Preliminary Results

RNS Number : 6745G
Renew Holdings PLC
24 November 2015
 

24 November 2015

Renew Holdings plc

("Renew" or the "Group")

 

Preliminary results

 

Renew (AIM: RNWH), the Engineering Services Group supporting critical UK infrastructure, announces record preliminary results for the year ended 30 September 2015. The Company continues to demonstrate strong cash generation and has increased the full year dividend by 40%.

 

Financial Highlights

 

2015

2014

 

Revenue

£519.6m

£464.5m

+12%

Adjusted operating profit

£20.4m

£16.4m

+24%

Adjusted operating margin

3.9%

3.5%

+11%

Adjusted profit before tax

£19.6m

£16.1m

+22%

Adjusted earnings per share

26.03p

20.80p

+25%

Basic earnings per share

21.34p

16.83p

+27%

Dividend per share

7.0p

5.0p

+40%

 

Adjusted results are shown prior to exceptional items, amortisation and discontinued operations.

 

Operational Highlights

·     Engineering Services revenue up 15% to £440.5m (2014: £382.5m)

§ 22% underlying organic growth excluding the effect of acquisitions and non-recurring revenue

·     Engineering Services adjusted operating profit up 23% to £20.1m (2014: £16.3m)

§ Engineering Services operating margin now 4.6% (2014: 4.3%)

·     Order book up 14% to £502m (2014: £439m)

·     Substantial reduction in net debt to £4.8m (2014: £16.1m)

§ Expected net cash position by the end of 2015/16 financial year

 

R J Harrison OBE, Chairman said: "These results highlight another record year for Renew as a leading provider of engineering services supporting critical infrastructure within the UK.

 

In 2014 we set our 2017 targets of total revenues of over £500m, a Group operating margin of 4.5% and growth in adjusted earnings per share of at least 40% from the 20.8p reported last year. We have achieved our revenue target ahead of schedule. With an 11% improvement in adjusted Group operating margin to 3.9% and a 25% increase in adjusted EPS in these results, the Board is confident that Renew is on track to deliver these strategic targets by 2017."

 

Tel: 0113 281 4200

 

 

 

Tel: 020 7260 1000

 

 

 

Tel: 020 7933 8780 or renew@walbrookpr.com 

Mob: 07980 541 893

Mob: 07584 391 303

 

 

About Renew Holdings plc

 

Engineering Services, which accounts for 85% 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

 

Results

 

Record results for the year ended 30 September 2015 demonstrate that the Group continues to progress as a leading provider of engineering services, supporting critical UK infrastructure.

 

Group revenue increased by 12% to £519.6m (2014: £464.5m) with operating profit prior to exceptional items and amortisation increasing by 24% to £20.4m (2014: £16.4m). Earnings per share on this basis increased by 25% to 26.03p (2014: 20.80p) with basic earnings per share on continuing activities up 27% to 21.34p (2014: 16.83p).

 

The Engineering Services business has seen growth of 15% across its Energy, Environmental and Infrastructure markets with revenue of £440.5m (2014: £382.5m). When the effect of acquisitions and non-recurring Rail revenue is eliminated, the underlying organic growth in Engineering Services is 22%.

 

Engineering Services now accounts for 85% of Group revenue (2014: 82%). Engineering Services operating profit was up 23% to £20.1m (2014: £16.3m) with a margin of 4.6% (2014: 4.3%). 

 

Specialist Building remains focused on the High Quality Residential market in London and the Home Counties. Revenue was £79.5m (2014: £82.1m) with an operating profit of £2.3m (2014: £2.2m) resulting in an improved margin of 2.9% (2014: 2.6%).

 

Dividend

 

The Board is proposing a final dividend of 4.75p per share, increasing the full year dividend by 40% to 7.0p (2014: 5.0p). The dividend will be paid on 1 March 2016 to shareholders on the register as at 29 January 2016. The Board continues to grow dividends progressively.

 

Order Book

The Group's contracted order book at 30 September 2015 stood at £502m (2014: £439m), a 14% increase, with the Engineering Services order book up 11% to £400m (2014: £361m). The order book reflects our established position in attractive markets with long-term visibility of revenue.

