Preliminary results

RNS Number : 8879T

Renew Holdings PLC

26 November 2013

 



Renew Holdings plc

("Renew" or the "Group")

Preliminary results

Renew (AIM: RNWH), the Engineering Services Group supporting UK infrastructure, announces record preliminary results for the year ended 30 September 2013.

Financial Highlights

	2013	2012
Revenue	£334.6m	£337.4m	-1%
Adjusted operating profit*	£11.2m	£10.3m	+9%
Operating margin	3.4%	3.0%	+13%
Adjusted profit before tax*	£10.7m	£10.0m	+7%
Reported profit before tax	£10.7m	£8.4m	+27%
Adjusted earnings per share*	14.81p	13.90p	+7%
Basic earnings per share	14.33p	7.91p	+81%
Dividend per share	3.6p	3.15p	+14%

Operational Highlights

·     Acquisition of Lewis Civil Engineering Limited for a cash consideration, including costs, of £8.2m

·     Engineering Services revenue up 9%, including organic growth of 6%,to £232.4m (2012: £214.1m)

·     Engineering Services revenue now accounts for 70% of Group revenue (2012: 63%) 

·     Group order book up 26% to £416m (2012: £331m) with Engineering Services order book up 28% to £301m (2012: £235m)

·     Returned to a net cash position of £2.8m (2012: net debt £5.5m)

·     Final dividend increased by 19% to 2.5p (2012: 2.1p)

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

Commenting on the results, Roy Harrison OBE, Chairman said: "The Group has delivered another set of record results with strong cash generation and has confirmed its growth strategy in Engineering Services with another successful acquisition. Renew is now firmly positioned as a leading infrastructure support services group and, with a record order book secured, the Board is confident of delivering further profitable growth." 

Enquiries:

Renew Holdings plc	Tel: [phone]
Brian May, Chief Executive
John Samuel, Group Finance Director
Numis Securities Limited	Tel: [phone]
Stuart Skinner (Nominated Adviser)
James Serjeant (Corporate Broker)
Walbrook PR	Tel: [phone]
Paul McManus (Media Relations)	Mob: [phone] or [e-mail]
Paul Cornelius (Investor Relations)	Mob: [phone] or [e-mail]

About Renew Holdings plc

Engineering Services, which now accounts for 70% of Group revenue and over 80% of Group 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 New Build Affordable Housing and High Quality Residential markets in the South of England.

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

Chairman's Statement

Results

The Group's record results for the year ended 30 September 2013 demonstrate its position as a leading provider of multidisciplinary Engineering Services supporting critical UK infrastructure. The Engineering Services business achieved strong growth in revenue, operating profit and forward order book.

Group operating profit prior to exceptional items and amortisation was up 9% to £11.2m (2012: £10.3m) on Group pre-exceptional revenue of £334.6m (2012: £337.4m). Group operating margin improved to 3.4% (2012: 3.0%).  Earnings per share prior to exceptional items and amortisation increased by 7% to 14.81p (2012: 13.90p) with basic earnings per share on continuing activities increasing by 25% to 14.85p (2012: 11.87p).

There have been a number of exceptional items during the year. The net impact of these items in the year is a profit before taxation of £0.5m. An amortisation charge of £0.5m has also been recognised offsetting the exceptional profit. Full details of these items are set out in Note 3 of the accompanying financial results.

The Engineering Services business has progressed well with a 9% increase in revenue to £232.4m (2012: £214.1m), together with a 10% increase in operating profit to £10.6m (2012: £9.6m). Operating margin improved to 4.6% (2012: 4.5%). 

The Specialist Building activity remained focused on selective niche markets in the South with operating margin improving to 2.0% (2012: 1.7%). As expected, operating profit was maintained at £2.1m (2012: £2.1m) on revenue of £102.5m (2012: £123.1m).

The Group's contracted order book at 30 September 2013 stood at £416m (2012: £331m), a 26% increase, with the Engineering Services order book up 28% to £301m (2012: £235m). 

Cash performance has been strong and I am pleased to report that the Group has returned to a year end net cash position of £2.8m (2012: net debt £5.5m). This improvement has come through a strong working capital performance combined with the benefit of the sale of land at Rugby which has been recorded as an exceptional item.

