Interim Results

RNS Number : 8804F
Renew Holdings PLC
23 May 2017
 

 

Renew Holdings plc

("Renew" or the "Group" or the "Company")

 

Interim Results

 

Renew (AIM: RNWH), the Engineering Services Group supporting UK infrastructure, announces another set of record interim results for the six months ended 31 March 2017. With a strong order book and growth in both revenue and operating profit, the Board is increasing its interim dividend in line with its progressive policy by 13% to 3.00p.

 

Financial Highlights

 

H1 2017

H1 2016

 

Revenue

£289.4m

£265.1m

+9%

Adjusted operating profit*

£12.1m

£10.5m

+15%

Adjusted operating margin*

4.2%

4.0%

+5%

Adjusted profit before tax*

£12.0m

£10.3m

+11%

Adjusted earnings per share*

15.49p

13.31p

+16%

Interim dividend per share

3.00p

2.65p

+13%

*Adjusted results are stated prior to exceptional items and amortisation charges

 

Operational Highlights

·  Engineering Services revenue up 6% to £234.3m (H1 2016: £221.3m)

·  Engineering Services operating profit* up 14% to £11.9m (H1 2016: £10.4m)

·  5% increase in Engineering Services order book to £435m (H1 2016: £416m)

·  Group expected revenue for H2 fully secured

·  After the £7m acquisition of Giffen, net debt £3.5m (H1 2016: £4.2m)

The Board expects to report net cash at the end of this financial year

·  Interim dividend increased by 13% to 3.00p per share (H1 2016: 2.65p)

 

R J Harrison OBE, Chairman said: "Our established strategy of providing engineering services in regulated UK infrastructure markets continues to deliver positive results for Renew. This has been another record half year, with strong growth in both revenue and operating profit. I am particularly pleased with the improvement in Group operating margin to 4.2%, on track to meet our target of 4.5% for the year. As a result, the Board has increased the interim dividend by 13% and we are confident of delivering full year results in line with market expectations."

 

Renew Holdings plc

                      Tel: 0113 281 4200

Paul Scott, Chief Executive

 

John Samuel, Group Finance Director

 

 

 

Numis Securities Limited

                      Tel: 020 7260 1000

Stuart Skinner/Kevin Cruickshank (Nominated Adviser)

 

Michael Burke (Corporate Broker)

 

 

 

Walbrook PR

                                      Tel: 020 7933 8780 or renew@walbrookpr.com

Paul McManus

Mob: 07980 541 893

Nick Rome

Mob: 07748 325 236

Lianne Cawthorne

Mob: 07584 391 303

       

 

Certain information contained in this announcement would have constituted inside information (as defined by Article 7 of Regulation (EU) No 596/2014) prior to its release as part of this announcement.

 

 

About Renew Holdings plc

 

Engineering Services, which accounts for over 80% of Group revenue and 90% of operating profit, focuses on the key markets of Energy (including Nuclear), Environmental and Infrastructure, which are largely governed by regulation and benefit from non-discretionary spend with long-term visibility of committed funding.

 

Specialist Building focuses on the High Quality Residential market in London and the Home Counties.

For more information please visit the Renew Holdings plc website: www.renewholdings.com

 

 

 

 

Chairman's Statement

 

Renew has again delivered record interim results with strong growth in both operating profit and revenue.

 

Our established strategy of providing engineering services in regulated UK infrastructure markets continues to deliver positive results. The Group focuses on directly delivering essential works to critical infrastructure which are mainly funded through our clients' operational expenditure budgets.

 

Results

 

Group operating profit, prior to exceptional items and amortisation charges, increased by 15% to £12.1m (2016: £10.5m), on revenue up 9% to £289.4m (2016: £265.1m). Operating margin increased to 4.2% (2016: 4.0%) with earnings per share prior to exceptional items and amortisation charges increasing by 16% to 15.49p (2016: 13.31p). After the £5.8m exceptional impairment charge detailed below, profit before income tax was £4.8m (2016: £8.8m).

 

In Engineering Services, revenue grew by 6% to £234.3m (2016: £221.3m), representing 81% (2016: 84%) of Group revenue with operating profit prior to exceptional items and amortisation charges increasing by 14% to £11.9m (2016: £10.4m), giving an improved operating margin of 5.1% (2016: 4.7%).

