that:
X Sureserve had successfully transitioned to a growth phase following
the disposal of its construction interests and the associated risks
X The Board was fully focused on driving shareholder value
X Group Governance was healthy
The report was presented in December 2019, and adopted at the January
2020 Board meeting.
Action plan for 2021/22
The focus for the Committee during the coming financial year will be:
X To conclude the search for a new Chief Financial Officer following the
appointment of Peter Smith to the Chief Executive Officer role
X To review succession planning within the Company and the
membership of the Executive Management Team which supports the
Executive Directors
X To review the Executive/Non-Executive balance of the Board
X The Board is mindful of the requirement to evidence diversity in
the workforce
Approved on behalf of the Board by:
Robert Legget
Senior Independent Director
Chairman of the Nomination Committee
24 January 2022
Audit Committee report
Strategic report | Corporate governance | Financial statements
Chair
Member
Member
DEREK ZISSMAN
Non-Executive Director
Chairman of the Audit Committee
Committee members
Derek Zissman
Independent Non-Executive Director
Nick Winks
Chairman
Robert Legget
Senior Independent Director
Allocation of time
Review of Final Audit Findings
Report for the year ended September 2020
and accounting judgements
40%
Key accounting considerations for
the Interim Results to 31 March 2021
20%
Review of Risk Registers and reports
from Risk Committee
15%
Review of Reports
from Internal Auditor
15%
Consideration of external auditor’s plan for
the September 2021 Audit
10%
The terms of reference of the Audit Committee
are available to view at
www.sureservegroup.co.uk/investors/corporate-governance
This is the Audit Committee Report for the year ended
30 September 2021.
Committee meetings
The Committee met 4 times during the year. The meetings are attended
by Committee members and, by invitation, the Chief Financial Officer,
senior management and representatives from the external and internal
auditors. Once a year, the Committee meets separately with the external
auditor without management being present.
Roles and responsibilities
The primary function of the Audit Committee is to assist the Board in
discharging its responsibilities with regard to financial reporting and the
external and internal controls, including:
X Reviewing and monitoring the integrity of the Group’s annual and
interim financial statements and accompanying reports to
shareholders and Corporate Governance statements
X Reporting to the Board on the appropriateness of the accounting
policies and practices
X In conjunction with the Board, reviewing and monitoring the
effectiveness of the Group’s internal control and risk management
systems, including reviewing the process for identifying, assessing
and reporting all key risks (see the Principal Risks and Uncertainties
on pages 40 to 42)
X Reviewing the effectiveness of the Group’s internal audit process and
approving the forward audit plan
X To make recommendations to the Board in relation to the appointment
and removal of the external auditor and to approve its remuneration
and terms of engagement
X To review and monitor the external auditor’s independence and
objectivity and the effectiveness of the audit process, taking into
consideration relevant UK professional and regulatory requirements
X Reviewing and monitoring the extent of the non-audit work undertaken
by the Group’s external auditor, taking into account relevant
professional and regulatory requirements
X Reviewing the adequacy and effectiveness of the whistleblowing and
anti-bribery policy and procedures
X Reviewing the Group’s risk management procedures and monitoring
actions taken in the year
The Committee is comprised of financially literate members with the
requisite ability and experience to enable the Committee to discharge its
responsibilities. Derek Zissman, Nick Winks and Robert Legget were the
members of the Committee during the period under review. The Chairman
of the Audit Committee during this period, Derek Zissman, is a Fellow
of the Institute of Chartered Accountants in England and Wales whilst
Robert Legget is a member of the Institute of Chartered Accountants
of Scotland.
Sureserve Group plc
Annual Report 2021 53
Audit Committee report continued
Activities of the Committee
During the course of the year the Committee undertook the
following activities:
X Considered the Final Audit Findings Report for the year ended
September 2020
X Reviewed the key accounting considerations and judgements
reflected in the Group’s results for the six-month period ended
31 March 2021
X Reviewed and agreed the external auditor’s audit plan in advance of
its audit for the year ended 30 September 2021
X Post year end discussed the report received from the external auditor
regarding its audit in respect of the year ended 30 September 2021,
which includes comments on its findings on internal control and a
statement on its independence and objectivity
X Assessed the impact of the Covid -19 pandemic on Group reporting
requirements in discussions with the external auditors and management
X Reviewed the Risk Management Framework of the business including
internal controls, the risk registers and the work of the Internal Auditor
X Supported the Risk Committee, which meets on a quarterly basis and
reports to Audit Committee
X Reviewed and approved the non-audit assignments undertaken by the
external auditor in the year to 30 September 2021
X Considered, together with the Board, the Principal Risks and
Uncertainties Review
External auditor
The Group’s external auditor – RSM UK Audit LLP – is subject to annual
reappointment by shareholders and partner rotation at the required
interval. Auditor rotation remains under review.
The Board is very aware that the effectiveness and independence of the
external auditor is central to ensuring the integrity of the Group’s published
financial information. During the year the Audit Committee took the following
steps to ensure that auditor independence was not compromised:
X The Committee annually reviews the Company’s relationship with its
auditor and assesses the level of controls and procedures in place to
ensure the required level of independence and that the Company has
an objective and professional relationship with RSM
X The Audit Committee reviews all fees paid for the audit and all
non-audit fees with a view to assessing the reasonableness of fees,
and any independence issues that may have arisen or may potentially
arise in the future
The Board is satisfied with the effectiveness and independence of RSM
UK Audit LLP as our external auditor.
Financial reporting and statutory audit
The Committee reviewed with the external auditor the Annual financial
statements and the Interim Report focusing on truth and fairness of the
results and financial position. Factors reviewed included:
X Compliance with best practice requirements
X Clarity of disclosures
X Appropriateness of accounting policies
X Review of significant accounting judgements made
Areas which were the subject of review from the Audit Findings
report included:
X Annual impairment review on goodwill and intangibles
X Provision for contract disputes and legal claims
Risk management and internal controls
One of the key priorities of the Audit Committee is the safeguarding of
the Group’s assets, both physical, such as inventory and intangible and
trade and other receivables. This is achieved through implementation
of policies and procedures and regular checks to ensure these are in
operation. The Audit Committee has primary responsibility for oversight
of the Group’s system of internal controls, including the risk management
framework and the work of the Internal Audit function. The system of
internal controls is designed to manage, rather than eliminate, the risk
of failure to achieve business objectives and the Board can only provide
reasonable and not absolute assurance against material misstatement
or loss. The Board has established a clear organisational structure with
defined authority levels. The day to day running of the Group’s business
is delegated to the Executive Directors of the Group, who meet with both
operational and financial management in each business area on a monthly
basis. Key financial and operational measurements are reported on a
monthly basis and are measured against both budget and reforecasts.
Risk Registers are maintained at both subsidiary company and Group
level and these outline the key risks faced by the Group, including their
impact and likelihood and relevant mitigation controls and actions.
The Group and business risk registers are reviewed and updated by
management quarterly and further reviewed by Risk Committee, before
being presented to Audit Committee for review at least semi-annually.
The principal risks and uncertainties which are judged currently to have
the most significant impact on the Group’s long term performance and
prospects are set out on pages 40 to 42.
Internal audit
The Company has an established Internal Audit function and during
the year a number of operational reviews have been undertaken by the
Internal Auditor. These included a review of accrued income across the
Group,and the submission of furlough claims for the business during the
early stages of the Covid-19 pandemic.
Internal Audit Reports are reviewed at each Audit Committee meeting.
A forward Audit Plan is agreed with the Internal Auditor and follow up
actions from previous Reviews considered.
Areas for review by the Committee in the
current financial year
These will include:
X Review of the delivery of the new integrated finance system across
the operating businesses
X Continuing to focus on operational reviews across the Group
Following the year end, the Committee has met to approve the Group’s
Annual Report and Financial Statements.
Derek Zissman
Non-Executive Director
Chairman of the Audit Committee
24 January 2022
54 Sureserve Group plc
Annual Report 2021
Directors’ remuneration report
Remuneration Committee Chairman’s annual statement
Strategic report | Corporate governance | Financial statements
ROBERT LEGGET
Senior Independent Director
Chairman of the Remuneration Committee
Committee members
Robert Legget
Senior Independent Director
Nick Winks
Chairman
Derek Zissman
Independent Non-Executive Director
Allocation of time
Chair
Member
Member
Incentivisation of Senior management team and the Executive
Management Team through a new Company Performance
Share Plan (PSP) and Company Share Option Plan (CSOP)
45%
Management and review of the Special Incentive Award Plan
for Executive Directors
25%
Review of proposed 2022
remuneration for Executive Directors
20%
Review of wider Group remuneration
and bonus arrangements for 2022
10%
The terms of reference of the Remuneration Committee
are available to view at
www.sureservegroup.co.uk/investors/corporate-governance
This is the Directors’ Remuneration Report for the year to
30 September 2021.
The Annual Report on Remuneration on pages 55 to 58 provides details
of each Director’s pay and benefits in the year to 30 September 2021.
Responsibilities and role of the
Remuneration Committee
The primary function of the Remuneration Committee is to review the
remuneration of the Executive Directors and to monitor the remuneration
of the Group’s senior managers. The remuneration strategy and policy for
all staff is also reviewed annually by the Committee.
The Remuneration Committee tries to ensure that a Director’s remuneration
encourages, reinforces and rewards the growth of shareholder value and
promotes the long-term success of the Company. The Directors’
Remuneration Policy for Executive Directors is intended to support the
business needs of the Company and to ensure it has the ability to attract,
motivate and retain senior leaders of a high calibre, remains competitive
and provides appropriate incentive for good performance. The Executive
Directors’ remuneration should also:
X Align executives with the best interests of the Company’s shareholders
and other relevant stakeholders through a significant weighting on
performance-related pay
X Be consistent with regulatory and Corporate Governance requirements
X Be straightforward and transparent and support the delivery of
strategic objectives
X Be consistent with the Group’s risk policies and systems to guard
against inappropriate risk taking
The Committee reviews the Company’s executive remuneration
arrangements taking external advice on current market practice,
as appropriate, and implements incentive arrangements to align the
interests of executives with shareholder value.
Membership of the Committee
The Committee is chaired by Robert Legget with Nick Winks and Derek
Zissman as members. Nick Winks joined the Committee following his
appointment as Chairman on 26 May 2021. All are Independent
Non-Executive Directors of the Group.
Before the appointment of Nick Winks, the then Executive Chairman,
Bob Holt, attended as required.
The Committee met 4 times during the year with all members attending
each meeting. As the members of the Committee are the Independent
Non-Executive Directors, they are recognised by the Board as bringing
independent judgement to the matters considered by the Committee.
This report is split into:
X Components of Executive remuneration for 2020/21
X Proposed remuneration for 2021/22
X Details of the Company’s remuneration policy
Sureserve Group plc
Annual Report 2021 55
Directors’ remuneration report continued
Components of Executive remuneration
The following section summarises how remuneration arrangements operated during the 2020/21 financial year.
Remuneration and benefits
The table below sets out the annual salary of each of the Executive Directors in the year to 30 September 2021 and the proposed 2021/22 salary for
each of their current roles.
Bob Holt1
Peter Smith2
Notes
2020/21
salary
2021/22
salary
% change in
basic salary
£nil
£375,000
£200,000 £280,000
0%
0%3
1. In addition to a salary of £75,000, Bob Holt was available to provide consultancy services to the Company and other Group companies. These services were provided by a consultancy company
of which Bob Holt is a shareholder. Such services were originally provided for two days per week over 47 weeks per year at a total cost of up to £150,000 p.a. (plus VAT).Following the
resignation of Michael McMahon, Bob Holt took on the role of Chief Executive Officer. These additional services were also provided through the consultancy company and represented a further
two days per week at an additional cost of up to £150,000 p.a (plus VAT), making a total of £375,000. Bob Holt resigned as of 18 March 2021.
2. In addition to base salary Peter Smith has elected to receive his contractual pension entitlement by way of additional salary and this is reflected the Directors Remuneration Schedule. Following
the resignation of Bob Holt, Peter Smith took on the additional role of Interim Chief Operating Officer, for which he received an additional allowance of £5000 per month. Post financial year end
Peter Smith was appointed to the role of Chief Executive Officer on 4 November 2021 for which his annual salary is £280,000.
3. Given the change in role for Peter Smith the salary rates quoted are not comparable.
The highest paid Director was paid £375,000 in the financial year, compared to an employee average of £34,826.
Annual bonus
No bonus was payable to Bob Holt in respect of the September 2021 financial year.
Peter Smith was paid an agreed bonus of £130,000 post year end and on finalisation of the Group Annual Report and Accounts for the year. This
represented £100,000 payable against agreed financial targets for the year and an additional bonus of £30,000 relating to his role as Interim Chief
Operating Officer for the period since March 2021.
Special Incentive Award Plan (‘SIAP’)
The Sureserve Group plc Special Incentive Award Plan (2019) was established in May 2019 having been approved by shareholders at the AGM in
March 2019. Full details of the Plan may be found in the 2019 Notice of Annual General Meeting at www.sureservegroup.co.uk. Awards under the
Plan were made to Bob Holt and Michael McMahon, both of whom were awarded options over 800,000 shares each. The options awarded to Michael
McMahon lapsed on his resignation from the business. An award over 180,000 shares was made to Peter Smith on 13 November 2020, following
satisfaction of contractual requirements.
The expiry date of the options was 15 May 2021 and both Bob Holt and Peter Smith exercised their option awards during the financial year.
A summary of SIAP and PSP share awards granted to Executive Directors
The table below sets out details of the Executive Directors’ outstanding option awards under the SIAP plan.
Name of Director
Scheme
Bob Holt
Peter Smith
Note
SIAP 1
SIAP 1
Total
Number of
options at
1 October
2020
800,000
Granted
during the
period
Lapsed
during the
period
Number of
options at
Exercised
during the 30 September
2021
period
—
— 800,000
180,000
180,000
800,000
180,000
— 980,000
—
—
Nil
Date
from which
exercisable
Expiry
date
15 November 2020
15 May 2021
15 November 2020
15 May 2021
1. The Sureserve Group plc Special Incentive Award Plan (2019) was established during 2019 and approved by shareholders at the AGM in March 2019. Full details of the Plan may be found in the
2019 Notice of Annual General Meeting at https://www.sureservegroup.co.uk/investors/shareholder-information/meeting-and-voting. An award under the Plan was made during the previous
year to Bob Holt of an option over 800,000 shares subject to the achievement of certain performance conditions. There was the ability to make further awards to eligible employees under the
Scheme and an award of an option over 180,000 shares was granted to Peter Smith post the 2020 financial year end.
Awards under this Scheme vested on 15 November 2020. After application of the performance conditions relating to the Scheme, an award capable of exercise was made to Bob Holt in respect
of 860,874 Ordinary shares and the award to Peter Smith is capable of exercise in respect of 193,676 Ordinary shares.
Company’s Performance Share Plan
Post the end of the financial year, in his role as Chief Executive Officer, Peter Smith was granted an option over shares under the terms of the above
Share Plan. The award was granted on 22 December 2021 and will vest on the third anniversary of grant, on 22 December 2024. Subject to the
achievement of the agreed performance condition the award is capable of exercise in respect of 304,900 Ordinary Shares. If the performance
condition is exceeded, the award would be capable of exercise in respect of a maximum of 381,125 Ordinary Shares.
Proposed remuneration for 2022
X For the current financial year to 30 September 2022 the Remuneration Committee is proposing no change to the remuneration of the Chairman
X No change in respect of the fees for the Non-Executive Directors
X An annual salary for the Chief Executive Officer of £280,000
X Annual bonus arrangements for the Chief Executive Officer have yet to be concluded for the 2021/22 Financial year, but will include targets around
EPS growth, cash conversion and satisfaction with the audit process. There will be clear financial targets based around increasing shareholder
value. The Committee is satisfied that these will be challenging and, in order for the maximum bonus to be earned, will demonstrate significant
improvement in the profit performance of the business
56 Sureserve Group plc
Annual Report 2021
Strategic report | Corporate governance | Financial statements
Single total figures of remuneration (audited information)
The table below reports the total remuneration received in respect of qualifying services by each Director during the year.
Details of the Company’s remuneration policy
2021
Executive Directors
Bob Holt5
Michael McMahon6
Peter Smith7
Non-Executive Directors
Nick Winks
Robert Legget
Derek Zissman
Christopher Mills
Notes
Total salary
and fees 1
£’000
Taxable
benefits 2
£’000
Annual
bonus 3
£’000
Long Term
Incentive 4
£’000
Pensions
related
benefits
£’000
Compensation
for loss
of office
£’000
188
—
250
37
50
45
20
5
—
12
—
—
—
—
—
—
130
—
—
—
—
702
—
158
—
—
—
—
1
—
—
—
—
—
—
187
—
—
—
—
—
—
2020
Total
remuneration
£’000
361
7
310
48
43
19
Total
£’000
1,083
—
550
37
50
45
20
1. Total salary and fees — the amount of salary/fees received in the year.
2. Taxable benefits — the taxable value of benefits received in the year (i.e. car allowance and private medical insurance).
