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Renew looks for acquisitions in civils

23 Nov 10 The reinvention of Renew continues with further growth in civil engineering and a reduction in dependence on the building industry. With £16.2m cash in the bank and zero debt, Renew is on the look out for acquisitions in the civils sector.

In the year ending 30 September 2010 the company’s Specialist Engineering division accounted for 44% or group revenue, compared with just 15% four years ago. The company says that its strategy is to move the balance of Group revenue towards Specialist Engineering.

Group revenue for the year was £290.4m (2009: £316.6m). EBITDA was £4.6m (2009: £5.5m). Profit after tax, exceptional items and amortisation charges was £2.7m (2009: £0.4m).

Specialist Engineering revenue increased by 11% to £127.4m (2009: £114.8m) and operating profit prior to exceptional items and amortisation charges increased by 4% to £4.2m (2009: £4.0m).

In Specialist Building revenue reduced in the year to £163.1m (2009: £202.4m) with operating profit prior to exceptional items and amortisation charges of £1.8m (2009: £2.5m).

The order book at 30 September 2010 stood at £304m, which is 50% higher than a year earlier, and includes 70% of revenue secured for 2011.

Chairman Roy Harrison said: “The group has made good progress during the year in moving the balance of group revenue further towards Specialist Engineering in line with our strategy. Our strong order book, debt free balance sheet and healthy cash position provides confidence that the Group will deliver growth in both revenue and profits in 2011."

The reinvention of Renew began five years ago when it changed its name from YJ Lovell. Engineering expertise in nuclear, water, rail and land remediation has been developed with the aid of acquisitions that have included VHE in the late 1990s and Seymour Civil Engineering Contractors in 2007.

Harrison said: ““Our aim is to increase revenue in Specialist Engineering both organically and by acquisition, whilst maintaining operating margins of 3% to 4%. In Specialist Building we aim to maintain profitability of at least 1% at the operating level with a longer term target of 2% as and when markets improve."

Commenting on the business outlook, Harrison concluded: "The board's analysis of the impact of the Comprehensive Spending Review on our activities is that it will be limited. After taking this into account, the board remains confident that the group will continue to deliver a resilient performance in the medium term and is positioned to take advantage of opportunities when economic conditions improve. Renew is well positioned with a debt free balance sheet, substantial cash resources and a strong confirmed order book. As a result, the board expects that the group will return to growth in both revenue and operating profits in 2011."

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