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Renew Holdings PLC (RNWH)

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Tuesday 22 May, 2018

Renew Holdings PLC

Interim Results

RNS Number : 7907O
Renew Holdings PLC
22 May 2018
 

Renew Holdings plc

("Renew" or the "Group")

 

Interim results

 

Renew (AIM: RNWH), the Engineering Services Group supporting UK infrastructure, announces their interim results for the six months ended 31 March 2018 which are in line with management expectations.

 

Financial Highlights:

 

H1 2018

H1 2017

Revenue

£262.2m

£281.8m

Adjusted operating profit*

£12.9m

£12.9m

Adjusted operating margin*

4.9%

4.6%

Adjusted earnings per share*

16.2p

16.5p

Interim dividend per share

3.33p

3.00p

* Adjusted results are shown prior to impairment, amortisation and exceptional items.

 

·     Engineering Services revenue was £221.8m (2017: £226.6m)

·     Engineering Services adjusted operating profit* of £12.9m (2017: £12.7m)

·     9% increase in Engineering Services order book to £472m (2017: £435m)

·     Exited the gas infrastructure market with the sale of Forefront

 

Post period end Highlights:

·     Materially earnings enhancing acquisition of QTS for a cash consideration of £80m

§ Funded by a successful equity placing of £45m and £35m debt facility

§ Complementary transaction which fits with Renew's established and proven strategy

 

David Forbes, Chairman of Renew Holdings, said: "This period has seen Renew deliver another set of interim results in line with management expectations. The Group's strategy remains to develop its engineering services business both organically and through selective acquisitions which was demonstrated by the post period end acquisition of QTS, positioning the Group to continue to generate shareholder value."

 

Enquiries:

Renew Holdings plc

www.renewholdings.com

Contact via Walbrook PR

Paul Scott, Chief Executive

 

Sean Wyndham-Quin, Group Finance Director

 

 

 

Numis Securities Limited

Tel: 020 7260 1000

Stuart Skinner/ Kevin Cruickshank (Nominated Adviser)

 

Michael Burke (Corporate Broker)

 

 

 

Walbrook PR

Tel: 020 7933 8780 or [email protected]

Paul McManus

Mob: 07980 541 893

Lianne Cawthorne

Mob: 07584 391 303

       

 

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

 

 

 

About Renew Holdings plc

 

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

 

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

 

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

 

 

 

 

Chairman's Statement

 

I am pleased to announce that Renew has delivered another set of interim results in line with management expectations. The Group focuses on directly delivering essential works to critical infrastructure in regulated markets where works are funded through clients' operational expenditure budgets.

 

Results

 

Group adjusted1 operating profit was £12.9m (2017: £12.9m) on revenue, including £0.9m (2017: £1.1m) from a joint venture, of £262.2m (2017: £281.8m). The Group's adjusted1 operating margin, increased to 4.9% (2017: 4.6%). Adjusted1 earnings per share was 16.2p (2017: 16.5p). Statutory profit before income tax was £2.0m (2017: £5.6m).

 

Engineering Services revenue was £221.8m (2017: £226.6m) with adjusted1 operating profit increasing to £12.9m (2017: £12.7m) resulting in an improved operating margin of 5.8% (2017: 5.6%).

 

As announced in November 2017, Specialist Building revenue reduced to £40.5m (2017: £53.5m). Operating profit was £0.9m (2017: £1.2m), maintaining operating margin at 2.2% (2017: 2.2%). The Group remains focused on contract selectivity and risk management within the High Quality Residential market in London and the Home Counties.

 

Corporate activity

 

Since the period end, we were pleased to announce the £80m acquisition of QTS Group Limited ("QTS"), a direct delivery provider of specialist engineering services to the rail industry. These services include asset support, maintenance and renewals undertaken primarily through Network Rail's non-discretionary operational expenditure budget. QTS is a well-established brand in the UK Rail market where it has operated for over 25 years. The combined capabilities broaden the service offering of the enlarged Group and enable us to maximise the opportunities under Control Period 6 ("CP6") (2019-2024) where the increase in spending to £48bn will focus on operations, maintenance, support and renewals across the rail network.

 

The acquisition was part funded by a successful equity placing to raise gross proceeds of £45m, with the balance of the consideration (plus associated transaction costs) funded from new debt facilities, comprising a £35m four year term loan, £20m revolving capital facility and £10m overdraft facility, which together replaced all existing debt facilities.

 

On 5 February 2018, the Group announced the disposal of Forefront Group Limited ("Forefront"), its engineering services business focused on the gas infrastructure market.