3. Annual bonus — the cash value of the bonus earned in respect of the year.
4. Share gain in respect of 2019 LTIP award granted and exercised during the financial year.
5. In addition to a salary of £75,000, Bob Holt is available to provide consultancy services to the Company and other Group companies. These services are provided by a consultancy company of
which Bob Holt is a shareholder. Such services were originally provided for two days per week over 47 weeks per year at a total cost of up to £150,000 p.a. (plus VAT). During the period, and
following the resignation of Michael McMahon, Bob Holt also took on the role of Chief Executive Officer. These additional services are also provided through the consultancy company and
represent a further two days per week at an additional cost of up to £150,000 p.a (plus VAT). Bob Holt resigned with effect from 18 March 2021.
6. Michael McMahon resigned from the Board with effect from 30 September 2019.
7. Peter Smith’s remuneration reflects a base salary of £200,000 during the year, together with an allowance for acting as Interim Chief Operating Officer from 18 March onwards. He also elected
during the year to take his contracted pension payments by way of additional salary.
Long term incentive vesting
The 2 remaining awards made under The Sureserve Group plc Special Incentive award Plan (2019) vested during the year.
Other directorships
Bob Holt, who resigned as Chairman on 18 March 2021 was also a Director of Totally plc during the period. This appointment was held prior to Bob Holt
joining the Company.
Work of the Committee during the year
The work of the Committee during the year predominantly revolved around:
X Satisfaction of awards under the Special Incentive Award Plan which had vested during the year
X Review of Managing Director and Senior Management pay and bonus awards for 2021
X Incentivisation plan for Chief Executive Officer and proposed Chief Financial Officer
X Agreement to framework for bonus arrangements for the coming financial year
Shareholder dilution
In accordance with the investor guidelines and the rules of the Company’s share schemes, the Company can issue a maximum of 10% of its issued
share capital in a rolling 10-year period to employees to satisfy vesting under all its share plans. The Sureserve Group operates all its share plans
within these guidelines.
Illustrations of application of remuneration policy
The Sureserve Group remuneration arrangements have been designed to ensure that a significant proportion of pay is dependent on the delivery of
short term and long-term goals that are aligned with the Company’s key strategic objectives and the creation of sustainable returns to shareholders.
The Committee has considered the potential amount payable to Executive Directors in different performance scenarios and is comfortable that the
amounts payable are appropriate in the context of the performance delivered and the value added for shareholders.
Sureserve Group plc
Annual Report 2021 57
Directors’ remuneration report continued
Service contracts and letters of appointment
The table below summarises the service contracts of the Executive Directors and Non-Executive Directors:
Name
Executive Directors
Bob Holt1
Peter Smith
Non-Executive Directors
Nick Winks2
Robert Legget
Derek Zissman
Christopher Mills
Notes
1. Bob Holt resigned with effect from 18 March 2021.
2. Nick Winks was appointed with effect from 26 May 2021.
Date of contract/
letter of appointment Notice period by Company
Notice period by Director
21 July 2016
29 July 2019
25 May 2021
19 April 2016
27 November 2017
18 March 2019
6 months
12 months
3 months
1 month
1 month
1 month
6 months
6 months
3 months
1 month
1 month
1 month
Non-Executive Directors
All Non-Executive Directors have letters of appointment with the Company for an initial period of three years, subject to annual reappointment at the
AGM. Appointments are terminable by either party on one month’s written notice. The appointment letters for the Non-Executive Directors provide that
no compensation is payable on termination, other than accrued fees and expenses.
All Executive Directors’ service agreements and Non-Executive Directors’ letters of appointment are available for inspection at the Company’s
registered office at Crossways Point 15, Victory Way, Crossways Business Park, Dartford, Kent, DA26DT.
Remuneration in the wider Group
Throughout the Group, base salary and benefit levels are set taking into account prevailing market conditions. Differences between Executive Director
pay policy and other employee terms reflect the seniority of the individuals and the nature of responsibilities. The key difference in policy is that for
Executive Directors a greater proportion of total remuneration is based on performance-related incentives. The Committee has oversight of incentive
plans operated throughout the Group. The incentive arrangements for the senior management immediately below Board level align with the long-term
interests of the business and, where appropriate, objectives may be tailored to individual business areas.
When setting the policy for the remuneration of the Executive Directors, the Committee pays regard to the pay and employment conditions of
employees within the Group. However, the Committee does not use comparison metrics or consult directly with employees when formulating the
remuneration policy for Executive Directors. The Committee reviews salary increases and pay conditions within the business as a whole to provide
context for decisions in respect of Executive Directors.
Shareholder engagement
We are committed to active engagement with our shareholders. As and when necessary, the Committee will consult with leading shareholders prior to
any material change in the way we operate the Directors’ Remuneration Policy or when a new policy is being proposed.
Robert Legget
Senior Independent Director
Chairman of the Remuneration Committee
24 January 2022
58 Sureserve Group plc
Annual Report 2021
Directors’ report
Strategic report | Corporate governance | Financial statements
The Directors present their Annual Report and the audited Financial Statements for the Group for the year ended 30 September 2021.
General information
The Company was incorporated as a public company limited by shares in England and Wales on 28 January 2015 with registered number 09411297
and traded as Lakehouse plc until the Company changed its name to Sureserve Group plc on 1 October 2018, following the divestment of the Group’s
Construction and Property Services divisions. It is domiciled in the UK. The Company is listed on the AIM market of the London Stock Exchange. The
Company’s registered address is Crossways Point 15, Victory Way, Crossways Business Park, Dartford, Kent, DA2 6DT.
Principal activities
Sureserve is a leading UK social housing energy services Group, delivering heating and energy efficiency measures to Housing Associations, Local
Authorities and landlords across the UK. The principal activity of the parent company is the holding of investments.
Results and dividends
The results for the year are set out in the consolidated statement of comprehensive income on page 68. The Directors do not intend to pay a dividend for
this financial year.
Directors and Directors’ interests
The Directors who held office during the year and to date were as follows:
Bob Holt OBE *
Nick Winks **
Peter Smith
Robert Legget
Derek Zissman
Christopher Mills
*
Bob Holt resigned as a Director with effect from 18 March 2021.
** Nick Winks was appointed as a Director with effect from 26 May 2021.
Biographical details and Committee membership details for Directors appear on pages 44 and 45.
All Directors are required to retire annually, in line with the Articles of Association.
The Directors who held office during the financial year had the following interests in the shares of the Company:
Bob Holt1
Nick Winks2
Peter Smith
Robert Legget
Derek Zissman
Christopher Mills3
Notes
Beneficial/
non-beneficial
Beneficial
Beneficial
Beneficial
Beneficial
Beneficial
Non-beneficial
At 1 October
2020
(or date of
appointment)
1,298,268
—
—
—
100,000
30,592,500
Movement
in year
(1,298,268)
100,000
95,837
—
30,000
(390,000)
At
30 September
2021
—
100,000
95,837
—
130,000
30,202,500
At
30 September
2021
Percentage
—
0.06%
0.06%
0.00%
0.08%
18.73%
1. Bob Holt resigned with effect from 18 March 2021.
2. Nick Winks was appointed with effect from 26 May 2021.
3. Christopher Mills is a Director and shareholder of Harwood Capital LLP and entities for which Harwood LLP acts as investment manager.
Details of Directors’ emoluments and interests in share options are disclosed in the report of the Board to the shareholders on Directors’ remuneration
on pages 55 to 58.
No Director has had a material interest in any contract of significance in relation to the business of the Company, or any of its subsidiary undertakings,
during the financial year or had as such at the end of the financial year.
Sureserve Group plc
Annual Report 2021 59
Directors’ report continued
Substantial shareholdings and share capital
As at 14 January 2022, being the latest practical date prior to the publication of this document, the Company has been advised of the following
interests in 3% or more of the Company’s ordinary share capital:
Harwood Capital Management Group
Slater Investments
Estate of Steve Rawlings
Chelverton Asset Management
Octopus Investments Limited
Number
of shares
Percentage
held
%
30,202,500
24,768,325
17,081,068
8,730,000
7,102,570
18.35%
15.05%
10.38%
5.30%
4.32%
The Company has one class of share in issue, being ordinary shares with a nominal value of 10 pence each. As at 30 September 2021, there were
161,213,788 shares in issue.
Directors’ indemnity
The Company’s Articles of Association provide, subject to the provisions of UK legislation, an indemnity for Directors and officers of the Company
and the Group in respect of liabilities they may incur in the discharge of their duties or in the exercise of their powers, including any liability relating to
the defence of any proceedings brought against them which relate to anything done or omitted, or alleged to have been done or omitted, by them as
officers or employees of the Company and the Group.
Directors’ and officers’ liability insurance cover is in place in respect of all the Company’s Directors.
Directors’ powers
As set out in the Company’s Articles of Association, the business of the Company is managed by the Board which may exercise all powers of
the Company.
Our people
The Group’s policy is to consider all job applications on a fair basis free from discrimination in relation to age, sex, race, ethnicity, religion, sexual
orientation or disability not related to job performance. Every consideration is given to applications for employment from disabled persons, where
the requirement of the job may be adequately covered by a disabled person. Where existing employees become disabled, it is the Group’s policy
wherever practicable to provide continuing employment under normal terms and conditions and to provide training and career development
wherever appropriate.
The Group places considerable value on the involvement of its employees and encourages the development of employee involvement in each of its
operating companies through formal and informal meetings. It is the Group’s policy to ensure that all employees are made aware of significant matters
affecting the performance of the Group through the operation of employee forums, information bulletins, informal meetings, team briefings, internal
newsletters and the Group’s website and intranet.
Key performance indicators
Details of the Group’s key performance indicators can be found on pages 20 to 23.
Principal risks and uncertainties
Details of the risks and uncertainties faced by the Group can be found in the Strategic Review on pages 40 to 42.
Financial instruments
An explanation of the Group’s treasury policies and existing financial instruments is set out in note 2 of the Financial Statements.
Post balance sheet event
Following the financial year end the Group acquired the entire issued share capital of CorEnergy Limited.
60 Sureserve Group plc
Annual Report 2021
Strategic report | Corporate governance | Financial statements
Donations
The Group made charitable donations in the year of £15,134. Information on the Group’s resources, relationships and sustainability is set out on
pages 1 to 43. The Group made no political donations during the year.
Annual General Meeting
A separate notice convening the Annual General Meeting of the Company to be held at the City of London Club, 19 Old Broad St, London EC2N 1DS
on 22 March 2022 will be sent out with this Annual Report and Financial Statements. Attendance will require pre-registration and there will be an
opportunity to put forward questions to be asked at the meeting in lieu of attendance.
Corporate governance
The Company’s statement on corporate governance can be found in the Corporate Governance Report on pages 44 to 62. The Corporate
Governance Report forms part of this Directors’ Report and is incorporated into it by cross-reference.
Section 172 statement
The required statement under section 172 of the Companies Act 2006 is contained within the Strategic Report on pages 14 to 17.
Matters of Strategic Importance
The company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the company’s strategic report information required by
Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors’ report. It has
done so in respect of Streamlined Energy Carbon Reporting, certain employment disclosures and corporate governance.
Independent auditor
The auditor, RSM UK Audit LLP, has indicated its willingness under section 489 of the Companies Act 2006 to continue in office and a resolution
that it be reappointed will be proposed at the Annual General Meeting.
Statement as to disclosure of information to auditor
Each of the persons who is a Director at the date of approval of this Annual Report confirms that:
X In so far as the Director is aware, there is no relevant audit information of which the Company’s auditor is unaware
X The Director has taken all the steps that he ought to have taken as a Director in order to make himself aware of any relevant audit information
and to establish that the Company’s auditor is aware of that information
This confirmation is given and should be interpreted in accordance with the provisions of section 418 of the Companies Act 2006.
By order of the Board
John Charlton
Group Company Secretary
24 January 2022
Sureserve Group plc
Annual Report 2021 61
Statement of Directors’ responsibilities in respect
of the Annual Report and the Financial Statements
The directors are responsible for preparing the Strategic Report and the
Directors’ Report, and the financial statements in accordance with
applicable law and regulations.
Company law requires the directors to prepare group and company
financial statements for each financial year. The directors have elected
under company law to prepare group financial statements in accordance
with international accounting standards in conformity with the requirements
of the Companies Act 2006 and have elected under company law to
prepare the company financial statements in accordance with United
Kingdom Generally Accepted Accounting Practice (United Kingdom
Accounting Standards and applicable law).
The group financial statements are required by law and international
accounting standards in conformity with the requirements of the
Companies Act 2006 to present fairly the financial position and
performance of the group. The Companies Act 2006 provides in relation to
such financial statements that references in the relevant part of that Act to
financial statements giving a true and fair view are references to their
achieving a fair presentation.
Under company law the directors must not approve the financial
statements unless they are satisfied that they give a true and fair view of
the state of affairs of the group and the company and of the profit or loss
of the group for that period.
Directors’ statement pursuant to the Disclosure
and Transparency Rules
Each of the directors, whose names and functions are listed in the
Directors’ Report that, to the best of each person’s knowledge:
a.
b.
the financial statements, prepared in accordance with the applicable
set of accounting standards, give a true and fair view of the assets,
liabilities, financial position and profit of the company and the
undertakings included in the consolidation taken as a whole; and
the Strategic Report contained in the Annual Report includes a
fair review of the development and performance of the business and
the position of the company and the undertakings included in the
consolidation taken as a whole, together with a description of the
principal risks and uncertainties that they face.
The directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Company’s website.
Legislation in the United Kingdom governing the preparation and
dissemination of financial statements may differ from legislation in
other jurisdictions.
This statement was approved by the Board of Directors on 24 January
2022 and is signed on its behalf by:
In preparing each of the group and company financial statements, the
directors are required to:
a. select suitable accounting policies and then apply them consistently;
Peter Smith
Chief Executive Officer
b.
c.
d.
e.
make judgements and accounting estimates that are reasonable
and prudent;
for the group financial statements, state whether they have been
prepared in accordance with international accounting standards in
conformity with the requirements of the Companies Act 2006 and
international financial reporting standards adopted pursuant to
Regulation (EC) No 1606/2002 as it applies in the European Union;
for the company financial statements, state whether applicable UK
accounting standards have been followed, subject to any material
departures disclosed and explained in the company financial statements;
prepare the financial statements on the going concern basis unless
it is inappropriate to presume that the group and the company will
continue in business.
The directors are responsible for keeping adequate accounting records
that are sufficient to show and explain the group’s and the company’s
transactions and disclose with reasonable accuracy at any time the
financial position of the group and the company and enable them to
ensure that the financial statements and the Directors’ Remuneration
Report comply with the Companies Act 2006 and, as regards the group
financial statements, Article 4 of the IAS Regulation. They are also
responsible for safeguarding the assets of the group and the company
and hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
62 Sureserve Group plc
Annual Report 2021
Independent auditor’s report
To the members of Sureserve Group plc
Strategic report | Corporate governance | Financial statements
Summary of our audit approach
Key audit
matters
Group
X Goodwill impairment
X Provisions and contingent liabilities
Materiality
Group
X Overall materiality: £1,090k (2020: £948k)
X Performance materiality: £821k (2020: £711k
Parent Company
X Overall materiality: £500k (2020: £500k)
X Performance materiality: £375k (2020: £375k)
Scope
Our audit procedures covered 100% of revenue,
100% of total assets and 100% of profit before tax.
Key audit matters
Key audit matters are those matters that, in our professional judgement,
were of most significance in our audit of the group and parent company
financial statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to fraud) we
identified, including those which had the greatest effect on the overall
audit strategy, the allocation of resources in the audit and directing the
efforts of the engagement team. These matters were addressed in the
context of our audit of the group and parent company financial statements
as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters.
There were no key audit matters identified in relation to the parent company.
Opinion
We have audited the financial statements of Sureserve Group plc (the
‘parent company’) and its subsidiaries (the ‘group’) for the year ended
30 September 2021 which comprise the consolidated statement of
comprehensive income, consolidated statement of financial position,
consolidated statement of changes in equity, consolidated statement of
cash flows, company statement of financial position, company statement
of changes in equity and notes to the financial statements, including
significant accounting policies. The financial reporting framework that
has been applied in the preparation of the group financial statements is
applicable law and International Accounting Standards in conformity with
the requirements of the Companies Act 2006. The financial reporting
framework that has been applied in the preparation of the parent company
financial statements is applicable law and United Kingdom Accounting
Standards, including Financial Reporting Standard 101 “Reduced
Disclosure Framework” (United Kingdom Generally Accepted
Accounting Practice).
