Renew Holdings plc

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

Interim Results

Renew (AIM: RNWH), the Engineering Services Group supporting UK infrastructure, announces record interim results for the six months ended 31 March 2015, achieving further growth in both operating profit and revenue. With strong growth in the order book, expected revenue for the second half is fully secured and the Company is increasing the interim dividend by 50% to 2.25p.

Financial Highlights

*Adjusted results are shown prior to amortisation of intangible assets with comparative figures restated to reflect the reclassification of a discontinued business.       

Operational Highlights

·     Order book up 28% to £471m at 31 March 2015 (H1 2014: £369m)

§ Expected revenue for H2 secured

·     25% increase in Engineering Services order book to £382m (H1 2014: £306m)

·     Engineering Services revenue up 24% to £209.8m (H1 2014: £169.2m)

§ 14% organic growth excluding impact of two acquisitions completed in H2 2014

·     Engineering Services adjusted operating profit* up 24% to £9.7m (H1 2014: £7.8m)

·     Further reduction of net debt position to £13.9m (30 Sept 2014: net debt £16.1m)

·     Interim dividend increased by 50% to 2.25p (H1 2014: 1.50p)

R J Harrison OBE, Chairman said: "The Group's position as a leading provider of engineering support services to the UK's Energy, Environmental and Infrastructure markets has continued to strengthen by focusing on our clients' long term operational spending programmes.

"Our strategy has delivered excellent organic growth which, together with our record order book, provides the Board with confidence that the Group's results will meet market expectations for the full financial year."

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About Renew Holdings plc

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

The first half of 2015 has seen the Group deliver record interim results again, achieving growth in both operating profit and revenue. This underlines the success of the Group's long term strategy of providing engineering services in regulated markets which benefit from established operational expenditure plans.

Results

Group operating profit, prior to amortisation, increased by 21% to £9.8m (2014: £8.1m), on revenue up 21% to £252.1m (2014: £207.6m). Operating margin was sustained at 3.9% with adjusted earnings per share increasing by 20% to 12.24p (2014: 10.23p). Profit before tax prior to amortisation increased by 19% to £9.5m (2014: £8.0m).

Engineering Services revenue grew by 24% to £209.8m (2014: £169.2m), representing 83% of Group revenue (2014: 82%). Operating profit prior to amortisation increased by 24% to £9.7m (2014: £7.8m) with operating margin maintained at 4.6%. Underlying organic growth of over 14% has been achieved.

In Specialist Building, the Board emphasises contract selectivity and risk management. The business is focused on the high quality residential market in London and the South East and delivered an operating profit of £1.0m (2014: £1.3m) on revenue of £42.5m (2014: £38.4m).

Dividend

In line with its progressive policy, the Board is increasing the interim dividend by 50% to 2.25p per share (2014: 1.50p) which will be paid on 6 July 2015 to shareholders on the register at 5 June 2015.

Order book

The Group's order book at 31 March 2015 increased by 28% to £471m (2014: £369m). When the contribution of acquisitions is eliminated, the organic increase was 15%. The Group's expected revenue for the second half of the financial year is fully secured.

Cash

At 31 March 2015, the Group had net debt of £13.9m (30 September 2014: £16.1m and 31 March 2014: cash of £8.1m). The debt is due to the two acquisitions made in the second half of last financial year.  The Board expects to reduce net debt further during the second half of the financial year.

Outlook

The Group has strengthened its position as a leading provider of engineering support services in the UK's Energy, Environmental and Infrastructure markets. We continue to focus on the long term operational spending programmes associated with the UK's existing key infrastructure assets, which provide good visibility of sustainable revenue.

It remains the Board's strategy to grow our Engineering Services business, both organically and through selective acquisitions. The excellent organic growth achieved in the first half together with our record order book gives the Board confidence that the Group will meet market expectations for the full financial year.  

R J Harrison OBE

Chairman

19 May 2015

Chief Executive's Review

Engineering Services

Renew continues to extend its position as a leading provider of engineering support services to the UK's critical infrastructure assets. The Group operates in the regulated Energy, Environmental and Infrastructure markets supporting the day to day operations of key assets including power plants, water and gas pipelines as well as the rail and wireless telecoms networks. Most of these markets have high barriers to entry.