 

Dividend

 

In line with its progressive policy, the Board is increasing the interim dividend by 11% to 3.33p (2017: 3.00p) per share which will be paid on 6 July 2018 to shareholders on the register at 1 June 2018.

 

Order book

 

The Group's order book at 31 March 2018 was £540m (2017: £517m). The Engineering Services order book grew 9% to £472m (2017: £435m). In Specialist Building, the order book was £68m (2017: £82m).

 

Cash

 

At 31 March 2018, the Group had a net debt of £2.5m (2017: £3.5m). 

 

Board changes

I was delighted to succeed Roy Harrison as Chairman following his retirement at the conclusion of the AGM in January. I would like to thank Roy for the contribution he has made to the Group over the past 14 years. In November, the Group appointed Sean Wyndham-Quin as Group Finance Director.

 

Outlook

 

We focus on supporting the country's key infrastructure assets, providing essential engineering services through long-term framework positions. It remains the Group's strategy to develop its engineering services business both organically and through selective acquisitions.

 

The Board remains confident of delivering full year results in line with market expectations.

 

  

D Forbes

Chairman

22 May 2018

 

 

 

Chief Executive's Review

 

Renew continues to expand its position as a leading provider of engineering support services to the UK's critical infrastructure assets in the Energy, Environmental and Infrastructure markets which have high barriers to entry.

 

Our work supports the daily operations of essential networks which include nuclear, rail and water infrastructure. Our directly employed, highly skilled teams deliver maintenance and renewals programmes to key infrastructure assets on these networks.

 

Corporate activity

 

On 9 May 2018, the Group announced the acquisition of QTS for a cash consideration of £80m. QTS is a provider of specialist services to the rail industry which include Civil Engineering, Geotechnical Services, Fencing and Devegetation. QTS is an excellent fit with Renew's established and proven strategy and has a longstanding relationship with Network Rail where they operate under long-term framework positions. This includes the recently awarded 10 regions on the five year Civils and Buildings Asset Management Frameworks. The additional services of QTS will broaden the opportunities available to Renew under CP6 (2019-2024) where Network Rail's significantly increased spending will focus on renewal and maintenance, our Group's key offering.

 

Headquartered in Drumclog, Scotland, QTS has eight operational bases across the UK. In the financial year ended 31 March 2018, over 90% of QTS' revenue was ultimately derived from Network Rail. The QTS brand will be retained and the business will operate as a standalone subsidiary, with Group oversight and support.

 

Exceptional items

 

In February, the Group announced its decision to exit the gas infrastructure market with the sale of subsidiary, Forefront. The sale allows management to focus on other opportunities that can deliver better value for shareholders. As a result of the disposal, the consolidated results of the Group will show a non-cash, balance sheet write-down of assets and intangible assets of approximately £9.9m which are shown as exceptional items in the Group's accounts. Renew bears no ongoing liability in respect of Forefront.

 

Engineering Services

 

Engineering Services revenue was in line with management expectations at £221.8m (2017: £226.6m). Adjusted 1 operating profit grew to £12.9m (2017: £12.7m). The adjusted1 operating margin increased to 5.8% (2017: 5.6%). In line with our strategy to focus on contract selectivity, we delivered improved margins across our Engineering Services sectors. 

 

At 31 March 2018, the Engineering Services order book increased 9% to £472m (2017: £435m) with expected revenue for the year fully secured.

 

Energy

 

Our engineering services support the day-to-day operation and maintenance of assets in the nuclear, thermal, and renewable energy markets.

 

Operating at 9 of the Nuclear Decommissioning Authority's ("NDA") 17 nuclear licenced sites in the UK, the majority of our work is undertaken at the Sellafield Nuclear site in Cumbria. Sellafield is currently allocated around 74% of the NDA's £3bn annual expenditure representing the scale of the decommissioning challenge at the site.

 

As the largest mechanical and electrical contractor at Sellafield we are positioned across the site supporting both new and existing operational plant. Our work on Sellafield's long-term, high priority programmes includes those associated with waste treatment, reprocessing, decontamination, and decommissioning.

 

We continue to work on long-term frameworks at Sellafield which include the 10-year Decommissioning Delivery Partnership Framework, Magnox Swarf Storage Silo, Bulk Sludge Retrieval, Site Remediation & Decommissioning, the Bundling Spares Framework and the Tanks and Vessels Framework. Our work on these frameworks also positions the Group strongly for opportunities in the major projects programmes at the site.

 

During the period we also commenced a new area of work at BAE Systems in Barrow where we are providing engineering support to the Astute Class nuclear submarine programme.

