Renew Holdings plc
Annual Report and Accounts 2019
renewholdings.com
Engineering
Infrastructure
for the future
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Renew Holdings plc
We provide essential engineering services to
maintain and renew critical infrastructure networks.
Our multidisciplinary engineering services are
delivered through our independently branded UK
subsidiary businesses that support the day-to-day
running of these infrastructure networks.
Read more online at: www.renewholdings.com
Highlights
Financial highlights
Group revenue1
£600.6m
(2018: £541.5m)
Adjusted operating profit 1
£38.3m
(2018: £31.1m)
Full year dividend per share
11.5p
(2018: 10.0p)
Adjusted operating margin1
6.4%
(2018: 5.7%)
Operational highlights
545.9
541.5
600.6
2017
2018
2019
28.4
31.1
38.3
2017
2018
2019
9.0
10.0
11.5
2017
2018
2019
5.2
5.7
6.4
2017
2018
2019
Record results
Record results driven in
particular by excellent
organic growth in Rail
including strong
contribution from QTS.
Working with
new clients
Appointed to a seven year
decommissioning services
framework for Dounreay
Site Restoration Ltd.
Key framework
awards
Key strategic CP6
framework renewals
awarded with
Network Rail.
Read more on pages
6–11
Read more on pages
20–26
Read more on page
20
D
Strategic report
IFC Highlights
1 Our vision
2 Our business
4
Investment case
6 Chairman’s statement
8 Chief Executive’s review
12 Our business model
14 Market overview
16 Our strategy
18 Key performance indicators
20 Operational review
27 Financial review
30 Sustainability
34 Risk management
Governance
38 Board of Directors
40 Corporate governance
49 Audit Committee report
51 Directors’ report
54 Directors’ remuneration report
60 Statement of Directors’ responsibilities
Financial statements
62 Independent auditor’s report
66 Group income statement
67 Group statement of comprehensive
income
67 Group statement of changes in equity
68 Group balance sheet
69 Group cashflow statement
70 Notes to the accounts
99 Company balance sheet
100 Company statement of
comprehensive income
100 Company statement of
changes in equity
101 Notes to the Company accounts
111 Directors, officers and advisors
112 Shareholder information
IBC Our subsidiary businesses
1
Renew uses a range of statutory performance measures
and alternative performance measures when reviewing the
performance of the Group against its strategy. Definitions of
the alternative performance measures, and a reconciliation
to statutory performance measures, are included in Note 29
to these accounts.
Renew Holdings plc Annual Report and Accounts 2019 Our vision
To safely and responsibly deliver essential
engineering services to the country’s key
infrastructure assets.
Engineering
Infrastructure
for the future
Read more on pages 20–26
Renew in action
Safety first
We operate in challenging environments
where our directly employed workforce are
highly skilled and experienced. We invest
heavily in training programmes and remain
committed to ensuring the safety of our
employees and those who work with us.
Delivering value
We seek to deliver value to shareholders
through our established and proven
strategy, providing reliable capital growth
alongside a progressive dividend policy.
Future growth opportunities
We remain focused on delivering organic
growth whilst looking to build on our
strengths through selective, complementary
acquisitions in both existing and new markets.
Read more on pages
4 & 5
Read more on page
31
Read more on pages
14 & 15
1
Renew Holdings plc Annual Report and Accounts 2019STRATEGIC REPORT OUR BUSINESS
Engineering
services
Our independently branded subsidiary businesses have expert knowledge in
their individual markets and directly deliver engineering services aligned to
the needs of our clients, many of whom are responsible for the long-term
maintenance and renewal of national infrastructure networks.
Read more on pages 20–26
Our capabilities
Infrastructure
Energy
Nuclear
• Operational support and asset care
• Critical planned and reactive maintenance and renewals
• Civil, mechanical and electrical engineering
• Nuclear decommissioning and decontamination
• Specialist fabrication and manufacturing
Thermal and renewable
• Operational support and asset care
• Critical planned and reactive maintenance and renewals
• Civil, mechanical and electrical engineering
Rail
• Operational support and asset care
• Critical planned and reactive maintenance and renewals
• Civil, mechanical and electrical engineering services
• Plant, power and signalling renewals
• 24/7 emergency provision
• Asset renewal and refurbishment
• Tunnel and shaft refurbishment, fencing and devegetation
• In-house design capability
Wireless telecoms
• Operational support and asset care
• Critical planned and reactive maintenance and renewals
• Civil, mechanical and electrical engineering
• Provision of 3G, 4G, 5G and Wi-Fi technologies
• Radio network planning, including the installation of specialist
indoor and outdoor coverage solutions
2
Renew Holdings plc Annual Report and Accounts 2019 Our subsidiaries
Environmental
Water
• Operational support and asset care
• Critical planned and reactive maintenance and renewals
• Civil, mechanical and electrical engineering
• Emergency works including flood risk management programmes
• Maintaining strategic water mains and mains drainage
• Clean and wastewater rehabilitation infrastructure
• Port, harbour and sea defences
Land remediation
• Soil and groundwater remediation
• Soil washing, biophysical treatment, solidification and stabilisation,
enhanced segregation and geotechnical improvements
• Design of bespoke remediation and ground engineering solutions
• In-house technology and environmental engineering resources
• Remediation strategies combined with infrastructure delivery
3
Renew Holdings plc Annual Report and Accounts 2019STRATEGIC REPORT INVESTMENT CASE
Delivering sustainable value
The regulated markets in which we operate have high barriers to entry
and, alongside our market expertise, provide long-term opportunities for
sustainable growth.
Renew
investment
case
A unique and diversified
business model
Established market
position
Our subsidiary businesses operate across a
diversified range of markets providing critical
asset maintenance and renewal services.
Working in the Energy, Environmental and
Infrastructure markets the Group develops
long-term relationships with its clients often
over many years.
Our businesses work in markets with high
barriers to entry which demand a highly
skilled and experienced workforce and
a proven track record of safe delivery.
We continue to develop our range of skills
enabling us to provide a more efficient and
cost-effective service to our clients.
Non-discretionary
spending programmes
Long-term growth
prospects
Delivering
sustainable returns
The Group operates in regulated markets
which have long-term asset renewal and
maintenance spending programmes,
visible in our client’s operational
expenditure budgets.
The Group is committed to growing
the business in its chosen markets
both organically and through selective
complementary acquisitions whilst
maintaining a disciplined approach to risk.
We work on long-term frameworks
delivering the day-to-day renewal and
maintenance tasks required to keep critical
networks operational.
We seek to deliver long-term share
price growth opportunities through
our established and proven strategy,
delivering reliable capital growth
alongside a progressive dividend policy
and a conservative approach to gearing.
4
Renew Holdings plc Annual Report and Accounts 2019 Delivering on
our commitment
2019 has been another strong year for the Group. We continue to
develop our position as a leading provider of engineering services,
delivering essential maintenance and renewals tasks across our markets.
Delivering to our
stakeholders
We continue to develop our progressive
dividend policy which will deliver an
increased dividend to shareholders.
Re-awarded key frameworks
We continue to build on our strong position
within our markets. During 2019 we were
re-awarded all the key frameworks we
tendered for across our market sectors.
Read more about how we deliver our
strategic priorities on pages 16 & 17
Read more about our key framework
awards on pages 20–26
Delivering results
Renew has delivered a record set
of results, successfully renewing
frameworks in our target markets and
achieving growth in both Group revenue1
and adjusted operating profit1 during
the year. Group revenue1 increased to
£600.6m (2018: £541.5m) with adjusted
operating profit1 increasing 23% to
£38.3m (2018: £31.1m).
1 Renew uses a range of statutory performance
measures and alternative performance measures
when reviewing the performance of the Group
against its strategy. Definitions of the alternative
performance measures, and a reconciliation
to statutory performance measures, are included
in Note 29 to these accounts.
Read more in our Financial
review on pages 27–29
Compliant delivery
During the year the Group continues
to make progress in maintaining a good
health and safety performance as well
as successfully managing all its key risks.
Organic growth
Good organic growth prospects achieved
by aligning our operating subsidiaries with
their clients and delivering an expanded
range of services.
Read more about how we
manage risk on pages 34–36
5
Renew Holdings plc Annual Report and Accounts 2019STRATEGIC REPORT CHAIRMAN’S STATEMENT
Further progress in delivering
our strategic objectives
is pleased to report a reduction of its net
debt1 in line with our expectations to
£10.2m (2018: £21.4m).
Governance
The Board believes a strong corporate
governance framework remains key to
ensuring we continue to deliver value
for all our stakeholders. The Board is
responsible for ensuring effective
corporate governance is applied
throughout the Group and all of its
activities and it will be continuing to
work towards further improving its
governance framework during 2020.
The Group continues to comply with the
QCA Corporate Governance Code 2018
and more details can be found in the
Corporate Governance section of the
Group’s website.
Risk management
The Executive Directors provide regular
updates to the Board on the principal risks
and controls across the Group, including the
roles and responsibilities of key management
in mitigating those risks. This process also
facilitates the embedding and monitoring
of the Board’s agreed risk management
protocols within the business, ensuring
controls are implemented effectively.
The Group keeps its principal risks under
continuous review and ensures those
identified risks are being effectively managed.
Corporate culture and ethics
The Board continuously monitors and
promotes its corporate culture throughout
the year led by its senior management team
who are key to communicating our shared
values. The Group strives to act responsibly
in all aspects of the work we undertake, an
approach which is underpinned by our
embedded core values. We aim to be
considerate, inclusive and respectful in the
way we employ and develop our workforce.
Board effectiveness
The Nomination Committee reviewed
the Board’s structure and composition
during 2019 to ensure it continues to
have an appropriate balance of skills and
experience to deliver the Group’s strategy.
The current members of the Board bring
an appropriate range of expertise on issues
of performance, strategy and governance,
which are vital to the success of the Group.
The Directors also recognise the broad
benefits of ethnic and gender diversity
when considering Board composition. The
Board has also made a number of changes
to the Group’s Committees during the year
which have focused on improving
efficiency and procedural approach.
Delivering long-term value for
shareholders
We have consistently delivered value to
shareholders through our established and
proven strategy, aiming to provide reliable
capital growth alongside a progressive
dividend policy. We regularly review market
trends, business operations and the key
objectives of our subsidiary businesses
to ensure they support the Group’s overall
strategic objectives. The Group targets
growth both organically and through
earnings enhancing acquisitions to
broaden our service offering to our
wide range of clients.
The Group is supported through its key
resources and relationships. Effective
relationships with our employees,
customers, suppliers, shareholders
and wider stakeholders is critical to
the continued success of our business.
David M Forbes
Chairman
Dear Shareholder
Introduction
I am pleased to report Renew has
delivered a record set of results,
achieving growth in both Group revenue1
and adjusted operating profit1 during the
year. We have had another successful
year winning new and renewing existing
frameworks in our target markets. Renew
provides engineering services to critical
UK networks in the Infrastructure, Energy
and Environmental markets. The Group
continues to develop its position within
its chosen infrastructure markets which
benefit from ongoing spending on essential
asset maintenance and renewals. These
markets are underpinned by regulatory
requirements and, as such, benefit from
long-term visible cycles of investment.
Group revenue1 increased to £600.6m
(2018: £541.5m) with adjusted operating
profit1 increasing 23 per cent to £38.3m
(2018: £31.1m). Statutory operating profit
was £27.5m (2018: £15.5m). The adjusted
EPS1 was 40.43p (2018: 35.48p). The Group
1
Renew uses a range of statutory performance measures and alternative performance measures when reviewing
the performance of the Group against its strategy. Definitions of the alternative performance measures, and a
reconciliation to statutory performance measures, are included in Note 29 to these accounts.
6
Renew Holdings plc Annual Report and Accounts 2019 " The Board believes a strong corporate
governance framework remains key to
ensuring we continue to deliver value for
all our stakeholders."
People
The Board would like to thank all employees
for their important contribution to the
continued success of the Group and wider
stakeholders for their ongoing support.
Future focus
The Board is committed to the continued
achievement of shareholder value through
the delivery of its strategic priorities
alongside a strong corporate governance
framework. The Group will continue to
develop its culture, where our core values
underpin delivery of sustainable economic,
social and environmental value.
Growth is driven both organically and through
strategic earnings enhancing acquisitions.
The Group’s focus remains on those markets
where non-discretionary spending programmes
exist to maintain critical infrastructure.
These markets have excellent long-term
prospects with growth driven by regulatory
requirements. The Group has strengthened
its position in markets which benefit from
visible funding. Our multidisciplinary
engineering services are closely aligned
with the requirements of the sustained
investment in these markets which provides
the Board with confidence in future growth.
David M Forbes
Chairman
26 November 2019
Dividend and Capital
Allocation Policy
For each of the last seven years, the Group
has consistently grown the dividend and
we are pleased to report we will do so
again this year. The Board proposes a final
dividend of 7.67p per share (2018: 6.67p) to
be paid on 6 March 2020 to shareholders
on the register as at 31 January 2020. The
ex-dividend date will be 30 January 2020.
This will represent a full year dividend of
11.5p per share (2018: 10.0p) reflecting our
confidence in the Group’s future prospects.
The Group has a Capital Allocation Policy
which supports the effective delivery
of our strategic priorities. This includes
maintaining a conservative level of debt
which ensures we have the ability to make
acquisitions in line with our strategy.
Board changes
On the 8 February 2019, Renew was
pleased to announce the appointment of
Shatish Dasani as a Non-executive Director
and Chairman of the Audit Committee
succeeding John Bishop who retired from
the Board at the same time. Shatish is a
Chartered Accountant with over 20 years’
experience in senior public company
finance roles across various sectors including
building materials, advanced electronics,
general industrial and business services.
The Board would like to thank John for the
valuable contribution he has made to the
Group since his appointment in 2006.
Our current priority is to develop further
diversity on the board. Specifically, we are
actively focused on improving gender
diversity. The Directors expect to be able
to announce progress in this area at the
Group’s Annual General Meeting in January.
Our culture
The Board monitors and promotes
a healthy corporate culture assisted
by its senior management team who
play a vital role in disseminating
the Group’s shared values with all
our employees.
Read more on page 46
Sustainability
As a business we understand the
wider responsibility of our activities
and work hard to ensure we consider
the social, environmental and
economic benefits of our activities.
Read more on pages 30–33
7
Renew Holdings plc Annual Report and Accounts 2019STRATEGIC REPORT CHIEF EXECUTIVE’S REVIEW
Success underpinned by a
differentiated business model
Dear Shareholder
The Group has made excellent progress
in delivering our strategic priorities
including the successful appointment
to key frameworks in the Infrastructure,
Energy and Environmental markets.
These frameworks strengthen the
Group’s position with clients responsible
for maintaining and renewing critical
UK infrastructure networks.
Our success is underpinned by a
differentiated business model, with a
number of defensive characteristics
that deliver reliability and a competitive
advantage, which is particularly relevant in
the current economic and political climate.
As a specialist engineering services
provider, we focus on directly delivering
non-discretionary maintenance and
renewals tasks, which means that our
average task size is comparatively small
and that the Group is not exposed to the
financial and contractual risks facing those
businesses that deliver large enhancement
schemes. This results in a fundamentally
lower risk profile, as demonstrated by our
stable track record of revenue growth,
profitability and cash generation. Working
in complex and challenging environments,
our highly skilled, directly employed
workforce ensures our delivery is safe
and responsive, as well as reducing our
exposure to supply chain price volatility.
We operate in the Infrastructure,
Energy and Environmental markets which
benefit from committed funding on
non-discretionary long-term maintenance
and renewal programmes. These sectors
have significant barriers to entry because
they are highly regulated, making them
resilient and providing reliable, long-term
earnings opportunities.
Results
The Group has seen record trading in
the period, in part reflecting a full year’s
contribution of QTS, a specialist rail services
provider acquired in May 2018, which has
continued to perform strongly. Group
revenue1 increased to £600.6m (2018:
£541.5m) with adjusted operating profit1
up 23 per cent to £38.3m (2018: £31.1m)
delivering an adjusted operating margin1 of
6.4 per cent (2018: 5.7 per cent). Net debt1
at the year end was £10.2m (2018: £21.4m)
reflecting our reliable cash generation and
conservative approach to gearing.
The Group’s strong financial position is
demonstrated by our low and falling net
debt position and our excellent profitability.
Our long-term track record of reliable
revenue growth and cash generation has
resulted in our ability to deliver earnings
growth and to consistently meet our own
and the market’s expectations.
The Group continues to have a strong order
book1, underpinning our future prospects,
and at 30 September 2019 it grew to £581m
(2018: £558m).
Engineering Services
Engineering Services is the key driver of
growth for the Group, and accounts for
over 90 per cent of Group revenue1 and
over 95 per cent of adjusted operating
profit1. Engineering Services revenue1 grew
21 per cent to £564.5m (2018: £466.5m)
with adjusted operating profit1 also
increasing by 21 per cent to £39.4m
(2018: £32.5m) maintaining the operating
margin1 at 7.0 per cent (2018: 7.0 per cent).
The excellent revenue performance in
Engineering Services was a reflection of the
impact of QTS as well as strong momentum
at the end of the rail Control Period 5
("CP5") which contributed towards organic
growth of 8 per cent. In rail, we have
8
Paul Scott
Chief Executive Officer
1
Renew uses a range of statutory performance measures
and alternative performance measures when reviewing
the performance of the Group against its strategy.
Definitions of the alternative performance measures,
and a reconciliation to statutory performance
measures, are included in Note 29 to these accounts.
Renew Holdings plc Annual Report and Accounts 2019 "The Group’s appointment to a number of
key frameworks in the period increases our
addressable market and provides significant
opportunity for continued organic growth."
commenced operations in the first year of
the new control period ("CP6") where we
are pleased to report that activity levels are
in line with our forecasts and momentum
is growing as expected. At 30 September
2019, the Engineering Services order book1
grew to £542m (2018: £510m).
Infrastructure
The UK rail network will play an essential
role in the country’s economic success.
Over the current five-year investment cycle,
Control Period 6 (“CP6”) which runs to
2024, Network Rail will spend £48bn on the
network including a c.25 per cent increase
in spending on operations, maintenance,
support and renewals activities2 increasing
the Group’s addressable market opportunities
from Control Period 5 (“CP5”).
As a major provider of infrastructure
services to Network Rail nationally, we
support its day-to-day operations by
providing a high volume of essential,
non-discretionary asset maintenance
activities through our long-term
frameworks. During the year we were
awarded the Minor Signaling Framework’s
in the Scotland, South East and Wales
regions in addition to our existing CP6
frameworks where we directly deliver civils
asset management, fencing, devegetation
and drainage.
We have significantly strengthened
our relationship with Network Rail during
the year, securing all the CP6 renewals
frameworks that we tendered for,
including the Multidisciplinary Renewals
and Geotechnical & Earthworks five year
frameworks in the Scotland North East
region. In addition, we continue to work on
Electrification and Plant, Slab Track, Station
Information & Security Systems as well as
Telecoms frameworks nationally across
the network.
Since the period end, we have secured new
positions on the CP6 Wales and Western
Renewals Frameworks across all five lots,
delivering a programme of engineering
services to assets including bridges,
embankments, tunnels and shafts as
well as the delivery of signaling, power
and communications schemes.
We have a 24/7 emergency support
provision which, during the period, included
clearing and securing large sections of the
embankments at Arrochar in Scotland to
enable the reopening of the West Highland
Line following a major landslip and at
Ecclefechan on the West Coast Main Line.
For London Underground we deliver
specialist electrical, plant and power
schemes through five framework
agreements. We were also awarded a
number of depot control system and major
depot refurbishment schemes in the
period. During the year we have also been
awarded a place on Merseyrail’s Principal
Contractor’s three year framework and we
continue to work on the Transport for Wales
STRIDE framework.
In the wireless telecoms market an
estimated £22bn will be invested in the
roll-out of 5G across the UK to meet
increasing demand for internet access.
All four major telecoms network providers
have announced plans to launch 5G as
part of a roll-out of wireless infrastructure
across the UK with further investment
programmes expected to follow targeting
widespread UK coverage by 2023. We
continue to see a significant increase in
work on Telefonica’s frameworks in London,
the South East and the North East of
England. We also secured a new framework
for MBNL to deliver EE’s 5G roll-out and
continued to deliver emergency reactive
works for our clients throughout the year.
Energy
The UK Government’s nuclear
decommissioning provision is currently
estimated at c.£124bn3. The Nuclear
Decommissioning Authority spends around
£3bn4 per annum on its 17 nuclear licensed
sites across the UK, the largest of which is
the Sellafield site in Cumbria which is
forecast to be allocated around 75 per cent
of the total decommissioning provision.
At Sellafield the focus has shifted away
from reprocessing nuclear fuel to broader
decommissioning activities including high
hazard retrievals and risk reduction
activities. Our range of multidisciplinary
engineering services support these
Our core values
As a holding company, Renew grants autonomy to its operating subsidiaries, enabling
them to be effective in their individual markets whilst setting overall standards and
shared values. Renew has the following values at its core:
Compliance
Consideration
Responsibility
Progression
9
Reliability
Sustainability
Responsiveness
Integrity
Renew Holdings plc Annual Report and Accounts 2019STRATEGIC REPORT CHIEF EXECUTIVE’S REVIEW CONTINUED
Energy continued
activities through established, long-term
framework agreements for decontamination,
decommissioning and waste management.
During the year the largest of these
frameworks, the Decommissioning Delivery
Partnership, was extended to 2026. This
programme delivers work across Sellafield
and is associated with some of the most
hazardous areas at the site including waste
retrieval from legacy storage ponds and
silos. We also continue to work on the
SR&DP Asset Care, Magnox Swarf Storage
Silo, Bundling Spares and the Tanks and
Vessels Frameworks as well as providing
support to numerous ongoing major projects.
In line with the Group’s strategy to
broaden its nuclear service offering, our
clients include EDF in association with
Westinghouse on Sizewell ‘B’ where we
are assisting with the control and data
acquisition system upgrade to extend
the life of the pressurised water reactor.
We also continue to work for BAE Systems
providing engineering support to the
nuclear submarine programme as well as
for Westinghouse at Springfields and for
Low Level Waste Repository and Magnox.
During the year we were also appointed
to a major decommissioning services
framework for new client, Dounreay Site
Restoration Limited, for a term of up to
seven years.
New nuclear will play an important role in
the government’s objective of delivering
sustainable and low-carbon energy.
Working at Hinkley Point ‘C’, during the
period, we have supplied and installed high
integrity manufactured components to the
site and we continue to selectively target
opportunities where our specialist
capabilities are well suited to major
future demand.
We continue to deliver long-term
engineering maintenance services at a
number of the UK’s thermal power stations
including at Drax Power Station where we
deliver electrical maintenance services on
a four year framework.
Our differentiators
• Our Infrastructure, Energy and
Environmental markets enjoy
committed funding
• We deliver non-discretionary
maintenance and renewals tasks
• We work in complex, challenging
and highly regulated environments
• We employ a highly skilled, directly
employed workforce
• We have a proven track record of
revenue growth, profitability and
cash generation
• Provides visible, reliable and resilient
revenues via long-term maintenance
and renewal programmes
• We have little exposure to the financial
and contractual risks facing those
businesses that deliver large
enhancement schemes funded by
capex spend
• In rail maintenance our average task
size is less than £20k
• Mainly funded from opex budgets
• Markets with high barriers to entry
• Underpins safe working practices
• Creates a culture of responsiveness
to client needs
• Reduces our exposure to
sub-contractor pricing volatility
• Presenting an attractive, long-term
investment case
Environmental
In Water, spending on the latest five year
investment cycle (AMP7) is estimated to
increase to c.£50bn5 as demand continues
to be driven by population growth,
ageing infrastructure and environmental
considerations. We provide a range of
engineering services to support the renewal
and maintenance of water infrastructure
assets including those on clean and
wastewater networks, flood alleviation and
coastal protection systems. These renewal
programmes require sustained long-term
investment through our clients’ operational
expenditure budgets.
For Dŵr Cymru Welsh Water, we operate
on the Pressurised Pipelines Framework,
Major Civils Framework and the Capital
Delivery Alliance Civils contracts across
the region. In addition to ongoing
maintenance and renewals tasks, we
provide 24/7 emergency reactive works
on the water network. As an approved
dam safety contractor we work on critical
infrastructure at reservoirs including
Talybont and Llanishen, in Cardiff.
Wessex Water’s planned £1.4bn AMP7
investment6 is focused on delivering
improvements to clean water and
sewerage systems and we continue to
work on the current AMP6 Civils & EMI
Delivery Partners Framework.
In line with a key strategic objective we
continue to broaden our customer base
securing long-term frameworks with new
water clients.
For Bristol Water, we were recently
appointed to the £75m AMP7 network
partnership programme, as the exclusive
provider for mains renovation works across
the region for the next five years. In
addition to this new framework, we have
been appointed to deliver a number of
significant mains rehabilitation schemes.
For Yorkshire Water we secured both
lots on the £290m AMP7 Minor Civils
Framework which will see us carry out
engineering works to existing assets on
operational treatment and distribution
facilities for the next five years.
10
Renew Holdings plc Annual Report and Accounts 2019 The Environment Agency ("EA") will have
invested approximately £2.6bn in flood
and coastal erosion risk management
projects in the five years to 2021 and
estimates that an increase in average
annual investment to around £1bn will be
necessary each year to 2065 to sufficiently
mitigate flooding risk in the UK7. We
continue our long association with the EA
delivering these important maintenance
and improvement works to environmental
assets nationally through the Flood and
Coastal Risk Management programme
where we have framework positions in the
North, Central, South West and South East
regions over the next four years. The Group
also secured a further extension to the
EA’s Northern Mechanical, Electrical,
Instrumentation, Control, and Automation
Framework (“MEICA”) as well as being on
the South East MEICA Projects Framework.
For the Canal and River Trust, we continue
to maintain the trust’s waterway assets
across England and Wales through a seven
year MEICA Framework.
In land remediation, we continue to
see long-term demand for brownfield
regeneration and during the year we
undertook a number of complex
remediation schemes for Harworth Estates
as well as delivering land regeneration
services for National Grid and Scotia Gas
Networks on the sites of former gasworks
through national framework agreements.
We also continue to be involved with
a number of phases of work at the
Palace of Westminster including specialist
restoration activities on the Cast Iron Roof
Restoration Framework and structural
repair works to the Elizabeth Tower. We
continue to see long-term opportunities at
this UNESCO World Heritage site which is
due to undergo further major renovation
programmes over the next decade.
Specialist Building
We specialise in the high quality
residential market in London and the Home
Counties and during the year we have been
successfully awarded a number of new
projects. In the science sector, where we
have a number of existing frameworks,
the Group has been awarded a significant
contract for a repeat client post period end.