In our opinion:
X the financial statements give a true and fair view of the state of the
group’s and of the parent company’s affairs as at 30 September 2021
and of the group’s profit for the year then ended;
X the group financial statements have been properly prepared in
accordance with International Accounting Standards in conformity
with the requirements of the Companies Act 2006;
X the parent company financial statements have been properly prepared
in accordance with United Kingdom Generally Accepted Accounting
Practice; and
X the financial statements have been prepared in accordance with the
requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards
on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities
under those standards are further described in the Auditor’s
responsibilities for the audit of the financial statements section of our
report. We are independent of the group and the parent company in
accordance with the ethical requirements that are relevant to our audit of
the financial statements in the UK, including the FRC’s Ethical Standard
as applied to listed entities and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe that
the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’
use of the going concern basis of accounting in the preparation of the
financial statements is appropriate. Our evaluation of the directors’
assessment of the group’s and parent company’s ability to continue
to adopt the going concern basis of accounting included audit of the
three-year forecasts prepared by management, review of compliance
with covenants for facilities in place in the period and after the period
end and corroboration of cash balances. We concluded that the
directors’ assessment was appropriate in the circumstances and have
no key observations to make.
Based on the work we have performed, we have not identified any
material uncertainties relating to events or conditions that, individually
or collectively, may cast significant doubt on the group’s or the parent
company’s ability to continue as a going concern for a period of at least
twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect
to going concern are described in the relevant sections of this report.
Sureserve Group plc
Annual Report 2021 63
Independent auditor’s report continued
To the members of Sureserve Group plc
Key audit matters continued
Goodwill impairment
Key audit matter
description
At 30 September 2021 the Group had goodwill totalling £42.5m (2020: £42.4m) as disclosed in Note 14 in the consolidated
financial statements. Management assess goodwill for impairment using discounted cash flow (“DCF”) models to estimate the
value in use of the group’s cash generating units (“CGUs”) and compare this to the goodwill and other assets of the relevant
CGU. The use of DCF models requires management to make estimates involving judgement, including forecasts of revenue
and profitability and application of appropriate discount rates and as a result of this, and the impact on allocation of audit
resource, the matter was considered to be one of most significance in the group audit and therefore determined to be a key
audit matter.
How the matter
was addressed
in the audit
Our response to the risk included:
X Audit of management’s models including a check of arithmetic and integrity
X Corroboration of inputs to the DCF models to relevant financial information and challenge of management assumptions
X Comparison of forecast financial performance to post year end trading to assess reliability of forecasting
X Comparison of growth and discount rate assumptions to comparable companies and specific challenge of the
appropriateness of the discount rate applied in the DCF models
X Challenge of forecasts focused on CGUs for which the DCF models showed lowest headroom or made assumptions
in relation to Covid restrictions and recovery, including a review of management’s sensitivity analysis and completion of
additional sensitivity analysis in this regard
X Consideration of available evidence of recoverable amount for components where management did not rely on a value in
use approach
X Audit of the disclosures in the financial statements and consideration of their completeness, accuracy and appropriateness
Provisions and contingent liabilities
Key audit matter
description
The financial statements include provisions for legal and other costs of £2.0m (2020: £3.2m) as disclosed in Note 24 of the
consolidated financial statements. The assessment of whether economic outflows are probable, possible or remote involves
a high degree of management judgement and the amounts provided by management involve a high degree of estimation
uncertainty. As a result of this, and the impact on allocation of audit resource, the matter was considered to be one of most
significance in the group audit and therefore determined to be a key audit matter.
How the matter
was addressed
in the audit
Our response to the risk included:
X Obtaining confirmation from management of the completeness of all actual and potential claims including confirmation
of their judgement as to whether the likelihood of claims is remote, possible or probable
X Requesting confirmation from the group’s solicitors regarding the status of known claims and completeness of claims
X Reviewing correspondence from the group’s solicitors in respect of actual and potential claims and holding discussions
with management regarding their judgement over the existence and valuation of required provisions, or lack thereof
X Consulting an auditor’s expert in respect of provisions and contingent liabilities relating to the disposal of Lakehouse
Contracts Limited and Foster Property Maintenance Limited
X Corroboration of key assertions made by management to supporting documentation
X Audit of the disclosures made in respect of provisions and contingent liabilities for which no provision has been made
64 Sureserve Group plc
Annual Report 2021
Strategic report | Corporate governance | Financial statements
Our application of materiality
When establishing our overall audit strategy, we set certain thresholds which help us to determine the nature, timing and extent of our audit
procedures. When evaluating whether the effects of misstatements, both individually and on the financial statements as a whole, could reasonably
influence the economic decisions of the users we take into account the qualitative nature and the size of the misstatements. Based on our professional
judgement, we determined materiality as follows:
Overall materiality
£1,090k (2020: £948k)
Group
Parent company
£500k (2020: £375k)
Basis for determining overall
materiality
Rationale for benchmark
applied
7.5% (2020: 9%) of EBITA
1% (2020:1%) of net assets
EBITA considered to be appropriate benchmark as
key KPI reported in the consolidated financial
statements.
Net assets considered appropriate benchmark
for holding company.
Performance materiality
£821k (2020: £711k)
£375k (2020: £375k)
Basis for determining
performance materiality
Reporting of misstatements
to the Audit Committee
75% (2020: 75%) of overall materiality
75% (2020: 75%) of overall materiality
Misstatements in excess of £55k (2020: £47k) and
misstatements below that threshold that, in our view,
warranted reporting on qualitative grounds.
Misstatements in excess of £25k (2020: £25k) and
misstatements below that threshold that, in our view,
warranted reporting on qualitative grounds.
An overview of the scope of our audit
The group consists of 16 components, all of which are based in the UK.
Full scope audit
Analytical procedures at group level
Total
Number of components
15
1
16
Revenue
98.2%
1.8%
100%
Total assets
Profit before tax
98.4%
1.6%
100%
98.1%
1.9%
100%
Other information
The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon.
The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover
the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial
statements or our knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies
or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
X the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial statements are prepared is
consistent with the financial statements; and
X the Strategic Report and the Directors’ Report have been prepared in accordance with applicable legal requirements.
Sureserve Group plc
Annual Report 2021 65
Independent auditor’s report continued
To the members of Sureserve Group plc
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent company and their environment obtained in the course of the audit,
we have not identified material misstatements in the Strategic Report or the Directors’ Report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
X adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches
not visited by us; or
X the parent company financial statements are not in agreement with the accounting records and returns; or
X certain disclosures of directors’ remuneration specified by law are not made; or
X we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page 62, the directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group’s and the parent company’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either
intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether
due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial statements.
The extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities are instances of non-compliance with laws and regulations. The objectives of our audit are to obtain sufficient appropriate audit evidence
regarding compliance with laws and regulations that have a direct effect on the determination of material amounts and disclosures in the financial
statements, to perform audit procedures to help identify instances of non-compliance with other laws and regulations that may have a material effect
on the financial statements, and to respond appropriately to identified or suspected non-compliance with laws and regulations identified during the
audit.
In relation to fraud, the objectives of our audit are to identify and assess the risk of material misstatement of the financial statements due to fraud, to
obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud through designing and implementing
appropriate responses and to respond appropriately to fraud or suspected fraud identified during the audit.
However, it is the primary responsibility of management, with the oversight of those charged with governance, to ensure that the entity’s operations
are conducted in accordance with the provisions of laws and regulations and for the prevention and detection of fraud.
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud, the group audit engagement team:
X obtained an understanding of the nature of the industry and sector, including the legal and regulatory frameworks that the group and parent
company operate in and how the group and parent company are complying with the legal and regulatory frameworks;
X enquired of management, and those charged with governance, about their own identification and assessment of the risks of irregularities, including
any known actual, suspected or alleged instances of fraud;
X discussed matters about non-compliance with laws and regulations and how fraud might occur including assessment of how and where the
financial statements may be susceptible to fraud.
All relevant laws and regulations identified at a Group level and areas susceptible to fraud that could have a material effect on the financial statements
were communicated to component auditors. Any instances of non-compliance with laws and regulations identified and communicated by a
component auditor were considered in our audit approach.
66 Sureserve Group plc
Annual Report 2021
Strategic report | Corporate governance | Financial statements
The extent to which the audit was considered capable of detecting irregularities, including fraud
continued
The most significant laws and regulations were determined as follows:
Legislation / Regulation
Additional audit procedures performed by the audit engagement
team included:
International Accounting Standards in conformity with
the requirements of the Companies Act 2006, FRS 101
and Companies Act 2006
Review of the financial statement disclosures and testing to supporting
documentation and completion of disclosure checklists to identify areas of non-
compliance.
Tax compliance regulations
Inspection of computations received from external tax advisors and consideration of
whether any matter identified during the audit required reporting to an appropriate
authority outside the entity.
Health and safety regulations
Enquiries of management and those charged with governance and inspection of
correspondence with regulatory authorities.
The areas that we identified as being susceptible to material misstatement due to fraud were:
Risk
Revenue recognition
Audit procedures performed by the audit engagement team:
Testing was completed on a sample basis to test whether revenue transactions were
recorded in the correct period.
Transactions posted to nominal ledger codes outside of the normal revenue cycle
were identified and investigated.
Management override of controls
Testing the appropriateness of journal entries and other adjustments;
Assessing whether the judgements made in making accounting estimates are
indicative of a potential bias; and
Evaluating the business rationale of any significant transactions that are unusual or
outside the normal course of business.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work
has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no
other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s
members as a body, for our audit work, for this report, or for the opinions we have formed.
GRAHAM RICKETTS (Senior Statutory Auditor)
For and on behalf of RSM UK Audit LLP, Statutory Auditor
Chartered Accountants
25 Farringdon Street
London
EC4A 4AB
24 January 2022
Sureserve Group plc
Annual Report 2021 67
Consolidated statement of comprehensive income
For the year ended 30 September 2021
Revenue
Cost of sales
Gross profit
Other operating expenses
Share of results of joint venture
Operating profit before exceptional and other items
Exceptional items
Amortisation of acquisition related intangibles
Impairment of goodwill
Operating profit
Finance expense
Finance income
Profit before tax
Taxation
Profit for the year attributable to the equity holders of the Group
Earnings per share
Basic
Diluted
Adjusted earnings per share
Basic
Diluted
The accompanying notes are an integral part of this consolidated statement of comprehensive income.
Notes
4
2021
£’000
2020
£’000
244,014
(201,340)
195,706
(160,449)
42,674
(29,239)
1,159
14,594
387
—
(188)
14,793
(1,020)
4
13,777
(2,425)
35,257
(24,952)
99
10,404
—
(1,600)
—
8,804
(1,047)
39
7,796
(1,486)
11,352
6,310
7.1p
7.0p
7.2p
7.1p
4.0p
3.9p
4.9p
4.8p
18
4,5
7
14
8
8
4
11
13
13
13
13
68
Sureserve Group plc
Annual Report 2021
Consolidated statement of financial position
At 30 September 2021
Strategic report | Corporate governance | Financial statements
`
Non-current assets
Goodwill
Other intangible assets
Property, plant and equipment
Right of use assets
Interests in joint ventures
Deferred tax assets
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total assets
Current liabilities
Trade and other payables
Lease liabilities
Provisions
Income tax payable
Net current assets
Non-current liabilities
Lease liabilities
Provisions
Total liabilities
Net assets
Equity
Called up share capital
Share premium account
Share-based payment reserve
Own shares
Merger reserve
Retained earnings
Equity attributable to equity holders of the Company
Notes
2021
£’000
2020
£’000
14
15
16
17
18
25
19
20
21
26
24
26
24
27
29
29
29
29
42,479
820
2,009
11,564
1,660
344
42,357
726
1,212
6,757
501
517
58,876
52,070
4,199
43,249
16,444
3,022
40,054
9,679
63,892
52,755
122,768
104,825
47,397
4,071
403
1,003
42,764
3,167
825
1,073
52,874
47,829
11,018
4,926
7,972
1,596
9,568
3,669
3,221
6,890
62,442
54,719
60,326
50,106
16,122
25,620
349
—
20,067
(1,832)
15,934
25,408
650
(290)
20,067
(11,663)
60,326
50,106
The financial statements of Sureserve Group plc (registered number 09411297) were approved by the Board of Directors and authorised for issue on
24 January 2022. They were signed on its behalf by:
P D M Smith
Director
The accompanying notes are an integral part of this consolidated statement of financial position.
Sureserve Group plc
Annual Report 2021
69
Merger
reserve
£’000
20,067
—
—
—
—
—
20,067
—
—
—
—
—
Retained
earnings
£’000
(17,237)
6,310
(795)
—
—
59
(11,663)
11,352
(1,595)
(105)
—
179
Total equity
£’000
44,291
6,310
(795)
129
171
—
50,106
11,352
(1,595)
295
168
—
(290)
—
—
—
—
—
(290)
—
—
—
—
290
—
20,067
(1,832)
60,326
Consolidated statement of changes in equity
For the year ended 30 September 2021
Share capital
£’000
Share
premium
account
£’000
Share-based
payment
reserve Own shares
£’000
£’000
At 1 October 2019
Profit for the year
Dividends paid (Note 12)
Issue of shares (exercise of options)
Share-based payments
Reserve transfer
At 30 September 2020
Profit for the year
Dividends paid (Note 12)
Issue of shares (exercise of options)
Equity settled share based payments, net of tax
Reserve transfer
15,895
—
—
39
—
—
15,934
—
—
188
—
—
25,318
—
—
90
—
—
25,408
—
—
212
—
—
At 30 September 2021
16,122
25,620
538
—
—
—
171
(59)
650
—
—
—
168
(469)
349
70 Sureserve Group plc
Annual Report 2021
Consolidated statement of cash flows
For the year ended 30 September 2021
Strategic report | Corporate governance | Financial statements
Cash flows from operating activities
Cash generated from operations
Interest paid
Income taxes paid
Net cash generated from operating activities
Cash flows from investing activities
Purchase of shares in subsidiary, net of cash acquired
Receipt of deferred consideration from disposals in prior years
Purchase of property, plant and equipment
Purchase of intangible assets
Sale of property and equipment
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of shares
Dividend paid to shareholders
Repayment of bank borrowings
Repayment of lease liabilities
Net cash used in financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
The accompanying notes are an integral part of this consolidated statement of cash flows.
Cash and cash equivalents shown above excludes capitalised loan arrangement fees.
Notes
32
2021
£’000
2020
£’000
17,492
(901)
(2,421)
23,869
(957)
(736)
14,170
22,176
(200)
—
(1,570)
(545)
18
(2,297)
295
(1,595)
—
(3,808)
—
930
(621)
(539)
31
(199)
129
(795)
(10,000)
(4,084)
(5,108)
(14,750)
6,765
9,679
16,444
7,227
2,452
9,679
Sureserve Group plc
Annual Report 2021
71
Notes to the consolidated Financial Statements
For the year ended 30 September 2021
General information
Sureserve Group plc is a company incorporated in England and Wales
under the Companies Act. The address of the registered office is
Crossways Point 15, Victory Way, Crossways Business Park, Dartford,
Kent, DA2 6DT.
The consolidated Financial Statements are presented in Pounds Sterling
because that is the currency of the primary economic environment in
which the Group operates. The principal activities are discussed in the
operational review of the annual report.
1. Basis of preparation
Basis of accounting
The Consolidated Financial Statements have been prepared on a
historical cost basis. The Consolidated Financial Statements have been
prepared in accordance with international accounting standards in
conformity with the requirements of the Companies Act 2006.
The principal accounting policies adopted are set out below.
The following accounting policies have been applied consistently
in dealing with items which are considered material in relation to the
Group’s Financial Statements except as noted below.
Adoption of new and revised standards
The accounting policies adopted are consistent with those of the
previous financial year.
New standards and interpretations not applied
The International Accounting Standards Board and the International
Financial Reporting Interpretations Committee (IFRIC) have issued the
following standards and interpretations for annual periods beginning on
or after the effective dates as noted below. The adoption of IFRS 17 is
not expected to have a significant impact on the financial statements.
IAS/IFRS standards
Effective for accounting
periods starting on
or after
IFRS 17
Insurance Contracts
1 January 2023
Basis of consolidation
The consolidated Financial Statements incorporate the assets, liabilities,
income and expenses of the Group. The Financial Statements of the
subsidiaries are prepared for the same financial reporting period as the
Company. Where necessary, adjustments are made to the Financial
Statements of subsidiaries to bring the accounting policies used into line
with those used by the Group. Intercompany transactions, balances and
unrealised gains and losses transitions between Group companies are
eliminated on consolidation.
As a consolidated statement of comprehensive income is published,
a separate profit and loss account for the parent company is omitted
from the Financial Statements by virtue of section 408 of the Companies
Act 2006.
Going concern
The Directors have a reasonable expectation that the Company and the
Group have adequate resources to continue in operational existence for
the foreseeable future. The Directors regard the foreseeable future as no
less than 12 months following publication of its annual Financial Statements,
so in practical terms, 16 months from the reporting date. The Directors
review and approve the annual budget, three-year plan and a rolling 12
month forecast, including forecasts of cash flows, borrowing requirements
and covenant headroom, taking account of reasonably possible changes
in trading performance and the current state of its operating market,
including the impact of Covid 19, and are satisfied that the Group should
be able to operate within the level of its current facilities and in compliance
with the covenants arising from those facilities. 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. At 24 January 2022, the revolving cash
facility remained undrawn. Accordingly, the directors have adopted the
going concern basis in preparing the financial information. Please see
further statement in the strategic report.