Cash

Cash generation has been good with a year-end cash position of £10.7m (2014: £5.6m) giving a net debt of £4.8m (2014: £16.1m). The Board expects the Group to report a net cash position by the end of the 2015/16 financial year.

People

 

We are pleased to report our commitment to providing a safe working environment which has seen the Group continue to record an Accident Incidence Rate substantially lower than the industry average. These results and the success of the Group demonstrate the skills and commitment of all our employees for which the Board would like to extend its gratitude.

 

Strategy

 

In Specialist Building, the Group concentrates on the High Quality Residential market in London and the Home Counties. Our expertise is in refurbishment of prestigious private residential projects where we specialise in engineering solutions for major structural alterations. 

 

In Engineering Services, the Group continues to develop its position as a leading provider of engineering services to support critical UK assets in the Energy, Environmental and Infrastructure markets. The markets we operate in are mainly governed by regulation. Our operations focus on the long-term programmes of essential maintenance spending in these markets, which provide good visibility of future opportunities and more sustainable earnings streams.

It remains the Board's strategy to continue the growth of its Engineering Services business, both organically and through selective acquisitions. Over the last nine years, Renew has completed six major acquisitions without recourse to shareholders for funding. Substantial, profitable growth has been generated from this strategy which, complemented by organic growth, has enabled the Board to deliver a six fold increase in market capitalisation since 2006. In recent weeks, the Board has seen a number of good quality, potential acquisitions across all market sectors of our Engineering Services business and we continue to pursue appropriate earnings enhancing additions to the Group.

Outlook

The Group enters the 2015/16 financial year in a strong position.

The Board previously published targets for 2017 of Group revenue in excess of £500m, Group operating profit margin prior to exceptional items and amortisation of 4.5% and growth in EPS on that basis of at least 40% from the reported level of 20.8p in 2014. The Group revenue target has been achieved with these results. The Group has also delivered an 11% improvement in Group operating margin to 3.9% and a 25% increase in EPS giving the Board confidence that the Group is on track to deliver on these strategic targets.

 R J Harrison OBE

Chairman

24 November 2015

 

         Chief Executive's Review

 

Renew delivers engineering support services to the UK's critical infrastructure assets. The Group has strong, long-term relationships built on responsiveness with a range of clients in the Energy, Environmental and Infrastructure markets. The Group operates in mainly regulated markets which have high barriers to entry. Integrated engineering services are delivered through our strong, independently branded UK subsidiary businesses which directly employ a highly skilled workforce. Our operations support the day-to-day running of key operational assets including nuclear and traditional power generation sites, water and gas pipes along with the rail and wireless telecoms networks. The Group also has a Specialist Building operation focusing on the High Quality Residential market in London and the Home Counties.

 

Engineering Services

 

Revenue in Engineering Services increased by 15% to £440.5m (2014: £382.5m) and accounted for 85% (2014: 82%) of Group revenue and 90% (2014: 88%) of Group operating profit prior to exceptional items, amortisation and central activities. This generated an improved margin of 4.6% (2014: 4.3%). The Engineering Services order book has grown 11% to £400m (2014: £361m).

 

Energy

 

In Energy, the Group provides integrated engineering support to assets in the nuclear, traditional and renewable energy markets and in the gas infrastructure market.

 

During the year, we were appointed by the UK's largest nuclear decommissioning company, Magnox, as the sole provider on the £30m Electrical, Controls & Instrumentation framework, which runs to 2019, across 10 UK sites. The Group now delivers multidisciplinary engineering services at 15 nuclear licenced sites, where we support operational plant associated with long-term waste treatment and processing, decommissioning and the clean-up of redundant facilities. The Nuclear Decommissioning Authority's expenditure continues at approximately £3bn per year, of which 67% is allocated to the Sellafield site in Cumbria where the majority of our work is undertaken. The Group has operated at Sellafield for over 70 years and remains the largest mechanical, electrical and instrumentation employer on site. 

 

As part of the high hazard risk reduction programme at Sellafield, work on the Evaporator D project has again grown materially ahead of expectation. During the year, the Group increased its resources to complete critical milestones as the project moves towards commissioning. This increased scope is now expected to deliver up to £100m of work over the duration of the project.