Much of the cash generated from the Rugby sale was redeployed in acquiring Lewis Civil Engineering Limited ("Lewis") for a cash consideration including costs of £8.2m. Lewis, which is based near Cardiff, specialises in the construction and maintenance of infrastructure and assets within the water industry. Lewis has revenue of approximately £25m per annum with an operating profit margin of circa 5%. It is a well respected brand in its region and market with clients including Wessex Water and Dŵr Cymru Welsh Water. It provides its services through framework agreements and employs 175 highly skilled personnel. Lewis's financial performance is expected to be both cash generative and accretive to Renew's Engineering Services operating margin in the 2013/14 financial year.

Dividend

The Board is proposing a final dividend of 2.50p per share, increasing the full year dividend by 14% to 3.60p (2012: 3.15p). The dividend will be paid on 3 March 2014 to shareholders on the register as at 31 January 2014. The Board intends to continue to grow dividends progressively.

Outlook

The Group enters the 2013/14 financial year in a strong position. In Specialist Building the Group operates in two discrete market sectors that have strong fundamentals and in which we have particular experience and expertise. In Engineering Services, the Group is expanding its position as a leading provider of engineering support services in the UK's Energy, Environmental and Infrastructure markets. These markets are mainly regulated and the critical assets are maintained by programmes of essential non-discretionary spending.  The Group continues to focus its activities on these programmes which provide both good visibility of future opportunities and sustainable earnings streams.

It remains the Board's strategy to grow the business, both organically and by selective acquisitions, developing Renew's position as a leading medium sized engineering support services group.  The Board's ambition is to grow Group revenue to over £500m, an achievement which continues to be likely to require further acquisitions. The Board continues to set challenging performance targets and believes that over the next three years the Group can increase its Engineering Services business operating margins to 5% whilst maintaining Specialist Building performance in line with that currently being achieved. The Group's successful acquisition record combined with these strong results and net cash position, together with the record forward order book indicate that Renew is well placed to achieve these targets.

R J Harrison OBE

Chairman

26 November 2013

Chief Executive's Review

The Group has successfully grown its Engineering Services business both organically and by acquisition. This has increased both revenue and operating profit and strengthened its position as a provider of multidisciplinary integrated engineering support services to critical UK infrastructure. Our Specialist Building activities have increased operating margin and remain focused on niche sustainable markets in the South.

Engineering Services

Operating in the Energy, Environmental and Infrastructure markets, Renew undertakes essential asset support providing maintenance and renewal services through its directly employed multidisciplinary workforce operating from local, independently branded businesses.

Revenue in Engineering Services grew by 9%, including organic growth of 6%, to £232.4m (2012: £214.1m) and now accounts for 70% of Group revenue (2012: 63%) and 84% of Group operating profit (2012: 82%). Operating margin improved to 4.6% (2012: 4.5%).

The Engineering Services order book has seen strong growth of 28% to £301m (2012: £235m), securing 83% of 2014 budget revenue (2013: 66%). This growth has been achieved in all market sectors with Energy up 7% to £133m (2012: £124m), Environmental up 79% to £59m (2012: £33m) and Infrastructure up 40% to £109m (2012: £78m).

The Group continues to deliver its strategy of growing its Engineering Services business both organically and through selective earnings enhancing acquisitions.  In the year under review, the Group acquired Lewis Civil Engineering Limited based near Cardiff. Lewis, which specialises in deep sewer and water main pipelines, waste water treatment and general water utility infrastructure works, further strengthens the Group's position in the Water sector adding two leading utility businesses as major clients in the Environmental market.

Energy

The Group operates in the nuclear, traditional and renewable power generation sectors nationally providing planned and reactive maintenance and asset renewal support for a range of clients mainly through long standing framework agreements.

The Group focuses its activity in the nuclear sector with the majority of work continuing to be undertaken across the Nuclear Decommissioning Authority's ("NDA") estate where we are active on nine sites that command around 70% of the NDA's £3bn annual expenditure. Work is concentrated at the Sellafield site on which the Group has been operational for over sixty years and where the Group provides engineering support for the care and maintenance of operational plant associated with waste treatment or processing, decommissioning, demolition and clean-up of redundant facilities. Sellafield continues to be allocated 55% of the NDA's annual budget.

Our position as the leading provider of mechanical and electrical services at Sellafield and the integrated service offering through our subsidiary businesses helped the Group achieve a 16% increase in our secured nuclear order book to £126m (2012: £109m). During the year, the Group became the first contractor to receive supply chain accreditation for service provision at the Sellafield site in recognition of our performance to the highest quality nuclear standards. Our continued attention to our safety performance was also recognised when we received the 2013 Sellafield Resident Engineers Safety Award for 'Outstanding Safety Performance'.

