RNS Number:9855W
Renew Holdings PLC
22 May 2007
Renew Holdings plc
("Renew" or the "Group")
Interims Results for the half year ended 31 March 2007
Renew, the specialist construction services business, today announces a robust
set of interim results, with Group cash and profit before tax up more than 70%
and a 50% increase in the interim dividend.
Financial Highlights
H1 2007 H1 2006 % increase
Turnover (ongoing operations) #172.7m #162.4m 6
Operating profit #2.1m #1.4m 50
Profit before tax #3.1m #1.8m 72
Earnings per share 5.1p 3.0p 70
Dividend per share 0.6p 0.4p 50
Cash #27.0m #8.2m 229
Operational Highlights
* Strategy delivering higher quality work flow within specialist areas
* Specialist Engineering turnover up by 23%
* Specialist Building margins up by 50%
* Order book up to #228.7m, 67% of new orders from repeat business
* Two year #25m framework in Nuclear business
* Three new Social Housing frameworks
Roy Harrison, Chairman, commented:
"I am pleased to report that in the first half of the year the Group has
delivered a robust set of interim results, a testament to the excellent progress
being made across all of the Group's activities.
The quality of earnings has shown major improvement evidenced by an increase in
both profits and cash generation. This positive momentum has continued into the
second half and the Board is confident of sustaining this progress throughout
the remainder of the year."
22 May 2007
Enquiries:
Renew Holdings plc Tel: 020 7522 3200
Brian May, Chief Executive
John Samuel, Finance Director
College Hill Tel: 020 7457 2020
Matthew Gregorowski
CHAIRMAN'S STATEMENT
Introduction
I am pleased to report that in the first half of the year the Group has
delivered a robust set of interim results, a testament to the excellent progress
being made across all of the Group's activities. As outlined at the end of last
year, in line with the Group's strategy, the business has been aligned into two
distinct business streams, namely Specialist Engineering and Specialist
Building. In these results we report revenues and profits accordingly for the
first time.
The focus on specialist markets within these two business streams, in which the
Group has excellent skills and experience and enjoys good market positions, is
resulting in higher profitability and cash flow as the quality of the Group's
earnings and work flow continues to improve. All the Group's businesses are
trading profitably and once again there are no exceptional items in these
results.
Further progress has been made in improving the control mechanisms in place
across the Group, which gives the Board confidence in its future performance. In
Health & Safety, a key area of focus for all of our businesses, we have
continued to make good progress during the period.
Results and dividend
Group turnover from ongoing operations for the six months ended 31 March 2007
was #172.7m (2006: #162.4m), a 6% increase over the corresponding period last
year. Profit before tax for the period was up 72% to #3.1m (2006: #1.8m) with
earnings per share up 70% to 5.1p (2006: 3.0p).
The Group's cash position as at 31 March was #27.0m, a major improvement over
the previous period which reflects the cash backed nature of our earnings and
the continuing realisation of surplus assets. Shareholders' funds have increased
by 31% since the end of the last financial year and now stand at #7.0m.
In accordance with the Group's progressive policy, the Board is declaring an
interim dividend of 0.6p per share (2006: 0.4p), an increase of 50%, to be paid
on 9 July 2007 to shareholders on the register as at 8 June 2007.
Group strategy
Under the sound leadership of our Chief Executive, Brian May, the Group is
making excellent progress in line with its strategic objectives. During the
period we have continued to improve margins in our Specialist Building
activities which have grown by 50% on similar levels of turnover. In Specialist
Engineering turnover has improved by 23%, whilst margins have been maintained at
target levels.
As previously indicated, part of the strategy of developing our Specialist
Engineering activities is to consider complementary acquisitions. The Group is
looking at a number of opportunities and has appointed a corporate development
officer to assist in this regard.
Outlook
The Group's focus on its two core business streams is bringing success. The
order book is slightly up on the same period last year at #228.7m (2006:
#223.2m) but the quality of earnings has shown major improvement evidenced by an
increase in both profits and cash generation. This positive momentum has
continued into the second half and the Board is confident of sustaining this
progress throughout the remainder of the year.
Roy Harrison, Chairman
22 May 2007
CHIEF EXECUTIVE'S REVIEW
Introduction
Our strategy of seeking growth in Specialist Engineering whilst increasing
margins in Specialist Building has resulted in improved results for the period.
New work flow in our Specialist Engineering activities increased to 25% of the
total order intake whilst Specialist Building has maintained a stable work
stream. Margins in Specialist Engineering have been maintained at target levels
with volumes increasing, whilst we are improving margins in Specialist Building
on steady volumes.
