Interim results

RNS Number : 6171Z

Renew Holdings PLC

21 May 2019

 

Renew Holdings plc

("Renew" or the "Group")

Interim results

Renew (AIM: RNWH), the Engineering Services group supporting UK infrastructure, announces its interim results for the six months ended 31 March 2019. The Group has delivered record trading in the period, in part reflecting the contribution of the acquisition of QTS in May 2018. The Board is confident that the Group's full year results will be in-line with expectations.

Financial Highlights:

	H1 2019	H1 2018
Revenue	£301.0m	£262.2m
Adjusted operating profit*	£18.4m	£13.2m
Adjusted operating margin*	6.1%	5.0%
Adjusted earnings per share*	19.2p	16.7p
Interim dividend per share	3.83p	3.33p

*2019 adjusted results are shown prior to amortisation and the 2018 results are shown prior to amortisation and exceptional items

·    Engineering Services revenue grew 25% to £281.6m (2018: £226.1m)

·    Engineering Services adjusted operating profit* increasing by 48% to £19.1m (2018: £12.9m)

·    Increase in Engineering Services order book to £531m (September 2018: £511m)

·    Interim dividend increased by 15% to 3.83p (2018: 3.33p)

·    Significant new frameworks secured in Energy and Infrastructure

David Forbes, Chairman of Renew, said: "The Group has delivered record interim results, in part reflecting the contribution of QTS which we acquired in the second half of last year. We are pleased to have increased the interim dividend by 15% consistent with our progressive dividend policy. We continue to deliver on our established strategic objectives and remain confident of reporting full year results in line with expectations."

Enquiries:

Renew Holdings plc		www.renewholdings.com Contact via Walbrook PR
Paul Scott, Chief Executive
Sean Wyndham-Quin, Chief Financial Officer
Numis Securities Limited		Tel: [phone]
Stuart Skinner/ Kevin Cruickshank (Nominated Adviser)
Michael Burke (Corporate Broker)
Walbrook PR	Tel: [phone] or [e-mail]
Paul McManus		Mob: [phone]
Lianne Cawthorne		Mob: [phone]

Certain information contained in this announcement would have constituted inside information (as defined by Article 7 of Regulation (EU) No 596/2014) prior to its release as part of this announcement.

About Renew Holdings plc

Engineering Services, which accounts for over 90% of Group revenue and over 95% of operating profit, focuses on the key markets of Energy (including Nuclear), Environmental and Infrastructure, which are largely governed by regulation and benefit from non-discretionary spend with long-term visibility of committed funding.

Specialist Building focuses on the High Quality Residential market in London and the Home Counties.

For more information please visit the Renew Holdings plc website: www.renewholdings.com 

Chief Executive's Review

Renew is a leading provider of engineering support services to critical UK infrastructure. Working in the regulated Energy, Environmental and Infrastructure markets, we have a wide range of integrated engineering capabilities and specialist knowledge of these markets, enabling our delivery of ongoing maintenance and renewals to support the day-to-day operation of these key infrastructure assets around the UK.

We are focused on engineering programmes funded by non-discretionary operating budgets. These programmes are underpinned by long-term framework agreements, providing visibility of committed funding. We have established strong, lasting relationships with key customers through our reputation for reliability and responsiveness, delivered by our highly skilled, directly employed workforce.

Group Results

The Group has seen record trading in the period, in part reflecting the contribution of QTS which was acquired in May 2018 and is now fully integrated. Adjusted¹ operating profit increased 39% to £18.4m (2018: £13.2m) on revenue of £301.0m (2018: £262.2m). Adjusted¹ operating margin, increased to 6.1% (2018: 5.0%). Adjusted¹ earnings per share was 19.2p (2018: 16.7p). Statutory profit before income tax was £14.5m (2018: £2.4m).

In line with the Board's progressive dividend policy, the interim dividend will increase by 15% to 3.83p (2018: 3.33p) per share which will be paid on 12 July 2019 to shareholders on the register at 7 June 2019. The ex-dividend date will be 6 June 2019.

