Preliminary Results

RNS Number : 8631X
Renew Holdings PLC
25 November 2014
 



25 November 2014

Renew Holdings plc

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

 

Preliminary Results

 

Renew (AIM: RNWH), the Engineering Services Group supporting UK infrastructure, announces record preliminary results for the year ended 30 September 2014.

 

Financial Highlights

 


2014

2013


Revenue*

£464.5m

£282.7m

+64%

Adjusted operating profit*

£16.4m

£10.0m

+64%

Adjusted operating margin*

3.5%

3.5%


Adjusted profit before tax*

£16.1m

£9.7m

+65%

Adjusted earnings per share*

20.80p

12.38p

+68%

Basic earnings per share*

16.83p

16.62p

+1%

Dividend per share

5.0p

3.6p

+39%

               

*Adjusted results are shown prior to exceptional items, amortisation and discontinued operations with comparative figures restated to reflect IAS 19 (revised) 

 

Operational Highlights

·     Group revenue up 64% to £464.5m

·     Group operating profit up 64% to £16.4m

·     Order book up 21% to £439m at 30 September 2014 (2013: £364m)

·     Successful acquisitions of Clarke Telecom Ltd and Forefront Group Ltd

·     Appointed to 7 Network Rail frameworks for Control Period 5 with advertised value of £450m over 5 years.

·     Adjusted EPS up 68% to 20.80p (2013: 12.38p)

·     Dividend increased by 39% to 5.0p (2013: 3.6p)

 

Post Period End Highlights

·     Successful disposal of Allenbuild Limited for a total consideration of £2.75m payable in cash

 

R J Harrison OBE, Chairman said: "I am pleased to announce another record set of preliminary results for the Group. Renew enters the 2014/15 financial year in a strong position having made excellent progress in expanding its position as a leading provider of engineering support services with strong organic growth coupled with two acquisitions into new markets. Our record order book of £439m gives the Board confidence for the next financial year. The Board's growth strategy for its Engineering Services business is proven and continues to deliver shareholder value which is reflected in the 39% increase in dividend. The Board has set targets for Group revenue in excess of £500m and a Group operating margin of at least 4.5% within the next three years."

 

 

 

 

 

 

Enquiries:

                      Tel: 0113 281 4200


John Samuel, Group Finance Director




Numis Securities Limited

                      Tel: 020 7260 1000




                      Tel: 020 7933 8780

Mob: 07980 541 893 or paul.mcmanus@walbrookpr.com

Bob Huxford

Mob: 07747 635 908 or bob.huxford@walbrookpr.com

 

About Renew Holdings plc

Engineering Services, which accounts for over 80% of Group revenue and 85% 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 Buildingfocuses 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

 

Results

 

Record results for the year ended 30 September 2014 demonstrate the Group's continued progress as a leading multidisciplinary Engineering Services provider, supporting critical UK infrastructure.

 

Group revenue and operating profit, prior to exceptional items, amortisation and discontinued operations were both up 64% to £464.5m (2013: £282.7m) and £16.4m (2013: £10.0m) respectively. Group operating margin was maintained at 3.5% (2013: 3.5%).  Earnings per share prior to exceptional items, amortisation and discontinued operations increased by 68% to 20.80p (2013: 12.38p) with basic earnings per share on continuing activities of 16.83p (2013: 16.62p).

 

The Engineering Services business has seen growth across all its markets of Energy, Environmental and Infrastructure with revenue up 65% to £382.5m (2013: £232.4m). Engineering Services accounts for 82% of Group revenue.

 

The largest area of growth was in our Rail business which experienced high levels of demand for emergency repair works following last winter's extreme weather conditions alongside a Network Rail "enhanced spend" programme which together added £64.7m of non-recurring revenue. Our position with Network Rail has been recently strengthened following our appointment to seven Control Period 5 Infrastructure Projects frameworks with an advertised value of £450m over the next five years.

