Renew Holdings Regulatory News (RNWH)

Renew Holdings plc

("Renew" or the "Group")

Preliminary results

Renew (AIM: RNWH) announces Preliminary results for the year ended 30 September 2011 with revenue up 23% and adjusted profit before tax* up 76% to £8.1m. 2011 saw the Group repositioned as an Engineering Services Group supporting UK Infrastructure.

Financial Highlights

Operational Highlights

·; Engineering Services revenue up 39% to £176.7m (2010: £127.4m)

·; Engineering Services adjusted operating profit* up 78% to £7.4m (2010: £4.2m)

·; Group order book of £285m (2010: £304m) - including Engineering Services order book up 118% to £179m (2010: £82m)

·; Acquisition of Engineering Services business Amco now fully integrated

·; Net debt of £6.8m in line with expectations following acquisition

* Pre-exceptional items and amortisation charges

Commenting on the business outlook, Roy Harrison OBE, Chairman said: "2011 has been a significant year for Renew, now successfully repositioned as a specialist provider of Engineering Services. The results demonstrate that the Group can deliver sustainable, profitable growth from our key markets of Energy, Environmental and Infrastructure. Our strong order book provides us with confidence that this will continue in 2012."

Enquiries:

About Renew Holdings plc

Engineering Services, which now accounts for over 60% of on-going Group revenue and over 80% of operating profit, focuses on the key markets of Energy (including Nuclear), Environmental and Infrastructure, which are largely governed by regulation and benefit from non-discretionary spend with long-term visibility of committed funding.

Specialist Building focuses on New Build Social Housing, High Quality Residential and Retail markets in the South of England.

For more information please visit the Renew Holdings plc website: www.renewholdings.com

Chairman's Statement

Introduction

2011 saw a decisive shift of the balance of the Group's activities into the Engineering Services sector in line with our established strategy.

The acquisition of Amco Group Holdings Limited ("Amco") in February 2011, together with continued organic growth and the decision to withdraw from non-specialist public sector building markets, has accelerated the Board's repositioning of Renew as an Engineering Services Group supporting UK infrastructure.

In 2009, the Board set out its strategy to deliver at least 50% of Group revenue from its Engineering Services activities with Group operating profit of over 2% by 2012. These targets have been achieved one year ahead of plan with Group operating profit margin for the year of 2.2% and Engineering Services accounting for 52% of Group revenue in the second half of the year.

Results

The Group has recorded results for the year ended 30 September 2011 which are in line with market expectations.

Group revenue was £356.7m (2010: £290.4m). Profit before income tax prior to exceptional items and amortisation charges was £8.1m (2010: £4.6m). Adjusted earnings per share, calculated prior to exceptional items and amortisation charges, was 9.6p (2010: 5.3p).

Engineering Services revenue was £176.7m (2010: £127.4m), an increase of 39%, with operating profit prior to exceptional items increasing by 78% to £7.4m (2010: £4.2m). These results include seven months of Amco's trading. Amco has integrated very well into the Group and has performed in line with expectations.

Specialist Building revenue increased to £178.9m (2010: £163.1m), with operating profit prior to exceptional items of £1.9m (2010: £1.8m).

The Group's contracted order book at 30 September 2011 stood at £285m (2010: £304m). This reduction is entirely due to our planned lower levels of activity in Specialist Building. The Engineering Services order book was £179m (2010: £82m), an increase of 118%.

At 30 September 2011, the Group's net debt was £6.8m comprising a loan of £12.5m and cash of £5.7m (2010: net cash £16.2m). The loan and the decrease in cash reflect the Amco acquisition.

Dividend

The Board is proposing a final dividend at 2.0p per share, maintaining the full year dividend at 3.0p (2010: 3.0p). The dividend will be paid on 23 February 2012 to shareholders on the register as at 27 January 2012.