 

In Specialist Building, the Group remains focused on contract selectivity and risk management within the High Quality Residential market in London and the Home Counties which has been particularly strong. Operating profit was £1.2m (2016: £1.1m) on revenue of £53.6m (2016: £44.4m).

 

Exceptional items

 

At the end of April 2017, the Group decided to withdraw from its loss-making low pressure, small diameter gas pipe replacement activities and as a result has reviewed the carrying value of its investment in that business. The Board has determined that a non-cash impairment charge of £5.8m should be made which is included within exceptional items. Our gas operations are now completely focused on medium pressure activities which will result in lower revenue but which have been consistently profitable. This restructuring will result in up to £0.5m of exceptional charges relating to redundancy and other costs which will be recorded in the second half of this financial year. Following these actions, the Board expects that its gas business will return to profitability in the financial year ending 30 September 2018.

 

Dividend

 

In line with its progressive policy, the Board is increasing the interim dividend by 13% to 3.00p (2016: 2.65p) per share which will be paid on 3 July 2017 to shareholders on the register at 2 June 2017.

 

Order book

 

The Group's order book at 31 March 2017 was £517m (2016: £515m). The Group's expected revenue for the second half of the financial year is fully secured.

 

Cash

 

At 31 March 2017, the Group had net debt of £3.5m (2016: £4.2m). The Board expects to report a net cash position at the end of the financial year.

 

Acquisition

 

In November 2016, Renew acquired Giffen Holdings Ltd, a specialist mechanical, electrical and power services provider for £7m which broadens the Group's offering within the railway environment. The integration of Giffen is progressing well.

 

Board changes

 

On 3 April 2017, the Group appointed David Brown to the Board as a Non-Executive Director. David is Group Chief Executive of The Go-Ahead Group Plc, a position he has held since 2011. I welcome David to our Board.

 

Outlook

 

Renew is a leading provider of engineering support services to the UK's critical Energy, Environmental and Infrastructure markets, where ongoing engineering maintenance requirements provide long-term, sustainable opportunities. Our expertise in these target markets and our direct delivery model positions us to provide our clients with an integrated and responsive service.

 

It remains the Board's strategy to grow our Engineering Services business both organically and through selective, earnings enhancing acquisitions. The Board is confident that Renew will achieve its financial target of a 4.5% Group operating margin and report results in line with market expectations for the year ending 30 September 2017. 

 

R J Harrison OBE

Chairman

23 May 2017

 

 

 

 

 

Chief Executive's Review

 

Renew is a leading engineering services provider supporting critical UK infrastructure across the Energy, Environmental and Infrastructure markets.

 

The Group provides integrated engineering services to support a wide range of assets which include nuclear and traditional power sites, water, flood alleviation and gas infrastructure, rail and wireless telecoms networks. We provide long-term asset care and maintenance services as well as emergency reactive works.

 

Engineering Services

 

Engineering Services revenue grew by 6% to £234.3m (2016: £221.3m). Operating profit prior to exceptional items and amortisation grew 14% to £11.9m (2016: £10.4m), increasing the operating margin to 5.1% (2016: 4.7%) and representing 91% (2016: 91%) of segment operating profit.

 

At 31 March 2017, the Engineering Services order book increased by 5% to £435m (2016: £416m).

 

Energy

 

Renew provides engineering support services to assets across the nuclear, fossil and renewable energy markets.

 

We operate at 12 of the Nuclear Decommissioning Authority's ("NDA") 17 nuclear licenced sites in the UK. The investment required to clean up the UK's nuclear legacy is estimated at £70bn and will take over 120 years to complete. The largest of the sites on the NDA's decommissioning programme is Sellafield, which is currently allocated 73% of this expenditure. The scale of the decommissioning challenge there requires much of the work to be delivered through long-term programmes of work.

