REG - Renew Holdings PLC - Half-year Report
17/05/2022 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20220517:nRSQ6559La&default-theme=true
RNS Number : 6559L Renew Holdings PLC 17 May 2022
17 May 2022
Renew Holdings plc
("Renew" or the "Group" or the "Company")
Half-year Report
Resilience shines through; trading in line with expectations
Renew (AIM: RNWH), the leading Engineering Services Group supporting the
maintenance and renewal of critical UK infrastructure, announces its interim
results for the six months ended 31 March 2022 ("the period").
Highlights
Six months ended 31 March HY2022 HY2021 Change
£m £m
Group revenue(1) £414.3m £366.4m +13.1%
Adjusted operating profit(1) £26.0m £22.0m +18.2%
Operating profit £22.1m £18.5m +19.3%
Adjusted operating margin(1) 6.3% 6.0% +26.9bps
Profit before tax £21.8m £18.1m +20.6%
Adjusted earnings per share(1) 26.2p 22.9p +14.6%
Interim dividend 5.67p 4.83p +17.4%
( )
· Record half year results
· Group order book of £771m (HY2021: £750m)
· Net debt (pre-IFRS16) of £1.2m (HY2021: £16.9m)
· Further de-risking of balance sheet with completion of Amco Group
Pension Scheme buy-in
· Increased interim dividend reflects board's confidence in the
Group's resilient trading performance, cash position and strong forward order
book
· Trading has started well in the second half of the year and we
remain confident of achieving our full year expectations
Operational Highlights
· Browne fully integrated and trading ahead of expectations
· Secured 2-year extensions to a number of our major rail
frameworks
· Making good progress in rail electrification
· Appointed to the Manchester Airports Group £700m Civils
Framework
· Significant framework appointments in Water with an expanding
client base
· Continued progress across our sustainability targets
Paul Scott, CEO of Renew, commented:
"The first six months of this financial year have presented a unique set of
circumstances and the Group's record performance clearly demonstrate the
resilient and differentiated nature of our business. Supported by the
commercial terms within our frameworks, we continue to successfully manage the
industry-wide material shortages and inflation challenges effectively, without
any material impact on trading.
We look to the future confident in the knowledge our strong market positions
underpinned by long-term, non-discretionary spending cycles mean we are well
positioned to take advantage of the UK Government's pledge to invest £650bn
in a green infrastructure-led recovery that will bring significant
opportunities for Renew and our differentiated, diversified, low-risk business
model.
I would like to thank my colleagues across the entire Group for their hard
work and continued commitment to our clients.
Trading has started well in the second half of the year and we remain
confident of achieving our full year expectations."
(1)Renew uses a range of statutory performance measures and alternative
performance measures when reviewing the performance of the Group against its
strategy. Definitions of the alternative performance measures, and a
reconciliation to statutory performance measures, are included in Note 30 of
the 2021 Annual Report & Accounts.
For further information, please contact:
Renew Holdings plc www.renewholdings.com
Paul Scott, Chief Executive Officer via FTI Consulting
Sean Wyndham-Quin, Chief Financial Officer 020 3727 1000
Numis Securities Limited (Nominated Adviser and Joint Broker) 020 7260 1000
Stuart Skinner / Kevin Cruickshank
Peel Hunt LLP (Joint Broker) 020 7418 8900
Mike Burke / Harry Nicholas / Charles Batten
FTI Consulting (Financial PR) 020 3727 1000
Alex Beagley / Sam Macpherson / Rafaella de Freitas Renew@fticonsulting.com
About Renew Holdings plc
Renew is a leading UK Engineering Services business, performing a critical
role in keeping the nation's infrastructure functioning efficiently and
safely. The Group operates through independently branded subsidiaries across
its chosen markets, delivering non-discretionary maintenance and renewal tasks
through its highly skilled, directly employed workforce.
Renew's activities are focused into two business streams: Specialist
Engineering, which accounts for over 95 per cent of the Group's adjusted
operating profit, focuses on the key markets of Rail, Infrastructure, Energy
(including Nuclear) and Environmental 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 and Science
markets in London and the Home Counties.
For more information please visit the Renew Holdings plc website:
www.renewholdings.com
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.
Chief Executive Officer's Review
Resilience shines through
The Group delivered another record trading performance over the first six
months of the financial year, despite the well-documented inflationary
pressures, demonstrating the resilience and differentiated nature of our
high-quality, low-risk business model, combined with the strong demand we have
seen in our markets as the UK's infrastructure-led economic recovery
continues.
At Renew, we are committed to delivering engineering infrastructure solutions
for a sustainable future. We perform a critical role in keeping the nation's
infrastructure functioning efficiently and safely as a leading provider of
essential maintenance and renewals-led engineering services, operating in
regulated markets with committed regulatory spending periods, including rail,
highways, mobile telecommunications, civil nuclear, water and environmental.
As part of the UK Government's pledge to level up the economy and reach net
zero carbon emissions by 2050, it has committed to a record £650bn(2)
investment in transforming the UK's infrastructure and we are continuing to
benefit from an increased focus on maintaining and renewing assets as part of
this shift. Renew has a vital role to play in supporting the green and
sustainable infrastructure of the future and we continue to make progress on
our own sustainability agenda.