Our multidisciplinary Engineering Services are delivered by our directly employed, highly skilled workforce through our local, independently branded businesses. We believe that this approach is an important ingredient of our success and a significant differentiator from our competitors. We continue to develop our client relationships through our responsiveness to their requirements.

During the first half of the year, Engineering Services revenue grew by 24% to £209.8m (2014: £169.2m). Engineering Services accounted for 83% (2014: 82%) of Group revenue. Operating profit prior to amortisation increased by 24% to £9.7m (2014: £7.8m) with operating margin maintained at 4.6%. Our target remains to grow this margin to 5% by 2017.

At 31 March 2015, the Engineering Services order book had increased by 25% to £382m (2014: £306m).

Energy

The majority of our work in Nuclear is at the Sellafield site in Cumbria, where we provide integrated engineering services as the largest mechanical and electrical contractor on site with 10 frameworks. Our work encompasses the long term care and maintenance of operational plant associated with waste treatment or reprocessing, decommissioning, demolition and clean-up of redundant facilities.

As part of the high hazard risk reduction operations at the site, work continued on the Evaporator Delta project. During the period, we have seen a substantialincrease in workload on the recently extended Multi Discipline Site Works framework, which runs to April 2017. This framework, where our participation focuses on Production Operations Support, is advertised to deliver £70m annually.

The Bulk Sludge Retrieval Facility framework has been extended for a further year and is progressing well on higher than anticipated volumes of work. Further framework extensions at Sellafield include the Bundling Spares and Site Remediation & Decommissioning Projects frameworks.

Work has been carried out for long standing client Westinghouse on the reactor outage at the Heysham nuclear power station and at Springfields where we are engaged in the delivery of a waste fuel processing facility.

Working nationally across 10 sites for Magnox, we were recently appointed as sole provider on the £30m Electrical, Controls & Instrumentation framework for 4 years with a 2 year extension option.

In the renewables sector, work is underway on a hydro scheme for Welsh Water at Tyn Y Waun, as part of the Hydro Generation Services framework. Recent awards include a Hydro Asset Upgrade scheme in the Scottish Highlands for SSE. We have also been reappointed to the maintenance framework at Deucheran Hill wind farm by E.ON.

Our activity in the gas sector is focused on the assets operated in the South East by National Grid and SGN. Work involves the renewal of mains under the HSE's 30/30 replacement programme. We are now seeing additional opportunities from the decommissioning and land remediation of gas holder sites that are surplus to operator requirements.

Environmental

In Water, we work for Northumbrian Water, Wessex Water and Welsh Water on a number of framework agreements.

For Northumbrian Water, significant awards in the period include the AMP6 Sewerage Repairs and Maintenance framework, as one of two suppliers, which is anticipated to deliver £14m of work annually over the 5 year term with a potential 5 year extension. The scope of this renewed framework has been extended to include additional works. We continue to work on the Major Waste Water, Clean Water and Maintenance and Trunk Mains Cleaning frameworks as well as on the accelerated flood alleviation workstreams.

During the period, in addition to work for Wessex Water under our Workstream framework, we have carried out several projects on the Wessex Integrated Grid. Welsh Water projects have included work under the Pressurised Pipeline framework and emergency reactive tasks.

Work for the Environment Agency is underway on the 4 year £10m MEICA framework for the Northern Region. This exclusive framework covers over 600 flood control and water management sites throughout the region. Our existing minor works frameworks for the Environment Agency have also been extended for a further 2 years.

The Group has extensive expertise in the renewal and refurbishment of moving structures. Good progress was made in the period on the £8m contract to refurbish the linkspans on the Woolwich Ferry for Transport for London.

Infrastructure

In Rail, we have seen strong levels of activity providing national off-track civil, mechanical and electrical engineering services to Network Rail, where we deliver planned and reactive infrastructure maintenance, refurbishment and renewal services as well as 24/7 emergency services to the national rail network.

Work has commenced for Network Rail on the 7 recently awarded Control Period 5 frameworks for Infrastructure Projects, which have an advertised value of £450m to 2019. In the period, work continued under the 6 Asset Management frameworks which are in the process of being extended until April 2017.