Work at Sellafield continues to be undertaken on the Multi Discipline Site Works framework which was renewed from 1 April 2013 and is valued at up to £280m over a four year period. As one of the three participants on the framework, we continue to be aligned with the largest area of spend, delivering production operations support work packages.

One of the major areas of work at Sellafield is in high hazard risk reduction and includes the Evaporator D scheme, currently the UK's largest nuclear programme. Revenues on this project are now expected to exceed £60m over its three year duration with completion due in 2015. The £26m four year Decommissioning and Bulk Sludge Retrievals framework has also experienced a substantial increase in scope during the period. Work also continues on the £58m four year Site Wide Asset Care framework.

We continue to support Sellafield's major projects programmes and are the sole mechanical and electrical supply chain partner on the fifteen year £1.1bn Infrastructure Strategic Alliance framework.

Elsewhere in the Energy market, the Group provides long term engineering support at five of the UK's traditional power generation sites through seven framework agreements.  The ongoing maintenance and support of these sites is critical in ensuring provision of the UK's future energy needs. 

In renewables, we have increased our service offering in the wind energy sector where we were commissioned by E.On to carry out a range of challenging repair works which successfully brought a number of turbines back on line on a remote site in Scotland. We are also engaged to supply a range of highly engineered components to one of the UK's largest offshore windfarms for the same client. Hydro generation schemes are also providing a number of opportunities with projects for Scottish and Welsh Water on track to commence in 2014 through our frameworks with these clients.

New Nuclear Power

HM Government's 'Strike Price' agreement with EDF Energy announced in October 2013 represents a crucial milestone in the role of new nuclear as part of the UK's future energy strategy. The final investment decision for the proposed new station at Hinkley Point is anticipated by the summer of 2014. The forecast costs of Hinkley Point 'C' are circa £16bn which is to be spent over a ten year construction period. This initial project as well as the anticipated increased momentum at other proposed new UK sites, which also have consents to develop, will present opportunities for Renew. An established and proven track record of service delivery to the highest standards within this highly regulated sector will be a prerequisite to participation. The Group has demonstrated its attainment of the necessary standards over many years and continues to be involved in supporting proposals for elements of the requirements at Hinkley Point, including the manufacture and supply of high integrity fabricated steel components which will be required early in the construction phase.              

Environmental

The Group continues to provide operational support and maintenance to the water infrastructure, flood alleviation, river and coastal defence, land remediation and engineering renovation sectors where much of the work is undertaken through long term framework agreements with repeat clients.

Our progress in the Water sector has been enhanced by the acquisition of Lewis Civil Engineering Limited ("Lewis"). Our work for Northumbrian Water, Wessex Water and Welsh Water includes sewer maintenance, clean and waste water rehabilitation, strategic mains maintenance and general utility infrastructure services under the regulated AMP5 programme.

For Northumbrian Water, Seymour has been appointed a preferred supplier to deliver a number of accelerated flood prevention schemes in addition to having been awarded their third out of four Trunk Mains Cleaning projects and continuing to provide maintenance support under seven frameworks.

For Wessex Water, Lewis is sole supplier on the Networks 1 framework under their AMP5 investment programme. For Welsh Water, Lewis has positions on the Pressurised Pipelines and Major Civil Engineering Projects frameworks. Lewis also adds a particular specialism to the Group with their expertise in trenchless technology.

In Land Remediation, work continues for long standing client National Grid under a number of established national remediation framework agreements. The National Contaminated Land Remediation Contractor's framework delivered the award of a major remediation scheme for Blackpool Council. Recent project awards for Scotia Gas Networks have led to a five year framework appointment.

During the year, the Group has been appointed to the Environment Agency's minor works frameworks across all of its regions. The Group is the only contractor to have achieved this nationwide position.

In the Engineering Renovation sector, the Group has recently commenced work on a £9m project at the Palace of Westminster. This contract is associated with the repair and restoration of the cast iron roofs at this World Heritage Site where the Group has previously completed work on a similar project on the Speaker's Court section of the roof. This award provides continuity with a long established client in a market sector where the Group has renowned expertise and a proven delivery record. Previously, the Group has carried out all of the restoration work on both the undercroft and roof during the redevelopment of St Pancras Station, together with work on many of the country's principal glasshouse structures including Kibble Palace and Wentworth House.

