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Renew Holdings PLC (RNWH)

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Tuesday 21 May, 2019

Renew Holdings PLC

Interim results

RNS Number : 6171Z
Renew Holdings PLC
21 May 2019
 

Renew Holdings plc

("Renew" or the "Group")

 

Interim results

 

Renew (AIM: RNWH), the Engineering Services group supporting UK infrastructure, announces its interim results for the six months ended 31 March 2019. The Group has delivered record trading in the period, in part reflecting the contribution of the acquisition of QTS in May 2018. The Board is confident that the Group's full year results will be in-line with expectations.

 

Financial Highlights:

 

H1 2019

H1 2018

Revenue

£301.0m

£262.2m

Adjusted operating profit*

£18.4m

£13.2m

Adjusted operating margin*

6.1%

5.0%

Adjusted earnings per share*

19.2p

16.7p

Interim dividend per share

3.83p

3.33p

 

 

*2019 adjusted results are shown prior to amortisation and the 2018 results are shown prior to amortisation and exceptional items

 

·    Engineering Services revenue grew 25% to £281.6m (2018: £226.1m)

·    Engineering Services adjusted operating profit* increasing by 48% to £19.1m (2018: £12.9m)

·    Increase in Engineering Services order book to £531m (September 2018: £511m)

·    Interim dividend increased by 15% to 3.83p (2018: 3.33p)

·    Significant new frameworks secured in Energy and Infrastructure

 

David Forbes, Chairman of Renew, said: "The Group has delivered record interim results, in part reflecting the contribution of QTS which we acquired in the second half of last year. We are pleased to have increased the interim dividend by 15% consistent with our progressive dividend policy. We continue to deliver on our established strategic objectives and remain confident of reporting full year results in line with expectations."

 

Enquiries:

Renew Holdings plc

www.renewholdings.com

Contact via Walbrook PR

Paul Scott, Chief Executive

 

Sean Wyndham-Quin, Chief Financial Officer

 

 

 

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 90% of Group revenue and over 95% 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 

 

 

 

Chief Executive's Review

 

Renew is a leading provider of engineering support services to critical UK infrastructure. Working in the regulated Energy, Environmental and Infrastructure markets, we have a wide range of integrated engineering capabilities and specialist knowledge of these markets, enabling our delivery of ongoing maintenance and renewals to support the day-to-day operation of these key infrastructure assets around the UK.

 

We are focused on engineering programmes funded by non-discretionary operating budgets. These programmes are underpinned by long-term framework agreements, providing visibility of committed funding. We have established strong, lasting relationships with key customers through our reputation for reliability and responsiveness, delivered by our highly skilled, directly employed workforce.

 

Group Results

 

The Group has seen record trading in the period, in part reflecting the contribution of QTS which was acquired in May 2018 and is now fully integrated. Adjusted1 operating profit increased 39% to £18.4m (2018: £13.2m) on revenue of £301.0m (2018: £262.2m). Adjusted1 operating margin, increased to 6.1% (2018: 5.0%). Adjusted1 earnings per share was 19.2p (2018: 16.7p). Statutory profit before income tax was £14.5m (2018: £2.4m).

 

In line with the Board's progressive dividend policy, the interim dividend will increase by 15% to 3.83p (2018: 3.33p) per share which will be paid on 12 July 2019 to shareholders on the register at 7 June 2019. The ex-dividend date will be 6 June 2019.

 

The Group's order book at 31 March 2019 was £580m (September 2018: £558m) and continues to be underpinned by a solid foundation of long-term frameworks, including significant new awards during the first half of the year.

 

At 31 March 2019, the Group had net debt of £17.2m which is £4.2m lower than at the previous year end, evidencing the Group's cash generation and our conservative approach to gearing.

 

Engineering Services

 

Engineering Services is the key driver of growth for the Group, and accounts for over 90% of revenue and over 95% of operating profit. Engineering Services revenue grew 25% to £281.6m (2018: £226.1m) with adjusted1 operating profit increasing by 48% to £19.1m (2018: £12.9m) with an improved operating margin of 6.8% (2018: 5.7%). The excellent revenue performance in Engineering Services was a reflection of the impact of QTS as well as strong momentum at the end of the rail Control Period 5 ("CP5") which contributed toward organic growth of 8%. At 31 March 2019, the Engineering Services order book grew to £531m (September 2018: £511m).


