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Renew Holdings Plc LSE:RNWH London Ordinary Share GB0005359004 ORD 10P
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Renew Holdings PLC Half-year Report

19/05/2020 7:00am

UK Regulatory (RNS & others)


Renew (LSE:RNWH)
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RNS Number : 2618N

Renew Holdings PLC

19 May 2020

Renew Holdings plc

("Renew" or the "Group")

Half-year Report

A record H1, strong cash generation, resilient trading through Covid-19

Renew (AIM: RNWH), the Engineering Services Group supporting UK infrastructure, announces its interim results for the six months ended 31 March 2020. The Group has delivered another record trading period, seeing strong cash generation and trading performance, inclusive of the contribution from the acquisition of Carnell Support Services in January 2020. The integration of the business has progressed well and the results are in line with the Board's expectations.

Financial Highlights:

 
                                 H1 2020     H1 2019 
 Revenue                       GBP313.6m   GBP301.0m 
                              ----------  ---------- 
 Adjusted operating profit*     GBP19.9m    GBP18.4m 
                              ----------  ---------- 
 Profit before tax              GBP15.2m    GBP14.5m 
                              ----------  ---------- 
 Adjusted operating margin*         6.4%        6.1% 
                              ----------  ---------- 
 Adjusted earnings per 
  share*                           20.1p       19.2p 
                              ----------  ---------- 
 

*Renew uses a range of statutory performance measures and alternative performance measures when reviewing the performance of the Group against its strategy. Definitions of the alternative performance measures, and a reconciliation to statutory performance measures, are included in the Group's 2019 Annual Report and Accounts.

   --    Engineering Services revenue grew 4% to GBP293.1m (2019: GBP281.6m) 
   --    Engineering Services adjusted operating profit* increased by 7% to GBP20.5m (2019: GBP19.1m) 
   --    Increase in Engineering Services order book to GBP591m (2019: GBP531m) 
   --    Net debt of GBP16.1m (2019: GBP17.2m) 

Ø Headroom in our available facilities of c.GBP55m plus GBP15m uncommitted accordion facility

   --    Broadened service offering into the Highway market, following the acquisition of Carnell 

-- Resilient in the face of Covid-19, with approx. 80% of activities continuing during the crisis

Ø Interim dividend payment suspended, as stated in the trading update on 1 April 2020

David Forbes, Chairman of Renew, said: " Our strong trading performance and cash generation in the first half of the year, is reflective of the reliable long-term nature of the UK infrastructure markets in which we operate, a strategy reinforced in the Government's latest Budget when they committed to investing GBP640bn in infrastructure over the next 5 years(7) .

Where we are able to satisfy the requirements of the Covid-19 safety guidelines, we continue to work closely with our customers directly delivering essential network services. In total, approximately 80% of our activities have continued during the crisis as they are deemed critical to the Covid-19 response. Following the UK Government's recovery strategy launched on 10 May 2020, we are addressing immediate opportunities to remobilise the remaining 20% of our operations and we anticipate this positive momentum will continue.

The strength of the Group's position in its markets and the essential nature of the work we undertake gives the Board confidence that Renew remains well placed to play a significant role in the long-term opportunities that will emerge across UK infrastructure, a sector that will play an important role in rebuilding our economy.

The Board and I would like to take this opportunity to thank all of our colleagues who have continued to deliver our essential services during this difficult time."

Enquiries:

 
 Renew Holdings plc                                                        Tel: 0113 281 4200 
 Paul Scott, CEO 
 Sean Wyndham-Quin, CFO 
 
 Numis Securities Limited (Nominated Adviser                               Tel: 020 7260 1000 
  & Broker) 
 Stuart Skinner/ Kevin Cruickshank 
 
 
 Walbrook PR                                       Tel: 020 7933 8780 or renew@walbrookpr.com 
 Paul McManus                                                              Mob: 07980 541 893 
 Lianne Cawthorne                                                          Mob: 07584 391 303 
 
 
 
 

About Renew Holdings plc

Engineering Services , which accounts for over 90% of Group revenue and over 95% of operating profit, focuses on the key markets of Rail, Infrastructure, Energy (including Nuclear) and Environmental, which are largely governed by regulation and benefit from non-discretionary spend with long-term visibility of committed funding.

Specialist Building focuses on the High Quality Residential and Science markets in London and the Home Counties.

Renew was pleased to be awarded the London Stock Exchange's Green Economy Mark which recognises companies that contribute to positive environmental outcomes.

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

Chief Executive's Review

As a leading provider of essential engineering support services to UK infrastructure networks, Renew operates in the regulated Rail, Infrastructure, Energy and Environmental markets. Our essential infrastructure maintenance and renewal services are underpinned by regulatory requirements and, as such, benefit from long-term visible cycles of investment. Our differentiated business model delivers reliability and a competitive advantage and is key to the Group's success in these markets.

How we are responding to the Covid-19 pandemic

We continue to respond decisively and effectively to the ongoing challenges of the Covid-19 pandemic. The health, safety and wellbeing of our people and all stakeholders continues to be our highest priority especially during this unprecedented period. I continue to be immensely proud of the reaction to this event by my colleagues and our entire workforce who remain fully committed to complying with the UK Government's safety guidelines whilst delivering essential services.

Where it remains safe to do so we continue to operate across the majority of our sectors; albeit some disruption has been inevitable. In Rail and Highways, which account for the majority of our engineering activity, we are working closely with our public sector customers in areas designated critical to the Covid-19 response. We continue to see clear commitment and ongoing demand for our directly delivered maintenance and renewal services. Water and Telecommunications have also been designated 'critical sectors' and our key workers continue to be deployed across all network areas where we have framework contracts. In total, approximately 80% of our activities have continued as they are in areas deemed critical to the Covid-19 response.

In response to the escalation of the Covid-19 pandemic, the Board has been focused on taking actions to preserve cash and protect liquidity in a way that does not compromise the long-term prospects of the business. These include deferral of all non-essential capital expenditure, a hiring freeze, deferral of VAT payments (GBP2.6m deferred in March 2020), utilisation of the Government's Coronavirus Job Retention Scheme (c.15% of the workforce furloughed) and a temporary 20% reduction in the salaries of the Board and senior management from 1 April 2020. As stated in the trading update on 1 April 2020, the Board has suspended payment of the interim dividend which would ordinarily have been paid to shareholders in July 2020. We understand the importance of the dividend to our shareholders and will keep our dividend policy under review in the coming months.