Strategy

The strategic targets set in 2009 have been successfully achieved a year ahead of schedule. Looking ahead, the Board has an ambition that the Group will have turnover of over £500m by 2014, achieved by acquisition and organic growth, with a target that Engineering Services will account for at least 70% of Group revenue and with Group operating margin of more than 3%. Our emphasis is to secure sustainable positions on framework agreements, focusing on areas of non-discretionary spend and selective capital projects.

In Specialist Building, our retained businesses operate in stable markets. With reduced levels of activity and greater focus on our target markets, the Board expects this business to deliver an improvement in operating margin. We will continue to manage risk carefully, maintaining selectivity of opportunities in markets where the Group has expertise and experience.

Board

The Board welcomes David Forbes, who joined on 1 June 2011 as a non-executive director. David's extensive experience in corporate advisory services with NM Rothschild & Son Limited will assist the Board in its ambition to secure further suitable acquisitions in the Engineering Services sector.

Outlook

Although the overall economic outlook remains uncertain, the Board believes that spending in infrastructure markets is likely to continue to offer opportunities. The decision to focus on key markets which are mainly governed by regulation enables the Group to take advantage of growth anticipated in the Energy, Environmental and Infrastructure market sectors. This is evidenced by the Group's strong confirmed order book which underpins our expectation of further progress in 2012.

R J Harrison OBE

Chairman

22 November 2011

Chief Executive's Review

Renew is now positioned as an Engineering Services Group supporting UK infrastructure. 2011 has been a significant year for the Group which, with further organic growth and the acquisition of Amco, has achieved its target of shifting the balance of operations into Engineering Services.

Engineering Services

Engineering Services revenue was £176.7m (2010: £127.4m) and now accounts for over 60% of on-going Group revenue and over 80% of operating profit. Operating margins improved to 4.2% (2010: 3.3%).

In Engineering Services, Renew targets the key markets of Energy, Environmental and Infrastructure. These markets, which are mainly governed by regulation, benefit from non-discretionary spending patterns and long-term visibility of committed funding. The Group focuses on the renewal, refurbishment and maintenance of essential operational assets providing an integrated engineering service through its local, directly employed delivery teams. It remains the Group's strategy to grow our presence in these markets, both organically and by acquisition. The Group targets earnings enhancing acquisitions in markets with long-term funding and whose skills are complementary to those already offered by the Group.

Energy

Renew continues to operate in the nuclear, gas, coal, wind, hydro and biomass power generation sectors. Much of the work is delivered through 24 framework agreements, primarily for non-discretionary engineering maintenance work.

In the Nuclear sector, where we operate at 9 nuclear licenced sites in the UK, we have experienced record revenue during the year. The Nuclear Decommissioning Authority has confirmed expenditure of £3bn per annum for the next 4 years, underpinned by committed Government funding. The sites where the Group is active have been allocated over 66% of this funding, with over 50% at Sellafield, where we remain the largest mechanical and electrical contractor.

At Sellafield, the Multi Discipline Site Wide framework has been extended to September 2012. In addition, we were also appointed to the Decommissioning and Demolition framework, which is secured until March 2015, with an advertised spend of over £30m per annum. Work continues on major project programmes with good progress being made on the Evaporator D, Encapsulated Product Store and Separation Area Ventilation schemes.

At the Westinghouse Springfields Fuels Site, we are nearing the successful completion of a major plant outage project and, during the year, we secured a 2 year decommissioning contract associated with a redundant Fuel Manufacturing Facility.

We continue to support the consortia involved in the Nuclear New Build programme where our skills in stainless steel fabrication, materials handling and mechanical and electrical services will be increasingly in demand.

In other Energy sectors, we are currently active at 5 power stations and 2 wind farms, where framework agreements provide maintenance services and enable access to larger capital projects. There are increasing opportunities in both the wind and biomass sectors and we have also recently been appointed to 2 hydroelectric generation framework agreements.

EnvironmentalThe Group has considerable expertise in the water, flood alleviation, coastal defence and land remediation sectors, providing multidisciplinary engineering services across 16 framework agreements.