Energy

 

We support the day-to-day operation, decommissioning and maintenance of assets in the nuclear, thermal, and renewable energy markets.

 

Working on UK sites that command approximately 90% of the Nuclear Decommissioning Authority's c.£3bn annual expenditure2, we provide a range of long-term multidisciplinary engineering services. The largest of these facilities is the Sellafield nuclear site in Cumbria, where we remain the largest mechanical and electrical contractor. We work on programmes associated with decontamination, decommissioning and waste management through long-term frameworks including the ten-year Decommissioning Delivery Partnership programme, SR&DP Asset Care, Magnox Swarf Storage Silo, Bulk Sludge Retrieval, Bundling Spares and the Tanks and Vessels Frameworks. Our involvement on these critical workstreams positions us well for emerging opportunities in Sellafield's major new programmes.

               

For BAE Systems in Barrow-in-Furness, there has been an increasing demand for our engineering support to the nuclear submarine programme and the major redevelopment and upgrade of this facility. We continue to be engaged by Westinghouse at Springfields & Sizewell 'B', Low Level Waste Repository and across Magnox where we deliver mechanical, electrical & instrumentation and decommissioning packages.

 

In the period we have grown our nuclear client base securing our first orders for work at the new nuclear Hinkley Point 'C' facility. This involves the supply of high-integrity manufactured components from our long established specialist nuclear manufacturing facilities, positioning us strongly for future major opportunities. We have also been appointed to a major decommissioning services framework for new client Dounreay Site Restoration Limited for a term of up to seven years. 

 

We operate at a number of the UK's thermal power stations where our embedded teams continue to deliver long-term engineering maintenance services. During the period we have seen increasing opportunities at the Drax Power Station where we operate on a four-year electrical maintenance framework.

 

Environmental

 

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

 

Dwr Cymru Welsh Water ("Welsh Water") plans to increase spending on Asset Management Period 7 (2020-2025) ("AMP7") by c.15% to £2.3bn3 compared to AMP6 with improvements focusing on environmental protection and service resilience. Our existing frameworks with Welsh Water include the Pressurised Pipelines Framework, Major Civils Framework and the Capital Delivery Alliance Civils contracts. In addition to ongoing maintenance and renewals tasks across the network, we have seen increasing demand for our emergency reactive works following a number of major events on the water network. We continue to develop our capabilities in dam safety with work on major projects at Usk, Talybont and Llanishen ongoing in the period.

 

Wessex Water plans a record investment of £1.4bn4 over the AMP7 period focused on delivering improvements to clean water and sewerage systems. We continue to work closely with Wessex Water on the current AMP6 Civils & EMI Delivery Partners Framework.

 

For Bristol Water, we have completed a number of schemes in the period including support to their mains rehabilitation programme.

 

The Environment Agency ("EA") currently spend c.£430m on flood and coastal defences annually, however it estimates that an average annual investment of c.£1bn will be necessary up to 2065 to sufficiently mitigate flooding risk5. The Group continues to strengthen its relationship with the EA, securing the award of a further framework on the Flood and Coastal Risk Management ("FCRM") programme in the South East region. This framework now aligns with our current frameworks in the North, Central and South West Regions, which have the ability to run for the next four years. The Group secured a further extension to the EA's Northern Mechanical, Electrical, Instrumentation, Control, and Automation ("MEICA") framework to March 2020.

 

During the period we were awarded a Sluice Gate Renewals Framework for new client Peel Ports. Our expertise in the management of waterway assets will see us deliver this refurbishment programme over the three-year term.

 

In land remediation, we were awarded further projects for Harworth Estates and we continue to work on frameworks for SGN and National Grid to remediate the sites of former gas works. 