 

Work on the Multi Discipline Site Works ("MDSW") framework continues and our operations remain focused on the largest scope of work, Production Operations Support. The MDSW framework, where we operate as one of three participants, has been extended for two years to early 2017 and is advertised to deliver £70m annually. Other framework extensions during the year include the Bundling Spares, Site Remediation & Decommissioning Project and Bulk Sludge Retrievals Facility frameworks.

 

The Group also operates in the traditional and renewable energy markets for clients including E.ON, SSE, Scottish Water and Dwr Cymru Welsh Water ("DCWW") where work includes long-term maintenance and asset renewal services. Achievements in the year include good progress on the hydroelectric scheme at Tyn Y Waun Water Treatment Works for DCWW, reappointment to the maintenance framework at Deucheran Hill Wind Farm by E.ON and the refurbishment of the Cuaich Aqueduct on the Tummel hydroelectric scheme for SSE.

 

In the gas infrastructure market work continues for National Grid and Southern Gas Networks on the 30/30 Iron Mains Replacement programme as well as on the London Medium Pressure Strategic Gas Mains Replacement programme. New frameworks for the delivery of these programmes have been slow to gain momentum and as a result this business has not performed to our expectations, however the addressable market is both substantial and visible with the national programme for iron mains replacement running to 2032 with an estimated value of £1bn per annum.

 

Environmental

 

The Group provides operational support to the water industry where the focus remains on maintaining and renewing infrastructure assets as well as the flood alleviation and river and coastal defence programmes.

 

In the year, we continued our long-standing relationships with our clients Northumbrian Water, Wessex Water and Welsh Water. Awards included Northumbrian Water's AMP6 Sewerage Repairs and Maintenance Framework where we operate as one of two suppliers; the framework has an advertised value of over £14m per annum to 2024.

 

Work for Wessex Water continued on the Workstream framework during the year with new awards including the AMP6 Minor Civils framework. Major projects completed included the Taunton Grid Scheme. 

 

Revenue for the Environment Agency has doubled in the year where our relationship was extended with the award of a £10m MEICA framework in 2014. This exclusive framework, which runs to March 2018, covers flood and water management sites throughout the Northern region. The appointment follows our success on the existing four Minor Works frameworks which were extended for a further two years.

 

In Land Remediation, we operate for National Grid on a number of frameworks nationally. Other frameworks include the Land Quality Services framework with Magnox to remediate the sites of former nuclear power generation across the UK and a new Landfill Engineering framework with Viridor for the North of England and Scotland regions.

 

Infrastructure

 

The Group delivers nationally a wide range of off-track asset renewal and maintenance engineering services as well as providing a 24/7 emergency service to the rail network. These services are provided through Infrastructure Projects and Asset Management support for Network Rail where we are a top four supplier.

 

Following the award in 2014 of a number of infrastructure renewal frameworks for Network Rail, which run to 2019, we have good visibility of future workflow. During the year, works were undertaken to enhance the Dawlish lower sea wall following our successful operation in 2014 to reinstate the wall after severe storms. Further to our work at Dawlish we have been appointed to undertake another coastal line protection scheme at Saltcoats in Scotland. We are now established as the major structures renewals & maintenance contractor in Scotland.

 

In Asset Management our frameworks have been extended by two years to 2017. We carry out infrastructure maintenance works to bridges, viaducts, tunnels, culverts, embankments, level crossings and line side structures. During the year, we have delivered over 5,000 individual schemes ranging from minor brickwork repairs to major sea defence works and our responsiveness was recognised at the National Rail Awards where we were presented with "Maintenance Team of the Year".

 

In the wireless telecoms infrastructure delivery market, the Group works for the major cellular network operators and original equipment manufacturers. This market has seen major corporate M&A activity during the year which has caused volatility and a performance below our expectations. The attraction of this market remains as demand for 4G mobile internet access and communications is outstripping current capacity, requiring additional infrastructure, upgrading of existing networks and decommissioning of redundant assets.