The Group again demonstrated its resilience during the first half of the
financial year, successfully navigating our way through the industry-wide
product shortages and inflation challenges without any material impact on
trading. As a result, we delivered operating profit, margin and revenue ahead
of the strong prior year comparative following the successful integration of
Browne, a business we acquired in March 2021. This again highlights Renew's
ability to perform through the economic cycle, thanks to the critical nature
of our work and the committed, long-term, highly visible spending programmes
that underpin our end markets.
After an outstanding FY21, the first six months of FY22 have further
demonstrated the differentiated qualities and resilient nature of our business
model. We continue to successfully manage the ongoing inflationary environment
and our strong forward order book underpins our confidence in achieving
further growth.
In addition, our robust balance sheet and strong cash generation gives us the
firepower and flexibility to invest in growth by capitalising on
value-accretive M&A opportunities to complement our organic growth
ambitions.
On behalf of the Board I would like to thank all our dedicated colleagues for
their outstanding work and continued commitment to providing our clients with
mission critical, highly responsive services at all times.
Compelling market drivers
Our businesses are exposed to attractive long-term, non-discretionary
structural growth drivers. Increasing demand for the maintenance and renewal
of existing UK infrastructure is driven by a number of factors including:
· A commitment by the Government to level up the economy by
investing £650bn(2) in a green infrastructure-led recovery, two-thirds of
which will be in the transport and energy sectors, with fiscal stimulus
measures likely to flow through to the type of lower cost infrastructure
maintenance programmes where Renew excels ahead of larger, more
capital-intensive enhancement schemes;
· Greater focus on sustainability and climate change as part of the
UK's target of reaching net zero carbon emissions by 2050, together with flood
risk prevention measures and investment in decarbonisation through nuclear
projects, renewables and electrification programmes;
· Population growth and socio-economic trends increasing the pressure on
housing, energy, water and demand for natural resources;
· Technological innovation driving a shift towards digital roads, smart
cities and the transformation of transport and telecommunications networks;
and
· Increased Government regulation to improve safety, efficiency and
resilience of key infrastructure assets leading to more demanding maintenance,
renewal and upgrading requirements.
Renew's strengths
Renew has a number of core strengths which provide distinct competitive
advantages in our chosen markets and leave us well placed to build on our
strong track record of long-term value creation:
· The health, safety and wellbeing of our people, and all stakeholders
impacted by our activities, remains our number one priority and we continue to
enforce strict safe working practices across all of our operations
· We operate a differentiated, diversified, low-risk, low-capital
operating model, providing critical asset maintenance and renewals services
that are not dependent on large, high-risk, capital-intensive contract awards
· Supported by the commercial terms within our frameworks, we
continue to successfully manage the industry-wide material shortages and
inflation challenges effectively, without any material impact on trading
· Our directly employed workforce enables us to provide a more
efficient and valuable service to our clients, reducing our exposure to
sub-contractor pricing volatility and enabling us to deliver highly responsive
solutions
· Our businesses work in complex, challenging and highly regulated
markets with significant barriers to entry, which demand a highly skilled and
experienced workforce and a proven track record of safe delivery
· We work in markets underpinned by resilient, long-term growth
dynamics and highly visible, reliable, committed regulatory spending periods,
providing predictable cashflows
· We have a proven track record of sustainable value creation,
reliable revenue growth and strong returns on capital thanks to our highly
cash generative earnings model
· We are committed to growing the business both organically and
through selective complementary acquisitions while maintaining a disciplined
approach to capital allocation and risk
· Our high-quality model of compounding earnings through the
redeployment of internally generated cashflows enables us to execute on our
strategy of delivering reliable growth for all our stakeholders
· We have strong relationships in place with all our stakeholders,
from our workforce to our customers, suppliers, communities and shareholders
Innovations
We continuously seek to develop and implement industry-leading innovations to
improve operational performance including the introduction of bespoke
plant-led technology to deliver cost, time and environmental improvements for
routine maintenance and renewal activities for our clients.
In 2021 we deployed the Rail MegaVac, a unique Road Rail Vehicle which
significantly improves the capacity and efficiency of drain management
operations on the rail network. We also introduced a UK first in the form of
the Vegetation Compactor, which reduces noise pollution resulting in less
disturbance to wildlife and neighbouring lineside properties. Following these
successful launches, in 2022 we introduced the Forwarder V2, which has a
mounted Mega Chipper which can process significantly larger trees and features
a metal detector in its feed bed, an industry first for this type of machine,
improving reliability and efficiency.
Results overview
During the period, Group revenue increased to £414.3m (HY2021: £366.4m) with
an adjusted(1) operating profit of £26.0m (HY2021: £22.0m). Adjusted(1)
operating profit margin was 6.3% (2021: 6.0%). As at 31 March 2022, the Group
had pre-IFRS16 net debt of £1.2m (31 March 2021: £16.9m). The Group's order
book at 31 March 2022 had strengthened to £771m (HY2021: £750m) underpinned
by long-term framework positions.
During the first half of the year, the Board conducted a detailed review of
the liabilities relating to Allenbuild Limited, a business that was sold in
2014 and successfully resolved the final remaining tax issues relating to
Lovell America. As a consequence, we have determined that a net additional
provision of £1.1m is required to enable us to deal with the known legacy
contractual issues. This is shown as a loss from discontinued operations
during the period in the Group Income Statement.
Amco pension buy-in
The Group is pleased to announce that on 8 April 2022, the Trustee of the Amco
Group Pension Scheme ("Amco Scheme"), in consultation with the Board, entered
into a "buy-in" agreement with a specialist insurer.