 

We continue to provide long-term engineering maintenance at five of the UK's thermal power stations and have recently been awarded a number of work packages.

 

Environmental

 

We support a wide range of water infrastructure assets including both clean and waste water networks as well as undertaking flood alleviation and coastal protection schemes.

 

We continue our strong relationship with Wessex Water on the AMP 6 Civils & EMI Delivery Partners Framework and for Welsh Water on the Major Civils Framework and the Capital Delivery Alliance Civils contracts as well as the Pressurised Pipelines Framework which includes the Emergency Reactive framework. During March, our reactive maintenance services supported Welsh Water through major network disruption following a period of severe weather. Our direct resources responded very quickly to an urgent demand for an extensive leakage programme on the potable water network supplying the main conurbations of Wales.

 

We continue to develop our relationship with the Environment Agency following the award of the five year Flood and Coastal Risk Management Frameworks in the Agency's North, Central and South West Hubs in March. We were the only contractor to secure a position in all three areas. The frameworks will see us deliver a range of small scale civil engineering and maintenance works to protect and improve the environment with the overall Flood and Coastal Risk Management programme set to deliver around £160m of works nationally. We continue to operate as sole provider on the Northern Mechanical, Electrical, Instrumentation, Control, and Automation ("MEICA") Framework.

 

For the Canal and River Trust, we have completed the first year of the MEICA Framework where we provide maintenance, renewal, upgrade, and emergency repairs services to around 1,000 of the Trust's waterway assets in England and Wales. During the period, our work included the installation of a new winding mechanism at Bath Deep Lock on the Kennet and Avon Canal.

 

In land remediation, we have worked on several frameworks for SGN and National Grid to remediate former gas works sites. New clients include Leeds City Council where we have recently been awarded a contract to remediate three sites in the Holbeck development area.

 

Restoration activity and work associated with the Palace of Westminster, including work on the Courtyard Conservation Framework and the Cast Iron Roof Restoration Framework is progressing well. Our position at the site provides good visibility of future essential works and we are well placed for the major opportunities that will present themselves at this UNESCO World Heritage site.

 

Infrastructure

 

As a major provider of infrastructure services to Network Rail, we undertake a wide range of multi-disciplinary maintenance and renewals activities as well as providing a 24/7 emergency reactive service across the rail network.

 

The Government's announcement of increased rail funding for CP6 to £48bn will see Network Rail increase expenditure in operations, maintenance, support, and renewals by 25% compared to the previous Control Period (2014-2019). The focus on renewals and maintenance as key priorities means the Group is excellently positioned to benefit from this spending plan.

 

Following Network Rail's recent renewal of the 5-Year Civils and Buildings Asset Management Frameworks we successfully renewed all our existing frameworks as well as adding a number of new positions extending our reach into the South East. These contract awards are testament to the strength of the Group's relationship with Network Rail and our ability to respond at short notice across a range of assets on the national rail network.

 

In addition to our civils and building asset management works, we remain sole provider on seven Infrastructure Project frameworks over the current CP5 investment period where we deliver renewal schemes on a range of assets including bridges, viaducts, stations, and tunnels.

 

We continue to see increasing opportunities in the wider rail market through the collaboration of Amco and Giffen. During the period we were awarded significant refurbishment projects at Upminster and Ealing Common Depots for London Underground Limited and the construction of Robroyston Station for the ScotRail Alliance in Scotland. In addition, Amco Giffen has been appointed as a Strategic Partner by SPL Powerlines UK Limited on the Midland Mainline Electrification Programme following their acquisition of the Carillion share in the CPL Joint Venture.

 

In wireless telecoms, we continue to work for the UK's major cellular network operators and original equipment manufacturers on the 3G and 4G roll out programmes.

 

Specialist Building

 

As previously announced, revenue in Specialist Building reduced against the comparative period to £40.5m (2017: £53.5m), with an operating profit of £0.9m (2017: £1.2m). Operating profit margin was maintained at 2.2% (2017: 2.2%). The forward order book stood at £68m (2017: £82m) with expected revenue for the year fully secured.

 

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

 

Strategy

 

Renew is a leading provider of engineering support services to the UK's critical Energy, Environmental and Infrastructure markets, where ongoing engineering maintenance and renewals requirements provide long-term, sustainable opportunities.

 

It remains the Group's strategy to grow our Engineering Services business both organically and through selective, earnings enhancing acquisitions with a clear focus on non-discretionary operational expenditure.

 

Our acquisition of QTS builds on this established strategy and positions the Group well to maximise the opportunities available under CP6 where increased spending will focus on renewals and maintenance.

