RNS Number:8088M
Renew Holdings PLC
28 November 2006
Renew Holdings plc
("Renew" or the "Group")
The following replaces the final results release at 7am today under RNS number
7907M. The company website address has been updated and the record date of the
dividend should be 26 January 2007 not 24 January 2007 as previously stated. The
full amended release appears below.
Preliminary Results for the year ended 30 September 2006
Renew, the specialist construction services business, today announces a strong
cash generative performance across all its businesses, a strengthened order book
and an appropriate dividend increase.
Financial Highlights
* Turnover from ongoing operations of #341.7m (2005:
#330.1m)
* Profit before tax of #4.6m (2005: #1.2m)
* Earnings per share of 10.0p (2005: 3.46p)
* Net cash balance at 30 September of #19.4m (2005: #13.6m)
* Final dividend of 0.8p resulting in total dividend for the
year of 1.2p (2005: 0.2p)
Operational Highlights
* No exceptional items, legacy contract provisions reconfirmed
* Tightened strategic focus - operating through two distinct
business streams:
o Specialist Engineering
o Specialist Building
* Order book of #208.7m (2005: 193m) of which 70% is with
repeat clients
* Acquisition of PPS Electrical creating largest M&E
contractor at Sellafield
Roy Harrison, Chairman, commented:
"I am pleased to report that the Group has made good progress over the past
year. All our businesses are trading profitably and are generating
corresponding levels of cash.
"The positive actions taken by the new management team augur well for the
future, and the Board is confident of making further progress in both
profitability and cash generation in the new financial year."
28 November 2006
Enquiries:
Renew Holdings plc Tel: 020 7457 2020 (today)
Brian May, Chief Executive Tel: 020 7522 3228 (thereafter)
John Samuel, Finance Director
College Hill Tel: 020 7457 2020
Matthew Gregorowski
Mark Garraway
A presentation for analysts is taking place at 09.30 today at the offices of
College Hill, 78 Cannon Street, London EC4N.
The report and accounts will be posted to shareholders in due course and copies
of the preliminary announcement are available upon request from the Company
Secretary, 39 Cornhill, London, EC3V 3NU or via the company's website:
www.renewholdings.com
CHAIRMAN'S STATEMENT
Introduction
I am pleased to report that the Group has made good progress over the past year.
All of the Group's businesses are trading profitably and are generating
corresponding levels of cash. These results do not include any exceptional items
and the Board remains confident that historic contract exposures are fully
provided for - evidence that the Group is in good health.
Further and stronger focus on particular areas of specialism where the Group has
strong skills and experience continues to enhance the quality and visibility of
earnings flow. This is highlighted in more detail in the Chief Executive's
report that follows. The Board remains committed to improving the Group's
Health & Safety performance and is pleased to note the progress made during the
year.
Results and Dividend
Group turnover from ongoing operations for the year ended 30 September 2006 was
#341.7m (2005: #330.1m) and profit before tax was #4.6m (2005: #1.2m). Earnings
per share were 10.00p (2005: 3.46p). The Group's net cash balance, exclusive of
a specific development loan of #9.8m, at 30 September was #19.4m (2005: #13.6m).
Net assets have increased to #5.3m from #4.8m after the impact of incorporating
a #2.8m net pension scheme deficit.
The Board is declaring a final dividend of 0.8p per share, which will be paid on
26 February 2007 to shareholders on the register as at 26 January 2007. This
will result in a dividend of 1.2p per share for the full year (2005: 0.2p),
reflecting the Group's progressive dividend policy and the Board's confidence in
the Group's future performance.
Acquisition
During the year the Group acquired PPS Electrical Limited, an electrical
contractor specialising in asset support for the nuclear sector, for #664,000 in
cash. PPS has been successfully integrated into Shepley Engineers and is
trading in line with expectations.
Pension Scheme
In line with many other UK companies, the Directors, in calculating the Group's
pension position, have adopted mortality tables which now reflect the
expectation of a longer lifespan for pension fund members. As a result, the
Directors have recognised a pension deficit of #2.8m on the Group balance sheet,
net of deferred tax, compared to a surplus of #1.6m at 30 September 2005.
Board Changes
On 1 May 2006, John Samuel FCA joined the Board as Group Finance Director and
Philip Underwood stepped down from the Board to concentrate on running VHE
Construction and Shepley Engineers. On 1 October 2006, John Bishop FCA joined
as non-executive director. John Bishop has extensive experience in the
construction industry and over 30 years PLC experience at main board level. On
31 October 2006, Arnold Wagner OBE stepped down from the Board to concentrate on
his executive responsibilities at Smiths Group plc.
