Final Results

Renew Holdings PLC

28 November 2023

Renew Holdings plc

("Renew" or the "Group" or the "Company")

Final Results

Record financial performance with consistent year on year growth

Renew (AIM: RNWH), the leading Engineering Services Group supporting the maintenance and renewal of critical UK infrastructure, announces its final results for the year ended 30 September 2023 ("the Period").

Financial Highlights

Year ended 30 September 2023	FY2023	FY2022	Change
Group revenue¹	£960.9m	£849.0m	+13.2%
Adjusted operating profit¹	£63.6m	£58.8m	+8.2%
Operating profit	£59.0m	£50.0m	+18.0%
Adjusted operating margin¹	6.6%	6.9%	-31bps
Profit before tax	£58.1m	£49.5m	+17.4%
Adjusted earnings per share¹	63.5p	59.5p	+6.7%
Full year dividend	18.0p	17.0p	+5.8%

· Record financial performance demonstrates the differentiated qualities and resilient nature of the Group, combined with the strong demand in our end markets

· Group revenue increased 13% to £960.9m (FY2022: £849.0m), with organic growth of 10%

· Group order book remained strong at £860m (FY2022: £775m)

· Net cash position (pre-IFRS16) of £35.7m (FY2022: £20.2m)

· Full year dividend of 18.00p (2022: 17.00p), an increase of 5.8% and reflecting the Board's confidence in the Group's trading performance

· Robust balance sheet and strong operational cash generation leaves us well positioned to continue to appraise selective value-accretive M&A opportunities

Operational Highlights

· Entered into new business areas with a sharpened focus on collaboration within the Group and the strategic acquisitions of Enisca and Rail Electrification Limited

· Largest provider of maintenance and renewals services to Network Rail nationally

· In Water, we have successfully leveraged our Mechanical, Electrical, Instrumentation, Control and Automation ("MEICA") capabilities to win the Welsh Water Major Electrical and Mechanical Framework

· In Rail, our subsidiaries have successfully collaborated to open up framework positions to the Group that were previously unattainable

· In Highways, we continue to deliver a growing work bank on our National Highways Scheme Delivery Frameworks

· Exceeded prior year safety comparators, ensuring that our workplace remains a safe and secure space

· Retained LSE Green Economy Mark as more than 50% of revenues are contributing to environmental objectives

Current Trading & Outlook

· Uniquely positioned to seize both organic and acquisitive growth opportunities with attractive structural growth drivers

· Well placed to benefit from the Government prioritising investment in maintenance and renewals of existing infrastructure instead of large-scale enhancement projects

· Exciting growth prospects in Water ahead of significantly increased sector expenditure over the next decade and beyond

· Post period end, we announced the acquisition of T.I.S. Cumbria Ltd, a leading nuclear manufacturing and fabrication specialist which will strengthen our position in the growing nuclear decommissioning and new build markets

· Trading momentum has continued into the new financial year, and we are encouraged by the significant opportunities across the Group

Paul Scott, CEO of Renew, commented:

"I am very pleased to report that we have once again delivered record results despite the turbulent macroeconomic landscape. Continued growth in revenue, profit and our solid operating cash generation is testament to the strength of our business model and the Group's well-established positions in attractive and sustainable growth markets. On behalf of the Board, I would like to sincerely thank all of our dedicated colleagues whose hard work and commitment has enabled the Group to deliver yet another record performance.

"Our core strengths leave us well placed to build on our strong track record of long-term value creation as we look ahead with impressive trading momentum and a strong forward order book. We remain excited about the significant growth opportunities across the Group, underpinned by the increasing national demand for the maintenance and renewal of existing UK infrastructure, which will continue to be a domestic priority regardless of the outcome of the next election."

For further information, please contact:

Renew Holdings plc	www.renewholdings.com
Paul Scott, Chief Executive Officer	via FTI Consulting
Sean Wyndham-Quin, Chief Financial Officer	020 3727 1000

Deutsche Numis (Nominated Adviser and Joint Broker)	020 7260 1000
Stuart Skinner / Kevin Cruickshank

Peel Hunt LLP (Joint Broker)	020 7418 8900
Mike Burke / Ed Allsopp

FTI Consulting (Financial PR)	020 3727 1000
Alex Beagley / Tom Hufton / Rafaella de Freitas / Amy Goldup	Renew@fticonsulting.com

About Renew Holdings plc

Renew is a leading UK Engineering Services business, performing a critical role in keeping the nation's infrastructure functioning efficiently and safely. The Group operates through independently branded subsidiaries across its chosen markets, delivering non-discretionary maintenance and renewal tasks through its highly skilled, directly employed workforce.

Renew's activities are focused into two business streams: Engineering Services, which accounts for over 98 per cent of the Group's adjusted operating profit, focuses on the key markets of Rail, Infrastructure, Energy (including Nuclear) and Environmental 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, Landmark and Science markets in London and the Home Counties.

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

Chairman's statement

Introduction

I am pleased to announce that the Group achieved a record financial performance, with continued growth in revenue, profit and strong operating cash generation. In what has been a challenging year for the economy, these excellent results are a testament to the Group's core strengths and well-established positions in attractive and sustainable growth markets.

Differentiated business model

Our differentiated business model and the services we provide continue to support key infrastructure assets in regulated markets. Our markets enjoy committed funding which provides visible, reliable and resilient revenues via long-term programmes.

We deliver non-discretionary maintenance and renewals tasks. Operating in complex, challenging and highly regulated environments, our markets have high barriers to entry, and we directly employ a highly skilled workforce which enables us to be extremely responsive to our clients' needs.

Results

Group revenue¹ increased to £960.9m (2022: £849.0m) with adjusted¹ operating profit increasing to £63.6m (2022: £58.8m) and an adjusted¹ operating margin of 6.6% (2022: 6.9%). Statutory operating profit was £59.0m (2022: £50.0m). The adjusted¹ EPS has increased by 6.7% to 63.5p (2022: 59.5p) and basic earnings per share was 54.9p (2022: 47.8p). The Group had a pre IFRS16 net cash¹ position of £35.7m (2022: £20.2m), in line with our expectations.

During the period we were delighted to announce the acquisition of Enisca Group Limited. This acquisition added new capabilities to Renew's water business and forms a key part of the Group's strategy to maximise the opportunities presented by AMP8. The acquisition was funded out of the Group's cash and existing debt facilities.

Post period end, we were pleased to announce the acquisition of T.I.S. Cumbria Ltd ("TIS"), a leading nuclear manufacturing and fabrication specialist. TIS was acquired by our existing nuclear subsidiary business Shepley Engineers and will benefit from synergies with our existing businesses and strengthen our position in the growing nuclear decommissioning and new build markets. We are delighted to welcome the management and staff of TIS to the Renew family.

Dividend

The Group's strong trading performance, cash position and positive outlook give the Board the confidence to propose a final dividend of 12.00p (2022: 11.33p) per share. This will be paid on 8 March 2024 to shareholders on the register as at 9 February 2024, with an ex-dividend date of 8 February 2024. This will represent a full year dividend of 18.00p (2022: 17.00p) per share, an increase of 5.8%.

Environmental, Social and Governance

Environmental

We are committed to achieving net zero by no later than 2040, ahead of the 2050 target date set by the Government. During 2023, we continued with our Climate and Nature Steering Group that comprises representatives from all the Group's subsidiary businesses and which focused on developing the Group's climate opportunities and climate related financial disclosure reporting. As part of this process, we continued to consider how we can best support our clients in achieving their own sustainability objectives.

We are pleased to retain our London Stock Exchange's Green Economy Mark, which recognises those companies that derive over 50 per cent of revenue from products and services that are contributing to environmental objectives. Renew plays an important role in helping to achieve Government aims for greater sustainable infrastructure.

A number of our businesses are in the process of submitting their science-based targets to the

Science Based Targets initiative. The lessons learned from this process will drive improvements in the collection of emissions data from across the Group.

Social

We understand the value that businesses can provide to the wider community and we continue to strengthen our relationships with local schools and education providers as well as continuing to engage with our local communities. During the year employees from across our businesses shared their knowledge and expertise to support young people with employment and education opportunities.