67% of our work is repeat business and 69% was generated from longer-term
framework agreements and negotiated contracts. 79% of orders received were in
our specialist markets. These are all well above our internal performance
targets.
PPS Electrical, the acquisition made in June 2006 by our Nuclear business, has
been successfully integrated into the Group's activities and is performing in
line with expectations, delivering margins which are in line with our Specialist
Engineering activities.
We continue to make progress in settling outstanding legacy contract claims, and
remain confident that the level of provisions is sufficient and prudent in
respect of the potential risks of non-recovery.
Review of operations
Specialist Engineering
In Nuclear, we were recently awarded a third framework contract at Sellafield.
This Multi Disciplinary Site Wide contract, to provide mechanical and electrical
services and minor civil works across the site as a primary contractor, is worth
an expected #25m over the next two years, with an option for a further two year
extension thereafter. Due to the nature of this contract, we have elected to
include only half of the expected contract value in the current order book of
#228.7m.
In Land Remediation, we were re-awarded a three year framework contract worth
#10m per annum with National Grid Properties, to carry out remediation works on
a number of their redundant sites. We have also recently secured a three year
framework with the North West Development Agency.
Specialist Building
In Social Housing, we were awarded a #15.5m contract for Metropolitan Housing
Association, and were subsequently appointed to their framework contract, taking
the number of social housing frameworks awarded during the first half to three.
We now have framework agreements with six leading Housing Associations in the
South East for the delivery of their new build programmes.
In Retail, we secured contracts with Tesco in Didcot, Ilminster and Birmingham,
together with a #5m contract for a new store shell in Maesteg, further
strengthening our excellent relationship with this client. We also completed a
new B&Q store in Folkestone.
In Science & Education, we gained two further contract awards from
GlaxoSmithKline, our biggest repeat business customer in the science sector. We
were also awarded a #7.5m project for the University of London and projects at
Imperial College and South Bank University.
In Restoration and Refurbishment, we have seen strong demand for projects in the
high quality residential market. We secured a #7.6m high quality residential
refurbishment project for Cadogan Estates, a long established client,
incorporating works on the retained facade. Work also commenced on the #5.8m
refurbishment of the Queen Elizabeth law courts in Liverpool and a #2.6m project
at the Victoria & Albert Museum. We have also been appointed to upgrade two
London underground stations for Metronet.
Property and central activities
During the period, we completed the sale of our development project in
Lancashire to Wichford PLC for a consideration of #15.5m. The related
development loan was redeemed from the proceeds of the sale, leaving the Group
debt free.
The Group continues its strategy of selling its historic property portfolio both
in the UK and US. We realised over #3m from our UK and US property holdings
during the period.
Further to the sale of our head office building in London last year, the Group
will be relocating its head office to Yorkshire during the summer.
Prospects
I am pleased by the growth achieved by our Specialist Engineering business and
by the improvement in margins being delivered by our Specialist Building
business. The progress the Group is making is very satisfying. I remain
confident of delivering further improvement in the second half of this year and
in our prospects for the future.
Brian May, Chief Executive
22 May 2007
Group Profit and Loss Account
for the six months ended 31 March 2007
Notes Six months ended Year ended
31 March 30 September
2007 2006 2006
Unaudited Unaudited Audited
#000 #000 #000
Turnover: Group and share of joint ventures 173,085 179,363 365,266
Less share of joint ventures' turnover (114) (1,150) (2,823)
Ongoing operations 172,653 162,442 341,698
Discontinuing operations 1 318 15,771 20,745
Group turnover 2 172,971 178,213 362,443
Cost of sales (153,654) (160,613) (328,393)
Gross profit 19,317 17,600 34,050
Administrative expenses (17,246) (16,210) (30,577)
Profit on ordinary activities before interest 2 2,071 1,390 3,473
Interest receivable 895 569 1,561
Interest payable (239) (661) (1,437)
Other finance income - FRS 17 pension 350 505 1,042
Profit on ordinary activities before taxation 2 3,077 1,803 4,639
Taxation on profit on ordinary activities 4 - - 1,349
Profit for the period 3,077 1,803 5,988
Basic earnings per Ordinary Share 5 5.14p 3.01p 10.00p
Diluted earnings per Ordinary Share 5 5.07p 3.01p 9.95p