Outlook
The positive actions taken by the new management team augur well for the future,
and the Board is confident of making further progress in both profitability and
cash generation in the new financial year.
Roy Harrison, Chairman
28 November 2006
CHIEF EXECUTIVE'S REVIEW
Overview and Strategy
This has been a year of further positive development for the Group, and I am
pleased to be reporting a good performance across all our businesses. This is
the result of our strategy of focusing on attractive market sectors in which we
have good skills and experience, whilst providing effective support and control
from the centre through our holding company structure.
This approach allows our individual specialist construction businesses to build
on the strength of their own brands within their areas of operation, whilst
benefiting from the financial strength, commercial controls and implementation
of best practice procedures from the Group's central function, thereby
maximising the use of Group resources.
This has resulted in a better quality order book, which at 30 September 2006 was
#208.7m compared to #193m at the same time last year, excluding the future
benefits of current frameworks. 78% of total orders now lie within our core
specialist activities, and 68% of new orders in 2006 were procured through a 2
stage, framework or negotiated process with key clients. Over 70% of our orders
won have been from clients with whom we have worked previously.
As a continuation of our strategy of specialism and project selectivity, and in
order to maximise the potential of our skills base and provide consistent and
cash generative growth, we will be aligning our activities into two focused
business streams, namely Specialist Engineering and Specialist Building.
Specialist Engineering will incorporate our Nuclear and Land Remediation
activities, and Specialist Building will operate across a range of regionally
based, selective markets including Social Housing, Retail, Restoration &
Refurbishment and Science & Education.
Through our Specialist Engineering activities we have established a good market
position and our intention is now to build on our reputation both through
organic growth and through strategic acquisitions. The objective of our
Specialist Building activities is to continue to generate reliable returns
whilst focusing on margin improvement and cash generation.
Review of Operations
In Nuclear, we were reappointed on major 3-year framework agreements with
British Nuclear Group to provide further operational asset support and
decommissioning and demolition services on a number of redundant facilities at
Sellafield. During the year, we acquired PPS Electrical Limited based at
Sellafield which has significantly enhanced our service offering, strengthening
Shepley Engineers' position as the largest mechanical and electrical contractor
at this site.
In Land Remediation, we project managed and carried out the reclamation of the
former Stella South Power Station in Gateshead for St Paul's Developments and
are currently delivering site clearance and infrastructure works at the former
Rugeley Power Station for Persimmon Homes, due for completion in September 2007.
We are also delivering remediation works for National Grid Property under a
framework agreement for its UK-wide portfolio of redundant gas works.
In Social Housing, we are now working in the South East with five of the top six
Housing Associations. During the year, we have successfully completed a #16.5m
project for Community Housing Association and have also been appointed by the
same client as a key framework contractor. In total, we have over #80m of
future work in negotiation with various Housing Associations as preferred
supplier.
In Retail, we completed a major distribution warehouse for Tesco during the year
as well as new build and refurbishment projects for three major stores. We have
been working with Tesco for over 20 years now, demonstrating the strength of our
relationship. We are also constructing a range of other retail projects
including a B&Q store in Folkestone and the refurbishment of the Cribbs Causeway
Retail Park in Bristol for Prudential Assurance.
In Science & Education, we secured a #13m project for the British Lending
Library. We are also carrying out a number of projects for The Department of the
Environment, Food and Rural Affairs through our current framework agreement
which is now in its sixth year. We have recently established another framework
agreement with the National Physical Laboratories. During the year we completed
schemes at a number of colleges and universities including a new build extension
at Imperial College, London and the new Institute of Cancer Therapeutics at
Bradford University as part of framework agreements with these clients.
In Restoration & Refurbishment, we are restoring the wrought and cast iron
Victorian roof and undercroft structures for the Grade 1 listed St Pancras
station in London, which will be the new hub for the Channel Tunnel Rail Link.
We continue to secure major contracts to restore and refurbish very high quality
residential properties in the west of London both for private individuals and
property investment businesses. Additionally, we have extended our customer base
in rail infrastructure refurbishment.
We are also starting to see the benefits of offering clients multiple and
complementary services, as is evidenced by a #15m public sector project in
Lancashire which was completed on time and to budget. This pre-sold integrated
development project combined the construction skills of Allenbuild and the land
remediation capabilities of VHE Construction.
Property
The Group continues its strategy of maximising the value of our portfolio of UK
and US property assets and progressively realising them for cash. During the
year, we sold our head office building at Cornhill in London for #12m, as well
as two other UK properties, which realised over #6m together. This enabled the
Group to eliminate over #12m of associated borrowings. In the USA, we have
generated more than #3m of cash through asset realisations.