The training and development of our colleagues remains essential to the Group's long-term success and we now have around 330 trainees, apprentices and graduates across the business. We are also committed to our management development programme, Renew Inspiring Successful Executives ("RISE") which allows us to develop leadership talent within the business and is a key element of the Group's succession planning strategy. This programme has also improved the levels of collaboration we are leveraging to drive success across our brands.

As part of our commitment to ensuring Renew remains an attractive and diverse employer, we have supported the Group and subsidiary businesses' diversity forums which are aimed at improving our performance in this important area and we continue to increase the number of female participants in our graduate training schemes.

Governance

As a Board, we are responsible for ensuring the effective application of high levels of governance within our business, balancing the interests of all our stakeholders. As a minimum, the Group complies with the QCA Corporate Governance Code, more details of which can be found in the corporate governance section of the Group's website. Risk management is led by the Board, which reviews the Group's risk profile on an ongoing basis alongside the Audit and Risk Committee.

Board changes

On 1 November 2022, we were delighted to announce the appointment of Liz Barber as a Non-executive Director. Liz has a wealth of experience gained over 12 years in the regulated water sector, an established growth market for Renew. Combined with her financial background, Liz complements the Board's current skillset which will be invaluable as we continue on our growth journey.

People and safety

As a Board we recognise the critical role our employees play in the success of the Group and we sincerely thank all our colleagues for their ongoing dedication and hard work. We remain focused on the mental and physical wellbeing of all our colleagues and continue to provide support through a number of schemes, including our Employee Assistance Programme, on a range of topics.

We are committed to providing a safe working environment to ensure that none of our colleagues, or those who work with us, are injured during the conduct of our operations. The Group's health and safety performance is discussed as a priority at each Board meeting and during the year we continued to focus on the behavioural science aspects of safety to further improve our safety record.

Future focus

The delivery of our long-term strategy is built on effective relationships with our directly employed workforce, customers, suppliers, shareholders and wider stakeholders, and these are critical to the ongoing success of the business. We will continue to deliver our strategic priorities whilst focusing on our environmental, social and governance responsibilities and on our approach to diversity and inclusion as we move through 2024 and beyond.

The Group's differentiated business model and the long-term investment programmes across our UK infrastructure markets give the Board continued confidence in delivering further growth, both organic and through strategic earnings-enhancing acquisitions.

David Brown

Chairman

27 November 2023

Chief Executive Officer's Review

Renew continues to outperform - demonstrating our resilient and differentiated model

In the face of an ever-changing macroeconomic backdrop, our business has once again demonstrated its unique characteristics by successfully navigating these challenges and delivering outstanding trading performance for the year. I am very pleased to be reporting another set of record results for Renew, demonstrating the resilience and differentiated nature of our high-quality, low-risk business model, combined with the strong demand we have seen in our end markets. As we look forward to commencing new control periods within the Rail and Water sectors we fully expect this growth to strengthen further.

Our track record of consistent year on year growth across all of our key financial metrics clearly illustrates the critical nature of our work and the committed, long-term, highly visible spending cycles that underpin our end markets. Whilst our business is not immune from the difficulties facing the wider economy, our focus on the maintenance and renewal of existing UK infrastructure means we are not dependent on large, capital-intensive contract awards, providing Renew with a significantly lower risk profile than others operating in our sectors. Supported by the commercial terms within our frameworks and the typically short execution periods of the tasks we undertake, the Group has been able to successfully alleviate UK-wide inflation challenges throughout the period, delivering strong margins as well as operating profit and revenue ahead of record prior year comparatives.

Further, with pressure on public expenditure as a result of the difficult macroeconomic environment, we are seeing increased funding being directed towards the maintenance and renewal of existing assets and away from major infrastructure enhancement projects which bodes well for our business. The Government continues to confirm infrastructure investment is a national priority and this, along with a target of net zero by 2050, will continue to be a priority regardless of a potential change in government in 2024.

We note the recent announcements regarding the reduction in the HS2 programme. It is anticipated that this funding will be reinvested into smaller, regional transportation improvement schemes which we believe will present a range of opportunities in our chosen markets.

There were many achievements across the Group during the year, but I would like to highlight some key examples of how we are delivering profitable organic growth. Some of our more recent strategic acquisitions and our sharpened focus on collaboration within the Group has seen us organically expand into areas where we had not previously operated. Most notably, the acquisitions of Enisca and Rail Electrification Limited ("REL") have added to our capabilities and the unlocking of greater opportunities in more frameworks. In Water, we have successfully leveraged our Mechanical, Electrical, Instrumentation, Control and Automation ("MEICA") capabilities to win the Welsh Water Major Electrical and Mechanical Framework, whilst in Rail, our subsidiaries have successfully collaborated to open up framework positions to the Group that were previously unattainable. In Highways, we continue to deliver a growing work bank on our National Highways Scheme Delivery Frameworks ("SDF") where there continues to be an emphasis on asset maintenance and renewals. It has been extremely rewarding from a management perspective to see the strategic rationale behind our acquisitions start to come to fruition and there is still more to come. The enhanced focus on collaboration between our brands has contributed to a strong rate of organic growth during the period and it will continue to be a focus going forward.

Acquisitions form a key feature of our strategic ambition to deliver compounding shareholder returns as we have historically demonstrated. We finished the year with a robust balance sheet and this, together with our strong operational cash generation, leaves us well positioned to continue to appraise selective value-accretive M&A opportunities. We are currently seeing a healthy pipeline of opportunities including complementary bolt-on acquisitions as well as larger, more complex opportunities that will grow our geographical reach and service capability in a similar way to that achieved by our recent strategic acquisitions. As we expand through M&A, we will continue to leverage collaboration opportunities between our brands, providing a unique advantage when applying for a broader range of frameworks.

Post-period end we were delighted to announce the acquisition of T.I.S. Cumbria Limited, a leading nuclear manufacturing and fabrication specialist. This acquisition represents an excellent strategic fit, adding new capabilities to Renew's nuclear services and immediately doubling our specialist manufacturing capacity. We are delighted to welcome all the T.I.S. employees to the Renew Group.

Safety is our highest priority at Renew and I would like to take this opportunity to commend our dedicated teams for their unwavering commitment to safety throughout the past year. Our strong safety record stands as a testament to the collective efforts of every individual within our organisation. Their vigilance, adherence to protocols, and proactive approach has fostered an environment where each employee can thrive without compromising their well-being. I take immense pride in the fact that we have not only met but exceeded our prior year comparators, ensuring that our workplace remains a safe, secure and nurturing space for all.

In summary, FY23 has been another terrific year for Renew and we enter FY24 with confidence as we continue to see robust demand across our end markets. By focusing on collaboration and leveraging the unique services of each of our brands, we are growing the list of capabilities within our business as we move through changing control periods in our key markets. The success of Renew is due to the outstanding work of our directly employed colleagues who continue to go above and beyond for our clients and I would like to thank, on behalf of the Board, all our dedicated workforce for their outstanding work and continued commitment to providing our clients with our mission-critical, highly responsive services at all times.

Renew's strengths

Renew has a number of core strengths which provide distinct competitive advantages in our chosen markets and leave us well placed to build on our strong track record of long-term value creation:

●	The health, safety and wellbeing of our colleagues, and those impacted by our work, remains our number one priority and we have implemented industry leading safe working practices for the Group's employees and operations.
●	We operate a differentiated, diversified, low-risk, low-capital operating model, providing critical asset maintenance and renewals services that are not dependent on large, high-risk, capital-intensive contract awards.
●	Our directly employed workforce enables us to provide a more efficient and valuable service to our clients, reducing our exposure to sub-contractor pricing volatility and being able to deliver extremely responsive solutions.
●	The commercial terms and short project durations within our frameworks mean we can proactively and effectively manage cost inflation enabling us to maintain strong margins.
●	Our businesses are well established in complex, challenging and highly regulated markets with significant barriers to entry, which demand a highly skilled and experienced workforce and a proven track record of safe delivery.
●	We have consistently demonstrated performance resilience despite significant global and macroeconomic events, including inflation, that have had a negative impact on the wider economy.
●	We have a proven track record of sustainable value creation, reliable revenue growth and strong returns on capital thanks to our highly cash generative earnings model and clearly defined strategy.
●	We are committed to growing the business both organically and through selective complementary acquisitions while maintaining a disciplined approach to capital allocation and risk underpinned by a strong balance sheet.
●	We have strong relationships in place with all our stakeholders, from our workforce to our customers, suppliers, communities and shareholders.
●	Our model of compounding earnings through the redeployment of internally generated cashflows enables us to execute on our strategy of delivering reliable and consistent growth for all our stakeholders.
●	Our complementary services enable us to leverage the strengths of collaboration across our brands.