Proposed dividend 6 0.60p 0.40p 0.80p
Group Statement of Total Recognised Gains and Losses
for the six months ended 31 March 2007
Notes Six months ended Year ended
31 March 30 September
2007 2006 2006
Unaudited Unaudited Audited
#000 #000 #000
Profit for the period 3,077 1,803 5,988
Dividend paid (479) (120) (360)
Exchange movements in reserves (96) 64 (119)
Net movements relating to defined benefit pension scheme 3 (890) (1,126) (6,175)
Movement on deferred tax relating to the defined pension scheme - - 1,186
Total recognised gains and losses since last annual report 1,612 621 520
Group Balance Sheet
at 31 March 2007
Notes 31 March 30 September
2007 2006 2006
Unaudited Unaudited Audited
#000 #000 #000
Fixed assets
Intangible assets: Goodwill 4,368 4,450 4,527
Tangible assets 3,513 14,663 3,819
Investments in joint ventures:
Loans to joint ventures 645 439 561
Share of gross assets 4,246 8,361 4,429
Share of gross liabilities (1,664) (4,805) (1,722)
3,227 3,995 3,268
11,108 23,108 11,614
Current assets
Stocks and work in progress 5,222 13,651 18,673
Debtors:
due after more than one year 4,298 5,850 4,346
due within one year 70,666 73,655 77,093
Current asset investments - assets held for - 3,182 -
resale
Cash at bank and in hand 27,022 8,194 19,735
107,208 104,532 119,847
Creditors: amounts falling due within one (106,965) (109,608) (121,555)
year
Net current assets/(liabilities) 243 (5,076) (1,708)
Total assets less current liabilities 11,351 18,032 9,906
Creditors: amounts falling due after more
than one year
Long-term debt - (8,363) -
Other creditors (1,605) (4,252) (1,821)
Net assets excluding pension liability 9,746 5,417 8,085
Pension liability 3 (2,769) - (2,769)
Net assets 6,977 5,417 5,316
Capital and reserves
Share capital 5,990 5,990 5,990
Share premium account 5,893 5,893 5,893
Capital redemption reserve 3,896 3,896 3,896
Revaluation reserve 73 73 73
Share based payments reserve 7 49 - -
Profit and loss account (8,924) (10,435) (10,536)
Equity shareholders' funds 8 6,977 5,417 5,316
Group Cash Flow Statement
for the six months ended 31 March 2007
Notes Six months ended Year ended
31 March 30 September
2007 2006 2006
Unaudited Unaudited Audited
#000 #000 #000
Net cash inflow/(outflow) from operating 9 18,028 (5,631) 10,661
activities
Returns on investments and servicing of finance
Interest received 895 569 1561
Interest paid (239) (661) (1,437)
656 (92) 124
Taxation
Net corporation tax paid - - (36)
Capital expenditure and financial investment
Payments to acquire tangible fixed assets (365) (507) (1,291)
Proceeds on sale of tangible fixed assets 145 58 393
Loans (advanced to)/repaid by joint ventures (110) 871 (149)
(330) 422 (1,047)
Acquisitions and disposals
Acquisition of a subsidiary, net of cash - - (664)
acquired
Cash obtained on acquisition of subsidiaries - - 65
and businesses
- - (599)
Equity dividends paid to shareholders (479) (120) (360)
Cash inflow/(outflow) before financing 17,875 (5,421) 8,743
Financing
Short term development funding (9,795) 3,953 9,795
Repayment of mortgage - - (8,363)
Movement in short-term borrowings (298) (3,600) (3,600)
Finance lease payments (318) (328) (686)
(10,411) 25 (2,854)
Increase/(decrease) in cash during the period 7,464 (5,396) 5,889
NOTES TO THE ACCOUNTS
Note 1: Discontinuing operations
Discontinuing operations relate to the activities of YJL Construction which are
in the process of being closed down.
Note 2: Segmental analysis
Six months ended Year ended
31 March 30 September
2007 2006 2006
Unaudited Unaudited Audited
#000 #000 #000
Turnover is analysed as follows:
Building 120,943 128,185 262,889
Engineering 34,501 28,086 54,553
Property and central activities 17,323 7,321 27,079
Discontinuing operations 318 15,771 20,745
Turnover: Group and share of joint ventures' turnover 173,085 179,363 365,266
Less: Share of joint ventures' turnover (114) (1,150) (2,823)
Group turnover 172,971 178,213 362,443
Analysed as to:
Ongoing operations 172,653 162,442 341,698
Discontinuing operations 318 15,771 20,745
Group turnover 172,971 178,213 362,443
Analysis of profit on ordinary activities before interest:
Building 1,513 1,038 2,603
Engineering 1,717 1,413 2,810
Property and central activities (1,159) (1,061) (1,940)
Discontinuing operations - - -
Profit on ordinary activities before interest 2,071 1,390 3,473
Net financing income 413 1,166
1,006
Profit on ordinary activities before taxation 3,077 1,803 4,639
Note 3: Defined benefit pension scheme
As at 30 September 2006, the FRS 17 valuation, prepared by Barnett Waddingham,
Consulting Actuaries, showed a net deficit of #2,769,000 after a deferred tax
credit of #1,186,000, which was recorded as a liability in the accounts in
accordance with the requirements of FRS 17. No updating FRS 17 valuation has
been performed for these interim accounts and the Directors consider that the
position shown at 30 September 2006 should be maintained in the accounts at 31
March 2007.
