TIDMRNWH
RNS Number : 1010H
Renew Holdings PLC
24 May 2011
Renew Holdings plc
("Renew" or the "Group")
Interim results for the half year ended 31 March 2011
Renew, the specialist engineering and construction services
Group, announces growth in revenue, operating profit and operating
margin with the interim dividend maintained at 1.0p.
Financial Highlights
H1 2011 H1 2010
Revenue GBP155.5m GBP138.6m +12%
Underlying operating profit GBP2.2m GBP1.7m +32%
Adjusted earnings per share 3.11p 2.52p +23%
Dividend per share 1.0p 1.0p
Note: Underlying operating profit and adjusted earnings per
share are shown prior to exceptional items and amortisation
charges.
Operational Highlights
-- Order book at 31 March 2011 up 16% at GBP334m (2010:
GBP289m)
-- Operating margins increased to 1.4% (2010: 1.2%)
-- Specialist Engineering increased to 46% (2010: 41%) of
revenue
-- Cash balance GBP4.7m (2010: GBP10.5m)
-- Amco integration progressing well
-- David Forbes appointed as non-executive director
-- Interim dividend maintained at 1.0p (2010: 1.0p)
Roy Harrison OBE, Chairman, commented:
"2011 is a transformational year for the Group as it repositions
itself as a specialist provider of engineering support to UK
infrastructure, particularly in the fields of Energy, Environmental
and Rail. The Board is confident of delivering sustainable,
profitable growth from our established position in key
markets."
24 May 2011
Chairman's Statement
In the six months ended 31 March 2011, the Group has recorded
growth in revenue, operating profit and operating margin.
The acquisition of the Specialist Engineering company, Amco,
combined with our withdrawal from non-specialist public spending
building markets, has transformed Renew into a predominantly
Specialist Engineering services provider with an increasing focus
on areas of non-discretionary spend. These steps are in line with
our established strategy and have broadened the Group's growth
opportunities and strengthened its resilience in what remains a
demanding economic climate.
Group operating profit, prior to amortisation and exceptional
charges, increased to GBP2.2m in the period (2010: GBP1.7m), on
revenue of GBP155.5m (2010: GBP138.6m). Operating margin was 1.4%
(2010: 1.2%). Adjusted earnings per share was 3.11p (2010: 2.52p).
The acquisition of Amco completed at the end of February and
consequently the interim results include only one month of Amco's
trading together with GBP1.3m of exceptional acquisition fees.
The Board is maintaining the interim dividend at 1.0p per share
(2010: 1.0p) which will be paid on 4 July 2011 to shareholders on
the register at 3 June 2011.
The Group's order book is GBP334m (2010: GBP289m), an increase
of 16% on the same position one year ago. The value of potential
future work which may arise from project frameworks is not
included. The Group had a cash balance of GBP4.7m (2010: GBP10.5m)
at the period end, with the reduction attributable to the Amco
acquisition. The business remains cash generative and the Board
expects the cash balance to increase in the second half of the
financial year.
Renew's strategy is to continue to grow its Specialist
Engineering activities both organically and with selective higher
margin acquisitions. In the 2012 financial year, it is expected
that Specialist Engineering will account for over 60% of revenue
(2010: 44%) and more than 80% (2010: 69%) of operating profits,
prior to central costs. Specialist Building will focus on our
established target sectors in the South where we have both strong
market position and expertise.
The integration of Amco is progressing well and in line with our
expectations. The Board is pleased to announce that Amco's
strategically important core frameworks with Network Rail have
recently been renewed and extended to encompass a national service,
including the South East region for the first time. The Group is
integrating its existing rail business in the South with Amco to
provide this extended service and accelerate growth within the Rail
sector.
The Board is pleased to announce the appointment of David Forbes
as a Non-executive director with effect from 1 June 2011. David has
been a leading figure in corporate advisory services for many
years, serving NM Rothschild & Son Limited from 1989 until
2010, most recently as a Managing Director in its Investment
Banking division. He continues as a consultant to the firm. He
brings a depth of corporate experience which complements the skills
of the Board and will become Chair of the Remuneration Committee.
