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Sureserve Group Plc reports 12.6% EBITDA growth in 2019 and almost no change in EBITDA Margin of 4.6%

21 Jan 2020 • About Sureserve Group Plc ($SUR) • By InTwits

Sureserve Group Plc reported FY2019 financial results today. Here are the key drivers of the company's long term financial model:
  • EBITDA Margin is quite volatile: 4.6% in FY2019, 4.6% in FY2018, 4.3% in FY2017, -6.6% in FY2016, 3.7% in FY2015
  • Sureserve Group Plc has low CAPEX intensity: 5 year average CAPEX/Revenue was 0.3%.
  • The company has business model with average profitability: ROIC is 10.3%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.

Revenue and profitability

The company's Revenue jumped on 11.2%. During FY2015-FY2019 Revenue growth bottomed in FY2017 at -44.5% and was accelerating since that time. EBITDA Margin showed almost no change in FY2019. During the last 5 years EBITDA Margin bottomed in FY2016 at -6.6% and was growing since that time.

Gross Margin increased slightly on 1.2 pp from 14.3% to 15.5% in FY2019.

Net Income margin increased on 7.8 pp from -5.4% to 2.4% in FY2019.

Investments (CAPEX, working capital and M&A)

In FY2019 Sureserve Group Plc had CAPEX/Revenue of 0.30%. The company showed almost no change in CAPEX/Revenue from FY2016 to FY2019. For the last three years the average CAPEX/Revenue was 0.34%.

Return on investment

The company operates at good ROE (12.1%) while ROIC is low (10.3%). ROIC increased on 5.7 pp from 4.6% to 10.3% in FY2019. ROE jumped on 35.3 pp from -23.2% to 12.1% in FY2019. During the last 5 years ROIC bottomed in FY2016 at -43.2% and was growing since that time.

Leverage (Debt)

Debt level is 0.7x Net Debt / EBITDA and 1.0x Debt / EBITDA. Net Debt / EBITDA dropped on 0.6x from 1.3x to 0.7x in FY2019. Debt dropped on 24.9% while cash surged on 43.8%.

Sureserve Group Plc has no short term refinancing risk: cash is higher than short term debt (4,540.7%).

Valuation and dividends

The company's trades at EV/EBITDA 7.9x and P/E 14.0x.

Financial and operational results

FY ended 30 Nov -0001

Sureserve Group Plc ($SUR) key annual financial indicators

mln. £201520162017201820192019/2018
Gross Profit43.427.527.027.432.920.1%
Net Income2.4-29.30.0-10.45.0
Balance Sheet
Short Term Debt0.
Long Term Debt0.320.827.20.19.816,158.3%
Cash flow
Revenue growth12.5%-3.8%-44.5%5.1%11.2%
EBITDA growth70.2%-272.7%-136.3%11.8%12.6%

Gross Margin12.8%8.4%14.9%14.3%15.5%1.2%
EBITDA Margin3.7%-6.6%4.3%4.6%4.6%0.1%
Net Income Margin0.7%-8.9%0.0%-5.4%2.4%7.8%
CAPEX, % of revenue0.3%0.3%0.5%0.2%0.3%0.1%

Net Debt/EBITDA-0.5x0.2x1.3x0.7x-0.6x

Peers in Diversified Support Services

Below we provide Sureserve Group Plc benchmarking against other companies in Diversified Support Services industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.

Top companies by Revenue growth, %

Top 5 FY2015 FY2016 FY2017 FY2018 FY2019
Development Securities(Investments) ($36JS)156.8%18.9%-48.8%40.1%
Corus Finance ($BD84)-99.5%13,313.3%10.4%12.9%
Bld Property Hldgs ($09GE)39.3%6.1%-0.2%8.5%
Sanctuary Housing ($BB21)5.3%7.2%0.3%5.5%
Housing Finance Corp ($68HB)9.1%10.9%8.2%3.0%
Median (14 companies)1.0%1.5%2.1%3.0%

Top companies by Gross margin, %

Top 5 FY2015 FY2016 FY2017 FY2018 FY2019
Sanctuary Housing ($BB21)97.6%97.1%97.4%98.1%
Glh Hotels Ltd ($97KI)57.6%57.8%60.1%59.0%
Lewis(John)Partnership ($BD32)33.8%33.9%33.8%33.0%
Lewis(John) ($BC32)33.8%33.9%33.8%33.0%
Ashpol ($BC24)0.0%0.0%
Median (8 companies)33.8%32.7%31.9%16.5%

Top companies by EBITDA margin, %

Top 5 FY2015 FY2016 FY2017 FY2018 FY2019
T.H.F.C.(Indexed 2) ($90IL)97.9%97.1%96.2%96.4%
Housing Finance Corp ($68HB)97.9%97.1%96.2%96.4%
T.H.F.C.(Indexed) ($96JS)97.9%97.1%96.2%96.4%
T.H.F.C.(Social Housing Finance) ($96JP)97.9%97.1%96.2%96.4%
Bld Property Hldgs ($09GE)215.1%165.3%36.3%87.6%
Median (13 companies)44.3%39.7%29.2%52.7%

Top companies by CAPEX/Revenue, %

Top 5 FY2015 FY2016 FY2017 FY2018 FY2019
Bld Property Hldgs ($09GE)59.2%84.6%53.0%55.6%
Sanctuary Housing ($BB21)60.0%31.0%33.3%42.3%
Mid Kent Water ($48HO)37.7%41.2%38.1%41.7%
Glh Hotels Ltd ($97KI)13.1%4.9%4.6%9.0%
Corus Finance ($BD84)9.6%6.6%5.7%
Median (13 companies)3.8%3.3%3.0%2.2%

Top companies by ROIC, %

Top 5 FY2015 FY2016 FY2017 FY2018 FY2019
Corus Finance ($BD84)-19.6%2.1%8.4%10.7%
Lewis(John) ($BC32)18.6%19.8%22.0%8.2%
Lewis(John)Partnership ($BD32)18.6%19.8%22.0%8.2%
Glh Hotels Ltd ($97KI)4.9%5.7%5.6%7.5%
Development Securities(Investments) ($36JS)7.4%5.1%0.2%6.1%
Median (43 companies)3.2%3.9%2.6%1.0%

Top companies by Net Debt / EBITDA

Top 5 FY2015 FY2016 FY2017 FY2018 FY2019
T.H.F.C.(Indexed 2) ($90IL)20.3x22.6x24.3x28.0x
T.H.F.C.(Indexed) ($96JS)20.3x22.6x24.3x28.0x
T.H.F.C.(Social Housing Finance) ($96JP)20.3x22.6x24.3x28.0x
Housing Finance Corp ($68HB)20.3x22.6x24.3x28.0x
West Bromwich B.S. ($WBS)2.3x4.9x10.5x12.7x
Median (13 companies)3.1x4.0x4.6x8.6x