The Group's order book at 31 March 2019 was £580m (September 2018: £558m) and continues to be underpinned by a solid foundation of long-term frameworks, including significant new awards during the first half of the year.

At 31 March 2019, the Group had net debt of £17.2m which is £4.2m lower than at the previous year end, evidencing the Group's cash generation and our conservative approach to gearing.

Engineering Services

Engineering Services is the key driver of growth for the Group, and accounts for over 90% of revenue and over 95% of operating profit. Engineering Services revenue grew 25% to £281.6m (2018: £226.1m) with adjusted¹ operating profit increasing by 48% to £19.1m (2018: £12.9m) with an improved operating margin of 6.8% (2018: 5.7%). The excellent revenue performance in Engineering Services was a reflection of the impact of QTS as well as strong momentum at the end of the rail Control Period 5 ("CP5") which contributed toward organic growth of 8%. At 31 March 2019, the Engineering Services order book grew to £531m (September 2018: £511m).

Energy

We support the day-to-day operation, decommissioning and maintenance of assets in the nuclear, thermal, and renewable energy markets.

Working on UK sites that command approximately 90% of the Nuclear Decommissioning Authority's c.£3bn annual expenditure², we provide a range of long-term multidisciplinary engineering services. The largest of these facilities is the Sellafield nuclear site in Cumbria, where we remain the largest mechanical and electrical contractor. We work on programmes associated with decontamination, decommissioning and waste management through long-term frameworks including the ten-year Decommissioning Delivery Partnership programme, SR&DP Asset Care, Magnox Swarf Storage Silo, Bulk Sludge Retrieval, Bundling Spares and the Tanks and Vessels Frameworks. Our involvement on these critical workstreams positions us well for emerging opportunities in Sellafield's major new programmes.

For BAE Systems in Barrow-in-Furness, there has been an increasing demand for our engineering support to the nuclear submarine programme and the major redevelopment and upgrade of this facility. We continue to be engaged by Westinghouse at Springfields & Sizewell 'B', Low Level Waste Repository and across Magnox where we deliver mechanical, electrical & instrumentation and decommissioning packages.

In the period we have grown our nuclear client base securing our first orders for work at the new nuclear Hinkley Point 'C' facility. This involves the supply of high-integrity manufactured components from our long established specialist nuclear manufacturing facilities, positioning us strongly for future major opportunities. We have also been appointed to a major decommissioning services framework for new client Dounreay Site Restoration Limited for a term of up to seven years. 

We operate at a number of the UK's thermal power stations where our embedded teams continue to deliver long-term engineering maintenance services. During the period we have seen increasing opportunities at the Drax Power Station where we operate on a four-year electrical maintenance framework.

Environmental

We support a wide range of water infrastructure assets including those across the clean and waste water networks as well as undertaking flood alleviation and coastal protection schemes.

Dwr Cymru Welsh Water ("Welsh Water") plans to increase spending on Asset Management Period 7 (2020-2025) ("AMP7") by c.15% to £2.3bn³ compared to AMP6 with improvements focusing on environmental protection and service resilience. Our existing frameworks with Welsh Water include the Pressurised Pipelines Framework, Major Civils Framework and the Capital Delivery Alliance Civils contracts. In addition to ongoing maintenance and renewals tasks across the network, we have seen increasing demand for our emergency reactive works following a number of major events on the water network. We continue to develop our capabilities in dam safety with work on major projects at Usk, Talybont and Llanishen ongoing in the period.

Wessex Water plans a record investment of £1.4bn⁴ over the AMP7 period focused on delivering improvements to clean water and sewerage systems. We continue to work closely with Wessex Water on the current AMP6 Civils & EMI Delivery Partners Framework.

For Bristol Water, we have completed a number of schemes in the period including support to their mains rehabilitation programme.

The Environment Agency ("EA") currently spend c.£430m on flood and coastal defences annually, however it estimates that an average annual investment of c.£1bn will be necessary up to 2065 to sufficiently mitigate flooding risk⁵. The Group continues to strengthen its relationship with the EA, securing the award of a further framework on the Flood and Coastal Risk Management ("FCRM") programme in the South East region. This framework now aligns with our current frameworks in the North, Central and South West Regions, which have the ability to run for the next four years. The Group secured a further extension to the EA's Northern Mechanical, Electrical, Instrumentation, Control, and Automation ("MEICA") framework to March 2020.