David is also a Non-executive director of Vertu Motors plc and
Chairman of Northern Ballet Theatre Limited.
The Group has secured its revenue for the financial year.
Margins are expected to improve steadily, accompanied by growth in
both revenue and operating profit, with associated cash generation.
The Board has confidence in Renew's ability to build upon its key
market positions and deliver strong financial performance.
Roy Harrison OBE
Chairman
24 May 2011
Chief Executive's Review
The established strategy of Renew to move the balance of its
activities towards the Specialist Engineering business stream has
seen significant progress during the period with over 60% of future
revenue anticipated from this sector.
The Group is now well positioned to provide a nationwide
multidisciplinary engineering service to maintain and develop
infrastructure in the Energy, Environmental and Rail sectors. Our
remaining Specialist Building activity is now focused in resilient
and sustainable sectors in the South.
The confirmed order book at 31 March 2011 was GBP334m compared
to GBP289m at 31 March 2010. Forecast revenue for the full
financial year is secured.
Specialist Engineering Renew focuses on the target markets of
Energy (including Nuclear), Environmental and Rail. These markets
offer strong growth opportunities and benefit from
non-discretionary spend patterns, many governed by regulatory
requirements, providing good visibility of sustainable earnings.
Importantly, our ability to provide an integrated service including
civil, mechanical and electrical engineering, supported by
fabrication and machining capabilities, is a differentiator in
these markets.
During the first half of the year, Specialist Engineering
revenue was GBP71.3m (2010: GBP57.5m) and accounted for 46% of
Group revenue (2010: 41%). The organic growth achieved in the
period was 9%. Operating profit was GBP2.4m (2010: GBP1.9m) with an
operating margin of 3.4% (2010: 3.2%). At 31 March 2011 the order
book was GBP164m (2010: GBP84m) with GBP80m secured through
non-discretionary frameworks.
Energy
Renew has an established presence in the nuclear, gas, coal,
wind and hydro power generation sectors. Revenue in this sector is
underpinned by 21 framework agreements primarily for
non-discretionary engineering and maintenance works.
The Group works on nine licenced UK nuclear sites. Shepley
Engineers has seen a 25% increase in resource requirements at
Sellafield since the beginning of the financial year and remains
the largest mechanical and electrical contractor at the site. A
three year framework to undertake site remediation and
decommissioning projects has recently been awarded in addition to
an extension of the Multi Discipline Site Wide framework. Further
works have also been awarded on the major Separation Area
Ventilation and Evaporator D schemes. In addition to operations at
Sellafield, Shepley Engineers has also further developed its
presence at Springfields with the award of a GBP4m decommissioning
project.
Amco has significant involvement across the energy sector
including a presence at nine power stations. Framework agreements
provide a core workload of maintenance and refurbishment tasks and
provide access to larger projects. The renewable energy sector is a
growing market. Amco has recently been awarded its second wind farm
framework with a number of further opportunities identified.
Environmental
The Group specialises in flood alleviation, river and coastal
defence and land remediation, where its work is underpinned by 13
frameworks.
In the Water sector, Northumbrian Water's ten year AMP5
framework, which was awarded in November 2010, provides the
opportunity for the selected contractors and consultants to win
work with an estimated total value of GBP1.5 billion. Additionally,
the Group has four minor works and maintenance frameworks with
Northumbrian Water and Scottish Water and is currently tendering a
further four non-discretionary maintenance frameworks.
Amco's involvement in the Environment sector includes the
provision of civil, mechanical and electrical engineering
maintenance services for the Environment Agency under a number of
frameworks. Specialist mining services are utilised under an
ongoing engineering support agreement with Cleveland Potash which
has recently been extended by the award of a shaft repair
project.
Land remediation works are progressing well on the former St.
Helier gas works site for the Royal States of Jersey. Work has also
continued on a number of projects under the established National
Grid framework, including the first cluster project near
Manchester, which is the first large scale use of an in-house Soil
Treatment Facility for multi-site remediation.
