Renew Holdings Regulatory News (RNWH)

6 Nov 2008 09:37



This replaces announcement 7591E released at 07:00 on 1 October 2008. The correct date for Renew Holdings' annual results is Tuesday 25 November 2008.

Renew Holdings plc

("Renew" or the "Group")

Pre-close Trading Update 

Following the end of its financial year on 30 September 2008, Renew is providing the following update on trading. 

The Board confirms that the Group has continued to trade satisfactorily during the second half of the year and the Board expects that this will result in a profit before intangible amortisation, exceptional items and taxation for the year in line with market expectations of £9.4m. The Group's profits remain demonstrably cash backed and the net cash balance at the end of September 2008 was in excess of £27m.

In the last few months, conditions in the house building market, which is the principal end market for our Land Remediation business, have worsened considerably. Additionally, the Group is identifying weaker market conditions ahead for non-specialised building which represented 27% of its Building turnover in 2007 financial year. 

Consequently, the Board has decided to realign the Land Remediation activities to address the more robust regional civil engineering market, whilst retaining its land remediation capability but on a smaller scale. In Specialist Building, the Group has reduced capacity by 15% in line with the reduction in its forward order book. 

These actions will result in an exceptional charge in 2008 of £1.5m for redundancy and other restructuring costs. The resultant savings in annual costs will be over £5m.

The Board is also making an extraordinary charge of £1m in connection with the statutory debt on the employer arising from the winding up of the British Building & Engineering Pension Scheme. The winding up of this historic scheme commenced in 1999 and is expected to be completed in the near future.

Looking forward, the cost reduction and repositioning actions will safeguard the returns from our Specialist Construction activities in the challenging market conditions ahead. By continuing emphasis on project selectivity and quality of earnings, the Board expects continued improvement in percentage operating margins to be delivered by its Specialist Building activities, albeit on reduced levels of activity. In Specialist Engineering, activity levels are expected to remain constant with 2008 with operating margins of 4%, as a result of the repositioning of the Land Remediation business as outlined above.  Overall in 2009, the Board expects a continuing improvement in the Group's operating margin percentage. 

The Board is pleased to announce that, in line with the declared strategy for Specialist Engineering, it has completed the acquisition of the whole of the issued share capital of C.&A. Pumps Limited for £1.75m, including a freehold property independently valued at £0.8m. C&A, a specialist water services business based in Bowburn, County Durham, operates nationally and will enhance the range of capabilities provided by Renew to the water industry. In the year ended 31 December 2007, C&A recorded an operating profit of £0.2m on a turnover of £4.7m. 

Renew's annual results will be announced on Tuesday 25 November 2008.

6 November 2008

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