Northumbrian Water Limited remains our largest client in the Water sector where our relationship extends for over 20 years. In the year, we were reappointed under AMP5 to the major waste water project framework which runs initially to 2015, with an intention to extend for a further 6 years. Importantly, we have also been appointed to a number of non-discretionary maintenance framework agreements. These include 2 new framework agreements for trunk mains cleansing and water distribution, in addition to our established sewer maintenance framework agreement, where we are experiencing increased volumes.

In Land Remediation, VHE has recently been appointed to 3 framework agreements with National Grid, continuing our long standing relationship with this client. These framework agreements are for major and minor soils remediation projects nationwide and are for a 3 year period, with an option to renew for a further 2 years. During the year, a number of projects were undertaken involving the remediation of former gas work sites, including work at St Helier for the Royal States of Jersey. Similar work was carried out for National Grid at Neepsend and Partington in Manchester, the first large scale cluster project in the UK, under the established framework agreement.

We continue to provide civil, mechanical and electrical services under 5 minor works and river maintenance framework agreements for the Environment Agency. During the year, we maintained our long standing relationship with Cleveland Potash where we secured a shaft repair contract in addition to our ongoing maintenance activities.

Infrastructure

The Group continues to carry out small value highways and industrial projects across the UK, both under framework arrangements and individually.

During the year, the majority of revenue has been generated in the rail sector where we are the leading provider of engineering maintenance works to Network Rail. This has been recently recognised with the award of Infrastructure Maintenance Team of the Year at the National Rail Awards.

Our activities in the rail sector involve the Group in the provision of integrated civil, mechanical and electrical engineering services where the focus is on renewal, refurbishment and maintenance through 8 framework agreements and individual capital projects.

In May, we were appointed by Network Rail to the Building and Civils Delivery Partnership ("BCDP") framework agreements with an advertised value of £100m per annum. Amco was the only contractor appointed nationally. These framework agreements continue for 3 years, with an option to extend for a further 2 years. Amco is also one of 4 contractors on the National Electrification and Plant framework agreement, delivering a maintenance and renewal programme on the network for Network Rail throughout the UK. YJL Infrastructure has now been successfully integrated with Amco to maximise our response to the BCDP framework and to extend our capability to deliver services to a range of clients in the South East.

During the year, a number of individual capital projects were completed, including refurbishment work at Blackburn Station and the major station modernisation schemes at Marble Arch and Notting Hill Gate for London Underground. Amco has particular expertise, and is the market leader, in tunnel refurbishment work for Network Rail, having carried out numerous schemes over the last 10 years and having recently been awarded the major repair project in the Ore Tunnel near Hastings.

Specialist Building

The Group now has three Specialist Building businesses in the South which target the New Build Social Housing, High Quality Residential and Retail markets. These markets, in which we have extensive experience and expertise, provide sustainable opportunities for the future. Specialist Building revenue was £178.9m (2010: £163.1m) with operating margin maintained at 1.1%.

In New Build Social Housing, the Government has reconfirmed its commitment to reduce the significant housing shortage in the South East, where the Group has 13 framework agreements with leading Housing Associations which provide access to a £600m annual market spend. Included are 3 new framework appointments with Estuary Housing Association, Hyde Housing Association and London and Quadrant Housing Trust, where the first project has commenced on site at Lynton Road.

In High Quality Residential, the Group's activities are focused in London and the Home Counties where the market remains strong. Our experience in this sector, in particular our temporary works engineering capability, continues to differentiate our services and provide opportunities. In the year, good progress was made on contracts in Mayfair and Belgravia, with new awards received for projects in Knightsbridge, Kensington and Chelsea.

In Retail, we were recently awarded a project to construct a new Tesco store at Widnes which is on-site and progressing well. A number of other projects were also successfully carried out during the year for Tesco at Portland, Risca and Sandwell.

People

The safety of our employees and those who work with us continues to be the Group's main priority. The results of our commitment to safety can be seen in the continued improvement in the Group's Accident Incidence Rate which has progressively reduced by 77% since 2005.