Rail
The Group has substantial expertise in providing civil,
mechanical and electrical engineering services across the UK rail
network where the focus is on infrastructure renewal, refurbishment
and maintenance. Amco is a leading provider of minor works to
Network Rail through a number of frameworks. These have recently
been reawarded and extended to provide national coverage under the
Building and Civils Delivery Partnership. These partnerships have a
proposed spend of over GBP100m per annum for the three year term,
with the option for a further two years extension.
The existing Renew rail business, YJL Infrastructure, is being
integrated with Amco to service the increasing Network Rail
requirements in London and the South East. This will also enable
the further development of existing relationships with London
Underground and train operating companies.
Our national presence in Rail provides the opportunity, outside
of frameworks, to access individual capital projects. Recent
examples include the GBP12m Newport Area Signalling Scheme, works
at Warrington station and a bridge gauging project, the first of a
series to provide improved clearance for freight trains. Amco is a
market leader in tunnel refurbishment regularly carrying out
projects for Network Rail and has recently completed work on the
Whiteball Tunnel near Exeter.
Specialist Building
Specialist Building activity is now focused on the New Build
Social Housing, High Quality Residential and Retail markets in the
South. Specialist Building revenue was GBP83.1m (2010: GBP81.2m) in
the period with a forward order book of GBP170m (2010: 205m),
frameworks accounting for GBP84m (2010: GBP66m). Operating profit
of GBP0.9m (2010: GBP0.8m) was recorded at a margin of 1.1% (2010:
1.0%).
During the period, three additional New Build Social Housing
frameworks have been secured in the South East with London and
Quadrant Housing Group, Estuary Housing and Connected Housing
Group. A total of 12 frameworks now provide access to a GBP600m
annual market spend. Following the award of GBP46m of work during
the period, 100% of revenue for 2011 and 2012 is now secured. In
High Quality Residential, work is progressing well on the major
refurbishment projects in Mayfair and Belgravia with strong demand
in the sector evidenced by a further GBP150m of identified
opportunities. Building upon our 20 year relationship, two major
projects have recently been completed for Tesco, with a further
GBP20m of Retail contracts secured.
Summary
The acquisition of Amco and the decision to exit the
non-specialist and discretionary public spending building market
ensures the Group is focused on sectors where its specialist
capabilities and experience continue to minimise the risks
associated with the current highly competitive environment.
The Group's future revenue will be predominantly generated from
its Specialist Engineering activities where organic growth
opportunities in target markets are promising. Additionally, the
Group will continue to look for suitable Specialist Engineering
acquisitions which offer sustainable and attractive margins.
Brian May
Chief Executive
24 May 2011
Group income statement
for the six months
ended 31 March 2011
Exceptional
items
Before and Before Exceptional
exceptional amortisation exceptional items and
items and of intangible items and amortisation
amortisation assets amortisation of
of (see of intangible
intangible Note intangible assets (see
assets 3) assets Note 3)
Six months
ended Year ended
31 March 30 September
2011 2011 2011 *2010 2010 2010 2010
Unaudited Unaudited Unaudited Unaudited Audited Audited Audited
Note GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Group revenue from
continuing
activities 2 155,477 - 155,477 138,640 290,395 - 290,395
Cost of sales (137,762) - (137,762) (122,991) (260,804) - (260,804)
------------- --------------- ---------- ---------- ------------- ------------- ----------
Gross profit 17,715 - 17,715 15,649 29,591 - 29,591
Administrative
expenses (15,473) (1,701) (17,174) (14,116) (25,073) (571) (25,644)
------------- --------------- ---------- ---------- ------------- ------------- ----------
Operating profit 2 2,242 (1,701) 541 1,533 4,518 (571) 3,947
Finance income 114 - 114 47 205 - 205
Finance costs (99) - (99) (31) (41) - (41)
Other finance
income/(charges) -
defined benefit
pension scheme 23 - 23 60 (119) - (119)
------------- --------------- ---------- ---------- ------------- ------------- ----------
Profit before income
tax 2 2,280 (1,701) 579 1,609 4,563 (571) 3,992
Income tax expense 4 (415) 135 (280) (266) (1,410) 154 (1,256)
------------- --------------- ---------- ---------- ------------- ------------- ----------
Profit for the period
attributable to
equity holders of the
parent company 1,865 (1,566) 299 1,343 3,153 (417) 2,736
------------- --------------- ---------- ---------- ------------- ------------- ----------
Basic earnings per 5 0.50p 2.24p 4.57p
share
Diluted earnings per 5 0.48p 2.17p 4.37p
share
---------- ---------- ----------
Proposed dividend 6 1.00p 1.00p 2.00p
---------- ---------- ----------
* Operating profit for the six months ended 31 March 2010
is after charging GBP162,000 of amortisation cost.
