Record results as Renew wins seven railway framework deals

The Leeds-based group, which counts Sellafield nuclear power station, Network Rail and the Environment Agency among its major clients, said it expects to see further growth next year after winning ​seven Network Rail framework deals worth £450m over five years.

Chief executive Brian May said: “We are obviously pleased with the results. It’s been another strong year and we’ve made good progress. We are very well placed in the sector.”

Revenue rose 64 per cent to​ ​£464.5m​ ​in the year to September 30 on the ​ba​ck of a 21 per cent increase in the order book to £439m at the end of September.

Adjusted pre-tax profits shot up 65 per cent to £16.1m.

Mr May said the two acquisitions made over the year, Clarke Telecom and Forefront Group, are bedding down well.

The group said it is in no rush to look for more acquisitions as it can meet targets without them.

“If we can increase margins of course we’ll be interested, but there’s nothing visible at the moment,” said Mr May.

The dividend was raised 39 per cent to 5.0p a share.

The group is working on flood protection with the Environment Agency. “We are seeing an increasing number of opportunities,” said Mr May.

“There is a lot of political pressure around environmental issues, especially after the last winter.”

Key projects carried out in the year included the reinstatement of the Dawlish Sea Wall, which was completed ahead of schedule enabling train services to resume to Cornwall.

“It’s been an incredible year for rail,” said Mr May.

“If there is another extreme winter, there is no doubt they will knock on our door. The fact is there are more flood situations. That’s not going away.

“We can respond quite quickly. We’ve got a large directly employed workforce.”

Renew provides off-track asset renewal and maintenance services nationally as well as a 24/7 emergency service to the rail network.

The severe weather and Government investment resulted in the gain of £65m of non-recurring revenue.

“That exaggerated the turnover, but without that we still had 17 per cent growth,” said Mr May.

Finance director John Samuel added: “When there is an emergency situation it takes work away from other activities. It was exaggerated last year.”

Renew is now one of the top 10 suppliers to Network Rail.

Mr May said the acquisition of Clarke takes the group into a new market. Clarke’s clients include all the major wireless network operators and original equipment manufacturers. He said that Clarke’s order book has grown by over 10 per cent since the acquisition six months ago.

Analyst Nick Spoliar at WH Ireland said: “A strong set of results from Renew features pre-tax profit ahead of expectations at £16.1m. The dividend is raised by 39 per cent to 5.0p, ahead of our 4.6p expectation, a strong sign of confidence in the future.”

He said that the order book underpins Renew’s good forward visibility.

“Behind the strong outcome lies a good performance across all the engineering sectors with rail and energy in particular delivering, but a positive outcome from water as well. We see the current year strategy as focusing on margin upside against a backdrop of decent underlying revenue growth,” he said.