People
The Group attaches great importance to the health and safety of all those
affected by our activities. At the start of the financial year I set out a
target of decreasing the accident incident rate by 10% per annum, and I am
pleased to report that we achieved a 19% reduction during the year.
The Group is now well on its way to recovery following what has been a difficult
period. The Board is pleased to note a significant improvement in the Group's
employee retention rate and is extremely grateful to all our people for their
hard work and dedication in helping to bring the business back to health. We
have an experienced management team in place and I am confident that with the
continued support of everyone in the Group we will see further success in
delivering on our strategy.
Prospects
Vigorous business processes are now established across all of the Group's
activities. Through increased focus on the strengths of our two specialist
business streams, which operate in robust and growing markets, we expect to
further develop our order book and to deliver consistent, growing profits
supported by strong cash generation.
Brian May, Chief Executive
28 November 2006
Group profit & loss account
For the year ended 30 September 2006
Note Total Total
2006 2005
#000 #000
Turnover: Group & share of joint ventures 344,521 457,750
Less share of joint ventures' turnover (2,823) (2,714)
Ongoing operations 341,698 330,113
Discontinuing operations 20,745 39,052
Total continuing operations 362,443 369,165
Discontinued operations 0 85,871
Group turnover 362,443 455,036
Cost of sales (328,393) (437,409)
Gross profit 34,050 17,627
Administrative expenses (30,577) (37,689)
Other operating income 0 53
Group operating profit/(loss) 3,473 (20,009)
Income from joint ventures - -
Profit from ongoing operations before exceptional items 3,473 2,687
Exceptional items - (19,845)
Profit/(loss) from ongoing operations after exceptional items 3,473 (17,158)
Profit/(loss) from discontinuing operations - (8,351)
Total profit/(loss) from continuing operations 3,473 (25,509)
Profit from discontinued operations - 5,500
Total operating profit/(loss) before interest, including share 3,473 (20,009)
of joint ventures
Profit on disposal of subsidiary company - 22,300
Profit on ordinary activities before interest 3,473 2,291
Interest receivable 1,561 921
Interest payable (1,437) (1,597)
Other finance income/(charges) - FRS17 pension 1,042 (440)
Profit on ordinary activities before taxation 4,639 1,175
Taxation credit on ordinary activities 4 1,349 899
Profit for the financial year 5,988 2,074
Basic earnings per Ordinary share 3 10.00p 3.46p
Diluted earnings per Ordinary share 3 9.95p 3.46p
Group statement of total recognised gains & losses Total Total
For the year ended 30 September 2006 2006 2005
#000 #000
Profit for the financial year 5,988 2,074
Dividends paid (360) -
Exchange movement in reserves (119) (171)
Movements in defined benefit pension scheme (6,175) (1,216)
Movement on deferred tax relating to the defined benefit 1,186 (1,006)
pension scheme
Total recognised gains and losses for the year 520 (319)
Group balance sheet
At 30 September 2006
Group
Note Group (restated)
2006 2005
#000 #000
Fixed assets
Intangible assets: Goodwill 4,527 4,602
Tangible assets 3,819 14,930
Investments - -
Investments in joint ventures:
Loans to joint ventures 561 438
Share of gross assets 4,429 9,704
Share of gross liabilities (1,722) (5,276)
3,268 4,866
11,614 24,398
Current assets
Stocks and work in progress 18,673 9,573
Debtors: due after more than one year 4,346 5,751
Debtors: due within one year 77,093 72,836
Current asset investments - 6,089
Cash at bank and in hand 19,735 13,590
119,847 107,839
Creditors: amounts falling due in less than one year (121,555) (115,020)
Net current liabilities (1,708) (7,181)
Total assets less current liabilities 9,906 17,217
Creditors: amounts falling due after more than one year
Long-term debt - (8,363)
Other creditors (1,821) (4,058)
Net assets excluding pension liability 8,085 4,796
Pension liability 5 (2,769) -
Net assets 5,316 4,796
Capital and reserves
Share capital 5,990 5,990
Share premium account 5,893 5,893
Capital redemption reserve 3,896 3,896
Revaluation reserve 73 73
Profit and loss account (10,536) (11,056)
Equity shareholders' funds 5,316 4,796
Group cash flow statement
For the year ended 30 September 2006
Note Total Total
2006 2005
#000 #000
Net cash inflow/(outflow) from operating activities 1 10,661 (25,338)
Returns on investments and servicing of finance