 

Engineering Services operating profit has seen a 54% increase to £16.3m (2013: £10.6m) with an operating margin of 4.3% (2013: 4.6%). Margin reduced slightly as much of the additional non-recurring Rail revenue referred to above was undertaken on a cost reimbursable basis with a lower margin. When the effect of the non-recurring Rail activity and acquisitions is excluded from our results, Engineering Services delivered 18% growth in revenue and 22% growth in operating profit.

 

Specialist Building is predominantly focused on the High Quality Residential market in London and the Home Counties. Revenue increased by 62% to £82.1m (2013: £50.6m) and operating profit by 69% to £2.2m (2013: £1.3m), delivering an operating margin of 2.6% (2013: 2.5%). These results exclude those of Allenbuild Limited which has been treated as a discontinued business following its sale subsequent to the year end.

 

Dividend

 

The Board is proposing a final dividend of 3.50p per share, increasing the full year dividend by 39% to 5.0p (2013: 3.60p). The dividend will be paid on 2 March 2015 to shareholders on the register as at 30 January 2015. The Board continues to grow dividends progressively.

 

Order Book

 

The Group's contracted order book at 30 September 2014 stood at £439m (2013: £364m), a 21% increase, with the Engineering Services order book up 20% to £361m (2013: £301m). 

 

Acquisitions

 

During the year, the Group made two complementary acquisitions in Clarke Telecom Limited, a market leader in wireless telecoms infrastructure delivery, for £17.1m and Forefront Group Ltd, a leading provider in the gas infrastructure market, for £14.8m. These strategically important acquisitions will be accretive to Renew's Engineering Services operating margin as we progress towards our target of 5% within this business segment, a key objective for the next financial year.

 

Disposal

 

Subsequent to the year end, the Group announced the disposal of Allenbuild Limited, the new build affordable housing part of the Group's Specialist Building business, to Places for People Group Limited ("PFP") for a total consideration of £2.75m payable in cash. PFP has acquired 50% of the issued share capital for £1.375m and will assume 100% ownership of Allenbuild after ten outstanding contracts, for which the Group retains the benefit, reach practical completion which is expected to be in about twelve months' time.

 

Cash

 

£24m of term loans were taken out to finance the Group's acquisitions. At the year end, net debt was £16.1m (2013: net cash £2.8m), which represents only 0.85 times 2014 EBITDA.

 

People

 

The Group prides itself on providing a safe and rewarding working environment for its highly skilled directly employed work force. Our results and ongoing success are a testament to the skills, hard work and commitment of all of the Group's employees and the Board would like to take this opportunity to express its gratitude.

 

Outlook

 

The Group enters the 2014/15 financial year in a strong position. In Specialist Building, the Group concentrates on the High Quality Residential market in London and the Home Counties. Our expertise is in the fit out and refurbishment of prestigious private residential projects, specialising in developing engineering solutions for major structural alterations. 

 

In Engineering Services, the Group has made excellent progress in expanding its position as a leading provider of engineering support services in the UK's Energy, Environmental and Infrastructure markets with strong organic growth coupled with two acquisitions into new markets. We operate in markets mainly governed by regulation that undertake long term programmes of essential non-discretionary spending to maintain critical infrastructure assets.  The Group continues to focus its activities on these programmes which deliver good visibility of future opportunities, margin enhancement potential and sustainable earnings streams.

 

It remains the Board's strategy to continue to grow its Engineering Services business, both organically and through selective acquisitions.  The Board's ambition is to grow Group revenue to over £500m delivering a Group operating margin of over 4.5% within the next three years.

 

The excellent organic and acquisitive growth achieved in the year along with its record order book gives the Board every confidence that the Group will continue to deliver on its strategic targets.