Compelling market drivers

Our businesses bring exposure to attractive long-term, non-discretionary structural growth drivers. Increasing demand for the maintenance and renewal of existing UK infrastructure is driven by a number of factors including:

●	a commitment by the Government to level up the economy by investing £600bn2 in an infrastructure-led recovery, two-thirds of which will be in the transport and energy sectors, with fiscal stimulus measures likely to flow through to lower cost infrastructure maintenance programmes ahead of larger, more capital-intensive enhancement schemes;
●	greater focus on sustainability, climate change and infrastructure resilience as part of the UK's target of reaching net-zero carbon emissions by 2050, together with flood risk prevention measures and investment in nuclear projects, renewables and rail electrification programmes;
●	population growth increasing the pressure on housing, transport, energy, water and demand for natural resources;
●	technological innovation, including artificial intelligence, driving a shift towards digital roads, smart infrastructure and the transformation of transport and telecommunications networks; and
●	increased Government regulation to improve safety, efficiency and resilience of key infrastructure assets leading to more demanding maintenance, renewal and upgrading requirements.

Our track record of resilient growth and long-term value creation

Renew has a strong track record of sustainable value creation through the economic cycle thanks to the Group's high-quality, value-accretive compounding earnings model. Over the past five years, we have delivered:

●	adjusted¹ earnings per share growth of 79 per cent;
●	an increase in dividends of 80 per cent from 10.0p to 18.0p per share
●	an increase in our adjusted¹ operating margin from 5.7 per cent to 6.6 per cent;
●	Group organic revenue growth of 36 per cent and total revenue growth of 77 per cent; and
●	five strategic acquisitions supported largely by our strong free cash flow, deploying £173m.

Our track record of reliable revenue growth, cash generation and conservative approach to gearing has resulted in our ability to deliver highly predictable, consistent organic earnings growth as well as funding for the acquisition of complementary businesses that meet our strategic requirements.

Results overview

During the period, Group revenue increased to £960.9m (FY2022: £849.0m), with organic growth of 10% and the Group achieved an adjusted¹ operating profit of £63.6m (FY2022: £58.8m). Statutory operating profit was £59.0m (2022: £50.0m). Adjusted¹ operating profit margin was 6.6%. As at 30 September 2023, the Group had pre-IFRS16 net cash of £35.7m (30 September 2022: net cash £20.2m). The Group's order book at 30 September 2023 remained strong at £860m (FY2022: £775m) underpinned by long-term framework positions.

Dividend

The Group's robust trading performance, cash position and strong forward order book have given the Board the confidence to declare a final dividend of 12.00p (FY2022: 11.33p) per share. This represents a full year dividend of 18.00p which is a 5.8 per cent increase over the prior year. This will be paid on 8 March 2024 to shareholders on the register as at 9 February 2024, with an ex-dividend date of 8 February 2024.

Engineering Services

Our Engineering Services activities account for over 98 per cent of the Group's adjusted¹ operating profit and delivered revenue of £887.5m (FY2022: £778.9m) with an adjusted¹ operating profit of £64.3m (FY2022: £59.1m) resulting in an adjusted¹ operating margin of 7.2% (FY2022: 7.6%). At 30 September 2023, the Engineering Services order book was £777m (30 September 2022: £717m). The Group's resilient performance was driven by continued positive momentum across our markets. We continue to resecure positions for CP7 in Rail, we have expanded our range of capabilities in the Water sector and we continue to see strong demand in our Telecoms activities.

Rail

Network Rail, a significant strategic customer for the Group, is investing £53bn³ over the current control period ("CP6"), which runs to March 2024. With CP6 drawing to a close and CP7 scheduled to start on 1 April 2024, the Group has been focusing efforts on securing framework extensions and expanding framework positions for CP7. In May 2023, Network Rail set out its Strategic Business Plan ("SBP") for CP7 which laid out a commitment of £44bn4 in the operations, maintenance and renewal of the railway in England and Wales. Whilst this spending commitment may appear to be a reduction from the previous control period, it's important to note that CP7 doesn't allocate a separate enhancement budget so the maintenance and renewals programme which directly supports our business is actually 2.5% higher than the projected CP6 expenditure.5 The ORR has since proposed that Network Rail increase the amount it spends on renewal and maintenance of its core assets on the rail network by a further £600m over the control period. As the largest provider of multidisciplinary maintenance and renewals engineering services to Network Rail, we support the day-to-day operation of the rail network nationally, directly delivering essential asset maintenance through our long-term frameworks. The Group assists the network through mission-critical renewals and maintenance services supporting assets including bridges, embankments, fencing, devegetation, tunnels, drainage systems, signalling, electrification and plant.

During the period, we were the largest provider of maintenance and renewals services to Network Rail nationally and achieved early success in securing CP7 frameworks with Wales & Western on their Wales Structures and Wales & Western Electrification & Plant frameworks and in North West and Central on the Reactive Maintenance Framework. It was particularly pleasing to win the Wales & Western Electrification & Plant frameworks as this work will be delivered through a unique collaboration between AmcoGiffen, REL and QTS ("ARQ") and again illustrates the expanding number of frameworks we are able to target through leveraging the capabilities within the businesses we have recently acquired complementing the existing Group. Elsewhere we expanded our credentials in emergency project delivery with Network Rail through our excellent work across the country. Throughout the year the Group assisted on projects which included major flooding incidents and landslides, whilst the Group's rock armour resilience work in Wales received excellent media coverage and accolades from Network Rail. Our early success in securing CP7 framework positions gives us confidence that we will be able to unlock further opportunities across other regions during the upcoming CP7 framework awards.

In our half year results, I wrote that we were mindful of speculation regarding public expenditure budgets for CP7 being constrained but we were continuing to see record demand for our services internally. Following the publication of Network Rail's SBP, it's clear there is an emphasis on driving as much value out of investment as possible with a focus on "what customers and wider society value most".6 This has resulted in an expanded budget in the area of renewals and maintenance which is good news for our Rail businesses.

The compelling maintenance-focused structural growth drivers within this sector and Renew's high-quality engineering expertise leaves the Group ideally positioned to deliver long-term, profitable growth in Rail. We continue to be confident of retaining our existing frameworks which are coming up for renewal and expanding upon those positions in CP7. We have previously highlighted in our results statements the opportunities we see in electrification of the rail network so it is pleasing to see that it has been included as one of five CP7 objectives in Network Rail's SBP. Our three rail brands have formed a collaborative and unique position for Overhead Line Electrification delivery, and this will become an increasing strategic focus for the Group.

Infrastructure

Highways

The Group continued to make good operational and strategic progress within Highways during the period, continuing work on the National Highways Scheme Delivery Framework ("SDF") across five framework lots, covering civil engineering, road restraint systems and drainage disciplines, worth £147m over six years. This work, delivered through a joint venture between two of our brands, successfully completed its first projects during the year, drawing client praise for delivery and performance. This joint venture is only the second successful joint venture on the SDF and makes the Group the second largest supplier of road restraint systems in the country.

Elsewhere, we were successful in securing a position on the new Manchester City Council Highways Framework for two years with an option to extend for a further two. We are delighted to have made progress in developing a work bank in Scotland which is a new region for our Highways business. The success the Group has enjoyed in delivering essential asset maintenance and critical infrastructure renewals across the country's strategic road network leaves it ideally positioned to take advantage of the increasing focus on maintenance and renewals over significant enhancement projects. Our innovative StoneMaster technology continued to be successfully deployed across the national highways network.