The Group recently refinanced its working capital facilities as part of the acquisition of Carnell Support Services ("Carnell") in January 2020 and now has a revolving credit facility ("RCF") provided by HSBC and NatWest of GBP44.2m, expiring in January 2024. In addition, the Group has a GBP10m unsecured overdraft facility. As at 31 March 2020, headroom in our available facilities was approximately GBP55m, plus a GBP15m uncommitted accordion facility on the RCF. The Group's cash generation has continued to be strong since the end of March with our regulated public sector customers adhering to the Government's Public Procurement Notice guidelines, that encourages prompt payment.

In order to provide a picture of the impact Covid-19 has had on our various market sectors we have provided a specific commentary in each of the following sector reviews. In general, while there is naturally some disruption, the Group's inherently defensive qualities are providing a good degree of resilience in these unprecedented circumstances.

Group results

The Group has seen record trading in the first half of the year. Adjusted(1) operating profit increased 8% to GBP19.9m (2019: GBP18.4m) on revenue of GBP313.6m (2019: GBP301.0m). Adjusted(1) operating margin, increased to 6.4% (2019: 6.1%). Adjusted(1) earnings per share was 20.1p (2019: 19.2p). Statutory profit before income tax was GBP15.2m (2019: GBP14.5m). The Group's order book at 31 March 2020 was GBP690m (2019: GBP580m) and includes significant new awards during the first half of the year. Since 31 March 2020 we have seen no significant change in the order book characteristics as a consequence of the pandemic. At 31 March 2020, the Group had net debt of GBP16.1m (2019: GBP17.2m) which reflects the Group's continued focus on cash generation and conservative approach to gearing. Included in this amount is the balance outstanding on the term loan used to fund the acquisition of QTS which is GBP17.5m.

The results include a contribution from Carnell which was acquired in January 2020. The integration of the business has progressed well and its results are in line with our expectations.

Engineering Services

Engineering Services revenue was GBP293.1m (2019: GBP281.6m) with an adjusted(1) operating profit of GBP20.5m (2019: GBP19.1m) resulting in an operating margin of 7.0% (2019: 6.8%). At 31 March 2020, the Engineering Services order book was GBP591m (2019: GBP531m).

Across our Engineering Services markets we focus on directly delivering high volumes of non-discretionary maintenance and renewals tasks. The average task size is comparatively small which minimises financial and contractual risk compared with those businesses delivering larger enhancement schemes.

Rail

Over the current 5-year investment cycle, Control Period 6 ("CP6"), which runs to 2024, Network Rail will spend GBP48bn on the network which includes a circa 25 per cent increase in spending on operations, maintenance, support and renewals activities compared to Control Period 5(2) . As a major provider of infrastructure services to Network Rail nationally, we support the day-to-day operation of the network by directly delivering essential asset maintenance through our long-term CP6 frameworks.

When the lockdown restrictions were imposed in March, our largest customer Network Rail confirmed their intention to proceed with all our planned works where we were able to comply with the UK Government's Covid-19 safety guidelines. We have experienced limited site closures to-date and in some cases we have taken the opportunity to deliver some schemes ahead of plan while the network has been running at limited capacity. We remain operational in all Network Rail routes and regions where, during April and into May, we have seen activity levels similar to those experienced prior to the pandemic's impact.

During the period we secured new positions on the CP6 Wales and Western 5-year Renewals frameworks across all 5 lots, where we will deliver a programme of engineering services to assets across the rail network including bridges, embankments, tunnels and electrification & plant. We were also awarded a further rail drainage framework in Scotland, complementing our existing rail drainage framework positions. We continue to operate on the Multidisciplinary Renewals and Geotechnical & Earthworks 5-year frameworks in Scotland as well as on existing frameworks for Slab Track in Scotland and for Station Information & Security Systems and Telecoms nationally. We provide a range of integrated services across the rail network which include civils asset management, signalling, fencing, devegetation and drainage.

In response to the effects of Storm Ciara and Storm Dennis in February 2020, which flooded rail and road networks across the country, we have seen significant and sustained demand for our emergency support services across the most severely impacted locations in Wales, North West and Central, Eastern and Scotland. Working around the clock, despite the challenging weather conditions and remote locations, our teams undertook vital works to ensure the integrity and safety of the railway for passengers and freight customers, minimising disruption and protecting community transport links. Works included repairs to a major landslide between Thornhill and Dumfries in Scotland and slope failure repairs at Auldgirth, Scotland. Emergency repairs were also undertaken on the Glasgow South Western Line following a significant landslip and at a number of locations on the Hereford to Newport Line in South Herefordshire.

Through our framework agreements with London Underground, we deliver specialist electrical, plant and power schemes. In addition to these frameworks we are also undertaking a number of depot control system and major depot refurbishment schemes. Work on Merseyrail's Principal Contractors 3-year framework and on the Transport for Wales STRIDE framework continues.

In the period we were awarded our first project to deliver a temporary compound for HS2. We are in negotiations to provide further compounds as part of a larger programme to establish around 100 similar facilities over the next 2 years.

Infrastructure

To support the Group's growth strategy, in January 2020 we were pleased to announce the acquisition of Carnell Support Services. Carnell is a leading provider of specialist engineering services on the Strategic Road Network where it directly delivers non-discretionary renewals and maintenance through long-term framework agreements. Post the period end, Carnell was awarded additional Asset Delivery frameworks in Areas 6 and 8, for its largest customer, Highways England. Carnell's complementary services are an excellent fit with the Group's established and proven strategy.

Further endorsement of this acquisition was provided when the Government confirmed in its latest Budget that it would spend GBP27.4bn as part of its 5-year Road Investment Strategy ("RIS2")(3) . GBP11.9bn of this funding will be ringfenced for operations, maintenance and renewals, a significant increase from GBP5.1bn in RIS1(4) .

Highways England remains focused on safely maintaining critical services to support the Strategic Road Network and the UK Government is clear that the industry should continue to operate whilst observing the Covid-19 safety guidelines. We remain operational across all areas for Highways England which is reflective of the resilience of this new market sector for Renew. During April and May, we have experienced similar levels of activity to those seen prior to the pandemic's impact.

In Wireless Telecoms, a sector also designated critical at this time, we have experienced limited interruption with some access restrictions across London. We continue to support the network operators to ensure the operation of critical services where it remains safe for our employees to do so. We have seen a significant increase in work across our framework contracts throughout the UK as the 5G roll-out accelerates including the first of several large packages to carry out 5G street works installations. We are gradually seeing a return to pre-Covid-19 activity levels and we anticipate this positive momentum will continue.

Energy

The Nuclear Decommissioning Authority continues to commit around GBP3bn(5) per annum on the decommissioning programme across its 17 nuclear licensed sites in the UK. We operate on sites that command approximately 90 per cent of this provision. The largest of these sites is Sellafield in Cumbria, where we remain a principal mechanical, electrical and instrumentation contractor.