This transaction will ensure the security of the benefits of the Amco Scheme's
pensioners and deferred members and, while the Group remains legally
responsible for the scheme, the transaction has eliminated all of the Group's
exposure to investment and funding risks in the Amco Scheme. The transaction
also improves the long-term security of members' benefits. As a result of this
buy-in, and the previous buy-in that occurred in 2013, all of the Amco
Scheme's liabilities are now matched with corresponding annuities.
The "buy-in" will be completed by using Amco Scheme assets plus an additional,
one off, cash contribution which is expected to be around £1.6m to purchase
annuities from the specialist insurer which match corresponding pension
liabilities, where the annuity policy remains an asset of the Amco Scheme.
Dividend
The Group's resilient trading performance, cash position and strong forward
order book have given the Board the confidence to declare an interim dividend
of 5.67p (HY2021: 4.83p) per share. This represents a 17.4 per cent increase
on the last interim dividend paid. This will be paid on 13 July 2022 to
shareholders on the register as at 10 June 2022, with an ex-dividend date of 9
June 2022.
Board changes
As referred to previously and confirmed in a separate announcement this
morning, after almost 11 years on the Board, David Forbes has resigned as
Chairman with immediate effect to pursue his other business interests. David
will be replaced by David Brown, currently non-executive Director. David Brown
will also assume the role as chair of the Nomination committee. At the same
time Shatish Dasani has additionally assumed the responsibilities of Senior
Independent Director and Stephanie Hazell has been appointed as Chair of the
Remuneration Committee.
The Board continues to search for an additional Non-Executive Director to
strengthen the Board.
Engineering Services
Our Engineering Services activities account for over 95 per cent of the
Group's adjusted(1) operating profit and delivered revenue of £377.5m
(HY2021: £327.5m) with an adjusted(1) operating profit of £26.6m (HY2021:
£22.2m) resulting in an operating margin of 7.1% (HY2021: 6.8%). At 31 March
2022, the Engineering Services order book was £705m (31 March 2021: £665m).
The Group's resilient performance was driven by continued positive momentum in
our key Engineering Services markets.
Rail
Network Rail, a significant strategic customer for the Group, is investing
£53bn(3) over the current control period (CP6), which runs to 2024. This
increased focus on operational support, renewal and maintenance plays to our
strengths as does the Government's commitment to its rail decarbonisation
programme, including a significant investment in electrification, as part of
the overall UK target to deliver net zero by 2050.
As the largest provider of multidisciplinary maintenance and renewals
engineering services to Network Rail, we support the day-to-day operation of
the rail network nationally, directly delivering essential asset maintenance
through our long-term CP6 frameworks. The Group assists Network Rail through
our mission-critical renewals and maintenance services supporting assets
including bridges, embankments, tunnels, drainage systems, signalling and
electrification.
During the period, we continued to add new positions under CP6 frameworks and
the Group now holds in excess of 50 CP6 maintenance and renewals frameworks
across all disciplines, covering the entire rail network. More recently, we
worked with Network Rail around the clock on the reopening of the Cambrian
Line between Shrewsbury and Newtown following the flood damage caused by Storm
Franklin, an example of the Group's mission-critical role in keeping the
nation's infrastructure functioning efficiently and safely. During the period
we were pleased to be awarded a 2-year extension to our national Civils and
Buildings Asset Management Frameworks. We were also awarded 2-year extensions
to the CP6 Geotechnical Framework and the Renewals & General Enhancements
Framework. These framework extensions give us good visibility going into the
first two years of CP7.
The Williams-Shapps Plan for Rail suggests the majority of decarbonisation is
likely to be delivered through a programme of electrification to support the
transition to a zero carbon railway between now and 2050. In July 2020, the
Traction Decarbonisation Network Strategy estimated that the associated
capital cost will be between £18bn to £26bn(4). With the Government's rail
decarbonisation programme as a key future target, the Group acquired Rail
Electrification Limited ("REL") during FY21, a leading provider of specialist
services and Road Rail Plant associated with the installation and
commissioning of Overhead Line Electrification ("OLE"). We continue to make
good progress in this new market area where our three rail brands have formed
a collaborative and unique proposition for OLE delivery. During the period, we
were awarded our first OLE renewals project at Morpeth on the East Coast
Mainline and we are also now involved in structure reconfiguration programmes
in Scotland and on the Midland Main Line as preparatory work for
electrification.
The compelling maintenance-focused structural growth drivers within this
sector and Renew's high quality engineering expertise leaves the Group ideally
positioned to deliver long term, profitable growth in Rail particularly as we
see opportunities present themselves in the current and future control
periods.
Infrastructure
Highways
The Group continued to make good operational and strategic progress within the
Highways segment in the first half, delivering essential asset maintenance and
critical infrastructure renewals underpinned by non-discretionary regulatory
requirements.
The UK Government has committed to an investment of £24bn(5) in the strategic
road network over a five-year period, as part of its second Road Investment
Strategy ("RIS2"), £11.9bn of this funding will be ringfenced for operations,
maintenance and renewals. Renew is well positioned to continue to benefit from
the increased opportunities in the sector.
We continue to deliver innovative technological solutions to support the needs
of major clients such as National Highways and during the period we were
awarded two lots on their Technical Survey and Testing Framework, worth £14m
across a seven-year duration.