The UK Government's second Road Investment Strategy ("RIS2") committed an unprecedented level of spending on England's strategic road network between 2020 and 2025. Of the £27.4bn committed over a five-year period, £11.9bn of this funding is ringfenced for operations, maintenance and renewals which gives Renew a unique advantage from which it has continued to benefit. We noted in our half year results that early market consultation for RIS3, which is scheduled to begin in 2025, suggested that there would be a sharper focus on critical maintenance and renewals as opposed to significant road enhancement projects and this appears to be correct. In May 2023, National Highways published an initial consultation on RIS3 outlining its proposed priorities highlighting that renewal of existing assets "is likely to be a growing element of the roads programme"7 and recognises that users want "existing roads in good condition before building new ones".8 Further, the House of Commons Committee report stated "the existing Strategic Road Network is ageing and requires significant renewal work in places. The portfolios for RIS3, RIS4 and beyond should prioritise investment in the maintenance, renewal and resilience of existing assets over brand new projects."9

With a sharp focus on public expenditure in the current macroeconomic environment it is clear the Government is prioritising critical maintenance and renewals programmes over significant enhancement projects. This emphasis clearly plays to the strengths of our business and we remain uniquely positioned to seize attractive growth and market share opportunities within Highways through the distinctive capabilities within our Group.

Aviation

The Group continues to see growing momentum in Aviation following its appointment to the 5-year Manchester Airports Group ("MAG") £700m Civils Framework to deliver medium-sized civil-engineering projects valued between £3m - £10m. The most pleasing part of our Aviation business is that we were able to move into this sector organically which has been historically difficult to do. Our early work at Manchester Airport has led to the Group securing further frameworks with the successful procurement of Airfield Works Phase 1 for the MAG worth up to £8m but more importantly providing our team with development and growth opportunities within the sector. We have seen demand for travel dramatically increase since 2022 after several years of decreased demand due to Covid-19 resulting in underinvestment in critical assets in the sector. Aviation is becoming an area of increased focus within the Group and we look forward to continuing to seize opportunities as we grow our credentials in the sector.

Wireless Telecoms

The nation's connectivity is becoming ever more critical in the digital age, and as a result the wireless telecoms sector contains many attractive growth drivers. An estimated £30bn1⁰ is required to upgrade the nation's broadband networks to gigabit-capable speeds, which includes the UK Government's £5bn investment in the roll-out of 5G, the expansion of the Shared Rural Network and the Government's £500m programme to extend 4G mobile coverage to 95% of the UK.

This year was another record year for our Telecoms business as we continued to design, build and commission infrastructure for all the nation's major network providers including Vodafone, EE, BT, VM02 and Three. We are particularly pleased that our recent work for Vodafone, delivering across multiple programmes, has established our subsidiary business as a key supplier to them moving forwards.

We are one of a very limited number of partners responsible for delivering the major new build sites for the Shared Rural Network, a complex programme delivering phone and data coverage in very remote locations driving transformational change for rural communities. We continue to explore new opportunities in 5G private networks after our recent completion of a 5G network for the UK Satellite Application Catapult. Our business continues to evolve to meet the needs of our niche target markets where we see considerable opportunities going forward.

Continuing to establish ourselves as a trusted partner to the nation's network providers will leave the Group well placed to seize further growth opportunities in the future.

Energy

Nuclear

Having worked for over 75 years in civil nuclear, we provide a multidisciplinary service through our large complement of highly skilled employees who operate to demanding nuclear standards, including decontamination and decommissioning services, operational support and asset care, as well as waste retrieval in high-hazard areas such as legacy storage ponds and silos.

The Government's total nuclear decommissioning provision is estimated at £124bn¹¹ over the next 120 years, with around 75% of the total spend allocated to Sellafield which is the largest of the Nuclear Decommissioning Authority's sites and where we remain a principal Mechanical, Electrical and Instrumentation services contractor.

In the period, we successfully signed four long-term frameworks as part of Sellafield's Project Partnership Programme ("PPP"), which was mobilised in 2019 with £7bn of capital projects planned for the next 20 years1². We will be delivering the frameworks alongside the PPP's Key Delivery Partners for Heating Ventilation Air Conditioning ("HVAC"), Electrical and Mechanical Fabrication and Installation Services.

We continue to operate across a number of other long-term frameworks at Sellafield, where works include the manufacture of the first of the Hybrid 2 fuel racks. These enable Sellafield to safely store all the spent fuel it receives from operating reactors in its existing storage pond without the need for new facilities. This further supports the UK decommissioning programme and delivers significant time and cost savings. Elsewhere at Sellafield, we continue to make good progress on the Magnox Swarf Storage Silo programme, one of the UK's most critical decommissioning projects and our work to decontaminate the first part of the recently closed Thermal Oxide Reprocessing Plant ("THORP") is progressing at pace.

Expanding our nuclear capabilities, the Group has been awarded a place to support a new six-year framework for Nuclear Restoration Services (formerly Magnox), for mechanical decommissioning and decontamination services. The programme of work covers 11 sites and will contribute to the clean-up of the UK's nuclear waste whilst reducing the environmental impact of the sites and helping to deliver the Nuclear Decommissioning Authority's strategic goals.

Post-period end we completed the acquisition of T.I.S. Cumbria Limited, strengthening our position in nuclear decommissioning and new build markets. In line with the Group's strategy, the acquisition enhances Renew's nuclear services offering by immediately doubling our specialist manufacturing capacity.

While the work we do in this sector is predominantly focused on decommissioning and waste retrieval in high-hazard areas such as legacy storage ponds and silos, the budget from the UK Government, announced earlier this year, suggests that new nuclear will offer further growth opportunities in the future. The UK Government has committed to achieving net zero emissions by 2050, and decarbonisation of our energy supply is a key step to achieving carbon neutrality. The Government is delivering a radical shift in the UK energy system towards cleaner, more affordable energy sources of which new nuclear is an essential component. This is underpinned by the creation of Great British Nuclear1³ and the Government's target to commence construction of up to three new nuclear plants in the next 10 years. This provides long-term and sustainable demand for our specialist manufacturing capabilities in high grade nuclear components which we are investing in and seeing record demand for.

Electric Vehicle Charging

The transition to Electric Vehicles ("EV") plays a key role in supporting the UK's ambition of achieving net zero emissions by 2050 and zero vehicle emissions by 2035. A collaboration between two of our subsidiaries has delivered EV charging solutions to Network Rail and Volvo Trucks and we continue to grow our services in this area, having recently been awarded significant UK wide roll-out projects for two major charge point operators.

Environmental

Water

The Group continues to expand its capabilities in Water and to grow its network in the sector. The UK's water companies', through their latest AMP8 business plans, are proposing to almost double their spending over the next five year control period compared with that determined in AMP7. With a strengthened position in the market, we are well positioned to benefit from this increased water investment. As we prepare for the AMP8 cycle beginning in April 2025, we have taken significant steps to secure our long-term future with framework proposals for each of our key clients. We have already received Early Contractor Involvement ("ECI") awards from Thames Water for three packages of mains renewals works worth up to £200m, which are planned to start in 2024 and run well into AMP8.

Building on momentum following the acquisition of Enisca in November 2022 and Browne in 2021, we are making significant strides in broadening our capabilities and growing our customer network. In addition, we have secured a new client in South West Water, which will drive significant organic growth and is testament to the strength of our strategic and value-add acquisitions and growing reputation in this sector.

In the period, we have progressed works for Severn Trent Water and secured places on both Dŵr Cymru Welsh Water's Major Electrical & Mechanical Frameworks and Major Civils Framework, as well as a further 5-year extension to our Thames Water Area-Wide Capital Delivery Framework.

With our work for Southern Water, priority compliance and work completions are at their highest levels for the last 9 years. We are also setting a new standard for how work is managed and delivered for Thames Water; from getting onto site within 9 weeks of receiving an order on design and build for multi-million-pound packages of works, to handover within 9 days of construction completion.

We are supporting Yorkshire Water with the delivery of their storm tank capacity schemes which are needed to satisfy new increased capacity obligations for storm storage on their wastewater treatment works. As part of the Water Industry National Environment Programme, these new consent capacities are spread across 3 years of delivery up to March 2025.

Further developing the synergies between our brands, the Enisca Browne joint project has delivered its first works in the Essex and Suffolk region for Northumbrian Water as the Low Complexity MEICA Framework commenced, and has seen growth in the value of work delivered for key client South East Water.