We further strengthened our position at Sellafield in the period with the appointment to both lots of the 4-year Fabrication and Machining Spares Framework where we will be supplying engineering components to very demanding nuclear standards. We continue to work on numerous high hazard retrievals and risk reduction activities across the site through established, long-term framework agreements for decontamination, decommissioning and waste management. Our Decommissioning Delivery Partnership Framework, which runs to 2026, delivers work across some of the most hazardous areas including waste retrieval from legacy storage ponds and silos.

The Sellafield site instigated emergency measures at the start of the Covid-19 lockdown and consequently all site work activity was suspended. This remained the case until the end of April 2020 when it restarted work on one prioritised programme. It still remains unclear when the suspended programmes will be recommenced. We continue to work very closely with this long-term customer, with which we have contractual protection measures, to retain our highly qualified resources and to cover the majority of costs associated with the interruption whilst assisting with the development of plans for the resumption of decommissioning activities.

At Springfields, all activity was initially suspended with the lockdown at the end of March. During April approximately 50 per cent of our activities, including operational support and decommissioning, recommenced at the site and we anticipate this positive momentum will continue.

Elsewhere in nuclear, we continue to work on the 7-year Decommissioning Services Framework at Dounreay and to support Rolls Royce on its Diesel Generator Programme at Hinkley Point 'C'.

Our essential engineering maintenance services at 6 of the UK's thermal power stations, including Drax, have continued with little interruption. We also have a Minor Works framework with National Grid as well as securing a Minor Civils framework with Western Power Distribution in the period.

Environmental

We provide a range of engineering services to support the renewal and maintenance of water infrastructure assets including those on clean and wastewater networks, flood alleviation and coastal protection systems. Spending on the latest 5-year investment cycle (AMP7) is estimated to be circa GBP50bn(6) as demand continues to be driven by population growth, ageing infrastructure and environmental considerations. These long-term renewal programmes require sustained investment through our clients' operational expenditure budgets.

Work continues for all our water clients and the Environment Agency where we are able to comply with the UK Government's Covid-19 safety guidelines. The nature of the essential maintenance and renewals tasks we undertake designates our teams as key workers and we remain fully operational across all our frameworks.

Since the extensive flooding that was caused by Storm Ciara and Storm Dennis in February 2020, we have been extremely busy delivering critical reactive works, through our framework agreements, to keep the water network operational. These essential works interrupted the delivery of regular planned maintenance and renewals works which are now recommencing.

For D r Cymru Welsh Water, we operate on the Pressurised Pipelines Framework, Major Civils Framework and the Capital Delivery Alliance Civils contracts across the region. In addition to ongoing maintenance and renewals tasks, we have provided extensive 24/7 emergency reactive works on the water network during the period to ensure continuity of supply. As an approved dam safety contractor, we continue to grow our portfolio of work with the award of 2 new dam infrastructure schemes.

Works continue with Wessex Water and Bristol Water as they develop their plans for AMP7. With new client Yorkshire Water, we will carry out engineering works to existing assets on operational treatment and distribution facilities over the next 5 years through the AMP7 Minor Civils Framework.

In the latest Budget the Government committed a record investment of GBP5.2bn (7) over the next 6 years to improve flood defences nationally. We see this as a major growth opportunity, where we currently work for customers including the Environment Agency and Canal and Rivers Trust delivering essential maintenance and improvement works nationally.

In Land Remediation, we have experienced disruption across our site activities due to the Covid-19 pandemic. A number of remediation sites have now reopened with enhanced safety protection in line with the UK Government's Covid-19 guidelines. In the period we worked on regeneration schemes for Homes England and Harworth Estates.

In Specialist Restoration, site work at the Palace of Westminster was suspended at the start of the Covid-19 restrictions, however, we have continued with renovation activities in our restoration workshop. Working closely with this client we have gradually restarted site operations and anticipate this momentum will continue.

Specialist Building

We specialise in the High Quality Residential and Science markets in London and the Home Counties. During the period, work continued uninterrupted on schemes for our Science clients including schemes for Defra and MRC London Institute of Medical Science. We experienced some disruption in the High Quality Residential sector in Central London; however, we are actively working with all of our clients in developing plans to safely resume site operations in May and June 2020. The Group continues to be selective in these markets where we have a long-established track record.

Revenue was in line with the Group's expectations at GBP20.5m (2019: GBP19.4m) reflecting a continued focus on contract selectivity and risk management. Operating profit was GBP0.4m (2019: GBP0.3m), with an operating margin of 2.0% (2019: 1.5%). In Specialist Building, the order book was GBP99m (2019: GBP49m).

Board changes

In February 2020 we were pleased to announce the appointment of Stephanie Hazell to the Renew Board as a Non-Executive Director from 1 March 2020. Stephanie has over 20 years' relevant experience working in high profile businesses including PricewaterhouseCoopers LLP, Orange SA, Virgin Management Ltd and National Grid Plc, where she held the position of director, strategy and corporate development. Stephanie is an industrial partner at Infracapital and a non-executive director for a number of its investments. Stephanie's appointment will bring additional valuable experience in a number of the Group's existing markets and strategic experience across the Infrastructure sector to assist in the development and delivery of the Group's established strategy.

Sustainability

In order to be able to deliver long-term value for all our stakeholders, we continue to embed robust environmental, social and governance ("ESG") practice and procedures throughout our business. Examples in the period include our work to develop the diversity of the Board and improvements in training and wellness opportunities for all our employees. Our subsidiary businesses also continue to work towards obtaining the latest environmental accreditations. The Group's strong core values underpin our approach to sustainable ESG, and we consider these to be fundamental to the long-term sustainability of the Group.

Outlook

Our strong trading performance and cash generation in the period is reflective of the reliable long-term nature of the UK infrastructure markets in which we operate, a strategy reinforced in the Government's latest Budget when it committed to investing GBP640bn in infrastructure over the next 5 years(7) . The acquisition of Carnell has broadened our service offering into the Highways market, increasing the opportunities available to the Group under this long-term spending programme.

Where we are able to satisfy the requirements of the Covid-19 safety guidelines, we continue to work closely with our customers directly delivering essential network services. In total, approximately 80% of our activities have continued during the crisis as they are deemed critical to the Covid-19 response. Following the UK Government's recovery strategy launched on 10 May 2020, we are addressing immediate opportunities to remobilise the remaining 20% of our operations and we anticipate this positive momentum will continue.

The strength of the Group's position in its markets and the essential nature of the work we undertake give the Board confidence that Renew remains well placed to play a significant role in the long-term opportunities that will emerge across UK infrastructure, a sector that will play an important role in rebuilding our economy.