 

R J Harrison OBE

Chairman

25 November 2014



 

Chief Executive's Review

 

Renew has continued to enhance its market position as a provider of multidisciplinary Engineering Services, successfully growing its Engineering Services both organically and by acquisition. Delivering long term maintenance and renewal services across the Energy, Environmental and Infrastructure markets, our highly skilled, directly employed workforce operates on the UK's essential infrastructure assets. Our offering is differentiated by the promotion of our independently branded subsidiary businesses which are aligned to the needs of their clients. In Specialist Building, our activity is now primarily focused on the High Quality Residential market in London and the Home Counties, which continues to see strong demand and in which we have many years of experience and an excellent reputation as a leading brand.

 

Engineering Services

 

Revenue in Engineering Services increased by 65% to £382.5m (2013: £232.4m) and accounts for 82% of Group revenue (2013: 82%) and 88% of Group operating profit before exceptional items and amortisation prior to central activities (2013: 89%), generating an operating margin of 4.3% (2013: 4.6%). The Engineering Services order book has grown 20% to £361m (2013: £301m).

 

During the year, the Group acquired two Engineering Services businesses which are leading brands in their respective markets. Clarke Telecom Limited ("Clarke"), a wireless telecoms infrastructure delivery business based in Manchester, which provides specialist services for the cellular market, was acquired in April. Forefront Group Limited ("Forefront"), which is based near London, operates across the gas network replacing strategic low and medium pressure mains, was acquired in August. Clients include National Grid and Southern Gas Networks.

 

These acquisitions establish the Group's position in additional and complementary engineering markets. Strong organic growth has been achieved through our service responsiveness and development of key relationships.

 

Energy

 

The Group operates nationally in the nuclear, traditional, renewable energy and gas infrastructure markets.

 

In Nuclear, we operate across the Nuclear Decommissioning Authority's estate where we are engaged on 9 sites that command around 80% of the £3bn annual expenditure. Over half of this spend is allocated to Sellafield, where we have operated for over 70 years and remain the largest mechanical, electrical and instrumentation employer on site. Our work concentrates on the support and care of operational plant associated with waste treatment or processing, decommissioning and clean up of redundant facilities.

 

Safety achievements at Sellafield include over 5 million man hours worked since a Lost Time Event and the award of Sellafield's 2014 Resident Engineers Safety Award for 'Outstanding Safety Performance'.

 

Work at the site has increased substantially during the year resulting in a 33% increase in our provision of resources at the site. Our operations include work on the Multi Discipline Site Works framework where we are aligned with the largest scope of work at the site, production operations support.

 

As part of the high hazard risk reduction operations at Sellafield, our service provision has again increased on the Evaporator Delta project which is now expected to provide over £80m of work through to its completion in 2015. A number of frameworks have also seen an increase in scope including the £26m Bulk Sludge Retrievals framework and the Decommissioning framework where we are involved with some of the oldest facilities on site.

 

The Infrastructure enhancement programme at Sellafield continues with the Site Wide Asset

Care framework where we operate as sole mechanical and electrical partner. We also continue to support the future Major Projects Programme at Sellafield where we have further developed our position as a key strategic partner on the £1.1bn Infrastructure Strategic Alliance framework.

 

Our work at Sellafield was recognised with the award of a supply chain accreditation for the second year running, demonstrating our ability to deliver to the highest quality standards in the nuclear industry.

 

Elsewhere, at Springfields where we have operated for 15 years, work has commenced for Westinghouse on a waste processing facility, following the recent successful completion of a large decommissioning and demolition project at the site. We have also been recently appointed to support reactor outage works at the Heysham nuclear power station. We remain committed to developing our position as a specialist contractor, continuing to support proposals within the nuclear new build market where we have initially focused on the manufacture and supply of high integrity fabricated components.

 

Our service teams deliver long term maintenance and asset renewal services at five of the UK's traditional power stations as well as progressing a number of opportunities in the renewable energy market including hydro schemes for Welsh Water.

 

The acquisition of Forefront extends our range of services into the specialist gas infrastructure market. Forefront operates for National Grid and Southern Gas Networks on the 30/30 iron mains replacement programme through frameworks and also on the London medium pressure strategic gas mains replacement programme. Forefront also has frameworks for specialist flow stopping, drilling and maintenance. Although Forefront has been part of the Group for only a few months, opportunities for collaborative working with other parts of the Group have already been identified and are being progressed.