 

We have seen increasing restoration activity associated with the Palace of Westminster where work continues on the Cast Iron Roof Restoration Framework and structural repair works to the Elizabeth Tower. Our involvement with a number of phases of work at this UNESCO World Heritage site positions us well for major long-term refurbishment programmes.

 

Infrastructure

 

As a major provider of infrastructure services to Network Rail, we deliver a wide range of multidisciplinary maintenance and renewals activities alongside an emergency support provision across the national UK's rail network.

 

The Government remains committed to the UK rail network with Network Rail spending £48bn6 over the current five-year funding cycle, Control Period 6 ("CP6"). CP6 will see a c.25% increase in spending on operations, maintenance, support, and renewals activities compared to CP5 with an emphasis on delivering an enhanced experience for passengers6. Our expanded range of complementary rail capabilities and national delivery provide the Group with greater opportunities within this rail investment cycle.

 

Network Rail recently announced a significant restructure and further devolution with the rail network managed via 5 regions and 13 routes. Operating nationally across all 13 Network Rail routes, our six-year maintenance frameworks support critical assets on the network including bridges, tunnels, viaducts and major embankments. We directly deliver our services which include civils asset management, fencing, devegetation, drainage and signalling. Frameworks renewed in the period include our five-year drainage frameworks and our national eight-year Road Rail Vehicle ("RRV") framework.

 

In the period we successfully secured all the CP6 renewals frameworks that we tendered for, maintaining our positions from CP5. This includes the five-year Geotechnical & Earthworks framework and the five-year Multidisciplinary Renewals Framework in the Scotland North East region. In addition, the Group continues to operate on the new national Station Information and Surveillance Services and Telecommunications Renewals frameworks.

 

Working for London Underground, the Group delivered major depot refurbishment schemes in the period as well as specialist electrical, plant and power schemes through five framework agreements. We have also been awarded the first of five schemes on London Underground's Depot Control System Programme.

 

Operating as a strategic partner to SPL Powerlines on the Midland Mainline Electrification Programme we have seen our scope grow as the scheme moves into its second phase.

 

In wireless telecoms, investment in 4G continues to provide good momentum. We continue to see a significant increase in work through Telefonica's frameworks in the North and London. In addition to infrastructure enhancements, we also delivered emergency reactive works for our clients across a wide portfolio of sites. Work is progressing well on the national Emergency Services Network programme and for BT link.

 

In the period we were also appointed to our first 5G related programme, an area where we see long-term opportunities on the next phase of mobile communications technologies.

 

Specialist Building

 

We remain focused on the High Quality Residential market in London and the Home Counties where we specialise in major structural engineering works. In the period, the Group was awarded a number of contracts for repeat clients in the science sector where we continue to be selective and have a long-established track record.

 

Revenue reduced to £19.4m (2018: £35.3m) in line with Group's expectations and continued focus on contract selectivity and risk management. Operating profit was £0.3m (2018: £0.9m), with an operating margin of 1.5% (2018: 2.5%). In Specialist Building, the order book was £49m (September 2018: £48m).

 

Board Changes

 

On the 8 February 2019, Renew was pleased to announce the appointment of Shatish Dasani as a Non-Executive Director and Chairman of the Audit Committee succeeding John Bishop who retired from the Board at the same time. Shatish is a Chartered Accountant with over 20 years' experience in senior public company finance roles across various sectors including building materials, advanced electronics, general industrial and business services.

 

Outlook

 

Renew continues to focus on providing engineering support services to the UK's critical Energy, Environmental and Infrastructure markets. The Group has a growing customer base and holds strong positions in its chosen markets, which provides good visibility of long-term opportunities. These regulated markets benefit from non-discretionary maintenance and renewal programmes and, as such, investment is unlikely to be affected by Brexit.

 

The Group's appointment to a number of key Network Rail CP6 frameworks in the period demonstrates the strength of the Group's position within the UK Rail market and provides significant opportunity for organic growth. It remains the Group's strategy to grow its Engineering Services business both organically and through selective, earnings enhancing acquisitions.

 

The Board is confident that the Group's full year results will be in-line with its expectations and that it will continue to deliver on the established strategic objectives.

