Renew's (RNWH) bumper dividend increase is testament to the engineering group's track record of retaining contracts and winning new business. A strong showing from its core engineering services business resulted in adjusted half-year operating profit rising by a fifth to £9.8m. What's more, its order book increased by just over a quarter by the end of the first half to £471m, meaning Renew has secured all of its expected revenue for the second half.
Engineering services - which account for 83 per cent of group revenue - grew sales by a quarter to £210m. The division won framework extensions for nuclear projects, primarily at the Sellafield site. These included the 'multi discipline site works' agreement, which is expected to deliver £70m annually through to April 2017. Renew's environmental segment also racked up a number of contract awards, including the 'AMP6 sewage repairs and maintenance' framework. Management anticipates this will deliver £14m of work annually over five years, with the potential for another five-year extension.
The high-quality residential market in London and the surrounding area remained robust during the first half, generating sales of £42.5m for Renew's specialist housing business. However, profit was held in check as margins returned to a more normal level following higher-rate account settlements during the first half of last year. Encouragingly, the segment's order book grew 41 per cent to £89m, more than half of which was awarded during the first half.
Broker Numis Securities expects adjusted EPS of 24.7p for the full year, up from 20.5p in 2014.
RENEW (RNWH) | ||||
|---|---|---|---|---|
| ORD PRICE: | 315p | MARKET VALUE: | £194m | |
| TOUCH: | 312-317p | 12-MONTH HIGH: | 325p | LOW: 222p |
| DIVIDEND YIELD: | 1.8% | PE RATIO: | 18 | |
| NET ASSET VALUE: | 31p* | NET DEBT: | 73% | |
| Half-year to 31 March | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 208 | 7.2 | 8.84 | 1.50 |
| 2015 | 252 | 7.7 | 9.96 | 2.25 |
| % change | +21 | +7 | +13 | +50 |
Ex-div: 4 Jun Payment: 6 Jul *Includes intangible assets of £58.3m, or 96p a share | ||||