The Group continues to be selective in
these markets where we have a long-
established track record.
Revenue in Specialist Building reduced
to £36.1m (2018: £74.2m), in line with our
expectations and reflecting our continued
focus on contract selectivity and risk
management. This is demonstrated by
an increased operating profit of £0.9m
(2018: £0.6m) at an operating margin of
2.4 per cent (2018: 1.5 per cent). At the
year end, the forward order book1 was
£39m (2018: £48m).
New and emerging markets
As part of the Group’s growth strategy,
we continue to seek opportunities
in new regulated markets that exhibit
characteristics and programmes of
infrastructure maintenance and renewal
spending which align with the Group’s
established and proven capabilities. Our
initial focus is on highway structures and
technology as well as power infrastructure.
In highways, the Government announced
a £25bn investment in the Road Investment
Strategy 28 while investment in the electricity
network during RII0-1 is estimated at c.£37bn
and focus on improving existing power
assets9. Entering these markets is part of
our long-term strategic plan and we will
provide updates when appropriate.
Health, safety and the
environment
We continue to make health and safety
a priority, ensuring safe working practices
for the Group’s employees, those who
work with us and our wider stakeholders.
The Group is pleased to report further
improvement in its health and safety
performance during the year.
The Group is committed to operating in
a sustainable and ethical manner and we
work hard to leave a lasting positive impact
with everything we do. The Group has
recently been awarded the London Stock
Exchange’s Green Economy Mark, which
recognises companies that contribute to
positive environmental outcomes.
Outlook
Renew continues to directly deliver
non-discretionary engineering support
services to the UK’s critical infrastructure
networks through its highly skilled
workforce. Technological developments,
demographic changes, historic
underinvestment, climate change and
legislative changes will necessitate
increased infrastructure investment over
a long period of time. These changing
dynamics continue to require our
clients to commit to clear spending plans
which are delivered through long-term
programmes of investment and, as such,
we are unlikely to be affected by the UK’s
potential withdrawal from the European
Union and the current political uncertainty.
The Group’s appointment to a number
of key frameworks in the period increases
our addressable market and provides
significant opportunity for continued
organic growth. The markets in which
we operate remain large and fragmented
and, as such, provide the Group with the
opportunity to grow its Engineering Services
business in the UK through selective,
earnings enhancing acquisitions that are
in line with our strategy. We also continue
to seek opportunities in new regulated
markets which align with the Group’s
established and proven capabilities.
The Group’s strong financial position and
our differentiated business model gives the
Board confidence the Group will continue
to deliver on its strategic objectives and
provide excellent growth opportunities.
Paul Scott
Chief Executive Officer
26 November 2019
CP6 Network Rail Strategic Business Plan – Summary
9 February 2018.
5
Water UK A Manifesto for Water, Summary of the Water
Industry’s Plans in England 2020-25 3 September 2018.
2
3
https://www.gov.uk/government/publications/
nuclear-provision-explaining-the-cost-of-cleaning-up-
britains-nuclear-legacy/nuclear-provision-explaining-
the-cost-of-cleaning-up-britains-nuclear-legacy.
4
NDA Business Plan 1 April 2019 to 31 March 2022
(March 2019).
6 Wessex Water Business Plan 2020-2025.
7
Environment Agency Research and analysis Long-term
investment scenarios (LTIS) 2019 (Updated May 2019).
8 HM Treasury Autumn Budget 2018 (October 2018).
9 Ofgem RIIO-1 PCFM (November 2018).
11
Renew Holdings plc Annual Report and Accounts 2019STRATEGIC REPORT OUR BUSINESS MODEL
Delivering
stakeholder value
As a holding company, Renew grants autonomy to its operating
subsidiaries, enabling them to be competitive and effective in their
individual markets whilst setting overall standards.
Our inputs
Our strategy
1
Key provider
2
Non-discretionary
focus
Read more on pages
16 & 17
Our core values
Long-term positions
in target markets
Our responsive engineering services,
combined with consistent delivery, mean
we are well positioned to work on some of
the largest asset maintenance and renewal
frameworks nationally, which are mainly
delivered through our clients’ operational
expenditure budgets.
Multidisciplinary services
We develop our engineering services both
organically and by acquisition to broaden
our service offering to existing and new
clients. Organic growth is achieved by
aligning our operating subsidiaries with their
clients. The Group also continues to look for
complementary acquisition opportunities
where businesses have strong relationships
in regulated markets.
Compliance
Our subsidiary businesses are governed by
a system of controls that includes our Group
minimum standards. These standards are
monitored by an internal audit process to
ensure compliance in areas including risk
management, control environment and
activities, information and communication,
and the evaluation of effectiveness to
deliver robust commercial risk management.
Direct delivery
Our highly skilled, directly employed
workforce are key to delivering safe and
responsive solutions for our clients. The
regulated and challenging markets in which
we operate demand high levels of skill
and experience and require a long-term
commitment to training programmes for our
employees.
D e l i vering value
Integrity
Compliant
Responsive
Considerate
Our values
Sustainable
Responsible
Reliable
Progressive
Delivering v a l u e
Compliant
• The safety, health and welfare of our
Responsible
• Our responsible business strategy is
employees and those potentially affected by
our activities is a fundamental driver to our
highest priority of compliant service delivery.
underpinned by our core values and supported
by our corporate governance framework
which facilitates our growth ambition.
Considerate
• To be considerate, inclusive and respectful
in the way we employ and develop our
workforce giving full recognition to our
socio-economic responsibilities.
Progressive
• Encouraging entrepreneurial spirit to drive
continuous improvement in all that we
do with the objective of adding value to
all stakeholders.
12
Renew Holdings plc Annual Report and Accounts 2019
3
4
5
The value we create
Direct delivery
Responsive
Deliver growth
What makes us different
Safe operations in
challenging environments
Direct delivery model
National coverage
Responsive service
Investment in skills
and labour
Specialist market
knowledge
In-house design
and fabrications
Planned and reactive
maintenance services
Wide range of integrated
engineering capabilities
Innovative solutions
Shareholder returns
By the effective management and control
of our subsidiary businesses, we deliver
shareholder value through capital growth
and a progressive dividend policy.
Employee engagement
Our subsidiary businesses provide a range
of opportunities for employees from training
and career progression to health and
wellbeing benefits.
Socio-economic impact
Our businesses work hard to ensure their
operations have a lasting, positive impact
on local communities. Ensuring effective
communication with our stakeholders is key
to our success.
Customer satisfaction
We develop safe, innovative and efficient
solutions for our clients. Our ability to
provide a range of services from across our
subsidiary businesses can provide both cost
and time efficiencies.
Reliable
• Demonstrable and reliable delivery
performance aligned with our clearly defined
strategic priorities.
Responsive
• A customer focused ‘can do’ attitude that
recognises the priorities of our clients and
all stakeholders.
Corporate governance 40–49
Strategy 16 & 17
Sustainable
• Our ambitions are long term and build on the
solid foundations we have established. We
are committed to an approach that delivers
sustainable economic, social and
environmental value.
Integrity
• To behave honestly, openly and fairly with the
highest levels of integrity and professionalism
at all times.
Key performance indicators 18 & 19
Principal risks 34–36
13
Renew Holdings plc Annual Report and Accounts 2019STRATEGIC REPORT MARKET OVERVIEW
Engineering Services
The UK infrastructure market is robust and sustainable with continued
growth in forecast spending, backed by strong government support and
committed investment in all key long-term programmes.
Technological developments, demographic
changes and increased legislation have
combined to provide conditions for the
sustained investment in new and
maintained infrastructure.
Our clients have clear spending plans
underpinned by strategic national need,
regulatory commitments and essential
maintenance requirements delivered
through long-term programmes of
investment, which provide visibility
of spend over regulatory cycles.
Investment in infrastructure2
£600bn
2018–2028
Market drivers
Regulatory periods ensure long-term visible pipeline
Rail
Water
CP5 CP6
AMP6
AMP7
Nuclear decommissioning
NDA
Wireless networks
4G
5G
Strategic highways
RIS1
RIS2
Power distribution
RIIO ED1
RIIO ED2
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
There are five fundamental long-term trends that will support growth in the Group over the next ten years.
Drivers
Political and economic landscape
End of austerity
Impact of Carillion collapse
Political uncertainty
Population growth
Increased pressure on transport capacity
Housing shortages
Demand for natural resources increases
Government regulation
Drive to extend the life of assets
Incentives linked to customer satisfaction
Climate change
Focus on decarbonisation
Increased flood risk
Technological developments
Move towards smart cities and smart transport
Need for improved wireless networks
Opportunity for Renew
• Increased investment in UK critical infrastructure
• Customers moving towards direct delivery models
• Infrastructure investment remains at the top of the agenda
• Investment to improve rail and highways capacity
• Regeneration of urban areas and brownfield sites
• Need for better resilience in energy and water supply
• Focus on upgrading/maintaining infrastructure assets
• Increased spend to reduce leaks and faults in utilities
• Investment in renewable energy and new technology
• Flood alleviation and dam safety programmes
• Digital railway, Smart Motorway and EV/CAVs
• Roll-out of 5G network across the UK
14
Renew Holdings plc Annual Report and Accounts 2019 Key markets
Rail
Investment in Control
Period 6 ("CP6") 3
£48bn
• CP6 is expected to see a
25% increase in spend on
operations, maintenance,
support and renewals.
• Opportunities will arise from
the integration of HS2 with
the existing rail infrastructure.
• Long-term investment is
required to deliver renewal
and maintenance services
on London Underground
and Train Operating
Company assets.
Nuclear
Water
Telecoms
Nuclear Decommissioning
Estimated spend in Asset
Authority ("NDA") spend
per annum 4
Management Programme
7 ("AMP7") 5
£3bn
• The government’s nuclear
decommissioning provision
is currently estimated at
£124bn over the next 120
years, with around 75%
allocated to the Sellafield
nuclear site.
• New nuclear is an essential
part of the government’s
objective of delivering a
sustainable and low-carbon
energy future to meet
increasing demand.
• The NDA will announce its
new procurement strategy
in 2020 having assumed
responsibility for the
decommissioning of
the Magnox estate.
£50bn
• AMP7 will focus on cost
efficiency and leak reduction
with total expenditure
forecast to increase by 13%
from AMP6.
• OFWAT are focusing on
customer experience and
outcome-based solutions
in AMP7 leading to an
increase in expenditure
on capital maintenance
and asset optimisation.
• Additional spend on
enhancing supply resilience
including dam safety
and infrastructure
refurbishment schemes.
Estimated investment to
roll out 5G across the UK6
£22bn
• The wireless telecoms
infrastructure market is
expected to grow significantly
as the demand for 5G
internet access increases.
• All four major UK Networks
have announced their
proposed 5G launch sites as
part of a roll-out of wireless
infrastructure across the UK.
• Further investment
programmes are expected
to follow the increase in
5G technologies, targeting
widespread UK coverage
by 2023.
Target markets
Highways
Power
Road Investment Strategy 2 ("RIS2")7
Estimated investment in electricity network during RII0-18
£25bn
£37bn
• Highways England continue to assume direct responsibility
for all maintenance, renewal and improvement schemes
on our strategic network by rolling out their Asset
Delivery model.
• Continued move towards electric vehicles will require additional
investment in charging infrastructure.
• The introduction of connected and autonomous vehicles
will necessitate a significant change in road infrastructure,
maintenance and operation over the next 10–15 years.
• Ofgem will announce the next ten year price control allowances
in 2020 with increased investment in existing distribution assets
to ensure network stability and resilience expected.
• Significant investment in the transmission and distribution
sector is forecast during the next ten years, most of it driven
by the move towards a CO2-free energy scenario by 2050.
• Increasing political pressure for electric vehicles will necessitate
substantial reinforcement of the network so that capacity exists
to enable multiple charging point installations.
Sources
2
Infrastructure and Projects Authority, Analysis of the National Infrastructure and
Construction Pipeline 26 November 2018.
5
Water UK A Manifesto for Water, Summary of the Water Industry’s Plans in England
2020-25 3 September 2018.
3 Network Rail Strategic Business Plan – Summary 9 February 2018.
6 Frontier, UK Mobile Market Dynamics, A report for DCMS (July 2018).
4
NDA Business Plan 1 April 2019 to 31 March 2022 (March 2019)
https://www.gov.uk/government/publications/nuclear-provision-explaining-the-
cost-of-cleaning-up-britains-nuclear-legacy/nuclear-provision-explaining-the-cost-
of-cleaning-up-britains-nuclear-legacy.
7 HM Treasury Autumn Budget 2018 (October 2018).
8 Ofgem RIIO-1 PCFM (November 2018).
15
Renew Holdings plc Annual Report and Accounts 2019STRATEGIC REPORT OUR STRATEGY
A focused strategy
Our long-term strategy concentrates on developing our range of
engineering services capabilities, both organically and through selective
acquisitions. The Group targets acquisitions that bring complementary
skills and allow us to deliver a wider range of services to our clients.
1
2
3
To be a key provider of
engineering services
in our target markets
To focus on asset support,
maintenance and renewals
programmes with
non-discretionary funding
To expand our direct
delivery model through
strong local brands
Progress in 2019
We have achieved a number of key
framework awards and extensions in the
period with both existing and new clients
responsible for critical UK networks.
We have been awarded all of the Network
Rail CP6 frameworks we tendered for as
well as being appointed to key AMP7
frameworks for clients including Welsh
Water and Bristol Water.
Progress in 2019
We continued to develop our range of
renewals and maintenance capabilities
enabling us to provide long-term
engineering services to our clients.
We focus on essential non-discretionary
spending on critical networks to ensure
their continued reliability. These spending
programmes are delivered through
our clients’ visible operational
expenditure budgets.
Progress in 2019
We continue to develop and invest in our
direct delivery model. The acquisition of
QTS in May 2018 saw another strong brand
added to the Group’s existing Engineering
Services businesses.
The Group directly employs over 2,750
people (as at 30 September 2019).
PAchieved in 2019
PAchieved in 2019
PAchieved in 2019
Future focus
Develop strategically important
relationships by delivering
market‑leading innovation and
cost efficiencies to our clients.
Future focus
We position our business to access
essential maintenance and renewals
spending programmes with our new
and existing clients.
Future focus
Seek complementary Engineering
Services acquisitions to expand our
capabilities and geographical coverage.
Continue to invest in our highly skilled,
multidisciplined workforce.
Link to KPIs
Read more on pages 18 & 19
Link to KPIs
Read more on pages 18 & 19
Link to KPIs
Read more on pages 18 & 19
A
C
E
F
A
B
C
E
E
F
16
Renew Holdings plc Annual Report and Accounts 2019 4
5
To establish long-term
relationships through
responsiveness to
clients’ needs
To continue to deliver
organic growth combined
with selective
complementary
acquisitions
Progress in 2019
We offer direct delivery, market expertise
and a local, responsive service to our
clients. We continue to expand our range
of capabilities to better meet the needs
of our key clients.
Progress in 2019
We continue to deliver both organic and
acquisitive growth. The Group’s range of
capabilities has been strengthened in rail
following a full year of QTS trading.
Discover more about
how we create value
Read more on pages 4 & 5
Discover more about
how we manage risks
Read more on pages 34–36
PAchieved in 2019
PAchieved in 2019
Future focus
Develop our range of capabilities
and utilise our market knowledge
to align our business to our clients’
long‑term objectives.
Continue to deliver a quality, safe and
cost‑effective service in our markets.
Future focus
Continue to grow the Group’s
Engineering Services operations,
both organically and through selective
complementary acquisitions.
Continue to develop growth
opportunities in both existing
and targeted emerging markets.
Link to KPIs
Read more on pages 18 & 19
Link to KPIs
Read more on pages 18 & 19
C
E
A
B
D
17
Renew Holdings plc Annual Report and Accounts 2019STRATEGIC REPORT KEY PERFORMANCE INDICATORS
Measuring
our progress
The Group has certain key performance indicators (“KPIs”) which are used to
measure and monitor its performance in a number of areas. The operating
profit KPIs are measured on a non-GAAP basis which reflect the most
appropriate view of the underlying performance of the business.
A
B
C
Adjusted engineering
services operating profit1
as a percentage
of revenue
Adjusted Group operating
profit1 as a percentage
of revenue1
Engineering Services
order book1
7.0%
7.0%
7.0%
6.3%
6.4%
6.4%
5.7%
5.2%
£542m
£510m
£542m
£438m
2017
2018
2019
2017
2018
2019
2017
2018
2019
Description
Adjusted engineering services operating
profit as a percentage of revenue.
Description
Adjusted Group operating profit as
a percentage of revenue.
Description
The Group’s Engineering Services
order book1.
Why it’s a KPI
The strength of our margin illustrates the
Group’s focus on quality of earnings.
Why it’s a KPI
An increase in margin illustrated the
Group’s focus on quality of earnings.
2019 performance
We continue to work to improve our
engineering services margin through
efficiencies and innovative
working practice.
Link to strategy
Read more on pages 16 & 17
2019 performance
We continue to improve the Group’s
margin through efficiencies and innovative
working practice.
Link to strategy
Read more on pages 16 & 17
Why it’s a KPI
This is a KPI to demonstrate the
development of our position as a leading
provider of essential engineering services.
2019 performance
The Engineering Services order book1 has
increased following a number of strategic
framework appointments and renewals.
Link to strategy
Read more on pages 16 & 17
1
2
5
2
5
1
2
4
1
Renew uses a range of statutory performance measures and alternative performance measures when reviewing the performance of the Group against its strategy. Definitions of the
alternative performance measures, and a reconciliation to statutory performance measures, are included in Note 29 to these accounts.
18
Renew Holdings plc Annual Report and Accounts 2019 Discover more about
our business model
Read more on pages 12 & 13
D
Dividend
11.5p
11.5p
10.0p
9.0p
E
F
Health
and safety
Investment in training
205
424
205
129
16,337
16,337
12,177
11,987
2017
2018
2019
2017
2018
2019
2017
2018
2019
Description
The Group’s full year dividend to
its shareholders.
Description
The average rate of non-fatal injuries with over
seven days absence per 100,000 workers.
Description
Number of training days undertaken
across the Group in our various
education programmes.
Why it’s a KPI
The increase in the Group’s dividend
shows the Board’s confidence in the
strength of its capabilities and position
within its key markets.
Why it’s a KPI
The safety of our employees and those who
work with us remains a high priority for the
Group. This measure reflects the Group’s
commitment to improving its safety record.
Why it’s a KPI
Measuring training days undertaken
demonstrates our continued investment
in our direct delivery workforce.
2019 performance
The Board approved an increase to the
Group’s final dividend to 11.5p.
Link to strategy
Read more on pages 16 & 17
2019 performance
The HSE published data shows the average
rate of non-fatal injuries with over seven
days absence per 100,000 workers in the
construction industry was 420. We are
pleased to report we performed at just
under half this construction industry rate
during the year.
2019 performance
We have significantly increased our
investment in training across the Group
which is evidenced in the number of
training days undertaken in 2019
compared with previous years.
Link to strategy
Read more on pages 16 & 17
Link to strategy
Read more on pages 16 & 17
5
1
2
3
4
1
3
19
Renew Holdings plc Annual Report and Accounts 2019STRATEGIC REPORT OPERATIONAL REVIEW
Infrastructure
As a leading provider of infrastructure services to Network
Rail, we undertake a high volume of asset maintenance
and renewals tasks across the UK.
We also undertake all aspects of wireless telecoms
network infrastructure delivery.
Rail
Capabilities
• Operational support and asset care
• Critical planned and reactive
maintenance and renewals
• Civil, mechanical and electrical
engineering services
• Geotechnical and earthworks
• Plant, power and signalling renewals
• 24/7 emergency provision
• Asset renewal and refurbishment
• Tunnel and shaft refurbishment
• Fencing and devegetation
• In-house design capability
Progress
As a major provider of infrastructure
services to Network Rail nationally,
supporting its day-to-day operations
by providing a high volume of essential,
non-discretionary asset maintenance
activities through our long-term
frameworks. During the year we were
awarded the Minor Signaling frameworks
in the Scotland, South East and Wales
regions in addition to our existing CP6
frameworks where we directly deliver civils
asset management, fencing, devegetation
and drainage alongside a 24/7 emergency
support provision.
We have significantly strengthened our
relationship with Network Rail during the year,
securing all the CP6 renewals frameworks that
we tendered for, including the Multidisciplinary
Renewals and Geotechnical and Earthworks
five year frameworks in the Scotland North
East region. In addition, we continue to
work on Electrification and Plant, Slab Track,
Station Information & Security Systems as
well as Telecoms frameworks nationally
across the network.
Since the period end, we have secured new
positions on the CP6 Wales and Western
Renewals Frameworks across all five lots,
delivering a programme of engineering
services to assets including bridges,
embankments, tunnels and shafts as
well as the delivery of signaling, power
and communications schemes.
For London Underground we deliver specialist
electrical, plant and power schemes through
five framework agreements. We were also
awarded a number of depot control system
and major depot refurbishment schemes in
the period. During the year we have also
been awarded a place on Merseyrail’s
Principal Contractor’s three year framework
and we continue to work on the Transport
for Wales STRIDE framework.
Future focus
We focus on developing the
opportunities arising from our
acquisitions where our expanded
range of services provides
opportunities in the wider rail market.
We continue to align our business
with the requirements of our largest
client, Network Rail, over the CP6
investment period.
20
Renew Holdings plc Annual Report and Accounts 2019 Collaborative
safety
AmcoGiffen and QTS, in
collaboration with Network Rail,
delivered several "Learning from
Events" safety stand down days
during 2019. Taking place at rail sites
across Scotland and North East
London, our Safety, Health,
Environmental and Quality ("SHEQ")
representatives delivered interactive
presentations designed to reinforce
the importance of safe performance,
equipping our teams with the
confidence and tools to challenge
unsafe practices and behaviours.
Rail maintenance
& emergency support
We undertook an emergency works programme to re-open the West Highland Line
following recent flood damage at locations around Crianlarich, Scotland. Our skilled,
directly employed team worked around the clock at five locations to repair damaged
rail infrastructure including clearing debris, devegetation, reconstructing embankments,
enhancing drainage and rebuilding the track-bed. In challenging conditions, we
worked safely and collaboratively with Network Rail and our supply chain to deliver
an early completion.
Previous emergency response works for Network Rail have included at Lamington
Viaduct on the West Coast Main Line and at Loch Eilt following a major landslide in
early 2018.
Rail renewals
We have recently completed the Up Passenger Loop Track Renewal at Birkenhead
North Station as part of the Merseytravel Platform Train Interface Project for Network
Rail which provides level access at all Merseytravel stations and sufficient gauge
clearance for the operation of new vehicles being manufactured for use on
the network.
Passengers with mobility issues, wheelchair users, and those with buggies, luggage
and bikes will be able to get on and off the new trains without assistance, due to the
alterations in height of station platforms and track realignment ensuring the new
train’s sliding step can meet the platform edge, making the Merseytravel network the
most accessible traditional rail network in the UK. With continued support from our
supply chain partners, the completion of Birkenhead North Station equates to 91 of
96 platforms we have delivered with Network Rail over the last 12 months.
Wireless telecoms
Progress
We continue to see a significant increase in
work on Telefonica’s frameworks in London,
the South East and the North East of
England. We also secured a new framework
for MBNL to deliver EE’s 5G roll-out and
continued to deliver emergency reactive
works for our clients throughout the year.
Future focus
We remain focused on the
requirements of the 4G and 5G
wireless telecoms network
programmes in the UK. The UK
government’s ambition to be a leader
in the provision of the next generation
of mobile communications
technologies is providing
opportunities through long‑term
5G investment programmes.
Capabilities
In wireless telecoms, we provide specialist
infrastructure services to network operators
and increasingly to multi-site operators
and vendors acting as managed services
providers. We undertake all aspects
of site acquisition, design, installation,
commissioning and integration
of stations onto the networks.
• Operational support and asset care
• Critical planned and reactive
maintenance and renewals
• Civil, mechanical and
electrical engineering
• Wireless telecoms installations
• Provision of 3G, 4G, 5G and
Wi-Fi technologies
• Radio network planning, including the
installation of specialist indoor and
outdoor coverage solutions
21
Renew Holdings plc Annual Report and Accounts 2019STRATEGIC REPORT OPERATIONAL REVIEW CONTINUED
Energy
Our services are associated with high hazard risk
reduction operations at nuclear facilities that include
waste treatment, reprocessing, decommissioning and
decontamination operations. We also provide long-term
maintenance and asset renewal support at many of the
UK’s thermal power generation plants.
Image courtesy of Sellafield
Nuclear
Capabilities
• Operational support and asset care
• Critical planned and reactive
maintenance and renewals
• Civil, mechanical and electrical engineering
• Nuclear decommissioning
and decontamination
• Specialist fabrication and manufacturing
Progress
At Sellafield, where we continue to operate
as the largest provider of mechanical and
electrical services, the focus has shifted away
from reprocessing nuclear fuel to broader
decommissioning activities including high
hazard retrievals and risk reduction activities.
Our range of multidisciplinary engineering
services support these activities through
established, long-term framework agreements
for decontamination, decommissioning
and waste management. During the year
the largest of these frameworks, the
Decommissioning Delivery Partnership, was
extended to 2026. This programme delivers
work across Sellafield and is associated
with some of the most hazardous areas
at the site including waste retrieval from
legacy storage ponds and silos. We also
continue to work on the SR&DP Asset Care,
Magnox Swarf Storage Silo, Bundling
Spares and the Tanks and Vessels
Frameworks as well as providing support
to numerous ongoing major projects.
In line with the Group’s strategy to
broaden its nuclear service offering,
our clients include EDF in association
with Westinghouse on Sizewell ‘B’ where
we are assisting with the control and data
acquisition system upgrade to extend
the life of the pressurised water reactor.
We also continue to work for BAE Systems
providing engineering support to the
nuclear submarine programme as well as
for Westinghouse at Springfields and for
Low Level Waste Repository and Magnox.
During the year we were also appointed
to a major decommissioning services
framework for new client, Dounreay Site
Restoration Limited, for a term of up to
seven years.
New nuclear will play an important role in
the government’s objective of delivering
sustainable and low-carbon energy.
Working at Hinkley Point ‘C’, during the
period, we have supplied and installed high
integrity manufactured components to the
site and we continue to selectively target
opportunities where our specialist
capabilities are well suited to major
future demand.
Future focus
We continue to look for opportunities
to broaden our range of skills and
develop our service offering in the
nuclear market which has high
barriers to entry and requires an
exceptional safety record. In the
emerging new nuclear market, we
focus on the supply of high integrity
fabrications as well as mechanical
and electrical installation support to
specialist equipment vendors.
