Engineering services group Renew (RNWH) gave up on Forefront, its small diameter gas pipe business earlier this year, selling it off in February. The £10m of associated impairments and losses on disposal weighed heavily on the group’s half-year numbers, pushing it into a net loss position in the six months to March.
And this was not the only hurdle Renew faced in the last six months: an unusually strong performance in the specialist building division in the comparable period last year led sales and the order book to decline in the division, while engineering services saw a slight drop in revenues following adverse weather in February and March.
But it wasn't all bad news. Focus on contract selectivity boosted margins slightly, leaving adjusted operating profit flat in the period and in the second half of the year (and beyond), the group should benefit from the acquisition of QTS, a rail contractor. The £80m acquisition was funded by £35m of debt and £45m of proceeds from an equity placing. Broker Numis increased its forecasts following the deal, and now expects pre-tax profit of £29.1m for the full year to September, giving EPS of 35.1p (from £25.3m and 33.1p in 2017).
| RENEW (RNWH) | ||||
| ORD PRICE: | 397p | MARKET VALUE: | £299m | |
| TOUCH: | 393-400p | 12-MONTH HIGH: | 470p | LOW: 355p |
| DIVIDEND YIELD: | 2.4% | PE RATIO: | 23 | |
| NET ASSET VALUE: | 30p* | NET DEBT: | 11% | |
| Half-year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 (restated) | 282 | 5.6 | 5.47 | 3.00 |
| 2018 | 262 | 2.0 | -0.41 | 3.33 |
| % change | -7 | -64 | - | +11 |
| Ex-div: | 31 May | |||
| Payment: | 6 Jul | |||
| *Includes intangible assets of £53m, or 71p a share | ||||