Infrastructure

The Group operates mainly in the Rail sector delivering off-track asset renewal and refurbishment as well as a wide range of planned and reactive maintenance services critical to keeping the rail network operational.

For our largest client, Network Rail, we remain the sole provider of engineering maintenance services nationally which we deliver under both the Building and Civils Delivery Partnership ("BCDP") and Asset Management ("AM") frameworks. In addition to ongoing engineering support our local delivery teams respond nationally across the rail network providing 24 hour emergency services.

We have seen a substantial increase in activity during the year across our entire work portfolio. This increase is attributable to the responsiveness of our local teams which are aligned closely with the operational structure of Network Rail. During the year, we have carried out approximately 4,000 separate instructions in AM and been awarded almost 100 projects in BCDP.

The Group's specialist skills in tunnel and shaft refurbishment provide a differentiator in this market and were further enhanced in the year with the formation of our National Tunnel Delivery Team. We have recently been awarded the £12m Holme Tunnel project which has now started on site, together with further works to reline the crown of Whiteball Tunnel.

Our increased activity in Rail is reflected in a 36% uplift in our forward order book to £101m (2012: £74m). The recently announced funding plan for Network Rail over the next five years provides excellent visibility of future work opportunities in the Rail sector.

Specialist Building

Specialist Building activity remains focused on the High Quality Residential and New Build Affordable Housing markets in the South. Specialist Building showed an increased operating margin of 2.0% (2012: 1.7%) through maintaining an operating profit of £2.1m (2012: £2.1m) on revenue of £102.5m (2012: £123.1m).  Our Specialist Building order book has grown by 20% to £115m (2012: £96m) and although we anticipate delivering growth in revenue during 2013/14, our focus in this segment will remain on delivering a consistent level of operating profit. The Group has specific expertise in these niche markets as well as many years' experience which combined with our strong relationships provides a sustainable environment for future opportunities. 

In the High Quality Residential market in London and the Home Counties we remain a leading quality provider. Our extensive experience and expertise in innovative temporary works engineering solutions when carrying out complex structural remodelling and extending properties below ground provides a key differentiator.  Over £60m of new opportunities have been secured in this strong market which has good visibility of future opportunities and the business has all of its budget revenue for 2013/14 already contracted. 

The demand for New Build Affordable Housing remains high and the Group has established relationships with many of the leading Housing Associations in the South providing access to an advertised spend of £700m per annum for the next three years. Over £50m of awards have been contracted during the year including further projects for Peabody, One Housing Group and Notting Hill Housing securing 76% of the business' 2013/14 budget revenue.

People

The Group's priority remains the safety of our employees and those working with us. Our commitment to this can be seen in the significant 92% reduction in our Accident Incidence Rate over the last eight years. The Group has a number of safety related initiatives in place and is particularly focused on ensuring that all incidents, not only those which result in reportable accidents, are recorded and analysed to ensure all possible lessons are learned.

The Group's strong results are a testament to the skills and commitment of all our employees. The Board would like to express its gratitude for this ongoing effort which is vital to the continued success of the Group.

Summary

Renew provides essential engineering maintenance, refurbishment and renewal services to support the UK's critical assets in regulated markets underpinned by sustainable revenue. 

Our strong order book and proven strategy of delivering growth in the Group's Engineering Services business, both organically and by acquisition, illustrates that we are increasingly well placed in our target markets, providing confidence for future growth.