 

 

Paul Scott

Chief Executive

22 May 2018

 

 

 

 1 Adjusted results are shown prior to impairment, amortisation and exceptional items (applies throughout the document whenever the term 'adjusted' is used)

 

 

Condensed consolidated income statement

for the six months ended 31 March 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Before exceptional items and

amortisation of intangible assets

Exceptional items and

amortisation of intangible assets

(see Note 3)

 

Six months ended

31 March

Before exceptional items and amortisation of intangible assets

 

 

Exceptional items and amortisation of intangible assets

(see Note 3)

Year ended

30 September

 

 

 

 

 

 

 

 

 

 

 

2018

2018

2018

2017*

 

2017

 

2017

 

2017

 

 

Note

 

Unaudited

 

£000

 

Unaudited

 

£000

 

Unaudited

 

£000

 

     Unaudited (restated**)

£000

Audited

(restated**)

£000

Audited

(restated**)

£000

Audited

(restated**)

£000

 

 

 

 

 

 

 

 

 

Revenue: Group including share of joint venture

2

 

262,159

-

262,159

281,785

545,932

-

545,932

Less share of joint venture's revenue

 

(853)

-

(853)

(1,130)

(2,239)

-

(2,239)

Group revenue from continuing activities

2

261,306

-

261,306

280,655

543,693

-

543,693

Cost of sales

 

(230,674)

-

(230,674)

(250,880)

(481,065)

-

(481,065)

Gross profit

 

30,632

-

30,632

29,775

62,628

-

62,628

Administrative expenses

 

(17,827)

(10,475)

(28,302)

(24,086)

(35,126)

(8,289)

(43,415)

Share of post-tax result of joint venture

 

65

-

65

81

166

-

166

Operating profit

2

12,870

(10,475)

2,395

5,770

27,668

(8,289)

19,379

Finance income

 

1

-

1

81

30

-

30

Finance costs

 

(385)

-

(385)

(210)

(528)

-

(528)

Other finance income - defined benefit pension schemes

 

 

-

-

-

-

197

-

197

Profit before income tax

2

12,486

(10,475)

2,011

5,641

27,367

(8,289)

19,078

Income tax expense

5

(2,371)

105

(2,266)

(2,231)

(4,838)

388

(4,450)

(Loss)/profit for the period from continuing activities

 

 

10,115

(10,370)

(255)

3,410

22,529

(7,901)

14,628

Loss for the period from discontinued operations

4

 

(1,320) 

 -

(1,320)

(655)

(2,201) 

(2,201)

(Loss)/profit for the period attributable to equity holders of the parent company

 

 

8,795 

 (10,370)

(1,575)

2,755

20,328 

(7,901) 

12,427

 

 

 

 

 

 

 

 

 

Basic earnings per share from continuing activities

6

 

16.16p 

(16.57p) 

(0.41p)

5.47p

36.04p 

(12.64p) 

23.40p

Diluted earnings per share from continuing activities

6

 

16.06p 

(16.46p) 

(0.40p)

5.42p

35.81p 

(12.56p) 

23.25p

 

 

 

 

 

 

 

 

 

Basic earnings per share

6

14.05p 

(16.57p) 

(2.52p)

4.42p

32.52p 

(12.64p) 

19.88p

Diluted earnings per share

6

13.96p 

(16.46p) 

(2.50p)

4.38p

32.31p 

(12.56p) 

19.75p

 

 

 

 

 

 

 

 

 

Proposed dividend

7

 

 

3.33p

3.00p

 

 

9.00p

 

*Operating profit for the six months ended 31 March 2017 is stated after charging £6,009,000 of exceptional items and £1,140,000 of amortisation cost (see Note 3).

** The prior year comparatives have been restated following the reclassification of a discontinued business (see Note 4).

 

 

 

 

Condensed consolidated statement of comprehensive income 

for the six months ended 31 March 2018 

 

 

Six months ended

Year ended

 

 

31 March

30 September

 

 

2018

2017

2017

 

 

 

 

 

 

 

Unaudited

Unaudited

Audited

 

 

£000

£000

£000

 

 

 

 

 

(Loss)/profit for the period attributable to equity holders of the parent company

 

(1,575)

2,755

12,427

 

 

 

 

 

Items that will not be reclassified to profit or loss:

 

 

 

 

Movement in actuarial valuation of the defined benefit pension schemes

 

-

-

(2,089)

Movement on deferred tax relating to the defined benefit pension schemes

 

-

-

806

Total items that will not be reclassified to profit or loss

 

-

-

(1,283)

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

 

 

 

 

