Renew (RNWH) has posted a record set of results for the half-year to the end of March 2017, with adjusted operating profit 15 per cent on the same period last year and adjusted EPS up 16 per cent. These improvements were largely driven by the performance of the engineering services business, which accounts for 80 per cent of group revenue. Revenue here was up 6 per cent to £234m, while the order book increased by 5 per cent to £435m. The division also increased margins by 40 basis points to 5.1 per cent. One notable contributor to the division's performance was the environmental business, which saw benefits from the ramping up of the AMP6 regulatory period.
The group has taken a non-cash impairment charge of £5.8m following a disappointing performance from the gas business. At the end of April 2017 it decided to withdraw from loss-making low pressure, small diameter pipe replacement activities to focus on medium pressure, which it says are "lower revenue but...consistently profitable".
Chief executive Paul Scott said the group would remain acquisitive, but had "fine tuned the search criteria" as a result. The recent acquisition of engineering company Giffen has resulted in a net debt position, but the group is expecting to be cash positive by the end of the financial year.
Analysts at WH Ireland forecast profit before tax of £24.9m, giving EPS of 31.7p for the September 2017 year-end (from £22.3m and 27.2 in 2016).
RENEW (RNWH) | ||||
|---|---|---|---|---|
| ORD PRICE: | 467p | MARKET VALUE: | £292m | |
| TOUCH: | 457-470p | 12-MONTH HIGH: | 490p | LOW: 292p |
| DIVIDEND YIELD: | 1.8% | PE RATIO: | 28 | |
| NET ASSET VALUE: | 35p* | NET DEBT: | 16% | |
| Half-year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2016 | 265 | 8.8 | 11.4 | 2.65 |
| 2017 | 289 | 4.8 | 4.4 | 3.00 |
| % change | +9 | -45 | -61 | +13 |
Ex-div: 1 Jun Payment: 3 Jul *Includes intangible assets of £62.3m, or 100p a share | ||||