 

Specialist Building

 

In Specialist Building revenue of £79.5m (2014: £82.1m) and an operating profit of £2.3m (2014: £2.2m) generated an improved margin of 2.9% (2014: 2.6%). Our Specialist Building order book stands at £102m (2014: £78m). In the High Quality Residential market in London and the Home Counties our subsidiary, Walter Lilly, is a market leading luxury brand. It focuses on major structural engineering works including extending properties below ground. In excess of £85m of new projects has been secured in the period.

 

Discontinued Operation

 

On 31 October 2014, the Board reached an agreement to sell Allenbuild Ltd to Places for People Group Ltd ("PFP") for a total consideration of £2.75m payable in cash. PFP paid the initial 50% of the consideration on 31 October 2014 and will pay the balance on 31 January 2016. Allenbuild Ltd is a business focused on the new build affordable housing market and as such was not core to the Group's strategy to develop its Engineering Services business. In accordance with IFRS 5, the results of Allenbuild Ltd have been treated as a discontinued business. During the transition period, Renew retains the cost and benefit of certain contracts. These were secured during the recession and subsequently supply chain prices have risen markedly resulting in post-tax losses of £7.3m in the discontinued business.

 

Summary

 

In Specialist Building, our business operates in the consistently robust High Quality Residential market and continues to improve its quality of earnings with an emphasis on risk mitigation.

 

In Engineering Services, we have strengthened our position in our chosen, mainly regulated markets, undertaking essential work on critical assets where funding is derived from clients' operational expenditure budgets.  Our key markets' characteristics combined with the Group's integrated engineering support services model will continue to provide opportunities for further profitable growth.

 

B W May

Chief Executive

24 November 2015

 

Group income statement

For the year ended 30 September 2015

 

 

 

 

 

 

 

Before

 

 

 

 

 

 

 

 

 

 

exceptional

 

 

 

 

 

 

 

 

 

 

items and

Amortisation

 

 

 

 

 

 

 

 

 

amortisation

of intangible

 

 

 

 

 

 

 

 

 

of intangible

assets

 

 

 

 

 

 

 

 

Note

assets

(see Note 3)

Total

Total

 

 

 

 

 

 

 

2015

2015

2015

       2014

 

 

 

 

 

 

 

£000

£000

£000

£000

Group revenue from continuing activities

 

 

2

519,645

-

519,645

464,474

Cost of sales

 

 

 

 

 

(462,154)

-

 (462,154)

(411,413)

Gross profit

 

 

 

 

 

57,491

-

57,491

53,061

Administrative expenses

 

 

 

 

 

(37,121)

(3,536)

(40,657)

(39,678)

Operating profit

 

 

 

 

2

20,370

(3,536)

16,834

13,383

Finance income

 

 

 

 

 

27

 -

27

182

Finance costs

 

 

 

 

 

(939)

-

(939)

(427)

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

 

189

 -

189

(87)

Profit before income tax

 

 

 

 

19,647

(3,536)

16,111

13,051

Income tax expense

 

 

 

 

4

(3,579)

636

(2,943)

(2,714)

Profit for the year from continuing activities

16,068

(2,900)

13,168

10,337

Loss for the year from discontinued operation                                                                                                                 3

 

 

(7,263)

(5,155)

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

 

 

5,905

5,182

Basic earnings per share from continuing activities

6

 

 

21.3p

16.8p

Diluted earnings per share from continuing operations

6

 

 

21.0p

16.6p

Basic earnings per share

6

 

 

9.6p

8.4p

Diluted earnings per share

 

 

6

 

 

9.4p

8.3p

 

 

 

 

 

 

 

 

 

 

 

Prior year operating profit of £13.4m is stated after charging £3.1m of exceptional items and amortisation (See Note 3).