 

 

 

Paul Scott

Chief Executive

21 May 2019

 

 

 Notes:

1 2019 adjusted results are shown prior to amortisation and the 2018 results are shown prior to amortisation & exceptional items

2 NDA Business Plan 1 April 2019 to 31 March 2022 (March 2019) 

3 Dŵr Cymru Welsh Water Our Plan PR19 Business Plan 2020-2025 

4 Wessex Water Business Plan 2020-2025

5 Environment Agency Research and analysis Long-term investment scenarios (LTIS) 2019 (Updated May 2019)  

6 Network Rail - Strategic Business Plan Summary (9 February 2018)

 

 

 

 

 

 

 

 

 

 

 

Condensed consolidated income statement

for the six months ended 31 March 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Before

amortisation of intangible assets

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

 

 

 

 

 

 

 

 

 

 

 

2019

2019

2019

2018*

 

2018

 

2018

 

2018

 

 

Note

 

Unaudited

 

£000

 

Unaudited

 

£000

 

Unaudited

 

£000

 

     Unaudited (restated**)

£000

Audited

 

£000

Audited

 

£000

Audited

 

£000

 

 

 

 

 

 

 

 

 

Revenue: Group including share of joint venture

2

 

300,978

-

300,978

262,159

541,469

-

541,469

Less share of joint venture's revenue

 

-

-

-

(853)

(853)

-

(853)

Group revenue from continuing activities

2

300,978

-

300,978

261,306

540,616

-

540,616

Cost of sales

 

(258,964)

-

(258,964)

(230,674)

(469,008)

-

(469,008)

Gross profit

 

42,014

-

42,014

30,632

71,608

-

71,608

Administrative expenses

 

(23,584)

(3,264)

(26,848)

(27,942)

(40,504)

(15,626)

(56,130)

Share of post-tax result of joint venture

 

-

-

-

65

-

-

-

Operating profit

2

18,430

(3,264)

15,166

2,755

31,104

(15,626)

15,478

Finance income

 

1

-

1

1

4

-

4

Finance costs

 

(691)

-

(691)

(385)

(1,080)

-

(1,080)

Other finance income - defined benefit pension schemes

 

 

-

-

-

-

306

-

306

Profit before income tax

2

17,740

(3,264)

14,476

2,371

30,334

(15,626)

14,708

Income tax expense

5

(3,304)

555

(2,749)

(2,266)

(6,364)

841

(5,523)

Profit for the period from continuing activities

 

 

14,436

(2,709)

11,727

105

23,970

(14,785)

9,185

Loss for the period from discontinued operations

4

 

 -

-

-

(1,680)

(2,412) 

(2,412)

Profit/(loss) for the period attributable to equity holders of the parent company

 

 

14,436 

 (2,709)

11,727

(1,575)

21,558 

(14,785) 

6,773

 

 

 

 

 

 

 

 

 

Basic earnings per share from continuing activities

6

 

19.18p 

(3.60p) 

15.58p

0.17p

35.48p 

(21.88p) 

13.60p

Diluted earnings per share from continuing activities

6

 

19.06p 

(3.57) 

15.49p

0.17p

35.28p 

(21.76p) 

13.52p

 

 

 

 

 

 

 

 

 

Basic earnings per share

6

19.18p 

(3.60p) 

15.58p

(2.52p)

31.91p 

(21.88p) 

10.03p

Diluted earnings per share

6

19.06p 

(3.57p) 

15.49p

(2.50p)

31.73p 

(21.76p) 

9.97p

 

 

 

 

 

 

 

 

 

Proposed dividend

7

 

 

3.83p

3.33p

 

 

10.00p

 

*Operating profit for the six months ended 31 March 2018 is stated after charging £9,923,000 of exceptional items and £552,000 of amortisation cost (see Note 3).

** The prior year comparatives have been restated to be consistent with the reclassification of a discontinued business in the audited accounts for the year ended 30 September 2018.