22
Renew Holdings plc Annual Report and Accounts 2019 Thermal and renewable
Future focus
We continue to develop our existing
relationships with clients responsible
for assets in the thermal and
renewable energy market. Our range
of capabilities and experience means
we are well placed to meet the needs
of a wide range of assets across
this sector.
Capabilities
• Operational support and asset care
• Critical planned and reactive
maintenance and renewals
• Civil, mechanical and
electrical engineering
Progress
We continue to deliver long-term
engineering services at a number of the
UK’s thermal power stations including
at Ferrybridge, Eggborough, Keadby,
Connah’s Quay and Drax. Our embedded
maintenance teams support these
sites through programmes of planned
maintenance and an emergency support
provision. Our work on these sites is
undertaken through long term framework
agreements including a four year electrical
maintenance services framework at Drax.
In renewable energy, we provide
maintenance and engineering support to
windfarm facilities including at Deucheran
Hill for E.ON.
Maintaining
E.ON’s
Deucheran
Hill Wind Farm
Through our framework with
E.ON, we deliver scheduled and
reactive maintenance services to
sustain operational functionality
at the Deucheran Hill Wind Farm
in Scotland.
Since 2010, our embedded support
team has been undertaking
mechanical maintenance as well as
servicing and repairs to the nine
Vestas V66 1.6MW turbines at the
site including planned preventative
maintenance, cabling support, 24
hour call out and decommissioning.
Our multidisciplinary approach,
combined with our multi‑skilled,
directly employed workforce,
enables us to deliver integrated
engineering solutions at this
iconic site.
23
Renew Holdings plc Annual Report and Accounts 2019STRATEGIC REPORT OPERATIONAL REVIEW CONTINUED
Environmental
We support our water clients by delivering asset
maintenance and renewals across water infrastructure
networks including flood alleviation and river and coastal
defence schemes. We specialise in undertaking complex
remediation schemes for clients across the UK.
Water
Capabilities
• Operational support and asset care
• Critical planned and reactive
maintenance and renewals
• Civil, mechanical and
electrical engineering
• Emergency works including flood risk
management programmes
• Maintenance of strategic water mains
and mains drainage
• Clean and wastewater
rehabilitation infrastructure
• Port, harbour and sea defences
For more information on
the opportunity in Water
Read more on pages 14 & 15
Progress
For Dŵr Cymru Welsh Water, we operate on
the Pressurised Pipelines Framework, Major
Civils Framework and the Capital Delivery
Alliance Civils contracts across the region.
In addition to ongoing maintenance and
renewals tasks, we provide 24/7 emergency
reactive works on the water network.
For Wessex Water we continue to work
on the current AMP6 Civils & EMI Delivery
Partners Framework.
In line with a key strategic objective we
continue to broaden our customer base
securing new long-term frameworks with
new water clients.
For Bristol Water, we were recently appointed
to the £75m AMP7 network partnership
programme, as the exclusive provider for
mains renovation works across the region
for the next five years. In addition to this
new framework, we have been appointed
to deliver a number of significant mains
rehabilitation schemes.
For Yorkshire Water we secured both lots
on the £290m AMP7 Minor Civils Framework
which will see us carry out engineering
works to existing assets on operational
treatment and distribution facilities for the
next five years.
We continue our long association with the
EA delivering important maintenance and
improvement works to environmental assets
nationally through the Flood and Coastal
Risk Management programme where we
have framework positions in the North,
Central, South West and South East regions
over the next four years. The Group also
secured a further extension to the EA’s
Northern Mechanical, Electrical,
Instrumentation, Control, and Automation
Framework (“MEICA”) as well as being on
the South East MEICA Projects Framework.
For the Canal and River Trust, we continue
to maintain the trust’s waterway assets
across England and Wales through a seven
year MEICA Framework.
Future focus
We will continue to develop the
opportunities available through our
existing framework agreements with
our water clients, supporting them in
the day‑to‑day running of their water
infrastructure networks.
24
Renew Holdings plc Annual Report and Accounts 2019 Land remediation and restoration
We also continue to be involved with a
number of phases of work at the Palace of
Westminster including specialist restoration
activities on the Cast Iron Roof Restoration
Framework and structural repair works to
the Elizabeth Tower. We continue to see
long-term opportunities at this UNESCO
World Heritage site which is due to undergo
further major renovation programmes over
the next decade.
Future focus
We continue to maximise the
potential of the position we have
developed in the UK remediation and
restoration markets.
Capabilities
As an industry leader of bespoke and
innovative remediation solutions, we have
over 40 years’ expertise in providing
specialist remediation and associated
earthworks nationwide. Our in-house
capabilities can add value, recovering up
to 100 per cent of soils and excavated
materials on site.
• Soil and groundwater remediation
• Soil washing, biophysical treatment,
solidification and stabilisation,
enhanced segregation and
geotechnical improvements
• Design of bespoke remediation and
ground engineering solutions
• In-house technology and environmental
engineering resources
• Remediation strategies combined with
infrastructure delivery
• Specialist restoration
Progress
During the year we undertook a number
of complex remediation schemes for
Harworth Estates as well as delivering
land regeneration services for National
Grid and Scotia Gas Networks on the sites
of former gasworks through national
framework agreements.
Innovative
remediation
solutions
During the year we were awarded
a contract for the major development
of Moss Nook, Merseyside for repeat
client, The Harworth Group. The 52.4
hectares of brownfield and open land
will be remediated for residential and
recreational use.
The mixed soils found on the site
include colliery spoil, demolition
arisings and by‑products from nearby
industries, in particular galligu, which
represent a significant engineering
challenge. Drawing on our experience
of working with similar materials
across the UK, our subsidiary
business, VHE, will remove and treat
affected areas of the site to provide a
platform for the development of the
site. Treatment will include excavation
& filling, surface & groundwater
management, screening of excavated
material & re‑use and modification
of insitu & as dug soils.
25
Renew Holdings plc Annual Report and Accounts 2019STRATEGIC REPORT OPERATIONAL REVIEW CONTINUED
Specialist Building
Our subsidiary, Walter Lilly, is recognised as a
market-leading luxury provider of prestigious private
residential refurbishment and science projects in
London and the Home Counties.
High quality residential and science
Capabilities
Our subsidiary, Walter Lilly, is
recognised as a market-leading luxury
provider of prestigious private residential
refurbishment and science projects in
London and the Home Counties.
The schemes we undertake often require
extensive structural engineering works
which, together with space restrictions in
the South and the complex nature of the
work, means that this market has high
barriers to entry.
In-house design and engineering
capabilities are able to provide innovative
solutions on projects that require extensive
underground development. Other services
include design management, planning,
traffic management and logistics support
as well as expertise in specialist finishes.
Progress
In the high quality residential market in
London and the Home Counties we have
been successfully awarded a number of
new projects during the year.
In the science sector, where we have a
number of existing frameworks, we have
been awarded a significant scheme for the
MRC London Institute of Medical Sciences
post period end. The Group continues to
be selective in these markets where we
have a long-established track record.
Future focus
We focus on delivering technically
challenging, high quality residential
and science projects in London
and the Home Counties where our
expertise and experience prove
differentiators in this market.
We continue to be selective in
these markets with a focus on
risk management.
Science
specialism
The Group, through its subsidiary
Walter Lilly, specialises in
constructing, renovating and
refurbishing science facilities. Over
the years we have worked on many
projects for key pharmaceutical
companies. Past projects have
included a virology containment
facility for DEFRA as well as chemistry
and biology laboratories for Eli Lilly.
During the year, Walter Lilly was
appointed to a seven year Capital
Programme Framework with the
London School of Hygiene and
Tropical Medicine for remodelling
and fit out works to its CAT III
laboratories as well as other areas.
The Group has a number of
frameworks in the science sector
and since the period end has been
awarded a significant scheme to
build a new biomedical research
facility for repeat client, the MRC
London Institute of Medical Sciences.
26
Renew Holdings plc Annual Report and Accounts 2019 FINANCIAL REVIEW
A strong financial performance
Dear Shareholder
Results
Group revenue1 from continuing activities
was £600.6m (2018: £541.5m), with an
operating profit before tax1 from continuing
activities prior to amortisation and exceptional
items of £38.3m (2018: £31.1m). A tax charge
of £7.3m (2018: £6.4m) resulted in a profit
after tax prior to amortisation and exceptional
items for the year of £30.4m (2018: £24.0m),
an increase of 26 per cent. After deducting
£10.8m (2018: £15.6m) of amortisation and
exceptional costs, the profit for the year
from continuing activities was £22.3m
(2018: £9.2m).
Amortisation and exceptional
items
The £10.8m of exceptional items and
amortisation is made up of £6.5m of
amortisation charges in the year relating
to contractual rights and customer
relationships which are primarily associated
with the acquisition of QTS Group Limited.
Following this amortisation there remains
£9.5m of other intangible assets on the
balance sheet. In addition, we have
recognised an exceptional charge in the
year of £4.3m in relation to the High Court
requirement to equalise pension benefits
between men and women due to
guaranteed minimum pension (GMP).
Net debt
The Group’s balance sheet shows a cash
balance of £11.7m (2018: £9.2m) and
borrowings of £21.9m (2018: £30.6m) at
the year end. Consequently, the Group’s
net debt1 position as at 30 September 2019
was £10.2m (2018: £21.4m).
Banking facilities
The Group has a four year term loan
with HSBC which was used to part-fund
the acquisition of QTS Group Limited in
2018. The loan is repayable in quarterly
instalments and is secured by a fixed and
floating charge over the Group’s assets.
The loan will be fully repaid during the
year ended 30 September 2022.
The Group has committed debt facilities
of £20m in the form of a revolving credit
facility with HSBC which is committed until
2022. In addition, the Group has a further
£10m overdraft, also with HSBC, which
is renewed annually in January.
The Group has complied with the covenants
associated with all of its debt facilities
throughout the year.
Leasing
At 30 September 2019, the Group had £5.8m
(2018: £4.4m) of finance lease obligations.
Sean Wyndham-Quin CA
Chief Financial Officer
Full year dividend
11.5p
2018: 10.0p
Adjusted operating profit 1
£38.3m
2018: £31.1m
27
Renew Holdings plc Annual Report and Accounts 2019STRATEGIC REPORT FINANCIAL REVIEW CONTINUED
"The Board is recommending a final dividend of
7.67p per share (2018: 6.7p) bringing the total for
the year to 11.5p (2018: 10.0p), an increase of
15 per cent."
Taxation
The tax charge on profit for the year is
£4.7m (2018: £5.5m), a rate of 18 per cent.
This rate is slightly lower than the headline
rate of 19 per cent due to timing differences
arising as a result of deferred tax. Corporation
tax payable for the year amounted to £5.3m
(2018: £3.6m), a rate of 14 per cent on profit
before exceptional items and amortisation.
The Group has been able to utilise some
brought forward losses which had not
previously been recognised as deferred
tax assets. Due to the tax deductibility
of defined benefit pension scheme
contributions which are not charged to the
Income Statement, the rate of corporation
tax payable in each of the next few years
should remain below the headline rate of
corporation tax in effect for the relevant
accounting period.
Pension schemes
At 30 September 2019, the IAS 19 valuation
of the Lovell Pension Scheme, which was
closed to new members in 2000, resulted
in an accounting surplus of £15.6m
(2018: £12.6m) after accounting for deferred
taxation. The net surplus has increased
by £3.0m during the year, due primarily
to contributions made by the Company
and reflects the impact of the equalisation
of guaranteed minimum pension (GMP).
The actuarial movement is accounted for
through the Group Statement of
Comprehensive Income.
During the year, the Board has continued
to work with the Trustees of the Lovell
Scheme, to reduce the risks associated
with the scheme’s liabilities by regularly
reviewing the scheme’s investment strategy
which includes a liability driven model
featuring interest rate hedging techniques.
At the year end, 52 per cent (2018: 57 per
cent) of the scheme’s total liabilities were
matched by annuities. In the triennial
valuation of the scheme, which was carried
out as at 31 March 2018, the scheme
actuary measured the deficit in the scheme
at £0.3m. In accordance with the scheme
specific funding requirements of the
Pensions Act 2005, the Board reached an
agreement with the Trustees of the scheme
on the level of future contributions at
£4.3m per annum until 31 July 2023 by
which point the scheme’s buy-out deficit is
expected to be cleared. The next triennial
valuation is due on 31 March 2021.
The IAS 19 valuation of the Amco Pension
Scheme shows a net surplus of £1.0m
(2018: £0.7m) after accounting for deferred
taxation. The net surplus has increased by
£0.3m during the year, due primarily to
contributions made by the Company and
reflects the impact of the equalisation
of guaranteed minimum pension (GMP).
The actuarial movement is accounted
for through the Group Statement of
Comprehensive Income.
Similar to the Lovell Scheme, the Board
has worked closely with the Trustees of
the Amco Scheme, to reduce the risks
associated with the liabilities of the scheme.
This has included agreeing to make £0.5m
of additional contributions to provide
liquidity so that the Trustees could fund
transfer values requested by members
without disturbing the investment portfolio
of the scheme. It is possible that further
contributions will be made in 2019/20 for
the same purpose. At the year end, 49 per
cent (2018: 47 per cent) of the scheme’s
total liabilities were matched by annuities.
In the triennial valuation of the scheme
which was carried out as at 31 December
2016, the scheme actuary measured the
deficit in the scheme at £3.4m. In
accordance with the scheme specific
funding requirements of the Pensions Act
2005, the Board agreed the level of future
contributions with the Trustees of the
scheme at £0.5m per annum. This recovery
plan is projected to eliminate the deficit
under the Statutory Funding Objective of
the Pensions Act 2004 by 31 October 2020.
The next triennial valuation is due on
31 December 2019.
Impact of IFRS 9
The new accounting standard IFRS 9
addresses the classification and
measurement of financial assets and
liabilities and replaces IAS 39. Among
other things, the standard introduces a
forward-looking credit loss impairment
model whereby entities need to consider
and recognise impairment triggers that
might occur in the future (an "expected
loss" model). The Group has adopted
IFRS 9 and has chosen to apply the
retrospective approach.
The adoption of IFRS 9 has had no material
impact on the Group’s financial statements.
Impact of IFRS 15
The new accounting standard, IFRS 15, sets
out a single and comprehensive framework
for revenue recognition. The guidance in
IFRS 15 is more detailed than previous IFRSs
for revenue recognition (IAS 11 "Construction
Contracts" and IAS 18 "Revenue and Associated
Interpretations"). The Group has adopted
IFRS 15 and has chosen to apply the
modified retrospective approach. There
has been no impact on the comparative
reported results and consequently no
adjustment has been required to the
opening balance of equity at the date of
initial application. The Group has adopted
the practical expedients not to restate
contracts for all contract modifications
that occurred before the date of initial
application and to recognise the incremental
costs of obtaining a contract as an expense
when incurred if the amortisation period of
the asset that the Group otherwise would
have recognised is one year or less.
The adoption of IFRS 15 has had no material
impact on the Group’s financial statements.
28
Renew Holdings plc Annual Report and Accounts 2019 IFRS 16
This new IFRS will be applicable
to the Group’s results for the year ending
30 September 2020. The Board assesses
that net impact to the Income Statement will
be immaterial as a result of the application
of IFRS 16. Both assets and liabilities on the
Balance Sheet are expected to increase
by corresponding amounts, which as at
30 September 2019 would have been in
the range of £9m–£11m.
Earnings per share
Earnings per share1 before exceptional
items and amortisation was 40.4p
(2018: 35.5p) and on a statutory basis,
after the impact of exceptional items
and amortisation, was 29.4p (2018: 10.0p).
The weighted average number of shares
in issue for the period was 75.3m.
Distributable profits
The distributable profits of Renew Holdings
plc are £46.4m (2018: £36.2m). The Board is
recommending a final dividend of 7.67p per
share (2018: 6.7p) bringing the total for the
year to 11.5p (2018: 10.0p), an increase of
15 per cent.
Going concern
The Directors continue to adopt the going
concern basis in preparing the Group’s
2019 financial statements.
Capital Allocation Policy
Capital allocation in priority order:
For the year ending 30 September 2020
1
2
3
4
5
To maintain sufficient financial headroom to comfortably manage temporary
variations in working capital and to provide headroom against known risks
and contingencies.
To maintain a conservative approach to leverage by seeking to pay down debt
quickly post-acquisitions and by ensuring that our net debt:EBITDA multiple
remains at an appropriate level.
To appropriately invest in the business to deliver organic growth.
To continue to pursue a progressive dividend policy whilst maintaining
an appropriate level of dividend cover.
To build a net cash balance to enable us to quickly respond to acquisition
opportunities that are consistent with our stated strategy and which are
earnings enhancing.
To the extent that all of these priorities have been achieved, we would consider returning
additional excess cash to shareholders.
Sean Wyndham-Quin CA
Chief Financial Officer
26 November 2019
29
Renew Holdings plc Annual Report and Accounts 2019STRATEGIC REPORT
SUSTAINABILITY
Committed to a lasting
positive impact
As a business we understand the wider responsibility of our activities and
work hard to ensure consideration is given to the social, environmental
and economic benefits of our activities.
Our approach to sustainability
As a business we understand the wider
responsibility of our activities and work
hard to ensure consideration is given to
the social, environmental and economic
benefits our activities can bring.
We are committed to ensuring our
employees, clients, supply chain and other
stakeholders are not adversely affected by
our work but that we leave a lasting positive
impact on those around us.
Read more on pages 31–33
Health and safety
Health and safety remains a priority across the Group. Health and safety is led by the
Chief Executive assisted by the Group’s SHEQ Director and safety advisors who are
based within our subsidiary businesses and who have experience and knowledge of
the specific environments in which they work.
People and potential
The Group’s success relies on its employees. Our highly skilled, directly employed
workforce are experienced in some of the most challenging and complex
environments. Investment in professional development and training is key to
attracting and retaining our skilled workforce.
Environment and ethics
The Group is committed to operating in a sustainable and ethical manner. The
environment and communities in which we operate are a priority and we work hard
to leave a lasting positive impact with our work.
Renew and STEM
Our businesses undertake many
initiatives throughout the year to raise
STEM (Science, Technology, Engineering
and Maths) awareness, including
hands-on events, activities and
exhibitions designed to inspire young
people and raise awareness of the
opportunities available within the
engineering sector.
Examples in the year include at Seymour,
where employees attend industry and
community events as STEM and CITB
Construction ambassadors. Seymour
continues to have strong connections
with a number of local schools and
colleges. Walter Lilly has been working
with local primary schools to deliver
"Brilliant Build Days" which give school
children the opportunity to explore work
in the construction industry. STEM
ambassadors at AmcoGiffen also
attended primary and secondary schools
in the South Yorkshire area delivering
activities including employability skills
sessions, mock interviews and interactive
STEM sessions.
QTS continue their association with the
Women in Rail Scottish Regional Group,
participating in steering committee
meetings as well as hosting the Women
in Rail Scotland’s networking event in
August in partnership with Network Rail.
30
Renew Holdings plc Annual Report and Accounts 2019 Our safety
performance
2018/19 has seen the Group achieve
significant improvements in its
statistical reporting with the
introduction of metrics including
Accident Frequency Rate ("AFR") and
Lost Time Incident Frequency Rate
("LTIFR"). The business also adopted
a standard approach to the trending
of events and close calls to inform
strategy on improvement initiatives
going forward. Our overall safety
performance improved during the
year with a reduction in the rate of
RIDDOR reportable injuries.
One successful initiative has been the
focus on driver safety. In-cab technology
has been installed in commercial vehicles
and cars at a number of the Group’s
subsidiaries to help modify driver behaviour
to deliver both safety and environmental
benefits. The introduction of this
technology helps to reduce accidents and
fuel usage by around 10 per cent. Safety
Stand Down days are undertaken where
employees participate in discussions and
presentations on various topics. Our
ongoing Change = Stop campaign also
continues to deliver improvements in our
health and safety performance targets. The
year has also seen many of our businesses
raising awareness of mental health issues.
Initiatives have included mental health first
aid training.
Accreditations
Our businesses continue to be accredited
with various health and safety schemes,
including Constructionline, SafeContractor,
the Contractors Health & Safety
Assessment Scheme ("CHAS"), Achilles
Verify and the Railway Industry Supplier
Qualification Scheme ("RISQS"). In addition
to this our Group minimum standards for
health and safety were reviewed and
updated early in the year with an audit
subsequently being carried out with every
subsidiary to confirm compliance.
Health
and safety
As a group, Renew continues to make
health and safety a priority, ensuring
safe working practices for the Group’s
employees, those who work with us
and wider stakeholders. Our subsidiary
businesses employ their own safety
practitioners who understand the complex
needs of their individual markets. The
Group also has its Safety and Environmental
Management Group ("SEMG") forum, which
met four times in the year, where senior
operational personnel and senior safety
practitioners from around the Group meet
to share best practice and knowledge. The
meetings each focused on a specific risk
issue, selected on the basis of commonality
across the subsidiaries and the potential for
meaningful sharing and improvement. The
SEMG themes were:
• Mental health
• Avoidance of damage to utility services
• Plant people interface
• Behavioural change
A safe culture
The development of a positive learning
culture throughout the business is key to
building on our improvements in health and
safety and is supported at Board level. The
positive learning culture is driven by close
call reporting, incident investigations and
just culture reinforcement.
Safety in action
The AmcoGiffen subsidiary has re-invented
its Safety, Health, Environment and Quality
("SHEQ") strategy under the title of SHEQ
24/7. This revised approach has an
underlying theme of mindfulness; everyone
involved must be actively thinking about
the SHEQ issues involved in the planning
and delivery of work, with a "predict and
prevent" mentality. Clarke Telecom and QTS
have also devised new health and safety
strategies, whilst Shepley, VHE, Lewis,
Seymour and Walter Lilly continue to
review, update and maintain their
ongoing initiatives.
As in recent years, we continue to focus
on behavioural safety-based initiatives to
promote learning by understanding the
reasons behind the incidents that occur.
Behavioural-based initiatives which involve
models such as “ABC” (Antecedents –
Behaviour – Consequence) and “COM-B”
(Competence + Opportunity + Motivation =
Behaviour) run alongside more traditional
courses such as manual handling and
working in confined spaces.
Our businesses undertake a wide
range of initiatives throughout the year
to drive health and safety performance
improvement in a number of key areas.
This year these have included fatigue
management which involves the use of
wearable technology and online training
trialled to look at reducing the exposure
to risk of incidents due to the reduced
alertness that comes with being tired.
31
Renew Holdings plc Annual Report and Accounts 2019STRATEGIC REPORT SUSTAINABILITY CONTINUED
Supporting
a great team
Employee Assistance
Programme
In 2019 the Employee Assistance
Programme was introduced which
offers all our employees and their
families a 24 hour helpline to assist
with a wide range of issues including
financial, childcare, medical, tax,
retirement and legal matters.
Employee training
The Group offers a number of
employee training opportunities
including work placements,
apprenticeships, work experience
and day release placements.
Number of apprentices,
trainees and undergraduates
in the Group
234
(2018: 222)
Training days undertaken
in 2019
16,337
(2018: 11,987)
People and
potential
Focus on recruitment, retention
and development of talent
Investing in training is key to recruiting and
retaining our highly skilled workforce. The
Group supports a range of training and
professional development opportunities for its
employees throughout the business. Examples
in the year include at Walter Lilly where they
have 13 day release and sponsored students
studying in Construction and Engineering
Management, Commercial Management and
Quantity Surveying, and Architectural
Engineering and Design Management.
Shepley continues to develop its
apprenticeship programme training in
partnership with Lakes College. VHE
extends its long tradition of providing
vocational training through
university placements.
Community engagement
Examples of community engagement
initiatives include AmcoGiffen, in partnership
with Network Rail, providing resources
to a number of local community projects.
Members of our IT Department volunteering
at the digital outreach scheme "Lifewise" run
by South Yorkshire Police. Students from
the Oasis Academy Byron visited Walter
Lilly’s offices to learn more about construction
and Shepley Engineers continued to support
local community causes including the
"Grow West" scheme to encourage outdoor
activities to improve wellbeing.
Diversity
The Group recognises the benefits a
balanced and diverse workforce brings
to an organisation. Set by the Board,
the Group’s strategy aims to encourage
diversity throughout the organisation
including, but not limited to, people of
varying gender, age, religion, race, ethnicity,
cultural background, sexual orientation,
religion, languages, education and ability.
32
Renew Holdings plc Annual Report and Accounts 2019 Environment
and ethics
Ethics and governance
Renew’s vision is to safely and responsibly
deliver essential engineering services to
some of the country’s key infrastructure
assets: “Engineering Infrastructure for the
future”. To deliver a growing business in the
challenging Energy, Environmental and
Infrastructure market sectors we set overall
standards for our subsidiary businesses
through a formal framework to promote
best practice and knowledge sharing.
The Board is responsible for ensuring
the corporate culture is implemented
throughout the business and it will
continue to evolve the governance
framework as we move through 2020.
The Group’s core values outline our
commitment to operating fairly and
responsibly with all our stakeholders.
The Group endeavours to be compliant;
considerate; responsible; progressive;
reliable; sustainable; responsive; and act
with integrity.
Environmental
We are committed to minimising the impact
of our operations on the environment
through ensuring good environmental
practices throughout our business.
Our business management systems
and procedures ensure our compliance
with all the relevant legislation
relating to the environment as well
as managing the implementation of
our environmental procedures.
Our subsidiary businesses set objectives
and targets to monitor their environmental
performance. Our businesses promote
sustainable development through the
conservation of energy, materials and
resources, minimising consumption,
maximising efficiency and effectively
managing wastes. We undertake employee
training on environmental awareness
and work alongside our supply chain
to encourage minimal use of materials,
energy or processes which may be
harmful to the environment.
Initiatives designed to focus on specific
areas of environmental concern help to
raise awareness and promote sustainable
solutions and during the year these have
included ‘carbon strategy’ which works to
reduce emissions through the use of more
efficient plant, equipment and vehicles.
Read more about our core
values on pages 12 & 13
Homelessness
Partnership
Clarke Telecom continues to work
with the Manchester Homelessness
Charter which supports homeless
charities across Manchester. The
team at Clarke have undertaken
various initiatives during the
year including:
• lunch and learn sessions for
employees to learn more about
homelessness and develop
initiatives to tackle it;
• participation in monthly
homelessness partnership
business group meetings;
• donating a Mercedes Sprinter van
to a local charity to help move
homeless people into permanent
accommodation; and
• office food collections which are
donated to city centre homeless
charities central food stores.
33
Renew Holdings plc Annual Report and Accounts 2019STRATEGIC REPORT Sean Wyndham-Quin CA
Chief Financial Officer
" Management
of the Group’s
principal risks
remains a key
area of focus
for the Board."
RISK MANAGEMENT
Risk
management
Risk management structure
The Executive Directors provide regular updates to the
Board on the principal risks and controls. The Executive
team works with its subsidiary businesses to identify and
assess key risks in their businesses. It also facilitates the
embedding and monitoring of the Board’s agreed risk
management process.