Interest received 1,561 921
Interest paid (1,437) (1,597)
124 (676)
Taxation
Net corporation tax paid (36) -
Capital expenditure and financial investment
Payments to acquire tangible fixed assets (1,291) (640)
Proceeds on sale of tangible fixed assets 393 225
Loans (advanced to)/repaid by joint venture (149) 200
(1,047) (215)
Acquisitions and disposals
Acquisition of a subsidiary, net of cash acquired (664) -
Proceeds from sale of subsidiaries and businesses - 21,343
Proceeds from sale of equity loans - 1,894
Cash obtained/(disposed) on acquisition/(disposal) of subsidiaries 65 (3,380)
and businesses
(599) 19,857
Equity dividends paid to shareholders (360) -
Cash inflow/(outflow) before financing 8,743 (6,372)
Financing
Movement in short-term borrowings (3,600) 3,600
Repayment of mortgage (8,363) -
Additional development loans 9,795 -
Finance lease payments (686) (623)
(2,854) 2,977
Increase/(decrease) in cash during the year 5,889 (3,395)
Reconciliation of net cash flow to movement in net funds
Increase/(decrease) in cash during the year 5,889 (3,395)
Movement in borrowings 2,556 (2,977)
Changes in net funds arising from cash flows 8,445 (6,372)
Other non-cash movements 256 (1,680)
Movement in net funds during the year 8,701 (8,052)
Opening net funds 269 8,321
Closing net funds 8,970 269
Notes to the accounts
1. Cash flow
2006 2005
#000 #000
Operating profit/(loss) 3,473 (20,009)
Amortisation of subsidiary goodwill 306 303
Depreciation 1,523 2,657
Profit on sale of fixed assets - (78)
Impairment of fixed assets - 450
Impairment in current asset investments - 1,299
(Increase) in stocks and work in progress (9,551) (932)
(Increase)/decrease in operating debtors and prepayments (866) 7,705
Decrease in current asset investments 16,643 -
(Decrease) in creditors and accruals (1,152) (12,952)
Net movement on pension deficit included within operating profit 68 (3,552)
Cash contribution to defined benefit scheme (1,246) (1,457)
Profit on sale of shared equity loans - (412)
Realisation of joint venture assets 1,463 1,640
Net cash inflow/(outflow) from operating activities 10,661 (25,338)
2. Dividends
2006 2005
Pence/share Pence/share
Interim (related to the year ended 30 September 2006) 0.40 -
Final (related to the year ended 30 September 2005) 0.20 -
Total dividend paid 0.60 -
#000 #000
Interim (related to the year ended 30 September 2006) 240 -
Final (related to the year ended 30 September 2005) 120 -
Total dividend paid 360 -
In accordance with FRS 21, dividends are recorded only when paid and are shown as a movement in
equity rather than as a charge in the profit and loss account. The Directors are proposing that a
final dividend of 0.8p per ordinary share be paid in respect of the year ended 30 September 2006.
This will be accounted for in the 2006/07 financial year.
3. Earnings per Ordinary Share
2006 2005
Weighted Weighted
average number average
number
Earnings of shares EPS Earnings of shares EPS
#000 '000 Pence #000 '000 Pence
FRS 14 basis
Basic earnings per share 5,988 59,899 10.00 2,074 59,899 3.46
Dilutive effect of share options 254 - - -
Diluted earnings per share 5,988 60,153 9.95 2,074 59,899 3.46
4. Taxation credit on ordinary activities
(a) Analysis of credit in year 2006 2005
#000 #000
Current tax:
UK corporation tax on profits of the year - -
Adjustments in respect of previous periods (74) 1
(74) 1
Foreign tax (2) -
Total current tax (76) 1
Deferred tax 1,425 898
Taxation credit on profit on ordinary activities 1,349 899
5. Pension commitments
The Group operates a defined benefit pension scheme which was closed to new members in June 2000.
The following disclosures required by FRS 17 have been based on an actuarial valuation as at 30 September
2006 carried out by the scheme's actuaries.
As at As at As at As at
30 September 30 30 30
September September September
2006 2005 2004 2003
#000 #000 #000 #000
Total market value of assets 108,641 108,534 102,488 109,968
Present value of scheme liabilities (112,596) (106,906) (105,840) (143,128)
Surplus/(deficit) in the scheme (3,955) 1,628 (3,352) (33,160)
Deferred tax 1,186 - 1,006 9,948
Net (deficit)/surplus (2,769) 1,628 (2,346) (23,212)
Balance sheet adjustments to reduce surplus to nil at 30 - (1,628) - -
September 2005
Net deficit (2,769) - (2,346) (23,212)
All of the movements in the deferred tax amount related to the pension scheme deficit are shown as a
movement through the statement of total recognised gains and losses.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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