 

 

 

 

Condensed consolidated statement of comprehensive income 

for the six months ended 31 March 2019 

 

 

Six months ended

Year ended

 

 

31 March

30 September

 

 

2019

2018

2018

 

 

 

 

 

 

 

Unaudited

Unaudited

Audited

 

 

£000

£000

£000

 

 

 

 

 

Profit/(loss) for the period attributable to equity holders of the parent company

 

11,727

(1,575)

6,773

 

 

 

 

 

Items that will not be reclassified to profit or loss:

 

 

 

 

Movement in actuarial valuation of the defined benefit pension schemes

 

-

-

5,477

Movement on deferred tax relating to the defined benefit pension schemes

 

-

-

(1,917)

Total items that will not be reclassified to profit or loss

 

-

-

3,560

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

 

 

 

 

Exchange movement in reserves

 

(5)

(66)

6

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

 

(5)

(66)

 

6

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

 

11,722

(1,641)

 

10,339

             

 

 

Condensed consolidated statement of changes in equity

for the six months ended 31 March 2019

 

                               

 

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 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

Transfer from income statement for the period

 

 

 

 

 

8,348

8,348

Dividends paid

 

 

 

 

 

(2,507)

(2,507)

New shares issued

1,268

42,049

 

 

 

 

43,317

Recognition of share based payments

 

 

 

 

132

 

132

Exchange differences

 

 

 

72

 

 

72

Actuarial movement recognised in the pension schemes

 

 

 

 

 

5,477

5,477

Movement on deferred tax relating to the pension schemes

 

 

 

 

 

 

(1,917)

 

(1,917)

At 30 September 2018

7,527

51,684

3,896

1,311

698

10,355

75,471

Transfer from income statement for the period

 

 

 

 

 

11,727

11,727

Dividends paid

 

 

 

 

 

(5,020)

(5,020)

New shares issued

6

220

 

 

 

 

226

Recognition of share based payments

 

 

 

 

(272)

 

(272)

Exchange differences

 

 

 

(5)

 

 

(5)

At 31 March 2019

7,533

51,904

3,896

1,306

426

17,062

82,127

 

 

 

Condensed consolidated balance sheet

at 31 March 2019

 

 

 

          31 March

30 September

 

 

2019

2018

2018

 

 

Unaudited

 

Unaudited

 

Audited

 

 

 

£000

£000

£000

Non-current assets

 

 

 

 

Intangible assets

 

 

 

 

- goodwill

 

105,282

51,089

105,282

- other

 

12,727

2,127

15,991

Property, plant and equipment

 

20,182

11,951

19,710

Investment in joint venture

 

123

302

123

Retirement benefit assets

 

23,271

11,822

20,424

Deferred tax assets

 

1,502

1,935

1,592

 

 

163,087

79,226

163,122

Current assets

 

 

 

 

Inventories

 

1,624

4,543

1,691

Assets held for resale

 

1,500

1,500

1,500

Trade and other receivables

 

119,133

99,450

129,376

Cash and cash equivalents

 

8,999

112

9,179

 

 

131,256

105,605

141,746

 

 

 

 

 

Total assets

 

294,343

184,831

304,868

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

 

 

 

 

Borrowings

 

(17,498)

-

(21,873)

Obligations under finance leases

 

(2,645)

(2,344)

(2,253)

Retirement benefit obligations

 

-

(538)

-

Deferred tax liabilities

 

(10,353)

(4,543)

(9,912)

Provisions

 

(298)

(314)

(298)

 

 

(30,794)

(7,739)

(34,336)

Current liabilities

 

 

 

 

 

 

 

 

 

Borrowings

 

(8,752)

(2,578)

(8,752)

Trade and other payables

 

(166,527)

(148,929)

(179,913)

Obligations under finance leases

 

(2,228)

(2,206)

(2,100)

Current tax liabilities

 

(1,864)

(794)

(2,245)

Provisions

 

(2,051)

(36)

(2,051)

 

 

(181,422)

(154,543)

(195,061)

 

 

 

 

 

Total liabilities

 

(212,216)

(162,282)

(229,397)

 

 

 

 

 

Net assets

 

82,127

22,549

75,471

 