 

Environmental

 

The Group operates in the water infrastructure, flood alleviation, river and coastal defence and land remediation markets providing operational support and maintenance services.

 

In Water, we continue to develop our long standing relationships with our largest clients Northumbrian Water, Wessex Water and Welsh Water where we deliver works under the regulated AMP 5 programme. We operate on a number of frameworks for Northumbrian Water including the Major Waste Water, Clean Water, Maintenance and Trunk Mains Cleaning frameworks. We were selected as one of two preferred partners to deliver the accelerated flood alleviation workstreams that have seen substantial investment in the period. We also undertake planned and reactive maintenance, sewer lining and infrastructure upgrades under their Minor Works framework. 

 

We have maintained 'Best Performing Contractor' status with both Wessex Water and Welsh Water in the period. Wessex Water frameworks include Workstream Partner and Minor Civils frameworks. For Welsh Water we work on the Pressurised Pipelines framework, which has recently been extended for two years, and also the Major Civil Engineering Projects frameworks. 

 

We have developed our relationship with the Environment Agency with the award of the £10m MEICA framework for the Northern region. This exclusive framework covers over 600 flood control and water management sites throughout the region and will run for 4 years to March 2018.

 

In Land Remediation our long term relationship with National Grid continues as we undertake work on established remediation frameworks nationally.  We have recently been awarded the Land Quality Services framework with Magnox for the design and construction of land remediation services on decommissioned nuclear power generation sites across the UK. Work is currently underway on the Scotia Gas Networks 8 year framework that will generate opportunities across Scotland and the South East of England until 2021.

 

Infrastructure

 

In the Rail sector, Renew provides off-track asset renewal and maintenance services nationally as well as a 24/7 emergency services to the rail network.

 

During 2014, AMCO Rail has responded to the challenges posed by the effects of last winter's severe weather and additional works provided by the Government's Fiscal Stimulus into the rail network. This has provided almost £65m of non-recurring revenue in the year in addition to underlying organic growth of 17%. AMCO Rail is increasingly recognised by Network Rail for its responsiveness to short term, low cost critical tasks and this is demonstrated by 5,000 individual remits carried out during the year on the Asset Management frameworks across the network. AMCO Rail is now one of the top 10 suppliers to Network Rail.

 

Our success in responding to and managing this additional workload has been recognised by Network Rail appointing AMCO Rail to seven Infrastructure Projects frameworks for Control Period 5, with an advertised value of £450m over the next five years.

 

Key projects carried out in the year included the reinstatement of the Dawlish Sea Wall, which was completed ahead of schedule enabling services to resume to Cornwall. Our specialist skills in tunnel and shaft maintenance and refurbishment saw us successfully complete major schemes at Holme Tunnel and Whiteball Tunnel, both of which were on time and within budget.

 

The acquisition of Clarke takes the Group into a new market.  As a leading provider of wireless telecoms infrastructure services, Clarke's clients include all of the major wireless network operators and original equipment manufacturers. Integration with the Group has progressed well since acquisition and Clarke's order book has grown by over 10% since acquisition.



 

Specialist Building

 

Specialist Building results have been restated following the reclassification of Allenbuild Ltd as a discontinued business, details of which are set out below.

 

An operating profit of £2.2m (2013: £1.3m-) was generated from revenue of £82.1m (2013: £50.6m), giving a margin of 2.6% (2013: 2.5%). Our Specialist Building order book stands at £78.1m (2013: £62.5m). In the High Quality Residential market in London and the Home Counties, we have over fifty years of experience and specialist engineering expertise in carrying out major structural alteration works including extensions below the ground. During the year, we completed projects for private clients at Wimbledon Village and on the Wentworth Estate, Surrey. Work is currently under way to demolish and reconstruct a substantial country home in Burnham Beeches and on a Grade II listed residence in London's Belgravia district. 