Paul Scott

Chief Executive

19 May 2020

(1) Renew uses a range of statutory performance measures and alternative performance measures when reviewing the performance of the Group against its strategy. Definitions of the alternative performance measures, and a reconciliation to statutory performance measures, are included in the Group's 2019 Annual Report and Accounts.

(2) CP6 Network Rail Strategic Business Plan - Summary, 9 February 2018.

(3) Department for Transport, Road Investment Strategy 2: 2020 - 2025, March 2020.

(4) Department for Transport, Road Investment Strategy: for the 2015/16-2019/20 Road Period, March 2015

(5) NDA Business Plan 1 April 2019 to 31 March 2022, March 2019.

(6) Water UK - A Manifesto for Water, Summary of the Water Industry's Plans in England 2020 - 25, 3 September 2018.

(7) Budget 2020 - What you need to know: Government website, 11 March 2020.

Our differentiated business model:

 
 
   *    Our Infrastructure, Energy and Environmental markets        *    Provides visible, reliable and resilient revenues v 
        enjoy committed funding                                    ia 
                                                                         long-term maintenance and renewal programmes 
 
  *    We deliver non-discretionary maintenance and renewals         *    We have little exposure to the financial and 
       tasks                                                              contractual risks facing those businesses that 
                                                                          deliver large enhancement schemes funded by capex 
                                                                          spend 
 
 
                                                                     *    In rail maintenance our average task size is less 
                                                                          than GBP20k 
 
 
                                                                     *    Mainly funded from opex budgets 
                                                              -------------------------------------------------------------- 
                                                               *    Markets with high barriers to entry 
   *    We work in complex, challenging and highly regulated 
        environments 
                                                              -------------------------------------------------------------- 
 
   *    We employ a highly skilled, directly employed               *    Underpins safe working practices 
        workforce 
 
                                                                    *    Creates a culture of responsiveness to client needs 
 
 
                                                                    *    Reduces our exposure to sub-contractor pricing 
                                                                         volatility 
                                                              -------------------------------------------------------------- 
 
   *    We have a proven track record of revenue growth,            *    Presenting an attractive, long-term investment case 
        profitability and cash generation 
                                                              -------------------------------------------------------------- 
 
 
               Condensed consolidated income statement 
                     for the six months ended 31 March 
                                                  2020 
 
 
 
                                           Exceptional                                              Exceptional 
                                Before           items                                   Before           items 
                           exceptional             and                              exceptional             and 
                                 items    amortisation                                    items    amortisation 
                                   and   of intangible                                      and              of 
                          amortisation          assets                             amortisation      intangible        Year 
                                    of            (see          Six months                   of          assets       ended 
                            intangible            Note             ended             intangible       (see Note          30 
                                assets              3)           31 March                assets              3)   September 
 
                                  2020            2020         2020        2019*           2019            2019        2019 
 
                             Unaudited       Unaudited    Unaudited    Unaudited        Audited         Audited     Audited 
 
                   Note         GBP000          GBP000       GBP000       GBP000         GBP000          GBP000      GBP000 
 
 Revenue: Group 
  including 
  share of joint 
  venture             2        313,566               -      313,566      300,978        600,631               -     600,631 
 Less share of 
  joint 
  venture's 
  revenue                            -               -            -            -          (709)               -       (709) 
                         -------------  --------------  -----------  -----------  -------------  --------------  ---------- 
 Group revenue 
  from 
  continuing 
  activities          2        313,566               -      313,566      300,978        599,922               -     599,922 
 Cost of sales               (268,924)               -    (268,924)    (258,964)      (514,299)               -   (514,299) 
                         -------------  --------------  -----------  -----------  -------------  --------------  ---------- 
 Gross profit                   44,642               -       44,642       42,014         85,623               -      85,623 
 Administrative 
  expenses                    (24,699)         (3,910)     (28,609)     (26,848)       (47,390)        (10,788)    (58,178) 
 Share of 
  post-tax 
  result of 
  joint 
  venture                            -               -            -            -             96               -          96 
                         -------------  --------------  -----------  -----------  -------------  --------------  ---------- 
 Operating 
  profit              2         19,943         (3,910)       16,033       15,166         38,329        (10,788)      27,541 
 Finance income                      1               -            1            1             50               -          50 
 Finance costs                   (863)               -        (863)        (691)        (1,244)               -     (1,244) 
 Other finance 
  income 
  - defined 
  benefit 
  pension 
  schemes                            -               -            -            -            615               -         615 
                         -------------  --------------  -----------  -----------  -------------  --------------  ---------- 
 Profit before 
  income 
  tax                 2         19,081         (3,910)       15,171       14,476         37,750        (10,788)      26,962 
 Income tax 
  expense             4        (3,755)             504      (3,251)      (2,749)        (7,306)           2,601     (4,705) 
                         -------------  --------------  -----------  -----------  -------------  --------------  ---------- 
 Profit for the 
  period 
  attributable 
  to 
  equity holders 
  of 
  the parent 
  company                       15,326         (3,406)       11,920       11,727         30,444         (8,187)      22,257 
                         -------------  --------------  -----------  -----------  -------------  --------------  ---------- 
 
 
 Basic earnings 
  per 
  share               5         20.06p         (4.46p)       15.60p       15.58p         40.43p        (10.88p)      29.55p 
 Diluted 
  earnings 
  per share           5         19.90p         (4.42p)       15.48p       15.49p         40.13p        (10.79p)      29.34p 
                         -------------  --------------  -----------  -----------  -------------  --------------  ---------- 
 
 Proposed 
  dividend            6                                       0.00p        3.83p                                     11.50p 
                                                        -----------  -----------                                 ---------- 
 

*Operating profit for the six months ended 31 March 2019 is stated after charging GBP3,264,000 of amortisation cost (see Note 3).

Condensed consolidated statement of comprehensive income

for the six months ended 31 March 2020

 
                                                       Six months ended        Year ended 
                                                           31 March          30 September 
                                                          2020        2019           2019 
 
                                                     Unaudited   Unaudited        Audited 
                                                        GBP000      GBP000         GBP000 
 
 Profit for the period attributable 
  to equity holders of the parent company               11,920      11,727         22,257 
                                                --------------  ----------  ------------- 
 
 Items that will not be reclassified 
  to profit or loss: 
 Movement in actuarial valuation of 
  the defined benefit pension schemes                        -           -          3,543 
 Movement on deferred tax relating 
  to the defined benefit pension schemes                     -           -        (1,240) 
                                                --------------  ----------  ------------- 
 Total items that will not be reclassified 
  to profit or loss                                          -           -          2,303 
                                                --------------  ----------  ------------- 
 Items that are or may be reclassified 
  subsequently to profit or loss: 
 Exchange movement in reserves                             (5)         (5)             28 
 Total items that are or may be reclassified 
  subsequently to profit or loss                           (5)         (5)             28 
                                                --------------  ----------  ------------- 
 Total comprehensive income for the 
  period attributable to equity holders 
  of the parent company                                 11,915      11,722         24,588 
                                                --------------  ----------  ------------- 
 