Exchange movement in reserves

 

(66)

84

(42)

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

 

(66)

84

 

(42)

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

 

(1,641)

2,839

 

11,102

             

 

 

Condensed consolidated statement of changes in equity

for the six months ended 31 March 2018

 

                               

 

Called up

Share

Capital

Cumulative

Share based

 

Total

 

share

premium

redemption

translation

payments

Retained

equity

 

capital

account

reserve

adjustment

reserve

earnings

Unaudited

 

£000

£000

£000

£000

£000

£000

£000

 

 

 

 

 

 

 

 

At 1 October 2016

6,232

8,481

3,896

1,347

571

366

20,893

Transfer from income statement for the period

 

 

 

 

 

2,755

2,755

Dividends paid

 

 

 

 

 

(3,349)

(3,349)

New shares issued

27

1,154

 

 

 

 

1,181

Recognition of share based payments

 

 

 

 

1

 

1

Exchange differences

 

 

 

84

 

 

84

At 31 March 2017

6,259

9,635

3,896

1,431

572

(228)

21,565

Transfer from income statement for the period

 

 

 

 

 

9,672

9,672

Dividends paid

 

 

 

 

 

(1,877)

(1,877)

Recognition of share based payments

 

 

 

 

108

 

108

Exchange differences

 

 

 

(126)

 

 

(126)

Actuarial movement recognised in the pension schemes

 

 

 

 

 

(2,089)

(2,089)

Movement on deferred tax relating to the pension schemes

 

 

 

 

 

 

806

 

806

At 30 September 2017

6,259

9,635

3,896

1,305

680

6,284

28,059

Transfer from income statement for the period

 

 

 

 

 

(1,575)

(1,575)

Dividends paid

 

 

 

 

 

(3,755)

(3,755)

Recognition of share based payments

 

 

 

 

(114)

 

(114)

Exchange differences

 

 

 

(66)

 

 

(66)

At 31 March 2018

6,259

9,635

3,896

1,239

566

954

22,549

 

 

 

Condensed consolidated balance sheet

at 31 March 2018

 

 

 

          31 March

30 September

 

 

2018

2017

2017

 

 

Unaudited

 

Unaudited

(restated*)

Audited

 

 

 

£000

£000

£000

Non-current assets

 

 

 

 

Intangible assets

 

 

 

 

- goodwill

 

51,089

58,505

57,982

- other

 

2,127

3,819

2,679

Property, plant and equipment

 

11,951

13,188

13,497

Investment in joint venture

 

302

152

237

Retirement benefit assets

 

11,822

9,834

9,692

Deferred tax assets

 

1,935

2,355

2,057

 

 

79,226

87,853

86,144

Current assets

 

 

 

 

Inventories

 

4,543

5,032

3,900

Assets held for resale

 

1,500

1,500

1,500

Trade and other receivables

 

99,450

92,821

115,598

Current tax assets

 

-

-

220

Cash and cash equivalents

 

112

2,671

6,967

 

 

105,605

102,024

128,185

 

 

 

 

 

Total assets

 

184,831

189,877

214,329

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

 

 

 

 

Obligations under finance leases

 

(2,344)

(2,569)

(2,376)

Retirement benefit obligations

 

(538)

(1,918)

(760)

Deferred tax liabilities

 

(4,543)

(3,813)

(3,892)

Provisions

 

(314)

(312)

(314)

 

 

(7,739)

(8,612)

(7,342)

Current liabilities

 

 

 

 

 

 

 

 

 

Borrowings

 

(2,578)

(6,200)

(3,100)

Trade and other payables

 

(148,929)

(148,946)

(173,245)

Obligations under finance leases

 

(2,206)

(2,426)

(2,547)

Current tax liabilities

 

(794)

(1,908)

-

Provisions

 

(36)

(220)

(36)

 

 

(154,543)

(159,700)

(178,928)

 

 

 

 

 

Total liabilities

 

(162,282)

(168,312)

(186,270)

 

 

 

 

 

Net assets

 

22,549

21,565

28,059

 

 

 

 

 

Share capital

 

6,259

6,259

6,259

Share premium account

 

9,635

9,635

9,635

Capital redemption reserve

 

3,896

3,896

3,896

Cumulative translation adjustment

 

1,239

1,431

1,305

Share based payments reserve

 

566

572

680

Retained earnings

 

954

(228)

6,284

Total equity

 

22,549

21,565

28,059

*details of restated comparative balance sheet as at 31 March 2017 are set out in Note 1 (e).