Flood and Coastal

Changing weather conditions continue to highlight the need for investment in flood defences and we see an increasing focus on climate and weather resilience. The UK Government has committed £5.2bn1⁴ from 2021-2027 to improve flood defence infrastructure. Of this, £1.6bn1⁵ is directed towards coastal erosion and sea flooding projects where the Group currently undertakes work for the Environment Agency ("EA") on the EA Flood and Coastal Erosion Framework.

In the period, we secured and delivered our first projects under the Canal & River Trust Minor Civils Framework and have been awarded the Leeds City Council Watercourse Maintenance Framework, a single source direct award maintenance framework supporting our growth in the Environmental sector.

Land Remediation and Specialist Restoration

In Land Remediation, we continue to see demand for our specialist environmental services during the period. We continue to further leverage the synergies of Renew's businesses, including the unlocking of long-term opportunities at the Palace of Westminster.

Specialist Building

Our Specialist Building business focuses on the High Quality Residential, Landmark and Science markets in London and the Home Counties.

The ultra-high quality residential sector remains resilient with a number of new projects awarded in the year. Work continues to progress at Lambeth Palace and the Natural History Museum in our Landmark sector.

In Science we have been awarded a new framework for the Medical Research Council at Harwell following the successful delivery of a new laboratory complex at Hammersmith. In addition, we have received a number of new awards through our existing Defra frameworks.

ESG

The Group continues to progress its ESG strategy and, in the period, has focused on developing reporting disclosures in line with Climate Related Financial Disclosure regulations, which are included as part of the 2023 Annual Report & Accounts.

With quantitative targets in place, we continue to focus our energy on and are making significant progress against our four key areas:

· climate action;

· operating responsibly;

· empowering our people; and

· building sustainable social value.

During the period we were pleased to retain our LSE Green Economy Mark, which recognises London-listed companies and funds that derive more than 50% of their revenues from products and services that are contributing the environmental objectives such as climate change mitigation and adaptation, waste and pollution reduction, and the circular economy.

It is well recognised that investment into low-carbon infrastructure will be fundamental in delivering the Government's ambition to reach net zero by 2050. From the rail network and digitally assisted roads to high-speed telecoms and clean energy, Renew has a key enabling role to play on the frontline of efforts to decarbonise the economy. Alongside our role in progressing the net zero transition, the Group has committed to reaching net zero emissions by 2040.

Health and Safety

The health, safety and wellbeing of our colleagues, and those impacted by our work, is our highest priority and at the heart of everything we do, and we take seriously our responsibility to provide a safe workplace for our employees.

We are proud to have in place industry-leading safe working practices for the Group's employees and operations and are pleased to be able to report an improved safety performance over the previous comparative period.

Outlook - outstanding FY23 gives further confidence in the year ahead

The outstanding trading result achieved in FY23 is testament to the strength of our business model and the people we employ. To once again report record results despite the continually shifting macroeconomic landscape illustrates quite clearly the differentiated qualities and resilient nature of Renew.

With a heightened focus on public expenditure as a result of the weak economic landscape, it is clear that the Government is prioritising investment in maintenance and renewals of existing infrastructure instead of large-scale enhancement projects. This plays to the Group's strengths and we have seen evidence of this in Network Rail's Strategic Business Plan1⁶ and the Transport Committee's Strategic Road Investment report1⁷. We also remain excited about the growth prospects in Water, a market that is likely to benefit from significantly increased expenditure over the next decade and beyond.

To this end, the structural growth drivers in our end markets have never been more attractive and we remain uniquely positioned to seize both organic and acquisitive growth opportunities. Our trading momentum has continued into the new financial year, and we are excited by the significant opportunities across the Group.

Paul Scott

Chief Executive Officer

27 November 2023

1	Renew uses a range of statutory performance measures and alternative performance measures when reviewing the performance of the Group against its strategy. Definitions of the alternative performance measures, and a reconciliation to statutory performance measures, are included in Note 9.
2	HM Treasury, Autumn budget and spending review 2022 - November 2022
3	Network Rail Delivery Plan, Control Period 6, High Level Summary - 26 March 2020
4	Network Rail Strategic Business Plan, Control Period 7 - 19 May 2023 Available at: https://www.networkrail.co.uk/wp-content/uploads/2023/05/England-and-Wales-CP7-Strategic-Business-Plan.pdf
5	Network Rail Strategic Business Plan, Control Period 7 - 19 May 2023, Page 6 Available at: https://www.networkrail.co.uk/wp-content/uploads/2023/05/England-and-Wales-CP7-Strategic-Business-Plan.pdf
6	Network Rail Strategic Business Plan, Control Period 7 - 19 May 2023, Page 7 Available at: https://www.networkrail.co.uk/wp-content/uploads/2023/05/England-and-Wales-CP7-Strategic-Business-Plan.pdf
7	Transport Committee, Strategic Road Investment (HC), 2022-23, HC 904, 27 July 2023 (paragraph 34) Available at: https://committees.parliament.uk/publications/41071/documents/199999/default/
8	Transport Committee, Strategic Road Investment (HC), 2022-23, HC 904, 27 July 2023 (paragraph 34) Available at: https://committees.parliament.uk/publications/41071/documents/199999/default/
9	Transport Committee, Strategic Road Investment (HC), 2022-23, HC 904, 27 July 2023 (paragraph 35) Available at: https://committees.parliament.uk/publications/41071/documents/199999/default/
10	UK Government Department for Digital, Culture, Media & Sport, Future Telecoms Infrastructure Review - 23 July 2018
11	UK Government Nuclear Decommissioning Authority, Nuclear Provision: the cost of cleaning up Britain's historic nuclear sites - 4 July 2019
12	The appeal of a 20-year pipeline, (2023). Construction News. Available at: https://www.constructionnews.co.uk/partnership-publishing/the-appeal-of-a-20-year-pipeline-02-10-2023/
13	Press statement by The RT Hon Grant Shapps MP, Shapps sets out plans drive multi-billion pound investment in energy revolution, (2023). Available at: https://www.gov.uk/government/news/shapps-sets-out-plans-to-drive-multi-billion-pound-investment-in-energy-revolution
14	Lovell, A. 2023. EA Chair says collaboration needed to protect local economies and nature on the coast. Annual Coastal Futures Conference, 26 January, London.
15	Lovell, A. 2023. EA Chair says collaboration needed to protect local economies and nature on the coast. Annual Coastal Futures Conference, 26 January, London.
16	Network Rail Strategic Business Plan, Control Period 7 - 19 May 2023 Available at: https://www.networkrail.co.uk/wp-content/uploads/2023/05/England-and-Wales-CP7-Strategic-Business-Plan.pdf
17	Transport Committee, Strategic Road Investment (HC), 2022-23, HC 904, 27 July 2023 Available at: https://committees.parliament.uk/publications/41071/documents/199999/default/

Group income statement for the year ended 30 September

		Before	Exceptional		Before	Exceptional
		exceptional	items and		exceptional	items and
		items and	amortisation		items and	amortisation
		amortisation	of intangible		amortisation	of intangible
		of intangible	assets		of intangible	assets
		assets	(see Note 3)	Total	assets	(see Note 3)	Total
		2023	2023	2023	2022	2022	2022
	Note	£000	£000	£000	£000	£000	£000

Revenue: Group including share of joint ventures*		960,937	-	960,937	849,048	-	849,048
Less share of joint ventures' revenue*		(39,383)	-	(39,383)	(32,772)	-	(32,772)
Group revenue from continuing activities	2	921,554	-	921,554	816,276	-	816,276
Cost of sales		(786,503)	-	(786,503)	(693,336)	-	(693,336)
Gross profit		135,051	-	135,051	122,940	-	122,940
Administrative expenses		(75,384)	(4,413)	(79,797)	(68,184)	(8,527)	(76,711)
Other operating income		3,865	-	3,865	3,655	-	3,655
Share of post-tax result of joint ventures		77	(231)	(154)	362	(267)	95
Operating profit	2	63,609	(4,644)	58,965	58,773	(8,794)	49,979
Finance income		360	-	360	16	-	16
Finance costs		(1,285)	-	(1,285)	(573)	-	(573)
Other finance income - defined benefit pension schemes		66	-	66	33	-	33
Profit before income tax	5	62,750	(4,644)	58,106	58,249	(8,794)	49,455
Income tax expense	5	(12,600)	1,554	(11,046)	(11,330)	1,782	(9,548)
Profit for the year from continuing activities		50,150	(3,090)	47,060	46,919	(7,012)	39,907
Loss for the year from discontinued operations	4			(3,676)			(2,242)
Profit for the year				43,384			37,665

Basic earnings per share from continuing activities	7	63.47p	(3.91)p	59.56p	59.52p	(8.89)p	50.63p
Diluted earnings per share from continuing activities	7	63.28p	(3.90)p	59.38p	59.30p	(8.87)p	50.43p
Basic earnings per share	7	63.47p	(8.56)p	54.91p	59.52p	(11.74)p	47.78p
Diluted earnings per share	7	63.28p	(8.54)p	54.74p	59.30p	(11.70)p	47.60p

* Alternative performance measure, please see Note 9 for further details.