Group statement of comprehensive income Six months ended Year ended
for the six months
ended 31 March 2011 31 March 30 September
2011 2010 2010
Unaudited Unaudited Audited
GBP000 GBP000 GBP000
Profit for the period
attributable to equity
holders of the parent
company 299 1,343 2,736
Exchange movements in
reserves (200) 286 13
Movements in actuarial
deficit - - 1,164
Movement on deferred
tax relating to the defined
benefit pension scheme - - (338)
---------- ---------- --------------
Total comprehensive income
for the period attributable
to equity holders of
the parent company 99 1,629 3,575
---------- ---------- -------------
Group statement of changes in equity
for the six months ended
31 March 2011
Called Share
up Share Capital Cumulative based Retained Total
share premium redemption translation payments earnings equity
capital account reserve adjustment reserve Unaudited
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 October
2009 5,990 5,893 3,896 1,046 162 (5,658) 11,329
Transfer
from income
statement
for the
period 1,343 1,343
Dividends
paid (1,196) (1,196)
Recognition
of share
based
payments 27 27
Exchange
differences 286 286
-------- -------- ----------- ------------ --------- --------- ----------
At 31 March
2010 5,990 5,893 3,896 1,332 189 (5,511) 11,789
Transfer
from income
statement
for the
period 1,393 1,393
Dividends
paid (601) (601)
Recognition
of share
based
payments 28 28
Exchange
differences (273) (273)
Actuarial
gain
recognised
in pension
scheme 1,164 1,164
Movement on
deferred
tax
relating to
the pension
scheme (338) (338)
-------- -------- ----------- ------------ --------- --------- ----------
At 30
September
2010 5,990 5,893 3,896 1,059 217 (3,893) 13,162
Transfer
from income
statement
for the
period 299 299
Dividends
paid (1,196) (1,196)
Recognition
of share
based
payments 36 36
Exchange
differences (200) (200)
-------- -------- ----------- ------------ --------- --------- ----------
At 31 March
2011 5,990 5,893 3,896 859 253 (4,790) 12,101
-------- -------- ----------- ------------ --------- --------- ----------
Group balance sheet
at 31 March 2011
31 March 30 September
2011 2010 2010
Unaudited Unaudited Audited
GBP000 GBP000 GBP000
Non-current assets
Intangible assets
-goodwill 24,805 9,558 9,558
-other 3,000 312 154
Property, plant
and equipment 4,817 5,065 4,690
Retirement benefit
assets 5,250 - 1,060
Deferred tax assets 3,547 3,920 3,283
---------- ---------- -------------
41,419 18,855 18,745
---------- ---------- -------------
Current assets
Inventories 8,464 8,547 8,570
Trade and other
receivables 94,814 70,981 69,997
Current tax assets 35 44 169
Cash and cash equivalents 4,670 10,835 16,376
107,983 90,407 95,112
---------- ---------- -------------
Total assets 149,402 109,262 113,857
---------- ---------- -------------
Non-current liabilities
Borrowings (10,000) - -
Obligations under
finance leases (246) (2) -
Retirement benefit
obligations - (1,337) -
Deferred tax liabilities (1,365) (233) (424)
Provisions (424) (680) (520)
---------- ---------- -------------
(12,035) (2,252) (944)
---------- ---------- -------------
Current liabilities
Borrowings (5,000) (339) (131)
Trade and other
payables (118,916) (93,814) (98,175)
Obligations under
finance leases (125) (10) (6)
Current tax liabilities (217) (99) (607)
Provisions (1,008) (959) (832)
(125,266) (95,221) (99,751)
---------- ---------- -------------
Total liabilities (137,301) (97,473) (100,695)
Net assets 12,101 11,789 13,162
---------- ---------- -------------