During the period we were awarded a Sluice Gate Renewals Framework for new client Peel Ports. Our expertise in the management of waterway assets will see us deliver this refurbishment programme over the three-year term.

In land remediation, we were awarded further projects for Harworth Estates and we continue to work on frameworks for SGN and National Grid to remediate the sites of former gas works. 

We have seen increasing restoration activity associated with the Palace of Westminster where work continues on the Cast Iron Roof Restoration Framework and structural repair works to the Elizabeth Tower. Our involvement with a number of phases of work at this UNESCO World Heritage site positions us well for major long-term refurbishment programmes.

Infrastructure

As a major provider of infrastructure services to Network Rail, we deliver a wide range of multidisciplinary maintenance and renewals activities alongside an emergency support provision across the national UK's rail network.

The Government remains committed to the UK rail network with Network Rail spending £48bn⁶ over the current five-year funding cycle, Control Period 6 ("CP6"). CP6 will see a c.25% increase in spending on operations, maintenance, support, and renewals activities compared to CP5 with an emphasis on delivering an enhanced experience for passengers⁶. Our expanded range of complementary rail capabilities and national delivery provide the Group with greater opportunities within this rail investment cycle.

Network Rail recently announced a significant restructure and further devolution with the rail network managed via 5 regions and 13 routes. Operating nationally across all 13 Network Rail routes, our six-year maintenance frameworks support critical assets on the network including bridges, tunnels, viaducts and major embankments. We directly deliver our services which include civils asset management, fencing, devegetation, drainage and signalling. Frameworks renewed in the period include our five-year drainage frameworks and our national eight-year Road Rail Vehicle ("RRV") framework.

In the period we successfully secured all the CP6 renewals frameworks that we tendered for, maintaining our positions from CP5. This includes the five-year Geotechnical & Earthworks framework and the five-year Multidisciplinary Renewals Framework in the Scotland North East region. In addition, the Group continues to operate on the new national Station Information and Surveillance Services and Telecommunications Renewals frameworks.

Working for London Underground, the Group delivered major depot refurbishment schemes in the period as well as specialist electrical, plant and power schemes through five framework agreements. We have also been awarded the first of five schemes on London Underground's Depot Control System Programme.

Operating as a strategic partner to SPL Powerlines on the Midland Mainline Electrification Programme we have seen our scope grow as the scheme moves into its second phase.

In wireless telecoms, investment in 4G continues to provide good momentum. We continue to see a significant increase in work through Telefonica's frameworks in the North and London. In addition to infrastructure enhancements, we also delivered emergency reactive works for our clients across a wide portfolio of sites. Work is progressing well on the national Emergency Services Network programme and for BT link.

In the period we were also appointed to our first 5G related programme, an area where we see long-term opportunities on the next phase of mobile communications technologies.

Specialist Building

We remain focused on the High Quality Residential market in London and the Home Counties where we specialise in major structural engineering works. In the period, the Group was awarded a number of contracts for repeat clients in the science sector where we continue to be selective and have a long-established track record.

Revenue reduced to £19.4m (2018: £35.3m) in line with Group's expectations and continued focus on contract selectivity and risk management. Operating profit was £0.3m (2018: £0.9m), with an operating margin of 1.5% (2018: 2.5%). In Specialist Building, the order book was £49m (September 2018: £48m).

Board Changes

On the 8 February 2019, Renew was pleased to announce the appointment of Shatish Dasani as a Non-Executive Director and Chairman of the Audit Committee succeeding John Bishop who retired from the Board at the same time. Shatish is a Chartered Accountant with over 20 years' experience in senior public company finance roles across various sectors including building materials, advanced electronics, general industrial and business services.