 

As the largest mechanical and electrical contractor at Sellafield, the Group supports long-term programmes associated with new and existing operational plant in the waste treatment, reprocessing, decontamination, decommissioning and clean up operations. We are strongly positioned on the 10-year Decommissioning Delivery Partnership Framework which is estimated at £500m with head room to increase expenditure to £1.5bn over the term to 2025. We are also engaged across numerous other long-term, high priority programmes at Sellafield including; Magnox Swarf Storage Silo, Bulk Sludge Retrieval, Site Remediation & Decommissioning, Box Encapsulation Plant, Pile Fuel Cladding Silo, the Bundling Spares Framework and the Tanks and Vessels Framework.

 

Elsewhere, our established relationship with Magnox as sole provider on the national Electrical, Controls and Instrumentation Framework runs to 2021. In the period, we were also engaged through a new contract at the Drigg Low Level Waste Repository.

 

We have repositioned the gas business which is now focused exclusively on medium pressure and larger diameter gas activities in London and the South East. This market is driven by the long-term 30/30 Iron Mains Replacement Programme which gives good visibility to 2032. A key factor going forward is our exclusive regional position on the medium pressure framework for Southern Gas Networks which is gaining momentum. 

 

Environmental

 

Renew provides engineering support services to the UK's water and sewer infrastructure networks as well as to flood alleviation and coastal protection programmes.

 

For Northumbrian Water, we undertake a range of tasks on the AMP 6 Sewerage Repair and Maintenance Framework. We are engaged by Wessex Water on the AMP 6 Civils & EMI Delivery Partners Framework, where work levels have increased as the AMP 6 programme accelerates. We have also experienced high demand on Welsh Water's Pressurised Pipelines Framework, with work also undertaken on the Major and Minor Civils and the Emergency Reactive frameworks.

 

As sole provider on the Environment Agency's MEICA Framework to 2019, we support around 600 flood and water management sites throughout the Northern Region. Work is also undertaken nationally for the Environment Agency on four minor works frameworks.


During the period, we were appointed as sole supplier on the national Canal & River Trust MEICA Framework. Work includes maintenance, renewal and emergency reactive tasks on around 1,000 of the Trust's assets across England and Wales over the seven-year term. These assets include swing bridges, lock gates, sluices, water level and flow monitoring systems and pumping stations.

 

In addition to our ongoing work under several frameworks for National Grid, our land remediation activities include a major scheme at Sighthill for Glasgow City Council.

 

At the Palace of Westminster, where we have long-term contracted work associated with the Cast Iron Roof programme and the Courtyards Conservation Framework, we anticipate further growth opportunities.

 

Infrastructure

 

As a major provider of infrastructure services to Network Rail, we undertake a wide range of planned maintenance and renewals tasks alongside a 24/7 emergency reactive service across the rail network.

 

We are sole provider on seven Infrastructure Projects frameworks over the current CP5 investment period, delivering renewal schemes nationally on assets including bridges, viaducts and specialist tunnel refurbishments. We deliver a high volume of maintenance tasks through six Asset Management frameworks and are the major structures renewals and sole maintenance contractor in Scotland.

 

The acquisition of Giffen Holdings Ltd ("Giffen") broadens the Group's offering to Network Rail and creates opportunities for the Group with London Underground Limited and Train Operating Companies.

 

In wireless telecoms, we work for all of the UK's major cellular network operators and several original equipment manufacturers. Work is concentrated on the 4G roll out programmes, which are driven by increasing consumer demand. 

 

Specialist Building

 

The Group's Specialist Building operations focus on the High Quality Residential market in London and the Home Counties where we specialise in major structural engineering works.

 

This market is robust and continues to provide stable earnings. Specialist Building revenue grew by 21% to £53.6m (2016: £44.4m), with an operating profit of £1.2m (2016: £1.1m). The forward order book was £82m (2016: £99m).  Expected revenue for the year is fully secured.

 

Strategy

 

We remain committed to developing our engineering services business in our existing infrastructure markets both organically and through selective acquisitions to build on our integrated service offering.

 

The Group focuses on developing long-term relationships with its clients for whom we directly deliver day-to-day maintenance and renewal services alongside emergency reactive works to the country's key infrastructure assets.