 

Condensed consolidated statement of changes in equity

for the six months ended 31 March 2020

 
                                              Share      Capital    Cumulative      Share                   Total 
                                                                                    based 
                                    Share   premium   redemption   translation   payments    Retained      equity 
                                  capital   account      reserve    adjustment    reserve    earnings   Unaudited 
                                   GBP000    GBP000       GBP000        GBP000     GBP000      GBP000      GBP000 
 
 At 1 October 2018                  7,527    51,684        3,896         1,311        698      10,355      75,471 
 Transfer from income 
  statement for the period                                                                     11,727      11,727 
 Dividends paid                                                                               (5,020)     (5,020) 
 New shares issued                      6       220                                                           226 
 Recognition of share 
  based payments                                                                    (272)                   (272) 
 Exchange differences                                                      (5)                                (5) 
                                 --------  --------  -----------  ------------  ---------  ----------  ---------- 
 At 31 March 2019                   7,533    51,904        3,896         1,306        426      17,062      82,127 
 Transfer from income 
  statement for the period                                                                     10,530      10,530 
 Dividends paid                                                                               (2,885)     (2,885) 
 Recognition of share 
  based payments                                                                      150                     150 
 Exchange differences                                                       33                                 33 
 Actuarial movement recognised 
  in the pension schemes                                                                        3,543       3,543 
 Movement on deferred 
  tax relating to the pension 
  schemes                                                                                     (1,240)     (1,240) 
                                 --------  --------  -----------  ------------  ---------  ----------  ---------- 
 At 30 September 2019               7,533    51,904        3,896         1,339        576      27,010      92,258 
 Transfer from income 
  statement for the period                                                                     11,920      11,920 
 Dividends paid                                                                               (5,770)     (5,770) 
 New shares issued                    322    15,024                                                        15,346 
 Recognition of share 
  based payments                                                                      (4)                     (4) 
 Exchange differences                                                      (5)                                (5) 
                                 --------  --------  -----------  ------------  ---------  ----------  ---------- 
 At 31 March 2020                   7,855    66,928        3,896         1,334        572      33,160     113,745 
                                 --------  --------  -----------  ------------  ---------  ----------  ---------- 
 

Condensed consolidated balance sheet

at 31 March 2020

 
                                                                             31 March      30 September 
                                                                  2020           2019              2019 
                                                             Unaudited      Unaudited           Audited 
                                                                GBP000         GBP000            GBP000 
 Non-current assets 
 Intangible assets - 
  goodwill                                                     125,092        105,282           105,282 
                         - other                                26,442         12,727             9,463 
 Property, plant and 
  equipment                                                     22,242         20,182            20,932 
 Right of use assets*                                           10,157              -                 - 
 Investment in joint 
  venture                                                           39            123               139 
 Retirement benefit 
  assets                                                        27,936         23,271            25,554 
 Deferred tax assets                                             1,462          1,502             1,416 
                                             -------------------------  -------------  ---------------- 
                                                               213,370        163,087           162,786 
                                             -------------------------  -------------  ---------------- 
 Current assets 
 Inventories                                                     1,675          1,624             2,632 
 Assets held for resale                                          1,500          1,500             1,500 
 Trade and other receivables                                   110,700        119,133           118,623 
 Current tax assets                                              1,334              -                 - 
 Cash and cash equivalents                                      31,430          8,999            11,667 
                                                               146,639        131,256           134,422 
                                             -------------------------  -------------  ---------------- 
 
 Total assets                                                  360,009        294,343           297,208 
                                             -------------------------  -------------  ---------------- 
 
 Non-current liabilities 
 Borrowings                                                   (38,750)       (17,498)          (13,123) 
 Obligations under finance 
  leases**                                                    (10,320)        (2,645)           (3,214) 
 Deferred tax liabilities                                     (14,755)       (10,353)          (10,598) 
 Provisions                                                      (452)          (298)             (452) 
                                             -------------------------  -------------  ---------------- 
                                                              (64,277)       (30,794)          (27,387) 
                                             -------------------------  -------------  ---------------- 
 Current liabilities 
 Borrowings                                                    (8,750)        (8,752)           (8,752) 
 Trade and other payables                                    (167,512)      (166,527)         (164,450) 
 Obligations under finance 
  leases**                                                     (5,714)        (2,228)           (2,546) 
 Current tax liabilities                                             -        (1,864)           (1,804) 
 Provisions                                                       (11)        (2,051)              (11) 
                                                           (181,987)        (181,422)         (177,563) 
                                             -------------------------  -------------  ---------------- 
 
 Total liabilities                                           (246,264)      (212,216)         (204,950) 
                                             -------------------------  -------------  ---------------- 
 
 Net assets                                                    113,745         82,127            92,258 
                                             -------------------------  -------------  ---------------- 
 
 Share capital                                                   7,855          7,533             7,533 
 Share premium account                                          66,928         51,904            51,904 
 Capital redemption 
  reserve                                                        3,896          3,896             3,896 
 Cumulative translation 
  adjustment                                                     1,334          1,306             1,339 
 Share based payments 
  reserve                                                          572            426               576 
 Retained earnings                                              33,160         17,062            27,010 
                                             -------------------------  -------------  ---------------- 
 Total equity                                                  113,745         82,127            92,258 
                                             -------------------------  -------------  ---------------- 
 
              *The Group has adopted IFRS 16 from 1 October 2019 using 
              the modified retrospective transition option. Under this 
              option, the comparative information is not restated. 
              (See Note 1.) 
 
              ** At 31 March 2020 current lease obligations included 
              GBP3,301,000 of additional liabilities and non-current 
              lease obligations included GBP6,925,000 of additional 
              liabilities recognised under IFRS 16. 
 
