Renew delivers record first half, dividend still suspended

Engineering services group Renew Holdings delivered “another record trading period” in its half-year report on Tuesday, with “strong” cash generation and trading performance, including a contribution from the acquisition of Carnell Support Services in January, although its interim dividend remained suspended.

The AIM-traded firm said the integration of that business had progressed well, with the results for the six months ended 31 March falling in line with the board's expectations.

Its revenue for the period was £313.6m, rising from £301m year-on-year, while adjusted operating profit rose to £19.9m from £18.4m.

Profit before tax stood at £15.2m, improving from £14.5m a year earlier, while the company’s adjusted operating margin was 6.4%, up from 6.1%.

Its adjusted earnings per share came in at 20.1p for the six months, compared to 19.2p in the first half of the 2019 financial year.

On a divisional basis, Renew said its engineering services revenue grew 4% to £293.1m, with adjusted operating profit in those operations improving 7% to £20.5m.

It also said its engineering services order book was up to £591m at period end, from £531m, while the firm’s net debt narrowed to £16.1m from £17.2m year-on-year.

Renew reported headroom in its available facilities of around £55m, as well as a £15m uncommitted accordion facility.

During the half-year, the company broadened its service offering into the highways market, following the acquisition of Carnell.

The board said the group was “resilient” in the face of the Covid-19 coronavirus pandemic, with around 80% of its activities continuing during the crisis.

It still confirmed the suspension of its interim dividend payment, as it stated in its trading update on 1 April.

“Our strong trading performance and cash generation in the first half of the year, is reflective of the reliable long-term nature of the UK infrastructure markets in which we operate, a strategy reinforced in the government's latest budget when they committed to investing £640bn in infrastructure over the next five years,” said chairman David Forbes.

“Where we are able to satisfy the requirements of the Covid-19 safety guidelines, we continue to work closely with our customers directly delivering essential network services.

“In total, approximately 80% of our activities have continued during the crisis as they are deemed critical to the Covid-19 response.”

Forbes said that, following the UK government's recovery strategy launched on 10 May, the company was addressing “immediate opportunities” to remobilise the remaining 20% of its operations, and was expecting that positive momentum to continue.

“The strength of the group's position in its markets and the essential nature of the work we undertake gives the board confidence that Renew remains well placed to play a significant role in the long-term opportunities that will emerge across UK infrastructure - a sector that will play an important role in rebuilding our economy.”

At 1047 BST, shares in Renew Holdings were up 14.66% at 479.28p.