 

 

 

 

Share capital

 

7,533

6,259

7,527

Share premium account

 

51,904

9,635

51,684

Capital redemption reserve

 

3,896

3,896

3,896

Cumulative translation adjustment

 

1,306

1,239

1,311

Share based payments reserve

 

426

566

698

Retained earnings

 

17,062

954

10,355

Total equity

 

82,127

22,549

75,471

 

           

 

 

Condensed consolidated cashflow statement

for the six months ended 31 March 2019

  

     Six months ended     

Year ended 

 

       31 March

30 September

 

2019

2018

2018

 

Unaudited

 

Unaudited

(restated**)

Audited

 

 

£000

£000

£000

Profit for the period from continuing operations

11,727

105

9,185

Share of post tax trading result of joint venture

-

(65)

-

Impairment and amortisation of intangible assets

3,264

7,445

4,157

Loss on disposal of subsidiary undertaking

-

3,030

9,930

Depreciation

2,826

1,789

4,356

Profit on sale of property, plant and equipment

(377)

(156)

(469)

Expense in respect of share option exercise

226

-

-

Decrease/(increase) in inventories

67

(747)

(1,190)

Decrease/(increase) in receivables

7,187

12,659

(4,974)

(Decrease) in payables

(11,946)

(20,764)

(3,054)

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

30

29

64

Cash contribution to defined benefit pension schemes

(2,847)

(2,352)

(5,772)

(Credit)/expense in respect of share options

(272)

(114)

18

Finance income

(1)

(1)

(4)

Finance expense

691

385

774

Interest paid

(691)

(385)

(1,080)

Income taxes paid

(2,600)

(479)

(1,717)

Income tax expense

2,749

2,266

5,523

Net cash inflow from continuing operating activities

10,033

2,645

15,747

Net cash inflow/(outflow) from discontinued operating activities

1,585

(3,825)

825

Net cash inflow/(outflow) from operating activities

11,618

(1,180)

16,572

Investing activities

 

 

 

Interest received

1

1

4

Dividend received from joint venture

-

-

114

Proceeds on disposal of property, plant and equipment

581

374

788

Purchases of property, plant and equipment

(1,680)

(284)

(1,329)

Acquisition of subsidiaries net of cash acquired

-

-

(75,874)

Net cash (outflow)/inflow from continuing investing activities

             (1,098)

             91

(76,297)

Net cash (outflow) from discontinued investing activities

-

-

Net cash (outflow)/inflow from investing activities

(1,098)

45

(76,297)

 

 

 

 

Financing activities

 

 

 

Dividends paid

(5,020)

(3,755)

(6,262)

Issue of Ordinary Shares

-

-

43,317

New loan

-

-

35,000

Loan repayments

(4,375)

(3,100)

(7,475)

Repayment of obligations under finance leases

(1,303)

(1,410)

(2,699)

Net cash (outflow)/inflow from continuing financing activities

(10,698)

(8,265)

61,881

Net cash outflow from discontinued financing activities

-

-

Net cash (outflow)/inflow from financing activities

(10,698)

(8,290)

61,881

 

 

 

 

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

(1,763)

(5,529)

1,331

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

1,585

(3,896)

825

Net (decrease)/increase in cash and cash equivalents

(178)

(9,425)

2,156

Cash and cash equivalents at the beginning of the period

9,179

6,967

6,967

Effect of foreign exchange rate changes on cash and cash equivalents

(2)

(8)

56

Cash and cash equivalents at the end of the period

8,999

(2,466)

9,179

 

 

 

 

Bank balances and cash

8,999

112

9,179

Overdraft

-

(2,578)

-

 

8,999

(2,466)

9,179

 

   ** The prior year comparatives have been restated to be consistent with the reclassification of a discontinued business in the audited accounts for the year ended 30 September 2018.

 

Notes to the condensed consolidated accounts

 

1.    Basis of preparation

 

(a) The condensed consolidated interim financial report for the six months ended 31 March 2019 and the equivalent period in 2018 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 21 May 2019.