Risk management framework
Board
Audit & Risk
Committee
Executive Committee
Internal controls
Internal audit
Group risk management
Principal risks occurrence
1 Major accident or hazard
2
Loss of a major customer
3 Major project loss
4
5
6
Economic conditions
Business continuity
and cyber risk
Management and
succession planning
Employees
Very
high
High
Medium
Low
Very
low
d
o
o
h
i
l
e
k
i
L
5
4
6
3
2
1
Impact
Medium
Low
Very
low
High
Very
high
Brexit
The Board has considered the risk of the impact of the UK’s withdrawal from the
European Union and has concluded that it is unlikely to have any material effect on
the performance of the Group. This is because Renew is a UK only business operating
in markets with long-term, non-discretionary spending programmes and it has very
little exposure to European supply chains or labour.
34
Renew Holdings plc Annual Report and Accounts 2019 Major accident or hazard
Potential impact
A major accident or incident for which we
are held primarily accountable could result
in personal or environmental harm and lead
to operational loss, regulatory, legal or
financial penalties and/or reputational loss.
Link to strategy
Read more on pages 16 & 17
1
2
4
Mitigation
Our established and proven processes,
policies and approach provides mitigation
to such an occurrence.
We directly employ safety practitioners
within our individual businesses who
understand the complex needs of the
individual environments in which they work.
Change in the year
During the year our Safety and
Environmental Management
Group has focused on
developing initiatives and
sharing learning from across
our organisation to ensure
the highest standards of
safety are in place.
Loss of a major customer
Potential impact
As a consequence of the market in which
we operate we inevitably have fewer, larger
clients. The loss of one such client could
result in both financial and reputational
consequences for the business.
Link to strategy
Read more on pages 16 & 17
1
2
4
1
2
Mitigation
We mitigate this risk by keeping close to our
clients and by being seen as responsive,
compliant, safe, innovative and proactive.
The business strategy also includes
ambition to expand our client base to
further lessen the reliance on larger clients.
Change in the year
A number of appointments
with new clients were made
in the year. Our Engineering
Services are usually provided
through long-term framework
agreements, often over
many years.
Major project loss
Potential impact
A major project loss could result in a
significant financial loss to the business.
Discontinued activities could present
legacy risk that could potentially incur
financial costs.
Link to strategy
Read more on pages 16 & 17
1
2
4
5
Mitigation
We continue to mitigate this risk by
ensuring rigorous selectivity procedures,
carrying out thorough risk management
and by maintaining first class records to
enable effective management of any
disputes. Projects within focus carrying
risk are fully discussed in the business
unit plans.
Change in the year
Good progress has been
made in the year to close out
a number of remaining legacy
issues. The risk in this area has
been significantly reduced
over the year.
35
Renew Holdings plc Annual Report and Accounts 2019STRATEGIC REPORT RISK MANAGEMENT CONTINUED
Economic conditions
Link to strategy
Read more on pages 16 & 17
2
3
4
Potential impact
Potential uncertainty in the economic
outlook includes a risk of inflation in supply
chain costs and availability of suitably
qualified and experienced personnel.
Mitigation
We focus on non-discretionary markets and
activities where expenditure is delivered
through long-term frameworks with
committed levels of funding.
Change in the year
The strategic shift of the Group
has naturally mitigated the
effect of volatile economic
conditions. We keep our
workload trends and cost base
under constant review to
ensure we continue to act
decisively to any change
in conditions.
Link to strategy
Read more on pages 16 & 17
1
2
1
4
Business continuity and cyber risk
Potential impact
With the ever-increasing dependence
on electronic communication and
management systems in the conduct of
our activities, the potential for a serious
business interruption event has increased.
Mitigation
We recognise the importance of maintaining
the integrity of the businesses’ electronic
communications and management systems
from both failure and cyber-attack. Defence
mechanisms are in place using industry
best practice tools and a business continuity
approach to disaster recovery is maintained
with automated offsite backup facilities and
secondary communication systems.
Change in the year
We continue to develop
our approach to cyber
risk management through
improvements to IT security
and through the continuation
of our user awareness training
programme. Minimum standards
are in place, with all businesses
audited to ensure compliance.
Management and succession planning
Link to strategy
Read more on pages 16 & 17
1
4
2
1
3
Potential impact
Lack of continuity of business leadership is
recognised as a risk to the business which
has the potential for both financial and
reputational damage to the business.
Mitigation
Each year, the Group carries out a review
of succession planning and management
in each of its subsidiary businesses. The
review looks at succession planning for the
senior teams in both the short, medium
and long-term.
Change in the year
The Group has further
developed its succession
planning procedures during
the year and continues to
carefully monitor any changes
at regular intervals with
our subsidiaries.
36
Renew Holdings plc Annual Report and Accounts 2019 Governance
38 Board of Directors
40 Corporate governance
49 Audit Committee report
51 Directors’ report
54 Directors’ remuneration report
60 Statement of Directors’ responsibilities
GOVERNANCE BOARD OF DIRECTORS
An experienced Board
The members of the Board bring a range of expertise on issues of
performance, strategy and governance, which are vital to the success
of the Group. The Board is satisfied that, between the Directors, it has an
effective and appropriate balance of skills and experience. The Board
continues to review the composition and effectiveness of its Board
through its annual Board performance review process.
David Forbes
Chairman
A R N
Shatish Dasani
Non-executive Director
David Brown
Non-executive Director
A R N
A R N
Appointment date:
Non-executive Director from June 2011.
Appointment date:
Non-executive Director from February 2019.
Appointment date:
Non-executive Director from April 2017.
Chairman from January 2018.
Experience:
Qualified as a Chartered Accountant
in 1984 with over 20 years’ experience
in corporate advisory services with
N M Rothschild & Son Limited. David has
held a variety of non-executive director
appointments at listed and private equity
backed companies since 2004.
External appointments:
None.
Skills brought to the Board:
Expertise in mergers and acquisitions,
corporate strategy and corporate finance.
Number of Board meetings attended:
Nine out of nine.
Sector experience:
Construction, retail, engineering,
communications and support services.
Experience:
A Chartered Accountant with over 20 years’
experience in senior public company finance
roles across various sectors including
building materials, advanced electronics,
general industrial and business services. He
was previously the chief financial officer of TT
Electronics plc and has also been alternate
non-executive director of Camelot Group plc
and public member at Network Rail plc.
External appointments:
Chief Financial Officer of Forterra plc,
which he joined in 2015.
Skills brought to the Board:
Strategy development and execution,
performance improvement, financial
management, corporate finance, mergers
and acquisitions.
Number of Board meetings attended:
Six out of six.
Sector experience:
Building materials, advanced electronics,
general industrial, business services
and infrastructure.
38
Experience:
Over 35 years of experience in the transport
industry with particular expertise in the
London bus market. Former managing
director of Surface Transport at Transport for
London and chief executive of Go-Ahead’s
London Bus business.
External appointments:
Group Chief Executive of The Go-Ahead
Group Plc and director of the Rail Delivery
Group Limited.
Skills brought to the Board:
Transport industry experience.
Number of Board meetings attended:
Eight out of nine.
Sector experience:
Transport.
Renew Holdings plc Annual Report and Accounts 2019 A
R
N
Audit Committee
Remuneration Committee
Nomination Committee
Chairman
Paul Scott
Chief Executive Officer
N
Sean Wyndham-Quin CA
Chief Financial Officer
Andries Liebenberg
Executive Director
Appointment date:
As Chief Executive from 1 October 2016,
previously as Group Engineering Services
Director from 21 July 2014.
Appointment date:
Appointed to the Board on 8 November 2017.
Appointed Chief Financial Officer on
29 November 2017.
Experience:
A qualified engineer who has been with
the Group for 20 years. Having directly led
subsidiaries through substantial growth in line
with the Group strategy, Paul’s responsibilities
gradually developed into a wider Group role
before being appointed as the CEO.
Experience:
Previously served as a partner at SPARK
Advisory Partners, a business he co-founded
in early 2012. Prior to that Sean worked for
Brewin Dolphin and Ernst & Young where
he qualified as a Chartered Accountant.
Appointment date:
Appointed as Executive Director on
31 March 2016.
Experience:
Managing director of Renew subsidiary,
AmcoGiffen. Andries has been with the
Group for over ten years. Previously worked
internationally in Africa and the UK overseeing
multi-million pound multidisciplinary fast
track construction projects and long-term
framework agreements.
External appointments:
None.
Skills brought to the Board:
Strong experienced leadership capability
with a track record of compliant delivery.
Proven capability in terms of developing
a culture to support the execution of our
agreed growth strategy.
Number of Board meetings attended:
Nine out of nine.
Sector experience:
Highly experienced across the UK
Infrastructure sectors that remain our
strategic focus.
External appointments:
None.
Skills brought to the Board:
Track record in advising Boards on strategy,
corporate governance and mergers and
acquisitions. Experience in financial modelling,
forecasting and business planning.
Number of Board meetings attended:
Nine out of nine.
Sector experience:
A broad range of experience across a
number of sectors including support services
and construction.
External appointments:
None.
Skills brought to the Board:
Experienced in strategic business
management including mergers
and acquisitions.
Number of Board meetings attended:
Nine out of nine.
Sector experience:
Multidisciplinary infrastructure project
delivery with a bias towards Rail, Energy
and Environmental sectors.
39
Renew Holdings plc Annual Report and Accounts 2019GOVERNANCE CORPORATE GOVERNANCE
Chairman’s introduction to governance
Committed to a transparent
and ethical approach
David M Forbes
Chairman
Dear Shareholder,
The Board of Renew Holdings is responsible
for driving the highest standards of corporate
governance throughout the business. The
Board believes good corporate governance
provides our business with a robust framework
of rules, practices and processes by which
our Company is directed and controlled
to ensure we continue to provide value
for our stakeholders.
Compliance with the QCA
Corporate Governance Code 2018
The Group complies with the principles
of the Quoted Companies Alliance ("QCA")
Corporate Governance Code 2018 to
the extent considered appropriate for
a company of this size and in many areas
we strive to further improve on the
requirements of the QCA code.
The ten principles of the QCA Code are set
out in the following pages with details as to
how Renew complies with that principle or
an explanation as to why it does not. More
details of how the Group complies can be
found in the Corporate Governance section
of our website at renewholdings.com.
Following the 2019 AGM, the Board has
liaised with its major shareholders and has
agreed not to use a ‘cash-box’ placing for
future fundraisings without consulting
shareholders in advance. Instead, the Board
will seek powers at the 2020 AGM to enable
the Company to allot up to 10 per cent of its
issued share capital non pre-emptively for
cash, 5 per cent of which can only be used
for an acquisition or ‘specified capital
investment’. The Board believes that
seeking these powers is consistent with
The Pre-Emption Group’s Statement of
Principles and will give the Board flexibility
to pursue its stated strategy of making
earnings enhancing acquisitions.
Future focus
The Board is focused on continuing to
improve the application of Corporate
Governance throughout the business.
During the year the Board has focused
on its corporate culture and Board
effectiveness. To ensure we continue
to have an effective balance of skills
and experience on the Board we will
be reviewing the diversity of the Board
as we move into 2020.
The Board looks forward to driving further
improvements through 2020 as well as
continuing to develop our core values
to underpin the delivery of sustainable
economic, social and environmental
value for all our stakeholders.
David M Forbes
Chairman
26 November 2019
Company values
The Group is built on a set of core
values which we believe provide a robust
framework of guiding principles; these
include compliance, consideration,
responsibility, progression, reliability,
sustainability, responsiveness and
integrity. The Board ensures these values
are reflected throughout the business
where they support the creation of
long-term value for all our stakeholders.
Shareholder engagement
The Board welcomes the views of its
shareholders and throughout the year
communicates with its shareholders
through the delivery of its results
information, face-to-face meetings, capital
markets days and the Company’s Annual
General Meeting ("AGM").
At the Company’s 2019 AGM, one of the
resolutions put to shareholders did not pass
and consequently another resolution was
not put to the meeting. The resolution that
did not pass would have authorised the
Directors to allot up to one-third of the
Company’s issued share capital for
non-cash consideration. The resolution
that was not put to meeting would have
empowered the directors to allot up to
5 per cent of the Company’s issued
share capital non pre-emptively for cash
in accordance with the Companies Act
2006. Whilst both of these resolutions
are considered standard for public
companies and were in-line with
guidance issued by The Investment
Association and The Pre-Emption Group
relating to the percentage of shares to
which the resolutions should relate, the
Board understands that shareholders
voted down the resolutions because the
Company used a ‘cash-box’ placing to allot
shares representing approximately 20 per
cent of the Company’s then existing issued
share capital to part finance the acquisition
of QTS Limited in May 2018.
40
Renew Holdings plc Annual Report and Accounts 2019 Statement of corporate governance
Principle 1: Establish a strategy
and business model which
promotes long-term value for
shareholders.
We seek to deliver value to shareholders
through our established and proven
strategy, providing reliable capital growth
alongside a progressive dividend policy. As
a holding company, Renew grants a degree
of autonomy to its operating subsidiaries,
enabling them to be competitive and
effective in their individual markets whilst
setting overall standards. Our independently
branded subsidiary businesses have expert
knowledge in their individual markets and
directly deliver engineering services aligned
to the needs of our clients, many of whom
are responsible for the long-term maintenance
and renewal of national infrastructure networks.
Key challenges to the successful
delivery of our business model and
strategy include:
Major accident or hazard
A major accident or hazard for which we
are held primarily accountable could result
in personal or environmental harm and lead
to operational loss, regulatory, legal or
financial penalties and/or reputational loss.
Our established and proven processes,
policies and approach provides mitigation
to such an occurrence. We directly employ
safety practitioners within our individual
businesses who understand the complex
needs of the individual environments in
which they work. During the year our Safety
Environmental Management Group has
focused on developing initiatives and
shared learning from across our
organisation to ensure the highest
standards of safety are in place.
Loss of a major customer
As a consequence of the markets in which
we operate we inevitably have fewer, larger
clients. The loss of one such client could
result in both financial and reputational
consequences for the business. We
mitigate this risk by keeping close to our
clients and by being seen as responsive,
compliant, safe, innovative and proactive.
The business strategy also includes
ambition to expand our client base to
further lessen the reliance on larger clients.
A number of appointments with new clients
were made in the year. Our engineering
Services are usually provided through
long-term framework agreements, often
over many years.
Major project loss
A major project loss could result in a
significant financial loss to the business.
Discontinued activities could present
legacy risk that could potentially incur
financial costs. We continue to mitigate
this risk by ensuring rigorous selectivity
procedures, carrying out thorough risk
management and by maintaining first class
records to enable effective management of
any disputes. Projects within focus carrying
risk are fully discussed in the business
unit plans. Good progress has been made
in the year to close out a number of
remaining legacy issues. The risk in this
area has been significantly reduced over
the year.
Economic conditions
Potential uncertainty in the economic
outlook includes a risk of inflation in supply
chain costs and availability of suitably
qualified and experienced personnel.
We focus on non-discretionary markets and
activities where expenditure is delivered
through long-term frameworks with
committed levels of funding. The strategic
shift of the Group has naturally mitigated
the effect of volatile economic conditions.
We keep our workload trends and cost base
under constant review to ensure we continue
to act decisively to any change in conditions.
Business continuity and cyber risk
With the ever-increasing dependence on
electronic communication and management
systems in the conduct of our activities, the
potential for a serious business interruption
event has increased. We recognise the
importance of maintaining the integrity of
the businesses’ electronic communications
and management systems from both failure
and cyber-attack. Defence mechanisms are
in place using industry best practice tools
and a business continuity approach to
disaster recovery is maintained with
automated offsite backup facilities and
secondary communication systems. We
continue to develop our approach to cyber
risk management through improvements to
IT security and through the continuation of
our user awareness training programme.
Minimum standards are in place, with all
businesses audited to ensure compliance.
Business model
Our long-term strategy is focused on continuing to develop our range of engineering
services capabilities, both organically and through selective acquisitions in order to deliver
value to our shareholders.
Our strategic priorities
To be a key provider of engineering services in our target markets
Focus on asset support, maintenance and renewals programmes with non-discretionary funding
Expand our direct delivery model through strong local brands
Establish long-term relationships through responsiveness to clients’ needs
Continue to deliver organic growth combined with selective complementary acquisitions
41
Renew Holdings plc Annual Report and Accounts 2019GOVERNANCE CORPORATE GOVERNANCE CONTINUED
Statement of corporate governance continued
Management and succession planning
Lack of continuity of business leadership is
recognised as a risk to the business which
has the potential for both financial and
reputational damage to the business.
Each year, the Group carries out a review
of succession planning and management
in each of its subsidiary businesses.
The review looks at succession planning
for the senior teams in both the short,
medium and long-term. The Group has
further developed its succession planning
procedures during the year and continues
to carefully monitor any changes at regular
intervals with our subsidiaries.
Principle 2: Seek to understand
and meet shareholder needs and
expectations.
Individual shareholders
Members of the Board have dialogue
with individual shareholders during the year
and the Chairman addresses shareholders
at the Group’s Annual General Meeting
(“AGM”) where questions are invited. Notice
of the AGM is provided to shareholders at
least 21 days in advance. Where resolutions
at the AGM are dealt with by show of hands,
the results of proxy votes are also announced
by the Company Secretary.
Financial and other information about
the Group is available via the Company’s
website: www.renewholdings.com.
Shareholders can also find a link to the
website of Link Asset Services Limited
for details of their shareholding.
Shareholders wishing to contact the
Company directly should address
communication to the Group’s Company
Secretary, Sean Wyndham-Quin, by email
to info@renewholdings.com or by post to
Renew Holdings plc, 3175 Century Way,
Thorpe Park, Leeds LS15 8ZB.
Institutional shareholders
The Chief Executive and Chief Financial
Officer communicate with institutional
investors frequently through formal
meetings immediately following the
Group’s interim and preliminary financial
results as well as through capital markets
presentations and informal briefings.
It is the intention of the Directors to
understand the objectives and concerns
of its institutional shareholders through
both direct communications and through
analyst and broker briefings.
The Chief Financial Officer is responsible
for informing the Board of the views and
concerns of its major shareholders. The
Board makes itself available to meet with
institutional investors as required to discuss
matters as they arise.
Shareholder engagement activities
November Preliminary results roadshow
January
Annual General Meeting
May
Interim results roadshow
Principle 3: Take into account
wider stakeholder and social
responsibilities and their
implications for long-term success.
By the effective management and control
of our subsidiary businesses, we deliver
the key elements of the Group’s business
model and ultimately shareholder value.
Our business is supported in this through
its key resources and relationships.
Operating companies
Our Executive Directors are in daily contact
with our subsidiary businesses. Each month
the subsidiary management meetings are
attended by at least one member of the
senior management team. Our subsidiary
businesses are supported by the central
Renew team across its business functions.
During the year the Group’s safety advisors
shared their knowledge and best practice
at an internal safety forum. Similarly in IT,
commercial, HR and finance, knowledge
sharing is key to achieving our improvement
targets. Our Executive team frequently
visits the Group’s subsidiary businesses
and has an in-depth knowledge of their
day-to-day operations. Communication
between our subsidiary businesses and the
Executive team is a critical element of the
effective running of the Group’s operations.
Employees
Effective communication with our
employees is key to successfully managing
our business. Renew’s subsidiaries benefit
from Group-wide communications on
shared topics including health and safety,
HR, IT, commercial and finance policies and
procedures. Our subsidiary businesses
undertake a range of initiatives to engage
with their employees including employee
newsletters, social media channels and
employee surveys. The Board recognises
the critical role our employees play in the
delivery of the Group’s success.
Customers
Strong communication with our customers
is critical for our businesses to understand
and deliver the requirements of their clients.
The long-term nature of the work we
undertake means this assists us in forging
close working relationships where
recognising both current and future
requirements supports the entire life
cycle of these relationships.
Shareholders
Communication with our shareholders
takes place throughout the year and
includes dialogue at our AGM, through
participation in investor and analysts site
visits as well as meetings with institutional
investors. The feedback we receive through
these channels helps guide the structure of
future communications. In addition to the
Regulatory News Service announcements
the Company releases we also provide
information to shareholders via the Group’s
website at www.renewholdings.com.
Public
Our businesses work hard to ensure
they effectively communicate with the
public when undertaking their work. Our
businesses hold public events to inform
and update the public on the nature and
progress of work as appropriate.
Where we receive feedback from the
public on societal matters we would seek
to amend our programme of works where
possible to address any concerns raised.
42
Renew Holdings plc Annual Report and Accounts 2019
Principle 4: Embed effective risk
management, considering both
opportunities and threats,
throughout the organisation.
The Executive Directors provide regular
updates to the Board on the principal risks
and controls across the Group, including
the roles and responsibilities of key
management in managing those risks. The
Executive team works with its subsidiary
businesses to identify and assess key risks
in their businesses. It also facilitates the
embedding and monitoring of the Board’s
agreed risk management process within
the business, under the direction of the
Executive Directors ensuring controls are
implemented effectively.
The Group identifies the following risks
to the Group:
Major accident or hazard
A major accident or hazard for which we
are held primarily accountable could result
in personal or environmental harm and lead
to operational loss, regulatory, legal or
financial penalties and/or reputational loss.
Our established and proven processes,
policies and approach provides mitigation
to such an occurrence. We directly employ
safety practitioners within our individual
businesses who understand the complex
needs of the individual environments in
which they work. During the year our Safety
Environmental Management Group has
focused on developing initiatives and
shared learning from across our
organisation to ensure the highest
standards of safety are in place.
Loss of a major customer
As a consequence of the markets in which
we operate we inevitably have fewer, larger
clients. The loss of one such client could
result in both financial and reputational
consequences for the business. We mitigate
this risk by keeping close to our clients and
by being seen as responsive, compliant,
safe, innovative and proactive. The business
strategy also includes ambition to expand
our client base to further lessen the reliance
on larger clients. A number of appointments
with new clients were made in the year. Our
engineering Services are usually provided
through long-term framework agreements,
often over many years.
Major project loss
A major project loss could result in a
significant financial loss to the business.
Discontinued activities could present
legacy risk that could potentially incur
financial costs. We continue to mitigate
this risk by ensuring rigorous selectivity
procedures, carrying out thorough risk
management and by maintaining first class
records to enable effective management of
any disputes. Projects within focus carrying
risk are fully discussed in the business
unit plans. Good progress has been made
in the year to close out a number of
remaining legacy issues. The risk in this
area has been significantly reduced over
the year.
Economic conditions
Potential uncertainty in the economic outlook
includes a risk of inflation in supply chain
costs and availability of suitably qualified
and experienced personnel. We focus on
non-discretionary markets and activities
where expenditure is delivered through
long-term frameworks with committed
levels of funding. The strategic shift of the
Group has naturally mitigated the effect of
volatile economic conditions. We keep our
workload trends and cost base under
constant review to ensure we continue to
act decisively to any change in conditions.
Business continuity and cyber risk
With the ever-increasing dependence
on electronic communication and
management systems in the conduct
of our activities, the potential for a
serious business interruption event has
increased. We recognise the importance
of maintaining the integrity of the
businesses’ electronic communications
and management systems from both failure
and cyber-attack. Defence mechanisms
are in place using industry best practice
tools and a business continuity approach
to disaster recovery is maintained with
automated offsite backup facilities and
secondary communication systems. We
continue to develop our approach to cyber
risk management through improvements to
IT security and through the continuation of
our user awareness training programme.
Minimum standards are in place, with all
businesses audited to ensure compliance.
43
Management and succession planning
Lack of continuity of business leadership is
recognised as a risk to the business which
has the potential for both financial and
reputational damage to the business.
Each year, the Group carries out a review
of succession planning and management
in each of its subsidiary businesses. The
review looks at succession planning for
the senior teams in both the short, medium
and long-term. The Group has further
developed its succession planning
procedures during the year and continues
to carefully monitor any changes at regular
intervals with our subsidiaries.
Internal controls
The Directors acknowledge that they have
overall responsibility for the Group’s system
of internal control and for reviewing and
monitoring its effectiveness. The system of
internal control is designed to manage and
mitigate, rather than eliminate, the risks to
which the Group is exposed and therefore
provides a reasonable, but not absolute,
assurance against a company failing to
meet its business objectives or against
material misstatement or loss. The Group
operates a risk management process,
which is embedded in normal management
and governance processes. There is a
system of self-examination of risk areas and
controls by subsidiaries and departments
within the Group. Where significant risks
are identified, the probability of those risks
occurring, their potential impact and the
plans for managing and mitigating each
of those risks is reported.
The Group operates a series of controls
which include the annual strategic planning
and budgeting process; short, medium and
long-term cash monitoring achieved by
means of daily, weekly and monthly forecasts
which are compared against budget and
previous forecasts; clearly defined capital
investment guidelines and levels of authority;
and a clear organisational structure within
which individuals’ responsibilities are
identified and monitored. These results
and processes are monitored, updated,
reviewed and considered by the Board.
The Group has established a series of group
minimum requirements in a number of
financial, commercial and operational areas
Renew Holdings plc Annual Report and Accounts 2019GOVERNANCE CORPORATE GOVERNANCE CONTINUED
Statement of corporate governance continued
with which each business within the Group
must comply. The senior management
team monitors and reviews compliance
with these requirements on a regular basis.
Due to the size and nature of the Group,
the Board does not consider that a separate
internal audit function is necessary. For the
last 13 years and including 2019, the Group
has carried out a programme of internal
audit conducted by the Group Commercial
Director and by members of the various
subsidiaries’ finance teams. This system
of peer review promotes best practice as
well as ensuring that Group Minimum
Requirements, as well as procedures and
internal controls, are being complied with.
The reports from these internal audits are
made available both to the Board and to
the external auditor. Senior management
and employees play a critical role in the
identification of risk. Employees are often
the first to become aware of risk and the
effective communication between
employees and senior management
is considered key in this area.
Principle 5: Maintain the Board as
a well-functioning, balanced team
led by the chair.
Independence of Non-executive Directors
The Board adopts the Principles of the QCA
Code regarding tenure of the Board and
seeks to balance experience and the need to
refresh the Board. In assessing the continued
independence of Directors, where they have
served more than nine years, the Board
considers their independence of judgement
and ability to continue to challenge the Board.
Renew complies with the provision of Board
independence as the Group has at least
two independent Non-executive Directors.
D M Forbes
D A Brown
S Dasani
Non-executive Chairman
Independent
Non-executive Director
Independent
Non-executive Director
Independent
P Scott
Chief Executive Officer
S Wyndham-Quin Chief Financial Officer
A Liebenberg
Executive Director
Board Committees
The Board operates with a number
of Committees. Shatish Dasani acts
as Chairman of the Audit Committee,
David Forbes acts as Chairman of the
Nomination Committee and David Brown,
the Senior Independent Non-executive
Director, chairs the Remuneration
Committee. The Board delegates clearly
defined powers to its Remuneration,
Nomination and Audit Committees.