In January 2022, work commenced on the National Highways Scheme Delivery
Framework ("SDF") across five lots, covering civil engineering, road restraint
systems and drainage disciplines, worth £147m over six years. The road
restraint lots will be delivered through a collaboration between two of the
Group's subsidiary businesses, illustrating the integration and collaboration
potential of our brands. Following this success, the Group continues to pursue
further opportunities where it can leverage the combined expertise of its
subsidiaries.
Aviation
During the period we were appointed to the 5-year Manchester Airports Group
£700m Civils Framework to deliver medium-sized civil-engineering projects
valued between £3m - £10m. This will support its programme of infrastructure
development across its three airports namely, Manchester, East Midlands and
Stansted.
Wireless Telecoms
The UK wireless telecoms sector contains many attractive growth drivers. An
estimated £30bn(6) is required to upgrade the nation's broadband networks to
gigabit-capable speeds, which includes the Government's £5bn(7) investment in
the roll-out of 5G, the expansion of the Shared Rural Network and the
£500m(8) programme to extend 4G mobile coverage to 95% of the UK. As a leader
in the wireless telecommunications infrastructure market, we have exposure to
all of these opportunities, holding long-term relationships with the main UK
network operators, equipment vendors and managed service providers including
Virgin Media O2, 3UK, EE, Cornerstone and MBNL.
We continue to work with EE and 3UK to remove Huawei equipment from their
networks by 2027. During the period, the Group was pleased to be awarded a new
national framework contract with 3UK and we recently secured a major programme
of design and construct work for new client Vodafone.
Energy
Nuclear
Having worked for over 80 years in civil nuclear, we provide a
multidisciplinary service through our large complement of highly skilled
employees who operate to demanding nuclear standards, including delivering
decontamination and decommissioning services, operational support, asset care
and waste retrieval in high hazard areas such as legacy storage ponds and
silos.
The Government's total nuclear decommissioning provision is estimated at
£124bn(9) over the next 120 years, with around 75% of the total spend
allocated to Sellafield which is the largest of the Nuclear Decommissioning
Authority's sites and where we remain a principal Mechanical, Electrical and
Instrumentation services contractor.
We continue to operate across a number of long-term frameworks on Sellafield
and are well-positioned for opportunities in the Major Projects Programme. We
are collaborating with Programme and Project Partners ("PPP") to secure
further growth opportunities at Sellafield. PPP is a 20-year framework for the
delivery of a broad range of major projects for the site, with £7bn allocated
for seven projects.
New awards include appointment to the Fuel Racks and the Pump and Valve
Frameworks at Sellafield as well as the £7m Expert Support and Alternative
Treatment Framework for LLW Repository Ltd. We continue to expand our
specialist manufacturing capabilities which now has a record order book.
The UK Government has committed to achieve net zero emissions by 2050, and
decarbonisation of our energy supply is a key step to achieve carbon
neutrality. As set out in the British Energy Security Strategy Policy Paper,
new nuclear is an essential component of the UK Government's plans to deliver
a sustainable, low-carbon energy future.
Outside of Sellafield, we continue to build on our relationship with Rolls
Royce to secure further opportunities since our appointment to the Diesel
Generator Programme at Hinkley Point "C". We continue to deliver operational
support and decommissioning activities at Springfield and seek further
opportunities with the Dounreay Decommissioning Services Framework. We have
also been appointed to engineering services frameworks at AWE Aldermaston
during the period.
Thermal Power, Networks and Distribution
Our essential engineering maintenance services continue at pace in a number of
the UK's thermal power stations. We are progressing delivery of our work on
the Minor Works Framework with National Grid and our Minor Civils Framework
with Western Power Distribution.
We remain well placed to seize the attractive growth and market share
opportunities with increased spending forecast over the next ten years in the
electric vehicle charging market. The Group is investing to take advantage of
these opportunities including development of an Independent Connection
Provider ("ICP") capability to support electric vehicle charging
infrastructure installations.
Environmental
Water
In Water, we continue to benefit from the UK Government's commitment to spend
£51bn(10) over AMP7 into 2025 with increased expenditure on capital
maintenance, asset optimisation and supply resilience including dam safety and
infrastructure refurbishment schemes. The market is underpinned by committed
regulatory spend and long-term growth opportunities.
Our offer of mains renewal, scheduled repairs and maintenance as well as
extensive 24/7 emergency reactive works remains one of our key strengths,
providing specialised, mission-critical services for clients around the UK.
Looking ahead, we anticipate Year 3 of the current AMP cycle will see an
increasing accelerated programme of regulatory spend, given the lower level of
expenditure in the early part of the AMP cycle.
Browne integrated into our business seamlessly in 2021 and the acquisition has
further strengthened our position in a key attractive infrastructure sector.
The business continues to trade well and is performing ahead of management
expectations. Following the acquisition, work for Thames Water and Southern
Water continues to gather momentum and we have recently been awarded a new
Below Ground Asset Delivery Framework for Affinity Water.
Our Water client base has grown and the Group is now engaged across 11 UK
water regions. We continue to strengthen relationships with our existing
market-leading clients. The Group continues to develop our strategy for AMP8
ahead of the anticipated start of procurement in 2024.
We continue to see long-term opportunities with existing clients, Environment
Agency and Canal and River Trust, where we have national framework positions.
Specialist Restoration
We are progressing well with works at the Palace of Westminster on the new
flat roofs phase at the site through a five-year conservation framework and we
have experienced increased demand for our specialist capabilities in this
area.
Specialist Building
Our Specialist Building business focuses on the High Quality Residential and
Science markets in London and the Home Counties.