                               

(b) The accounts for the year ended 30 September 2018 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 2018 have been audited. The comparative figures for the period ended 31 March 2018 are unaudited.

 

(c) For the year ending 30 September 2019, 2 new accounting standards IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers, which have been adopted by the EU, applied and have been 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 2018 except for the impact of IFRS 15. The adoption of IFRS 9 from 1 October 2018 did not result in adjustments to the amounts recognised in the financial statements.  The Group has no hedging transactions.

 

IFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised.  It replaces IAS 11 Construction contracts and related interpretations.  IFRS 15 introduces new concepts for revenue and cost recognition.  Unlike IAS 11 there is no automatic right to recognise revenue on a progressive basis for construction contracts.  Progressive revenue recognition is only permitted where the contractual rights and obligations satisfy certain criteria.  The Group's revenue qualifies to be recognised over time, and the series of distinct performance obligations carried out under framework agreements has resulted in no change to revenue recognition. The Group has adopted IFRS 15 using the input method with the effect of applying this standard recognised at the date of initial application (1 October 2018).  As noted above, IFRS 15 has had no impact on the timing of revenue recognition recognised by the Group, and so the comparative figures in the financial statements are unchanged as a consequence of the transition to the new standard.

 

(d) 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 2018.  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, 3175 Century Way, Thorpe Park, Leeds, LS15 8ZB, 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

 

2019

Unaudited

 

 

Less share of joint venture

 

2019

Unaudited

 

Group revenue from continuing activities

Six months ended

31 March

Group including share of joint venture

 

2018

Audited

 

 

 

Less share of joint venture

 

2018

Audited

 

 

Group revenue from continuing activities

Year ended

30 September

2018

Audited

 

 

2019

Unaudited

 

2018*

Unaudited

          (restated)

 

Revenue is analysed as follows:

£000

 

 

£000

£000

£000

 

 

£000

 

 

£000

£000

 

 

 

 

 

 

 

 

 

 

Engineering Services

281,552

-

281,552

226,136

467,335

(853)

466,482

 

Specialist Building

19,426

-

19,426

35,279

74,208

-

74,208

 

Inter segment revenue

(633)

-

(633)

(144)

(1,208)

-

(1,208)

 

Segment revenue

300,345

-

300,345

261,271

540,335

(853)

539,482

 

Central activities

   633

-

633

  35

1,134

-

1,134

 

Group revenue from continuing operations

300,978

 

-

300,978

261,306

 

541,469

 

(853)

540,616

 

 

*Revenue for the six months ended 31 March 2018 is stated after eliminating £853,000 of joint venture income. Reclassification of a small subsidiary from Specialist Building to Engineering Services has resulted in a corresponding reclassification of the comparative segment analysis.

 

Before  amortisation of intangible assets

2019

Unaudited

 

 

Amortisation of intangible assets

2019

Unaudited

 

Six months ended

31 March

Before exceptional items and amortisation of intangible assets

2018

Audited

 

 Exceptional items and

amortisation of intangible assets

2018

Audited

 

Year ended

30 September

2018

Audited

 

2019

Unaudited

 

2018*

Unaudited

(restated)

 

£000

£000

£000

£000

£000

£000

£000

Analysis of operating profit

 

 

 

 

 

 

 

 

Engineering Services

19,096

(3,264)

15,832

2,431

32,520

(15,626)

16,894

Specialist Building

333

-

333

920

574

-

574

Segment operating profit

19,429

 

(3,264)

16,165

3,351

 

33,094

 

(15,626)

17,468

Central activities

(999)

-

(999)

(596)

(1,990)

-

(1,990)

Operating profit

18,430

(3,264)

15,166

2,755

31,104

(15,626)

15,478

Net financing expense

    (690)

 

-

  (690)

  (384)

 

(770)

 

-

(770)

Profit before income tax

17,740

 

(3,264)

14,476

2,371

 

30,334

 

(15,626)

14,708

                             

 

*Operating profit for the six months ended 31 March 2018 is stated after charging £9,923,000 of exceptional items and £552,000 of amortisation cost (see Note 3). Reclassification of a small subsidiary from Specialist Building to Engineering Services has resulted in a corresponding reclassification of the comparative segment analysis.