72 Sureserve Group plc
Annual Report 2021
2. Significant accounting policies
Operating segments
The Directors regard the Group’s reportable segments of business to be
Compliance and Energy Services. Costs are allocated to the appropriate
segment as they arise with central overheads apportioned on a
reasonable basis. Operating segments are presented in a manner
consistent with internal reporting, with inter-segment revenue and
expenditure eliminated on consolidation.
Business combinations
Acquisitions of subsidiaries are accounted for using the acquisition method.
The consideration transferred in a business combination is measured
at fair value, which is calculated as the sum of the acquisition-date fair
values of assets transferred by the Group, liabilities incurred by the
Group to the former owners of the acquired company and the equity
interest issued by the Group in exchange for control of the acquired
company. Acquisition-related costs are recognised as non-trading
exceptional costs in profit or loss as incurred.
At the acquisition date, the identifiable assets acquired and liabilities
assumed are recognised at their fair value. Goodwill is measured as
the excess of the sum of the consideration transferred over the net of the
acquisition-date amounts of the identifiable assets acquired and liabilities
assumed. If, after reassessment, the net of the acquisition-date amounts
of the identifiable assets acquired and liabilities assumed exceeds the
sum of the consideration transferred, the excess is recognised
immediately in profit or loss as a bargain purchase gain.
When the consideration transferred by the Group in a business
combination includes an asset or liability resulting from a contingent
consideration arrangement, the contingent consideration is measured at
its acquisition-date fair value and included as part of the consideration
transferred in a business combination. Changes in fair value of the
contingent consideration that qualify as measurement period adjustments
are adjusted retrospectively, with corresponding adjustments against
goodwill. Measurement period adjustments are adjustments that arise
from additional information obtained during the ‘measurement period’
(which cannot exceed one year from the acquisition date) about facts and
circumstances that existed at the acquisition date.
The subsequent accounting for changes in the fair value of the
contingent consideration that do not qualify as measurement period
adjustments depends on how the contingent consideration is classified.
Contingent consideration that is classified as equity is not remeasured at
subsequent reporting dates and its subsequent settlement is accounted
for within equity. Contingent consideration that is classified as an asset
or liability is remeasured at subsequent reporting dates in accordance
with IFRS 9 or IAS 37 as appropriate, with the corresponding gain or
loss being recognised in profit or loss.
Acquisition costs
Management believe that acquisition costs are exceptional in nature and
they are presented as such in the income statement, so as not to distort
presentation of the underlying performance of the Group.
Goodwill
Goodwill is initially recognised and measured as set out above.
Goodwill is not amortised but is reviewed for impairment at least annually.
For the purpose of impairment testing, goodwill is allocated to each of
the Group’s cash-generating units expected to benefit from the synergies
of the combination. Cash-generating units to which the goodwill has
been allocated are tested for impairment annually, or more frequently
when there is an indication that the unit may be impaired. If the
recoverable amount of the cash-generating unit is less than the carrying
amount of the unit, the impairment loss is allocated first to reduce the
carrying amount of any goodwill allocated to the unit and then to the
other assets of the unit pro-rata on the basis of the carrying amount of
each asset in the unit. An impairment loss recognised for goodwill is not
reversed in a subsequent period.
On disposal of a subsidiary, the attributable amount of goodwill is
included in the determination of the profit or loss on disposal.
Strategic report | Corporate governance | Financial statements
2. Significant accounting policies continued
Intangible assets acquired separately
Intangible assets with finite useful lives that are acquired separately are
carried at cost less accumulated amortisation and accumulated
impairment losses. Amortisation is recognised on a straight line basis
over their useful lives. The estimated useful life and amortisation method
are reviewed at the end of each reporting period, with the effect of any
changes in estimate being accounted for on a prospective basis.
The estimated useful life for each asset type is set out below.
Computer software and
capitalised development costs
—
three to five years
Development costs are capitalised when the asset is identifiable, the
value can be measured reliably and it is probable that economic benefits
will flow to the Group.
Intangible assets acquired in a business combination
Intangible assets acquired in a business combination and recognised
separately from goodwill are initially recognised at their fair value at the
acquisition date (which is regarded as their cost). Intangible assets are
recognised if they are separable from the acquired entity or give rise to
other contractual/legal rights. The amounts ascribed to such intangibles
are arrived at by using suitable valuation techniques.
Subsequent to initial recognition, intangible assets acquired in a
business combination are reported at cost less accumulated amortisation
and accumulated impairment losses, on the same basis as intangible
assets that are acquired separately.
The estimated useful economic lives and the methods used to determine
the cost of intangibles acquired in a business combination are as follows:
Intangible asset
Useful economic life
Valuation method
Contracted customer
order book
Customer relationships Five years
Remaining period
of the contract
Non-compete
agreements
Five years
Expected cash
flows receivable
Expected cash
flows receivable
With or without method
Derecognition of intangible assets
An intangible asset is derecognised on disposal, or when no future
economic benefits are expected from use or disposal. The gain or loss
from derecognition of an intangible asset, measured as the difference
between the net disposal proceeds and the carrying amount of the asset;
is recognised in profit or loss when the asset is derecognised.
Property, plant and equipment, and right of use assets
Property, plant and equipment, and right of use assets are stated at cost
less accumulated depreciation and any recognised impairment loss.
Depreciation is calculated so as to write off the cost of a tangible asset,
less its estimated residual value, over the estimated useful economic life
of that asset on the following bases:
Leasehold improvements
Plant & equipment
Fixtures & fittings
Motor vehicles
Right of use assets
—
—
—
—
—
over the period of the lease
15% to 33.33% per annum
on a straight line basis
20% to 33.33% per annum
on a straight line basis
25% per annum on a straight
line basis
over the period of the lease
The estimated useful lives, residual values and depreciation method are
reviewed at the end of each reporting period, with the effect of any
changes in estimate accounted for on a prospective basis. Right of use
assets are depreciated over their expected useful lives on the same basis
as owned assets or, where shorter, over the term of the relevant lease.
An item of property, plant and equipment is derecognised upon disposal,
or when no future economic benefits are expected to arise from the
continued use of the asset. The gains or loss arising on the disposal or
scrappage of an asset is determined as the difference between the sales
proceeds and the carrying amount of the asset and is recognised in profit
or loss.
Impairment of tangible and intangible assets excluding goodwill
At each reporting date, the Group reviews the carrying amounts
of tangible and intangible assets to determine whether there is any
indication that those assets have suffered an impairment loss. If any
such indication exists, the recoverable amount of the asset is estimated
to determine the extent of the impairment loss (if any). Where the asset
does not generate cash flows that are independent from other assets,
the Group estimates the recoverable amount of the cash-generating unit
to which the asset belongs. When a reasonable and consistent basis of
allocation can be identified, corporate assets are also allocated to individual
cash-generating units, or otherwise they are allocated to the smallest
group of cash-generating units for which a reasonable and consistent
allocation basis can be identified.
An intangible asset with an indefinite useful life is tested for impairment
at least annually and whenever there is an indication that the asset may
be impaired.
Recoverable amount is the higher of fair value less costs to sell and
value in use. In assessing value in use, the estimated future cash flows
are discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the
risks specific to the asset for which the estimates of future cash flows
have not been adjusted. If the recoverable amount of an asset (or
cash-generating unit) is estimated to be less than its carrying amount,
the carrying amount of the asset (or cash-generating unit) is reduced to
its recoverable amount. An impairment loss is recognised immediately
in profit or loss, unless the relevant asset is carried at a revalued amount,
in which case the impairment loss is treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of
the asset (or cash-generating unit) is increased to the revised estimate of
its recoverable amount, but so that the increased carrying amount does
not exceed the carrying amount that would have been determined had no
impairment loss been recognised for the asset (or cash-generating unit)
in prior years. A reversal of an impairment loss is recognised immediately
in profit or loss, unless the relevant asset is carried at a revalued amount,
in which case the reversal of the impairment loss is treated as a
revaluation increase.
Exceptional items
Items which are significant by their size and/or nature require separate
disclosure and are reported separately in the statement of comprehensive
income. Details of exceptional items are explained in Note 7.
Revenue
Revenue recognition is determined according to the requirements
of IFRS 15 “Revenue from contracts with customers”. All revenue is
considered revenue from contracts with customers as defined by IFRS 15.
IFRS 15 prescribes a five-step model of accounting for revenue recognition
which includes identifying the contract, identifying performance obligations,
determining the transaction price, allocating the transaction price to different
performance obligations and the timing of recognition of revenue in
connection with different performance obligations.
For contracts with multiple components to be delivered such as lift
maintenance, servicing and repairs, management applies judgement to
consider whether those promised goods and services are: (i) distinct –
to be accounted for as separate performance obligations; (ii) not distinct
– to be combined with other promised goods or services until a bundle
is identified that is distinct; or (iii) part of a series of distinct goods and
services that are substantially the same and have the same pattern of
transfer to the customer.
Sureserve Group plc
Annual Report 2021 73
2. Significant accounting policies continued
Revenue continued
At contract inception the total transaction price is estimated, being the
amount to which the Group expects to be entitled and has rights to under
the present contract. This includes the fixed price stated in the contract
and an assessment of any variable consideration resulting from variation
orders, discounts, rebates, refunds, performance bonuses, penalties,
service credits. Variable consideration is estimated based on the expected
value or the most likely outcome method and is only recognised to the
extent that it is highly probable that a subsequent change in its estimate
would not result in a significant revenue reversal.
Once the total transaction price is determined, the Group allocates this
to the identified performance obligations in proportion to their relative
stand-alone selling prices and recognises revenue when (or as) those
performance obligations are satisfied.
For each performance obligation identified in the contract, the Group
determines if revenue will be recognised over time or at a point in time.
Performance obligations satisfied over time
The Group recognises revenue over time on contracts where any of the
following criteria is met:
X The customer simultaneously receives and consumes the benefits
provided by the Group’s performance as the Group performs it; or
X The services provided creates or enhances an asset that the
customer controls; or
X The services provided do not create an asset with an alternative use
to the Group and the Group has an enforceable right to payment for
performance completed to date.
The Group typically recognises revenue on an over time basis for
the following:
X Certain energy services
X Gas services
X Fire services
X Water and air hygiene services
X Lift services
For each performance obligation to be recognised over time, the Group
applies a revenue recognition method that faithfully depicts the Group’s
performance in transferring control of the goods or services to the
customer. This decision requires assessment of the real nature of the
goods or services that the Group has promised to transfer to the
customer. The Group applies the relevant output or input method
consistently to similar performance obligations in other contracts.
Performance obligations satisfied at a point in time
If the criteria for satisfying a performance obligation over time are not
met, revenue is recognised at the point in time when control of the goods
or services transfers to the customer. This will be at the point when the
jobs are completed and there is a right to invoice.
The Group typically recognises revenue on a point in time basis for
the following:
X Smart metering
X Certain energy services
(i) Schedule of Rates (“SOR”) contracts
SOR contracts are set based on predetermined rates for a list of services
and duties required by the customer.
For short term jobs usually completed within a few days, the right to
consideration is considered to correspond directly with the value of
performance completed to date as measured by the amounts specified
for each job set out on the rate card. Revenue is recognised when the
jobs are completed or invoiced. Where deemed appropriate, the Group will
utilise the practical expedient within IFRS 15 and recognises revenue in line
with amounts invoiced. Contract fulfilment costs are expensed as incurred.
74 Sureserve Group plc
Annual Report 2021
For longer term jobs, the Group applies the relevant output or input
revenue recognition method for measuring progress that depicts the
Group’s performance in transferring control of the goods or services
to the customer. Contract fulfilment costs are expensed as incurred.
Certain longer term jobs use the output method based upon surveys of
performance completed or milestones reached which allow the Group
to recognise revenue on the basis of direct measurements of the value to
the customer of the goods or services transferred to date relative to the
remaining goods or services under the contract.
Under the input method, revenue is recognised in direct proportion to
costs incurred where the transfer of control is most closely aligned to
the Group’s efforts in delivering the service.
(ii) Fixed price (or lump sum) service contracts
Certain contracts, in particular for gas servicing and maintenance, are
procured on a fixed price basis. Revenue qualifies for recognition over
time as the customer receives and consumes the benefits from the service
as it is being provided. Revenue for maintenance/reactive activities is
recognised on a straight line basis over the term of the contract. Where
servicing and maintenance activity is expected to take place evenly
throughout the performance period, revenue is recognised on a straight-line
basis over the contract term. Where activity is more aligned to periodic
service events, then revenue is allocated to those events and recognised
over the contract term when those events take place. Contract fulfilment
costs are expensed as incurred.
(iii) Accrued income and deferred income
The Group’s customer contracts include a diverse range of payment
schedules which are often agreed at the inception of longer term jobs
under which it receives payments throughout the term of the contracts.
Where revenue recognised at the period end date is more than amounts
invoiced, the Group recognises an accrued income contract asset for
this difference. Where revenue recognised at the period end date is less
than amounts invoiced, the Group recognises a deferred income contract
liability for this difference.
Employee benefits
Retirement benefit costs
The Group contributes to the personal pension plans of certain
employees of the Group. The assets of these schemes are held in
independently administered funds. The pension cost charged in the
Financial Statements represents the contributions payable by the Group
in accordance with IAS 19.
Share-based payments
The Company has issued equity-settled share-based awards and free
shares to certain employees. The fair value of share-based awards with
non-market performance conditions is determined at the date of the grant
using a bi-nominal model. The fair value of share-based awards with
market related performance conditions is determined at the date of grant
using the Monte Carlo model. Share-based awards are recognised as
expenses based on the Company’s estimate of the shares that will
eventually vest, on a straight line basis over the vesting period, with
a corresponding increase in the share option reserve.
At each reporting date the Company revises its estimates of the number
of options that are expected to vest based on service and non-market
performance conditions. The amount expensed is adjusted over the
vesting period for changes in the estimate of the number of shares that
will eventually vest. The impact of the revision of the original estimates,
if any, is recognised in profit or loss such that the cumulative expense
reflects the revised estimate, with a corresponding adjustment to equity
reserves. Options with market-related performance conditions will vest
based on total shareholder return against a selected group of quoted
market comparators. Following the initial valuation, no adjustments are
made in respect of market based conditions at the reporting date.
Notes to the consolidated Financial Statements continuedFor the year ended 30 September 2021 Strategic report | Corporate governance | Financial statements
2. Significant accounting policies continued
Employee Benefit Trust
The Company established an Employee Benefit Trust upon its IPO,
whose remit is to hold Sureserve Group plc shares on behalf of its
employees. The trust is wholly funded by the Group and although legally
independent is deemed to be controlled by the Group as the Trust relies
on it for funding and the Company is able to remove and appoint the
trustees. The assets and liabilities of the Trust are therefore consolidated
with those of the Group.
Finance income and costs
Interest receivable and payable on bank balances is credited or charged
to the statement of comprehensive income as incurred.
Finance arrangement fees and issue costs are capitalised and netted
off against borrowings. All other borrowing costs are written off to the
statement of comprehensive income as incurred.
Notional interest payable, representing the amortisation of loan
arrangement fees, is charged to finance costs.
Costs incurred in raising finance
Costs incurred in raising finance are capitalised and amortised through
the profit and loss account over the term of the funding. In the event that
the associated finance product is refinanced prior to its expiring, the
unamortised costs are treated as an “Other Item” on the face of the
statement of comprehensive income, to the extent that they are replaced
with fees and costs associated with raising the new finance.
Taxation
The tax expense represents the sum of the tax currently payable and
deferred tax.
The current tax payable is based on taxable profit for the year. Taxable
profit differs from net profit as reported in the statement of comprehensive
income because it excludes items of income or expense that are taxable
or deductible in other years and it further excludes items that are never
taxable or deductible. The Group’s asset for current tax is calculated
using tax rates prevailing at the year end.
Deferred tax is the tax expected to be payable or recoverable on
differences between the carrying amounts of assets and liabilities in
the Financial Statements and the corresponding tax bases used in the
computation of taxable profit and is accounted for using the statement
of financial position liability method. Deferred tax liabilities are generally
recognised for all taxable temporary differences; deferred tax assets are
recognised to the extent that it is probable that taxable profits will be
available against which deductible temporary differences can be utilised.
Such assets and liabilities are not recognised if the temporary difference
arises from the initial recognition of goodwill or from the initial recognition
(other than in a business combination) of other assets and liabilities in a
transaction that affects neither the taxable profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each statement
of financial position date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow all or part
of the asset to be recovered.
Deferred tax is calculated at the tax rates that have been enacted
or substantively enacted at the statement of financial position date.