 

Condensed consolidated cashflow statement

for the six months ended 31 March 2020

 
                                                     Six months ended      Year ended 
                                                          31 March       30 September 
                                                      2020        2019           2019 
                                                 Unaudited   Unaudited        Audited 
                                                    GBP000      GBP000         GBP000 
 Profit for the period from continuing 
  operating activities                              11,920      11,727         22,257 
 Share of post-tax trading result of 
  joint venture                                          -           -           (96) 
 Impairment and amortisation of intangible 
  assets                                             2,148       3,264          6,528 
 Defined benefit pension scheme guaranteed 
  minimum equalisation                                   -           -          4,260 
 Depreciation*                                       4,749       2,826          5,561 
 Profit on sale of property, plant and 
  equipment                                          (308)       (377)          (621) 
 Decrease/(increase) in inventories                    245          67          (210) 
 Decrease in receivables                            20,647       7,187          7,769 
 Decrease in payables                              (5,005)    (11,946)       (15,239) 
 Current and past service cost in respect 
  of defined benefit pension scheme                     25          30             46 
 Cash contribution to defined benefit 
  pension schemes                                  (2,382)     (2,847)        (5,279) 
 Credit in respect of share options                    (4)       (272)          (122) 
 Finance income                                        (1)         (1)           (50) 
 Finance expense                                       863         691            629 
 Interest paid                                       (863)       (691)        (1,244) 
 Income taxes paid                                 (5,372)     (2,600)        (5,524) 
 Income tax expense                                  3,251       2,749          4,705 
 Net cash inflow from continuing operating 
  activities                                        29,913       9,807         23,370 
 Net cash (outflow)/inflow from discontinued 
  operating activities                               (213)       1,585             71 
                                               -----------  ----------  ------------- 
 Net cash inflow from operating activities          29,700      11,392         23,441 
                                               -----------  ----------  ------------- 
 Investing activities 
 Interest received                                       1           1             50 
 Dividend received from joint venture                  100           -             80 
 Proceeds on disposal of property, plant 
  and equipment                                        376         581            939 
 Purchases of property, plant and equipment        (1,710)     (1,680)        (2,619) 
 Acquisition of subsidiaries net of cash 
  acquired                                        (40,512)           -              - 
                                               -----------  ----------  ------------- 
 Net cash outflow from investing activities       (41,745)     (1,098)        (1,550) 
 
 Financing activities 
 Dividends paid                                    (5,770)     (5,020)        (7,905) 
 Issue of Ordinary Shares                           15,346         226            226 
 New loan                                           49,000           -              - 
 Loan repayments                                  (23,375)     (4,375)        (8,750) 
 Repayment of obligations under finance 
  leases**                                         (3,394)     (1,303)        (3,076) 
                                               -----------  ----------  ------------- 
 Net cash inflow/(outflow) from financing 
  activities                                        31,807    (10,472)       (19,505) 
 
 Net increase/(decrease) in continuing 
  cash and cash equivalents                         19,975     (1,763)          2,315 
 Net (decrease)/increase in discontinued 
  cash and cash equivalents                          (213)       1,585             71 
                                               -----------  ----------  ------------- 
 Net increase/(decrease) in cash and 
  cash equivalents                                  19,762       (178)          2,386 
 Cash and cash equivalents at the beginning 
  of the period                                     11,667       9,179          9,179 
 Effect of foreign exchange rate changes 
  on cash and cash equivalents                           1         (2)            102 
 Cash and cash equivalents at the end 
  of the period                                     31,430       8,999         11,667 
                                               -----------  ----------  ------------- 
 
 Bank balances and cash                             31,430       8,999         11,667 
                                               -----------  ----------  ------------- 
 

* Additional depreciation on the Group's right of use assets due to the adoption of IFRS 16 amounted to GBP1,863,000 for the six months ended 31 March 2020.

** Additional lease repayments of GBP1,794,000 were recorded due to the adoption of IFRS 16 for the six months ended 31 March 2020.

Notes to the condensed consolidated accounts

   1.    Basis of preparation 

(a) The condensed consolidated interim financial report for the six months ended 31 March 2020 and the equivalent period in 2019 has not been audited or reviewed by the Group's auditor. It does not comprise statutory accounts within the meaning of Section 435 of the Companies Act 2006. It has been prepared under the historical cost convention and on a going concern basis in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union. The report does not comply with IAS 34 "Interim Financial Reporting", which is not currently required to be applied for AIM companies and it was approved by the Directors on 19 May 2020.

(b) The accounts for the year ended 30 September 2019 were prepared under IFRS and have been delivered to the Registrar of Companies. The report of the auditor on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under Section 498(2) or (3) of the Companies Act 2006. In this report, the comparative figures for the year ended 30 September 2019 have been audited. The comparative figures for the period ended 31 March 2019 are unaudited.

(c) For the year ending 30 September 2020, one new accounting standard IFRS 16 "Leases" has been adopted by the EU, applied and have been implemented for the condensed consolidated interim financial report. The accounting policies adopted in the preparation of the condensed consolidated interim financial report are consistent with those adopted in the Group's accounts for the year ended 30 September 2019 except for the impact of IFRS 16.

IFRS 16 has become effective for the year ending 30 September 2020 and replaces the requirements of IAS 17 "Leases". The Group has adopted IFRS 16 using the modified retrospective approach under which the cumulative effect of adoption is recognised through reserves, with comparatives continuing to be reported under IAS 17. An asset representing the Group's right as a lessee to use a leased item and a liability for the associated future lease payments, has been recognised for all leases, subject to limited exemptions for short-term leases and low-value lease assets. The cost of leases has been recognised in the condensed consolidated income statement split between depreciation of the lease asset and a finance charge on the lease liability. This is similar to the accounting for finance leases under IAS 17, but different to the accounting for operating leases (under which no lease asset or lease liability was recognised, and operating lease rentals were charged to the condensed consolidated income statement on a straight-line basis).

As a result of adopting the new accounting standard for the six months ended 31 March 2020, the Group's profit before tax has reduced by GBP69,000 and operating profit has increased by GBP79,000. The reduction in profit before tax is the net impact of GBP148,000 of additional finance charges and GBP1,863,000 of additional depreciation, replacing GBP1,942,000 of operating lease rental charges. Finance charges under IFRS 16 are front-loaded in the early part of the lease term and, when using the modified retrospective approach to adoption, this resulted in the overall cost of leases being greater than the operating lease charges would have been under IAS 17.

The Group adopted IFRS 16 with a date of initial application of 1 October 2019 using the modified retrospective approach whereby the right of use asset on transition equalled the lease liability. The comparative information for the six months ended 31 March 2019 and for the year ended 30 September 2019 has not been restated and continues to be reported under IAS 17.

The Group applied the following measures/exemptions available on transition to IFRS 16, to leases previously classified as operating leases:

- On transition to IFRS 16, the Group elected to apply the practical expedient to grandfather the assessment of which transactions are leases. It applies IFRS 16 only to contracts that were previously identified as leases. Contracts that were not identified as leases under IAS 17 and IFRIC 4 were not reassessed for whether there is a lease. Therefore, the definition of a lease under IFRS 16 was applied only to contracts entered into or changed on or after 1 October 2019.

- The Group has relied on its previous assessment of whether leases are onerous in accordance with IAS 37 immediately before the date of application as an alternative to performing an impairment review.