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
Cumulative translation
adjustment 859 1,332 1,059
Share based payments
reserve 253 189 217
Retained earnings (4,790) (5,511) (3,893)
---------- ---------- -------------
Total equity 12,101 11,789 13,162
---------- ---------- -------------
Group cashflow statement
for the six months ended 31
March 2011
Six months ended Year ended
31 March 30 September
2011 2010 2010
Unaudited Unaudited Audited
GBP000 GBP000 GBP000
Profit for the period 299 1,343 2,736
Amortisation of intangible assets 154 162 320
Depreciation 527 620 1,135
Loss/(profit) on sale of property,
plant and equipment 25 (20) (22)
Increase in inventories (16) (56) (377)
Increase in receivables (1,958) (3,464) (2,674)
Increase/(decrease) in payables 5,041 (383) 3,945
Current service cost in respect
of defined benefit pension scheme 38 38 85
Cash contribution to defined
benefit pension scheme (1,562) (1,014) (2,451)
Expense in respect of share
options 36 27 55
Financial income (114) (47) (205)
Financial expenses 99 31 160
Interest paid (99) (31) (41)
Income taxes paid (417) (111) (229)
Income tax expense 280 266 1,256
Net cash inflow/(outflow) from
operating activities 2,333 (2,639) 3,693
---------- ---------- -------------
Investing activities
Interest received 114 47 205
Proceeds on disposal of property,
plant and equipment 1,689 50 125
Purchases of property, plant
and equipment (186) (347) (560)
Acquisition of subsidiary net
of cash acquired (29,319) - -
Net cash outflow from investing
activities (27,702) (250) (230)
---------- ---------- -------------
Financing activities
Dividends paid (1,196) (1,196) (1,797)
New loan 15,000 - -
Repayment of obligations under
finance leases (8) (15) (21)
---------- ---------- -------------
Net cash inflow/(outflow) from
financing activities 13,796 (1,211) (1,818)
---------- ---------- -------------
Net (decrease)/increase in cash
and cash equivalents (11,573) (4,100) 1,645
Cash and cash equivalents at
the beginning of the period 16,245 14,600 14,600
Effect of foreign exchange rate
changes (2) (4) -
Cash and cash equivalents at
the end of the period 4,670 10,496 16,245
---------- ---------- -------------
Bank balances and cash 4,670 10,835 16,376
Overdrafts - (339) (131)
---------- ---------- -------------
4,670 10,496 16,245
---------- ---------- -------------
NOTES TO THE ACCOUNTS
Note 1 Basis of preparation
(a) The consolidated interim financial report for the six months
ended 31 March 2011 and the equivalent period in 2010 have not been
audited or reviewed by the Group's auditors. 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 24 May 2011.
(b) The accounts for the year ended 30 September 2010 were
prepared under IFRS and have been delivered to the Registrar of
Companies. The report of the auditors 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 2010 have been audited. The comparative
figures for the period ended 31 March 2010 are unaudited.
(c) For the year ending 30 September 2011, the following new
accounting standard, which has been adopted by the EU, applies and
has been implemented for this interim financial report.
IFRS 3 (amendment) "Business Combinations"
The amendment to this standard requires costs associated with an
acquisition to be charged to the income statement rather than being
capitalised.
(d) 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, Specialist Building and
Specialist Engineering have been determined to represent operating
segments.