Deferred tax is charged or credited in the statement of comprehensive
income, except when it relates to items charged or credited in other
comprehensive income, in which case the deferred tax is also dealt with
in other comprehensive income.
The measurement of deferred tax liabilities and assets reflects the tax
consequences that would follow from the manner in which the Group
expects, at the end of the reporting period, to recover or settle the
carrying amount of its assets and liabilities. Deferred tax assets and
liabilities are offset when there is a legally enforceable right to set off
current tax assets against current tax liabilities and when they relate to
income taxes levied by the same taxation authority and the Group intends
to settle its current tax assets and liabilities on a net basis.
Current and deferred tax are recognised in profit or loss, except when
they relate to items that are recognised in other comprehensive income
or directly in equity, in which case, the current and deferred tax are also
recognised in other comprehensive income or directly in equity, respectively.
When current tax or deferred tax arises from the initial accounting for a
business combination, the tax effect is included in the accounting for the
business combination.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost
comprises direct materials and, where appropriate, labour and overheads
which have been incurred in bringing the inventories to their present
location and condition. Net realisable value represents the estimated
selling price less all estimated costs of completion and costs to be
incurred in marketing, selling and distribution. Provision is made, where
appropriate, to reduce the value of inventory to its net realisable value.
Government grants
The Group recognises a government grant when it is receivable. Government
grants are offset against applicable costs where appropriate, as opposed to
other income.
Provisions
Provisions are recognised when the Group has a present legal or
constructive obligation as a result of a past event, and where it is
probable that the Group will be required to settle that obligation and the
amount can be reliably estimated. The amount recognised as a provision
is the best estimate of the consideration required to settle the present
obligation at the statement of financial position date, taking into account
the risks and uncertainties surrounding the obligation. Where a provision
is measured using the cash flows estimated to settle the present
obligation, its carrying amount is the present value of those cash flows
(when the time value of money is material). Details of material provisions
are disclosed unless it is not practicable to do so or where it could be
expected to prejudice seriously the position of the entity.
Contingent liabilities
Where a provision or accrual is deemed to be required it has been
included within the consolidated statement of financial position. For
contingent liabilities where an economic outflow is possible, it is often
not practicable to estimate the financial effect due to the range of
estimation uncertainty. For contingent liabilities where the possibility
of economic outflow is remote, disclosure of the estimated financial
effect is not required.
Contingent liabilities acquired in a business combination are initially
valued at fair value at the acquisition date. At the end of subsequent
reporting periods, such contingent liabilities are measured at the higher
of the amount that would be recognised in accordance with IAS 37 and
the amount initially recognised.
Joint ventures
Under IFRS 11 joint ventures are accounted for under the equity method
of accounting. A joint venture is a joint arrangement whereby the parties
have joint control of the arrangement and have rights to the net assets of
the arrangement. Loans receivable from joint ventures and investments in
joint venture entities are reviewed for impairment at each year end.
Financial instruments
Financial assets and financial liabilities are recognised on the Group’s
statement of financial position when the Group becomes a party to the
contractual provisions of the instrument. The principal financial assets
and liabilities of the Group are as follows:
(a) Trade and other receivables
Trade and other receivables are recognised initially at fair value
and measured subsequently at amortised cost less any provision for
impairment losses including expected credit losses. In accordance with
IFRS 9 the Group applies the simplified approach to measuring expected
credit losses which uses a lifetime expected loss allowance for all trade
receivables and accrued income contract assets, estimated using a
combination of historical experience and forward-looking information.
Sureserve Group plc
Annual Report 2021 75
2. Significant accounting policies continued
Financial instrument continued
(b) Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits
with a maturity of three months or less. Bank overdrafts are presented
as current liabilities to the extent that there is no right of offset with
cash balances.
(c) Trade and other payables
Trade and other payables are not interest bearing and are stated initially
at fair value and subsequently held at amortised cost.
(d) Bank and other borrowings
Interest-bearing bank and other loans are recorded at the fair value of the
proceeds received, net of direct issue costs. Finance charges, including
premiums payable on settlement or redemption and direct issue costs,
are accounted for at amortised cost and on an accruals basis in the
statement of comprehensive income using the effective interest method.
Interest is added to the carrying value of the instrument to the extent that
they are not settled in the period in which they arise.
(e) Financial liabilities and equity
Financial liabilities and equity are classified according to the substance
of the financial instrument’s contractual obligations rather than the financial
instrument’s legal form. An equity instrument is any contract that evidences
a residual interest in the assets of the Group after deducting all of
its liabilities.
(f) Equity instruments
Equity instruments issued by the Company are recorded at the proceeds
received, net of direct issue costs.
Leases
The Group assesses whether a contract is a lease at inception of
the contract. A lease conveys the right to direct the use and obtain
substantially all of the economic benefits of an identified asset for
a period of time in exchange for consideration.
A right of use asset and corresponding lease liability are recognised at
commencement of the lease. The lease liability is measured at the present
value of the lease payments, discounted at the rate implicit in the lease, or
if that cannot be readily determined, at the group’s incremental borrowing
rate specific to the type of asset. The lease liability is subsequently
measured at amortised cost using the effective interest rate method. It is
remeasured, with a corresponding adjustment to the right of use asset,
when there is a change in future lease payments resulting from a rent
review, or change in the Group’s assessment of whether it is reasonably
certain to exercise a purchase, extension or break option. The right of use
asset is initially measured at cost, comprising: the initial lease liability and
any dilapidation or restoration costs. The right of use asset is subsequently
depreciated on a straight-line basis over the shorter of the lease term or
the useful life of the underlying asset. The right of use asset is tested for
impairment if there are any indicators of impairment. Leases of low value
assets and short-term leases of 12 months or less are expensed to the
Group income statement over the lease term.
Nature and purpose of each reserve in equity
Share capital is determined using the nominal value of shares that have
been issued.
Share premium represents the difference between the nominal value of
shares issued and the fair value of the total consideration receivable at
the issue date.
Equity-settled share-based employee remuneration is credited to the
share-based payment reserve until the related share options are exercised.
Upon exercise the share-based payment reserve is transferred to
retained earnings.
The merger reserve was created in relation to the Group reorganisation
under IFRS 3, in which Sureserve Group plc replaced Sureserve
Holdings Limited as the Group’s ultimate parent company.
76 Sureserve Group plc
Annual Report 2021
3. Critical accounting judgements and key
sources of uncertainty
In the application of the Group’s accounting policies, which are
described in Note 2, the Directors are required to make judgements,
estimates and assumptions about the carrying amount of assets and
liabilities that are not readily apparent from other sources. These estimates
and associated assumptions are based on historical experience and other
factors that are considered to be relevant. Actual results may differ from
these estimates.
The estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognised in the period in
which the estimate is revised if the revision affects only that period, or the
period of the revision and future periods if the revision affects both
current and future periods.
Key sources of estimation uncertainty
The key assumptions concerning the future and other key sources of
estimation uncertainty at the reporting date, that may have a significant
risk of causing material adjustment to the carrying amounts of assets
and liabilities within the next financial year, are discussed below.
Revenue recognition
Revenue is recognised based on the stage of completion of job or
contract activity. Certain types of service provision pricing mechanisms
require minimal estimation and judgement; however service provision
lump sum and longer term contracts do require judgements and estimates
to be made to determine the stage of completion and the expected
outcome for the individual contract. A sum will be recognised in relation
to accrued income on the statement of financial position, details of
which are described in Note 20.
The accrued income balance at 30 September 2021 was £17.9m (2020:
£17.3m). These assessments include a degree of uncertainty and therefore
if the key judgements and estimates change, further adjustments of
recoverable amounts may be necessary. Revenue is generated from
a large number of contracts with customers, such that there is limited
sensitivity to material revisions arising from changes in estimates on
individual contracts.
Provisions for legal and other claims
The Group continues to manage a number of potential risks and
uncertainties, including claims and disputes, which are common to other
similar businesses and 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 statement of
comprehensive income.
In quantifying the likely outturn for the Group, the key judgements and
estimates will typically include:
X The scope of the Group’s assessed responsibility;
X An assessment of the potential likelihood of economic outflow;
X An estimation of economic outflow (including potential likelihood);
X A commercial assessment of potential further liabilities.
Estimates of amounts provided take account of legal advice where sought.
Details of specific cases are not disclosed due to potential commercial
sensitivity. Provisions at 30 September 2021 includes £1.1m (2020: £0.8m)
in respect of the disposal of Lakehouse Contracts Limited and Foster
Property Maintenance Limited – see Notes 7 and 24 for details of the
basis of estimation used.
The total carrying value of provisions at 30 September 2021 was
£2.0m (2020: £4.0m) – see Note 24 for further details.
Impairment of intangible assets and goodwill
The Group assess whether there are any indicators of impairment for
all non-financial assets at each reporting date. Goodwill is tested for
impairment annually and at other times when such indicators exist. Other
non-financial assets are tested for impairment when there are indicators
that the carrying amounts may not be recoverable.
Notes to the consolidated Financial Statements continuedFor the year ended 30 September 2021 Strategic report | Corporate governance | Financial statements
3. Critical accounting judgements and key sources of uncertainty continued
Impairment of intangible assets and goodwill continued
When value-in-use calculations are undertaken, management must estimate the expected future cash flows from the cash-generating unit and choose
a suitable discount rate in order to calculate the present value of those cash flows. These cash flows are based on the Board approved annual budget
and three year plan. Further details are given in Note 14.
4. Operating segments
The Group’s chief operating decision maker is considered to be the Board of Directors. The Group’s operating segments are determined with
reference to the information provided to the Board of Directors in order for it to allocate the Group’s resources and to monitor the performance of the
Group.
The Board of Directors has determined an operating management structure aligned around the two core activities of the Group, with the following
operating segments applicable:
X Compliance: focused on gas, fire, electrics, air, water and lifts where we contract predominantly under framework agreements. Services comprise
the following:
f Installation, maintenance and repair-on-demand of gas appliances and central heating systems;
f Compliance services in the areas of fire protection and building electrics;
f Air and water hygiene solutions;
f Service, repair and installation of lifts.
X Energy Services: we offer a range of services in the energy efficiency sector, including external, internal and cavity wall insulation, loft insulation,
gas central heating, boiler upgrades and other renewable technologies. The services are offered under various energy saving initiatives including
Energy Company Obligations (“ECO”), Green Deal and the Scottish Government’s HEEPs (“Home Energy Efficiency Programme”) Affordable
Warmth programme. Clients include housing associations, social landlords, local authorities and private householders and we have trading
relationships with all of the large utility suppliers and many of the leading smaller suppliers. We also provide metering services involving the
installation, servicing and administration of devices and associated data.
The accounting policies of the reportable segments are the same as those described in the accounting policies section.
All revenue and profit is derived from operations in the United Kingdom only.
The profit measure the Board used to evaluate performance is operating profit before exceptionals and amortisation of acquisition intangibles.
Operating profit before exceptionals and amortisation of acquisition intangibles is defined as operating profit before deduction of exceptional items
and amortisation of acquisition intangibles, as outlined in Note 7 and on the face of the income statement.
The Group accounts for inter-segment trading on an arm’s length basis. All inter-segment trading is eliminated on consolidation. The following is an
analysis of the Group’s revenue and Operating profit before exceptional and amortisation of acquisition intangibles by reportable segment:
Revenue
Compliance
Energy Services
Total segment revenue
Inter-segment elimination
Total revenue
Revenue
2021
Gas services
Fire and electrical services
Water and hygiene services
Lift services
Compliance segment revenue
Energy services
Smart metering
Energy segment revenue
Inter-segment elimination
Total revenue
2021
£’000
2020
£’000
162,429
84,563
137,155
60,363
246,992
(2,978)
197,518
(1,812)
244,014
195,706
Revenue recognised
Over time
£’000
127,405
18,965
7,588
8,471
162,429
At a point in
time
£’000
Total
£’000
— 127,405
18,965
—
7,588
—
8,471
—
— 162,429
41,491
—
41,491
(2,978)
14,817
28,255
43,072
—
56,308
28,255
84,563
(2,978)
200,942
43,072
244,014
Sureserve Group plc
Annual Report 2021 77
4. Operating segments continued
Revenue
2020
Gas services
Fire and electrical services
Water and hygiene services
Lift services
Compliance segment revenue
Energy services
Smart metering
Energy segment revenue
Inter-segment elimination
Total revenue
Reconciliation of Operating profit before exceptional and other items to profit before taxation
Operating profit before exceptional and other items by segment
Compliance
Energy Services
Central costs
Total operating profit before exceptional and other items
Amortisation of acquisition intangibles
Exceptional items
Impairment of goodwill
Finance income
Finance costs
Profit before taxation
Revenue recognised
Over time
£’000
102,014
17,419
7,031
10,691
137,155
33,112
—
33,112
(1,812)
At a point in
time
£’000
Total
£’000
— 102,014
17,419
—
7,031
—
10,691
—
—
137,155
10,043
17,208
27,251
—
43,155
17,208
60,363
(1,812)
168,455
27,251
195,706
2021
£’000
2020
£’000
13,896
3,447
(2,749)
14,594
—
387
(188)
4
(1,020)
11,813
788
(2,197)
10,404
(1,600)
—
—
39
(1,047)
13,777
7,796
Only the Group consolidated statement of financial position is regularly reviewed by the chief operating decision maker and consequently no segment
assets or liabilities are disclosed here under IFRS 8.
None of the Group’s major clients account for more than 10% of Group revenue for 2021 or 2020.
5. Profit before taxation
Profit before taxation is stated after
charging/(crediting):
Amount of inventories recognised as an expense (Note 19)
Depreciation of property, plant and equipment (Note 16)
Depreciation of right of use assets (Note 17)
Amortisation of intangible assets (Note 15)
Staff costs (Note 9)
Profit on disposal of property, plant and equipment
2021
£’000
2020
£’000
63,289
681
4,403
451
92,800
(208)
50,615
682
4,111
1,984
75,632
(10)
78 Sureserve Group plc
Annual Report 2021
Notes to the consolidated Financial Statements continuedFor the year ended 30 September 2021 6. Auditor’s remuneration
The analysis of the auditor’s remuneration is as follows:
Fees payable to the Company’s auditor and their associates for audit services to the Group:
– The audit of the Company’s and the Group’s annual accounts
– The audit of the Company’s subsidiaries
Total audit fees
Fees payable to the Company’s auditor and their associates for other services to the Group:
– Agreed upon procedures on interim results
Total non-audit fees
7. Exceptional and other items
Profit on disposal of Orchard (Holdings) UK Limited
Release of provision for potential legal settlement costs
Costs on disposal of Lakehouse Contracts Limited and Foster Property Maintenance Limited
Strategic report | Corporate governance | Financial statements
2021
£’000
2020
£’000
100
250
350
35
35
2021
£’000
—
1,187
(800)
387
90
215
305
28
28
2020
£’000
303
—
(303)
—
Exceptional items are considered non-trading because they are not part of the underlying trade of the Group.
The Group’s Construction and Property Services divisions which were sold on 17 August 2018 and Orchard (Holdings) UK Limited which was sold in
September 2017 were previously disclosed as discontinued operations. The Board has reviewed the nature and time elapsed in classifying these and
determined they are exceptional items.
The result for the year of exceptional items comprises:
X £0.8m (2020: £0.3m) of additional costs provided for the year, relating to legacy transactions;
X £1.2m (2020: £nil) release of provisions for potential legal settlement costs (see further details in note 30); and
X £nil (2020: £0.3m) profit on sale of Orchard (Holdings) UK Limited from reassessment of the fair value of consideration receivable.
On 20 December 2019, Mapps Group Limited, the acquirer of Lakehouse Contracts Limited and Foster Property Maintenance Limited, went into
liquidation. We held meetings during the year with the Liquidators and advisers to both Mapps Group Limited and Lakehouse Contracts Limited in an
effort to progress and resolve any outstanding claims. We are still awaiting the provision of necessary information from the Liquidators in order to
progress matters. £0.8m of additional costs have been provided for during the year. As at 30 September 2021, the group has provisions for liabilities
relating to the disposal of £1.1m (2020: £0.8m). In addition to the amounts provided for above, there are a number of potential contingent liabilities
arising from the disposal including:
X Potential claims under parent company guarantees and bonds for projects. The value of bonds and guarantees is disclosed in Note 31
X Potential claims under clauses in the sale and purchase agreement including working capital adjustments and warranties/indemnities. Resolution of
these outstanding claims is in the hands of the Liquidators of Mapps Group Limited and Lakehouse Contracts Limited
Whilst a claim has been received from the Liquidators of Lakehouse Contracts Limited, the Group has claims against Lakehouse Contracts Limited and
Mapps Group Limited for amounts that exceed their best estimate of any amounts that may potentially be due to Lakehouse Contracts Limited and Mapps
Group Limited under clauses in the sale and purchase agreement. The Board are in continuing dialogue with all parties.
Further details are not disclosed on the basis that such disclosure would be seriously prejudicial.
