Final Results

Renew Holdings PLC 28 November 2006 Renew Holdings plc ('Renew' or the 'Group') 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.co.uk 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 24 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

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