Brian May

Chief Executive

26 November 2013

Group income statement

For the year ended 30 September 2013

															Before	Exceptional
															exceptional	items and
															items and	amortisation
															amortisation	of intangible
															of intangible	assets
														Note	assets	(see Note 3)	Total	Total
															2013	2013	2013	2012
															£000	£000	£000	£000
Group revenue from continuing activities														2	334,649	15,412	350,061	337,423
Cost of sales															(296,232)	(14,408)	(310,640)	(301,040)
Gross profit															38,417	1,004	39,421	36,383
Administrative expenses															(27,185)	(968)	(28,153)	(27,735)
Operating profit														2	11,232	36	11,268	8,648
Finance income															25	-	25	45
Finance costs															(362)	-	(362)	(518)
Other finance (expense)/income - defined benefit pension schemes															(232)	-	(232)	246
Profit before income tax															10,663	36	10,699	8,421
Income tax expense														4	(1,778)	(9)	(1,787)	(1,308)
Profit for the year from continuing activities															8,885	27	8,912	7,113
Loss for the year from discontinued operation                                                                   3																	(315)	(2,372)
Profit for the year attributable to equity holders of the parent company																	8,597	4,741
Basic earnings per share from continuing activities													6				14.9p	11.9p
Diluted earnings per share from continuing operations													6				14.7p	11.4p
Basic earnings per share													6				14.3p	7.9p
Diluted earnings per share													6				14.1p	7.6p
Group statement of comprehensive income
For the year ended 30 September 2013																	2013	2012
																	£000	£000
Profit for the year attributable to equity holders of the parent company																	8,597	4,741
Items that will not be reclassified to profit or loss:
Movement in actuarial valuation of the defined benefit pension schemes																	(6,895)	(3,442)
Movement on deferred tax relating to the defined benefit pension schemes																	1,429	847
Total items that will not be reclassified to profit or loss																	(5,466)	(2,595)
Items that are or may be reclassified subsequently to profit or loss:
Exchange movements in reserves																	(24)	(407)
Total items that are or may be reclassified subsequently to profit or loss																	(24)	(407)
Total comprehensive income for the year attributable to equity holders of the parent company																	3,107	1,739
Group statement of changes in equity
					Called up				Share				Capital		Cumulative	Share based	Retained	Total
					share				premium				redemption		translation	payments	earnings	equity
					capital				account				reserve		adjustment	reserve
					£000				£000				£000		£000	£000	£000	£000
At 1 October 2011					5,990				5,893				3,896		1,182	283	(8,268)	8,976
Transfer from income statement for the year																	4,741	4,741
Dividends paid																	(1,827)	(1,827)
Recognition of share based payments																6		6
Exchange differences															(407)			(407)
Actuarial losses recognised in pension schemes																	(3,442)	(3,442)
Movement on deferred tax relating to the pension schemes																	847	847
At 30 September 2012					5,990				5,893				3,896		775	289	(7,949)	8,894
Transfer from income statement for the year																	8,597	8,597
Dividends paid																	(1,917)	(1,917)
New shares issued					150													150
Recognition of share based payments																101		101
Exchange differences															(24)			(24)
Actuarial losses recognised in pension schemes																	(6,895)	(6,895)
Movement on deferred tax relating to the pension schemes																	1,429	1,429
At 30 September 2013					6,140				5,893				3,896		751	390	(6,735)	10,335

Group balance sheet                              

At 30 September 2013

		2013	2012
		£000	£000
Non-current assets
Intangible assets - goodwill		33,060	26,918
- other		3,959	2,250
Property, plant and equipment		8,680	4,690
Retirement benefit assets		962	1,820
Deferred tax assets		3,051	2,929
		49,712	38,607
Current assets
Inventories		3,195	9,109
Trade and other receivables		75,868	73,958
Current tax assets		1,007	834
Cash and cash equivalents		5,348	2,040
		85,418	85,941
Total assets		135,130	124,548
Non-current liabilities
Borrowings		-	(2,500)
Obligations under finance leases		(1,984)	(676)
Retirement benefit obligations		(3,545)	(569)
Deferred tax liabilities		(1,036)	(1,039)
Provisions		(628)	(566)
		(7,193)	(5,350)
Current liabilities
Borrowings		(2,500)	(5,000)
Trade and other payables		(112,329)	(104,302)
Obligations under finance leases		(1,509)	(570)
Current tax liabilities		(1,160)	(266)
Provisions		(104)	(166)
		(117,602)	(110,304)
Total liabilities		(124,795)	(115,654)
Net assets		10,335	8,894
Share capital		6,140	5,990
Share premium account		5,893	5,893
Capital redemption reserve		3,896	3,896
Cumulative translation reserve		751	775
Share based payments reserve		390	289
Retained earnings		(6,735)	(7,949)
Total equity		10,335	8,894