8. Finance income and finance expenses
Finance income
Other interest receivable
Finance expenses
Interest payable on bank overdrafts and loans
Loan arrangement fee amortisation
Interest on lease agreements (Note 26)
Other interest payable
2021
£’000
2020
£’000
4
39
378
109
475
58
652
109
258
28
1,020
1,047
Sureserve Group plc
Annual Report 2021 79
9. Information relating to employees
The average number of employees, including Directors, employed by the
Group during the year was:
12. Dividends
The Board did not recommend the payment of a dividend for the year
ended 30 September 2021.
The final dividend for the year ended 30 September 2020 of 1 pence per
share amounting to £1.6m was paid in the year.
13. Earnings per share
The calculation of the basic and diluted earnings per share is based on
the following data:
Weighted average number of ordinary
shares for the purposes of basic earnings
per share
Diluted
Effect of dilutive potential ordinary shares:
Share options
Weighted average number of ordinary
shares for the purposes of diluted
earnings per share
Earnings for the purpose of basic and
diluted earnings per share being net profit
after tax attributable to the owners of the
Company (£’000)
Basic earnings per share
Diluted earnings per share
Adjusted earnings for the purpose of
basic and diluted earnings per share
being net profit after tax adjusted for
share based payments and amortisation
of acquisition related intangibles
attributable to the owners of the Company
(£’000)
Basic earnings per share
Diluted earnings per share
2021
Number
2020
Number
160,267,970 159,025,339
2,910,442
3,200,981
163,178,412 162,226,320
11,352
6,310
7.1p
7.0p
11,583
4.0p
3.9p
7,745
7.2p
7.1p
4.9p
4.8p
The number of shares in issue at 30 September 2021 was 161,213,788
(2020: 159,335,259).
The weighted average number of ordinary shares in issue during the year
excludes those accounted for in the own shares reserve (Note 29).
Direct labour and contract management
Administration and support
The aggregate remuneration was as follows:
Wages and salaries
Social security
Pension costs - defined contribution plans
Equity-settled share-based payments
2021
Number
1,641
713
2,354
2021
£’000
81,981
8,517
2,017
285
2020
Number
1,487
573
2,060
2020
£’000
66,932
6,811
1,718
171
92,800
75,632
10. Retirement benefit obligations
The Group contributes to the personal pension plans of certain
employees of the Group. The assets of these schemes are held in
independently administered funds. From 1 February 2014, the Group
contributes to a new workplace pension scheme for all employees in
compliance with the automatic enrolment legislation. The Group paid
£2,008,000 in the year ended 30 September 2021 (2020: £1,718,000).
At the reporting date, £442,000 of contributions were payable to the
funds (2020: £341,000).
11. Tax on profit on ordinary activities
Current tax
Current year
Current tax - prior year
Total current tax
Deferred tax (Note 25)
Total tax on profit on ordinary activities
2021
£’000
2020
£’000
2,268
101
2,369
56
2,425
1,637
(101)
1,536
(50)
1,486
The tax assessed for the year differs from the standard rate of
corporation tax in the UK. The differences are explained below:
Profit before tax
Effective rate of corporation tax in the UK
Profit before tax at the effective rate of
corporation tax
Effects of:
Expenses not deductible for tax purposes
Adjustment of deferred tax to closing tax rate
Current tax - prior year
Deferred tax - prior year
2021
£’000
13,777
19%
2020
£’000
7,796
19%
2,618
1,481
(174)
(102)
101
(18)
(15)
(34)
(101)
155
Tax charge for the year
2,425
1,486
Factors that may affect future charges
The closing deferred tax provision has been calculated at 25% in
accordance with the rate enacted at the statement of financial
position date.
In the Spring Budget 2021, the Government announced that from
1 April 2023 the corporation tax rate would increase to 25%. This new
law was substantively enacted on 24 May 2021.
80 Sureserve Group plc
Annual Report 2021
Notes to the consolidated Financial Statements continuedFor the year ended 30 September 2021 Strategic report | Corporate governance | Financial statements
14. Goodwill
At 1 October 2019 and 30 September 2020
Acquisition of Vinshire Gas Services Limited
Other adjustments to goodwill - Just Energy Solutions Limited
At 30 September 2021
£’000
42,357
310
(188)
42,479
Goodwill arising on consolidation represents the excess of the fair value of the consideration transferred over the fair value of the Group’s share of the
net assets of the acquired subsidiary at the date of acquisition.
Goodwill is not amortised but is reviewed for impairment on an annual basis or more frequently if there is an indication that goodwill may be impaired.
Goodwill acquired in a business combination is allocated to cash-generating units (“CGUs”) according to the level at which management monitors
that goodwill.
Goodwill is carried at cost less accumulated impairment losses.
The carrying value of goodwill is allocated to the following CGUs:
CGU
K&T Heating Services Limited
Sureserve Fire and Electrical Limited
Everwarm Limited
H2O Nationwide Limited
Providor Limited
Sure Maintenance Limited
Aaron Services Limited
Precision Lifts Limited
Just Energy Solutions Limited
Segment
Compliance
Compliance
Energy services
Compliance
Energy services
Compliance
Compliance
Compliance
Compliance
2021
£’000
3,774
3,717
17,476
2,209
3,037
4,225
3,977
4,064
—
2020
£’000
3,774
3,717
17,476
2,209
3,037
4,225
3,667
4,064
188
42,479
42,357
An asset is impaired if its carrying value exceeds the unit’s recoverable amount which is based upon value in use. At each reporting date impairment
reviews are performed by comparing the carrying value of the CGU to its value in use. At 30 September 2021 the value in use for each CGU was
calculated based upon the cash flow projections of the latest Board approved three-year forecasts together with a further two years estimated and an
appropriate terminal value to perpetuity.
Future forecasted profits are estimated by reference to the average operating margins achieved in the period immediately before the start of the
forecast period.
The estimated growth rates are based on past experience and knowledge of the individual sector’s markets. The Directors believe that the compliance
and energy service markets will continue to present strong growth opportunities for the CGUs outlined above. Management believe that future growth
in these markets is underpinned by a number of factors including:
X A pipeline of new tenders;
X Further opportunities to work with other Group companies;
X Client demand for safe buildings;
X Adjacent market opportunities.
The assumptions used in the impairment reviews are outlined below.
The growth rate applied to the cash flows in years four and five of the impairment review performed at 30 September 2021 was 4% (2020: 4%). A
terminal growth rate of 2% (2020: 2%) was applied. The pre-tax discount rate applied was 7.3% (2020: 7.2%). Three different types of sensitivity
analysis have been performed on entities that showed potential indicators of impairment, including a 20% reduction in revenue, a reduction in the
operating profit margin of between 1% and 2% and an increase in the discount rate by between 1.5% and 3%. Additional sensitivity has been
completed regarding the potential effect of Covid-19 in 2022 and 2023 for the Energy Services division. The Directors consider that any reasonable
possible change in the key assumptions would not cause the carrying amount to exceed its recoverable amount.
The goodwill in Just Energy Solutions has been written down to zero as it is no longer a trading CGU.
Sureserve Group plc
Annual Report 2021 81
15. Other intangible assets
Cost
At 1 October 2019
Additions
Disposals
At 30 September 2020
Additions
Disposals
At 30 September 2021
Amortisation
At 1 October 2019
Amortisation charge
Disposals
At 30 September 2020
Amortisation charge
Disposals
At 30 September 2021
Carrying value
At 30 September 2021
At 30 September 2020
Acquisition intangibles
Computer
software
£’000
Contracted
customer
order book
£’000
Customer
relationships
£’000
Non-compete
agreements
£’000
1,349
539
(15)
1,873
545
(272)
18,606
—
—
18,606
—
—
14,655
—
—
14,655
—
—
2,146
18,606
14,655
778
384
(15)
1,147
451
(272)
18,522
84
—
18,606
—
—
13,139
1,516
—
14,655
—
—
1,670
—
—
1,670
—
—
1,670
1,670
—
—
1,670
—
—
Total
£’000
36,280
539
(15)
36,804
545
(272)
37,077
34,109
1,984
(15)
36,078
451
(272)
1,326
18,606
14,655
1,670
36,257
820
726
—
—
—
—
—
—
820
726
Contracted customer order book
The value placed on the order book was based upon the cash flow projections over the contracts in place when a business is acquired. Due to
uncertainties with trying to forecast revenues beyond the contract term, the Directors have valued contracts over the contractual term only. The value
of the order book was amortised over the remaining life of each contract which typically range from one to five years.
Customer relationships
The values placed on the customer relationships were based upon the non-contractual expected cash inflows forecast on the base business over and
above contracted revenues. The value of customer relationships was amortised over five years.
Non-compete agreements
The value placed on the non-compete agreements was based upon the non-compete clause and knowledge and know-how of the former owners of
the acquired businesses. The value of non-compete was amortised over five years.
82 Sureserve Group plc
Annual Report 2021
Notes to the consolidated Financial Statements continuedFor the year ended 30 September 2021 16. Property, plant and equipment
Cost
At 1 October 2019
Additions
Disposals
At 30 September 2020
Additions
Disposals
At 30 September 2021
Depreciation
At 1 October 2019
Charge for the year
Disposals
At 30 September 2020
Charge for the year
Disposals
At 30 September 2021
Net book value
At 30 September 2021
At 30 September 2020
17. Right of use assets
Cost
At 1 October 2019
Additions
Disposals
At 30 September 2020
Acquisition of Vinshire Gas Services Limited
Additions
Disposals
At 30 September 2021
Depreciation
At 1 October 2019
Charge for the year
Disposals
At 30 September 2020
Charge for the year
Disposals
At 30 September 2021
Net book value
At 30 September 2021
At 30 September 2020
Strategic report | Corporate governance | Financial statements
Leasehold
improvements
£’000
Plant and
equipment
£’000
Fixtures and
fittings
£’000
Motor
vehicles
£’000
686
10
(20)
676
635
(71)
1,224
373
(208)
1,389
586
(223)
1,640
238
(118)
1,760
349
(307)
1,240
1,752
1,802
272
207
(19)
460
99
(2)
557
683
216
737
236
(208)
765
355
(208)
912
840
624
1,275
228
(107)
1,396
227
(307)
1,316
486
364
379
—
(203)
176
—
(61)
115
301
11
(144)
168
—
(53)
115
—
8
Leasehold
property
£’000
Commercial
vehicles
£’000
2,989
246
—
3,235
—
3,325
(130)
5,171
2,750
(887)
7,034
283
6,025
(1,006)
Total
£’000
3,929
621
(549)
4,001
1,570
(662)
4,909
2,585
682
(478)
2,789
681
(570)
2,900
2,009
1,212
Total
£’000
8,160
2,996
(887)
10,269
283
9,350
(1,136)
6,430
12,336
18,766
—
1,111
—
1,111
1,074
(130)
—
3,000
(599)
2,401
3,329
(583)
—
4,111
(599)
3,512
4,403
(713)
2,055
5,147
7,202
4,375
2,124
7,189
11,564
4,633
6,757
Sureserve Group plc
Annual Report 2021 83
18. Group entities
Subsidiaries
The Group’s subsidiary undertakings are:
Aaron Services Limited
Sureserve Fire and Electrical Limited
Bury Metering Services Limited
Everwarm Limited
H20 Nationwide Limited
Just Energy Solutions Limited
K & T Heating Services Limited
Precision Lift Services Limited
Providor Limited
Smart Metering Limited
Sure Maintenance Limited
Sureserve Compliance Services Limited
Sureserve VGS Limited (formerly known as Sureserve Construction
Services Limited)
Sureserve Design and Build Limited
Sureserve Energy Services Limited
Sureserve Holdings Limited*
Vinshire Gas Services Limited
* Directly held investment.
Country of
incorporation
Class of
capital
England Ordinary
England Ordinary
England Ordinary
Scotland Ordinary
England Ordinary
England Ordinary
England Ordinary
England Ordinary
England Ordinary
England Ordinary
England Ordinary
England Ordinary
England Ordinary
England Ordinary
England Ordinary
England Ordinary
England Ordinary
%
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Principal activity
Maintenance and installation of
domestic gas heating systems
Fire alarm engineers
Non-trading
Energy and insulation services
Water hygiene
Non-trading
Plumbing and heating engineers
Lift installation, modernisation and
maintenance services
Smart Metering
Non-trading
Maintenance and installation of
domestic gas heating systems
Intermediate holding company
Intermediate holding company
Non-trading
Intermediate holding company
Intermediate holding company
Maintenance and installation of
domestic as heating systems
The registered office of all entities above is Crossways Point 15, Victory Way, Crossways Business Park, Dartford, Kent, DA2 6DT except for
Everwarm Limited whose registered office is 3 Inchcorse Place, Whitehill Industrial Estate, Bathgate, Scotland, EH48 2EE.
Joint ventures
The Group’s joint ventures are:
Warmworks Scotland LLP
Arbed am Byth
Details of joint ventures
Carrying value of investment in Arbed am Byth
Carrying value of investment in Warmworks Scotland LLP
Country of
incorporation
Class of
capital
%
Principal activity
Scotland
Ordinary
33.33
Energy and insulation services
Wales
Ordinary
50
Energy and insulation services
2021
£’000
536
1,124
1,660
2020
£’000
390
111
501
Warmworks, a joint venture with Changeworks Resources for Life and the Energy Saving Trust Enterprises Limited, commenced trading in September 2015,
and the profit for 2021 was £1,013,000 (2020: loss of £62,000). The registered office of Warmworks Scotland LLP is 1 Carmichael Place, Leith,
Edinburgh, Midlothian, EH6 5PH.
Arbed am Byth, a joint venture with the Energy Saving Trust Enterprises Limited, commenced trading in August 2018, and the profit for 2021 was
£146,000 (2020: £161,000). The registered office of Arbed am Byth is Unit 2 Cefn Coed, Nantgarw, Cardiff, Wales, CF15 7QQ.
84 Sureserve Group plc
Annual Report 2021
Notes to the consolidated Financial Statements continuedFor the year ended 30 September 2021 Strategic report | Corporate governance | Financial statements
19. Inventories
21. Trade and other payables
Raw materials and consumables
2021
£’000
4,199
2020
£’000
3,022
There are no inventories at 30 September 2021 or 30 September 2020
carried at fair value less costs to sell. The Directors consider that the
replacement value of inventories is not materially different from their
carrying value. There was no specific security held at either reporting
date over inventory.
£63,289,000 (2020: £50,615,000) of inventories were recognised as an
expense in the year.
20. Trade and other receivables
Current
Trade receivables
Social security and other taxes
Other receivables
Prepayments
Accrued income
2021
£’000
2020
£’000
18,414
—
3,698
3,219
17,918
16,667
7
3,708
2,336
17,336
43,249
40,054
Other receivables include sales retentions of £2,920,000
(2020: £2,461,000), rebates receivable of £516,000 (2020: £714,000),
and finance issue costs of £27,000 (2020: £136,000).
Trade receivables
Trade receivables not due
Trade receivables past due 1-30 days
Trade receivables past due 31-60 days
Trade receivables past due 61-90 days
Trade receivables past due over 90 days
2021
£’000
2020
£’000
16,386
1,666
84
93
433
15,231
1,088
255
64
475
Gross trade receivables
18,662
17,113
Provision for credit losses brought forward
Amounts written off
Provision charged to profit or loss in the year
Provision for credit losses carried forward
(446)
208
(10)
(248)
(619)
312
(139)
(446)
Net trade receivables
18,414
16,667
The provision for credit losses of £248,000 (2020: £446,000) includes
£148,000 (2020: £446,000) of trade receivables over 90 days past their
due date.
The Directors consider that the carrying amount of trade receivables
approximates to their fair value. Debts provided for and written off are
determined on an individual basis and included in other operating expenses
in the financial statements. The Directors believe the credit risk is low due
to the majority of the Group’s customer base being either public sector or
regulated bodies. The Group’s maximum exposure on credit risk is fair
value on trade receivables as presented above. The Group has not
pledged any trade receivables as security.
At the end of the year one client represented over 5% of the total balance
of trade receivables (2020: one client).
Current
Trade payables
Sub-contract retentions
Accruals
Deferred income
Social security and other taxes
Other payables
2021
£’000
2020
£’000
24,937
727
11,727
980
7,524
1,502
19,547
833
9,918
920
10,508
1,038
47,397
42,764
The Directors consider that the carrying amount of trade payables
approximates to their fair value for each reported period. Trade payables
are non-interesting bearing. Average settlement days are 68 days
(2020: 65 days).
22. Borrowings
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.
23. Net cash
Cash and cash equivalents
Unamortised finance costs (included in
other receivables)
Net cash pre lease liabilities
Lease liabilities
2021
£’000
16,444
27
16,471
(12,043)
2020
£’000
9,679
136
9,815
(6,836)
Total net cash
4,428
2,979
24. Provisions
At 1 October 2019
Additional provision
Utilised in the year
At 30 September 2020
Additional provision
Released during the year
Utilised in the year
At 30 September 2021
Current provisions
Non-current provisions
Legal and
other
£’000
3,610
632
(196)
4,046
746
(1,187)
(1,606)
1,999
403
1,596
Legal and other
Provisions relate to property dilapidation obligations, potential contract
settlement costs and other potential legal settlement costs. These are
expected to result in an outflow of economic benefit over the next one
to five years. See notes 7 and 30 for further details.
