Renew’s £40m of Sellafield contract extensions

Leeds-based Renew will carry out repair and maintenance work at the plant.

Chief executive Brian May said the scope of the group’s works programme on Evaporator D, the largest nuclear project in the UK today, has been increased substantially. Evaporator D has been set up to handle the UK’s liquid nuclear waste.

Renew said it has also secured a six-month extension to the long-standing Multi Discipline Site Wide framework at the plant.

The company said it traded satisfactorily during the second half of the year and expects that operating profit before exceptional items and amortisation will be in line with market expectations for the year to September 30.

Analysts have pencilled in pre-tax profits of £9.6m, up from £8.1m last year.

The group incurred exceptional redundancy and restructuring costs of £1.3m relating to its specialist building and other divisions in the south of England.

Additionally, the board has decided to close Durham-based C&A Pumps with immediate effect.

Renew said it has become increasingly difficult for this small business to trade profitably following changes to water industry framework arrangements in AMP5.

A spokesman for Renew said: “It has become increasingly difficult for C&A, as a small business, to trade profitably following changes to the way in which the water industry assets are managed. Regrettably, this has meant that we had to make the difficult decision to close the business.”

C&A will be accounted for as a discontinued business in the annual results with a trading loss of £300,000.

There will also be £300,000 of redundancy costs and £1.4m of non-cash asset write downs including £900,000 of goodwill.

Renew said there are no plans to close down any other parts of the business.

Mr May said that the acquisition of Amco in February 2011 has accelerated the development of Renew’s engineering services business, supporting sectors critical to UK infrastructure.

Renew paid £20m for Amco in order to increase its focus on the rail and energy sectors.

As a result, Renew has now been reclassified to business support services within the industry classification benchmark categories of the London Stock Exchange.

Analyst Andy Brown, at Panmure Gordon, said: “A solid full year trading update from Renew indicates that its core operations continue to trade in line with expectations.

“While it has flagged the need for some exceptional restructuring costs, it also continues to win more work through its core engineering services division. With our upbeat view on UK infrastructure prospects we reiterate our positive stance.

“Renew has good exposure to the key infrastructure areas of energy, environment and rail. While spending can be lumpy the importance of maintaining and improving existing structures is of national economic importance. This along with its attractive valuation means we stay positive.”

He rated the stock with a ‘Buy’ rating.

Renew said that in order to maximise growth opportunities in engineering services, it has appointed Paul Scott, managing director of Shepley Engineers, as engineering services director. Mr Scott will report to the board through Mr May.

The group’s annual results will be announced on November 27.

Renew is working on nine nuclear sites across the UK. It is also working on five coal power stations, including Ferrybridge and Eggborough in Yorkshire.

Mr May said he expects Britain to remain reliant on coal-fired power for some time as new nuclear is delayed, helping the group’s pipeline of work.

“They’re going to have to keep them open for a bit longer,” he said.

Adjusted pre-tax profits almost doubled to £4.4m in the six months to the end of March from £2.3m a year earlier. Revenues lifted 18 per cent to £183.7m during this period.

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