Decisive action helps Renew Holdings
RENEW Holdings, the Leeds-based specialist construction services business today delivered a strong set of full-year results and said decisive action to reduce costs and move into less exposed markets would give it resilience.
Chairman Roy Harrison said the group is “strongly positioned with an experienced management team, substantial cash resources and a strong forward work position”.
It saw pre-tax profits before exceptional items and amortisation rise 29% to £9.5m in the year to September 30 on revenue up 12% to £390.6m. It is paying a final dividend of 2p to make a full year dividend of 3p.
Its net cash position at the year-end was £28.2m.
Mr Harrison said that the weak housebuilding market has seen Renew refocus its land remediation work on the more “robust” regional civil engineering market while it has also cut staff numbers by 15% to deliver annual cost savings of £5m.
“Against a background of increasingly difficult market conditions, the results again illustrate the quality and sustainability of earnings with our forward order book indicating an increased level of work in our specialist sectors,” said Mr Harrison.
The forward order book is £219m.
Renew – which has its head office in Leeds – has engineering subsidiaries including Yorkshire-based VHE and building companies such as Allenbuild, Britannia Construction and Walter Lilly.
The group is organised into two business streams – specialist engineering with expertise in nuclear, land remediation and water through its subsidiaries Shepley Engineers, VHE and Seymour – and specialist building incorporating retail, social housing, science and education, restoration and refurbishment.
Mr Harrison added: “Our declared strategy of focusing on two distinct business streams, specialist engineering and specialist building, remains in place.
“Our aim is to increase revenues in specialist engineering both organically and by acquisition, with operating margins of at least 4%. In specialist building, our aim is to continue to increase operating margins with a medium-term target of 2%. Currently our specialist building margin stands at 1.7%.
“Our medium term objective remains to develop a specialist construction business with overall operating margins of 2.5% and with specialist engineering providing 33% of revenues.
“Market conditions are more challenging but the Group is operating from a position of strength, supported by a strong balance sheet with cash resources available to take advantage of carefully considered opportunities which may arise.
“The impact of the decisive action taken in September to realign and reduce capacity, and the continued resilience of our specialist markets, gives the board confidence that we can continue to grow the group’s operating margin percentage albeit on reduced levels of activity in 2009,” he added.