 

Subsequent to the year end, we announced the sale of Allenbuild Ltd, our subsidiary business which focused on the new build affordable housing market, to Places for People Group Limited ("PFP"). PFP has acquired 50% of the issued share capital for £1.375m and will assume 100% ownership of Allenbuild after ten outstanding contracts, for which the Group retains the benefit, reach practical completion which is expected to be in about twelve months' time. PFP will have the benefit of four new contracts and any further work which is now procured. 

 

People

 

Our commitment to the safety of our employees and those who work with us remains a priority for everyone at Renew. The changing nature of our operations into smaller, high volume tasks has seen an increase in behavioural safety training, alongside a wide range of safety initiatives, undertaken over the year. We are pleased to report a cumulative reduction in our Accident Incidence Rate of more than 90% over the last 9 years.

 

Summary

 

Our Specialist Building business has demonstrated its ability to deliver consistent profits and is well positioned with a strong order book.

 

In Engineering Services, our range of capabilities and responsiveness to our clients' needs sees us operate on some of the largest programmes of work to maintain key infrastructure assets in the UK.

 

We are strongly positioned in sustainable markets which are mainly regulated and which benefit from long term spending programmes. This will continue to provide opportunities for further profitable growth.

 

 

 

Brian May

Chief Executive

25 November 2014



 

Group income statement

For the year ended 30 September 2014

 

 

 


















Before

Exceptional










exceptional

items and










items and

amortisation










amortisation

of intangible










of intangible

assets









Note

assets

(see Note 3)

Total

Total











2013








2014

2014

2014

(restated*)








£000

£000

£000

£000

Group revenue from continuing activities



2

464,474

464,474

298,161

Cost of sales






(411,413)

-

    (411,413)

(258,568)

Gross profit






53,061

-

53,061

39,593

Administrative expenses






(36,623)

(3,055)

(39,678)

(26,254)

Operating profit





2

16,438

(3,055)

13,383

13,339

Finance income






182

 -

182

25

Finance costs






(427)

-

(427)

(362)

Other finance (expense)/income - defined benefit pension schemes


(87)

 -

(87)

43

Profit before income tax





16,106

(3,055)

13,051

13,045

Income tax expense





4

(3,325)

611

(2,714)

(3,075)

Profit for the year from continuing activities

12,781

(2,444)

10,337

9,970

Loss for the year from discontinued operations                                                       3



(5,155)

(1,498)

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



5,182

8,472

Basic earnings per share from continuing activities

6



16.8p

16.6p

Diluted earnings per share from continuing operations

6



16.6p

16.5p

Basic earnings per share

6



8.4p

14.1p

Diluted earnings per share



6



8.3p

14.0p























*The prior year income statement has been restated following the reclassification of a discontinued business (see Note 3), and the impact of IAS 19 (revised) on administrative expenses and other finance income (see Note 2).

Prior year revenue includes £15.4m of exceptional revenue resulting from the sale of land (see Note 2).

Prior year operating profit of £13.3m is stated after crediting £3.3m of exceptional items (See Note 3).












Group statement of comprehensive income








For the year ended 30 September 2014






2014

2013










£000

£000

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



5,182

8,472

Items that will not be reclassified to profit or loss:





Movement in actuarial valuation of the defined benefit pension schemes



1,068

(6,770)

Movement on deferred tax relating to the defined benefit pension schemes



(214)

1,429

Total items that will not be reclassified to profit or loss



854

(5,341)

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





Exchange movements in reserves



1

(24)

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



 

1

 

(24)






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



 

6,037

 

3,107












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 2012

5,990

5,893

3,896

775

289

(7,949)

8,894

Transfer from income statement for the year






 

8,472

 

8,472

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






 

(6,770)

 

(6,770)

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

Transfer from income statement for the year






 

5,182

 

5,182

Dividends paid






(2,461)

