Engineering group disposes of loss-making division

Renew Holdings has announced the disposal of loss-making division Forefront, an engineering services business focused in the gas infrastructure market.

The AIM listed West Yorkshire-based engineering services group said that, as previously announced, it made the decision to exit from the loss-making low pressure, small diameter gas pipe replacement activities with the expectation that the remaining business, now focused on medium pressure activities, would return to profitability in the financial year ending September 30 2018.

However, it said there has been no improvement in the financial performance of Forefront since the start of this financial year and is disposing of Forefront in order to “allow management to focus on the continuing growth opportunities within the remaining parts of the group”.

Forefront has been sold to Ferns Group for a de-minimis consideration and in return Renew will bear no ongoing liability in respect of Forefront.

As a result of this disposal, the consolidated results of the group will show a non-cash, balance sheet write-down of assets and intangible assets of approximately £9m relating to Forefront which will be shown as an exceptional item in the group’s accounts.

In the last financial year, Forefront made a pre-tax loss of £2.8m.

Renew bought Forefront in 2014 in a deal worth £14.8m.

“The financial performance of the group remains in line with market expectations,” Renew added.