Renew in strong position as Lewis integration knits

The Leeds-based group said orders across the business have been encouraging and its results will be in line with market expectations for the year.

Analyst Howard Seymour, at Numis, said: “Renew is in a very attractive position going into the current year, following the acquisition of Lewis Civil Engineering and land asset disposals in August.

“Lewis will complement attractive existing organic growth prospects from contract wins, while the disposals have meant that Renew is in a net cash position which provides the resources for the group to continue to look for bolt-on acquisitive growth.”

The group’s annual results will be announced on November 26.

In August, Renew said it is in a strong position to make further acquisitions following a £1.3m exceptional net gain following the sale of 71 acres of land.

Renew’s sale of the land near Rugby for £11m moves the group to a debt-free position.

Yesterday it said it will record a net cash position from the end of September.

The group said the cash will be used to pay off the borrowings used to finance the £8m acquisition of Lewis Civil Engineering in August.

The acquisition has boosted Renew’s presence in the water industry.

Finance director John Samuel said: “In terms of growth, what we’re looking to do is broaden and penetrate further into our clients which gives us an organic growth... and then on top of that where appropriate find acquisitions that have got all the same characteristics of the businesses we currently own and where we can bring some additional value to those businesses.”

He added: “We are definitely on the lookout to find other suitable businesses to add to the group.”

The deal to buy Lewis marked Renew’s first since it bought Amco in February 2011.

Mr Samuel said that the sectors in which Renew is involved, the maintenance and renewal of the UK’s infrastructure, are stable and predictable sectors, but do not inherently have “stellar growth prospects” due to the nature of their spend profiles, hence its acquisitive approach.

Three exceptional items will affect results for the year to September 30, resulting in an exceptional net gain before tax of £1.3m.

These include the land sale near Rugby, the write-down of land assets held in the US by £5.2m to £2.7m and a £2.9m provision following the closure of regional building businesses.

Renew announced in 2011 that it was withdrawing from non-specialist building markets in the North East and North West of England.

The sale of agricultural land near Rugby resulted in an exceptional profit of £9.4m.