Year
Six months ended ended 30
31 March September
2011 2010 2010
Unaudited Unaudited Audited
Revenue is analysed as follows: GBP000 GBP000 GBP000
Specialist Building 83,079 81,155 163,134
Specialist Engineering 71,338 57,469 127,382
Inter segment revenue (60) - (191)
---------------------- ---------------------------- ----------
Segment revenue 154,357 138,624 290,325
Central activities 1,120 16 70
---------------------- ---------------------------- ----------
Group revenue from continuing
operations 155,477 138,640 290,395
---------------------- ---------------------------- ----------
Before Before
exceptional Exceptional exceptional Exceptional
items and items and items and items and Year
amortisation amortisation amortisation amortisation ended 30
of of of of September
intangible intangible Six months intangible intangible Audited
assets 2011 assets 2011 ended assets 2010 assets 2010 2010
GBP000 GBP000 31 March GBP000 GBP000 GBP000
Unaudited Unaudited
2011 *2010
GBP000 GBP000
Analysis of
operating
profit
Specialist
Building 938 - 938 782 1,836 - 1,836
Specialist
Engineering 2,397 - 2,397 1,853 4,160 - 4,160
------------- ------------- ---------- ---------- ------------- ------------- ----------
Segment
operating
profit 3,335 - 3,335 2,635 5,996 - 5,996
Central
activities (1,093) (1,701) (2,794) (1,102) (1,478) (571) (2,049)
------------- ------------- ---------- ---------- ------------- ------------- ----------
Operating
profit 2,242 (1,701) 541 1,533 4,518 (571) 3,947
Net
financing
income 38 - 38 76 45 - 45
------------- ------------- ---------- ---------- ------------- ------------- ----------
Profit
before
income tax 2,280 (1,701) 579 1,609 4,563 (571) 3,992
------------- ------------- ---------- ---------- ------------- ------------- ----------
*Operating profit for the six months ended 31 March 2010 is
after charging GBP162,000 of amortisation cost.
Note 3 Exceptional items and amortisation of intangible
assets
Six months ended Year ended
31 March 30 September
2011 2010 2010
Unaudited Unaudited Audited
GBP000 GBP000 GBP000
Acquisition costs 1,347 - -
Additional provision in
respect of OFT fine 200 - 251
Total exceptional items 1,547 - 251
Amortisation of intangible
assets 154 162 320
---------- ---------- -------------
1,701 162 571
---------- ---------- -------------
Redundancy and restructuring costs of GBP3.5m announced in March
2011 will be charged in the second half of the 2011 financial year
following the completion of consultation exercises.
Note 4 Income tax expense
Six months ended Year ended
31 March 30 September
2011 2010 2010
Unaudited Unaudited Audited
GBP000 GBP000 GBP000
Current tax:
UK corporation tax on
profits for the period (75) (89) (551)
Adjustments in respect
of previous periods - - (39)
---------- ---------- -------------
Total current tax (75) (89) (590)
Deferred tax (205) (177) (666)
---------- ---------- -------------
Income tax expense (280) (266) (1,256)
---------- ---------- -------------
The Group has unused tax losses available to carry forward
against future taxable profits, although a substantial element of
these losses relates to activities which are not forecast to
generate the level of profits needed to utilise these losses. A
related deferred tax asset of GBP2,466,000 (2010: GBP2,855,000) has
been recognised to the extent considered reasonable by the
Directors.
Note 5 Earnings per share
Year ended 30
6 months ended 31 March September
2011 2010 2010
Unaudited Unaudited Audited
Earnings EPS DEPS Earnings EPS DEPS Earnings EPS DEPS
GBP000 Pence Pence GBP000 Pence Pence GBP000 Pence Pence
Earnings
before
exceptional
costs and
amortisation 1,865 3.11 2.97 1,505 2.52 2.43 3,153 5.26 5.04
Exceptional
costs and
amortisation (1,566) (2.61) (2.49) (162) (0.28) (0.26) (417) (0.69) (0.67)
--------- ---------- ------- --------- ---------- ------- --------- -------- -------
Basic
earnings per
share 299 0.50 0.48 1,343 2.24 2.17 2,736 4.57 4.37
--------- ---------- ------- --------- ---------- ------- --------- -------- -------
Weighted
average
number of
shares 59,899 62,803 59,899 61,928 59,899 62,584
---------- ------- ---------- ------- -------- -------
The dilutive effect of share options is to increase the number
of shares by 2,904,000 (March 2010: 2,029,000; September 2010:
2,685,000) and reduce the basic earnings per share by 0.02p (March
2010: 0.07p; September 2010: 0.20p).