Sureserve Group plc
Annual Report 2021 85
25. Deferred taxation
Asset/(provision) bought forward as at 1 October 2019
Credit/(debit) to P&L
Asset/(provision) carried forward as at 30 September 2020
Credit/(debit) to P&L
Deferred tax on share- based payments recognised in equity
(Liability)/asset carried forward as at 30 September 2021
At 30 September 2021
Non-current asset
Non-current liability
Net deferred tax (liability)/asset
At 30 September 2020
Non-current asset
Non-current liability
Net deferred tax asset
Accelerated
capital
allowances
£’000
Short term
timing
differences
£’000
Share based
payments
£’000
Acquisition
intangibles
£’000
Unutilised
losses
£’000
233
(140)
93
(260)
—
(167)
—
(167)
(167)
93
—
93
290
(61)
229
72
—
301
301
—
301
229
—
229
92
(36)
56
89
(117)
28
28
—
28
56
—
56
(272)
272
—
—
—
—
—
—
—
—
—
—
124
15
139
43
—
182
182
—
182
139
—
139
Total
£’000
467
50
517
(56)
(117)
344
511
(167)
344
517
—
517
Deferred tax assets and liabilities are offset where the Group has a legally enforceable right to do so.
26. Lease liabilities
At 1 October 2019
Repayments
Interest
New obligations
Obligations cancelled
At 30 September 2020
Repayments
Interest
New obligations on acquisition
Variation in terms
New obligations
Obligations cancelled
At 30 September 2021
Future lease payments are due as follows:
Less than one year
Between two and five years
At 30 September 2021
Less than one year
Between two and five years
At 30 September 2020
86 Sureserve Group plc
Annual Report 2021
Present value
of minimum
lease
payments
£’000
8,160
(4,289)
258
2,996
(289)
6,836
(4,283)
475
283
18
9,332
(618)
12,043
Present value
of minimum
lease
payments
£’000
4,071
7,972
12,043
3,167
3,669
6,836
Notes to the consolidated Financial Statements continuedFor the year ended 30 September 2021 Strategic report | Corporate governance | Financial statements
27. Called up share capital
Allotted, called-up and fully paid:
2021
Number
2020
Number
2021
£
2020
£
161,213,788
159,335,259
Ordinary shares of £0.10 each
16,121,379
15,933,526
Details of options granted under the Group’s share scheme are contained in Note 28.
Voting rights
The holders of ordinary shares are entitled to receive notice of, attend or participate in any general meeting of the Company and to receive any notice
of a written resolution proposed to be passed by the Company.
On a show of hands at a meeting the holders of any such shares shall be entitled to one vote for all such shares held.
On a poll at a meeting, for a written resolution, the holder of such shares shall be entitled to such number of votes as corresponds to the nominal value
(in pence) or the relevant shares held.
28. Share-based payments
The Company has established a Share Incentive Plan (SIP), Sharesave Scheme (SAYE), Company Share Option Plan (CSOP), Performance Share
Plan (PSP) and a Special Incentive Award Plan (SIAP).
The charge recognised for share based payments in the year was £285,000 (2020: £171,000), gross of tax.
Share Incentive Plan (SIP)
The SIP is an HMRC-approved scheme plan open to all UK employees at the date of the IPO, 23 March 2015. Each employee was given £200 of free
shares; there were no performance conditions apart from remaining in employment for three years from the date of award. Shares totalling 325,842
were transferred directly to the SIP trust and on 29 April 2015, 236,213 share allotted in relation to the initial award of shares under the SIP. No
further awards have been made under the SIP.
Sharesave Scheme (SAYE)
The SAYE is open to all employees who satisfy certain criteria, particularly relating to period of employment. The exercise price is equal to the average
of the closing quoted market price for the preceding three days less a discretionary discount approved by the Board of not less than 80% of the market
value of a share. The Scheme is for three years, during which the holder must remain in the employment of the Group. The shares can be exercised
within six months from the maturity of the Scheme.
Company Share Option Plan (CSOP)
The CSOP is open to all employees at the discretion of the Remuneration Committee. The exercise price is equal to the average of the closing
quoted market price at the date of grant. The vesting period is for three years, during which the holder must remain in the employment of the Group
and is conditional on the achievement of a mix of market and non-market performance conditions from the date of granting the option to the date of
potential exercise.
Performance Share Plan (PSP)
The PSP is open to certain employees at the discretion of the Remuneration Committee at a limit not exceeding 150% of the individual’s base salary
at the date of grant. The exercise price is £nil. The vesting period is for three years, during which the holder must remain in the employment of the
Group and is conditional on the achievement of a mix of market and non-market performance conditions from the date of granting the option to the
date of potential exercise.
Special Incentive Award Plan (SIAP)
Awards granted under the SIAP take the form of options to acquire Sureserve Shares for nil consideration. The awards will have no beneficial tax
status. Only employees who are also Directors of the Company may be granted an award under the SIAP. The Remuneration Committee will have
absolute discretion to select the persons to whom awards may be granted and in determining the number of shares to be subject to each award.
Sureserve Group plc
Annual Report 2021 87
28. Share-based payments continued
Number
At 1 October 2019
Granted
Lapsed
Exercised
At 30 September 2020
Granted
Lapsed
Exercised
At 30 September 2021
Weighted average exercise price (p)
At 1 October 2020
Granted
Lapsed
Exercised
Outstanding at 30 September 2021
Outstanding value at 30 September 2020
Fair value of options granted
Weighted fair value of one option
Assumptions used in estimating the fair value (weighted average)
Share price at date of grant
Exercise price
Expected dividend yield
Risk free rate
Expected volatility
Expected life
SIP
SAYE
CSOP
PSP
SIAP
65,867
—
—
(65,867)
2,963,436
1,818,896
(583,656)
(387,792)
— 3,810,884
—
—
(769,129)
—
(551,336)
—
1,248,153
1,880,000
(15,000)
—
3,113,153
—
(137,870)
(272,643)
160,000
680,000
—
—
840,000
—
—
—
800,000
—
—
—
800,000
180,000
—
(980,000)
—
2,490,419
2,702,640
840,000
—
0.00p
—
—
0.00p
0.00p
0.00p
30.22p
—
30.72p
33.24p
29.40p
30.22p
42.71p
—
44.00p
40.75p
42.84p
42.71p
0.00p
—
—
—
0.00p
0.00p
0.00p
0.00p
—
0.00p
0.00p
0.00p
—
8.32p
17.85p
39.42p
6.00p
31.17p
—
29.40p
—
2.18%
—
0.39%
—
—
40.45%
— 3.42 years
42.58p
42.84p
3.81%
0.04%
56.76%
5.26 years
43.24p
0.00p
2.90%
(0.03%)
57.10%
3.00 years
27.10p
0.00p
1.00%
0.71%
34.90
1.50 years
In the year ended 30 September 2021, options were granted in respect of the SIAP schemes.
The weighted average remaining contractual life of outstanding options at 30 September 2021 was 1.2 years (2020: 1.7 years).
The SAYE, CSOP and PSP options were valued under the binomial methodology.
The SIAP options were valued using a Monte Carlo model.
The inputs into the Binomial model are as follows:
Share price (p)
Exercise price (p)
Expected volatility (%)
Expected life (years)
Risk-free rate (%)
Expected dividend yield (%)
The inputs into the Monte Carlo model are as follows:
Share price (p)
Exercise price (p)
Expected volatility (%)
Expected life (years)
Risk-free rate (%)
Expected dividend yield (%)
2021
2020
— 32.00 — 44.00
— 0.00 — 44.00
— 35.00 — 58.00
—
3 — 6.5
— (0.05) — 0.20
— 1.75 — 1.85
2021
27.1
0.00
34.90
1.50
0.71
1.00
2020
—
—
—
—
—
—
Expected volatility was based upon the historical volatility over the expected life of the schemes. The expected life is based upon scheme rules and
reflect management’s best estimates for the effects of non-transferability, exercise restrictions and behavioural considerations.
88 Sureserve Group plc
Annual Report 2021
Notes to the consolidated Financial Statements continuedFor the year ended 30 September 2021 29. Reserves
Share premium reserve
The share premium account represents amounts received in excess of
the nominal value of shares on issue of new shares, net of the direct
costs associated with issuing those shares.
Own shares reserve
At IPO, each employee was given £200 of free shares, to be held for their
benefit in an Employee Benefit Trust. Shares totalling 325,842 were transferred
directly to the Employee Benefit Trust on 23 March 2015. The own shares
reserve at 30 September 2020 represented the cost of 325,842 shares in
Sureserve Group plc. At 30 September 2021, the shares had been
transferred to employees and the reserve balance was £nil.
Merger reserve
On 23 March 2015 Sureserve Group plc (then Lakehouse plc) was listed
on the Premium Listing segment of the Official List and trading on the
Main Market of the London Stock Exchange. As part of a restructuring
accompanying the Initial Public Offering (“IPO”) of the Group on 23
March 2015, Sureserve Group plc replaced Sureserve Holdings Limited
as the Group’s ultimate parent company by way of a share exchange
agreement. Under IFRS 3 this has been accounted for as a group
reconstruction under merger accounting.
Merger accounting principles for this combination gave rise to a merger
reserve of £20,067,000.
Share based payment reserve
See note 28 for further details.
30. Guarantees and contingent liabilities
The Company and certain subsidiaries have, in the normal course of
business, given guarantees and performance bonds relating to the
Group’s contracts totalling £5,463,000 (2020: £4,621,000). A subsidiary
of the Group has provided a guarantee of £750,000 (2020: £750,000)
to the Warmworks Scotland LLP joint venture.
Contingent liabilities in respect of the disposal of Lakehouse Contracts
Limited and Foster Property Maintenance Limited are disclosed in Note 7.
The £1.2m provisions release (note 24) relates to a past event which in
the directors’ judgement has a lower risk likelihood and is now considered
possible rather than probable, and hence is disclosed as a contingent
liability in the current year.
31. Financial instruments
Financial instruments comprise both financial assets and financial
liabilities. The carrying value of these financial assets and liabilities are
assumed to approximate their fair values.
The principal financial assets in the Group comprise trade, loans and
other receivables and cash and cash equivalents. The principal financial
liabilities in the Group comprise borrowings which are categorised as
debt at amortised cost, together with trade and other payables, other
long-term liabilities, which are classified as other financial liabilities.
Financial risk management
The Group’s objectives when managing finance and capital are to
safeguard the Group’s ability to continue as a going concern in order to
provide returns to shareholders and benefits to other stakeholders and to
maintain an optimal capital structure to reduce the cost of capital. The
Group is not subject to any externally imposed capital requirements.
The main financial risks faced by the Group are liquidity risk, credit risk
and market risk (which includes interest rate risk). Currently the Group
only operates in the UK and only transacts in Sterling. It is therefore not
exposed to any foreign currency exchange risk. The Board regularly
reviews and agrees policies for managing each of these risks.
Strategic report | Corporate governance | Financial statements
Categories of financial instruments
Financial assets
Current financial assets
Trade receivables, loans and other receivables
Cash and cash equivalents
Financial liabilities
Current financial liabilities
Trade and other payables
Lease liabilities
Total current financial liabilities
Non-current financial liabilities
Lease liabilities
Financial assets measured
at amortised cost
2021
£’000
2020
£’000
40,030
16,444
37,711
9,679
56,474
47,390
Financial liabilities
measured at amortised cost
2021
£’000
2020
£’000
38,027
4,071
31,336
3,167
42,098
34,503
7,972
3,669
50,070
38,172
The Directors consider that the carrying amounts of financial assets and
financial liabilities recorded at amortised cost in the financial statements
approximate their fair values.
Credit risk
Credit risk refers to the risk that a counterparty will default on its
contractual obligations resulting in financial loss to the Group. The Group
has adopted a policy of only dealing with creditworthy counterparties and
obtaining sufficient collateral where appropriate, as a means of mitigating
the risk of financial loss from defaults. The Group does not enter into
derivatives to manage its credit risk.
The maximum exposure to credit risk at the reporting date is represented
by the carrying value of the financial assets in the statement of financial
position. The Group does not have any significant credit risk exposure
to any single counterparty or any group of counterparties having
similar characteristics.
There has been a minimal history of bad debts as the majority of its sales
are to local government councils or housing trust partnerships and as a
consequence the Directors do not consider that the Group has a material
exposure to credit risk.
Market risk
As the Group only operates in the UK and only transacts in Sterling, the
Group’s activities expose it primarily to the financial risks of changes in
interest rates only and as a consequence of being debt free the Directors
do not consider that the Group has a material exposure to interest
rate risk.
Liquidity risk
Ultimate responsibility for liquidity risk management rests with the Board,
which has established an appropriate liquidity risk management
framework for the management of the Group’s short, medium and long
term funding and liquidity management requirements. The Group’s policy
on liquidity is to ensure that there are sufficient committed borrowing
facilities to meet the Group’s long to medium-term funding requirements.
The Group manages liquidity risk by maintaining adequate reserves,
banking facilities and reserve borrowing facilities, by continuously
monitoring forecast and actual cash flows, and by matching the maturity
profiles of financial assets and liabilities.
(a) Interest rate of borrowings
Due to the floating rate of interest on the Group’s principal borrowings,
the Group is exposed to interest rate risk. The Group’s average interest
rate was 3.3% (2020: 3.7%) which included LIBOR and margin.
(b) Interest rate risk.
Due to the floating rate of interest on the Group’s principal borrowings,
the Group is exposed to interest rate risk.
Sureserve Group plc
Annual Report 2021 89
32. Cash generated from operations
Operating profit
Adjustments for:
Depreciation
Share-based payments
Amortisation of intangible related assets
Impairment of goodwill and acquisition intangibles
Profit on disposal of property, plant and equipment
Changes in working capital:
Inventories
Trade and other receivables
Trade and other payables
Provisions
Cash generated from operations
2021
£’000
2020
£’000
14,793
8,805
5,084
285
451
188
(208)
(1,158)
(3,661)
3,765
(2,047)
4,793
171
1,984
—
(10)
37
1,618
6,035
436
17,492
23,869
33. Business combinations
Vinshire Gas Service Limited
On 3 December 2020 the Group acquired certain trade and other assets of Vinshire Plumbing and Heating Limited, which included the entire share
capital of Vinshire Gas Services Limited, for consideration as detailed below. Vinshire Gas Services Limited’s principal activity is that of installation
and maintenance of plumbing and heating systems. The effect of the acquisition on the Group’s assets and liabilities were as follows:
Assets
Non-current
Property, plant and equipment
Current
Inventories
Trade and other receivables
Cash
Total assets
Liabilities
Current
Provisions
Trade and other payables
Total liabilities
Net liabilities acquired
Satisfied by:
Cash consideration
Goodwill
Fair value
£’000
283
19
693
—
995
(20)
(1,085)
(1,105)
(110)
200
310
The Directors consider the value assigned to goodwill represents the workforce acquired, expected synergies to be generated, and access to
additional geographical areas in the UK as a result of this acquisition. It is not expected that any goodwill will be deductible for tax purposes.
Post-Acquisition results
The results for Vinshire Gas Services Limited since the acquisition date, included within the consolidated Statement of Comprehensive Income for the
period ended 30 September 2021, are:
Revenue
Operating profit
Interest payable
Profit before tax
Taxation
Profit for the period
There is no difference between the revenue and profit for the period and for the period starting 1 October 2020.
90 Sureserve Group plc
Annual Report 2021
£’000
4,278
154
(6)
148
(29)
119
Notes to the consolidated Financial Statements continuedFor the year ended 30 September 2021 Strategic report | Corporate governance | Financial statements
34. Related party transactions
Balances and transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not
disclosed in this Note.
Trading transactions
The Company’s subsidiary, Everwarm Limited, provides services to Warmworks Scotland LLP, a joint venture with Changeworks Resources for Life
and Energy Saving Trust Enterprises Limited. £9,609,000 of services were provided in 2021 (2020: £5,285,000). £848,000 was charged to
Everwarm Limited from Warmworks Scotland LLP for services provided in 2021 (2020: £484,000).
At 30 September 2021 Everwarm Limited had a receivable owing from Warmworks amounting to £1,601,000 (2020: £1,166,000), and a payable of
£138,000 (2020: £23,000).
The Company’s subsidiary, Everwarm Limited, provides services to Arbed am Byth , a joint venture with Energy Saving Trust Enterprises Limited. As at
30 September 2021 Everwarm Limited had a receivable owing from Arbed am Byth amounting to £3,000 (2020: £18,000). £243,000 was charged
by Everwarm Limited to Arbed am Byth for services provided in 2021 (2020: £359,000).