 

Paul Scott

Chief Executive

23 May 2017

 

 

 

Condensed consolidated income statement

for the six months ended 31 March 2017

 

 

 

 

Before exceptional items and

amortisation of intangible assets

Exceptional items and

amortisation of intangible assets

(see Note 3)

 

Six months ended

31 March

Before amortisation of intangible assets

 

 

Amortisation of intangible assets

Year ended

30 September

 

 

 

 

 

 

 

 

 

 

 

2017

2017

2017

2016

 

2016

 

2016

 

2016

 

 

Note

 

Unaudited

£000

 

Unaudited

£000

 

Unaudited

£000

 

        Unaudited

£000

Audited

£000

Audited

£000

Audited

£000

 

 

 

 

 

 

 

 

 

Group revenue from continuing activities

2

289,404

-

289,404

265,079

525,737

-

525,737

Cost of sales

 

(259,180)

-

(259,180)

(237,763)

(469,180)

-

(469,180)

Gross profit

 

30,224

-

30,224

27,316

56,557

-

56,557

Administrative expenses

 

(18,113)

(7,149)

(25,262)

(18,315)

(34,603)

(2,954)

(37,557)

Operating profit

2

12,111

(7,149)

4,962

9,001

21,954

(2,954)

19,000

Finance income

 

81

-

81

131

373

-

373

Finance costs

 

(216)

-

(216)

(333)

(624)

-

(624)

Other finance income - defined benefit pension schemes

 

 

-

-

-

-

625

-

625

Profit before income tax

2

11,976

(7,149)

4,827

8,799

22,328

(2,954)

19,374

Income tax expense

5

(2,315)

243

(2,072)

(1,760)

(5,268)

532

(4,736)

Profit for the period from continuing activities

 

 

9,661

(6,906)

2,755

7,039

17,060

(2,422)

14,638

Loss for the period from discontinued operation

4

 

 

-

-

 

 

(4,026)

Profit for the period attributable to equity holders of the parent company

 

 

 

2,755

7,039

 

 

10,612

 

 

 

 

 

 

 

 

 

Basic earnings per share from continuing activities

6

 

 

4.42p

11.35p

 

 

23.53p

Diluted earnings per share from continuing activities

6

 

 

4.38p

11.26p

 

 

23.33p

 

 

 

 

 

 

 

 

 

Basic earnings per share

6

 

 

4.42p

11.35p

 

 

17.06p

Diluted earnings per share

6

 

 

4.38p

11.26p

 

 

16.91p

 

 

 

 

 

 

 

 

 

Proposed dividend

7

 

 

3.00p

2.65p

 

 

8.00p

 

 

Operating profit for the six months ended 31 March 2016 is stated after charging £1,477,000 of amortisation cost.

 

Condensed consolidated statement of comprehensive income 

for the six months ended 31 March 2017

 

 

 

Six months ended

Year ended

 

 

31 March

30 September

 

 

2017

2016

2016

 

 

 

 

 

 

 

Unaudited

Unaudited

Audited

 

 

£000

£000

£000

 

 

 

 

 

Profit for the period attributable to equity holders of the parent company

 

2,755

7,039

10,612

 

 

 

 

 

Items that will not be reclassified to profit or loss:

 

 

 

 

Movement in actuarial valuation of the defined benefit pension schemes

 

-

-

(14,229)

Movement on deferred tax relating to the defined benefit pension schemes

 

-

-

2,561

Total items that will not be reclassified to profit or loss

 

-

-

(11,668)

Items that are or may be reclassified subsequently to profit or loss:

 

 

 

 

Exchange movement in reserves

 

84

135

291

Total items that are or may be reclassified subsequently to profit or loss

 

84

135

 

291

Total comprehensive income for the period attributable to equity holders of the parent company

 

2,839

7,174

 

(765)

             

 

 

 

Condensed consolidated statement of changes in equity

for the six months ended 31 March 2017

 

                               

 

Called up

Share

Capital

Cumulative

Share based

 

Total

 

share

premium

redemption

translation

payments

Retained

equity

 

capital

account

reserve

adjustment

reserve

earnings

Unaudited

 

£000

£000

£000

£000

£000

£000

£000

 

 

 

 

 

 

 

 

At 1 October 2015

6,192

6,989

3,896

1,056

327

6,509

24,969

Transfer from income statement for the period

 

 

 

 

 

7,039

7,039

Dividends paid

 

 

 

 

 

(2,960)

(2,960)

New shares issued

40

1,492

 

 

 

 

1,532

Recognition of share based payments

 