Outlook

Renew continues to focus on providing engineering support services to the UK's critical Energy, Environmental and Infrastructure markets. The Group has a growing customer base and holds strong positions in its chosen markets, which provides good visibility of long-term opportunities. These regulated markets benefit from non-discretionary maintenance and renewal programmes and, as such, investment is unlikely to be affected by Brexit.

The Group's appointment to a number of key Network Rail CP6 frameworks in the period demonstrates the strength of the Group's position within the UK Rail market and provides significant opportunity for organic growth. It remains the Group's strategy to grow its Engineering Services business both organically and through selective, earnings enhancing acquisitions.

The Board is confident that the Group's full year results will be in-line with its expectations and that it will continue to deliver on the established strategic objectives.

Paul Scott

Chief Executive

21 May 2019

 Notes:

¹ 2019 adjusted results are shown prior to amortisation and the 2018 results are shown prior to amortisation & exceptional items

² NDA Business Plan 1 April 2019 to 31 March 2022 (March 2019) 

³ Dŵr Cymru Welsh Water Our Plan PR19 Business Plan 2020-2025 

⁴ Wessex Water Business Plan 2020-2025

⁵ Environment Agency Research and analysis Long-term investment scenarios (LTIS) 2019 (Updated May 2019)  

⁶ Network Rail - Strategic Business Plan Summary (9 February 2018)

Condensed consolidated income statement for the six months ended 31 March 2019
		Before amortisation of intangible assets	Amortisation of intangible assets (see Note 3)	Six months ended 31 March		Before exceptional items and amortisation of intangible assets	Exceptional items and amortisation of intangible assets (see Note 3)	Year ended 30 September
		2019	2019	2019	2018*	2018	2018	2018
	Note	Unaudited £000	Unaudited £000	Unaudited £000	Unaudited (restated**) £000	Audited £000	Audited £000	Audited £000
Revenue: Group including share of joint venture	2	300,978	-	300,978	262,159	541,469	-	541,469
Less share of joint venture's revenue		-	-	-	(853)	(853)	-	(853)
Group revenue from continuing activities	2	300,978	-	300,978	261,306	540,616	-	540,616
Cost of sales		(258,964)	-	(258,964)	(230,674)	(469,008)	-	(469,008)
Gross profit		42,014	-	42,014	30,632	71,608	-	71,608
Administrative expenses		(23,584)	(3,264)	(26,848)	(27,942)	(40,504)	(15,626)	(56,130)
Share of post-tax result of joint venture		-	-	-	65	-	-	-
Operating profit	2	18,430	(3,264)	15,166	2,755	31,104	(15,626)	15,478
Finance income		1	-	1	1	4	-	4
Finance costs		(691)	-	(691)	(385)	(1,080)	-	(1,080)
Other finance income - defined benefit pension schemes		-	-	-	-	306	-	306
Profit before income tax	2	17,740	(3,264)	14,476	2,371	30,334	(15,626)	14,708
Income tax expense	5	(3,304)	555	(2,749)	(2,266)	(6,364)	841	(5,523)
Profit for the period from continuing activities		14,436	(2,709)	11,727	105	23,970	(14,785)	9,185
Loss for the period from discontinued operations	4	-	-	- -	(1,680)	(2,412)	-	(2,412)
Profit/(loss) for the period attributable to equity holders of the parent company		14,436	(2,709)	11,727	(1,575)	21,558	(14,785)	6,773
Basic earnings per share from continuing activities	6	19.18p	(3.60p)	15.58p	0.17p	35.48p	(21.88p)	13.60p
Diluted earnings per share from continuing activities	6	19.06p	(3.57)	15.49p	0.17p	35.28p	(21.76p)	13.52p
Basic earnings per share	6	19.18p	(3.60p)	15.58p	(2.52p)	31.91p	(21.88p)	10.03p
Diluted earnings per share	6	19.06p	(3.57p)	15.49p	(2.50p)	31.73p	(21.76p)	9.97p
Proposed dividend	7			3.83p	3.33p			10.00p

*Operating profit for the six months ended 31 March 2018 is stated after charging £9,923,000 of exceptional items and £552,000 of amortisation cost (see Note 3).

** The prior year comparatives have been restated to be consistent with the reclassification of a discontinued business in the audited accounts for the year ended 30 September 2018.