(2,461)

New shares issued

12

49





61

Recognition of share based payments





(98)


(98)

Exchange differences




1



1

Actuarial gains recognised in pension schemes






 

1,068

 

1,068

Movement on deferred tax relating to the pension schemes






 

(214)

 

(214)

At 30 September 2014

6,152

5,942

3,896

752

292

(3,160)

13,874































































 

 

 



 

Group balance sheet                                              

At   30 September 2014



2013



2014

(restated*)



£000

£000

Non-current assets




Intangible assets - goodwill


53,286

33,474

                               - other


7,770

3,959

Property, plant and equipment


15,283

8,188

Retirement benefit assets


1,456

962

Deferred tax assets


2,741

3,051



80,536

49,634

Current assets




Inventories


4,068

3,195

Trade and other receivables


85,557

75,868

Assets held for resale


1,250

-

Cash and cash equivalents


5,586

5,348



96,461

84,411





Total assets


176,997

134,045





Non-current liabilities




Borrowings


(15,500)

-

Obligations under finance leases


(3,575)

(1,984)

Retirement benefit obligations


-

(3,545)

Deferred tax liabilities


(1,749)

(938)

Provisions


(1,232)

(628)



(22,056)

(7,095)

Current liabilities




Borrowings


(6,200)

(2,500)

Trade and other payables


(131,041)

(112,349)

Obligations under finance leases


(2,764)

(1,509)

Current tax liabilities


(694)

(153)

Provisions


(368)

(104)



(141,067)

(116,615)





Total liabilities


(163,123)

(123,710)





Net assets


13,874

10,335





Share capital


6,152

6,140

Share premium account


5,942

5,893

Capital redemption reserve


3,896

3,896

Cumulative translation reserve


752

751

Share based payments reserve


292

390

Retained earnings


(3,160)

(6,735)

Total equity


13,874

10,335





*The Balance sheet for 2013 has been restated following a hindsight fair value adjustment to Lewis Civil Engineering Ltd to align the depreciation policy with the Group. The impact was to reduce Property, plant and equipment by £0.5m, reduce the deferred tax liability by £0.1m and increase goodwill by £0.4m. There was no impact on the Group profit for the years ending 30 September 2013 or 2014.

Group cash flow statement

For the year ended 30 September








2013

 







2014

(restated *)







£000

£000

 

Profit for the year from continuing activities



10,337

9,970

 

Amortisation of intangible assets



2,231

500

 

Depreciation





2,893

1,218

 

Profit on sale of property, plant and equipment


(435)

(110)

 

(Increase)/decrease in inventories




(323)

6,466

 

Decrease in receivables




1,324

2,490

 

Increase in payables




                    

9,630

4,308

 

Current service cost in respect of defined benefit pension scheme

59

53

 

Cash contribution to defined benefit pension schemes


(3,117)

(2,946)

 

(Credit)/expense in respect of share options



(98)

101

 

Financial income





(182)

(25)

 

Financial expenses





514

319

 

Interest paid





(427)

(362)

 

Income taxes paid


(1,926)

(429)

 

Income tax expense





2,714

3,075

 

Net cash inflow from continuing operating activities


23,194

24,628

 

Net cash outflow from discontinued operating activities


(4,691)

(5,390)

 

Net cash inflow from operating activities


18,503

19,238

 









 

Investing activities







 

Interest received





182

25

 

Proceeds on disposal of property, plant and equipment


647

1,854

 

Purchases of property, plant and equipment


(1,559)

(649)

 

Acquisition of subsidiaries net of cash acquired


(32,132)

(9,384)

 

Net cash outflow from continuing investing activities


(32,862)

(8,154)

 

Net cash outflow from discontinued investing activities


(106)

(56)

 

Net cash outflow from investing activities


(32,968)

(8,210)

 





 

Financing activities







 

Dividends paid





(2,461)

(1,917)

 

Issue of Ordinary Shares


61

150

 

New loan


24,000

-

 