 

 

 

11

 

11

Exchange differences

 

 

 

135

 

 

135

At 31 March 2016

6,232

8,481

3,896

1,191

338

10,588

30,726

Transfer from income statement for the period

 

 

 

 

 

3,573

3,573

Dividends paid

 

 

 

 

 

(1,651)

(1,651)

Recognition of share based payments

 

 

 

 

233

 

233

Exchange differences

 

 

 

156

 

 

156

Actuarial movement recognised in the pension schemes

 

 

 

 

 

(14,229)

(14,229)

Movement on deferred tax relating to the pension schemes

 

 

 

 

 

 

2,561

 

2,561

At 30 September 2016

6,232

8,481

3,896

1,347

571

842

21,369

Transfer from income statement for the period

 

 

 

 

 

2,755

2,755

Dividends paid

 

 

 

 

 

(3,349)

(3,349)

New shares issued

27

1,154

 

 

 

 

1,181

Recognition of share based payments

 

 

 

 

1

 

1

Exchange differences

 

 

 

84

 

 

84

At 31 March 2017

6,259

9,635

3,896

1,431

572

248

22,041

 

 

 

Condensed consolidated balance sheet

at 31 March 2017

 

 

 

          31 March

30 September

 

 

2017

2016

2016

 

 

Unaudited

Unaudited

Audited

 

 

£000

£000

£000

Non-current assets

 

 

 

 

Intangible assets

 

 

 

 

- goodwill

 

58,505

56,259

56,259

- other

 

3,819

2,757

1,280

Property, plant and equipment

 

13,188

14,095

13,673

Retirement benefit assets

 

9,834

17,284

7,704

Deferred tax assets

 

2,355

1,674

1,581

 

 

87,701

92,069

80,497

Current assets

 

 

 

 

Inventories

 

5,032

5,077

5,362

Assets held for resale

 

1,500

1,567

1,500

Trade and other receivables

 

92,973

94,452

93,520

Current tax assets

 

-

1,389

-

Cash and cash equivalents

 

2,671

8,192

14,084

 

 

102,176

110,677

114,466

 

 

 

 

 

Total assets

 

189,877

202,746

194,963

 

 

 

 

 

Non-current liabilities

 

 

 

 

Borrowings

 

-

(6,200)

(3,100)

Obligations under finance leases

 

(2,569)

(2,134)

(3,030)

Retirement benefit obligations

 

(1,918)

(407)

(2,110)

Deferred tax liabilities

 

(2,504)

(3,654)

(1,664)

Provisions

 

(312)

(580)

(312)

 

 

(7,303)

(12,975)

(10,216)

Current liabilities

 

 

 

 

Borrowings

 

(6,200)

(6,200)

(6,200)

Trade and other payables

 

(148,946)

(149,881)

(153,472)

Obligations under finance leases

 

(2,426)

(2,944)

(2,623)

Current tax liabilities

 

(2,741)

-

(863)

Provisions

 

(220)

(20)

(220)

 

 

(160,533)

(159,045)

(163,378)

 

 

 

 

 

Total liabilities

 

(167,836)

(172,020)

(173,594)

 

 

 

 

 

Net assets

 

22,041

30,726

21,369

 

 

 

 

 

Share capital

 

6,259

6,232

6,232

Share premium account

 

9,635

8,481

8,481

Capital redemption reserve

 

3,896

3,896

3,896

Cumulative translation adjustment

 

1,431

1,191

1,347

Share based payments reserve

 

572

338

571

Retained earnings

 

248

10,588

842

Total equity

 

22,041

30,726

21,369

 

 

           
 

 

Condensed consolidated cashflow statement

for the six months ended 31 March 2017

 

 

     Six months ended     

Year ended 

 

       31 March

30 September

 

2017

2016

2016

 

Unaudited

Unaudited

Audited

 

£000

£000

£000

 

 

 

 

Profit for the period from continuing operations

2,755

7,039

14,638

Amortisation of intangible assets

1,140

1,477

2,954

Goodwill impairment

5,800

-

-

Depreciation

2,080

1,968

4,036

Profit on sale of property, plant and equipment

(328)

(275)

(569)

