Renew Holdings Regulatory News (RNWH)

23 Mar 2009 07:05



Renew Holdings plc

("Renew" or the "Group")

Trading Update 

Results for the first half of the year are expected to be satisfactory, however the outlook has deteriorated and as a result the Board does not now expect the Group's results to meet full year market expectations.

In Specialist Building, the last two months have been challenging, with project cancellations and deferrals leading to reduced trading expectations for the second half of this financial year. As a result of these weaker market conditions, the Board is acting to reduce capacity in this business stream by a further 23%, giving a reduction of 37% over the last year. These cost reductions will be implemented progressively through the second half of the year.

This action will result in an exceptional charge in the second half of £2.5m for redundancy and other restructuring costs. The resultant savings in annual costs will be more than £7m. The Board believes that this further reduced cost base positions its Specialist Building business appropriately in the current difficult economic climate. The focus in this area will remain on project selectivity and quality of earnings. Operating margins in Specialist Building will decrease reflecting the economic pressures currently prevailing in this market.

In Specialist Engineering, the market and the forward order book remain stable with trading for the full year anticipated to be in line with market expectations. The Board has decided to reclassify its Rail Infrastructure business from Specialist Building into Specialist Engineering as this reflects better the nature of work performed. Specialist Engineering is expected to represent approximately 40% of Group revenues going forward with operating margins remaining stable.

The Board intends to continue to strengthen and develop its Specialist Engineering activities both organically and by acquisition and can report that C.&A. Pumps has integrated well into the Group since its acquisition on 1 October 2008. 

The Group has recently reached final account settlement on the last of the basket of legacy construction contracts, which were originally provided against in 2005. This has led to an exceptional charge of £1m which will be reported in the first half results. 

Renew's balance sheet remains debt free with substantial cash resources and the Board intends to declare an unchanged interim dividend of 1.0p per share.

Renew's interim results for the six months ended 31 March 2009 will be announced on Tuesday 19 May 2009.

23 March 2009

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