 

Condensed consolidated statement of comprehensive income 

for the six months ended 31 March 2019 

			Six months ended		Year ended
			31 March		30 September
		2019		2018	2018
		Unaudited		Unaudited	Audited
		£000		£000	£000
Profit/(loss) for the period attributable to equity holders of the parent company		11,727		(1,575)	6,773
Items that will not be reclassified to profit or loss:
Movement in actuarial valuation of the defined benefit pension schemes		-		-	5,477
Movement on deferred tax relating to the defined benefit pension schemes		-		-	(1,917)
Total items that will not be reclassified to profit or loss		-		-	3,560
Items that are or may be reclassified subsequently to profit or loss:
Exchange movement in reserves		(5)		(66)	6
Total items that are or may be reclassified subsequently to profit or loss		(5)		(66)		6
Total comprehensive income for the period attributable to equity holders of the parent company		11,722		(1,641)		10,339

Condensed consolidated statement of changes in equity

for the six months ended 31 March 2019

	Called up	Share	Capital	Cumulative	Share based		Total
	share	premium	redemption	translation	payments	Retained	equity
	capital	account	reserve	adjustment	reserve	earnings	Unaudited
	£000	£000	£000	£000	£000	£000	£000
At 1 October 2017	6,259	9,635	3,896	1,305	680	6,284	28,059
Transfer from income statement for the period						(1,575)	(1,575)
Dividends paid						(3,755)	(3,755)
Recognition of share based payments					(114)		(114)
Exchange differences				(66)			(66)
At 31 March 2018	6,259	9,635	3,896	1,239	566	954	22,549
Transfer from income statement for the period						8,348	8,348
Dividends paid						(2,507)	(2,507)
New shares issued	1,268	42,049					43,317
Recognition of share based payments					132		132
Exchange differences				72			72
Actuarial movement recognised in the pension schemes						5,477	5,477
Movement on deferred tax relating to the pension schemes						(1,917)	(1,917)
At 30 September 2018	7,527	51,684	3,896	1,311	698	10,355	75,471
Transfer from income statement for the period						11,727	11,727
Dividends paid						(5,020)	(5,020)
New shares issued	6	220					226
Recognition of share based payments					(272)		(272)
Exchange differences				(5)			(5)
At 31 March 2019	7,533	51,904	3,896	1,306	426	17,062	82,127

 

Condensed consolidated balance sheet

at 31 March 2019

			31 March		30 September
		2019		2018	2018
		Unaudited		Unaudited	Audited
		£000		£000	£000
Non-current assets
Intangible assets
- goodwill		105,282		51,089	105,282
- other		12,727		2,127	15,991
Property, plant and equipment		20,182		11,951	19,710
Investment in joint venture		123		302	123
Retirement benefit assets		23,271		11,822	20,424
Deferred tax assets		1,502		1,935	1,592
		163,087		79,226	163,122
Current assets
Inventories		1,624		4,543	1,691
Assets held for resale		1,500		1,500	1,500
Trade and other receivables		119,133		99,450	129,376
Cash and cash equivalents		8,999		112	9,179
		131,256		105,605	141,746
Total assets		294,343		184,831	304,868
Non-current liabilities
Borrowings		(17,498)		-	(21,873)
Obligations under finance leases		(2,645)		(2,344)	(2,253)
Retirement benefit obligations		-		(538)	-
Deferred tax liabilities		(10,353)		(4,543)	(9,912)
Provisions		(298)		(314)	(298)
		(30,794)		(7,739)	(34,336)
Current liabilities
Borrowings		(8,752)		(2,578)	(8,752)
Trade and other payables		(166,527)		(148,929)	(179,913)
Obligations under finance leases		(2,228)		(2,206)	(2,100)
Current tax liabilities		(1,864)		(794)	(2,245)
Provisions		(2,051)		(36)	(2,051)
		(181,422)		(154,543)	(195,061)
Total liabilities		(212,216)		(162,282)	(229,397)
Net assets		82,127		22,549	75,471
Share capital		7,533		6,259	7,527
Share premium account		51,904		9,635	51,684
Capital redemption reserve		3,896		3,896	3,896
Cumulative translation adjustment		1,306		1,239	1,311
Share based payments reserve		426		566	698
Retained earnings		17,062		954	10,355
Total equity		82,127		22,549	75,471