Note 6 Dividends
The proposed interim dividend is 1.0p per share (2010: 1.0p).
This will be paid out of the Company's available distributable
reserves to shareholders on the register on 3 June 2011, payable on
4 July 2011. 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.
Note 7 Acquisition of subsidiary
On 23 February 2011, the Company acquired the whole of the
issued share capital of Amco Group Holdings Limited ("Amco") for a
consideration of GBP27.1m, of which GBP20.9m was paid in cash and
GBP6.2m in deferred consideration.
The value of the assets and liabilities of Amco at the date of
acquisition were:
Book value Adjustments Fair value
GBP000 GBP000 GBP000
Non-current assets
Intangible assets
-goodwill - 15,247 15,247
-other - 3,000 3,000
Property, plant and
equipment 1,571 611 2,182
Retirement benefit
assets 2,628 - 2,628
Deferred tax assets 212 52 264
----------- ------------ -----------
4,411 18,910 23,321
----------- ------------ -----------
Current assets
Inventories 10 - 10
Trade and other receivables 22,945 - 22,945
22,955 - 22,955
----------- ------------ -----------
Total assets 27,366 18,910 46,276
----------- ------------ -----------
Non-current liabilities
Obligations under
finance leases (248) - (248)
Deferred tax liabilities (736) - (736)
(984) - (984)
----------- ------------ -----------
Current liabilities
Borrowings (2,266) - (2,266)
Trade and other payables (15,561) (201) (15,762)
Obligations under
finance leases (125) - (125)
Current tax liabilities (86) - (86)
(18,038) (201) (18,239)
----------- ------------ -----------
Total liabilities (19,022) (201) (19,223)
Net assets 8,344 18,709 27,053
----------- ------------ -----------
Goodwill of GBP15,247,000 arises on acquisition and will be
reviewed for impairment one year after the acquisition as permitted
by IFRS 3. The goodwill is attributable to the expertise and
workforce of the acquired business. Other intangible assets,
provisionally valued at GBP3,000,000, representing contractual
rights, were also acquired and will be amortised over their useful
economic life in accordance with IFRS 3. Amortisation of these
intangible assets will commence from April 2011.
The value of freehold land and buildings acquired with Amco and
included in property, plant and equipment has been increased from
GBP969,000 to GBP1,580,000 as a result of a fair value adjustment.
The freehold land and buildings were independently valued by King
Sturge LLP on 4 November 2010. The freehold land and buildings were
sold for GBP1,580,000 to a company controlled by Amco's previous
owners as part of the deferred consideration settlement on 23
February 2011. At the same time, the remainder of the deferred
consideration was settled following the receipt of a debt due to
Amco by a company controlled by Amco's previous owners.