           
 

 

Condensed consolidated cashflow statement

for the six months ended 31 March 2018

  

     Six months ended     

Year ended 

 

       31 March

30 September

 

2018

2017

2017

 

Unaudited

 

Unaudited

(restated**)

Audited

(restated**)

 

£000

£000

£000

 

 

 

 

(Loss)/profit for the period from continuing operations

(255)

3,410

14,628

Share of post tax trading result of joint venture

(65)

(81)

(166)

Impairment and amortisation of intangible assets

7,445

6,940

8,080

Depreciation

1,789

1,860

3,675

Profit on sale of property, plant and equipment

(156)

(281)

(501)

Loss on disposal of subsidiary undertaking

3,030

-

-

Expense in respect of share option exercise

-

1,181

1,181

(Increase)/decrease in inventories

(1,069)

529

1,217

Decrease/(increase) in receivables

12,787

3,689

(22,875)

(Decrease)/increase in payables

(20,429)

(12,032)

14,842

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

29

29

60

Cash contribution to defined benefit pension schemes

(2,352)

(2,322)

(5,291)

(Credit)/expense in respect of share options

(114)

1

109

Finance income

(1)

(81)

(30)

Finance expense

385

210

331

Interest paid

(385)

(210)

(528)

Income taxes paid

(479)

-

(2,145)

Income tax expense

2,266

2,231

4,450

Net cash inflow from continuing operating activities

2,426

5,073

17,037

Net cash outflow from discontinued operating activities

(3,606)

(1,441)

(1,999)

Net cash (outflow)/inflow from operating activities

(1,180)

3,632

15,038

 

 

 

 

Investing activities

 

 

 

Interest received

1

81

30

Proceeds on disposal of property, plant and equipment

374

334

663

Purchases of property, plant and equipment

(284)

(647)

(2,084)

Acquisition of subsidiaries net of cash acquired

-

(7,014)

(7,024)

Net cash inflow/(outflow) from continuing investing activities

             91

             (7,246)

(8,415)

Net cash (outflow)/inflow from discontinued investing activities

(4)

244

Net cash inflow/(outflow) from investing activities

45

(7,250)

(8,171)

 

 

 

 

Financing activities

 

 

 

Dividends paid

(3,755)

(3,349)

(5,226)

Loan repayments

(3,100)

(3,100)

(6,200)

Repayment of obligations under finance leases

(1,410)

(1,284)

(2,471)

Net cash outflow from continuing financing activities

(8,265)

(7,733)

(13,897)

Net cash outflow from discontinued financing activities

(63)

(71)

Net cash outflow from financing activities

(8,290)

(7,796)

(13,968)

 

 

 

 

Net decrease in continuing cash and cash equivalents

(5,748)

(9,906)

(5,275)

Net decrease in discontinued cash and cash equivalents

(3,677)

(1,508)

(1,826)

Net decrease in cash and cash equivalents

(9,425)

(11,414)

(7,101)

 

 

 

 

Cash and cash equivalents at the beginning of the period

6,967

14,084

14,084

Effect of foreign exchange rate changes on cash and cash equivalents

(8)

1

(16)

 

 

 

 

Cash and cash equivalents at the end of the period

(2,466)

2,671

6,967

 

 

 

 

Bank balances and cash

112

2,671

6,967

Overdraft

(2,578)

-

-

 

(2,466)

2,671

6,967

 

   ** The prior year comparatives have been restated following the reclassification of a discontinued business (see Note 4).

 

Notes to the condensed consolidated accounts

 

1.    Basis of preparation

 

(a) The condensed consolidated interim financial report for the six months ended 31 March 2018 and the equivalent period in 2017 has not been audited or reviewed by the Group's auditor. It does not comprise statutory accounts within the meaning of Section 435 of the Companies Act 2006. It has been prepared under the historical cost convention and on a going concern basis in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union. The report does not comply with IAS34 "Interim Financial Reporting", which is not currently required to be applied for AIM companies and it was approved by the Directors on 22 May 2018.

                               

(b) The accounts for the year ended 30 September 2017 were prepared under IFRS and have been delivered to the Registrar of Companies. The report of the auditor on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under Section 498(2) or (3) of the Companies Act 2006. In this report, the comparative figures for the year ended 30 September 2017 have been audited. The comparative figures for the period ended 31 March 2017 are unaudited.

 

(c) For the year ending 30 September 2018, there are no new accounting standards, which have been adopted by the EU, applied and implemented for the condensed consolidated interim financial report.  The accounting policies adopted in the preparation of the condensed consolidated interim financial report are consistent with those adopted in the Group's accounts for the year ended 30 September 2017.

