Renew celebrates record half year

Engineering services group Renew Holdings has reported record half year trading following the £80m acquisition of leading Scottish railway contractor QTS last May.

Renew's chief executive Paul Scott
Renew's chief executive Paul Scott

The Leeds-based firm said its order book rose 4 per cent to £580m and is underpinned by a solid foundation of long-term frameworks, including significant new awards during the first half of the year.

Renew's chief executive Paul Scott said: "QTS has bedded down really well. We're absolutely delighted. It's not only made a strong contribution, the way it has engaged and embraced becoming part of the group has been excellent.

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"Post-acquisition, it has overcome a number of hurdles involving reviewing its framework so not only has it contributed well, the foundation it has built for future visibility is equally strong.

"That's a testament to the way we acquire businesses. We don't break their brand strength and identity. We don't change. We actually help businesses thrive under our ownership."

Mr Scott said Renew is looking to make further acquisitions.

"We have this fine tuned acquisition search criteria. Whatever we look at has to be accretive and it has to be operating in regulated markets in UK infrastructure and have an established brand identity and customer value," he said.

"Equally we have an ambition to organically grow the group. We have a track record of doing that. We're delighted to deliver 8 per cent organic growth in the period. It's a double stranded approach to our growth strategy."

Mr Scott said that rail activity is driving growth in its core engineering services division.

"From December through to the end of March, we had a really strong run of activity," he said.

"Nationally we were really strong in our maintenance and renewal activity.

"We're on every route in every region. LNE has probably been the busiest route and region for us. It's about bridges, culverts and embankments. It's about embankment stabilisation. The rail network has a major programme of activity around its embankments. The last thing you want is the embankment interfering with your train operating programme."

Mr Scott said Renew is not Brexit immune, but the group has many protective measures in place to counteract any Brexit damage.

"The fact we're working on non-discretionary programmes means we haven't seen a falling off in the amount of work available to us," he said.

"We are simply doing things that are essential to maintaining networks, whether it's in water, the environment, the rail network or energy.

"It's just not an option for our customers to stop spending money because of the political circumstances."

He said Renew has 3,700 staff, but less than a 100 are non-UK nationals.

"We have a very, very small compliment of European nationals and rest of the world nationals. It's less than a 100 people. We have a number of defensive measures against the Brexit issues playing out around us."

Looking forward, the group said it expects full year results to be in line with expectations.

"We've had a really strong start to the year," said Mr Scott.

"The operating performance has been strong. It's about the strong foundations. Our order book is underpinned by a number of frameworks which has strengthened in the period in all of our three sectors."

Engineering services revenue rose 25 per cent to £282m in the six months to March 31 and the division's adjusted operating profit increased by 48 per cent to £19m.

Renew increased its interim dividend by 15 per cent, reflecting confidence in future growth.