Charge in respect of share option exercise

1,181

1,532

1,532

Decrease/(increase) in inventories

530

(91)

60

Decrease/(increase) in receivables

5,252

(2,063)

(63)

(Decrease)/increase in payables

(12,952)

253

2,609

Current service cost in respect of defined benefit pension scheme

29

29

47

Cash contribution to defined benefit schemes

(2,322)

(2,322)

(4,701)

Charge in respect of share options

1

11

244

Finance income

(81)

(131)

(373)

Finance costs/(other income)

216

333

(1)

Interest paid

(216)

(333)

(624)

Income taxes paid

-

(800)

(863)

Income tax expense

2,072

1,760

4,736

Net cash inflow from continuing operating activities

5,157

8,387

23,662

Net cash outflow from discontinued operating activities

(1,525)

(2,003)

(6,109)

Net cash inflow from operating activities

3,632

6,384

17,553

 

 

 

 

Investing activities

 

 

 

Interest received

81

131

373

Proceeds on disposal of property, plant and equipment

381

359

1,020

Purchases of property, plant and equipment

(698)

(1,471)

(1,304)

Acquisition of subsidiaries net of cash acquired

(7,014)

(208)

(208)

Net cash outflow from investing activities

             (1,189)

(119)

 

 

 

 

Financing activities

 

 

 

Dividends paid

(3,349)

(2,960)

(4,611)

Loan repayments

(3,100)

(3,100)

(6,200)

Repayment of obligations under finance leases

(1,347)

(1,620)

(3,225)

Net cash outflow from financing activities

(7,680)

(14,036)

 

 

 

 

Net (decrease)/increase in continuing cash and cash equivalents

(9,889)

(482)

9,507

Net (decrease) in discontinued cash and cash equivalents

(1,525)

(2,003)

(6,109)

Net (decrease)/increase in cash and cash equivalents

(11,414)

(2,485)

3,398

 

 

 

 

Cash and cash equivalents at the beginning of the period

14,084

10,662

10,662

Effect of foreign exchange rate changes

1

15

24

 

 

 

 

Cash and cash equivalents at the end of the period

2,671

8,192

14,084

 

 

 

 

Bank balances and cash

2,671

8,192

14,084

 

Notes to the condensed consolidated accounts

 

1 - Basis of preparation

 

(a) The condensed consolidated interim financial report for the six months ended 31 March 2017 and the equivalent period in 2016 has not been audited or reviewed by the Group's auditor. It does not comprise statutory accounts within the meaning of Section 435 of the Companies Act 2006. It has been prepared under the historical cost convention and on a going concern basis in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union. The report does not comply with IAS34 "Interim Financial Reporting", which is not currently required to be applied for AIM companies and it was approved by the Directors on 23 May 2017.

                               

(b) The accounts for the year ended 30 September 2016 were prepared under IFRS and have been delivered to the Registrar of Companies. The report of the auditor on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under Section 498(2) or (3) of the Companies Act 2006. In this report, the comparative figures for the year ended 30 September 2016 have been audited. The comparative figures for the period ended 31 March 2016 are unaudited.

 

(c) For the year ending 30 September 2017, there are no new accounting standards, which have been adopted by the EU, applied and implemented for the condensed consolidated interim financial report.  The accounting policies adopted in the preparation of the condensed consolidated interim financial report are consistent with those adopted in the Group's accounts for the year ended 30 September 2016.

 

(d) On 31 October 2014 Places for People Group Limited ("PFP") acquired 50% of the ordinary share capital of Allenbuild Ltd, a Specialist Building subsidiary.  PFP acquired the remaining 50% on 31 January 2016.  Consequently, Allenbuild Ltd has been treated as a discontinued operation.

 

(e) The principal risks and uncertainties affecting the Group are unchanged from those set out in the Group's accounts for the year ended 30 September 2016.  The Directors have reviewed financial forecasts and are satisfied that the Group has adequate resources to continue in operational existence for the foreseeable future.  Accordingly, the Group continues to adopt the going concern basis in preparing the condensed consolidated interim financial report.

 

This condensed consolidated interim financial report is being sent to all shareholders and is also available upon request from the Company Secretary, Renew Holdings plc, Yew Trees, Main Street North, Aberford, West Yorkshire LS25 3AA, or via the website www.renewholdings.com.