Condensed consolidated cashflow statement

for the six months ended 31 March 2019

	Six months ended		Year ended
	31 March		30 September
	2019	2018	2018
	Unaudited	Unaudited (restated**)	Audited
	£000	£000	£000
Profit for the period from continuing operations	11,727	105	9,185
Share of post tax trading result of joint venture	-	(65)	-
Impairment and amortisation of intangible assets	3,264	7,445	4,157
Loss on disposal of subsidiary undertaking	-	3,030	9,930
Depreciation	2,826	1,789	4,356
Profit on sale of property, plant and equipment	(377)	(156)	(469)
Expense in respect of share option exercise	226	-	-
Decrease/(increase) in inventories	67	(747)	(1,190)
Decrease/(increase) in receivables	7,187	12,659	(4,974)
(Decrease) in payables	(11,946)	(20,764)	(3,054)
Current and past service cost in respect of defined benefit pension scheme	30	29	64
Cash contribution to defined benefit pension schemes	(2,847)	(2,352)	(5,772)
(Credit)/expense in respect of share options	(272)	(114)	18
Finance income	(1)	(1)	(4)
Finance expense	691	385	774
Interest paid	(691)	(385)	(1,080)
Income taxes paid	(2,600)	(479)	(1,717)
Income tax expense	2,749	2,266	5,523
Net cash inflow from continuing operating activities	10,033	2,645	15,747
Net cash inflow/(outflow) from discontinued operating activities	1,585	(3,825)	825
Net cash inflow/(outflow) from operating activities	11,618	(1,180)	16,572
Investing activities
Interest received	1	1	4
Dividend received from joint venture	-	-	114
Proceeds on disposal of property, plant and equipment	581	374	788
Purchases of property, plant and equipment	(1,680)	(284)	(1,329)
Acquisition of subsidiaries net of cash acquired	-	-	(75,874)
Net cash (outflow)/inflow from continuing investing activities	(1,098)	91	(76,297)
Net cash (outflow) from discontinued investing activities	-	(46)	-
Net cash (outflow)/inflow from investing activities	(1,098)	45	(76,297)
Financing activities
Dividends paid	(5,020)	(3,755)	(6,262)
Issue of Ordinary Shares	-	-	43,317
New loan	-	-	35,000
Loan repayments	(4,375)	(3,100)	(7,475)
Repayment of obligations under finance leases	(1,303)	(1,410)	(2,699)
Net cash (outflow)/inflow from continuing financing activities	(10,698)	(8,265)	61,881
Net cash outflow from discontinued financing activities	-	(25)	-
Net cash (outflow)/inflow from financing activities	(10,698)	(8,290)	61,881
Net (decrease)/increase in continuing cash and cash equivalents	(1,763)	(5,529)	1,331
Net increase/(decrease) in discontinued cash and cash equivalents	1,585	(3,896)	825
Net (decrease)/increase in cash and cash equivalents	(178)	(9,425)	2,156
Cash and cash equivalents at the beginning of the period	9,179	6,967	6,967
Effect of foreign exchange rate changes on cash and cash equivalents	(2)	(8)	56
Cash and cash equivalents at the end of the period	8,999	(2,466)	9,179
Bank balances and cash	8,999	112	9,179
Overdraft	-	(2,578)	-
	8,999	(2,466)	9,179

   ** The prior year comparatives have been restated to be consistent with the reclassification of a discontinued business in the audited accounts for the year ended 30 September 2018.

 

Notes to the condensed consolidated accounts

1.    Basis of preparation

(a) The condensed consolidated interim financial report for the six months ended 31 March 2019 and the equivalent period in 2018 has not been audited or reviewed by the Group's auditor. It does not comprise statutory accounts within the meaning of Section 435 of the Companies Act 2006. It has been prepared under the historical cost convention and on a going concern basis in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union. The report does not comply with IAS34 "Interim Financial Reporting", which is not currently required to be applied for AIM companies and it was approved by the Directors on 21 May 2019.