Group statement of comprehensive income
for the year ended 30 September

	2023	2022
	£000	£000

Profit for the year	43,384	37,665
Items that will not be reclassified to profit or loss:
Movement in actuarial valuation of the defined benefit pension schemes	387	347
Movement on deferred tax relating to the pension schemes	(106)	(240)
Total items that will not be reclassified to profit or loss	281	107

Total comprehensive income for the year net of tax	43,665	37,772

Group statement of changes in equity
for the year ended 30 September
		Share	Capital	Cumulative	Share based
	Share	premium	redemption	translation	payments	Retained	Total
	capital	account	reserve	adjustment	reserve	earnings	equity
	£000	£000	£000	£000	£000	£000	£000

At 1 October 2021	7,868	66,378	3,896	1,308	1,079	44,290	124,819
Transfer from income statement for the year						37,665	37,665
Dividends paid						(13,281)	(13,281)
New shares issued	18						18
Recognition of share based payments					658		658
Vested share option transfer					(362)	362	-
Reclassification on closure of overseas subsidiaries				(1,308)			(1,308)
Actuarial movement recognised in pension schemes						347	347
Movement on deferred tax relating to the pension schemes						(240)	(240)
At 30 September 2022	7,886	66,378	3,896	-	1,375	69,143	148,678
Transfer from income statement for the year						43,384	43,384
Dividends paid						(13,683)	(13,683)
New shares issued	27	41					68
Recognition of share based payments					669		669
Vested share option transfer					(777)	777	-
Actuarial movement recognised in pension schemes						387	387
Movement on deferred tax relating to the pension schemes						(106)	(106)
At 30 September 2023	7,913	66,419	3,896	-	1,267	99,902	179,397

Group balance sheet
At 30 September

	2023	2022*
	£000	£000
Non-current assets
Intangible assets - goodwill	148,805	138,445
- other	27,869	22,385
Property, plant and equipment	19,400	17,834
Right of use assets	19,174	15,519
Investment in joint ventures	3,979	5,538
Retirement benefit asset	2,456	2,230
Deferred tax assets	-	2,899
	221,683	204,850
Current assets
Inventories	4,169	2,613
Assets held for resale	-	1,250
Trade and other receivables	187,311	164,590
Current tax assets	814	-
Cash and cash equivalents	35,657	27,559
	227,951	196,012

Total assets	449,634	400,862

Non-current liabilities
Lease liabilities	(10,733)	(8,640)
Retirement benefit obligation	(822)	(1,049)
Deferred tax liabilities	(7,363)	(7,568)
Provisions	(338)	(338)
	(19,256)	(17,595)
Current liabilities
Borrowings	-	(7,341)
Trade and other payables	(228,677)	(212,684)
Lease liabilities	(6,945)	(5,884)
Current tax liabilities	-	(595)
Provisions	(15,359)	(8,085)
	(250,981)	(234,589)

Total liabilities	(270,237)	(252,184)

Net assets	179,397	148,678

Share capital	7,913	7,886
Share premium account	66,419	66,378
Capital redemption reserve	3,896	3,896
Share based payments reserve	1,267	1,375
Retained earnings	99,902	69,143
Total equity	179,397	148,678

*reclassification between cash and borrowings (please see accounting policy note 1)

Group cashflow statement
for the year ended 30 September
	2023	2022
	£000	£000

Profit for the year from continuing operating activities	47,060	39,907
Share of post-tax trading result of joint ventures	154	(95)
Impairment and amortisation of intangible assets	6,014	8,109
Gain on remeasurement of existing equity asset	(2,164)	-
Research and development expenditure credit	(1,249)	(1,353)
Depreciation of property, plant and equipment and right of use assets	10,688	10,136
Profit on sale of property, plant and equipment	(822)	(830)
Increase in inventories	(1,348)	(534)
Increase in receivables	(14,060)	(7,455)
Increase in payables and provisions	11,247	10,986
Current and past service cost in respect of defined benefit pension scheme	-	23
Cash contribution to defined benefit pension schemes	-	(315)
Charge in respect of share options	669	657
Finance income	(360)	(16)
Finance expense	1,219	540
Interest paid	(1,285)	(573)
Income taxes paid	(11,767)	(7,595)
Income tax expense	11,046	9,548
Net cash inflow from continuing operating activities	55,042	61,140
Net cash outflow from discontinued operating activities	(1,265)	(3,977)
Net cash inflow from operating activities	53,777	57,163

Investing activities
Interest received	360	16
Dividend received from joint venture	-	265
Proceeds on disposal of property, plant and equipment	1,251	1,514
Purchases of property, plant and equipment	(5,509)	(5,056)
Acquisition of subsidiaries net of cash acquired	(13,324)	-
Net cash outflow from investing activities	(17,222)	(3,261)

Financing activities
Dividends paid	(13,683)	(13,281)
Issue of share equity	68	18
New loan	23,000	18,000
Loan repayments	(23,000)	(22,373)
Repayments of obligations under lease liabilities	(7,501)	(6,693)
Net cash outflow from financing activities	(21,116)	(24,329)

Net increase in continuing cash and cash equivalents	16,704	33,550
Net decrease in discontinued cash and cash equivalents	(1,265)	(3,977)
Net increase in cash and cash equivalents	15,439	29,573
Cash and cash equivalents at beginning of year	20,218	(9,355)
Cash and cash equivalents at end of year	35,657	20,218

Bank balances and cash	35,657	27,559
Bank overdraft	-	(7,341)
Cash and cash equivalents at end of year	35,657	20,218

Notes

1 Basis of preparation

The consolidated financial statements for the year ended 30 September 2023 have been prepared in accordance with International Financial Reporting Standards ("IFRS"). These preliminary results are extracted from those financial statements.

Going concern

The Board has concluded that it is appropriate to adopt the going concern basis, having undertaken a rigorous review of financial forecasts and available resources. The Directors have robustly tested the going concern assumption in preparing these financial statements, taking into account the Group's liquidity position at 30 September 2023. The Directors have considered the results of the stress testing of key assumptions and consider the likelihood of events or circumstances that would impact the going concern assessment as collectively remote. The Directors have reviewed the period to 31 December 2024.

Prior year restatement

In the prior year, the Group incorrectly offset a net £7,341,000 overdraft balance with one financial institution against a positive cash balance with another financial institution.

However, since the cash balance was with a different institution, there was no legal right of offset. As a result of the error, a restatement has been recorded to increase Cash and cash equivalents by £7,341,000 to £27,559,000 and Bank overdraft, disclosed within Borrowings, has also increased by £7,341,000 from £Nil. The restatement does not impact net assets, nor any other primary statement.

2 Segmental analysis

The Group is organised into two operating business segments plus central activities which form the basis of the segment information reported below. These segments are:

Engineering Services, which comprises the Group's engineering activities which are characterised by the use of the Group's skilled engineering workforce, supplemented by specialist subcontractors where appropriate, in a range of civil, mechanical and electrical engineering applications;

Specialist Building, which comprises the Group's building activities which are characterised by the use of a supply chain of subcontractors to carry out building works under the control of the Group as principal contractor; and

Central activities, which include the leasing and sub-leasing of some UK properties and the provision of central services to the operating subsidiaries.