The strong financial results demonstrate the skills and determination of everyone who works for Renew. The Board would like to thank its employees for their continued hard work and commitment to the success of the Group.

Summary

The acquisition of Amco has accelerated the transformation in the shape of the Group and offers Renew a range of opportunities for further growth in Engineering Services markets. Over the last five years, our Engineering Services activities have grown organically by 93% and, when combined with our acquisitions, now represent annual revenue of more than £200m as well as providing 80% of the Group's operating profit.

The development of our Engineering Services business has also improved Group operating margin and created a platform of sustainable revenue generated from over 50 framework agreements with major clients, most of which operate in regulated markets. These framework agreements, together with expected extensions and renewals, provide good visibility of income and quality of earnings both for the coming year and beyond.

Brian May

Chief Executive

22 November 2011

Group income statement

For the year ended 30 September 2011

Group balance sheet

At 30 September 2011

Group cash flow statement

For the year ended 30 September

Notes

1 International Financial Reporting Standards

The consolidated financial statements for the year ended 30 September 2011 have been prepared in accordance with International Financial Reporting Standards ("IFRS"). These preliminary results are extracted from those financial statements.

2 Segmental analysis

The Group's businesses are organised into two operating segments which form the basis of the segment information reported below. These segments are:

Engineering Services, which comprises the Group's engineering activities which are characterised by the use of the Group's skilled engineering workforce, supplemented by specialist subcontractors where appropriate, in a range of civil, mechanical and electrical engineering applications and:

Specialist Building, which comprises the Group's building activities which are characterised by the use of a supply chain of subcontractors to carry out building works under the control of the Group as principal contractor.

3 Exceptional items and amortisation of intangible assets

The Board has determined that certain charges to the income statement should be separately identified for better understanding of the Group's results.

During the year ended 30 September 2011, the Board determined to withdraw from non-specialist public spending building markets. As a result, the Group has incurred redundancy and restructuring costs of £3,680,000 in the year.

In 2009, the Group provided for a fine of £500,000 in connection with the decision of the Office of Fair Trading following its investigation into tender activities within the construction sector. The related offences occurred in 2003 and 2004 in part of the Group which has since been closed. In the year ended 30 September 2011 the Group incurred £10,000 (2010: £251,000) of legal fees in connection with its defence in respect of the Office of Fair Trading investigation. The Group's appeals were determined during the year and the fine was paid in September 2011 resulting in a further exceptional charge of £200,000.

In 2011, the Group acquired Amco Group Holdings Limited and incurred £1,357,000 of costs associated with the acquisition.

The Board has also separately identified the charge of £404,000 (2010: £320,000) for the amortisation of the fair value ascribed to certain intangible assets other than goodwill arising from the acquisitions of Seymour (C.E.C) Holdings Limited and Amco Group Holdings Limited.

4 Income tax expense

Dividends are recorded only when authorised and are shown as a movement in equity rather than as a charge in the income statement. The Directors are proposing that a final dividend of 2.0p per Ordinary Share be paid in respect of the year ended 30 September 2011. This will be accounted for in the 2011/12 financial year.

6 Earnings per share

The dilutive effect of share options is to increase the number of shares by 2,194,000 (2010: 2,685,000) and reduce basic earnings per share by 0.08p (2010: 0.20p).

7 Preliminary financial information

The financial information set out above does not constitute the Company's statutory accounts for the years ended 30 September 2011 or 2010. The financial information for 2010 is derived from the statutory accounts for 2010 which have been delivered to the Registrar of Companies. The auditors have reported on the 2010 accounts; their report was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006. The statutory accounts for 2011 will be finalised on the basis of the financial information presented by the directors in this preliminary announcement and will be delivered to the Registrar of Companies in due course.

8 Posting of Report & Accounts

The Group confirms that the annual report and accounts for the year ended 30 September 2011 will be posted to shareholders as soon as practicable and a copy will be made available on the Group's website:

www.renewholdings.com