(b) The accounts for the year ended 30 September 2018 were prepared under IFRS and have been delivered to the Registrar of Companies. The report of the auditor on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under Section 498(2) or (3) of the Companies Act 2006. In this report, the comparative figures for the year ended 30 September 2018 have been audited. The comparative figures for the period ended 31 March 2018 are unaudited.

(c) For the year ending 30 September 2019, 2 new accounting standards IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers, which have been adopted by the EU, applied and have been implemented for the condensed consolidated interim financial report.  The accounting policies adopted in the preparation of the condensed consolidated interim financial report are consistent with those adopted in the Group's accounts for the year ended 30 September 2018 except for the impact of IFRS 15. The adoption of IFRS 9 from 1 October 2018 did not result in adjustments to the amounts recognised in the financial statements.  The Group has no hedging transactions.

IFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised.  It replaces IAS 11 Construction contracts and related interpretations.  IFRS 15 introduces new concepts for revenue and cost recognition.  Unlike IAS 11 there is no automatic right to recognise revenue on a progressive basis for construction contracts.  Progressive revenue recognition is only permitted where the contractual rights and obligations satisfy certain criteria.  The Group's revenue qualifies to be recognised over time, and the series of distinct performance obligations carried out under framework agreements has resulted in no change to revenue recognition. The Group has adopted IFRS 15 using the input method with the effect of applying this standard recognised at the date of initial application (1 October 2018).  As noted above, IFRS 15 has had no impact on the timing of revenue recognition recognised by the Group, and so the comparative figures in the financial statements are unchanged as a consequence of the transition to the new standard.

(d) The principal risks and uncertainties affecting the Group are unchanged from those set out in the Group's accounts for the year ended 30 September 2018.  The Directors have reviewed financial forecasts and are satisfied that the Group has adequate resources to continue in operational existence for the foreseeable future.  Accordingly, the Group continues to adopt the going concern basis in preparing the condensed consolidated interim financial report.

This condensed consolidated interim financial report is being sent to all shareholders and is also available upon request from the Company Secretary, Renew Holdings plc, 3175 Century Way, Thorpe Park, Leeds, LS15 8ZB, or via the website www.renewholdings.com.

 2. Segmental analysis

Operating segments have been identified based on the internal reporting information provided to the Group's Chief Operating Decision Maker. From such information, Engineering Services and Specialist Building have been determined to represent operating segments.

	Group including share of joint venture 2019 Unaudited	Less share of joint venture 2019 Unaudited	Group revenue from continuing activities Six months ended 31 March		Group including share of joint venture 2018 Audited	Less share of joint venture 2018 Audited	Group revenue from continuing activities Year ended 30 September 2018 Audited
			2019 Unaudited	2018* Unaudited           (restated)
Revenue is analysed as follows:	£000	£000	£000	£000	£000	£000	£000
Engineering Services	281,552	-	281,552	226,136	467,335	(853)	466,482
Specialist Building	19,426	-	19,426	35,279	74,208	-	74,208
Inter segment revenue	(633)	-	(633)	(144)	(1,208)	-	(1,208)
Segment revenue	300,345	-	300,345	261,271	540,335	(853)	539,482
Central activities	633	-	633	35	1,134	-	1,134
Group revenue from continuing operations	300,978	-	300,978	261,306	541,469	(853)	540,616

*Revenue for the six months ended 31 March 2018 is stated after eliminating £853,000 of joint venture income. Reclassification of a small subsidiary from Specialist Building to Engineering Services has resulted in a corresponding reclassification of the comparative segment analysis.