	Group including	Less	Group revenue	Group revenue
	share of joint	share of joint	from continuing	from continuing
	ventures	ventures	activities	activities
Revenue is analysed as follows:	2023	2023	2023	2022
	£000	£000	£000	£000

Engineering Services	887,541	(39,383)	848,158	746,145
Specialist Building	73,375	-	73,375	70,125
Segment revenue	960,916	(39,383)	921,533	816,270
Central activities	21	-	21	6
	960,937	(39,383)	921,554	816,276

Analysis of profit on ordinary activities before taxation from continuing activities

	Before			Before
	exceptional	Exceptional		exceptional	Exceptional
	items and	items and		items and	items and
	amortisation	amortisation		amortisation	amortisation
	of intangible	of intangible		of intangible	of intangible
	assets	assets		assets	assets
	2023	2023	2023	2022	2022	2022
	£000	£000	£000	£000	£000	£000

Engineering Services	64,275	(4,084)	60,191	59,123	(8,376)	50,747
Specialist Building	1,269	-	1,269	1,679	-	1,679
Segment operating profit	65,544	(4,084)	61,460	60,802	(8,376)	52,426
Central activities	(1,935)	(560)	(2,495)	(2,029)	(418)	(2,447)
Operating profit	63,609	(4,644)	58,965	58,773	(8,794)	49,979
Net financing costs	(859)	-	(859)	(524)	-	(524)
Profit on ordinary activities before income tax	62,750	(4,644)	58,106	58,249	(8,794)	49,455

3 Exceptional items and amortisation of intangible assets	2023	2022
	£000	£000

Acquisition costs/aborted acquisition costs	560	418
Total losses arising from exceptional items	560	418
Amortisation of intangible assets	6,245	7,123
Gain on remeasurement of existing equity interest	(2,161)	-
Impairment of intangible asset	-	1,253
Total exceptional items and amortisation charge before income tax	4,644	8,794
Taxation credit on exceptional items and amortisation	(1,554)	(1,782)
Total exceptional items and amortisation charge	3,090	7,012

During the year the Company incurred £560,000 of costs on acquiring Enisca Group Ltd. Prior year's

acquisition costs related to an unsuccessful acquisition opportunity.

On 25 November 2022, the Company acquired the whole of the issued share capital of Enisca Group Limited which resulted in the Group owning 100% of Enisca Browne Ltd. The Group previously owned 50% of this Company and accounted for it as a joint venture using the equity method of accounting. As a result, under IFRS 3 this is treated as a step acquisition where the previously held equity interest is remeasured at its acquisition-date fair value with the resulting gain recognised in the income statement. Further information on this acquisition can be found in Note 10.

	£000

Remeasured value	3,566
Less equity interest (previously included in investments in joint ventures)	(1,405)
Gain on remeasurement of existing equity interest	2,161

The Directors in the comparative year made a full provision of £ 1,253,000 against Britannia's goodwill carrying value following the decision to wind down that company's operations.

4 Loss for the year from discontinued operations	2023	2022
	£000	£000
Revenue	-	-
Expenses	(3,676)	(2,242)
Loss before income tax	(3,676)	(2,242)
Income tax charge	-	-
Loss for the year from discontinued operations	(3,676)	(2,242)

On 31 October 2014, the Board reached an agreement to sell Allenbuild Ltd to Places for People Group Ltd. As a term of the disposal Renew Holdings plc retained both the benefits and the obligations associated with a number of Allenbuild contracts. At the time of the disposal, the sale of this business was accounted for as a discontinued operation.

During the year an additional provision of £3,676,000 (2022: £3,353,000) has been recognised, and because this adjustment relates to uncertainties directly related to the operations of Allenbuild before its disposal, this has been classified within discontinued operations. This additional provision was as a result of the settlement of historical claims during the financial year and a subsequent internal reassessment of the likely costs required to settle other known contractual disputes. The comparative figure comprised £3,353,000 in relation to increases in the provision partially offset by £1,308,000 which related to the recycling of the foreign currency reserve.

5 Income tax expense

(a) Analysis of expense in year	2023	2022
	£000	£000
Current tax:
UK corporation tax on profits of the year	(12,447)	(10,692)
Adjustments in respect of previous period	1,164	(193)
Total current tax	(11,283)	(10,885)
Deferred tax - defined benefit pension schemes	(29)	(87)
Deferred tax - other temporary differences	266	1,424
Total deferred tax	237	1,337
Income tax expense in respect of continuing activities	(11,046)	(9,548)

(b) Factors affecting income tax expense for the year	2023	2022
	£000	£000

Profit before income tax	58,106	49,455
Profit multiplied by standard rate
of corporation tax in the UK of 22% (2022: 19%)	(12,783)	(9,396)
Effects of:
Expenses not deductible for tax purposes	(620)	(1,705)
Timing differences not provided in deferred tax	-	1,721
Non-taxable income	696	-
Change in tax rate	640	25
Adjustment in respect of tax losses	(143)	-
Adjustments in respect of previous period	1,164	(193)
Adjustments in respect of previous period	(11,046)	(9,548)

Corporation tax rate increased from 19% to 25% from April 2023 so profits for the year are subject to a blended rate of 22% (2022: 19%).

Deferred tax has been provided at a rate of 25% (2022: 25%) following the decision that the UK corporation tax rate should increase to 25% (effective from 1 April 2023) and substantively enacted on 24 May 2021. The deferred tax asset and liability at 30 September 2023 has been calculated based on these rates, reflecting the expected timing of reversal of the related temporary timing differences (2022: 25%).

The Group has available further unused UK tax losses of £23.1m (2022: £23.7m) to carry forward against future taxable profits. 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 deferred tax asset has been provided to the extent considered reasonable by the Directors, where recovery is expected to be recognisable within the foreseeable future. The unrecognised deferred tax asset in respect of these losses amounts to £5.8m (2022: £5.9m).

6 Dividends	2023	2022
	Pence/share	Pence/share

Interim (related to the year ended 30 September 2023)	6.00	5.67
Final (related to the year ended 30 September 2022)	11.33	11.17
Total dividend paid	17.33	16.84

	£000	£000
Interim (related to the year ended 30 September 2023)	4,748	4,472
Final (related to the year ended 30 September 2022)	8,935	8,809
Total dividend paid	13,683	13,281

Dividends are recorded only when authorised and are shown as a movement in equity rather than as a charge in the income statement. The Directors are proposing that a final dividend of 12.00p per Ordinary Share be paid in respect of the year ended 30 September 2023. This will be accounted for in the 2023/24

financial year.

7 Earnings per share
		2023				2022
	Earnings	EPS	DEPS	Earnings		EPS	DEPS
	£000	Pence	Pence	£000		Pence	Pence

Earnings before exceptional items and amortisation	50,150	63.47	63.28		46,919	59.52	59.30
Exceptional items and amortisation	(3,090)	(3.91)	(3.90)		(7,012)	(8.89)	(8.87)
Basic earnings per share - continuing activities	47,060	59.56	59.38		39,907	50.63	50.43
Loss for the year from discontinued operations	(3,676)	(4.65)	(4.64)		(2,242)	(2.85)	(2.83)
Basic earnings per share	43,384	54.91	54.74		37,665	47.78	47.60

Weighted average number of shares ('000)		79,011	79,253			78,825	79,125

The dilutive effect of share options is to increase the number of shares by 242,000 (2022: 299,750) and reduce basic earnings per share by 0.17p (2022: 0.18p).

8 Preliminary financial information

The financial information set out above does not constitute the company's statutory accounts for the years ended 30 September 2023 or 2022. Statutory accounts for 2022 have been delivered to the registrar of companies. The auditor has reported on those accounts; his reports were (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006. The statutory accounts for 2023 will be finalised on the basis of the financial information presented by the Directors in this preliminary announcement and will be delivered to the Registrar of Companies in due course.

9 Alternative performance measures

Renew uses a variety of alternative performance measures ('APM') which, although financial measures of either historical or future performance, financial position or cash flows, are not defined or specified by IFRSs. The Directors use a combination of APMs and IFRS measures when reviewing the performance, position and cash of the Group.

The Directors believe that APMs provide a better understanding of the ongoing trading performance of the business by removing costs such as amortisation, and one-off exceptional items which will not directly impact the future cashflows and will mainly relate to the unrepeated cash outflows incurred in acquiring a specific equity investment.

Depreciation is not removed on the basis that the tangible and right of use assets will be replaced at the end of their useful economic lives resulting in future cash outflows.