Group cash flow statement

For the year ended 30 September

										2013	2012
										£000	£000
Profit for the year from continuing operations										8,912	7,113
Amortisation of intangible assets										500	500
Depreciation										1,288	905
Profit on sale of property, plant and equipment										(110)	(17)
Decrease/(increase) in inventories										6,466	(501)
Decrease in receivables										2,093	10,081
Increase/(decrease) in payables										1,936	(10,969)
Current service cost in respect of defined benefit pension scheme										53	54
Cash contribution to defined benefit pension schemes										(3,346)	(3,477)
Expense in respect of share options										101	6
Financial income										(25)	(291)
Financial expenses										594	518
Interest paid										(362)	(518)
Income taxes paid										(429)	(333)
Income tax expense										1,787	1,308
Net cash inflow from continuing operating activities										19,458	4,379
Net cash outflow from discontinued operating activities										(220)	(794)
Net cash inflow from operating activities										19,238	3,585
Investing activities
Interest received										25	45
Proceeds on disposal of property, plant and equipment										1,854	191
Purchases of property, plant and equipment										(705)	(270)
Acquisition of subsidiaries net of cash acquired										(9,384)	-
Net cash outflow from continuing investing activities										(8,210)	(34)
Net cash inflow from discontinued investing activities										-	36
Net cash (outflow)/inflow from investing activities										(8,210)	2
Financing activities
Dividends paid										(1,917)	(1,827)
Issue of Ordinary Shares										150	-
Loan repayments										(5,000)	(5,000)
Repayments of obligations under finance leases										(958)	(396)
Net cash outflow from continuing financing activities										(7,725)	(7,223)
Net cash outflow from discontinued financing activities										-	-
Net cash outflow from financing activities										(7,725)	(7,223)
Net increase/(decrease) in continuing cash and cash equivalents										3,523	(2,878)
Net decrease in discontinued cash and cash equivalents										(220)	(758)
Net increase/(decrease) in cash and cash equivalents										3,303	(3,636)
Cash and cash equivalents at beginning of year										2,040	5,688
Effect of foreign exchange rate changes on cash and cash equivalents										5	(12)
Cash and cash equivalents at end of year										5,348	2,040
Bank balances and cash										5,348	2,040

Notes

1 International Financial Reporting Standards

The consolidated financial statements for the year ended 30 September 2013 have been prepared in accordance with International Financial Reporting Standards ("IFRS"). These preliminary results are extracted from those financial statements.

2 Segmental analysis

The Group is organised into two operating business segments plus central activities which form the basis of the segment information reported below. These segments are:

Engineering Services, which comprises the Group's engineering activities which are characterised by the use of the Group's skilled engineering workforce, supplemented by specialist subcontractors where appropriate, in a range of civil, mechanical and electrical engineering applications and:

Specialist Building, which comprises the Group's building activities which are characterised by the use of a supply chain of subcontractors to carry out building works under the control of the Group as principal contractor and;

Central activities, which include the sale of land for development, the leasing and sub-leasing of some UK properties and the provision of central services to the operating subsidiaries.

		2013	2012
Revenue is analysed as follows:		£000	£000
Engineering Services		232,371	214,102
Specialist Building		102,521	123,070
Inter segment revenue		(246)	(179)
Segment revenue		334,646	336,993
Central activities		3	430
Group revenue before exceptional items		334,649	337,423
Exceptional revenue		15,412	-
Group revenue from continuing activities		350,061	337,423

	Before
	exceptional	Exceptional
	items and	items and
	amortisation	amortisation
	charges	charges	2013	2012
Analysis of operating profit	£000	£000	£000	£000
From continuing activities
Engineering Services	10,646	(500)	10,146	8,653
Specialist Building	2,083	(3,539)	(1,456)	1,500
Segment operating profit	12,729	(4,039)	8,690	10,153
Central activities	(1,497)	4,075	2,578	(1,505)
Operating profit	11,232	36	11,268	8,648
Net financing expense	(569)	-	(569)	(227)
Profit on ordinary activities before income tax	10,663	36	10,699	8,421

3 Exceptional items and amortisation of intangible assets

	2013	2012
	£000	£000
Redundancy and restructuring costs	272	1,120
Provision against amounts recoverable on old Building contracts	2,767	-
Costs related to exceptional storm damage on a Building contract	500	-
Lewis acquisition costs	196	-
Profit arising from sale of land	(9,190)	-
Write down of land stock in the USA	4,919	-
Total (gains)/losses arising from exceptional items	(536)	1,120
Amortisation of intangible assets	500	500
	(36)	1,620

The Board has determined that certain charges to the income statement should be separately identified for better understanding of the Group's results.