Each of the Board’s Committees has
carefully drafted terms of reference.
Risk management framework
Board
Audit & Risk
committee
Executive committee
Internal controls
Internal audit
Group risk management
Employees
44
Remuneration Committee
The Remuneration Committee, which
comprises all the Non-executive Directors,
determines and agrees with the Board
the framework and policy of executive
remuneration packages, including bonuses,
incentive payments, share options or
awards and pension arrangements. The
Remuneration Committee has held three
meetings in the year.
Nomination Committee
The Nomination Committee, which
comprises all the Non-executive Directors
and Paul Scott, monitors the composition
of the Board and recommends the
appointment of new Directors. The
Nomination Committee has held two
meetings during the year.
The Nomination Committee terms
of reference include:
(a) to review the structure, size and
composition of the Board;
(b) to consider succession planning
for Directors and senior executives;
(c) to identify and nominate, for approval
by the Board, suitable candidates to fill
Board vacancies; and
(d) to make recommendations to the Board
on the contents of letters of appointment,
Directors’ duties, reappointment or
re-election of Directors upon conclusion
of a specified term or retirement
by rotation.
Audit Committee
The Audit Committee has held three
meetings to consider Audit Committee
business. The Audit Committee consists
of all three Non-executive Directors. The
Executive Directors are invited to attend
Audit Committee meetings but at least
one meeting each year is held with the
external auditor at which the Executive
Directors are not present.
The Audit Committee considers the
adequacy and effectiveness of the risk
management and control systems of the
Group and reports the results to the Board. It
reviews the scope and results of the external
audit, its cost effectiveness and the objectivity
of the auditor. The Audit Committee monitors
Renew Holdings plc Annual Report and Accounts 2019 the non-audit work performed by the auditor
to help ensure that the independence of the
auditor is maintained. All fees paid to the
auditor whether for audit or non-audit work
are approved by the Audit Committee in
advance. The Audit Committee also reviews
the Interim statement, the preliminary
announcement, the Annual Report and
Accounts and accounting policies.
General Purposes Committee
The Board forms a General Purposes
Committee from time to time as it deems
necessary. This Committee comprises any
two of the Executive Directors as determined
by the Board to consider individual business
matters, which have been specifically
delegated to it by the Board.
Board and Committee meetings
The Board met formally nine times in the
year ended 30 September 2019 with all
Directors in attendance other than on one
occasion. Committee meetings dealing
with the daily business of the Company
were held as necessary. The Board receives
written and oral reports from the Executive
Directors ensuring matters are considered
fully and enabling Directors to discharge
their duties properly. There is a formal
schedule of matters reserved for the
Board’s decision ensuring the maintenance
of control over strategic, financial and
operational matters.
Board effectiveness
Board composition
The Board comprises the independent
Non-executive Chairman, Chief Executive
Officer, two Executive Directors and two
independent Non-executive Directors.
Brief biographies of the Directors can
be viewed on pages 38 and 39.
Shatish Dasani was appointed as a
Non-Executive Director and Chairman of
the Audit Committee 8 February 2019.
The Board comprises of three independent
Non-executive Directors and three
Executive Directors.
Time commitment
Directors are expected to commit as much
time as is necessary to fully undertake their
duties. Board members are expected to
attend all Board meetings and Committee
meetings as well as any additional meetings
as requested.
Principle 6: Ensure that, between
them, the Directors have the
necessary up-to-date experience,
skills and capabilities.
Details of the Board members’ skills and
experience are noted on pages 38 and 39
of this report.
The members of the Board bring a range
of expertise on issues of performance,
strategy and governance, which are vital
to the success of the Group. The Board
is satisfied that, between the Directors, it
has an effective and appropriate balance
of skills and experience.
Senior Independent Director
David Brown is the Senior Independent
Director and undertakes a key role in
supporting the Chairman in the effective
running of the Board.
Company Secretary
Sean Wyndham-Quin is responsible
for assisting the Board in discharging its
statutory duties and responsibilities as well
as liaising with the Group’s shareholders
and other stakeholder groups.
External advisors
For the appointment of a new Non-
executive Director, a specialist executive
search agency was engaged.
Professional development
Appropriate training, briefings and
inductions are available to all Directors
on appointment and subsequently as
necessary, considering existing
qualifications and experience. The Board
members have many years of relevant
experience and each is responsible for
ensuring their continuing professional
development to maintain their effective
skills and knowledge.
Independent advice
Procedures are in place for the Directors
to seek independent professional advice,
if necessary, at the Company’s expense.
Board and Committee meetings
The Directors attended the following meetings in the year ended 30 September 2019:
David Forbes
David Brown
John Bishop
Shatish Dasani
Paul Scott
Sean Wyndham-Quin
Andries Liebenberg
Board
Meeting
Audit
Committee
Remuneration
Committee
Nomination
Committee
9/9
8/9
3/3
6/6
9/9
9/9
9/9
2/3
3/3
2/2
1/1
—
—
—
2/3
3/3
1/1
2/2
—
—
—
2/2
2/2
—
2/2
2/2
—
—
45
Renew Holdings plc Annual Report and Accounts 2019GOVERNANCE CORPORATE GOVERNANCE CONTINUED
Statement of corporate governance continued
Principle 7: Evaluate Board
performance based on clear and
relevant objectives, seeking
continuous improvement.
The Chairman and fellow members of
the Board are responsible for making
sure Board members are updated with
information concerning the state of
the business and its performance,
and information necessary for them to
effectively discharge their duties and
responsibilities, in a timely manner.
Each year Board members are required
to complete a questionnaire to evaluate
both the Board as a whole and its individual
members providing an opportunity for
comment and suggestions for improvements.
The responses to the surveys are provided
to the Chairman who prepares a report and
actions are shared with the Board. The last
formal Board review was completed in 2019.
It is the intention of the Board that every
three years the evaluation of the Board will
be externally facilitated to assess the Board
and its Committees to ensure they are
equipped to support the Group’s evolving
requirements. This process takes the format
of an initial questionnaire followed by
interviews and Board observations. Areas
of focus are identified, and an action plan
prepared for the Board.
Succession planning
Continuity of leadership is recognised
as a critical factor in maintaining both
short-term and longer-term business
success. Succession planning and
management is key to delivering this
continuity. Each year the Board carries out
its annual review of succession planning at
both Board and subsidiary business level.
Board
The Nomination Committee considers
succession planning for the Board each
year, considering the challenges specific
to the required role. The Chairman is
responsible for overseeing the process
of succession planning for the Board.
In identifying suitable external Board
candidates, independent executive
search consultants will normally be used.
Senior management
The executive level succession framework,
which addresses senior management
succession in the Group’s subsidiary
businesses, forms part of the subsidiary
budget and strategic planning process and
is reported to the Board on an annual basis.
Principle 8: Promote a corporate
culture that is based on ethical
values and behaviours.
Renew’s vision is to safely and responsibly
deliver essential engineering services to
some of the country’s key infrastructure
assets: “Engineering Infrastructure for the
future”. To deliver a growing business in the
challenging Energy, Environmental and
Infrastructure market sectors we set overall
standards for our subsidiary businesses
through a formal framework to promote
best practice and knowledge sharing.
The Board is responsible for ensuring
the corporate culture is implemented
throughout the business and it will continue
to evolve the governance framework as we
move through 2020.
Our business model and strategy drive
our corporate culture and in the year the
Group focused on further developing its
behavioural safety initiatives supported
across the subsidiary businesses with
campaigns to empower employees
to improve the safety of their
individual environments.
The Board monitors and promotes its
corporate culture assisted by its senior
management team who play a vital role
in disseminating the Company’s shared
values with its employees. Within our
subsidiary businesses, monthly
management meetings are attended
by at least one member of the senior
management team. Regular Executive
Management Committee meetings are held
with the involvement of all the Managing
Directors and the senior management
team. In conjunction with annual events,
including the Senior Manager’s
Conference, the Board can assess the
Group’s culture on an ongoing basis.
Principle 9: Maintain governance
structures and processes that are
fit for purpose and support good
decision making by the Board.
Roles and responsibilities
Chairman
The Board, run by Chairman David Forbes,
is responsible for Group strategy, results,
direction, risk management and business
performance. The Board is ultimately
responsible for overseeing the success
of the Group.
Chief Executive
Chief Executive Paul Scott oversees the
management of the business supported
by his Executive team with responsibility
for delivery of the Group’s strategic
direction and management of its
day-to-day performance.
The Senior Independent Director
David Brown is the Senior Independent
Director and undertakes a key role in
supporting the Chairman in the effective
running of the Board.
Chief Financial Officer and
Company Secretary
Sean Wyndham-Quin is responsible
for assisting the Board in discharging its
statutory duties and responsibilities as well
as liaising with the Group’s shareholders
and other stakeholder groups.
Appropriate training, briefings and
inductions are available to all Directors
on appointment and subsequently as
necessary, taking into account existing
qualifications and experience.
Procedures are in place for the Directors
to seek independent professional advice,
if necessary, at the Company’s expense.
46
Renew Holdings plc Annual Report and Accounts 2019 Board and Committee meetings
The Board typically meets nine times a year
with all Directors in attendance. Committee
meetings dealing with the daily business of
the Company were held as necessary. The
Board receives written and oral reports
from the Executive Directors ensuring
matters are considered fully and enabling
Directors to discharge their duties properly.
There is a formal schedule of matters
reserved for the Board’s decision ensuring
the maintenance of control over strategic,
financial and operational matters.
Board Committees
The Board delegates clearly defined powers
to its Remuneration, Nomination and Audit
Committees. Each of the Board’s Committees
has carefully drafted terms of reference.
Remuneration Committee
The Remuneration Committee, which
comprises of David Forbes, David Brown
and Shatish Dasani, determines and agrees
with the Board the framework and policy
of executive remuneration packages.
Key responsibilities:
• Remuneration packages
• Bonuses
• Incentive payments
• Share options or awards
• Pension arrangements
Nomination Committee
The Nomination Committee, which
comprises all the Non-executive Directors
and Paul Scott, monitors the composition
of the Board and recommends the
appointment of new Directors.
Key responsibilities:
• Reviews the structure, size and
composition of the Board
• Considers succession planning for
Directors and senior executives
• Identifies and nominates, for approval
by the Board, suitable candidates to fill
Board vacancies
• Makes recommendations to the Board on
the contents of letters of appointment,
Directors’ duties, reappointment or
re-election of Directors upon conclusion of
a specified term or retirement by rotation
Audit Committee
The Audit Committee consists of all three
Non-executive Directors. The Executive
Directors are invited to attend Audit
Committee meetings but at least one
meeting is held each year with the external
auditor at which the Executive Directors are
not present.
Key responsibilities:
• Considers the adequacy and
effectiveness of the risk management
and control systems of the Group, and
reports the results to the Board
• Reviews the scope and results of the
external audit, its cost effectiveness
and the objectivity of the auditor
• Monitors the non-audit work performed
by the auditor to help ensure that the
independence of the auditor is maintained
• Approves all fees paid to the auditor
whether for audit or non-audit work
in advance
• Reviews the Interim statement, the
preliminary announcement, the
Annual Report and Accounts and
accounting policies
The Board is responsible for ensuring
thorough corporate governance is applied
throughout its business and will be
continuing to work towards improving its
governance framework throughout 2020.
The continued growth of the Group has
necessitated further review and revaluation
of the governance framework the Group
applies. The Group has a series of Group
minimum requirements in a number of
financial and operational areas with which
each business within the Group must comply.
Principle 10: Communicate how
the Company is governed and is
performing by maintaining
dialogue with shareholders and
other relevant stakeholders.
Board and Committee meetings
The Board met formally nine times in the year
ended 30 September 2019 with all Directors
in attendance other than on one occasion.
Committee meetings dealing with the daily
business of the Company were held as
necessary. The Board receives written and
oral reports from the Executive Directors
ensuring matters are considered fully and
enabling Directors to discharge their duties
properly. There is a formal schedule of
matters reserved for the Board’s decision
ensuring the maintenance of control over
strategic, financial and operational matters.
Committee reporting
The Audit Committee report is set out
on pages 49 and 50.
The Remuneration report is set out
on pages 54 to 59.
Shareholder engagement
We regularly engage with our shareholders
including through results presentations and
roadshows, our Annual General Meeting,
investor and analysts site visits and institutional
investor meetings. Feedback received via
these channels is an important element of
shaping the Group’s future communications.
Corporate information (including all Company
announcements and presentations) is
available to shareholders, investors and
the public in the Investors section of
the Company’s corporate website,
www.renewholdings.com/investors.
The Chief Financial Officer and Company
Secretary, Sean Wyndham-Quin, is the
primary contact for all investor relations
queries and can be contacted by email
at info@renewholdings.com or by post
at Renew Holdings plc, 3175 Century Way,
Thorpe Park, Leeds LS15 8ZB.
47
Renew Holdings plc Annual Report and Accounts 2019GOVERNANCE CORPORATE GOVERNANCE CONTINUED
Statement of corporate governance continued
Shareholder voting
The tables below show the votes cast at the 2019 Annual General Meeting held on 30 January 2019.
2019 Annual General Meeting voting results
The 59th Annual General Meeting of Renew Holdings plc was held at Thorpe Park Hotel on 30 January 2019 at 11.00am. Voting on the
resolutions put to the meeting was as follows:
Voting for Voting against Voting withheld
Ordinary resolution 1
To receive, approve and adopt the Company’s audited financial statements for the year ended
30 September 2018 and the reports of the Directors and auditor thereon.
33,374,286
Ordinary resolution 2
To declare a final dividend for the year ended 30 September 2018 of 6.67p per Ordinary Share
in the capital of the Company to be paid on 8 March 2019 to shareholders who appear on the
register at the close of business on 1 February 2019.
33,375,995
0
0
1,709
0
Ordinary resolution 3
To re-elect David Forbes as a Director of the Company. Mr Forbes retires as a Director in
accordance with the Company’s Articles of Association and offers himself for re-election.
29,362,336
883,717
3,129,942
Ordinary resolution 4
To re-elect Andries Liebenberg as a Director of the Company. Mr Liebenberg retires as a Director
in accordance with the Company’s Articles of Association and offers himself for re-election.
33,266,971
106,346
2,678
Ordinary resolution 5
To approve the Remuneration Report for the year ended 30 September 2018. (Explanatory note:
this is an advisory resolution only.)
33,088,602
284,693
2,700
Ordinary resolution 6
To appoint KPMG LLP as auditor of the Company.
32,875,406
393,609
106,980
Ordinary resolution 7
To authorise the Audit Committee of the Board of Directors of the Company to determine the
remuneration of the auditor.
33,268,396
105,099
2,500
15,624,290 17,795,638
15,877
Ordinary resolution 8
THAT the Directors be and are generally and unconditionally authorised pursuant to and in accordance
with Section 551 of the Companies Act 2006 (the “Act”) to exercise all the powers of the Company to
allot shares or grant rights to subscribe for or to convert any security into shares in the Company up
to a nominal amount of £2,509,000 such authority to apply in substitution for all previous authorities
pursuant to Section 551 of the Act and to expire at the end of the Annual General Meeting in 2020 or
on 30 April 2020 whichever is the earlier (unless renewed, varied or revoked by the Company prior to
or on such date) but, in each case, save that the Company may make offers and enter into agreements
before this authority expires which would, or might, require shares to be allotted or rights to subscribe
for or to convert any security into shares to be granted after this authority ends and the Directors may
allot shares or grant such rights pursuant to any such agreement as if this authority had not expired.
Special resolution 9
As resolution 8 did not pass, resolution 9 was not put to the meeting.
Sean Wyndham-Quin CA
Company Secretary
26 November 2019
48
Renew Holdings plc Annual Report and Accounts 2019 AUDIT COMMITTEE REPORT
Ensuring financial integrity
Shatish Dasani
Chairman of the Audit Committee
Audit Committee
key areas of focus
• Considers the adequacy and
effectiveness of the risk
management and control systems
of the Group, and reports the results
to the Board
• Reviews the scope and results of the
external audit, its cost effectiveness
and the objectivity of the auditor
• Monitors the non-audit work
performed by the auditor to help
ensure that the independence of
the auditor is maintained
• Approves all fees paid to the auditor
whether for audit or non-audit work
in advance
• Reviews the Interim statement,
the preliminary announcement,
the Annual Report and Accounts
and accounting policies
Introduction
Dear Shareholder,
I am pleased to present the Audit
Committee report for the financial year
ended 30 September 2019.
The role of the Audit Committee is to
protect the interests of shareholders
by ensuring the integrity of the Group’s
financial reporting and by monitoring
the ongoing effectiveness of the Group’s
internal controls. The Committee is
appointed by the Board and comprises
independent Non-executive Directors
and provides independent monitoring,
guidance and challenge to the
Executive Directors.
The Audit Committee report sets out the
responsibilities of the Committee, its
composition and the work undertaken
during the year.
Responsibilities and terms
of reference
The terms of reference are approved by the
Board and are available for review on the
Company website (www.renewholdings.com).
The principal responsibilities of the
Committee are to:
• monitor the integrity of the Financial
Statements, half year report and any
other announcements relating to the
Group’s financial performance or position;
• review and challenge, where necessary,
the appropriateness of accounting
policies, key accounting judgements
and sources of estimation;
• keep under review the adequacy and
effectiveness of the Group’s internal
control and risk management systems;
• evaluate the effectiveness of the Group’s
internal audit process; and
• review the effectiveness and
independence of the external auditor,
negotiate and agree its remuneration and
make recommendations to the Board in
respect of its appointment.
Committee composition
The Audit Committee consists of all three
Non-executive Directors and is chaired
by me as an Independent Non-executive
Director with recent and relevant financial
experience. Prior to me joining the Board
on 8 February 2019, the Committee was
chaired by John Bishop. The Board believes
that the members have sufficient skills,
qualifications and experience to discharge
their duties in accordance with the
Committee’s terms of reference and as a
Committee has competence in the sector
within which the Group operates.
Summary of activity
The Audit Committee formally met on three
occasions since the date of the last report.
The Chief Executive Officer and the
Chief Financial Officer attend Committee
meetings by invitation to ensure that the
Committee is fully informed of material
matters within the Group. The external
auditor attended two of the meetings
and on one of these occasions also met
separately with the Audit Committee without
any of the Executive Directors present.
During the period to the date of this report,
the principal activities of the Committee
were as follows:
• review of the Group’s financial
statements and preliminary results
announcements including consideration
of significant financial reporting issues
and matters of judgement inherent within
the above;
• review of the content of the Annual
Report and Accounts to ensure it
provides the information necessary
for shareholders to assess the Group’s
financial position and performance,
business model and strategy;
• monitor and review of the Group’s
internal control and risk management
systems; and
• consideration of the external auditor’s
audit plan, scope and coverage of
audit work, internal quality procedures,
independence and agreement of the
audit fee.
49
Renew Holdings plc Annual Report and Accounts 2019GOVERNANCE AUDIT COMMITTEE REPORT CONTINUED
External auditor
KPMG has been the external auditor since
2007 but has regularly rotated its audit
partner in line with best practice. As
required, the external auditor provided the
Audit Committee with information about its
policies and processes for maintaining
independence and compliance regarding
the rotation of audit partners and staff.
The Audit Committee considered all
relationships between the external auditor
and the Group and was satisfied that they
did not compromise the external auditor’s
judgement or independence, particularly
with the provision of non-audit services.
With input from management, the
Committee was satisfied with the external
audit team’s knowledge of the business,
that the scope of the audit was appropriate
and all significant accounting judgements
had been challenged robustly.
All of the above was considered before
a recommendation was made by the
Committee to the Board to propose
KPMG for re-election at the AGM.
Approval
The Audit Committee report was approved
by the Board on 26 November 2019 and
signed on its behalf by:
Shatish Dasani
Chairman of the Audit Committee
26 November 2019
Significant financial reporting
risks and judgement areas
considered
The following judgement areas and
significant estimates were considered by
the Committee in the review and approval
of the 2018/19 Financial Statements:
Revenue recognition and valuation
of contract balances
In accordance with IFRS 15, the Group
makes assessments as to the stage of
completion of a contract in order to
determine the amount of revenue it is able
to recognise. The Committee has critically
reviewed the process adopted to make
these assessments and discussed key
contract issues with exposure to
recognition risks with management.
It also considered the work undertaken
by the external auditor in relation to
key contract judgements.
Valuation of subsidiary undertakings
in the parent company accounts
The Committee has reviewed the
assumptions and sensitivities applied
by management in undertaking the
impairment testing of the carrying value
of the subsidiaries in the parent
company accounts.
Valuation of the defined benefit
obligation in relation to both the
AMCO and Lovell pension schemes
The valuation of the defined benefit plan
liabilities are based on a number of key
assumptions including inflation, discount
rate and mortality rates. The Committee
received reports from management
outlining the assumptions used, including
input from the Group’s actuaries. It has also
considered the external benchmark of key
assumptions provided by the external
auditor and the sensitivity of changes to
these assumptions.
50
Renew Holdings plc Annual Report and Accounts 2019 DIRECTORS’ REPORT
The Directors present their report and
the audited accounts for the year ended
30 September 2019.
Principal activities
For the year ended 30 September 2019 the
principal activity of the Group continued to
be as contractors in Engineering Services
and Specialist Building. The main activities
are carried out in the United Kingdom. More
details of these activities, the year’s trading
and future developments are contained
in the Chairman’s statement, the Chief
Executive’s review, the Strategic report
and the Financial review. A list of the
Group’s subsidiaries as at 30 September
2019 is listed in Note S to the Company’s
financial statements.
Results and dividends
The Group profit for the year after tax and after
accounting for discontinued operations
was £22,257,000 (2018: £6,773,000). The
Directors recommend the payment of a
final dividend on the Ordinary Shares of
7.67p (2018: 6.67p) giving a total for the
year of 11.5p (2018: 10.0p).
Business review
Information that fulfils the business review
requirements applicable to the Group can
be found in this report, the Chief Executive’s
review and the Strategic report.
Derivatives and other financial
instruments
The Group’s principal financial instruments
comprise bank loans, cash and short-term
deposits and obligations under finance
leases. The main purpose of these financial
instruments is to provide finance for the
Group’s operations. The Group has various
other financial instruments such as trade
receivables and trade payables that arise
directly from its operations. It is, and has
been throughout the period under review,
the Group’s policy that no trading in
financial instruments shall be undertaken.
The main risks arising from the Group’s
financial instruments are interest rate risk,
liquidity risk, credit risk and foreign
currency risk.
Interest rate risk
Interest bearing assets comprise cash and
bank deposits and earn interest at floating
rates. The Group’s bank loan, revolving
credit facility and overdraft facility bear
interest at floating rates.
Liquidity risk
The Group’s policy is to ensure availability
of operating funds by maintaining an
appropriate cash balance in both current
and deposit accounts and, when necessary,
to establish appropriate levels of borrowing
facilities to provide short-term flexibility.
Foreign currency risk
As a result of the discontinuation of the
Group’s operations in the United States the
remaining investment in operations in the
United States is no longer material and
therefore movements in the US dollar/
sterling exchange will not materially affect
the Group’s and the Company’s balance
sheet. As at 30 September 2019 £474,000
(2018: £474,000) of the Group’s net assets
are denominated in US dollars. The Group
does not use derivative financial instruments
in its management of foreign currency risk.
Credit risk
The Group’s principal financial assets are
bank balances, cash, contract assets and
trade receivables, which represent the
Group’s maximum exposure to credit risk
in relation to financial assets.
The Group’s credit risk is primarily
attributable to its contract assets and trade
receivables. Credit risk is managed by
monitoring the aggregate amount and
duration of exposure to any one customer
depending upon their credit rating. The
amounts presented in the balance sheet
are net of allowances for doubtful debts,
estimated by the Group’s management
based on prior experience and their
assessment of the current
economic environment.
Payment of creditors
The Group recognises the importance of
good relationships with its suppliers and
sub-contractors and has established the
following payment policy:
(a) agree payment terms in advance of
any commitment being entered into;
(b) ensure suppliers are made aware of
these terms by inclusion of the terms of
payment on the order or contract; and
(c) ensure that payments are made in
accordance with the terms of the
contract or order providing that the
presented documentation is complete
and accurate.
Employees
The Directors recognise the need for
communication with employees at every
level. All employees have access to a copy
of the Annual Report and Accounts which,
together with staff briefings, internal notice-
board statements and newsletters, keeps
them informed of the Group’s progress. The
Group produces an in-house publication,
Renews, which provides information to its
employees about the activities and
performance of the Group.
The Group continues to be committed
to the health, safety and welfare of its
employees and to observe the terms of
the Health and Safety at Work Act 1974,
and all other relevant regulatory and
legislative requirements.
It is the policy of the Group that there shall
be no discrimination or less favourable
treatment of employees, workers or job
applicants in respect of race, colour, ethnic
or national origins, religious beliefs, sex,
sexual orientation, disability, political
beliefs, age or marital status. Full
consideration will be given to suitable
applications for employment from disabled
persons, where they have the necessary
abilities and skills for that position, and
wherever possible to re-train employees
who become disabled, so that they can
continue their employment in another
position. The Group engages, promotes
and trains staff on the basis of their
capabilities, qualifications and experience,
without discrimination, giving all employees
an equal opportunity to progress.
51
Renew Holdings plc Annual Report and Accounts 2019GOVERNANCE DIRECTORS’ REPORT CONTINUED
Health and safety management
Paul Scott, the Chief Executive Officer,
was the designated Director of Health
and Safety with Group responsibility for
safety and environmental management
throughout the year. Health, safety and
environmental management issues and
reports are reviewed at every Group Board
meeting with the Head of Department in
attendance when necessary.
The Executive Management Committee,
chaired by the Chief Executive Officer,
discusses and progresses policy, legislative
changes, best practice, training needs,
inspections, audits (internal and external),
performance measurement and statistical
information. All topics are discussed with
a specific focus on improvement.
Control at business level remains with
subsidiary Managing Directors who are
required to appoint a Director who is
responsible for safety and environmental
matters. Health, safety and environmental
issues are discussed as the first agenda
item at monthly Board meetings. Each
business safety and environmental meeting
encourages open communication between
all employees and is a key part of the Group’s
efforts to gather and disseminate good
practice for inclusion in business-based
management systems. Our safety and
environmental standards are contained
within bespoke business Safety and
Environmental Management Systems. This
system is based on Group activities and
provides specific standards, procedures,
information, forms and advice which
accommodate changes in legislation
expected during the coming financial year.