Note 8 Amco Group Holdings Limited
In compliance with AIM Rules 18 and 19, the unaudited interim
consolidated financial statements for the six months ended 31 March
2011 for Amco Group Holdings Limited are presented below:
Amco Group Holdings Limited
Income statement
Six months ended
31 March
2011 2010
Unaudited Unaudited
GBP000 GBP000
Revenue from continuing activities 38,863 37,425
Cost of sales (34,906) (31,584)
------------- -----------
Gross profit 3,957 5,841
Administrative expenses (2,637) (1,823)
------------- -----------
Operating profit 1,320 4,018
Finance costs (8) (22)
Profit before income tax 1,312 3,996
Income tax expense (196) (1,100)
------------- -----------
Profit for the period attributable
to equity holders of the parent company 1,116 2,896
------------- -----------
Amco Group Holdings Limited
Statement of comprehensive income Six months ended
31 March
2011 2010
Unaudited Unaudited
GBP000 GBP000
Profit for the period
attributable to equity
holders of the parent
company 1,116 2,896
Gain recognised in the
pension schemes 236 26
Movement on deferred
tax relating to the defined
benefit pension scheme (68) -
---------- ----------
Total comprehensive income
for the period attributable
to equity holders of
the parent company 1,284 2,922
---------- ----------
Amco Group Holdings Limited
Statement of changes in equity
Called up Retained Total
share earnings equity
capital Unaudited
GBP000 GBP000 GBP000
At 1 October 2009 450 10,391 10,841
Transfer from income
statement for the period 2,896 2,896
Actuarial gain recognised
in pension scheme 26 26
---------- --------- ----------
Total comprehensive income
for the period - 2,922 2,922
---------- --------- ----------
Transactions with owners,
recorded directly into
equity
Bonus shares issued 8,000 (8,000) -
Repurchase of own shares (8,000) - (8,000)
---------- --------- ----------
Total contribution to owners - (8,000) (8,000)
---------- --------- ----------
At 31 March 2010 450 5,313 5,763
Transfer from income statement
for the period 2,133 2,133
Actuarial gain recognised
in pension scheme 75 75
Movement on deferred tax
relating to the pension
scheme (21) (21)
---------- --------- ----------
At 30 September 2010 450 7,500 7,950
Transfer from income statement
for the period 1,116 1,116
Actuarial gain recognised
in pension scheme 236 236
Movement on deferred tax
relating to the pension
scheme (68) (68)
---------- --------- ----------
At 31 March 2011 450 8,784 9,234
---------- --------- ----------
Amco Group Holdings Limited
Balance sheet
31 March
2011 2010
Unaudited Unaudited
GBP000 GBP000
Non-current assets
Property, plant and equipment 589 1,285
Retirement benefit assets 2,828 2,306
Deferred tax assets 212 249
---------- ----------
3,629 3,840
---------- ----------
Current assets
Inventories 10 68
Trade and other receivables 25,591 17,787
Current tax assets - 41
Cash and cash equivalents - 214
25,601 18,110
---------- ----------
Total assets 29,230 21,950
---------- ----------
Non-current liabilities
Obligations under finance
leases (246) -
Deferred tax liabilities (735) (646)
(981) (646)
---------- ----------
Current liabilities
Borrowings (1,929) (400)
Trade and other payables (16,798) (15,141)
Obligations under finance
leases (125) -
Current tax liabilities (163) -
(19,015) (15,541)
---------- ----------
Total liabilities (19,996) (16,187)
Net assets 9,234 5,763
---------- ----------
Share capital 450 450
Retained earnings 8,784 5,313
---------- ----------
Total equity 9,234 5,763
---------- ----------
Amco Group Holdings Limited
Cashflow statement
Six months ended
31 March
2011 2010
Unaudited Unaudited
GBP000 GBP000
Profit for the period 1,116 2,896
Depreciation 60 37
Profit on sale of property,
plant and equipment (611) -
Decrease/(increase) in inventories 24 (14)
Decrease/(increase) in receivables 77 (1,665)
(Decrease)/increase in payables (2,144) 1,045
Cash contribution to defined
benefit pension scheme (263) (355)
Financial expenses 8 22
Interest paid (8) (22)
Income taxes paid (808) (1,225)
Income tax expense 196 1,100
Net (outflow)/inflow from operating
activities (2,353) 1,819
---------- ----------
Investing activities
Proceeds on disposal of property,
plant and equipment 1,580 -
Purchases of property, plant
and equipment (330) (23)
Net cash inflow/(outflow) from
investing activities 1,250 (23)
---------- ----------
Financing activities
Inception of hire purchase 330 -
Bank, funding and other loans (8) (633)
Repurchase of own shares - (8,000)
---------- ----------
Net cash inflow/(outflow) from
financing activities 322 (8,633)
---------- ----------
Net decrease in cash and cash
equivalents (781) (6,837)
Cash and cash equivalents at
the beginning of the period (1,148) 6,651
Cash and cash equivalents at
the end of the period (1,929) (186)
---------- ----------
Bank balances and cash - 214
Overdrafts (1,929) (400)
---------- ----------
(1,929) (186)
---------- ----------
This information is provided by RNS
The company news service from the London Stock Exchange
END
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