 

(d) On 2 February 2018 Ferns Group Ltd ("Ferns") acquired 100% of the ordinary share capital of Forefront Group Ltd, an Engineering Services subsidiary. Consequently Forefront Group Ltd has been treated as a discontinued business.

 

(e) The comparative balance sheet as at 31 March 2017 has been restated to reflect the prior year adjustment identified during the preparation of the financial statements for the year ended 30 September 2017. Deferred tax should have been charged at 35% on the Retirement Benefit Asset which resulted in an increase in the deferred tax liability of £1,309,000. The correction to the corporation tax creditor of £833,000 resulted in a net reduction in net assets of £476,000.

 

(f) The principal risks and uncertainties affecting the Group are unchanged from those set out in the Group's accounts for the year ended 30 September 2017.  The Directors have reviewed financial forecasts and are satisfied that the Group has adequate resources to continue in operational existence for the foreseeable future.  Accordingly, the Group continues to adopt the going concern basis in preparing the condensed consolidated interim financial report.

 

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

 

 

 

 

2.   Segmental analysis  

                                                                                                                                                                                                                                                                                     

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

               

                                                                               

 

 

 

Group including share of joint venture

 

2018

Unaudited

 

 

Less share of joint venture

 

2018

Unaudited

 

Group revenue from continuing activities

Six months ended

31 March

Group including share of joint venture

 

2017

Audited

(restated)

 

 

Less share of joint venture

 

2017

Audited

 

 

Group revenue from continuing activities

Year ended

30 September

2017

Audited

(restated)

 

2018

Unaudited

 

2017*

Unaudited

(restated)

 

Revenue is analysed as follows:

£000

 

 

£000

£000

£000

 

 

£000

 

 

£000

£000

 

 

 

 

 

 

 

 

 

 

Engineering Services

221,768

(853)

220,915

225,514

437,517

(2,239)

435,278

 

Specialist Building

40,500

-

40,500

53,573

106,834

-

106,834

 

Inter segment revenue

(144)

-

(144)

(399)

(921)

-

(921)

 

Segment revenue

262,124

(853)

261,271

278,688

543,430

(2,239)

541,191

 

Central activities

    35

-

  35

  1,967

2,502

-

2,502

 

Group revenue from continuing operations

262,159

 

(853)

261,306

280,655

 

545,932

 

(2,239)

543,693

 

 

*Revenue for the six months ended 31 March 2017 is stated after eliminating £1,130,000 of joint venture income.

 

 

Before exceptional items and amortisation of intangible assets

2018

Unaudited

 

 Exceptional items and

amortisation of intangible assets

2018

Unaudited

 

Six months ended

31 March

Before exceptional items and amortisation of intangible assets

2017

Audited

(restated)

 Exceptional items and

amortisation of intangible assets

2017

Audited

(restated)

Year Ended

30 September

2017

Audited

(restated)

2018

Unaudited

 

2017*

Unaudited

(restated)

 

£000

£000

£000

£000

£000

£000

£000

Analysis of operating profit

 

 

 

 

 

 

 

 

Engineering Services

12,891

(10,475)

2,416

5,598

27,255

(8,289)

18,966

Specialist Building

935

-

935

1,158

2,418

-

2,418

Segment operating profit

13,826

 

(10,475)

3,351

6,756

 

29,673

 

(8,289)

21,384

Central activities

(956)

-

(956)

(986)

(2,005)

-

(2,005)

Operating profit

12,870

(10,475)

2,395

5,770

27,668

(8,289)

19,379

Net financing expense

    (384)

 

-

  (384)

  (129)

 

(301)

 

-

(301)

Profit before income tax

12,486

 

(10,475)

2,011

5,641

 

27,367

 

(8,289)

19,078

                             

 

*Operating profit for the six months ended 31 March 2017 is stated after charging £6,009,000 of exceptional items and £1,140,000 of amortisation cost (see Note 3).

 

 

 

 

 

 

 

3.   Exceptional items and amortisation of intangible assets

 

 

Six months ended

 

Year ended

 

31 March

 

30 September

 

2018

 

2017

 

2017

 

Unaudited

 

 

Unaudited

 

 

Audited

(restated)

 

£000

 

£000

 

£000

Acquisition costs re Giffen Holdings Ltd

-

 

209

 

209

Loss on disposal

3,030

 

-

 

-

Impairment of goodwill

6,893

 

5,800

 

                     5,800

Total charges arising from exceptional items

9,923

 

    6,009

 

                     6,009

Amortisation of intangible assets

552

 

1,140

 

2,280

 

10,475

 

7,149

 

8,289

 

The sale of Forefront Group incurred a loss on disposal of £3,030,000, and resulted in a £6,893,000 write off of goodwill attributable to that subsidiary undertaking. As a consequence of the disposal, the 30 September 2017 £657,000 exceptional redundancy and restructuring cost has been reclassified and is now included within the respective comparative loss for the period from discontinued operations.