Management advice is provided by the
Group Health, Safety, Environmental and
Quality (“SHEQ”) Director.
Certain Group companies employ
their own specialist advisors who liaise
directly with the Group SHEQ Director on
common issues. The Group maintains its
membership with the Royal Society for the
Prevention of Accidents and locally based
construction safety groups. All safety
and environmental department personnel
hold membership with the Institution
of Occupational Safety and Health.
Attendance on the five day Construction
Industry Training Board Site Safety
Management Training Scheme continues
to be a requirement for all construction
management personnel, with a two day
refresher required every five years. A one
day Directors and Senior Managers course
is available internally and is used to
introduce new systems and detail changes
to construction legislation. Short duration
"tool box talks" and "safety briefings" are
used to enhance the knowledge and
competence of supervisory management.
Group policy requires each business to
report and record all injuries, diseases
and dangerous occurrences, regardless
of severity. An incident database is
maintained to collate this information
and provide statistical data allowing
performance to be measured and
determine system amendments and future
training requirements. A system of Safety
and Environmental Alerts ensures lessons
learnt and changes to working practices are
rapidly transmitted to our workforce,
businesses and their contractors. The
Accident Frequency Rate (“AFR”) for the
year is a key area where the Group
measures its performance.
Sustainability
The Group’s Sustainability report, which
includes its report on corporate social
responsibility, is on pages 30 to 33.
Directors
The Directors of the Company who served
throughout the year and their brief
biographical details are set out below.
Non-executive Directors
David Brown – Director, 58, was appointed
to the Board on 3 April 2017. He is currently
group chief executive of The Go-Ahead
Group Plc, a position he has held since 2011.
Prior to that, he was managing director of
Surface Transport for Transport for London
and chief executive of Go-Ahead’s London
Bus business. He is also a director of the
Rail Delivery Group Limited.
David Forbes – Director, 59, was appointed
to the Board as a Non-executive Director
in June 2011 and became Chairman in
January 2018. He qualified as a Chartered
52
Accountant in 1984 and has over 20 years’
experience in corporate advisory services
with N M Rothschild & Son Limited.
Shatish Dasani – Director, 57, was
appointed to the Board as a Non-executive
Director in February 2019. He is currently
Chief Financial Officer of Forterra plc, a
position he has held since 2015. A
Chartered Accountant with over 20 years’
experience in senior public company
finance roles across various sectors
including building materials, advanced
electronics, general industrial and business
services. Previously the chief financial
officer of TT Electronics plc and has also
been alternate non-executive director of
Camelot Group plc and public member
at Network Rail plc.
Executive Directors
Andries Liebenberg – Director, 51, was
appointed to the Board on 31 March 2016.
Andries is the Managing Director of
Renew’s largest business, Amalgamated
Construction Limited, and has been with
the Group over ten years.
Paul Scott – Director, 55, was appointed to
the Board as Engineering Services Director
on 21 July 2014 and as Chief Executive on
1 October 2016. Paul has been with the
Group for 20 years, serving as Managing
Director of Shepley Engineers Limited, the
Group’s nuclear services business, prior to
assuming the Group-wide Engineering
Services role.
Sean Wyndham-Quin – Director, 39, was
appointed to the Board on 8 November
2017 and as Chief Financial Officer on 29
November 2017. Previously, he served as
a partner at SPARK Advisory Partners, a
business he co-founded in early 2012. Prior
to that he worked for Brewin Dolphin and
Ernst & Young where he qualified as a
Chartered Accountant.
Paul Scott retires by rotation at the 2020
Annual General Meeting (“AGM”) and offers
himself for reappointment. Additionally,
Shatish Dasani, who was appointed during
the year, offers himself for reappointment.
The Board recommends their reappointment
as it considers that they continue to perform
their roles well and bring considerable
Renew Holdings plc Annual Report and Accounts 2019 strategic, financial and management
experience to the Group’s business.
The Articles of Association provide that
each Director shall be indemnified by
the Company against losses, costs and
expenses he may sustain or incur in
connection with the performance of
his duties of office, to the fullest extent
permitted by law. The Company has
purchased and maintained throughout
the year directors’ and officers’ liability
insurance in respect of its Directors.
Directors’ interests
The beneficial interests of the Directors
(and their immediate family members) in
the shares of the Company and options for
shares as at 30 September 2019 are set out
on pages 57 and 58. No Director has any
interest in any other Group company.
Details of the Directors’ remuneration
and service contracts appear on pages
56 and 57.
Share capital
As at the date of this report, the total
number of shares in issue (being Ordinary
Shares of 10p each) is 75,329,224. During
the year, the Company has not bought back
any of its Own Shares. 61,717 new Ordinary
Shares of 10p each were issued at nominal
cost during the year to satisfy the exercise
of share options.
Forward looking statements
This Annual Report contains certain
forward-looking statements. These
statements are made by the Directors
in good faith, based on the information
available to them up to the time of approval
of this report. Actual results may differ
to those expressed in such statements,
depending on a variety of factors. These
factors include customer acceptance of
the Group’s services, levels of demand in
the market, restrictions to market access,
competitive pressure on pricing or
additional costs, failure to retain or
recruit key personnel and overall
economic conditions.
Viability statement
The Directors have conducted a review
and assessed the prospects and viability
of the Group.
Although the Directors have no reason to
believe that the Group will not be viable
over a longer period, the Board has chosen
to conduct this review for a period of three
years. The Group believes that this is an
appropriate timeframe as it aligns with its
strategic and financial planning horizon.
The Directors have taken account of
the Group’s financial forecasts for the
three-year period following the balance
sheet date, comparing future funding
requirements with committed external
borrowing facilities. These external facilities
Disclosable interests
As at 26 November 2019, the Company has been notified of the following disclosable
interests in the voting rights of the Company:
Number
of ordinary
shares
Percentage
of issued
share capital
Octopus Investments Nominees Limited
13,284,506
17.6%
Investec Wealth & Investment Limited
Charles Stanley Group PLC
Canaccord Genuity Group Inc.
Polar Capital LLP
BlackRock Asset Management Limited
Rathbone Brothers PLC
Hargreaves Lansdown PLC
8.5%
6.7%
5.4%
4.7%
4.2%
3.9%
3.1%
6,400,410
5,063,699
4,100,241
3,565,852
3,184,143
2,927,678
2,307,326
53
are due for refinancing by May 2022, the
final year of the period being considered,
and the Directors have assumed that
this is done on the same terms as the
current facility.
The Directors confirm that they have a
reasonable expectation that the Group will
continue in operation, meet liabilities as
they fall due and will not breach banking
covenants within this period.
In support of the viability statement the
Group financial forecasts have been
stress-tested by estimating the potential
impact of key risks. These estimates
reflected the Directors’ judgement as to
the net potential financial impact and the
likelihood of these key risks occurring.
Disclosure of information
to the auditor
The Directors who held office at the date
of approval of this Directors’ report confirm
the following:
• so far as each Director is aware, there is
no relevant audit information of which
the Group’s auditor is unaware; and
• each Director has taken all the steps
that he ought to have taken as a Director
in order to make himself aware of
any relevant audit information and
to establish that the Group’s auditor
is aware of that information.
Auditor
Resolutions will be proposed at the
forthcoming AGM to reappoint KPMG LLP
as auditor to the Group and to authorise the
Directors to determine their remuneration.
Approval
The Board approved the Report of the
Directors on 26 November 2019.
By Order of the Board
Sean Wyndham-Quin
Company Secretary
26 November 2019
Company number 650447
Renew Holdings plc Annual Report and Accounts 2019GOVERNANCE DIRECTORS’ REMUNERATION REPORT
David A Brown
Chairman of the Remuneration Committee
Remuneration Committee
key areas of focus
• Determine and agree the
framework and policy for the
remuneration packages
• Review and approve the design
of all share incentive plans and
performance related pay schemes
• Determine targets and awards
made under share incentive
plans and performance related
pay schemes
• Determine the policy for, and scope
of, pension arrangements
• Ensure contractual terms and
payments made on termination
are fair
At the last Annual General Meeting, votes
on the advisory resolution relating to the
Remuneration report were cast as follows:
In favour
– 33,088,602 (99.1 per cent)
Against
– 284,693 (0.9 per cent)
Withheld
– 2,700 (0.0 per cent)
Total votes cast – 33,375,995 (100 per cent)
The Remuneration Committee typically
consults with major shareholders when any
significant change in the structure or scale
of Directors’ remuneration is being
considered and will continue to do so
where appropriate. No material matters
have been raised by shareholders relating
to Directors’ remuneration during the year.
Terms of reference
The Remuneration Committee’s terms
of reference include:
(a) to determine and agree with the Board
the framework and policy for the
remuneration packages, including
bonuses, incentive payments and
share options or share awards of the
Executive Directors and members
of the Executive Management;
(b) to review and approve the design
of all share incentive plans and
performance related pay schemes
for approval by the Board and
shareholders as applicable;
(c) to determine targets and awards
made under share incentive plans and
performance related pay schemes;
(d) to determine the policy for, and scope
of, pension arrangements for each
Executive Director and other senior
executives; and
(e) to ensure contractual terms and
payments made on termination are fair
to the individual and the Company and
that failure is not rewarded.
Introduction
Dear Shareholder,
On behalf of the Remuneration Committee
I am pleased to present the Directors’
remuneration report (the “Remuneration
Report”) for the financial year ended
30 September 2019.
The Remuneration report sets out the
details of the Remuneration Committee
including its terms of reference, the
Company’s Remuneration Policy,
remuneration for the year ended
30 September 2019 and the intended
remuneration for the year ending
30 September 2020.
As an AIM listed company, Renew is not
required to prepare this Remuneration
report in accordance with the Directors’
Remuneration Report Regulations 2002
or the Large and Medium-sized Companies
and Groups (Accounts and Reports)
(Amendment) Regulations 2013 (together
“the Regulations”). However, the
Remuneration Committee recognises the
importance, and support the principles,
of the Regulations and seek to follow them
to the extent considered relevant for an
AIM listed company. The Remuneration
Committee will continue to monitor market
practice to ensure that this report works
towards including disclosures at least as
good as market practice for AIM companies.
The auditor is not required to report
to the shareholders on the
Directors’ remuneration report.
The Remuneration report will be presented
at the AGM on 29 January 2020 and will be
the subject of an advisory vote.
Remuneration Committee
The Remuneration Committee is chaired
by D A Brown and comprises D M Forbes
and S Dasani. The Committee held three
meetings during the financial year to
discuss remuneration arrangements.
S Dasani was appointed to the Board and
the Remuneration Committee on 8 February
2019, succeeding J Bishop who resigned
from the Board and from the Remuneration
Committee on the same day.
54
Renew Holdings plc Annual Report and Accounts 2019 Non-executive Directors do not have any
personal interest in the matters to be
decided by the Committee other than as
shareholders, nor any potential conflicts
of interest arising from cross-directorships
and no day-to-day involvement in the
running of the Company. The Executive
Directors and other senior personnel may
be invited to attend meetings when
appropriate to provide advice. However,
no Director is present or takes part
in discussions concerning their
own remuneration.
Remuneration policy
The Company’s remuneration policy is
that the remuneration packages of the
Executive Directors should be sufficiently
competitive to attract, retain and motivate
those Directors to achieve the Company’s
objectives, without making excessive
payments. The remuneration and
employment terms of the Executive
Directors are determined by the
Remuneration Committee by comparison
with salaries paid to, and terms agreed with,
directors in similar companies in the same
sector and of a similar size and after a
review of the performance of the individual.
It is the aim of the Remuneration
Committee to reward Executive Directors
competitively and broadly in line with senior
management of other comparable public
companies. For guidance, the Remuneration
Committee refers to published survey data.
The Board determines the terms and
conditions of Non-executive Directors.
There are four main elements to the
remuneration packages of the Executive
Directors and other senior executives:
• basic salary and benefits;
• annual bonus awards;
• long-term equity incentive plans; and
• pension arrangements.
Basic salary and benefits
Basic salaries are reviewed annually by the
Remuneration Committee and adjusted
where the Committee believes that
adjustments are appropriate to reflect
performance, changed responsibilities
and/or market conditions. Other benefits for
Executive Directors include car allowances
and certain medical cover for Directors and
their immediate family. The Company also
has a permanent health insurance policy to
provide cover for the Executive Directors.
Annual bonus awards
It is the Company’s policy to provide a bonus
incentive scheme for Directors linked directly
to the financial performance of the Group.
The Executive Directors’ bonuses are related
to the performance of the Group as a whole,
including the health and safety performance
of the Group. All performance criteria are
subject to approval by the Remuneration
Committee at the beginning of the year and
all payments are made only when approved
by the Remuneration Committee.
Details of the annual bonus scheme for the
year under review and the following year
are set out below.
Long-term equity incentive plans
The Remuneration Committee
implemented a new long term incentive
plan (“LTIP”) which was approved at an
Extraordinary General Meeting (“EGM”)
held on 25 January 2012. The LTIP has
been designed so as to comply with ABI
guidelines in all material respects and
to align a material part of an Executive
Director’s remuneration more closely
with shareholders.
The performance criteria to be achieved
by the Company in respect of the LTIP
are as follows:
Vesting of one half of the options is
dependent on absolute growth in the
Company’s Total Shareholder Return
("TSR"), and the other half dependent on the
Company’s TSR performance as compared
to the TSR achieved by other companies in
a comparator group of companies selected
by the Remuneration Committee.
The constituents of the comparator group
are reconsidered by the Remuneration
Committee each year. All TSR calculations
are based on the average of the opening
and closing share price over a 30 day
period prior to the commencement and
end of the performance period.
The absolute TSR growth target requires
the Company’s TSR over the three year
performance period to have grown by more
than 25 per cent. For aggregate TSR growth
between 25 per cent and 100 per cent, the
half of the option which is subject to the
absolute TSR growth target vests on
a straight-line basis from nil vesting at
25 per cent growth, to 100 per cent vesting
at 100 per cent growth. There is no vesting
if aggregate TSR growth is 25 per cent or
less. The Remuneration Committee
considers this mechanism important to
ensure that it meets the overall objectives
of the LTIP.
In the event of a material correction of any
accounts of the Company used to assess
satisfaction of any performance conditions,
or in the event of a participant’s gross
misconduct, options may be reduced,
adjusted or cancelled as determined by the
Remuneration Committee. To the extent
that options have already been exercised,
the Remuneration Committee may (having
considered all the circumstances) require
the participant to return any shares
received, or the amounts of any proceeds
of the sale of such shares (net of tax).
The Remuneration Committee is
empowered to grant a maximum number
of LTIP options over 10p Ordinary Shares
equivalent in value to 150 per cent of basic
salary per financial year. The options may
be granted with an exercise price equal to
their nominal value or as nil-cost options.
The Company also has the ability, but not
the obligation, to provide a cash alternative
to participants equal to the net benefit of
their LTIP option. This simplifies the
settlement process, reducing complexity
and cost to both the Company and the
participant and reducing dilution to the
shareholders, all whilst preserving the
overall economic effect of the LTIP award.
Pension arrangements
Under their terms of engagement, the
Executive Directors are entitled to receive
an annual pension contribution of 15 per
cent of their basic salary or an equivalent
cash amount. The Remuneration
Committee believes that these payments
are broadly in line with senior management
in other comparable public companies.
55
Renew Holdings plc Annual Report and Accounts 2019GOVERNANCE DIRECTORS’ REMUNERATION REPORT CONTINUED
Remuneration policy continued
Executive Director minimum shareholding requirement
The Executive Directors are required by the Remuneration Committee to build up and hold a minimum of 100 per cent of their basic
annual salary equivalent value in Ordinary Shares in the Group before they are permitted to sell any shares. In exceptional circumstances,
and at the sole discretion of the Remuneration Committee, or if shares are sold to cover a tax liability that arises as a result of an exercise
of an LTIP, this requirement may be waived.
Remuneration for the year ending 30 September 2019
Service contracts and letters of appointment
The Company’s policy is for all of the Executive Directors to have rolling service contracts that provide for a twelve month notice period.
The fees of Non-executive Directors are determined by the full Board within the limits set out in the Articles of Association. The
Non-executive Directors are not eligible for bonuses, pension benefits, share options or other benefits. The Directors are indemnified
to the full extent permitted by statute under the Articles of Association. All Non-executive Directors are subject to re-election at least
every three years.
The service contracts of the Directors, who served during the year ended 30 September 2019 and were in post on that date, include the
following terms:
Directors
D M Forbes
D A Brown
S D Dasani
P Scott
A Liebenberg
S C Wyndham-Quin
Executive/Non-executive
Date of contract
Unexpired term
Non-executive
Non-executive
Non-executive
Executive
Executive
Executive
1 June 2011
2 April 2017
8 February 2019
1 July 2014
31 March 2016
8 November 2017
Rolling one month
Rolling one month
Rolling one month
Rolling one year
Rolling one year
Rolling one year
S Dasani was appointed to the Board on 8 February 2019. J Bishop resigned from the Board on 8 February 2019.
Notice period
(months)
1
1
1
12
12
12
56
Renew Holdings plc Annual Report and Accounts 2019 Directors’ remuneration
Information is provided below for Directors who served during the financial year and as at 30 September 2019:
Notes
Salary/fees
£000
Bonuses
£000
LTIP
£000
Benefits
£000
Total
emoluments
2019
£000
Total
emoluments
2018
£000
1,2,3,4,5,12
2,3,4,5,6,12
2,4,5,7,12
8
9
10
11
9
300
215
225
—
75
45
30
19
—
309
221
232
—
—
—
—
—
—
127
108
—
—
—
—
—
—
—
61
63
52
—
—
—
—
—
—
797
607
509
—
663
564
352
54
1,913
1,633
75
45
30
19
—
62
42
—
42
22
2,082
1,801
Executive Directors
P Scott
A Liebenberg
S Wyndham-Quin
J Samuel
Non-executive Directors
D M Forbes
D A Brown
S Dasani
J Bishop
R J Harrison
Notes:
1 The highest paid Director for 2019 was P Scott who received emoluments of £797,000 (2018: £663,000).
2 Bonuses were earned by P Scott, A Liebenberg and S Wyndham-Quin during the current financial year and will be paid in the year ending 30 September 2020.
3 Details of the LTIP options exercised during the year can be found in the Directors’ remuneration report.
4 Benefits include car allowances and certain medical cover for the Director and immediate family.
5
Executive Directors received payments amounting to 15 per cent of their basic salary, in lieu of Company pension contributions. These were paid through the payroll and taxed
as salary and are included in benefits above.
6 All of A Liebenberg’s emoluments were borne by a subsidiary undertaking.
7
S Wyndham-Quin was appointed as a Company Director on 8 November 2017 and took responsibility as Chief Financial Officer on 29 November 2017. Comparative emoluments
represent the period from 8 November 2017 until 30 September 2018.
8 J Samuel resigned as a Company Director on 29 November 2017 and so the comparative emoluments represent the period from 1 October 2017 until 29 November 2017.
9
R J Harrison resigned as the Non-executive Chairman on 31 January 2018 and so the comparative emoluments represent the period from 1 October 2017 until 31 January 2018.
D M Forbes succeeded R J Harrison as Chairman on 31 January 2018.
10 S Dasani was appointed as a Non-executive Director with effect from 8 February 2019 and so the emoluments represent the period from 8 February 2019 until 30 September 2019.
11 J Bishop resigned as a Non-executive Director on 8 February 2019 and so the emoluments represent the period from 1 October 2018 until 8 February 2019.
12 P Scott, A Liebenberg and S Wyndham-Quin received part of their bonuses in Ordinary Shares in the Company in accordance with the remuneration policy.
57
Renew Holdings plc Annual Report and Accounts 2019GOVERNANCE DIRECTORS’ REMUNERATION REPORT CONTINUED
Remuneration for the year ending 30 September 2019 continued
Annual bonus awards
The Company provides a bonus incentive scheme for Executive Directors which is linked to the performance of the Group.
At the beginning of the current financial year, the Remuneration Committee agreed a target for operating profit before exceptional items
for the Group. In this year, if the Group meets that target, then the Executive Directors were entitled to receive an annual bonus equal to
100 per cent of their salary. The level of over and under performance results in the level of annual bonus to be varied on a straight-line
basis, with the maximum bonus of 130 per cent of salary being paid if the performance exceeded the target by 30 per cent with no bonus
being payable if performance was 50 per cent or more below target. Any bonus payable in excess of 100 per cent of basic salary will be
paid in shares and will be subject to the minimum shareholding requirements set out in this report. The Remuneration Committee makes
such adjustments to the target and/or results to remove distortions such as acquisitions and disposals during the year and other items as
they believe are necessary.
At the beginning of the year ended 30 September 2019, the Remuneration Committee agreed a target for operating profit1 before
exceptional items for the Group of £37,208,000. The operating profit before exceptional items for the Group exceeded this revised target by
approximately 3 per cent. Accordingly, under the terms of the scheme, the Executive Directors are entitled to receive an annual bonus equal
to 103 per cent of salary.
Long-term equity incentive plans
The market price of the Company’s shares at 30 September 2019 (being the last trading day of the month) was 385p and the range
of market prices during the year was between 437p and 330p.
Information is provided below for Directors who served during the financial year and as at 30 September 2019.
Pursuant to the LTIP, the Board has granted options to the Executive Directors as set out in the following table.
The LTIP options are exercisable at nominal cost but are only exercisable to the extent that certain performance criteria are achieved
by the Company over a three year performance period.
Exercisable between
25 Nov 2019 and 24 Nov 2026
Exercisable between
23 Nov 2020 and 22 Nov 2027
Exercisable between
3 Dec 2021 and 2 Dec 2028
Number of Ordinary Shares under option
LTIP options
P Scott
A Liebenberg
S Wyndham-Quin
91,400
67,700
—
99,000
73,500
73,500
129,310
92,833
96,983
Performance criteria for the vesting of the share options under the LTIP are set out in the Remuneration Policy above and in Note 23 to
the Accounts.
During the year, options awarded on 27 January 2016 amounting to 61,717 shares in aggregate, vested in accordance with their vesting
conditions. These options were subsequently exercised on 5 February 2019 and 33,240 shares were issued to P Scott and 28,477 shares
to A Liebenberg. The level of vesting reflects the total shareholder return during the vesting period in accordance with the scheme rules.
In addition, and in accordance with the rules of the LTIP, payments of £7,978 and £6,834 were made to P Scott and A Liebenberg respectively
representing dividends accrued during the vesting period on the shares vested as detailed above. As a consequence of the LTIP vesting,
P Scott made a gain on exercise of options of £118,667 and A Liebenberg made a gain on exercise of options of £101,663. Post the period end,
on 25 November 2019, 67,936 options awarded on 24 November 2016 vested in accordance with their vesting conditions but have not yet
been exercised.
58
Renew Holdings plc Annual Report and Accounts 2019 Directors’ pension information
No Director has pension entitlements under the Group’s defined benefit pension scheme arrangements. The Group has established
individual stakeholder plans for each employee who elects to join into which the Group makes contributions; P Scott, A Liebenberg
and S Wyndham-Quin receive a sum equivalent to 15 per cent of their basic salary in lieu of pension contributions from the Company.
Directors’ share interests
Those Directors serving at the end of the year and their immediate families had interests in the share capital of the Company at
30 September 2019 as follows:
D M Forbes
D A Brown
S D Dasani
P Scott
A Liebenberg
S Wyndham-Quin
Ordinary Shares of 10p each
30 September
2019
30 September
2018
35,000
35,000
7,042
5,000
47,412
33,371
11,628
7,042
—
29,042
17,634
11,628
Remuneration for the year ending 30 September 2020
Basic salary and benefits
The basic salary of P Scott, S C Wyndham-Quin and A Liebenberg has increased by 2.5 per cent to £307,500, £230,625 and £220,757
respectively which is closely aligned to the average annual pay award across the Group as a whole excluding rises for promotions or other
changes in responsibility. There have been no material changes in the benefits which the Executive Directors are entitled to receive. The
Non-executive Directors’ fees increased by 2.5%.
Annual bonus awards
The structure of the annual bonus scheme for the year ending 30 September 2020 is the same as for the previous year, as set out above,
in all material respects (except for the targets). Executive Directors will therefore be entitled to receive a cash bonus of 100 per cent of
their basic salary if the Group achieves target operating profit and a maximum of 130 per cent of their basic salary if the Group achieves
130 per cent of target operating profit. No bonus will be paid if the Group achieves 50 per cent or less of target operating profit. Any bonus
payable in excess of 100 per cent of basic salary will be paid in shares and will be subject to the minimum shareholding requirements set
out earlier in this report. As in previous years, the bonus payable will be reduced by the Remuneration Committee if certain health and
safety targets are not achieved during the year.
Long-term equity incentive plan
The Remuneration Committee has made annual awards under the LTIP since it was set up in 2012 and will do so again this year. Each
award has been made shortly after the publication of the Company’s annual results, or in circumstances where the rules are being
amended at the Company’s AGM, then shortly after that meeting. It is expected that the next award will be announced shortly after
the publication of the Company’s annual results. Awards for each participant in the Scheme are limited in amount to 150 per cent of
that participant’s basic salary. The sixth tranche of options granted under the LTIP, granted on 24 November 2016 as detailed above,
will vest during the coming year subject to the performance criteria contained therein.
Approval
The Directors’ remuneration report was approved by the Board on 26 November 2019 and signed on its behalf by:
David A Brown
Chairman of the Remuneration Committee
26 November 2019
59
Renew Holdings plc Annual Report and Accounts 2019GOVERNANCE STATEMENT OF DIRECTORS’ RESPONSIBILITIES
in respect of the Annual Report and the Financial Statements
The directors are responsible for preparing
the Annual Report and the Group and parent
Company financial statements in accordance
with applicable law and regulations.
Company law requires the directors to
prepare Group and parent Company financial
statements for each financial year. Under the
AIM Rules of the London Stock Exchange
they are required to prepare the Group
financial statements in accordance with
International Financial Reporting Standards
as adopted by the European Union (IFRSs as
adopted by the EU) and applicable law and
they have elected to prepare the parent
Company financial statements in accordance
with UK accounting standards and applicable
law (UK Generally Accepted Accounting
Practice), including FRS 102 The Financial
Reporting Standard applicable in the UK
and Republic of Ireland.
Under company law the directors must not
approve the financial statements unless they
are satisfied that they give a true and fair view
of the state of affairs of the Group and parent
Company and of their profit or loss for that
period. In preparing each of the Group and
Parent company financial statements, the
directors are required to:
• select suitable accounting policies and
then apply them consistently;
• make judgements and estimates that are
reasonable, relevant, reliable and prudent;
• for the Group financial statements, state
whether they have been prepared in
accordance with IFRSs as adopted by
the EU;
• for the parent Company financial
statements, state whether applicable
UK accounting standards have been
followed, subject to any material
departures disclosed and explained
in the financial statements;
• assess the Group and parent Company’s
ability to continue as a going concern,
disclosing, as applicable, matters related
to going concern; and
• use the going concern basis of
accounting unless they either intend
to liquidate the Group or the parent
Company or to cease operations, or
have no realistic alternative but to do so.