 

2 - Segmental analysis 

 

Operating segments have been identified based on the internal reporting information provided to the Group's Chief Operating Decision Maker. From such information, Engineering Services and Specialist Building have been determined to represent operating segments.               

 

 

 

 

               Six months ended

              31 March

Year ended

30 September

 

 

 

2017

2016

2016

 

 

 

Unaudited

Unaudited

Audited

 

 

Revenue is analysed as follows:

£000

£000

£000

 

 

 

 

 

 

 

 

Engineering Services

234,263

221,345

436,213

 

 

Specialist Building

53,573

44,375

90,503

 

 

Inter segment revenue

(399)

(641)

(983)

 

 

Segment revenue

287,437

265,079

525,733

 

 

Central activities

1,967

-

4

 

 

Group revenue from continuing operations

289,404

265,079

525,737

 

 

 

 

 

 

 

 

 

 

Before exceptional items and amortisation of intangible assets

2017

Unaudited

 

 

 

 

 

Exceptional items and

amortisation of intangible assets

2017

Unaudited

 

 

 

 

Six months ended

31 March

Before amortisation of intangible assets

2016

Audited

 

 

 

 

 

 

 

Amortisation of intangible assets

2016

Audited

 

Year Ended

30 September

2016

Audited

 

2017

Unaudited

2016

Unaudited

 

£000

£000

£000

£000

£000

£000

£000

Analysis of operating profit

 

 

 

 

 

 

 

 

Engineering Services

11,939

(7,149)

4,790

8,929

21,541

(2,954)

18,587

Specialist Building

1,158

-

1,158

1,054

2,334

-

2,334

Segment operating profit

13,097

 

(7,149)

5,948

9,983

 

23,875

 

(2,954)

20,921

Central activities

(986)

-

(986)

(982)

(1,921)

-

(1,921)

Operating profit

12,111

(7,149)

4,962

9,001

21,954

(2,954)

19,000

Net finance (costs)/other income

    (135)

 

-

  (135)

  (202)

 

374

 

-

374

Profit before income tax

11,976

 

(7,149)

4,827

8,799

 

22,328

 

(2,954)

19,374

                               

 

 

Operating profit for the six months ended 31 March 2016 is stated after charging £1,477,000 of amortisation cost. 

 

3 - Exceptional items and amortisation of intangible assets

 

 

Six months ended

 

Year ended

 

31 March

 

30 September

 

2017

 

2016

 

2016

 

Unaudited

 

Unaudited

 

Audited

 

£000

 

£000

 

£000

 

 

 

 

 

 

Acquisition costs re Giffen Holdings Ltd

209

 

-

 

-

Impairment of goodwill

5,800

 

-

 

-

Total charges arising from exceptional items

6,009

 

 -

 

-

Amortisation of intangible assets

1,140

 

1,477

 

2,954

 

7,149

 

1,477

 

2,954

 

Following the decision in April 2017 to withdraw from the loss-making low pressure, small diameter gas pipe replacement activities of Forefront Utilities Ltd, the Board has carried out a review of the carrying value of goodwill attributable to that cash generating unit which has resulted in an impairment charge of £5,800,000.

 

 

4 - Discontinued operation analysis

 

 

Six months ended

 

Year ended

 

31 March

 

30 September

 

 

 

 

 

 

 

2017

 

2016

 

2016

 

Unaudited

 

Unaudited

 

Audited

 

£000

 

£000

 

£000

 

 

 

 

 

 

Revenue

147

 

4,876

 

 7,500

Expenses

(147)

 

(4,876)

 

(11,493)

Loss before income tax

-

 

    -

 

(3,993)

Income tax credit - benefit of tax losses

-

 

-

 

785

Income tax charge - adjustment in respect

of previous period

-

 

-

 

(818)

Loss for the period from discontinued operation

-

 

-

 

(4,026)

 

 

 

5 - Income tax expense

 

 

Six months ended

Year ended

 

31 March

30 September

 

2017

2016

2016

 

Unaudited

Unaudited

Audited

 

£000

£000

£000

Current tax:

 

 

 

UK corporation tax on profits for the period

(1,877)

(1,598)

(3,742)