Loan repayments


(4,800)

(5,000)

 

Repayments of obligations under finance leases


(2,096)

(958)

 

Net cash inflow/(outflow) from continuing financing activities


14,704

(7,725)

 

Net cash outflow from discontinued financing activities


-

-

 

Net cash inflow/(outflow) from financing activities


14,704

(7,725)

 









 

Net increase in continuing cash and cash equivalents


5,036

8,749

 

Net decrease in discontinued cash and cash equivalents


(4,797)

(5,446)

 

Net increase in cash and cash equivalents


239

3,303

 

Cash and cash equivalents at beginning of year


5,348

2,040

 

Effect of foreign exchange rate changes on cash and cash equivalents

(1)

5

 

Cash and cash equivalents at end of year

5,586

5,348

 







 

Bank balances and cash




5,586

5,348

 

*The prior year cash flow statement has been restated following the reclassification of a discontinued business  

(see Note 3), and the impact of IAS 19 (revised) on administrative expenses and other finance income (see Note 2).



 

Notes

 

1 International Financial Reporting Standards

 

The consolidated financial statements for the year ended 30 September 2014 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.

 

Subsequent to the year end the Group has entered into a contract to dispose of part of its Specialist Building segment.  The results of that business are shown as a discontinued operation.  Comparative figures have been restated accordingly.

 

Prior year costs for central activities have been increased by £400,000 as a result of the impact of IAS 19 (revised).  These costs were formerly dealt with in the statement of comprehensive income.

 




2013



2014

(restated)

Revenue is analysed as follows:


£000

£000





Engineering Services


382,467

232,371

Specialist Building


82,112

50,621

Inter segment revenue


(105)

(246)

Segment revenue


464,474

282,746

Central activities


-

3

Group revenue before exceptional items


464,474

282,749

Exceptional revenue


-

15,412

Group revenue from continuing activities


464,474

298,161

 

 

 

 

 

 

 

 

 

 


Before





exceptional

Exceptional




items and

items and




amortisation

amortisation




charges

charges

                    2014

      2013

Analysis of operating profit

£000

£000

£000

£000

from continuing activities










Engineering Services

16,280

(2,231)

14,049

10,146

Specialist Building

2,157

-

2,157

1,015

Segment operating profit

18,437

(2,231)

16,206

11,161

Central activities

(1,999)

(824)

(2,823)

2,178

Operating profit

16,438

(3,055)

13,383

13,339

Net financing expense

(332)

-

(332)

(294)

Profit on ordinary activities before income tax

16,106

(3,055)

13,051

13,045

 

Segment operating profit for the year ended 30 September 2013 is stated after charging exceptional items and amortisation charges totalling £772,000. Central activities is stated after crediting £4,075,000 of exceptional items.

 

3 Exceptional items and amortisation of intangible assets

 


2014

2013


£000

£000

Acquisition costs

824

196

Redundancy and restructuring costs

-

272

Profit arising from sale of land

-

(9,190)

Write down of land stock in the USA

-

4,919

Total losses/(gains) arising from exceptional items

824

(3,803)

Amortisation of intangible assets

2,231

500


3,055

(3,303)

 

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 Company acquired Forefront Group Ltd and Clarke Telecom Ltd and incurred £824,000 of costs associated with the acquisitions.  In 2013 £196,000 of costs were incurred on the acquisition of Lewis Civil Engineering Ltd.

 

In 2013 the Group incurred £272,000 of exceptional redundancy and restructuring costs in respect of a regional non-specialist Building office.

 

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.

 

In 2013, as a result of changes to detailed planning and zoning agreements in respect of land owned by the Group in the USA, the Board wrote down the carrying value of these assets by £4,919,000.

 

The Board has also separately identified the charge of £2,231,000 (2013: £500,000) for the amortisation of the fair value ascribed to certain intangible assets other than goodwill arising from the acquisitions of Amco Group Holdings Ltd, Lewis Civil Engineering Ltd, Clarke Telecom Ltd and Forefront Group Ltd.