- The Group has not recognised right of use assets and liabilities for leases of low value or for which the lease term ends within 12 months of the date of initial application , on a lease-by-lease basis; and

- The Group has applied a single discount rate to a portfolio of leases with reasonably similar characteristics (such as leases with a similar remaining lease term in a similar class of underlying assets).

The Group has changed its accounting policies and updated its internal processes and controls related to leasing. The new definition of a lease has been applied to contracts entered into from 1 October 2019.

Lease accounting policy

The Group has relied upon the exemption under IFRS 16 to exclude the impact of low-value leases and leases that are short-term in nature (defined as leases with a term of 12 months or less). Costs on these leases are recognised on a straight-line basis as an operating expense within the income statement. All other leases are accounted for in accordance with this policy.

The Group has various lease arrangements for properties (e.g. office buildings and storage facilities), vehicles, and other equipment including plant and machinery. At the inception of a lease contract, the Group assesses whether the contract conveys the right to control the use of an identified asset for a certain period of time and whether it obtains substantially all the economic benefits from the use of that asset, in exchange for consideration. The Group recognises a lease liability and a corresponding right of use asset with respect to all such lease arrangements in which it is a lessee.

A right of use asset is capitalised on the balance sheet at cost which comprises the present value of future lease payments determined at the inception of the lease adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred in addition to an estimate of costs to remove or restore the underlying asset. Where a lease incentive is receivable, the amount is offset against the right of use asset at inception. Right of use assets are depreciated using the straight-line method over the shorter of the estimated useful life of the asset or the lease term and are assessed in accordance with IAS 36 "Impairment of Assets" to determine whether the asset is impaired and to account for any loss.

The lease liability is initially measured at the present value of lease payments as outlined above and is subsequently increased by the interest cost on the lease liability and decreased by any payments made. Lease payments comprise fixed lease rental payments. Lease liabilities are classified between current and non-current on the balance sheet.

The key estimate applied by management relates to the assessment of the incremental borrowing rate adopted by the Group to discount the future lease rentals to present value in order to measure the lease liabilities at 1 October 2019. The weighted average rate applied by the Group at transition was 3.0%.

The impact on the Group's opening balance sheet at 1 October 2019 as a result of the adoption of IFRS 16 was as follows:

 
                                               GBP000 
 Net assets at 30 September 2019               92,258 
 Right of use assets recognised                10,001 
 Lease liabilities recognised                (10,001) 
                                   ------------------ 
 Net assets at 1 October 2019                  92,258 
                                   ------------------ 
 

Applying the Group's incremental borrowing rate to discount the operating lease commitments reported at 30 September 2019 results in a liability of GBP10.0m. This reconciles to the right of use asset recognised as follows:

 
                                                                  GBP000 
 Operating lease commitments at 30 September 2019                 10,885 
 Recognition exemption for short-term and low-value 
  leases                                                           (272) 
 Discount using the incremental borrowing rate at 
  1 October 2019                                                   (612) 
                                                      ------------------ 
 Right of use asset recognised at 1 October 2019                  10,001 
                                                      ------------------ 
 

(d) The Board has reviewed the principal risks and uncertainties affecting the Group in the context of the impact of the Covid-19 pandemic. The Board recognises that the impact of Covid-19 is being felt across all aspects of the Group's operations and that the overall risk environment has increased as a result of the pandemic. Despite this, the Board considers that the principal risks and uncertainties set out in the Group's accounts for the year ended 30 September 2019 are still appropriate and has taken additional actions to address those risks specifically arising from Covid-19. In this context, the Directors have reviewed financial forecasts and are satisfied that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, the Group continues to adopt the going concern basis in preparing the condensed consolidated interim financial report.

This condensed consolidated interim financial report is being sent to all shareholders and is also available upon request from the Company Secretary, Renew Holdings plc, 3175 Century Way, Thorpe Park, Leeds, LS15 8ZB, or via the website www.renewholdings.com .

   2.    Segmental analysis 

Operating segments have been identified based on the internal reporting information provided to the Group's Chief Operating Decision Maker. From such information, Engineering Services and Specialist Building have been determined to represent operating segments.

 
                                                     Group revenue 
                                                    from continuing 
                                                       activities 
                                                    Six months ended 
                                                        31 March 
                           Group                                               Group 
                       including                                           including                   Group revenue 
                           share   Less share                                  share   Less share    from continuing 
                        of joint     of joint                               of joint     of joint         activities 
                         venture      venture                                venture      venture         Year ended 
                                                                                                        30 September 
                            2020         2020         2020      2019            2019         2019               2019 
                       Unaudited    Unaudited    Unaudited    Unaudited      Audited      Audited            Audited 
 Revenue is 
 analysed 
 as follows:              GBP000       GBP000       GBP000       GBP000       GBP000       GBP000             GBP000 
 
 Engineering 
  Services               293,093            -      293,093      281,552      564,478        (709)            563,769 
 Specialist 
  Building                20,473            -       20,473       19,426       36,125            -             36,125 
 Inter segment 
  revenue                  (965)            -        (965)        (633)      (1,461)            -            (1,461) 
                     -----------  -----------  -----------  -----------  -----------  -----------  ----------------- 
 Segment revenue         312,601            -      312,601      300,345      599,142        (709)            598,433 
 Central activities          965            -          965          633        1,489            -              1,489 
                     -----------  -----------  -----------  -----------  -----------  -----------  ----------------- 
 Group revenue from 
  continuing 
  operations             313,566            -      313,566      300,978      600,631        (709)            599,922 
                     -----------  -----------  -----------  -----------  -----------  -----------  ----------------- 
 
 
                                                Six months ended 
                                                     31 March 
                      Before                                                Before 
                 exceptional    Exceptional                            exceptional    Exceptional 
                       items          items                                  items          items 
                         and            and                                    and            and 
                amortisation   amortisation                           amortisation   amortisation        Year 
                          of             of                                     of             of       ended 
                  intangible     intangible                             intangible     intangible          30 
                      assets         assets                                 assets         assets   September 
                        2020           2020        2020       2019*           2019           2019        2019 
                   Unaudited      Unaudited   Unaudited   Unaudited        Audited        Audited     Audited 
                      GBP000         GBP000      GBP000      GBP000         GBP000         GBP000      GBP000 
 Analysis of 
 operating 
 profit 
 Engineering 
  Services            20,542        (3,910)      16,632      15,832         39,410        (6,788)      32,622 
 Specialist 
  Building               415              -         415         333            882              -         882 
               -------------  -------------  ----------  ----------  -------------  -------------  ---------- 
 Segment 
  operating 
  profit              20,957        (3,910)      17,047      16,165         40,292        (6,788)      33,504 
 Central 
  activities         (1,014)              -     (1,014)       (999)        (1,963)        (4,000)     (5,963) 
               -------------  -------------  ----------  ----------  -------------  -------------  ---------- 
 Operating 
  profit              19,943        (3,910)      16,033      15,166         38,329       (10,788)      27,541 
 Net 
  financing 
  expense              (862)              -       (862)       (690)          (579)              -       (579) 
               -------------  -------------  ----------  ----------  -------------  -------------  ---------- 
 Profit 
  before 
  income 
  tax                 19,081        (3,910)      15,171      14,476         37,750       (10,788)      26,962 
               -------------  -------------  ----------  ----------  -------------  -------------  ---------- 
 
 

* Operating profit for the six months ended 31 March 2019 is stated after charging GBP3,264,000 of amortisation cost (see Note 3).