Following our success on the high profile repairs to the Great Western Main Line railway infrastructure at Dawlish, we have carried out a further £12m of sea defence works there during the period.

In the wireless telecoms market we provide engineering services to all of the UK's cellular network operators and major network equipment manufacturers through framework agreements. We have recently secured a major new infrastructure delivery framework for Telefonica which will see us undertake design, acquisition and site construction activity across their network in the North of England. 

Specialist Building

Specialist Building revenue was £42.5m (2014: £38.4m), generating operating profit of £1.0m (2014: £1.3m). Margins have returned to more normal levels following final account settlements in the comparative period. The forward order book has increased by 41% to £89m (2014: £63m).

The High Quality Residential market in London and the Home Counties remains robust. This was reflected in £54m of awards in the period for private client projects in Chelsea, Highgate and Belgravia. The Group's expertise in providing challenging structural engineering solutions continues to provide a differentiator in this market. To minimise risk, our work is procured predominately on a negotiated and two stage basis.

Strategy

The Board continues to pursue its strategy of developing our Engineering Services business through a combination of organic and acquisitive growth. We continue to look for earnings enhancing, complementary acquisitions to expand our range of services and markets.

Brian May

Chief Executive

19 May 2015

Group income statement

for the six months ended 31 March 2015

*Operating profit for the six months ended 31 March 2014 is after charging £750,000 of amortisation cost. (See Note 3)

** Comparative figures have been restated to reflect the reclassification of a discontinued business. Details are set out in Note 3.

Group statement of comprehensive income

for the six months ended 31 March 2015

Group statement of changes in equity

for the six months ended 31 March 2015

Group balance sheet

at 31 March 2015

Group cashflow statement

for the six months ended 31 March 2015

NOTES TO THE ACCOUNTS

Note 1 - Basis of preparation

(a) The consolidated interim financial report for the six months ended 31 March 2015 and the equivalent period in 2014 have not been audited or reviewed by the Group's auditor. They do not comprise statutory accounts within the meaning of Section 435 of the Companies Act 2006. They have 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. This interim financial report does not comply with IAS34 "Interim Financial Reporting", which is not currently required to be applied for AIM companies.  This interim report was approved by the Directors on 19 May 2015.

(b) The accounts for the year ended 30 September 2014 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 2014 have been audited. The comparative figures for the period ended 31 March 2014 are unaudited.

(c) For the year ending 30 September 2015, there are no new accounting standards, which have been adopted by the EU, applied and implemented for this interim financial report.

(d) On 31 October 2014, Places for People Group Limited ("PFP") acquired 50% of the ordinary share capital of Allenbuild Ltd, a Specialist Building subsidiary.  Following the practical completion of a number of partly completed contracts, the benefit of which continues to accrue to the Group, PFP will acquire the remaining 50%.  This is expected to be at 31 January 2016.  Consequently, Allenbuild Ltd has been treated as a discontinued business.

(e) The Directors are satisfied that the Group has adequate resources to continue in operational existence for the foreseeable future. 

This interim statement 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.

Note 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.               

*Operating profit for the six months ended 31 March 2014 is after charging £750,000 of amortisation.

** Comparative figures have been restated to reflect the reclassification of a discontinued business.  Details are set out in Note3.

Note 3 - Exceptional items and amortisation of intangible assets

Discontinued operation analysis

Revenue                                                                                   19,343                      18,238                         49,992

Note 4 - Income tax expense

Note 5 - Earnings per share                          

The dilutive effect of share options is to increase the number of shares by 761,000 (March 2014: 828,000; September 2014: 882,000) and reduce the basic earnings per share by 0.12p (March 2014: 0.12p; September 2014: 0.12p).  On 25 March 2015 400,000 new Ordinary shares of 10p each were issued following the exercise of share options bringing the total number in issue to 61,917,948.

Note 6 - Dividends                        

The proposed interim dividend is 2.25p per share (2014: 1.50p).  This will be paid out of the Company's available distributable reserves to shareholders on the register on 5 June 2015, payable on 6 July 2015. 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.