Nuclear contracts help fill Renew’s record order book

ENGINEER Renew Holdings reported a record order book at £361m, driven by contract gains at the Sellafield nuclear processing plant.

The Leeds-based group reported a 19 per cent rise in its order book at the end of March,

In the six months to March 31, pre-tax profits rose seven per cent to £4.6m despite a 16 per cent fall in revenues to £152m, reflecting a 45 per cent slump in the specialist building division following delayed projects.

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Talking about the record order book, Renew’s chief executive Brian May said there are other opportunities out there.

“There are opportunities in Sellafield and at other sites. At Sellafield there are a number of major projects we’re discussing – other works that come out periodically. There’s an ongoing top up of the order book,” he said.

“We’d also look to do more in rail and water.”

The group’s order book is growing as the engineer shifts its focus towards regulated areas such as nuclear, rail and water and away from construction.

Renew’s markets have high barriers to entry and much of its work is contract renewals, offering good visibility for future revenues.

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The group’s business comes from its clients’ operating budgets rather than their discretionary budgets, which means the work has to be undertaken even when the economy slumps.

Renew is looking to grow both organically and by acquisition.

Organic growth was five per cent during the first half.

When it comes to acquisitions, finance director John Samuel said the group will look at companies with an operating profit of between £1m and £5m.

Mr May said that over the past two years there have not been many quality, potential acquisitions, but there are signs of increasing activity in the market which may lead to better opportunities.

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During the six-month period Renew became the first contractor at Sellafield to receive Supply Chain Accreditation for the provision of its services at the site.

The group said the accreditation recognises its ability to perform to the highest quality standards demanded in the nuclear sector.

“We can deliver the highest quality on nuclear.

“Other companies will be getting accreditation, but it shows our strength that we were the first,” said Mr May.

Analyst Nick Spoliar, at WH Ireland, said: “The key contract at Sellafield is starting to come on stream and we expect further positive newsflow from the nuclear business, which has been a mainstay of the group in recent years and is a highly respected Tier 2 operator at Sellafield.

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“There is positive news on awards across the operations, and on the emergency as well as the regular side of rail.”

In line with policy, the group is increasing the interim dividend by five per cent to 1.1p a share.

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