Interim Results

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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