Renew looks to bright future

New chief executive Paul Scott said the results had set a new record for group revenue, operating profits and margins.

Engineering services company '‹R'‹enew Holdings reported record results and said it has a bright future as it embarks on new contracts with London Underground and other train '‹operating companies.'‹

Leeds-based Renew said adjusted pre-tax profits jumped 14 per cent to £22.3m in the year to September 30 while revenue rose 1 per cent to £526m.

New chief executive Paul Scott said the results had set a new record for group revenue, operating profits and margins.

Earlier this month Renew bought a railway services business in a £7m deal that it said would strengthen its links with national rail operators.

Leeds-based Renew paid £5m to buy Giffen Holdings and a further £2m was paid to redeem loans from Giffen’s private equity owners.

Giffen specialises in mechanical, electrical and power services within the railway sector and works for Network Rail, London Underground and a number of train operating companies.

It has four frameworks with Network Rail and six frameworks with London Underground.

"Giffen has built a reputation in the rail sector," said Mr Scott.

"It would have been extremely difficult for us to grow our business with London Underground as we don't do any work with them at the moment so this is a new opportunity.

"London Underground is spending £2.4bn per annum to renew its entire network and one of our ambitions is to cross sell to London Underground."

He said that the group is looking at other acquisitions.

"We are looking at one in infrastructure and one in environmental. They went away to reshape what they are presenting."

Renew said it had not been impacted by the UK's decision to leave the EU.

"We've seen no Brexit impact," said Mr Scott.

"UK infrastructure is a pretty good place to be. There is not an option to slow down. We are not exposed to volatility.

"We are looking to the future with confidence and we have long term visibility."

Analyst Howard Seymour at Numis said: "In keeping with previous years, we have seen and continue to expect a solid market backdrop for Renew, organic out performance (both against the market and management's latest targets) and strengthening balance sheet which will enable complementary growth through acquisition.

"Renew offers a unique mix of growth plus defensive attributes in these uncertain times which are not factored into the share price in our view, hence our increased target price here and 'Add' recommendation."