Revenue for the first half was £36.9m (HY2021: £38.9m). We reported
operating profit of £0.6m (HY2021: £0.8m) and a margin of 1.6% (HY2021:
2.1%). The order book was £66.0m (HY2021: £85.0m), providing strong
visibility for the second half.
We continue to make good progress on critical science schemes for Defra and
the Medical Research Council.
ESG
We are pleased to report good progress across our sustainability targets in
the first half. We continue to advance our ESG strategy, measuring progress
across five key areas:
· Customer value;
· Climate action;
· Operating responsibly;
· Engaging our people; and
· Supporting our local communities.
Environmental
It is well recognised that investment into low carbon infrastructure will be
fundamental in delivering the Government's Green Industrial Revolution and
getting to net zero emissions in the UK by 2050. From the rail network and
digitally assisted roads to high-speed telecoms and clean energy, Renew has a
key enabling role to play on the frontline of efforts to decarbonise the
economy.
Our long-term approach to sustainability is more relevant now than ever
before. In recognition of this, we introduced, in May 2021, quantitative
targets to embed our own ESG strategy within our wider business operations and
to continuously monitor the progress. Furthermore, it is the Board's ambition
that the Group will achieve net zero by no later than 2040.
Leveraging our innovative capabilities, we have implemented a number of
Group-wide initiatives to reduce our environmental footprint. These include
the use of Hydrotreated Vegetable Oil, 'F' pod fuel storage and battery
storage units as an alternative to diesel and gas oil in our commercial fleet.
We have also adopted aggregate in compound setups, graphene in concrete and
carbon modelling. Our STONEmaster solution has received a Green Apple award,
which recognises environmental best practice around the world, for its filter
drain recycling process and we continue to introduce a number of waste
management initiatives.
Renew reports under the Streamlined Energy and Carbon Reporting regulations
and our core objectives are closely aligned to the United Nations Sustainable
Development Goals, prioritising our people, communities, environment and
innovation.
We are proud holders of the London Stock Exchange's Green Economy Mark, which
recognises companies that derive 50% or more of their total annual revenue
from products and services that contribute to the global Green Economy.
Social value
We are committed to adding value and contributing to the communities in which
we operate. During the period, the business has engaged with local schools and
education providers as well as participating in a range of charity events and
contributing to local communities.
We are committed to help grow the future of the industry, investing in young
talent through a variety of schemes including a graduate scheme to support the
development of talent within rail construction.
We work with local and national partners to develop the talent pipeline,
providing opportunities and insight into our different sectors. Initiatives
include a green labour employability programme and STEM ambassador programmes.
A number of our businesses have also signed up to the Women in Rail EDI
Charter, demonstrating their dedication to advancing female careers in the
sector.
Our businesses have sponsored award events including the Social Inclusion
category of the Team Awards at the Women in Rail Awards 2022. Our subsidiary
achievements include social value certification and recognition as Disability
Confident Committed Employers, reflecting inclusive hiring practices.
In the period, we launched culture programmes and have progressed
collaborative working schemes with local councils including with Redcar &
Cleveland Borough Council shaping their 'Building Our Future' primary school
programme.
Governance
The Board is responsible for overseeing the effective application of high
levels of governance across the Group businesses, whilst pursuing what is in
the best interest of all our stakeholders. The Board is also responsible for
risk management.
In line with the Group's commitment to the highest standards of governance,
the Group is compliant with the QCA Corporate Governance Code.
Outlook
As the UK Government makes progress on its plans to invest in infrastructure
and reach net zero by 2050 the structural growth drivers in our end markets
have never been more attractive. One of the unique strengths of Renew is that
the spending plans of our clients are underpinned by strategic national needs
and regulatory commitments.
Trading has started well in the second half of the year and we remain
confident of achieving our full year expectations. We continue to successfully
manage the industry-wide challenges around staff retention, material shortages
and inflation, without any material impact on trading.
Our strong market positions across key infrastructure sectors with visible,
long-term, non-discretionary spending cycles, from rail to nuclear energy,
gives us confidence in the Group's prospects.
References
1 Renew uses a range of statutory performance measures and alternative
performance measures when reviewing the performance of the Group against its
strategy. Definitions of the alternative performance measures, and a
reconciliation to statutory performance measures, are included in Note 30 of
the 2021 Annual Report & Accounts.