As the balance sheet position of the pension scheme has been maintained at #
(2,769,000) during the period, contributions to reduce the deficit have been
shown as part of the movements in the group statement of total recognised gains
and losses.
Note 4: Taxation on profit on ordinary activities
Six months ended Year ended
31 March 30 September
2007 2006 2006
Unaudited Unaudited Audited
#000 #000 #000
Current tax:
UK corporation tax on profits for the period - - -
Adjustments in respect of previous periods - - (74)
- - (74)
Foreign tax - - (2)
Total current tax - - (76)
Deferred tax - - 1,425
Taxation credit on profit on ordinary - - 1,349
activities
The Group and Company have unused tax losses available to carry forward against
future taxable profits, although a significant element of these losses relates
to activities which are not forecast to generate the level of profits needed to
utilise these losses. A deferred tax asset of #2,899,000 has been recognised to
the extent considered reasonable by the directors and included in Debtors: due
within one year. This is in respect of losses where recovery can be reasonably
expected within twelve months of the balance sheet date. The amount has been
maintained at the same level as 30 September 2006.
Note 5: Earnings per ordinary share
Six months ended Year ended
2007 2006 2006
31 March 31 March 30 September
Weighted Weighted Weighted
average average average
number number number
Earnings of shares EPS Earnings of shares EPS Earnings of shares EPS
#000 '000 Pence #000 '000 Pence #000 '000 Pence
Basic earnings per 3,077 59,899 5.14 1,803 59,899 3.01 5,988 59,899 10.00
share
Dilutive effect of - 765 (0.07) - - - - 254 (0.05)
share options
Diluted earnings 3,077 60,664 5.07 1,803 59,899 3.01 5,988 60,153 9.95
per share
Note 6: Dividends
The proposed interim dividend is 0.6p per share (2006: 0.4p). This will be paid
out of the Company's available distributable reserves to shareholders on the
register on 8 June 2007, payable on 9 July 2007. In accordance with FRS21
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.
Note 7: Share based payments reserve
FRS 20 Share based payments requires a fair value to be established for any
equity settled share based payments. Fair value has been independently measured
using a Black-Scholes valuation model. The fair value determined at the grant
date of the equity settled share based payments is expensed on a straight-line
basis over the vesting period, based on the Group's estimate of shares that will
eventually vest. In total 1,284,196 share options are in issue with a vesting
period of 3 years. 522,292 of these options were issued during the period and
#49,000 has been charged to administrative expenses. There is no impact on net
assets since an equivalent amount is credited to the share based payments
reserve.
Note 8: Reconciliation of movements in Group shareholders' funds
Six months ended Year ended
31 March 30 September
2007 2006 2006
Unaudited Unaudited Audited
#000 #000 #000
Profit for the period 3,077 1,803 5,988
Dividends (479) (120) (360)
2,598 1,683 5,628
Movement in share based payments reserve 49 - -
Other recognised gains and losses for the period (986) (1,062) (5,108)
Net movement in shareholders' funds 1,661 621 520
Opening shareholders' funds 5,316 4,796 4,796
Closing shareholders' funds 6,977 5,417 5,316
Note 9: Net cash inflow/(outflow) from operating activities
Six months ended Year ended
31 March 30 September
2007 2006 2006
Unaudited Unaudited Audited
#000 #000 #000
Operating profit 2,071 1,390 3,473
Depreciation 563 735 1,523
Amortisation of subsidiary goodwill 159 152 306
Share based payments 49 - -
Profit on sale of fixed assets (37) (19) -
Decrease/(increase) in stocks and work in progress 13,170 (4,078) (9,551)
Decrease/(increase) in operating debtors and 6,460 (918) (866)
prepayments
Decrease in current asset investments - 2,907 16,643
Decrease in creditors and accruals (3,867) (5,179) (1,152)
Defined benefit pension scheme contributions charged 48 - 68
to operating profit
Contributions to defined benefit scheme (588) (621) (1,246)
Realisation of joint venture assets - - 1,463
Net cash inflow/(outflow) from operating activities 18,028 (5,631) 10,661
This information is provided by RNS
The company news service from the London Stock Exchange
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