Adjustments in respect of previous periods

-

-

(171)

Total current tax

(1,877)

(1,598)

(3,913)

Deferred tax

(195)

(162)

(823)

Income tax expense

(2,072)

(1,760)

(4,736)

 

 

 

 

 

 

 

 

 

 

6 - Earnings per share

 

                                                              Six months ended 31 March

Year ended 30 September

 

 

 

2017

 

 

 

 

2016

 

 

 

2016

 

 

 

 

Unaudited

 

 

 

Unaudited

 

 

 

Audited

 

 

Earnings

EPS

DEPS

 

Earnings

EPS

DEPS

 

Earnings

EPS

DEPS

 

£000

Pence

Pence

 

£000

Pence

Pence

 

£000

Pence

Pence

Earnings before exceptional items and amortisation

 

9,661

15.49

15.37

 

 

8,250

13.31

13.20

 

17,060

27.43

27.19

Exceptional items and amortisation

 

   (6,906)

(11.07)

(10.99)

 

 

   (1,211)

(1.96)

(1.94)

 

(2,422)

(3.90)

(3.86)

Basic earnings per share - continuing operations

 

2,755

4.42

4.38

 

 

7,039

11.35

11.26

 

14,638

23.53

23.33

Loss for the period from discontinued operation

 

-

  -

-

 

 

-

  -

-

 

(4,026)

(6.47)

(6.42)

Basic earnings per share

 

2,755

4.42

4.38

 

 

7,039

11.35

11.26

 

10,612

      17.06

16.91

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares

 

62,376

62,860

 

 

62,001

62,524

 

 

            62,201

62,739

                                       

 

 

The dilutive effect of share options is to increase the number of shares by 484,000 (March 2016: 523,000; September 2016: 538,000) and reduce the basic earnings per share by 0.04p (March 2016: 0.09p; September 2016: 0.15p).  On 13 January 2017 273,503 new Ordinary shares of 10p each were issued following the exercise of share options bringing the total number in issue to 62,591,451.

 

7 - Dividends

 

The proposed interim dividend is 3.00p per share (2016: 2.65p).  This will be paid out of the Company's available distributable reserves to shareholders on the register on 2 June 2017, payable on 3 July 2017. In accordance with IAS 1, dividends are recorded only when paid and are shown as a movement in equity rather than as a charge in the income statement.

 

8 - Intangible assets

 

 

 

 

Goodwill

Contractual rights and customer relationships

 

 

 

£000

£000

Cost:

 

 

 

 

At 1 April 2016

 

 

57,067

12,323

Addition

 

 

-

-

At 1 October 2016

 

 

57,067

12,323

Addition

 

 

8,046

3,679

At 31 March 2017

 

 

65,113

16,002

 

 

 

 

 

Impairment losses/amortisation:

 

 

 

 

At 1 April 2016

 

 

(808)

(9,566)

Amortisation

 

 

-

(1,477)

At 1 October 2016

 

 

(808)

(11,043)

Amortisation

 

 

-

(1,140)

Impairment

 

 

(5,800)

-

At 31 March 2017

 

 

(6,608)

(12,183)

 

 

 

 

 

Carrying amount:

 

 

 

 

At 1 April 2016 (unaudited)

 

 

56,259

2,757

At 1 October 2016 (audited)

 

 

56,259

1,280

At 31 March 2017 (unaudited)

 

 

58,505

3,819

 

 

 

 

 

 

On 31 October 2016, the Group acquired the whole of the issued share capital of Giffen Holdings Ltd ("Giffen") for a cash consideration of £5m with a further £2m payment to redeem loans.

 

The Board's preliminary estimate is that goodwill of £8m arises on acquisition which will be reviewed for impairment one year after the acquisition as permitted by IFRS 3.  Goodwill will be finally determined following the completion of the audit of the accounts of Giffen for the year ended 30 September 2016.  The goodwill is attributable to the expertise and workforce of the acquired business.

 

Other intangible assets, provisionally valued at £3.7m, representing contractual rights and customer relationships, were also acquired and will be amortised over their useful economic lives, which range from two to five years, in accordance with IFRS 3.  Deferred tax has been provided on this amount. Amortisation of this intangible asset commenced in November 2016.

 

 


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