Renew reports 'record' results, acquires Enisca Group

Engineering services provider Renew reported a “record” set of final results on Tuesday, with group revenue rising 7.3% to £849m, as it also announced the acquisition of Enisca Group.

The AIM-traded firm said its adjusted operating profit was ahead 14.8% year-on-year for the 12 months ended 30 September, to £58.8m, while its operating profit was ahead 21.7% at £50m.

Its adjusted operating margin expanded 45 basis points over the prior year, to 6.9%, while its profit before tax grew by 21.4% to £49.5m.

Adjusted earnings per share were 17.8% higher at 59.5p.

Renew said its group order book totalled £775m at the end of the financial year, up from £749m year-on-year, while it swung to a net cash position of £20.2m pre-IFRS 16, from net debt of £13.7m a year earlier.

The board declared a final dividend of 11.33p due to the firm’s “strong” cash position and positive outlook, taking the full-year distribution to 17p, up 6.3%.

Looking ahead, Renew said its positive trading momentum continued into the new financial year.

The board said that, while the company was “not immune” to the “challenging” macroeconomic environment, structural growth drivers in its end markets had “never been more attractive”.

It also noted the government’s reiteration of infrastructure as a growth priority, as well as its restatement of its commitment to invest more than £600bn in infrastructure by 2027.

“Given the difficulties faced by most UK businesses in 2022, I am extremely pleased to be presenting another set of record results for the group,” said chief executive officer Paul Scott.

“This continued success would not be possible without the incredible hard work of our colleagues who I would like to thank on behalf of the board.

“The last three years have presented a unique set of unprecedented circumstances and our continued outperformance in each year illustrates the resilient nature of our differentiated, high-quality, low-risk business model.”

Scott said that looking ahead, Renew was “committed” to building on its strengths, and would continue to leverage the combined expertise of its subsidiary businesses.

“Pleasingly, our positive trading momentum has continued into the new financial year and we enter 2023 with a strong order book and believe the structural growth drivers in our end markets, underpinned by committed regulatory spend, continue to provide the group with significant opportunities.”

In a separate announcement on Tuesday, Renew said it had acquired the entire issued share capital of Enisca Group from its founders for a total consideration of £15.6m in cash.

The company described Enisca as a “multi-disciplinary engineering business” operating in the water and environmental sector, with headquarters in Cookstown, Northern Ireland, and a base in Britain.

It said Enisca has long-term mechanical, electrical, instrumentation, controls and automation (MEICA) frameworks with utility operators Southern Water, South East Water, Affinity Water, Yorkshire Water, Irish Water, Northern Ireland Water, Anglian Water and Northumbrian Water.

The board said the acquisition was an “excellent strategic fit”, adding new capabilities and clients to its water business, which was still benefiting from the government's commitment to spend £51bn over the seventh asset management period (AMP7) into 2025.

Additionally, it said Enisca would form a “key part” of its strategy to maximise the opportunities presented by AMP8 ahead of the anticipated start of procurement in 2024.

Enisca was expected to be immediately earnings enhancing, with forecast sales of £30m and operating profit of £2.1m.

The consideration of £15.6m on a cash-free, debt-free basis was being funded by a combination of cash and the group's existing revolving credit facility.

There would be no deferred consideration payable, with the entire executive management team of Enisca set to remain with the business post-acquisition.

“This acquisition broadens Renew's exposure to the UK water market and is consistent with our stated strategic objectives,” Paul Scott added.

“Enisca is a highly regarded business with a strong track record and is well known to Renew having been a joint venture partner of Browne since the start of AMP6 in 2015.

“Our existing multidisciplinary water capability, complemented by the inclusion of Enisca will significantly enhance Renew's proposition ahead of AMP8 procurement in 2024.”

At 1613 GMT, shares in Renew Holdings were up 4.43% at 683.99p.

Reporting by Josh White for Sharecast.com.