2 Infrastructure and Projects Authority, Analysis of the National
Infrastructure and Construction Pipeline 2021, August 2021
3 Network Rail Delivery Plan, Control Period 6, High Level Summary, 26
March 2020
4 Network Rail Traction Decarbonisation Network Strategy, September 2020
5 HM Treasury, Autumn budget and spending review 2021, October 2021
6 Department for Digital, Culture, Media & Sport, Delivering a
gigabit-capable UK: Gigabit Infrastructure Subsidy, 1 June
2021
7 Department for Digital, Culture, Media & Sport, Project Gigabit,
Phase One Delivery Plan, 19 March 2021
8 Gov.uk press release, Government breakthrough on £500 million support
package to boost rural mobile coverage, 11 March 2021
9 Nuclear Decommissioning Authority, Nuclear Provision: the cost of
cleaning up Britain's historic nuclear sites, 4 July 2019
10 Ofwat PR19 final determinations, December 2019
CONDENSED CONSOLIDATED INCOME STATEMENT
for the six months ended 31 March 2022
Before exceptional items and amortisation of intangible assets Exceptional items and amortisation of intangible assets Before exceptional items and amortisation of intangible assets Year ended
(see Note 3) Six months ended 30 September
31 March Exceptional items and amortisation of intangible assets
(see Note 3)
2022 2022 2022 2021* 2021 2021 2021
Note Audited Audited Audited
Unaudited Unaudited Unaudited Unaudited
£000 £000 £000
£000 £000 £000 £000
Revenue: Group including share of joint ventures 2 - 414,343 366,411 790,995 - 790,995
414,343
Less share of joint ventures' revenue - (15,228) - (15,356) - (15,356)
(15,228)
Group revenue from continuing activities 2 - 399,115 366,411 775,639 - 775,639
399,115
Cost of sales (342,373) - (342,373) (316,127) (666,454) - (666,454)
Gross profit 56,742 - 56,742 50,284 109,185 - 109,185
Administrative expenses (32,663) (3,896) (36,559) (31,763) (57,985) (10,070) (68,055)
Other operating income 1,665 - 1,665 - - - -
Share of post-tax result of joint ventures - 250 - 11 - 11
250
Operating profit 2 25,994 (3,896) 22,098 18,521 51,211 (10,070) 41,141
Finance income 3 - 3 13 19 - 19
Finance costs (329) - (329) (478) (836) - (836)
Other finance income - defined benefit pension schemes - - - 428 - 428
-
Profit before income tax 2 25,668 (3,896) 21,772 18,056 50,822 (10,070) 40,752
Income tax expense 5 (5,048) 890 (4,158) (3,029) (11,096) 2,427 (8,669)
Profit for the period from continuing activities (3,006) 17,614 15,027 39,726 (7,643) 32,083
20,620
Loss for the period from discontinued operations 4 (1,103) - (1,620)
Profit for the period attributable to equity holders of the parent company 16,511 15,027 30,463
Basic earnings per share from continuing operations 6 (3.82p) 22.37p 19.12p 50.51p (9.72p) 40.79p
26.19p
Diluted earnings per share from continuing operations 6 (3.79p) 22.23p 18.98p 50.09p (9.63p) 40.46p
26.02p
Basic earnings per share 6 26.19p (5.22p) 20.97p 19.12p 50.51p (11.78p) 38.73p
Diluted earnings per share 6 26.02p (5.18p) 20.84p 18.98p 50.09p (11.68p) 38.41p
Proposed dividend 7 5.67p 4.83p 16.00p
*Operating profit for the six months ended 31 March 2021 is stated after
charging £2,810,000 of amortisation cost and £669,000 acquisition cost (see
Note 3).
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 31 March 2022
Six months ended Year ended
31 March 30 September
2022 2021 2021
Unaudited Unaudited Audited
£000 £000 £000
Profit for the period attributable to equity holders of the parent company 16,511 15,027 30,463
Items that will not be reclassified to profit or loss:
Movement in actuarial valuation of the defined benefit pension schemes - (27,337) (25,672)
Movement on deferred tax relating to the defined benefit pension schemes - 9,568 9,026
Total items that will not be reclassified to profit or loss - (17,769) (16,646)
Items that are or may be reclassified subsequently to profit or loss:
Exchange movement in reserves 1 (30) (8)
Total items that are or may be reclassified subsequently to profit or loss 1 (30) (8)
Total comprehensive income for the period attributable to equity holders of 16,512 (2,772) 13,809
the parent company
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 31 March 2022
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 2020 7,856 66,378 3,896 1,316 821 40,180 120,447
Transfer from income statement for the period 15,027 15,027
Dividends paid (6,554) (6,554)
New shares issued 12 647 659
Recognition of share based payments (30) (30)
Exchange differences (30) (30)
Actuarial movement recognised in the pension schemes (27,337) (27,337)
Movement on deferred tax relating to the pension schemes 9,568 9,568
At 31 March 2021 7,868 67,025 3,896 1,286 791 30,884 111,750
Transfer from income statement for the period 15,436 15,436
Share premium cost reclassification (647) 647 -
Dividends paid (3,800) (3,800)
Recognition of share based payments 288 288
Exchange differences 22 22
Actuarial movement recognised in the pension schemes 1,665 1,665
Movement on deferred tax relating to the pension schemes
(542) (542)
At 30 September 2021 7,868 66,378 3,896 1,308 1,079 44,290 124,819
Transfer from income statement for the period 16,511 16,511
Dividends paid (8,809) (8,809)
New shares issued 18 1,451 1,469
Recognition of share based payments (32) (32)
Exchange differences 1 1
Cumulative translation reclassification (1,309) 1,309 -
At 31 March 2022 7,886 66,378 3,896 - 1,047 54,752 133,959
CONDENSED CONSOLIDATED BALANCE SHEET
at 31 March 2022
31 March 31 March 30 September
2022 2021 2021
Unaudited Unaudited Audited
£000 £000 £000
Non-current assets
Intangible assets - goodwill 139,698 139,479 139,698
- other 25,814 34,394 29,241
Property, plant and equipment 15,154 15,324 16,254
Right of use assets 16,037 17,940 17,247
Investment in joint ventures 5,560 586 5,708
Retirement benefit assets 761 974 661
Deferred tax assets 1,861 2,233 2,301