 

Discontinued operations analysis





2014

2013


£000

£000

Revenue

49,992

51,536

Expenses

(54,124)

(54,279)

Loss before income tax

(4,132)

(2,743)

Income tax expense - deferred tax

(1,023)

1,245

Loss for the year from discontinued operations

(5,155)

(1,498)

 

On 31 October 2014, Places for People Group Ltd ("PfP") acquired 50% of the ordinary share capital of Allenbuild Ltd, a Specialist Building subsidiary.  Following the practical completion of a number of partly completed contracts, the benefit of which will accrue to the Group, PfP will acquire the remaining 50%.  This is expected to be in approximately 12 months' time.  The trading result for this business has therefore been included within the loss for the year from discontinued operations and the comparative figures have been reclassified accordingly.

 

Discontinued expenses include the following exceptional items:


2014

2013


£000

£000

Provision against amounts recoverable on old

Building contracts

 

2,528

 

2,767

Costs related to exceptional storm damage on a Building contract

 

1,500

 

500


4,028

3,267

 

The provision of £2,528,000 relates to settling final accounts and contractual issues on old contracts.

 

A further £1,500,000 of costs has been recognised following the exceptional storm damage experienced in 2013.

 

4 Income tax expense

 

Analysis of expense in year

 

2014

 

2013


£000

£000

Current tax:



UK corporation tax on profits of the year

(2,265)

(2,146)

Adjustments in respect of previous periods

(227)

10

Total current tax

(2,492)

(2,136)

Deferred tax - defined benefit pension schemes

(594)

(612)

Deferred tax - other timing differences

(651)

(540)

Total deferred tax

(1,245)

(1,152)

Income tax expense

(3,737)

(3,288)

Deferred tax in respect of discontinued operations

1,023

213

Income tax expense in respect of continuing activities

(2,714)

(3,075)

5 Dividends


2014

2013

 



Pence/share

Pence/share

 

Interim (related to the year ended 30 September 2014)


1.50

1.10

 

Final (related to the year ended 30 September 2013)


2.50

2.10

 

Total dividend paid


4.00

3.20

 





 



£000

£000

 

Interim (related to the year ended 30 September 2014)


923

658

 

Final (related to the year ended 30 September 2013)


1,538

1,259

 

Total dividend paid


2,461

1,917

 

 

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 3.50p per Ordinary Share be paid in respect of the year ended 30 September 2014.  This will be accounted for in the 2014/15 financial year.

 

6 Earnings per share





2014




2013



Earnings

EPS

DEPS


Earnings

EPS

DEPS



£000

Pence

Pence


£000

Pence

Pence

Earnings before exceptional items & amortisation charges


12,781

20.80

20.51


7,427

12.38

12.25

Exceptional items & amortisation charges


(2,444)

(3.97)

(3.92)


2,543

4.24

4.20

Basic earnings per share - continuing activities


10,337

16.83

16.59


9,970

16.62

16.45

Loss for the year from discontinued operation


       (5,155)

(8.39)

(8.27)


          (1,498)

(2.50)

(2.47)










Basic earnings per share


5,182

8.44

8.32


8,472

14.12

13.98










Weighted average number of shares



61,431

62,313



59,998

60,624

 

The dilutive effect of share options is to increase the number of shares by 882,000 (2013: 626,000) and reduce basic earnings per share by 0.12p (2013: 0.14p).

 

 

 

7 Preliminary financial information

 

The financial information set out above does not constitute the company's statutory accounts for the years ended 30 September 2014 or 2013. Statutory accounts for 2013 have been delivered to the registrar of companies, and those for 2014 will be delivered in due course. The auditor has reported on those accounts; their reports were (i) unqualified, (ii) did not include a reference to any matters to which the auditor 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 2014 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 2014 will be posted to shareholders as soon as practicable and a copy will be made available on the Group's website: www.renewholdings.com

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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