   3.    Exceptional items and amortisation of intangible assets 
 
                                                                   Six months ended                     Year ended 
                                                                       31 March                       30 September 
                                                                      2020        2019                        2019 
                                                                 Unaudited   Unaudited                     Audited 
                                                                    GBP000      GBP000                      GBP000 
 Defined benefit pension scheme guaranteed minimum pension 
  equalisation                                                           -           -                       4,260 
 Acquisition cost                                                    1,762           -                           - 
 Total charges arising from exceptional items                        1,762           -                       4,260 
 Amortisation of intangible assets                                   2,148       3,264                       6,528 
                                                                ----------  ----------  -------------------------- 
 Total exceptional items and amortisation charge before income 
  tax                                                                3,910       3,264                      10,788 
 Taxation credit on exceptional items and amortisation               (504)       (555)                     (2,601) 
                                                                ----------  ----------  -------------------------- 
 Total exceptional items and amortisation charge                     3,406       2,709                       8,187 
                                                                ----------  ----------  -------------------------- 
 
   4.    Income tax expense 
 
                                         Six months ended        Year ended 
                                             31 March          30 September 
                                            2020        2019           2019 
                                       Unaudited   Unaudited        Audited 
                                          GBP000      GBP000         GBP000 
 Current tax: 
 UK corporation tax on profit 
  for the period                         (2,774)     (2,218)        (5,291) 
 Adjustments in respect of previous 
  periods                                      -           -            208 
                                      ----------  ----------  ------------- 
 Total current tax                       (2,774)     (2,218)        (5,083) 
 Deferred tax                              (477)       (531)            378 
                                      ----------  ----------  ------------- 
 Income tax expense                      (3,251)     (2,749)        (4,705) 
                                      ----------  ----------  ------------- 
 
 
   5.    Earnings per share 
 
                                                      Six months ended 31 March      Year ended 30 September 
 
                                  2020                 2019                            2019 
                             Unaudited                        Unaudited                                 Audited 
                  Earnings         EPS     DEPS    Earnings         EPS     DEPS   Earnings                 EPS      DEPS 
                    GBP000       Pence    Pence      GBP000       Pence    Pence     GBP000               Pence     Pence 
 Earnings 
  before 
  exceptional 
  items and 
  amortisation      15,326       20.06    19.90      14,436       19.18    19.06     30,444               40.43     40.13 
 Exceptional 
  items and 
  amortisation     (3,406)      (4.46)   (4.42)     (2,709)      (3.60)   (3.57)    (8,187)             (10.88)   (10.79) 
                ----------  ----------  -------  ----------  ----------  -------  ---------  ------------------  -------- 
 Basic 
  earnings 
  per share         11,920       15.60    15.48      11,727       15.58    15.49     22,257               29.55     29.34 
                ----------  ----------  -------  ----------  ----------  -------  ---------  ------------------  -------- 
 
 Weighted 
  average 
  number 
  of shares                     76,405   77,016                  75,285   75,721                         75,308    75,856 
                            ----------  -------              ----------  -------             ------------------  -------- 
 
 

The dilutive effect of share options is to increase the number of shares by 611,000 (March 2019: 436,000; September 2019: 548,000) and reduce the basic earnings per share by 0.12p (March 2019: 0.09p; September 2019: 0.21p).

   6.    Dividends 

The proposed interim dividend is 0.00p per share (2019: 3.83p).

   7.    Acquisition of subsidiary 

On 30 January 2020, the Company acquired the whole of the issued share capital of Agger Ltd ("Agger") for a cash consideration of GBP38m plus a net cash and working capital adjustment of GBP5.7m. The acquisition was funded by a placement of 3,157,894 new ordinary shares raising GBP15m, and a revolving credit facility provided by HSBC Bank plc and NatWest Bank plc.

The value of the assets and liabilities of Agger at the date of acquisition were:

 
                                         Book value   Adjustments   Fair value 
                                             GBP000        GBP000       GBP000 
 Non-current assets 
 Intangible assets 
  -goodwill                                  12,142         7,668       19,810 
                         -other                   -        19,127       19,127 
 Property, plant and 
  equipment                                     905             -          905 
 Right of use assets                             63             -           63 
                                             13,110        26,795       39,905 
                                   ----------------  ------------  ----------- 
 Current assets 
 Inventories                                     20             -           20 
 Trade and other receivables                 13,523             -       13,523 
 Current tax asset                              540             -          540 
 Cash and cash equivalents                    3,203             -        3,203 
                                             17,286             -       17,286 
                                   ----------------  ------------  ----------- 
 
 Total assets                                30,396        26,795       57,191 
                                   ----------------  ------------  ----------- 
 
 Non-current liabilities 
 Obligations under 
  finance leases                               (36)             -         (36) 
 Deferred tax liabilities                         -       (3,634)      (3,634) 
                                               (36)       (3,634)      (3,670) 
                                   ----------------  ------------  ----------- 
 Current liabilities 
 Trade and other payables                   (9,779)             -      (9,779) 
 Obligations under 
  finance leases                               (27)             -         (27) 
                                            (9,806)             -      (9,806) 
                                   ----------------  ------------  ----------- 
 
 Total liabilities                          (9,842)       (3,634)     (13,476) 
                                   ----------------  ------------  ----------- 
 
 Net assets                                  20,554        23,161       43,715 
                                   ----------------  ------------  ----------- 
 

Goodwill of GBP19,810,000 arises on acquisition and is attributable to the expertise and workforce of the acquired business. Other intangible assets, provisionally valued at GBP19,127,000, represent customer relationships and contractual rights, were also acquired and will be amortised over their useful economic life in accordance with IFRS 3. Deferred tax has been provided on this amount. Amortisation of this intangible asset commenced from February 2020.

Fair value adjustments arising from the acquisition

In accordance with IFRS 3, the Board will review the fair value of assets and liabilities using information available up to 12 months after the date of acquisition. Fair value has been calculated using Level 3 inputs as defined by IFRS 13.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

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