The directors are responsible for keeping
adequate accounting records that are
sufficient to show and explain the parent
Company’s transactions and disclose with
reasonable accuracy at any time the financial
position of the parent Company and enable
them to ensure that its financial statements
comply with the Companies Act 2006. They
are responsible for such internal control as
they determine is necessary to enable the
preparation of financial statements that are
free from material misstatement, whether
due to fraud or error, and have general
responsibility for taking such steps as are
reasonably open to them to safeguard the
assets of the Group and to prevent and
detect fraud and other irregularities.
Under applicable law and regulations, the
directors are also responsible for preparing a
Strategic report and a Directors’ report that
complies with that law and those regulations.
60
Renew Holdings plc Annual Report and Accounts 2019 Financial
statements
62 Independent auditor’s report
66 Group income statement
67 Group statement of comprehensive income
67 Group statement of changes in equity
68 Group balance sheet
69 Group cashflow statement
70 Notes to the accounts
99 Company balance sheet
100 Company statement of comprehensive income
100 Company statement of changes in equity
101 Notes to the Company accounts
111 Directors, officers and advisors
112 Shareholder information
IBC Our subsidiary businesses
FINANCIAL STATEMENTS INDEPENDENT AUDITOR’S REPORT
to the members of Renew Holdings plc
1 Our opinion is unmodified
We have audited the financial statements of Renew Holdings plc (“the Company”) for the year ended 30 September 2019 which comprise
the Group income statement, Group statement of comprehensive income, Group statement of changes in equity, Group balance sheet,
Group cashflow statement, Company balance sheet, Company statement of comprehensive income, Company statement of changes in
equity, and the related notes, including the accounting policies in notes 1 and A.
In our opinion:
• the financial statements give a true and fair view of the state of the Group’s and of the parent Company’s affairs as at 30 September 2019
and of the Group’s profit for the year then ended;
• the Group financial statements have been properly prepared in accordance with International Financial Reporting Standards as adopted
by the European Union;
• the parent Company financial statements have been properly prepared in accordance with UK accounting standards, including FRS 102
The Financial Reporting Standard applicable in the UK and Republic of Ireland; and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities
are described below. We have fulfilled our ethical responsibilities under, and are independent of the Group in accordance with, UK ethical
requirements including the FRC Ethical Standard as applied to listed entities. We believe that the audit evidence we have obtained is a
sufficient and appropriate basis for our opinion.
2 Key audit matters: including our assessment of risks of material misstatement
Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of the financial statements
and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by us, including those
which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the
engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters. In arriving at our audit opinion above, the key audit matters
were as follows.
The impact of
uncertainties due
to the UK exiting
the European
Union on our audit
New risk
Refer to page 34.
Unprecedented levels
of uncertainty
All audits assess and challenge
the reasonableness of estimates,
in particular as described in the
recoverability of carrying value
of parent company investments
in subsidiaries below, and related
disclosures and the appropriateness
of the going concern basis of
preparation of the financial statements
(see below). All of these depend on
assessments of the future economic
environment and the group’s future
prospects and performance.
Brexit is one of the most significant
economic events for the UK and
at the date of this report its effects
are subject to unprecedented levels
of uncertainty of outcomes, with the
full range of possible effects unknown.
Our response
We developed a standardised firm-wide approach to
the consideration of the uncertainties arising from Brexit in
planning and performing our audits. Our procedures included:
• Our Brexit knowledge – We considered the directors’
assessment of Brexit-related sources of risk for the group’s
business and financial resources compared with our own
understanding of the risks.
• Sensitivity analysis – When addressing recoverability of carrying
value of investments and other areas that depend on forecasts,
we compared the directors’ analysis to our assessment of the
full range of reasonably possible scenarios resulting from Brexit
uncertainty and, where forecast cash flows are required to be
discounted, considered adjustments to discount rates for the
level of remaining uncertainty.
• Assessing transparency – As well as assessing individual
disclosures as part of our procedures on recoverability of
carrying value parent company investments in subsidiaries
we considered all of the Brexit related disclosures together,
including those in the strategic report, comparing the overall
picture against our understanding of the risks.
However, no audit should be expected to predict the unknowable
factors or all possible future implications for a company and this
is particularly the case in relation to Brexit.
62
Renew Holdings plc Annual Report and Accounts 2019 2 Key audit matters: including our assessment of risks of material misstatement continued
Recognition of
revenue and profit,
and carrying value
of contract
balances
Recurring risk
£113.5 million
of contract balances
(2018: £126.1 million).
£600.6 million
of revenue (2018:
£541.5 million)
Refer to pages 71 and 72
(accounting policy) and
pages 76 and 85
(financial disclosures).
Subjective estimate
The carrying value of construction
contract assets as well as revenue
and profit recognised are based on
estimates of variable considerations,
such as in instances where the value
of variations is not yet agreed.
Estimated contract costs, and as a
result revenues, can be affected by
a variety of uncertainties, including
associated customer claims, that
depend on the outcome of future
events resulting in revisions
throughout the contract period.
The effect of these matters is
that, as part of our risk assessment
for audit planning purposes, we
determined that the carrying value
of contract assets, revenue and profit
recognised on construction contracts
has a high degree of estimation
uncertainty, with a potential range
of reasonable outcomes greater
than our materiality for the financial
statements as a whole.
Forecast-based valuation
The carrying amount of the parent
company’s investments in subsidiaries
and debtor balance due from other
group companies are significant.
The estimated recoverable amount
of these balances is subjective due to
the inherent uncertainty in forecasting
trading conditions and cash flows
used in the budgets.
Recoverability of
parent company’s
investment in
subsidiaries & debt
due from group
entities
Recurring risk
£164.3 million
(2018: £167.3 million)
of investments
in subsidiaries.
£56.4 million
(2018: £63.1 million)
of debt due from
group entities.
Refer to page 101
(accounting policy)
and page 104
(financial disclosures).
Our procedures included:
• Test of detail: Identifying contracts with risk indicators, including
low margin or loss making contracts, large carrying values of
contract assets and contracts with known recoverability risks.
For these contracts we agreed the year-end contract balance to
certification received post year end or the work certified to date;
• Test of detail: Challenging the Group in respect of contract
balances in the sample identified, where cash has not been
received or work has not been certified post year end, by
inspecting correspondence with the customer including
agreed variation schedules, and where relevant third party
legal correspondence, to corroborate the position. We
challenged management on uncertain variable consideration
and contract asset positions where evidence of customer
agreement was not available;
• Test of detail: Inspecting a sample of contract agreements
with customers to identify key terms and conditions, including
contracting parties, contract sum, the scope of work and
evaluating whether these key terms and conditions had been
appropriately reflected in the total estimated revenue and
costs to complete in the forecast cost to complete;
• Test of detail: Verifying the existence of customer claims
and disputes to external correspondence and challenging
management’s assessment of these involving our own
specialists to challenge the position taken;
• Historical comparisons: Assessing the reliability of the directors’
forecasting process by performing a retrospective review by
comparing the final margin achieved on a sample of completed
contracts with previous margin estimates made for those
contracts; and
• Assessing transparency: Assessing the adequacy of the Group’s
disclosures on revenue recognition and the degree of estimation
involved in arriving at the contract balances and associated
revenue and profit recognition.
• Tests of detail: Comparing the carrying amount of the
investments & intercompany balances with management’s
value in use calculation, being an estimate of the minimum
recoverable amount, to consider whether there is an indicator
of potential impairment;
• Benchmarking assumptions: Challenging the assumptions
used in the cash flow forecasts included in the budgets based
on our knowledge of the Group and the markets in which the
subsidiaries operate;
• Historical comparisons: Assessing the reasonableness
of the budgets by considering the historical accuracy
of the previous forecasts;
• Tests of detail: For investments where the carrying amount
exceeded the value in use, comparing the carrying amount of
the investment with the recoverable value of the business based
on a fair value less cost to sell model, using a suitable multiple
of the subsidiaries’ sustainable earnings;
• Assessing transparency: Assessing the adequacy of the
parent company’s disclosures in respect of the investment
in subsidiaries/group debtor balance.
63
Renew Holdings plc Annual Report and Accounts 2019FINANCIAL STATEMENTS INDEPENDENT AUDITOR’S REPORT CONTINUED
to the members of Renew Holdings plc
3 Our application of materiality and an overview of the scope of our audit
Materiality for the Group financial statements as a whole was set at £1.5 million (2018: £1.4 million), determined with reference to a
benchmark of Group profit before taxation from continuing operations normalised to exclude the charge related to the defined benefit
scheme guaranteed minimum pension equalisation, totalling £4.3m (2018: normalised to exclude the loss on disposal of Forefront,
impairment of goodwill and QTS acquisition expenses, totalling £11.5 million), of which it represents 5% (2018: 5%).
Materiality for the parent company financial statements as a whole was set at £1.13 million (2018: £1.16 million), determined with reference
to a benchmark of company net assets, of which it represents 1.0% (2018: 1.0%).
We agreed to report to the Audit Committee any corrected or uncorrected identified misstatements exceeding £0.075 million
(2018: £0.075 million), in addition to other identified misstatements that warranted reporting on qualitative grounds.
Of the group’s 29 (2018: 29) reporting components, we subjected 20 (2018: 23) to full scope audits for group purposes. These audits
covered 100% (2018: 100%) of total Group revenue, 98% (2018: 100%) of Group profit before tax, and 98% (2018: 99%) of Group total
assets. Component materiality levels were set individually for all components having regard to the mix of size and risk profile of the
Group across the components, and ranged from £1,173,000 to £19,200 (2018: £1,340,000 to £34,500).
The work on all component was performed by the Group team. The group team performed procedures on the items excluded from profit
before tax before continuing operations.
4 We have nothing to report on going concern
The Directors have prepared the financial statements on the going concern basis as they do not intend to liquidate the Company or the
Group or to cease their operations, and as they have concluded that the Company’s and the Group’s financial position means that this
is realistic. They have also concluded that there are no material uncertainties that could have cast significant doubt over their ability
to continue as a going concern for at least a year from the date of approval of the financial statements (“the going concern period”).
Our responsibility is to conclude on the appropriateness of the Directors’ conclusions and, had there been a material uncertainty
related to going concern, to make reference to that in this audit report. However, as we cannot predict all future events or conditions
and as subsequent events may result in outcomes that are inconsistent with judgements that were reasonable at the time they were
made, the absence of reference to a material uncertainty in this auditor’s report is not a guarantee that the group or the company
will continue in operation.
In our evaluation of the Directors’ conclusions, we considered the inherent risks to the Group’s and Company’s business model and
analysed how those risks might affect the Group’s and Company’s financial resources or ability to continue operations over the going
concern period. The risks that we considered most likely to adversely affect the Group’s and Company’s available financial resources
over this period was:
• The ongoing availability & headroom on bank facilities in order to meet working capital requirements.
As this was a risk that could potentially cast significant doubt on the Group’s and the Company’s ability to continue as a going concern,
we considered sensitivities over the level of available financial resources indicated by the Group’s financial forecasts taking account of
reasonably possible (but not unrealistic) adverse effects that could arise from this risk and evaluated the achievability of the actions the
Directors consider they would take to improve the position should the risks materialise. We also considered less predictable but realistic
second order impacts, such as the impact of Brexit on the erosion of customer confidence which could result in a reduction of available
financial resources.
Based on this work, we are required to report to you if we have concluded that the use of the going concern basis of accounting is
inappropriate or there is an undisclosed material uncertainty that may cast significant doubt over the use of that basis for a period
of at least a year from the date of approval of the financial statements.
We have nothing to report in these respects, and we did not identify going concern as a key audit matter.
5 We have nothing to report on the other information in the Annual Report
The directors are responsible for the other information presented in the Annual Report together with the financial statements. Our opinion
on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or, except as
explicitly stated below, any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether, based on our financial statements audit work, the
information therein is materially misstated or inconsistent with the financial statements or our audit knowledge. Based solely on that work
we have not identified material misstatements in the other information.
Strategic report and directors’ report
Based solely on our work on the other information:
• we have not identified material misstatements in the strategic report and the directors’ report;
• in our opinion the information given in those reports for the financial year is consistent with the financial statements; and
• in our opinion those reports have been prepared in accordance with the Companies Act 2006.
64
Renew Holdings plc Annual Report and Accounts 2019 6 We have nothing to report on the other matters on which we are required to report by exception
Under the Companies Act 2006, we are required to report to you if, in our opinion:
• adequate accounting records have not been kept by the parent Company, or returns adequate for our audit have not been received
from branches not visited by us; or
• the parent Company financial statements are not in agreement with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
We have nothing to report in these respects.
7 Respective responsibilities
Directors’ responsibilities
As explained more fully in their statement set out on page 60, the directors are responsible for: the preparation of the financial
statements including being satisfied that they give a true and fair view; such internal control as they determine is necessary to enable
the preparation of financial statements that are free from material misstatement, whether due to fraud or error; assessing the Group and
parent Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and using the going
concern basis of accounting unless they either intend to liquidate the Group or the parent Company or to cease operations, or have no
realistic alternative but to do so.
Auditor’s responsibilities
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue our opinion in an auditor’s report. Reasonable assurance is a high level of
assurance, but does not guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when
it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of the financial statements.
A fuller description of our responsibilities is provided on the FRC’s website at www.frc.org.uk/auditorsresponsibilities.
8 The purpose of our audit work and to whom we owe our responsibilities
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in
an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone
other than the company and the company’s members, as a body, for our audit work, for this report, or for the opinions we have formed.
David Morritt (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
1 Sovereign Square
Sovereign Street
Leeds
LS1 4DA
26 November 2019
65
Renew Holdings plc Annual Report and Accounts 2019FINANCIAL STATEMENTS GROUP INCOME STATEMENT
for the year ended 30 September
Revenue: Group including share of joint venture
Less share of joint venture’s revenue
Group revenue from continuing activities
Cost of sales
Gross profit
Note
2
2
2
Exceptional
items and
amortisation
of intangible
assets
(see Note 3)
2019
£000
Before
exceptional
items and
amortisation
of intangible
assets
2018
£000
Exceptional
items and
amortisation
of intangible
assets
(see Note 3)
2018
£000
Total
2019
£000
— 600,631
541,469
(709)
—
(709)
(853)
— 599,922
540,616
Before
exceptional
items and
amortisation
of intangible
assets
2019
£000
600,631
599,922
(514,299)
Total
2018
£000
541,469
(853)
540,616
—
—
—
— (514,299)
(469,008)
— (469,008)
85,623
—
85,623
71,608
—
71,608
Administrative expenses
(47,390)
(10,788)
(58,178)
(40,504)
(15,626)
(56,130)
Share of post-tax result of joint venture
14
96
—
96
—
—
—
Operating profit
Finance income
Finance costs
Other finance income – defined benefit
pension schemes
Profit before income tax
Income tax expense
Profit for the year from continuing activities
Loss for the year from discontinued operations
Profit for the year attributable to equity holders
of the parent company
Basic earnings per share from continuing activities
Diluted earnings per share from continuing activities
Basic earnings per share
Diluted earnings per share
3
5
5
5
7
4
9
9
9
9
38,329
(10,788)
27,541
31,104
(15,626)
15,478
50
(1,244)
615
—
—
—
50
4
(1,244)
(1,080)
615
306
—
—
—
4
(1,080)
306
37,750
(10,788)
26,962
30,334
(15,626)
14,708
(7,306)
2,601
(4,705)
(6,364)
841
(5,523)
30,444
(8,187)
22,257
23,970
(14,785)
—
22,257
29.55p
29.34p
29.55p
29.34p
9,185
(2,412)
6,773
13.60p
13.52p
10.03p
9.97p
66
Renew Holdings plc Annual Report and Accounts 2019 GROUP STATEMENT OF COMPREHENSIVE INCOME
for the year ended 30 September
Profit for the year attributable to equity holders of the parent company
Items that will not be reclassified to profit or loss:
Movement in actuarial valuation of the defined benefit pension schemes
Movement on deferred tax relating to the pension schemes
Total items that will not be reclassified to profit or loss
Items that are or may be reclassified subsequently to profit or loss:
Exchange movement in reserves
Total items that are or may be reclassified subsequently to profit or loss
Total comprehensive income for the year attributable to equity holders
of the parent company
Note
27
2019
£000
22,257
3,543
(1,240)
2,303
28
28
2018
£000
6,773
5,477
(1,917)
3,560
6
6
24,588
10,339
GROUP STATEMENT OF CHANGES IN EQUITY
for the year ended 30 September
At 1 October 2017
6,259
9,635
3,896
1,305
680
Share
capital
£000
Share
premium
account
£000
Capital
redemption
reserve
£000
Cumulative
translation
adjustment
£000
Share
based
payments
reserve
£000
Transfer from income statement for the year
Dividends paid
New shares issued
Recognition of share based payments
Exchange differences
Actuarial movement recognised in
pension schemes
Movement on deferred tax relating to the
pension schemes
1,268
42,049
18
6
At 30 September 2018
7,527
51,684
3,896
1,311
698
Transfer from income statement for the year
Dividends paid
New shares issued
Recognition of share based payments
Exchange differences
Actuarial movement recognised in
pension schemes
Movement on deferred tax relating
to the pension schemes
6
220
(122)
28
Retained
earnings
£000
6,284
6,773
(6,262)
Total
equity
£000
28,059
6,773
(6,262)
43,317
18
6
5,477
5,477
(1,917)
(1,917)
10,355
22,257
(7,905)
75,471
22,257
(7,905)
226
(122)
28
3,543
3,543
(1,240)
(1,240)
At 30 September 2019
7,533
51,904
3,896
1,339
576
27,010
92,258
67
Renew Holdings plc Annual Report and Accounts 2019FINANCIAL STATEMENTS
GROUP BALANCE SHEET
at 30 September
Non-current assets
Intangible assets
– goodwill
– other
Property, plant and equipment
Investment in joint venture
Retirement benefit asset
Deferred tax assets
Current assets
Inventories
Assets held for resale
Trade and other receivables
Cash and cash equivalents
Total assets
Non-current liabilities
Borrowings
Obligations under finance leases
Deferred tax liabilities
Provisions
Current liabilities
Borrowings
Trade and other payables
Obligations under finance leases
Current tax liabilities
Provisions
Total liabilities
Net assets
Share capital
Share premium account
Capital redemption reserve
Cumulative translation adjustment
Share based payments reserve
Retained earnings
Total equity
Approved by the Board and signed on its behalf by:
D M Forbes
Chairman
26 November 2019
68
Note
2019
£000
2018
£000
10
10
11
14
27
7
12
13
15
17
19
20
7
21
19
18
20
21
23
24
24
24
24
24
105,282
9,463
20,932
139
25,554
1,416
162,786
2,632
1,500
118,623
11,667
134,422
297,208
(13,123)
(3,214)
(10,598)
(452)
105,282
15,991
19,710
123
20,424
1,592
163,122
1,691
1,500
129,376
9,179
141,746
304,868
(21,873)
(2,253)
(9,912)
(298)
(27,387)
(34,336)
(8,752)
(164,450)
(2,546)
(1,804)
(11)
(8,752)
(179,913)
(2,100)
(2,245)
(2,051)
(177,563)
(195,061)
(204,950)
(229,397)
92,258
7,533
51,904
3,896
1,339
576
27,010
92,258
75,471
7,527
51,684
3,896
1,311
698
10,355
75,471
Renew Holdings plc Annual Report and Accounts 2019 GROUP CASHFLOW STATEMENT
for the year ended 30 September
Profit for the year from continuing operating activities
Share of post-tax trading result of joint venture
Impairment and amortisation of intangible assets
Loss on disposal of discontinued business
Defined benefit pension scheme guaranteed minimum pension equalisation
Depreciation
Profit on sale of property, plant and equipment
Increase in inventories
Decrease/(increase) in receivables
Decrease in payables and provisions
Current and past service cost in respect of defined benefit pension scheme
Cash contribution to defined benefit pension schemes
(Credit)/charge in respect of share options
Finance income
Finance expense
Interest paid
Income taxes paid
Income tax expense
Net cash inflow from continuing operating activities
Net cash inflow from discontinued operating activities
Net cash inflow from operating activities
Investing activities
Interest received
Dividend received from joint venture
Proceeds on disposal of property, plant and equipment
Purchases of property, plant and equipment
Acquisition of subsidiaries net of cash acquired
Net cash outflow from investing activities
Financing activities
Dividends paid
Issue of share equity
New loan
Loan repayments
Repayments of obligations under finance leases
Net cash (outflow)/inflow from financing activities
Net increase in continuing cash and cash equivalents
Net increase in discontinued cash and cash equivalents
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Effect of foreign exchange rate changes on cash and cash equivalents
Cash and cash equivalents at end of year
Bank balances and cash
69
Note
14
10
3
3
11
3
27
27
24
5
5
7
14
8
19
31
2019
£000
22,257
(96)
6,528
—
4,260
5,561
(621)
(210)
7,769
(15,239)
46
(5,279)
(122)
(50)
629
(1,244)
(5,524)
4,705
23,370
71
23,441
50
80
939
(2,619)
—
(1,550)
(7,905)
226
—
(8,750)
(3,076)
(19,505)
2,315
71
2,386
9,179
102
11,667
11,667
2018
£000
9,185
—
4,157
9,930
—
4,356
(469)
(1,190)
(4,974)
(3,054)
64
(5,772)
18
(4)
774
(1,080)
(1,717)
5,523
15,747
825
16,572
4
114
788
(1,329)
(75,874)
(76,297)
(6,262)
43,317
35,000
(7,475)
(2,699)
61,881
1,331
825
2,156
6,967
56
9,179
9,179
Renew Holdings plc Annual Report and Accounts 2019FINANCIAL STATEMENTS NOTES TO THE ACCOUNTS
1 Accounting policies
Presentation of consolidated financial statements
The consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards ("IFRSs")
as adopted by the EU ("adopted IFRSs"). The financial statements are presented in sterling since this is the currency in which the majority
of the Group’s transactions are denominated.
Accounting estimates involving judgements
In the preparation of these financial statements the Board has made certain judgements and estimates which impact the measurement
of various assets and liabilities in the Group balance sheet, the value of transactions recorded in the Group income statement and the
movements in equity as shown in the Group statement of changes in equity. The actual financial outcomes may ultimately differ from
that which is indicated by these judgements and estimates. Estimates and judgements are reviewed by management and the Board
on an ongoing basis and changes which may arise in them are reflected in the financial statements for the period in which such
changes are made.
The Board has determined that the following areas are those in which estimates and judgements have been made and where material
impacts could arise in the financial statements were such estimates and judgements to be varied.
a) Construction contract revenue
IFRS 15 Revenue from contracts with customers is applicable to these financial statements commencing on 1 October 2018, for the
first time. Whilst it applies to all revenue recognition, it has replaced IAS 11 Construction contracts and represents a key area of judgement.
Management must assess the performance obligations under each contract and the point at which those obligations have been fulfilled,
allocating the transaction price as necessary to each obligation. The estimates and judgements which management must carry out
to assess the total expected cost on a contract remain necessary under IFRS 15. The Group has control and review procedures in place
to regularly monitor and evaluate, the estimates being made to ensure that they are consistent and appropriate. This includes reviewing
the independent certification of the value of work done, the progress of work against contracted timescales and the costs incurred
against plan. In particular, management makes judgements on the expected recoverability of value recorded in respect of performance
obligations which have been completed but not yet agreed with the customer and on the likelihood of the entitlement to any variable
consideration. Differences arising on the ultimate completion of the contract and any unforeseen changes or events as the contract
progresses may result in material changes to the expected financial outcome. The transition to IFRS 15 has had no material impact
on the measurement of revenue in the comparative period.
b) Accounting for the defined benefit pension schemes in accordance with IAS 19 "Employee Benefits"
Independent actuaries calculate the Group’s asset/liability in respect of the defined benefit pension schemes. The actuaries make
assumptions as to discount rates, salary escalations, net interest on scheme assets/liabilities, future pension increases, mortality rates
applicable to members and future rates of inflation. These assumptions are made under the Board’s direction. The Board determines
the appropriateness of these assumptions by benchmarking them against those used by other schemes and by taking advice from
the independent actuaries. The only assumption where it is considered that a reasonably possible change could give rise to a materially
different value is the discount rate. More information is given in Note 27 to these financial statements.
Accounting judgements
c) Carrying value of intangible fixed assets
A number of commercial and financial assumptions and judgements have been made to support both the initial recognition and the
current carrying value of the intangible asset, categories of goodwill, customer related intangible assets, order book and software for
own use.
The Group undertakes a fair value assessment of any acquisition during the year. This assessment includes a detailed analysis of the
accounting policies and methods adopted by the acquired business and an estimate of the value of the separately identifiable intangible
assets, principally customer related intangible assets and order book. The estimate requires the Directors to estimate the likely revenues
from and costs of the delivery of the future services to the customers of the acquired business at the date that the business was acquired.
d) Going concern
The Group’s business activities, together with the factors likely to affect its future development performance and position are set out in
the Operating Review. The financial position of the Group, its cash flows, liquidity position and borrowing facilities are described in the
Financial Review. In addition, Note 22 to the financial statements includes: the Group’s objective, policies and processes for managing
its capital; its financial risk management objectives; details of its financial instruments; and its exposure to credit, liquidity, currency
and market risk.
(i) Basis of accounting and preparation
The accounts have been prepared on the going concern basis and in accordance with applicable accounting standards under the
historical cost convention. In determining that the going concern basis is appropriate the Directors have reviewed budgets, including
cashflow forecasts, and concluded that the Group has adequate cash resources to continue trading for the foreseeable future.
The consolidated financial statements have been prepared in accordance with IFRSs as adopted for use in the EU. The Group has
applied all accounting standards and interpretations issued by the IASB and the International Financial Reporting Committee relevant
to its operations and which are effective in respect of these financial statements.
70
Renew Holdings plc Annual Report and Accounts 2019 1 Accounting policies continued
(i) Basis of accounting and preparation continued
EU endorsed standards effective in the year
In these financial statements various IFRSs which are effective for the first time have been adopted, including the following standards,
amendments and interpretations:
IFRS 9 Financial Instruments
IFRS 15 Revenue from Contracts with Customers
The new accounting standard IFRS 15 sets out a single and comprehensive framework for revenue recognition. The guidance in
IFRS 15 is more detailed than previous IFRSs for revenue recognition (IAS 11 Construction Contracts and IAS 18 Revenue and associated
interpretations). The Group has adopted IFRS 15 and has chosen to apply the modified retrospective approach. There has been no impact
on the comparative reported results and consequently no adjustment has been required to the opening balance of equity at the date of
initial application. The Group has adopted the practical expedients not to restate contracts for all contract modifications that occurred
before the date of initial application; and to recognise the incremental costs of obtaining a contract as an expense when incurred if
the amortisation period of the asset that the Group otherwise would have recognised is one year or less.