Bob Holt provided consultancy services via a company of which he is a shareholder. The daily fee payable for such consultancy services was £1,595
plus VAT. Such services were provided at a total cost of £150,000 (2020: £285,000) (plus VAT). A further £150,000 compensation for loss of office
(2020: £nil), was also paid. Sureserve group plc had an amount owing to the company of £nil (2020: £nil).
Remuneration of key management personnel
The remuneration of the Directors and members of the Board, together with other key management personnel of the Group, is set out below in
aggregate for each of the categories specified in IAS 24 – Related Party Disclosures. The key management personnel are the members of the
Executive Management Team. Further information about the remuneration of individual Group Directors is provided in the audited part of the
remuneration report.
Number of members of the Executive Management Team at each year end
Short-term employee benefits
Share-based payment charge
Post-employment benefits
Compensation for loss of office
2021
Number
15
2021
£’000
2,766
113
211
187
3,277
2020
Number
15
2020
£’000
2,383
—
142
—
2,525
In addition to the above dividends were paid to directors of £1,000 (2020: £7,000). Gains on exercise of share options were £860,000 (2020: £nil).
Sureserve Group plc
Annual Report 2021 91
35. Events after the reporting date
On 4 November 2021, Peter Smith was appointed as the new CEO.
Arbed am Byth
The Arbed 3 programme for the Welsh Government is delivered via our joint venture with the Energy Saving Trust. The original three-year contract
term had seen a six-month extension to November 2021 as previously announced. While we are disappointed the scheme has now concluded, we
were satisfied with the delivery volumes achieved despite the challenges Covid-19 has presented during the term. The Welsh Government has not yet
announced details of any successor scheme. We will monitor this alongside other appropriate opportunities. The joint venture has now concluded the
installation programme and is currently undertaking remaining post installation obligations. We are delighted the Group continues to install energy
efficiency measures in Wales through our recently awarded energy retrofit scheme with Pobl Group in Swansea. Other Group works in Wales include
our fire business SS F&E is undertaking ongoing sprinkler installations in Newport.
CorEnergy Limited
On 7 December 2021, the Group, acquired the entire issued share capital of CorEnergy Limited, a business focused on delivering sustainable energy
solutions for public and private sector organisations.
The maximum total consideration payable for CorEnergy is £7.5 million, plus any working capital adjustments with an initial £5.9 million payable on
completion, satisfied through £2.9m in cash and the issue of 3,281,879 new ordinary shares of 10p each in Sureserve. The Consideration Shares
were issued at an effective price of 89.4p each. Further deferred consideration of up to a maximum of £1.6 million may be payable, split equally between
cash and shares, depending on CorEnergy’s full year results to December 2021. The transaction is to be achieved on a debt free / cash free basis.
The provisional effect of the acquisition on the Group’s assets and liabilities were as follows:
Assets
Non-current
Deferred tax asset
Current
Trade and other receivables
Cash
Total current assets
Total assets
Liabilities
Current
Provisions
Trade and other payables
Total liabilities
Net assets acquired
Goodwill and intangible assets acquired
Satisfied by:
Cash consideration
Deferred cash consideration
Share consideration
Deferred share consideration
Working capital adjustment (paid in cash)
Provisional
fair value
£’000
91
671
1,651
2,322
2,413
(40)
(1,258)
(1,298)
1,115
6,494
7,609
2,934
300
2,934
300
1,141
7,609
Contingent deferred consideration has been calculated based on the expectations of future performance of the entity compared to the calculation
methodology set out in the Share Purchase Agreement. The contingent deferred consideration may vary depending on the underlying trading
performance of the business.
The CorEnergy Limited intangible assets and goodwill represent the expected value to be derived from the acquired customer-related contracts and
acquired customer relationships. The value of the customer-related contracts and customer relationships will be based on expected post-tax cash
inflows over the estimated remaining life of the contract. The estimated life for customer contracts is assumed to be the remaining life of the contract,
and the customer relationships are expected to have a life of up to three years.
The Directors consider the value assigned to goodwill will represent the workforce acquired, expected synergies to be generated, and access to
additional geographical areas in the UK as a result of this acquisition. It is not expected that any goodwill will be deductible for tax purposes.
92
Sureserve Group plc
Annual Report 2021
Notes to the consolidated Financial Statements continuedFor the year ended 30 September 2021 Company balance sheet
At 30 September 2021
Strategic report | Corporate governance | Financial statements
Fixed assets
Investments in subsidiaries
Intangible fixed assets
Tangible fixed assets
Right of use assets
Current assets
Debtors - due within one year
Debtors - due after more than one year
Income tax receivable
Trade and other payables
Lease liabilities
Creditors: Amounts falling due within one year
Net current assets
Total assets less current liabilities
Creditors: Amounts falling due after more than one year
Lease liabilities
Provisions for liabilities
Net assets
Capital and reserves
Called up share capital
Share premium account
Own shares
Share-based payment reserve
Profit and loss account
Shareholders funds
Notes
2021
£’000
2020
£’000
39
40
41
42
43
43
44
46
46
45
47
48
49
12,392
740
248
231
12,392
598
201
223
13,611
13,414
7,538
55,076
1,812
64,426
(15,821)
(94)
4,506
59,284
903
64,693
(22,235)
(74)
(15,915)
(22,309)
48,511
42,384
62,122
55,798
(142)
(1,062)
(152)
(2,059)
60,918
53,587
16,122
25,620
—
349
18,827
15,934
25,408
(290)
650
11,885
60,918
53,587
As a consolidated statement of comprehensive income is published, a separate statement of comprehensive income for the parent company is
omitted by virtue of the exemption available in section 408 of the Companies Act 2006. The Company’s profit and total comprehensive income for the
year was £8,463,000 (2020: profit of £2,835,000).
The financial statements of Sureserve Group plc (registered number 09411297) were approved by the Board of Directors and authorised for issue on
24 January 2022. They were signed on its behalf by:
P D M Smith
Director
The accompanying notes are an integral part of this company balance sheet.
Sureserve Group plc
Annual Report 2021 93
Company statement of changes in equity
For the year ended 30 September 2021
At 1 October 2019
Profit for the year
Dividends paid (Note 12)
Issue of shares (exercise of options)
Share-based payment
Reserve transfer
At 30 September 2020
Profit for the year
Dividends paid (Note 12)
Issue of shares (exercise of options)
Share-based payment
Reserve transfer
At 30 September 2021
Share
capital
£’000
15,895
—
—
39
—
—
15,934
—
—
188
—
—
Share
premium
account
£’000
25,318
—
—
90
—
—
25,408
—
—
212
—
—
16,122
25,620
Share-
based
payment
reserve
£’000
538
—
—
—
171
(59)
650
—
—
—
168
(469)
349
Own
shares
£’000
(290)
—
—
—
—
—
(290)
—
—
—
—
290
Profit and
loss
account
£’000
9,786
2,835
(795)
—
—
59
11,885
8,463
(1,595)
(105)
—
179
Total
equity
£’000
51,247
2,835
(795)
129
171
—
53,587
8,463
(1,595)
295
168
—
—
18,827
60,918
94 Sureserve Group plc
Annual Report 2021
Notes to the Company Financial Statements
For the year ended 30 September 2021
Strategic report | Corporate governance | Financial statements
Company only
The following notes 36 to 49 relate to the Company only position for year ended 30 September 2021.
36. Accounting policies
Statement of compliance and basis of preparation
The separate Financial Statements of the Company are presented as required by the Companies Act 2006. The Company meets the definition of a
qualifying entity under FRS 100 (Financial Reporting Standard 100) issued by the Financial Reporting Council. Accordingly the Financial Statements
have been prepared in accordance with FRS 101 (Financial Reporting Standard 101) ‘Reduced Disclosure Framework’ as issued by the Financial
Reporting Council.
As permitted by FRS 101, the Company has taken advantage of the disclosure exemptions available under that standard in relation to share-based
payment, financial instruments, capital management, presentation of a cash flow statement and certain related party transactions including
remuneration of key management personnel.
Where required, equivalent disclosures are given in the consolidated Financial Statements.
The Financial Statements have been prepared on the historical cost basis. The principle accounting policies adopted are the same as those set out in
Note 2 to the consolidated Financial Statements except as noted below.
Investments
Investments in subsidiary undertakings are stated at cost less any provision for impairment.
Cost is defined as the consideration transferred and is measured at fair value. Fair value is calculated as the sum of the acquisition-date fair values of
assets transferred by the Company, liabilities incurred by the Company to the former owners of the acquired company and the equity interest issued
by the Company in exchange for control of the acquired company. Acquisition-related costs are recognised in profit or loss as incurred.
When the consideration transferred by the Company includes an asset or liability resulting from a contingent consideration arrangement, the
contingent consideration is measured at its acquisition-date fair value and included as part of the consideration transferred. Changes in fair value of
the contingent consideration are adjusted when identified with corresponding adjustments dependent upon on how the contingent consideration is
classified. Where contingent consideration is classified as equity any change in fair value is accounted for within equity. Contingent consideration that
is classified as an asset or liability is remeasured at subsequent reporting dates in accordance with IFRS 9: Financial instruments, or IAS 37: Provisions,
contingent liabilities and contingent assets, as appropriate, with the corresponding gain or loss being recognised in profit or loss.
Impairment of investments
At each balance sheet date, the Company tests the carrying amounts of investments to determine whether those investments have suffered
an impairment loss. The recoverable amount of the asset is estimated to determine the extent of the impairment loss (if any). Where the asset does not
generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the
asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating
units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be
identified.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks
specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable
amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the
impairment loss is treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but
so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised
for the asset in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued
amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
37. Critical accounting judgements and key sources of uncertainty
Critical accounting estimates and judgements
The preparation of financial statements requires the use of certain critical accounting estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the Financial Statements and the reported amounts of revenues and expenses during the reporting period.
Estimates and judgements are continually made and are based on historic experience and other factors, including expectations of future events that are
believed to be reasonable in the circumstances. As the use of estimates is inherent in financial reporting, actual results could differ from these estimates.
Impairment of investments
The Company reviews the valuation of all its investments for impairment annually or if events and changes in circumstances indicate that the carrying
value may not be recoverable. The recoverable amount is determined based on value-in-use calculations. The use of this method requires the estimation
of future cash flows and the choice of a suitable discount rate in order to calculate the present value of these cash flows. See Note 15 for
further information.
Sureserve Group plc
Annual Report 2021 95
Notes to the Company Financial Statements continued
For the year ended 30 September 2021
38. Staff numbers and costs
Office and administration
The aggregate payroll costs of these persons were as follows:
Wages and salaries
Social security costs
Other pension costs
Equity-settled share-based payments
39. Investment in subsidiaries
Cost
At 1 October 2020 and 30 September 2021
Net book value
At 1 October 2020 and 30 September 2021
Further information is provided in Note 18.
40. Intangible fixed assets
Cost
At 1 October 2019
Additions
At 30 September 2020
Additions
Disposals
At 30 September 2021
Amortisation
At 1 October 2019
Amortisation charge
At 30 September 2020
Amortisation charge
Disposals
At 30 September 2021
Carrying value
At 30 September 2021
At 30 September 2020
96 Sureserve Group plc
Annual Report 2021
2021
Number
62
2021
£’000
3,923
497
116
285
4,821
2020
Number
50
2020
£’000
3,059
308
89
171
3,627
£’000
12,392
12,392
Computer
software
£’000
606
443
1,049
490
(271)
1,268
249
202
451
348
(271)
528
740
598
41. Property, plant and equipment
Cost
At 1 October 2019
Additions
At 30 September 2020
Additions
Disposals
At 30 September 2021
Depreciation
At 1 October 2019
Depreciation charge
At 30 September 2020
Depreciation charge
Disposals
At 30 September 2021
Carrying value
At 30 September 2021
At 30 September 2020
42. Right of use assets
Cost
At 30 September 2019
Additions
Disposals
At 30 September 2020
Additions
At 30 September 2021
Depreciation
At 30 September 2019
Charge for the year
Disposals
At 30 September 2020
Charge for the year
At 30 September 2021
Carrying value
At 30 September 2021
At 30 September 2020
Strategic report | Corporate governance | Financial statements
Leasehold
improvements
£’000
Plant and
equipment
£’000
Fixtures and
fittings
£’000
Total
£’000
154
—
154
48
—
202
7
15
22
17
—
39
163
132
112
24
136
28
(73)
91
58
26
84
36
(73)
47
44
52
24
—
24
31
—
55
2
5
7
7
—
14
41
17
290
24
314
107
(73)
348
67
46
113
60
(73)
100
248
201
Leasehold
property
£’000
Commercial
vehicles
£’000
Total
£’000
387
—
—
387
—
387
—
174
—
174
72
246
141
213
3
11
(3)
11
92
103
—
3
(2)
1
12
13
90
10
390
11
(3)
398
92
490
—
177
(2)
175
84
259
231
223
Sureserve Group plc
Annual Report 2021 97
Notes to the Company Financial Statements continued
For the year ended 30 September 2021
43. Debtors
Amounts falling due within one year
Amounts owed by Group undertakings
Prepayments
Deferred tax asset
Other debtors
Tax receivable
Amounts falling due after more than one year
Amounts owed by Group undertakings
44. Creditors
Creditors: Amounts falling due within one year
Bank loans and overdrafts
Trade creditors
Amounts owed to Group undertakings
Accruals and deferred income
Social security and other taxes
Deferred tax liability
Other creditors
2021
£’000
2020
£’000
6,337
1,022
—
32
147
4,039
227
77
163
—
7,538
4,506
55,076
59,284
2021
£’000
2020
£’000
6,658
283
7,017
1,580
106
159
18
9,160
341
10,551
2,037
134
—
12
15,821
22,235
There is a charge over all of the Company’s assets in respect of continuing security for the Group’s obligations to pay under the Group’s £15m
revolving credit facility with NatWest.
Legal and
other
£’000
2,059
500
(800)
(697)
1,062
45. Provisions for liabilities
At 1 October 2020
Additional provision
Released during the year
Utilised in the year
At 30 September 2021
Further information is provided in Note 24.
98 Sureserve Group plc
Annual Report 2021
46. Lease liabilities
At 30 September 2019
Repayments
Interest
New obligations
Obligations cancelled
At 30 September 2020
Repayments
Interest
New obligations
Obligations cancelled
At 30 September 2021
Future lease payments are due as follows:
Less than one year
Between two and five years
At 30 September 2021
Less than one year
Between two and five years
At 30 September 2020
47. Share capital
Allotted, called-up and fully paid:
Ordinary shares of £0.10 each
Strategic report | Corporate governance | Financial statements
Present value
of minimum
lease
payments
£’000
390
(183)
9
11
(1)
226
(90)
7
160
(67)
236
Present value
of minimum
lease
payments
£’000
94
142
236
74
152
226
Number
£
161,213,788
16,121,379
Details of the movements in share capital together with the key rights and preferences of the share capital are disclosed in Note 27.
48. Share premium account
The share premium account represents amounts received in excess of the nominal value of shares on issue of new shares, net of the direct costs
associated with issuing those shares.
49. Share based payments
During the year ended 30 September 2021 the Company had five share based payment arrangements, which are described in Note 28.
Sureserve Group plc
Annual Report 2021 99
Corporate directory
Company registration number
09411297
Directors
Bob Holt OBE (Chairman and Chief Executive)
(appointed 21 July 2016, resigned 18 March 2021)
Nick Winks (Chairman)
(appointed 26 May 2021)
Peter Smith (Chief Executive Officer)
Robert Legget (Senior Independent Director)
Derek Zissman (Non-Executive Director)
Christopher Mills (Non-Executive Director)
Group Company Secretary
John Charlton
Registered office
Crossways Point 15
Victory Way
Crossways Business Park
Dartford
Kent
DA2 6DT
Independent auditors
RSM UK Audit LLP
25 Farringdon Street
London
EC4A 4AB
Principal bankers
NatWest
9th floor
250 Bishopsgate
London
EC2M 4AA
Legal advisers to the Company
BPE Solicitors LLP
St James House
St James Square
Cheltenham
GL50 3PR
DLA Piper UK LLP
1 St Paul’s Place
Sheffield
S1 2JX
Financial adviser and stockbroker
Shore Capital
Cassini House
57 St James’s Street
London
SW1A 1LD
Registrars
Link Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
Corporate calendar
Annual General Meeting
22 March 2022
Announcement of Interim Results
May 2022
Announcement of Final Results
January 2023
100 Sureserve Group plc
Annual Report 2021
CBP010871
Sureserve Group’s commitment to environmental issues is reflected in this Annual Report, which
has been printed on Chorus Silk, an FSC® certified material. This document was printed by Park
Communications using its environmental print technology, which minimises the impact of printing on
the environment, with 99% of dry waste diverted from landfill. Both the printer and the paper mill are
registered to ISO 14001.
Crossways Point 15
Victory Way
Crossways Business Park
Dartford
Kent
DA2 6DT
www.sureservegroup.co.uk