 

 

 

 

 

 

 

 

 

 

 

Group statement of comprehensive income

 

 

 

 

 

 

 

For the year ended 30 September 2015

 

 

 

 

 

2015

2014

 

 

 

 

 

 

 

 

 

£000

£000

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

 

 

5,905

5,182

Items that will not be reclassified to profit or loss:

 

 

 

 

Movement in actuarial valuation of the defined benefit pension schemes

 

 

8,880

1,068

Movement on deferred tax relating to the defined benefit pension schemes

 

 

(1,570)

(214)

Total items that will not be reclassified to profit or loss

 

 

7,310

854

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

 

 

 

 

Exchange movements in reserves

 

 

304

1

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

 

 

 

304

 

1

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

 

 

 

13,519

 

6,037

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 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

Transfer from income statement for the year

 

 

 

 

 

 

5,905

 

5,905

Dividends paid

 

 

 

 

 

(3,546)

(3,546)

New shares issued

40

1,047

 

 

 

 

1,087

Recognition of share based payments

 

 

 

 

35

 

35

Exchange differences

 

 

 

304

 

 

304

Actuarial gains recognised in pension schemes

 

 

 

 

 

 

8,880

 

8,880

Movement on deferred tax relating to the pension schemes

 

 

 

 

 

 

(1,570)

 

(1,570)

At 30 September 2015

6,192

6,989

3,896

1,056

327

6,509

24,969

 

 

 

 

 

 

 

 

                                 

 

Group balance sheet                              

At 30 September 2015

 

 

 

2014

 

 

2015

(restated*)

 

 

£000

£000

Non-current assets

 

 

 

Intangible assets - goodwill

 

56,060

56,060

                               - other

 

4,234

7,770

Property, plant and equipment

 

13,101

14,143

Retirement benefit assets

 

15,154

1,456

Deferred tax assets

 

1,718

2,741

 

 

90,267

82,170

Current assets

 

 

 

Inventories

 

4,864

4,068

Trade and other receivables

 

96,960

85,319

Assets held for resale

 

-

1,250

Current tax assets

 

2,187

-

Cash and cash equivalents

 

10,662

5,586

 

 

114,673

96,223

 

 

 

 

Total assets

 

204,940

178,393

 

 

 

 

Non-current liabilities

 

 

 

Borrowings

 

(9,300)

(15,500)

Obligations under finance leases

 

(2,514)

(3,575)

Retirement benefit obligations

 

(599)

-

Deferred tax liabilities

 

(3,537)

(1,056)

Provisions

 

(1,232)

(1,232)

 

 

(17,182)

(21,363)

Current liabilities

 

 

 

Borrowings

 

(6,200)

(6,200)

Trade and other payables

 

(153,612)

(133,130)

Obligations under finance leases

 

(2,609)

(2,764)

Current tax liabilities

 

-

(694)

Provisions

 

(368)

(368)

 

 

(162,789)

(143,156)

 

 

 

 

Total liabilities

 

(179,971)

(164,519)

 

 

 

 

Net assets

 

24,969

13,874

 

 

 

 

Share capital

 

6,192

6,152

Share premium account

 

6,989

5,942

Capital redemption reserve

 

3,896

3,896

Cumulative translation reserve

 

1,056

752

Share based payments reserve

 

327

292

Retained earnings

 

6,509

(3,160)

Total equity

 

24,969

13,874

 

 

 

 

*See  Note 7

 

Group cash flow statement

For the year ended 30 September

 

 

 

 

 

 

2015

       2014

 

 

 

 

 

 

£000

£000

 

Profit for the year from continuing activities

 

 

13,168

10,337

 

Amortisation of intangible assets

 

 

3,536

2,231

 

Depreciation

 

 

 

 

3,927

2,893

 

Profit on sale of property, plant and equipment

 

(278)

(435)

 

Expense in respect of share option exercise

 

 

 

1,087

-

 

(Increase) in inventories

 

 

 

(586)

(323)

 

(Increase)/decrease in receivables

 

 

 

(14,191)

1,324

 

Increase in payables

 

 

 

                    

18,741

9,630

 

Current and past service cost in respect of defined benefit pension scheme

248

59

 

Cash contribution to defined benefit pension schemes

 

(4,279)

(3,117)

 

Expense/(credit) in respect of share options

 

 

35

(98)

 

Finance income

 

 

 

 

(27)

(182)

 

Finance expenses

 

 

 

 

750

514

 

Interest paid

 

 

 

 

(939)

(427)

 

Income taxes paid

 

(3,066)

(1,926)

 

Income tax expense

 

 

 

 

2,943

2,714

 

Net cash inflow from continuing operating activities

 

21,069

23,194

 

Net cash outflow from discontinued operating activities

 

(3,590)

(4,691)

 