	Before  amortisation of intangible assets 2019 Unaudited		Amortisation of intangible assets 2019 Unaudited		Six months ended 31 March				Before exceptional items and amortisation of intangible assets 2018 Audited		Exceptional items and amortisation of intangible assets 2018 Audited		Year ended 30 September 2018 Audited
					2019 Unaudited		2018* Unaudited (restated)
	£000		£000		£000		£000		£000		£000		£000
Analysis of operating profit
Engineering Services	19,096		(3,264)		15,832		2,431		32,520		(15,626)		16,894
Specialist Building	333		-		333		920		574		-		574
Segment operating profit	19,429		(3,264)		16,165		3,351		33,094		(15,626)		17,468
Central activities	(999)		-		(999)		(596)		(1,990)		-		(1,990)
Operating profit	18,430		(3,264)		15,166		2,755		31,104		(15,626)		15,478
Net financing expense	(690)		-		(690)		(384)		(770)		-		(770)
Profit before income tax	17,740		(3,264)		14,476		2,371		30,334		(15,626)		14,708

*Operating profit for the six months ended 31 March 2018 is stated after charging £9,923,000 of exceptional items and £552,000 of amortisation cost (see Note 3). Reclassification of a small subsidiary from Specialist Building to Engineering Services has resulted in a corresponding reclassification of the comparative segment analysis.

3.   Exceptional items and amortisation of intangible assets

	Six months ended				Year ended
	31 March				30 September
	2019		2018		2018
	Unaudited		Unaudited		Audited
	£000		£000		£000
Acquisition costs	-		-		1,539
Impairment of goodwill	-		6,893		6,893
Loss on disposal	-		3,030		3,037
Total charges arising from exceptional items	-		9,923		11,469
Amortisation of intangible assets	3,264		552		4,157
	3,264		10,475		15,626

4.   Loss for the period from discontinued operations

	Six months ended				Year ended
	31 March				30 September
	2019		2018		2018
	Unaudited		Unaudited (restated)		Audited
	£000		£000		£000
Revenue	-		4,835		11,412
Expenses	-		(6,515)		(13,667)
Loss before income tax	-		(1,680)		(2,255)
Income tax charge	-		-		(157)
Loss for the period from discontinued operations	-		(1,680)		(2,412)

5.   Income tax expense

	Six months ended		Year ended
	31 March		30 September
	2019	2018	2018
	Unaudited	Unaudited	Audited
	£000	£000	£000
Current tax:
UK corporation tax on profit for the period	(2,218)	(1,493)	(3,571)
Adjustments in respect of previous periods	-	-	(336)
Total current tax	(2,218)	(1,493)	(3,907)
Deferred tax	(531)	(773)	(1,616)
Income tax expense	(2,749)	(2,266)	(5,523)

6.   Earnings per share                                         

Six months ended 31 March												Year ended 30 September
		2019				2018							2018
		Unaudited					Unaudited							Audited
	Earnings	EPS	DEPS		Earnings (restated)		EPS (restated)		DEPS (restated)			Earnings		EPS		DEPS
	£000	Pence	Pence		£000		Pence		Pence			£000		Pence		Pence
Earnings before exceptional items and amortisation	14,436	19.18	19.06		10,475		16.74		16.63			23,970		35.48		35.28
Exceptional items and amortisation	(2,709)	(3.60)	(3.57)		(10,370)		(16.57)		(16.46)			(14,785)		(21.88)		(21.76)
Basic earnings per share - continuing activities	11,727	15.58	15.49		105		0.17		0.17			9,185		13.60		13.52
Loss for the period from discontinued operations	-	-	-		(1,680)		(2.69)		(2.67)			(2,412)		(3.57)		(3.55)
Basic earnings per share	11,727	15.58	15.49		(1,575)		(2.52)		(2.50)			6,773		10.03		9.97
Weighted average number of shares		75,285	75,721				62,592		62,983					67,558		67,938

The dilutive effect of share options is to increase the number of shares by 436,000 (March 2018: 391,000; September 2018: 380,000) and reduce the basic earnings per share by 0.09p (March 2018: (0.02)p; September 2018: 0.06p). 

7.    Dividends          

The proposed interim dividend is 3.83p per share (2018: 3.33p).  This will be paid out of the Company's available distributable reserves to shareholders on the register on 7 June 2019, payable on 12 July 2019. The ex-dividend date will be 6 June 2019. 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.

 

END

 

 

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