 

 

 

 

 

 

 

 

3.   Exceptional items and amortisation of intangible assets

 

 

Six months ended

 

Year ended

 

31 March

 

30 September

 

2019

 

2018

 

2018

 

Unaudited

 

Unaudited

 

Audited

 

£000

 

£000

 

£000

Acquisition costs

-

 

-

 

1,539

Impairment of goodwill

-

 

6,893

 

                     6,893

Loss on disposal

-

 

3,030

 

3,037

Total charges arising from exceptional items

-

 

9,923

 

                     11,469

Amortisation of intangible assets

3,264

 

552

 

4,157

 

3,264

 

10,475

 

15,626

 

 

 

4.   Loss for the period from discontinued operations

 

 

Six months ended

 

Year ended

 

31 March

 

30 September

 

2019

 

2018

 

2018

 

Unaudited

 

 

Unaudited

(restated)

 

Audited

 

 

£000

 

£000

 

£000

Revenue

-

 

4,835

 

11,412

Expenses

-

 

(6,515)

 

(13,667)

Loss before income tax

-

 

(1,680)

 

(2,255)

Income tax charge

-

 

-

 

(157)

Loss for the period from discontinued operations

-

 

(1,680)

 

(2,412)

 

 

 

5.   Income tax expense

 

 

Six months ended

Year ended

 

31 March

30 September

 

2019

2018

2018

 

Unaudited

Unaudited

Audited

 

£000

£000

£000

Current tax:

 

 

 

UK corporation tax on profit for the period

(2,218)

(1,493)

(3,571)

Adjustments in respect of previous periods

-

-

(336)

Total current tax

(2,218)

(1,493)

(3,907)

Deferred tax

(531)

(773)

(1,616)

Income tax expense

(2,749)

(2,266)

(5,523)

 

 

 

 

 

 

 

 

6.   Earnings per share                                         

 

                                                     Six months ended 31 March

Year ended 30 September

 

 

 

2019

 

 

 

 

2018

 

 

 

2018

 

 

 

 

Unaudited

 

 

 

Unaudited

 

 

 

Audited

 

 

Earnings

EPS

 

DEPS

 

 

Earnings

(restated)

EPS

(restated)

DEPS

(restated)

 

Earnings

 

EPS

 

DEPS

 

 

£000

Pence

Pence

 

£000

Pence

Pence

 

£000

Pence

Pence

Earnings before exceptional items and amortisation

 

 

 

14,436

19.18

19.06

 

 

 

 

10,475

16.74

16.63

 

23,970

35.48

35.28

Exceptional items and amortisation

 

 

   (2,709)

(3.60)

(3.57)

 

 

 

   (10,370)

(16.57)

(16.46)

 

(14,785)

(21.88)

(21.76)

Basic earnings per share - continuing activities

 

 

 

11,727

15.58

15.49

 

 

 

 

105

0.17

0.17

 

9,185

13.60

13.52

Loss for the period from discontinued operations

 

 

 

-

-

-

 

 

 

 

(1,680)

  (2.69)

(2.67)

 

(2,412)

(3.57)

(3.55)

Basic earnings per share

 

11,727

15.58

15.49

 

 

(1,575)

(2.52)

(2.50)

 

6,773

      10.03

9.97

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares

 

75,285

75,721

 

 

62,592

62,983

 

 

            67,558

67,938

                                   

 

 

The dilutive effect of share options is to increase the number of shares by 436,000 (March 2018: 391,000; September 2018: 380,000) and reduce the basic earnings per share by 0.09p (March 2018: (0.02)p; September 2018: 0.06p). 

 

 

7.    Dividends          

                               

The proposed interim dividend is 3.83p per share (2018: 3.33p).  This will be paid out of the Company's available distributable reserves to shareholders on the register on 7 June 2019, payable on 12 July 2019. The ex-dividend date will be 6 June 2019. 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.

 

 

 

 

 

 

 

 

 

 

 

 

 


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