Furthermore, they believe that the Group's stakeholders use these APMs, for example when assessing the performance of the Group against discounted cash flow models, and it is therefore appropriate to give them prominence in the Annual Report and Accounts.

The APMs used by the Group are defined below:

Net Cash - This is the cash and cash equivalents less bank debt. This measure is visible in Note 32 in the Annual Report & Accounts. The Directors consider this to be a good indicator of the financing position of the Group.

Adjusted operating profit (£63.609m) and adjusted profit before tax (£62.750m) - Both of these measures are reconciled to total operating profit and total profit before tax on the face of the consolidated income statement. The Directors consider that the removal of exceptional items and amortisation provides a better understanding of the ongoing performance of the Group. The equivalent GAAP measures are operating profit (£58.965) and profit before tax (£58.106m).

Adjusted operating margin (6.6%) - This is calculated by dividing operating profit before exceptional items and amortisation of intangible assets (£63.609m) by Group revenue including share of joint venture (£960.937m) both of which are visible on the face of the income statement. The Directors believe that removing exceptional items and amortisation from the operating profit margin calculation provides a better understanding of the ongoing performance of the Group. The equivalent GAAP measure is operating profit margin (6.4%) which is calculated by dividing operating profit (£58.965m) from group revenue from continuing activities (£921.554m).

Adjusted earnings per share (63.47p) - This measure is reconciled to the earnings per share calculation based on earnings before exceptional items and amortisation in Note 7. The Directors believe that removing exceptional items and amortisation from the EPS calculation provides a better understanding of the ongoing performance of the Group.

Group Revenue (£960.937m) - This measure is visible on the face of the income statement as Revenue: Group including share of joint ventures.

Group order book, Engineering Services order book and Specialist Building order book - This measure is calculated by the Directors taking a conservative view on secured orders and visible workload through long-term frameworks.

Engineering Services revenue (£887.541m) - This measure is visible in Note 2 segmental analysis as Engineering Services revenue including share of joint venture. The Directors consider this to be a good indicator of the ongoing performance of the Group's Engineering Services business.

Adjusted Engineering Services operating profit (£64.275m) - This measure is visible in Note 2 segmental analysis as Engineering Services operating profit before exceptional items and amortisation of intangible assets. The Directors consider this to be a good indicator of the ongoing performance of the Group's Engineering Services business. The GAAP equivalent measure is Engineering Services operating profit (£60.194m) which is also visible in Note 2.

Adjusted Engineering Services operating profit margin (7.2%) - This is calculated in the same way as adjusted operating profit margin but based on the adjusted Engineering Services operating profit (£64.275m) and the Engineering Services revenue (£887.541m) figures as set out above. The equivalent GAAP measure is Engineering Services operating profit margin (7.1%) which is calculated by dividing Engineering Services operating profit (£60.194m) from Engineering Services revenue from continuing operations (£848.158m).

10 Acquisition of subsidiary undertaking - Enisca Group Limited

On 25 November 2022, the Company acquired the whole of the issued share capital of Enisca Group Limited ("Enisca") for a cash consideration of £14.6m. The Group previously held a 50% interest in Enisca Browne Ltd, a joint venture originally acquired through its subsidiary J Browne Group Ltd. As a result of obtaining control of Enisca Group Ltd, the Group has derecognised the investment in the joint venture and accounted for the acquisition of the remaining 50% interest as a business combination achieved in stages. This required the Group, as acquirer, to remeasure its previously held equity investment in Enisca Browne Ltd at its acquisition-date fair value. The Group's equity interest prior to acquisition was £1.4m and its remeasurement to £3.6m resulted in a gain of £2.2m which was recognised in the income statement (please see note 3).

The net acquisition cost was funded by a combination of cash and the Group's existing revolving credit facility provided by HSBC UK Bank plc, National Westminster Bank plc and Lloyds Bank plc.

Enisca is a multi-disciplinary engineering business operating in the water and environmental sector with headquarters in Cookstown, Northern Ireland but with a base on the UK mainland. Enisca has long term Mechanical, Electrical, Instrumentation, Controls and Automation (MEICA) frameworks with Southern Water, South East Water, Affinity Water, Yorkshire Water, Irish Water, Northern Ireland Water, Anglian Water and Northumbrian Water.

The acquisition represents an excellent strategic fit, adding new capabilities and clients to Renew's water business which continues to benefit from the UK Government's commitment to spend £51bn over AMP7 into 2025. Further, Enisca will form a key part of the Group's strategy to maximise the opportunities presented by AMP8 ahead of the anticipated start of procurement in 2024.

The value of the assets and liabilities of Enisca at the date of acquisition were:

						Fair value
						£000
Assets
Intangible assets						11,498
Property, plant and equipment						328
Right of use assets						501
Inventories						208
Trade and other receivables						7,411
Cash and cash equivalents						1,264
Total assets						21,210

Liabilities
Lease liabilities						(403)
Deferred tax liabilities						(2,833)
Trade and other payables						(9,736)
Lease liabilities						(121)
Current tax liability						(324)
Total liabilities						(13,417)

Total identifiable net assets at fair value						7,793

50% equity interest measured at fair value						(3,555)
Goodwill arising on acquisition						10,360
Purchase consideration transferred						14,598

Goodwill of £10,360,000 arose on acquisition and is attributable to the expertise and workforce of the acquired business. Other intangible assets provisionally valued at £11,498,000, which represent customer relationships and contractual rights, were also acquired and will be amortised over their useful economic lives in accordance with IAS 38 and as defined within accounting policy Note 1 (v) Intangible assets of the Annual Report & Accounts. Amortisation of this intangible asset commenced from December 2022. Deferred tax has been provided on this amount.

Right of use assets and obligations under finance leases

The Group measured the acquired lease liabilities using the present value of the remaining lease payments at the date of acquisition.

The right of use assets were measured at an amount equal to the lease liabilities.

Fair value adjustments arising from the acquisition

In accordance with IFRS 3, the Board reviewed the fair value of assets and liabilities using information available during the 12 months after the date of acquisition. Fair value has been calculated using Level 3 inputs as defined by IFRS 13. No impairment was identified.

The fair value of trade and other receivables was £7.4m. The gross amount of trade and other receivables was £7.4m and it is expected that the full contractual amounts will be collected.

From the date of acquisition, Enisca has contributed £31.5m to revenue and £1.8m to profit before tax from continuing operations of the Group. If the acquisition of Enisca had occurred on 1 October 2022, Group revenue from continuing operations would have been approximately £925.0m and profit before tax for the year ended 30 September 2023 would have been approximately £58.2m

Transaction costs of £0.6m were expensed and are included in exceptional items (please see Note 3).

11 Post balance sheet event

Acquisition

On 26 October 2023, West Cumberland Engineering Ltd, a wholly-owned subsidiary of Renew Holdings Plc, acquired the whole of the issued share capital of TIS Cumbria Ltd ("TIS") for a gross cash consideration of £4.7m less a net working capital adjustment of £(0.6)m. The net £4.1m acquisition cost was funded from cash resources. There is no deferred consideration payable.

Based in Cumbria, TIS is a leading nuclear manufacturing and fabrication specialist. In line with the Group's strategy, the acquisition enhances Renew's nuclear services offering by immediately doubling manufacturing capacity and strengthening Renew's position in the growing nuclear decommissioning and new build markets.

This acquisition will allow the Group to continue to support its existing clients and take advantage of increasing demand across the decommissioning and new nuclear build programmes. The added manufacturing capacity will allow Renew to better support its existing clients, as well as strengthening its broader market position. TIS represents an excellent strategic fit with the Group's existing multidisciplinary nuclear capability, which offers attractive long term structural growth opportunities underpinned by highly visible committed regulatory spend in a sector where the Group has extensive experience.

The principal asset category acquired is tangible fixed assets with a net book value of c.£4m including freehold land and buildings externally valued at £3.1m. All cash and loans, with the exception of two small hire purchase agreements, were settled prior to acquisition. The fair value exercise continues for net working capital categories. The acquisition will be reported in more detail in the Interim results for the six months ending 31 March 2024.

12 Posting of Report & Accounts

The Group confirms that the annual report and accounts for the year ended 30 September 2023 will be posted to shareholders as soon as practicable and a copy will be made available on the Group's website:

www.renewholdings.com

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