CEO of engineering group hails ‘strong set of results’ after completing £80m acquisition

The CEO of Renew Holdings, the Leeds-based engineering services group with divisions across energy, infrastructure an environment, has hailed a “strong set of results” for the year after completing an acquisition which is set to strengthen its work across the UK’s rail networks.

The firm has reported a 9.6% rise in adjusted operating profit, from £28m to £31m. However, its group revenues dipped from £545m to £541m in the year to 30 September 2018, while pre-tax profits slipped to £14m from £19m.

Net debt at the year-end was £21.4m (2017: net cash £3.9m) reflecting the £80m acquisition of specialist rail contractor QTS in May – of which £45m was raised through a placing. The deal was the firm’s largest ever acquisition and strengthens the Group’s position in the rail market.

Engineering Services, which accounts for over 85% of Group revenue and 95% of operating profit, focuses on the key markets of Energy (including Nuclear), Environmental and Infrastructure, which are largely governed by regulation and benefit from non-discretionary spend with long-term visibility of committed funding.

 Paul Scott, CEO, told TheBusinessDesk.com this morning that although the rail contracts had flattened during the year, that had been expected during 2018. However, both Renew and QTS have been successful in winning places on frameworks which begin in April 2019 which will mean that the company works on seven of the eight rail networks across the country. 

“I am very pleased to be reporting a very strong set of results, driven by the engineering services division. We have focused on the quality and the opportunity.”

Of the QTS acquisition, Scott said he was so far “delighted with the contribution it had made to the group.” He added: “They are embracing the concept of being part of a larger group. It sets the foundations for what we believe is growth opportunity in the world of rail.”

Scott added that there had been growth in the water and environmental sectors of the group, with the “strongest year yet” with their work with the Environment Agency, and that during the year, Renew expanded its nuclear footprint. In its coastal and river work, Renew is still working on the River Fosse barrier. While he added that the topline revenue “was a bit mixed” the firm had a solid foundations for growth.

Renew’s specialist building division, which accounts for 5% of group operating margin and focuses on high quality residential market in London and the Home Counties, saw revenues reduce to £74.2m (2017: £106.8m) and operating profit reduce to £600,000 (2017: £2.4m). At the year-end, the forward order book stood at £48m (2017: £73m). Scott said the drop showed that the group had gone from delivering three major projects in 2017 to a reduced number this year because the firm was not looking to take on risk. He added: “It is nt a reflection of the market because the opportunity is very strong., It is just not a major part of the group.”

In February, the Group made the decision to exit from its gas infrastructure activities with the disposal of Forefront, allowing management to focus on the continuing growth opportunities elsewhere in the Group.

David M Forbes, Chairman, said: “I am encouraged by another set of excellent results which demonstrates the continued progress in executing our long-standing strategy by growing the business in our chosen markets both organically and through selective complementary acquisitions. Our solid foundations allow the Board to look forward to 2019 with confidence.”

The group announced an increased dividends payment of 10p per share, up from 9p in 2017.

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