Net cash inflow from operating activities

 

17,479

18,503

 

 

 

 

 

 

 

 

 

 

Investing activities

 

 

 

 

 

 

 

Interest received

 

 

 

 

27

182

 

Proceeds on disposal of property, plant and equipment

 

530

647

 

Purchases of property, plant and equipment

 

(1,454)

(1,559)

 

Disposal/(acquisition) of subsidiaries net of cash acquired

 

1,135

(32,132)

 

Net cash inflow/(outflow) from continuing investing activities

 

238

(32,862)

 

Net cash inflow/(outflow) from discontinued investing activities

 

162

(106)

 

Net cash inflow/(outflow) from investing activities

 

400

(32,968)

 

 

 

 

 

 

Financing activities

 

 

 

 

 

 

 

Dividends paid

 

 

 

 

(3,546)

(2,461)

 

Issue of Ordinary Shares

 

-

61

 

New loan

 

-

24,000

 

Loan repayments

 

(6,200)

(4,800)

 

Repayments of obligations under finance leases

 

(3,067)

(2,096)

 

Net cash (outflow)/inflow from financing activities

 

(12,813)

14,704

 

 

 

 

 

 

 

 

 

 

Net increase in continuing cash and cash equivalents

 

 

8,494

 

5,036

 

Net decrease in discontinued cash and cash equivalents

 

(3,428)

(4,797)

 

Net increase in cash and cash equivalents

 

5,066

239

 

Cash and cash equivalents at beginning of year

 

5,586

5,348

 

Effect of foreign exchange rate changes on cash and cash equivalents

10

(1)

 

Cash and cash equivalents at end of year

 

10,662

5,586

 

 

 

 

 

 

 

 

 

 

 

Bank balances and cash

 

 

 

10,662

5,586

 

                         

 

 

 

 

 

Notes

 

1 International Financial Reporting Standards

 

The consolidated financial statements for the year ended 30 September 2015 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.

On 31 October 2014, the Group entered into a contract to dispose of part of its Specialist Building segment.

The results of that business are shown as a discontinued operation. 

 

 

 

 

 

 

2015

2014

Revenue is analysed as follows:

 

£000

£000

 

 

 

 

Engineering Services

 

440,502

382,467

Specialist Building

 

79,492

82,112

Inter segment revenue

 

(380)

(105)

Segment revenue

 

519,614

464,474

Central activities

 

31

-

Group revenue from continuing activities

 

519,645

464,474

 

 

 

Before

 

 

 

 

exceptional

Exceptional

 

 

 

items and

items and

 

 

 

amortisation

amortisation

 

 

 

charges

charges

                    2015

      2014

Analysis of operating profit

£000

£000

£000

£000

from continuing activities

 

 

 

 

 

 

 

 

 

Engineering Services

20,055

(3,536)

16,519

14,049

Specialist Building

2,274

-

2,274

2,157

Segment operating profit

22,329

(3,536)

18,793

16,206

Central activities

(1,959)

-

(1,959)

(2,823)

Operating profit

20,370

(3,536)

16,834

13,383

Net financing expense

(723)

-

(723)

(332)

Profit on ordinary activities before income tax

19,647

(3,536)

16,111

13,051

 

Segment operating profit for the year ended 30 September 2014 is stated after charging exceptional items and amortisation charges totaling £3,055,000.

 

3 Exceptional items and amortisation of intangible assets

 

 

2015

2014

 

£000

£000

Acquisition costs

-

824

Total losses arising from exceptional items

-

824

Amortisation of intangible assets

3,536

2,231

 

3,536

3,055

The Board has determined that certain charges to the income statement should be separately identified for better understanding of the Group's results. In 2014 the Company acquired Forefront Group Ltd and Clarke Telecom Ltd and incurred £824,000 of costs associated with the acquisitions. 