 

 

4.     Loss for the period from discontinued operations

 

 

Six months ended

 

Year ended

 

31 March

 

30 September

 

2018

 

2017

 

2017

 

Unaudited

 

 

Unaudited

(restated)

 

Audited

(restated)

 

£000

 

£000

 

£000

Revenue

3,850

 

8,896

 

15,032

Expenses

(5,170)

 

(9,710)

 

(17,808)

Loss before income tax

(1,320)

 

    (814)

 

(2,776)

Income tax credit - benefit of tax losses

-

 

159

 

575

Loss for the period from discontinued operations

(1,320)

 

(655)

 

(2,201)

 

On 2 February 2018 Ferns Group Ltd ("Ferns") acquired 100% of the ordinary share capital of Forefront Group Ltd, an Engineering Services subsidiary. The trading result for this cash generating unit has therefore been included within the loss for the period from discontinued operations and the comparative figures have been reclassified accordingly.

 

 

 

 

5.     Income tax expense

 

 

Six months ended

Year ended

 

31 March

30 September

 

2018

2017

2017

 

Unaudited

 

Unaudited

(restated)

Audited

(restated)

 

£000

£000

£000

Current tax:

 

 

 

UK corporation tax on (loss)/ profit for the period

(1,493)

(1,673)

(3,294)

Adjustments in respect of previous periods

-

-

825

Total current tax

(1,493)

(1,673)

(2,469)

Deferred tax

(773)

(558)

(1,981)

Income tax expense

(2,266)

(2,231)

(4,450)

 

 

 

 

 

 

 

 

 

 

6.   Earnings per share                                         

 

                                                              Six months ended 31 March

Year ended 30 September

 

 

 

2018

 

 

 

 

2017

 

 

 

2017

 

 

 

 

Unaudited

 

 

 

Unaudited

 

 

 

Audited

 

 

Earnings

EPS

 

DEPS

 

 

Earnings

(restated)

EPS

(restated)

DEPS

(restated)

 

Earnings

(restated)

EPS

(restated)

DEPS

(restated)

 

£000

Pence

Pence

 

£000

Pence

Pence

 

£000

Pence

Pence

Earnings before exceptional items and amortisation

 

 

 

10,115

16.16

16.06

 

 

10,316

16.54

16.41

 

22,529

36.04

35.81

Exceptional items and amortisation

 

 

   (10,370)

(16.57)

(16.46)

 

 

   (6,906)

(11.07)

(10.99)

 

(7,901)

(12.64)

(12.56)

Basic earnings per share - continuing activities

 

 

 

(255)

(0.41)

(0.40)

 

 

3,410

5.47

5.42

 

14,628

23.40

23.25

Loss for the period from discontinued operations

 

 

 

(1,320)

  (2.11)

(2.10)

 

 

 

 

(655)

  (1.05)

(1.04)

 

(2,201)

(3.52)

(3.50)

Basic earnings per share

 

(1,575)

(2.52)

(2.50)

 

 

2,755

4.42

4.38

 

12,427

      19.88

19.75

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares

 

62,592

62,983

 

 

62,376

62,860

 

 

            62,514

62,917

                                   

 

 

The dilutive effect of share options is to increase the number of shares by 391,000 (March 2017: 484,000; September 2017: 403,000) and reduce the basic earnings per share by (0.02)p (March 2017: 0.04p; September 2017: 0.13p). 

 

7.   Dividends          

                       

The proposed interim dividend is 3.33p per share (2017: 3.00p).  This will be paid out of the Company's available distributable reserves to shareholders on the register on 1 June 2018, payable on 6 July 2018. In accordance with IAS 1, dividends are recorded only when paid and are shown as a movement in equity rather than as a charge in the income statement.

 

8.    Acquisition of subsidiary

 

On 9 May 2018 the Company announced that it had agreed to acquire the entire issued share capital of QTS Group Limited, a leading specialist independent rail contractor based in Scotland, for a cash consideration of £80m.  The acquisition was funded by a placement of 12,676,056 new ordinary shares raising £45m, and a four year loan of £35m provided by HSBC Bank plc.  Further information on the acquisition will be included in the Annual Report and Accounts for the year ending 30 September 2018.              

 

 

 

 

 

 

 

 

 

 

 

 


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