204,885 210,930 211,110
Current assets
Inventories 2,061 1,699 2,078
Assets held for resale 1,250 1,500 1,250
Trade and other receivables 166,812 150,640 157,416
Current tax assets 1,316 911 1,382
Cash and cash equivalents - 1,836 881
171,439 156,586 163,007
Total assets 376,324 367,516 374,117
Non-current liabilities
Lease liabilities (8,542) (9,740) (9,421)
Retirement benefit obligation - - (152)
Deferred tax liabilities (8,219) (6,925) (8,067)
Provisions (441) (441) (441)
(17,202) (17,106) (18,081)
Current liabilities
Borrowings (1,211) (18,750) (14,609)
Trade and other payables (215,320) (210,728) (207,667)
Lease liabilities (5,871) (6,421) (6,180)
Provisions (2,761) (2,761) (2,761)
(225,163) (238,660) (231,217)
Total liabilities (242,365) (255,766) (249,298)
Net assets 133,959 111,750 124,819
Share capital 7,886 7,868 7,868
Share premium account 66,378 67,025 66,378
Capital redemption reserve 3,896 3,896 3,896
Cumulative translation adjustment - 1,286 1,308
Share based payments reserve 1,047 791 1,079
Retained earnings 54,752 30,884 44,290
Total equity 133,959 111,750 124,819
CONDENSED CONSOLIDATED CASHFLOW STATEMENT
for the six months ended 31 March 2022
Six months ended Year ended
31 March 30 September
2022 2021 2021
Unaudited Unaudited Audited
£000 £000 £000
Profit for the period from continuing operating activities 17,614 15,027 32,083
Share of post-tax trading result of joint venture (250) - (11)
Amortisation of intangible assets 3,561 2,810 6,463
Defined benefit pension scheme G.M.P. equalisation/past service cost - - 2,805
Depreciation 4,978 4,799 10,504
Profit on sale of property, plant and equipment (561) (80) (649)
Decrease/(increase) in inventories 17 (45) (405)
Increase in receivables (9,637) (8,560) (15,289)
Increase in payables 7,191 9,565 3,996
Current and past service cost in respect of defined benefit pension scheme 25 25 61
Cash contribution to defined benefit pension schemes (252) (252) (560)
(Credit)/charge in respect of share options (32) (30) 258
Finance income (3) (13) (19)
Finance expense 329 478 408
Interest paid (329) (478) (836)
Income taxes paid (3,500) (2,862) (7,335)
Income tax expense 4,158 3,029 8,669
Net cash inflow from continuing operating activities 23,309 23,413 40,143
Net cash outflow from discontinued operating activities (424) (1,111) (976)
Net cash inflow from operating activities 22,885 22,302 39,167
Investing activities
Interest received 3 13 19
Dividend received from joint venture 264 - 60
Proceeds on disposal of property, plant and equipment 1,116 483 1,263
Purchases of property, plant and equipment (814) (1,327) (4,042)
Acquisition of subsidiaries net of cash acquired - (29,206) (33,343)
Net cash inflow/(outflow) from investing activities 569 (30,037) (36,043)
Financing activities
Dividends paid (8,809) (6,554) (10,354)
Issue of Ordinary Shares 1,469 659 659
New loan 18,000 10,000 10,000
Loan repayments (22,375) (4,375) (18,752)
Repayment of obligations under finance leases (3,598) (3,528) (7,410)
Net cash outflow from financing activities (15,313) (3,798) (25,857)
Net increase/(decrease) in continuing cash and cash equivalents 8,565 (10,422) (21,757)
Net decrease in discontinued cash and cash equivalents (424) (1,111) (976)
Net increase/(decrease) in cash and cash equivalents 8,141 (11,533) (22,733)
Cash and cash equivalents at the beginning of the period (9,355) 13,396 13,396
Effect of foreign exchange rate changes on cash and cash equivalents 3 (27) (18)
Cash and cash equivalents at the end of the period (1,211) 1,836 (9,355)
Bank balances and cash - 1,836 881
Bank overdraft (1,211) - (10,236)
Cash and cash equivalents at end of period (1,211) 1,836 (9,355)
NOTES TO THE CONDENSED CONSOLIDATED ACCOUNTS
1 Basis of preparation
(a) The condensed consolidated interim financial report for the six months
ended 31 March 2022
and the equivalent period in 2021 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 applicable law and
international accounting standards in conformity with the requirements of the
Companies Act 2006 ("Adopted IFRSs"). The report does not comply with IAS 34
"Interim Financial Reporting" which is not currently required to be applied
for AIM companies and it was approved by the Directors on 17 May 2022.
(b) The accounts for the year ended 30 September 2021 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 2021 have been audited. The comparative figures for
the period ended 31 March 2021 are unaudited.
(c) The accounting policies applied in preparing the condensed consolidated
interim financial information are the same as those applied in the preparation
of the annual financial statements for the year ended 30 September 2021 as
described in those financial statements.
(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
2021. 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 (http://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 ventures Group revenue from continuing activities Group including share of joint ventures
Less share of joint ventures Six months ended Group revenue from continuing activities
2022 31 March 2021 Less share of joint ventures Year ended
Unaudited 2022 Audited 30 September
Unaudited (* restated) 2021 2021
Audited Audited
(* restated)
2022 2021
Unaudited Unaudited
(* restated)
£000 £000 £000 £000
£000 £000 £000
Analysis of revenue
Engineering Services 377,460 (15,228) 362,232 327,514 706,563 (15,356) 691,207
Specialist Building 36,882 - 36,882 38,897 84,425 - 84,425
Segment revenue 414,342 (15,228) 399,114 366,411 790,988 (15,356) 775,632
Central activities 1 - 1 - 7 - 7
Group revenue from continuing operations 414,343 399,115 366,411 775,639
(15,228) 790,995 (15,356)
· Comparatives for the 6 months ended 31 March 2021 and
year ended 30 September 2021 have been restated to remove inter-segmental
revenue disclosure.