During the year, the Group has incurred £272,000 (2012: £1,120,000) of exceptional redundancy and restructuring costs in closing a regional non-specialist Building office. Additionally revenue of £1,028,000 was recorded and provisions amounting to £2,767,000 have been made against old Building contracts in previously closed regional non-specialist Building offices, primarily resulting from the insolvency of certain subcontractors which arose in the year.

A Building subsidiary has recognised a charge in respect of costs arising from exceptional storm damage resulting in a charge of £500,000.

On 9 August 2013 the Company acquired Lewis Civil Engineering Ltd and incurred £196,000 of costs associated with the acquisition.

On 21 August 2013 the Company sold 71 acres of land near Rugby for a gross sum of £14,384,000 resulting in a profit of £9,190,000.

As a result of changes to detailed planning and zoning agreements in respect of land owned by the Group in the USA, the Board has written down the carrying value of these assets by £4,919,000.

The Board has also separately identified the charge of £500,000 (2012: £500,000) for the amortisation of the fair value ascribed to certain intangible assets other than goodwill arising from the acquisition of Amco Group Holdings Ltd.

Discontinued operation analysis

	2013	2012
	£000	£000
Revenue	(364)	1,816
Expenses	92	(3,216)
Write off of goodwill and fair value adjustment	-	(904)
Loss before income tax	(272)	(2,304)
Income tax expense - deferred tax	(43)	(68)
Loss for the year from discontinued operation	(315)	(2,372)

The discontinued operation, C&A Pumps Ltd, was sold on 14 November 2012 for a nominal consideration.

4 Income tax expense

Analysis of expense in year			2013		2012
			£000		£000
Current tax:
UK corporation tax on profits of the year			(858)		(266)
Adjustments in respect of previous periods			10		86
Total current tax			(848)		(180)
Deferred tax - defined benefit pension schemes			(612)		(893)
Deferred tax - other timing differences			(370)		(302)
Total deferred tax			(982)		(1,195)
Income tax expense			(1,830)		(1,375)
Deferred tax in respect of discontinued operation			43		67
Income tax expense in respect of continuing activities			(1,787)		(1,308)
5 Dividends			2013			2012
			Pence/share			Pence/share
Interim (related to the year ended 30 September 2013)			1.10			1.05
Final (related to the year ended 30 September 2012)			2.10			2.00
Total dividend paid			3.20			3.05
			£000			£000
Interim (related to the year ended 30 September 2013)			658			628
Final (related to the year ended 30 September 2012)			1,259			1,199
Total dividend paid			1,917			1,827

Dividends are recorded only when authorised and are shown as a movement in equity rather than as a charge in the income statement.  The Directors are proposing that a final dividend of 2.50p per Ordinary Share be paid in respect of the year ended 30 September 2013.  This will be accounted for in the 2013/14 financial year.

6 Earnings per share

				2013				2012
		Earnings	EPS	DEPS		Earnings	EPS	DEPS
		£000	Pence	Pence		£000	Pence	Pence
Earnings before exceptional items & amortisation		8,885	14.81	14.66		8,328	13.90	13.33
Exceptional items & amortisation		27	0.04	0.04		(1,215)	(2.03)	(1.95)
Basic earnings per share - continuing		8,912	14.85	14.70		7,113	11.87	11.38
Loss for the year from discontinued operation		(315)	(0.52)	(0.52)		(2,372)	(3.96)	(3.79)
Basic earning per share		8,597	14.33	14.18		4,741	7.91	7.59
Weighted average number of shares			59,998	60,624			59,899	62,493

The dilutive effect of share options is to increase the number of shares by 626,000 (2012: 2,594,000) and reduce basic earnings per share by 0.15p (2012: 0.32p).

7 Preliminary financial information

The financial information set out above does not constitute the Company's statutory accounts for the years ended 30 September 2013 or 2012. The financial information for 2012 is derived from the statutory accounts for 2012 which have been delivered to the Registrar of Companies. The auditors have reported on the 2012 accounts; their report was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006. The statutory accounts for 2013 will be finalised on the basis of the financial information presented by the Directors in this preliminary announcement and will be delivered to the Registrar of Companies in due course.

8 Posting of Report & Accounts

The Group confirms that the annual report and accounts for the year ended 30 September 2013 will be posted to shareholders as soon as practicable and a copy will be made available on the Group's website:

www.renewholdings.com

 

END

 

 

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