 

The Board has also separately identified the charge of £3,536,000 (2014: £2,231,000) 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 operation analysis

 

 

 

 

2015

2014

 

£000

£000

Revenue

31,947

49,992

Expenses

(41,278)

(54,124)

Profit on disposal

1,250

-

Loss before income tax

(8,081)

(4,132)

Income tax credit - benefit of tax losses

818

-

Income tax expense - deferred tax

-

(1,023)

Loss for the year from discontinued operation

(7,263)

(5,155)

 

On 31 October 2014, the Board reached an agreement to sell Allenbuild Ltd to Places for People Group Ltd ("PFP") for a total consideration of £2.75m payable in cash. PFP paid the initial 50% of the consideration on 31 October 2014 and will pay the balance on 31 January 2016. The trading result for this business has therefore been included within the loss for the year from discontinued operations.

 

Discontinued expenses include the following exceptional items:

 

2015

2014

 

£000

£000

Provision against amounts recoverable on old

Building contracts

 

1,755

 

2,528

Costs related to exceptional storm damage on a Building contract

 

800

 

1,500

 

2,555

4,028

 

The provision of £1,755,000 (2014:£2,528,000) relates to settling final accounts and contractual issues on old contracts.

 

A further £800,000 (2014:£1,500,000) of costs have been recognised following the exceptional storm damage experienced in 2013. 

 

 

4 Income tax expense

 

Analysis of expense in year

 

2015

 

2014

 

£000

£000

Current tax:

 

 

UK corporation tax on profits of the year

(2,360)

(2,265)

Adjustments in respect of previous periods

1,359

(227)

Total current tax

(1,001)

(2,492)

Deferred tax - defined benefit pension schemes

(760)

(594)

Deferred tax - other timing differences

(1,182)

(651)

Total deferred tax

(1,942)

(1,245)

Income tax expense

(2,943)

(3,737)

Deferred tax in respect of discontinued operation

-

1,023

Income tax expense in respect of continuing activities

(2,943)

(2,714)

 

 

 

 

5 Dividends

 

2015

2014

 

 

 

Pence/share

Pence/share

 

Interim (related to the year ended 30 September 2015)

 

2.25

1.50

 

Final (related to the year ended 30 September 2014)

 

3.50

2.50

 

Total dividend paid

 

5.75

4.00

 

 

 

 

 

 

 

 

£000

£000

 

Interim (related to the year ended 30 September 2015)

 

1,393

923

 

Final (related to the year ended 30 September 2014)

 

2,153

1,538

 

Total dividend paid

 

3,546

2,461

 

               

 

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 4.75p per Ordinary Share be paid in respect of the year ended 30 September 2015.  This will be accounted for in the 2015/16 financial year.

 

6 Earnings per share

 

 

 

 

2015

 

 

 

2014

 

 

Earnings

EPS

DEPS

 

Earnings

EPS

DEPS

 

 

£000

Pence

Pence

 

£000

Pence

Pence

Earnings before exceptional items & amortisation charges

 

16,068

26.03

25.70

 

12,781

20.80

20.51

Exceptional items & amortisation charges

 

(2,900)

(4.69)

(4.64)

 

(2,444)

(3.97)

(3.92)

Basic earnings per share - continuing activities

 

13,168

21.34

21.06

 

10,337

16.83

16.59

Loss for the year from discontinued operation

 

       (7,263)

(11.77)

(11.62)

 

          (5,155)

(8.39)

(8.27)

Basic earnings per share

 

5,905

9.57

9.44

 

5,182

8.44

8.32

Weighted average number of shares

 

 

61,718

62,533

 

 

61,431

62,313

 

The dilutive effect of share options is to increase the number of shares by 815,000 (2014: 882,000) and reduce basic earnings per share by 0.13p (2014: 0.12p).

 

7 Restatement of 2014 Balance Sheet

 

The Balance sheet for 2014 has been restated following a hindsight fair value adjustment to Forefront Group Ltd. The impact was to reduce Property, plant and equipment by £1.1m, to reduce Trade receivables by £0.3m, to increase Trade and other payables by 2.1m, to increase the deferred tax asset by £0.7m and to increase Goodwill by £2.8m.

 

8 Preliminary financial information

 

The financial information set out above does not constitute the company's statutory accounts for the years ended 31 September 2015 or 2014 but is derived from those accounts. Statutory accounts for 2014 have been delivered to the registrar of companies, and those for 2015 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.

 

9 Posting of Report & Accounts

 

The Group confirms that the annual report and accounts for the year ended 30 September 2015 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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