Before exceptional items and amortisation of intangible assets Exceptional items and Six months ended Before exceptional items and amortisation of intangible assets Exceptional items and Year ended
2022 amortisation of intangible assets 31 March 2021 amortisation of intangible assets 30 September
Unaudited 2022 Audited 2021 2021
Unaudited Audited Audited
2022 2021*
Unaudited Unaudited
£000 £000 £000 £000 £000 £000 £000
Analysis of operating profit
Engineering Services 26,623 (3,561) 23,062 18,739 51,526 (9,070) 42,456
Specialist Building 585 - 585 786 1,613 - 1,613
Segment operating profit 27,208 23,647 19,525 44,069
(3,561) 53,139 (9,070)
Central activities (1,214) (335) (1,549) (1,004) (1,928) (1,000) (2,928)
Operating profit 25,994 (3,896) 22,098 18,521 51,211 (10,070) 41,141
Net financing expense (326) (326) (465) (389)
- (389) -
Profit before income tax 25,668 21,772 18,056 40,752
(3,896) 50,822 (10,070)
*Operating profit for the six months ended 31 March 2021 is stated after
charging £2,810,000 of amortisation cost and £669,000 acquisition cost (see
Note 3).
3 Exceptional items and amortisation of intangible assets
Six months ended Year ended
31 March 30 September
2022 2021 2021
Unaudited Unaudited Audited
£000 £000 £000
Defined benefit pension scheme guaranteed minimum pension equalisation - - 1,107
Amco defined benefit scheme past service cost deficit - - 1,698
Aborted acquisition costs/acquisition costs 335 669 802
Total charges arising from exceptional items 335 669 3,607
Amortisation of intangible assets 3,561 2,810 6,463
Total exceptional items and amortisation charge before income tax 3,896 3,479 10,070
Taxation credit on exceptional items and amortisation (890) (538) (2,427)
Total exceptional items and amortisation charge 3,006 2,941 7,643
During the period the Company incurred £335,000 on an unsuccessful
acquisition opportunity.
4 Loss for the period from discontinued operations
Six months ended Year ended
31 March 30 September
2022 2021 2021
Unaudited Unaudited Audited
£000 £000 £000
Revenue - - -
Expenses (1,103) - (1,620)
Loss before income tax (1,103) - (1,620)
Income tax charge - - -
Loss for the period from discontinued operations (1,103) - (1,620)
The Group has increased accruals as a result of the settlement of Allenbuild
Ltd historic claims during the period and an internal reassessment of the
likely costs required to settle other known contractual disputes.
5 Income tax expense
Six months ended Year ended
31 March 30 September
2022 2021 2021
Unaudited Unaudited Audited
£000 £000 £000
Current tax:
UK corporation tax on profit for the period (3,566) (4,075) (8,719)
Adjustments in respect of previous periods - 531 25
Total current tax (3,566) (3,544) (8,694)
Deferred tax (592) 515 25
Income tax expense (4,158) (3,029) (8,669)
6 Earnings per
share
Year ended 30 September
Six months ended 31 March
2022 2021
2021
Unaudited Unaudited Audited
Earnings EPS DEPS Earnings EPS DEPS Earnings EPS DEPS
£000 Pence Pence £000 Pence Pence £000 Pence Pence
Earnings before exceptional items and amortisation 26.19 26.02 22.86 22.70 39,726 50.51 50.09
20,620 17,968
Exceptional items and amortisation (3.82) (3.79) (3.74) (3.72) (7,643) (9.72) (9.63)
(3,006) (2,941)
Basic earnings per share - continuing activities 22.37 22.23 19.12 18.98 32,083 40.79 40.46
17,614 15,027
Loss for the period from discontinued activities (1.40) (1.39) - - (1,620) (2.06) (2.05)
(1,103) -
Basic earnings per share 20.97 20.84 19.12 18.98 30,463 38.73 38.41
16,511 15,027
Weighted average number of shares 78,727 79,234 78,587 79,166 78,655 79,304
The dilutive effect of share options is to increase the number of shares by
507,000 (March 2021: 579,000; September 2021: 649,000) and reduce the basic
earnings per share by 0.13p (March 2021: 0.14p; September 2021: 0.32p).
7 Dividends
The proposed interim dividend is 5.67p (2021: 4.83p) per share. This will be
paid out of the Company's available distributable reserves to shareholders on
the register on 10 June 2022, payable on 13 July 2022. The ex-dividend date
will be 9 June 2022. In accordance with IAS 1 "Presentation of Financial
Statements", dividends are recorded only when paid and are shown as a movement
in equity rather than as a charge in the Income statement.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR XQLFFLELZBBLRecent news on Renew Holdings
See all newsREG - Renew Holdings PLC - H1 Trading Update and Notice of Results
AnnouncementREG - Renew Holdings PLC - Holding(s) in Company
AnnouncementREG - Renew Holdings PLC - Holding(s) in Company
AnnouncementREG - Renew Holdings PLC - Holding(s) in Company
AnnouncementREG - Renew Holdings PLC - Holding(s) in Company
Announcement