The adoption of IFRS 15 has resulted in a reclassification of contract assets and contract liabilities in the Notes to the Accounts
(see Notes 15, 16 and 18); this representation has not resulted in a change to the previously reported net assets of the Group.
The new accounting standard IFRS 9 addresses the classification and measurement of financial assets and liabilities and replaces IAS 39.
Among other things, the standard introduces a forward looking credit loss impairment model whereby entities need to consider and
recognise impairment triggers that might occur in the future (an "expected loss" model). The Group has adopted IFRS 9 and has
chosen to apply the retrospective approach.
None of the IFRSs adopted by the Group had a material impact on the Group’s result for the year or its equity.
The following new or revised International Financial Reporting Standards and IFRIC interpretations will be adopted, where applicable,
for the purpose of preparing future financial statements. The Group has carried out a systematic review to ensure that the impact and
effects of IFRS 16 are fully understood and any necessary changes to current accounting procedures can be implemented in time.
In respect of IFRS 16, no material net impact from the adoption of this new standard is expected, although assets and liabilities will
increase correspondingly.
The Group has chosen not to adopt any of the standards and interpretations noted below earlier than required.
International Financial Reporting Standards
IFRS 16 Leases
Applies to accounting period commencing
1 October 2019
The other standards and interpretations that are applicable for the first time in the Group’s financial statements for the year ended
30 September 2019 have had no effect on these financial statements.
(ii) Basis of consolidation
The Group accounts consolidate the accounts of the Company and its subsidiary undertakings. The results and net assets of
undertakings acquired are included in the Group income statement and balance sheet using the acquisition method of accounting.
The results of undertakings acquired/disposed of are included from the date the Group obtains/loses control as defined in IFRS 10.
Business combinations are accounted for under IFRS 3 Business combinations using the purchase method. The Group’s interests in
joint ventures are accounted for using the equity method. Under this method the Group’s share of the profits less losses of joint ventures
is included in the consolidated income statement and its interest in their net assets is included in investments in the consolidated balance
sheet. Where the share of losses exceeds the Group’s interest in the entity and there is no obligation to fund these losses, the carrying
value is reduced to nil, following which no further losses are recognised.
(iii) Revenue
Revenue, which excludes intra-group revenue and Value Added Tax, comprises:
• value of performance obligations satisfied over time on construction contracts; and
• sales of land which are recorded upon legal completion.
The Engineering segment encompasses businesses in the water, rail, nuclear and telecoms sectors. The nature of the deliverables and
performance obligations within these businesses is however consistent since revenue is earned from the maintenance of infrastructure
assets, with a high volume of relatively short duration contracts, the terms of which are usually governed by larger frameworks.
The Specialist Building segment earns revenues from the refurbishment of private residential assets and the construction, renovation
and refurbishment of science facilities. Revenues in this segment are earned from a low volume of high value contracts, each of which
is governed by a separate contract with the customer. Each contract represents a separate performance obligation.
71
Renew Holdings plc Annual Report and Accounts 2019FINANCIAL STATEMENTS NOTES TO THE ACCOUNTS CONTINUED
1 Accounting policies continued
(iii) Revenue continued
Each contract represents a separate performance obligation on the basis that performance is not interdependent with other contracts,
and each contract represents a deliverable which is a distinct promise, separately agreed and negotiated, and whose progress can be
individually and reliably measured.
Revenue from each performance obligation is recognised over time, on the basis that contractual performance takes place on the
customer’s premises and the Group has a legally enforceable right to payment for performance to date.
As each contract represents a separate single performance obligation, the transaction price allocated to each performance obligation
is usually stated within either the contract or the wider framework agreement. Variable consideration arises from pain/gain sharing
arrangements in addition to contract variations where not stated in the contract. Variable consideration is recognised only to the
extent that it is considered highly probable that it will be agreed by the customer.
(iv) Construction contracts
When the outcome of individual contracts can be estimated reliably, contract revenue and costs are recognised as revenue and expenses
respectively over time by reference to the fulfilment of performance obligations using the input method of estimating progress of delivery
at the reporting date. Costs are recognised as incurred, and revenue is recognised using the input method. The stage of completion of
a contract is assessed by reference to the completion of a physical proportion of the contract work. Revenue includes the initial amount
agreed in the contract plus any variations in contracted work, to the extent that it is probable that they will result in revenue and can be
measured reliably. Revenue includes an assessment of any variable which may become receivable based upon relevant performance
measures. Variable consideration is included based on the expected amount or most likely amount only to the extent that it is highly
probable that there will not be a significant reversal in the amount of the cumulative revenue recognised. When an amendment to an
existing contract arises, the Group reviews the nature of the modification and whether or not it reflects a separate or new performance
obligation to be satisfied or whether it is an amendment to an existing performance obligation.
Provision is made for all known or expected losses on contracts as soon as they are foreseen. These provisions are reviewed throughout
the contract life and are adjusted as required. However, the nature of the risks on contracts are such that it is often not possible to resolve
them until the end of the contract and therefore the provisions may not reverse until the contract is concluded.
The Group does not expect to have any contracts where the period between the transfer of the promised goods or services to the
customer and payments by the customer exceeds one year. As a consequence, the Group does not adjust its transaction price for the
time value of money.
(v) Segment reporting
The operating segments are based on the components that the Board, the Group’s principal decision-making body (the Chief Operating
Decision Maker), monitors in making decisions about operating matters. Such components are identified on the basis of information
that is provided internally in the form of monthly management account reporting, budgets and forecasts to formulate allocation of
resources to segments and to assess performance. Revenue from reportable segments is measured on a basis consistent with the
income statement. Revenue is principally generated from within the UK, the Group’s country of domicile. Segment results show the
contribution directly attributable to each segment in arriving at the Group’s operating profit. Segment assets and liabilities comprise
those assets and liabilities directly attributable to each segment. Group eliminations represent such consolidation adjustments that
are necessary to determine the Group’s assets and liabilities.
(vi) Intangible assets
a)
Goodwill arising on consolidation represents the excess of the cost of acquisition over the Group’s interest in the fair value of the
identifiable assets, liabilities and contingent liabilities of a subsidiary, associate or jointly-controlled entity at the date of acquisition.
Goodwill is recognised as an asset and is tested for impairment annually, or on such other occasions that events or changes in
circumstances indicate that it might be impaired. For the purpose of such impairment reviews, goodwill is allocated to the relevant
cash-generating unit (CGU), or group of CGUs which are expected to benefit from synergies of the combination. A goodwill
impairment loss is recognised in the income statement for the amount by which the carrying value of the related CGU, or group
of CGUs, exceeds the recoverable amount, which is the higher of a CGU’s net realisable value and its value in use.
On disposal of a subsidiary undertaking, the attributable amount of unamortised goodwill which has not been subject to impairment
is included in the determination of the profit or loss on disposal.
b)
Intangible assets acquired as part of a business combination are capitalised separately from goodwill if the fair value can be
measured reliably on initial recognition. Other intangible assets are stated at cost less accumulated amortisation and impairment
losses. The cost of intangible assets is amortised over their expected useful lives. These intangibles relate to customer relationships
and contractual rights and are amortised over the period over which the Board has determined that future cash flows are likely to
arise from these relationships and rights.
72
Renew Holdings plc Annual Report and Accounts 2019
1 Accounting policies continued
(vii) Property, plant and equipment
Property, plant and equipment is recorded at cost less provision for impairment if required. Depreciation is provided on all property, plant
and equipment, other than freehold land. Provision is made at rates calculated to write off the cost of each asset, less estimated residual
value, evenly over its expected useful life as follows:
Freehold land
– no depreciation charge
Freehold buildings
– fifty years
Plant, vehicles and equipment – three to ten years
(viii) Impairments
Goodwill arising on acquisitions and other assets that has an indefinite useful life and is therefore not subject to amortisation, is reviewed
at least annually for impairment. Other intangible assets and property, plant and equipment are reviewed for impairment whenever there
is any indication that the carrying amount of the asset may not be recoverable. If the recoverable amount of any asset is less than its
carrying amount, a loss on impairment is recognised. Recoverable amount is the higher of the fair value of the asset less any costs which
would be incurred in selling the asset and its value in use. Value in use is assessed by discounting the estimated future cash flows that the
asset is expected to generate. For this purpose, assets are grouped into cash generating units which represent the lowest level for which
there are separately identifiable cash flows. Impairment losses in respect of goodwill are not reversed in future accounting periods.
Reversals of other impairment losses are recognised in income when they arise.
(ix) Inventories
Inventories comprise land and raw materials and are stated at the lower of cost and net realisable value. Cost includes appropriate
attributable overheads and excludes interest. Where necessary, provision is made for obsolete, slow moving and defective inventories.
(x) Trade receivables
Trade receivables do not carry any interest and are initially recognised at their fair value and then at amortised cost.
(xi) Contract assets
Contract assets represent amounts for which the Group has an unconditional right to consideration in respect of unbilled revenue
recognised at the balance sheet date and comprises costs incurred plus attributable margin.
(xii) Trade payables
Trade payables on normal terms are not interest bearing and are initially recognised at their fair value and then at amortised cost.
(xiii) Contract liabilities
Contract liabilities represent the obligation to transfer goods or services to a customer for which the consideration has been received,
or consideration is due, from the customer.
(xiv) Cash and cash equivalents
Cash and cash equivalents in the cash flow statement comprise cash at bank and in hand, including bank deposits with original maturities
of less than three months, net of bank overdrafts.
Bank overdrafts are included within borrowings within current liabilities in the balance sheet.
(xv) Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of a past event and where
it is probable that an outflow will be required to settle that obligation and where the amount can be reliably estimated.
(xvi) Leasing commitments
Assets held under finance leases, where substantially all the benefits and risks of ownership of an asset have been transferred to the
Group, are capitalised and are depreciated in accordance with the depreciation policy for the relevant class of asset. The interest element
of the rental obligation is charged to the income statement and represents a constant proportion of the balance of capital repayments
outstanding. Rentals under operating leases are charged to the income statement on a straight-line basis over the term of the lease.
73
Renew Holdings plc Annual Report and Accounts 2019FINANCIAL STATEMENTS NOTES TO THE ACCOUNTS CONTINUED
1 Accounting policies continued
(xvii) Defined benefit pension schemes
Pension scheme assets are measured using market values. Pension scheme liabilities are measured using the projected unit actuarial
method and are discounted at the current rate of return on a high quality corporate bond of equivalent term and currency to the liability.
Any increase in the present value of liabilities within the Group’s defined benefit pension schemes expected to arise from employee
service in the period is charged to the income statement. The Group determines the net interest income/(expense) on the net defined
benefit asset/(liability) for the period by applying the discount rate as determined at the beginning of the annual period to the net
defined benefit asset/(liability) taking account of changes arising as a result of contributions and benefit payments. This is recognised
in the income statement. Movements in actuarial measurement of the net defined benefit asset/(liability) is recognised in other
comprehensive income in the period in which it occurs. Pension scheme surpluses, to the extent they are considered recoverable,
or deficits are recognised in full and presented on the face of the Group balance sheet.
(xviii) Defined contribution pension plans
Contributions to defined contribution pension plans are charged to the income statement as incurred.
(xix) Taxation
The tax charge is composed of current tax and deferred tax, calculated using tax rates that have been enacted or substantively enacted
by the balance sheet date. Current tax and deferred tax are charged or credited to the income statement, except when they relate to
items charged or credited directly to equity, in which case the relevant tax is also dealt with in equity.
Current tax is based on the profit for the year. Deferred tax is provided in full, using the liability method, on temporary differences arising
between the tax bases of assets and liabilities and their carrying amounts in the financial statements.
Deferred tax on such assets and liabilities is not recognised if the temporary difference arises from the initial recognition (other than
in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary
differences can be utilised. The carrying amount of deferred tax assets is reviewed at each balance sheet date.
Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the Group intends
to settle its current assets and liabilities on a net basis.
(xx) Foreign currencies
Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies are retranslated at the rate of exchange ruling at the balance sheet date. The income statements of
overseas subsidiary undertakings are translated at the average rate of exchange ruling throughout the financial year. The balance sheets
of overseas subsidiary undertakings are translated at the rate of exchange ruling at the balance sheet date. Exchange differences arising
from this policy and arising on the retranslation of the opening net assets are taken directly to reserves. All other exchange differences
are taken to the income statement.
(xxi) Financial instruments
Financial assets classified as "loans and receivables" under IAS 39 (being trade and other receivables and amounts due from undertakings
in which the Group has a participating interest) continue to be classified within the "amortised cost" category according to IFRS 9. The
Group has no derivative financial assets or hedging instruments. Non-derivative financial assets include trade and other receivables and
contract assets, as defined by IFRS 15. Neither of these two categories contain a significant financing element and, as such, expected
credit losses are measured under IFRS 9 using the simplified impairment approach. This approach requires expected lifetime losses
to be recognised upon the initial recognition of the asset. At initial recognition, the Group measures a non-derivative financial asset
at its fair value plus transaction costs that are directly attributable to the acquisition of the financial asset. The Group subsequently
measures trade and other receivables and contract receivables at amortised cost.
The carrying amounts of the Group’s non-financial assets, other than inventories and deferred tax assets, are reviewed at each balance
sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is
estimated. An impairment loss is recognised whenever the carrying amount of an asset or its CGU exceeds its estimated recoverable
amount. Impairment losses are recognised in the Income Statement. Impairment losses recognised in respect of CGUs are allocated
first to reduce the carrying amount of any goodwill allocated to CGUs and then to reduce the carrying amount of the other assets in
the unit on a pro-rata basis. A CGU is the smallest identifiable group of assets that generates cash inflows that are largely independent
of the cash inflows from other assets or group of assets.
74
Renew Holdings plc Annual Report and Accounts 2019 1 Accounting policies continued
(xxii) Share based payments
IFRS 2 "Share Based Payment" requires a fair value to be established for any equity settled share based payments. Fair value has
been independently measured using a Monte Carlo valuation model. The fair value determined at the grant date of the equity settled
share based payments is expensed on a straight-line basis over the vesting period based on the Directors’ estimate of shares that will
eventually vest.
(xxiii) Earnings per share
The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the
profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding
in the period. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average
number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares, which comprise share options granted
to employees.
(xxiv) Rental income
Rental income from property is recognised in the income statement on a straight-line basis over the term of the lease. Lease incentives
granted are recognised as an integral part of the total rental income, over the term of the lease.
(xxv) Finance income and expense
Finance income comprises interest income on funds invested that are recognised in income or expense. Interest income is recognised
as it accrues in income or expense, using the effective interest method. Finance expense comprises interest expense on borrowings,
unwinding of the discount on provisions that are recognised in income or expense. All borrowing costs are recognised in income
or expense using the effective interest method.
(xxvi) Exceptional items
Exceptional items are defined as items of income and expenditure which are material and unusual in nature and which are considered
to be of such significance that they require separate disclosure on the face of the Income Statement. Any future movement on items
previously classified as exceptional will also be classified as exceptional.
2 Segmental analysis
The Chief Operating Decision Maker ("CODM") is responsible for the overall resource allocation and performance assessment of the
Group. The Board approves major capital expenditure and assesses the performance of the Group and its progress against the strategic
plan through monitoring key performance indicators. The Board also determines key financing decisions such as raising equity, all loan
or bank borrowing arrangements and the granting of security over the Group’s assets. As such the Group considers that the Board
is the CODM.
Operating segments have been identified based on the internal reporting information provided to the CODM. From such information
Engineering Services and Specialist Building have been determined to represent operating segments. Following the identification
of the operating segments the Group has assessed the similarity of the characteristics of the operating segments. Given the different
performance targets and markets operated within each operating segment it is not appropriate to aggregate the operating segments
for reporting purposes and therefore both of the identified operating segments are disclosed as reportable segments. The information
received by the CODM shows results both pre and post exceptional items. The Group had one customer within the Engineering Services
sector which represented 49.4% (2018: 37.7%) of Group revenue. No other customer represented more than 10% of the Group’s revenue.
The segments are:
• Engineering Services, which comprises the Group’s engineering activities which are characterised by the use of the Group’s skilled
engineering workforce, supplemented by specialist subcontractors where appropriate, in a range of civil, mechanical and electrical
engineering applications;
• Specialist Building, which comprises the Group’s building activities which are characterised by the use of a supply chain of
subcontractors to carry out building works under the control of the Group as principal contractor; and
• Central activities, which include the sale of land, the leasing and sub-leasing of some UK properties and the provision of central services
to the operating subsidiaries.
On 31 October 2014, the Group entered into a contract to dispose of part of its Specialist Building segment, Allenbuild Limited. Following
a strategic review last year, The Board decided to close Lovell America Inc, a subsidiary that carried out land development in the USA,
which formed part of the Group’s central activities. The results of these businesses are shown as discontinued operations.
75
Renew Holdings plc Annual Report and Accounts 2019FINANCIAL STATEMENTS NOTES TO THE ACCOUNTS CONTINUED
2 Segmental analysis continued
(a) Business analysis
Revenue is analysed as follows:
Engineering Services
Specialist Building
Inter segment revenue
Segment revenue
Central activities
Group including
share of joint
venture
2019
£000
Less share
of joint
venture
2019
£000
Group revenue
from continuing
activities
2019
£000
Group revenue
from continuing
activities
2018
£000
564,478
(709)
563,769
466,482
36,125
(1,461)
599,142
1,489
600,631
—
—
36,125
(1,461)
74,208
(1,208)
(709)
598,433
539,482
—
1,489
1,134
(709)
599,922
540,616
Analysis of profit on ordinary activities before taxation from continuing activities
Before
exceptional
items and
amortisation
of intangible
assets
2019
£000
39,410
882
40,292
(1,963)
38,329
(579)
Exceptional
items and
amortisation
of intangible
assets
2019
£000
2019
£000
(6,788)
32,622
—
(6,788)
(4,000)
(10,788)
—
882
33,504
(5,963)
27,541
(579)
Before
exceptional
items and
amortisation
of intangible
assets
2018
£000
32,520
574
33,094
(1,990)
31,104
(770)
Exceptional
items and
amortisation
of intangible
assets
2018
£000
(15,626)
—
(15,626)
—
(15,626)
—
2018
£000
16,894
574
17,468
(1,990)
15,478
(770)
37,750
(10,788)
26,962
30,334
(15,626)
14,708
Engineering Services
Specialist Building
Segment operating profit
Central activities
Operating profit
Net financing costs
Profit on ordinary activities
before income tax
Balance sheet analysis of business segments
Engineering Services
Specialist Building
Central activities
Discontinued operations
Group eliminations
Group net assets
Other information
Engineering Services
Specialist Building
Central activities
Assets
£000
2019
Liabilities
£000
235,435
(168,024)
60,288
173,497
4,999
(177,011)
(54,815)
(142,840)
(16,282)
177,011
Net assets
£000
67,411
5,473
30,657
(11,283)
Assets
£000
2018
Liabilities
£000
226,049
(164,964)
75,303
190,122
8,530
(70,419)
(169,309)
(19,841)
195,136
—
(195,136)
297,208
(204,950)
92,258
304,868
(229,397)
Net assets
£000
62,074
4,884
19,824
(11,311)
—
75,471
2019
2018
Capital
additions
£000
4,480
27
2,594
7,101
Depreciation
£000
Amortisation
£000
4,256
89
1,216
5,561
6,528
—
—
6,528
Capital
additions
£000
2,121
39
1,183
3,343
Depreciation
£000
Amortisation
£000
3,377
110
869
4,356
4,157
—
—
4,157
(b) Geographical analysis
The whole of the Group’s revenue for both financial years is derived from continuing activities in the UK.
All of the Group’s non-current assets are deployed in the UK.
76
Renew Holdings plc Annual Report and Accounts 2019 3 Operating profit
Operating profit is arrived at after charging/(crediting)
Auditor’s remuneration – audit services
Auditor’s remuneration – non audit services
Depreciation of owned assets
Depreciation of assets held under finance leases
Operating lease rentals – plant and machinery
Operating lease rentals – motor vehicles
Operating lease rentals – other
Rental income
Profit on sale of property, plant and equipment
During the year, the following services were provided by the Group’s auditor:
Fees payable to the Company’s auditor for the audit of the financial statements
Fees payable to the Company’s auditor and its associates for other services:
Audit of the financial statements of the Company’s subsidiaries pursuant to legislation
Tax advisory services
Other non-audit services
Other assurance services
2019
£000
380
13
3,884
1,677
1,708
2,312
2,690
(326)
(621)
2019
£000
83
297
11
—
2
393
2018
£000
360
134
2,424
1,932
1,547
1,533
2,129
(247)
(469)
2018
£000
75
285
12
120
2
494
Details of the Group’s policy on the use of the auditor for non-audit services, the reason why the auditor was used and how the auditor’s
independence and objectivity was safeguarded, are set out in the Audit Committee report. No services were performed pursuant to
contingent fee arrangements.
Exceptional items and amortisation of intangible assets
Defined benefit pension scheme guaranteed minimum pension equalisation
Acquisition costs
Impairment of goodwill
Loss on disposal of subsidiary undertaking
Total losses arising from exceptional items
Amortisation of intangible assets (see Note 10)
Total exceptional items and amortisation charge before income tax
Taxation credit on exceptional items and amortisation
Total exceptional items and amortisation charge
2019
£000
4,260
—
—
—
4,260
6,528
10,788
(2,601)
8,187
2018
£000
—
1,539
6,893
3,037
11,469
4,157
15,626
(841)
14,785
On 26 October 2018, the High Court handed down a judgment involving the Lloyds Banking Group’s defined benefit pension schemes.
The judgment concluded the schemes should be amended to equalise pension benefits for men and women in relation to guaranteed
minimum pension benefits. The issues determined by the judgment arise in relation to many other defined benefit pension schemes.
The impact of additional liabilities amounted to £260,000 for the Amco Pension Scheme and £4,000,000 for the Lovell Pension Scheme.
The Board has separately identified the charge of £6,528,000 (2018: £4,157,000) for the amortisation of the fair value ascribed to certain
intangible assets, other than goodwill, arising from the acquisitions of Giffen Holdings Ltd and QTS Group Ltd. Further details are given
in Note 10.
77
Renew Holdings plc Annual Report and Accounts 2019FINANCIAL STATEMENTS
NOTES TO THE ACCOUNTS CONTINUED
4 Loss for the year from discontinued operations
Revenue
Expenses
Loss before income tax
Income tax charge
Loss for the year from discontinued operations
5 Finance income and costs
Finance income
Finance income of £50,000 (2018: £4,000) has been earned during the year on bank deposits.
Finance costs
On bank loans and overdrafts
Other interest payable
Other finance income – defined benefit pension schemes
Interest on scheme assets
Interest on scheme obligations
Net pension interest
Further information on the defined benefit pension schemes is set out in Note 27 to the accounts.
6 Employee numbers and remuneration
The average monthly number of employees, including Executive Directors, employed in continuing
activities during the year was:
At 30 September:
Production
Administrative
Cost of staff, including Executive Directors, during the year amounted to:
Wages and salaries
Social security costs
Other pension costs
Share based payments
Directors’ emoluments
Aggregate emoluments
Highest paid director: aggregate emoluments
78
2019
£000
—
—
—
—
—
2019
£000
(1,086)
(158)
(1,244)
5,230
(4,615)
615
2018
£000
11,412
(13,667)
(2,255)
(157)
(2,412)
2018
£000
(825)
(255)
(1,080)
4,782
(4,476)
306
2019
Number
2018
Number
2,775
2,779
1,893
882
2,775
2019
£000
137,811
14,467
10,115
(122)
2,675
2,759
1,826
849
2,675
2018
£000
125,030
13,200
6,522
18
162,271
144,770
2019
£000
2,082
797
2018
£000
1,801
663
Renew Holdings plc Annual Report and Accounts 2019
6 Employee numbers and remuneration continued
Directors’ emoluments continued
Executive Directors
P Scott
A Liebenberg
S Wyndham-Quin
J Samuel
Non-executive Directors
D M Forbes
D Brown
S Dasani
J Bishop
R J Harrison
Salary/fees
£000
Bonuses
£000
LTIP
£000
Benefits
£000
Total
emoluments
2019
£000
Total
emoluments
2018
£000
300
215
225
—
75
45
30
19
—
309
221
232
—
—
—
—
—
—
127
108
—
—
—
—
—
—
—
61
63
52
—
—
—
—
—
—
797
607
509
—
1,913
75
45
30
19
—
663
564
352
54
1,633
62
42
—
42
22
2,082
1,801
Directors’ share options
Pursuant to the long term incentive plan ("LTIP"), the Board has granted options to the Executive Directors as set out in the following table.
The LTIP options are exercisable at a nominal cost but are only exercisable to the extent that certain performance criteria are achieved
by the Company over a three year performance period.
Number of Ordinary Shares under option
LTIP Options
P Scott
A Liebenberg
S Wyndham-Quin
Exercisable
between
25 Nov 2019 &
24 Nov 2026
Exercisable
between
23 Nov 2020 &
22 Nov 2027
Exercisable
between
3 Dec 2021 &
2 Dec 2028
91,400
67,700
—
99,000
73,500
73,500
129,310
92,833
96,983
During the year £(122,000) (2018: £18,000) was (credited)/charged to the income statement with a corresponding charge/(credit) to the
share based payments reserve in accordance with IFRS 2.
7 Income tax expense
(a) Analysis of expense in year
Current tax:
UK corporation tax on profits of the year
Adjustments in respect of previous period
Total current tax
Deferred tax – defined benefit pension schemes
Deferred tax – other timing differences
Total deferred tax
Income tax expense in respect of continuing activities
2019
£000
2018
£000
(5,291)
208
(5,083)
(556)
934
378
(4,705)
(3,571)
(336)
(3,907)
(1,969)
353
(1,616)
(5,523)
79
Renew Holdings plc Annual Report and Accounts 2019FINANCIAL STATEMENTS
NOTES TO THE ACCOUNTS CONTINUED
7 Income tax expense continued
(b) Factors affecting income tax expense for the year
Profit before income tax
Profit multiplied by standard rate of corporation tax in the UK of 19% (2018: 19%)
Effects of:
Expenses not deductible for tax purposes
Timing differences not provided in deferred tax
Change in tax rate
Adjustments in respect of previous period
2019
£000
26,962
(5,123)
(114)
326
(2)
208
2018
£000
14,708
(2,795)
(808)
(670)
(914)
(336)
(4,705)
(5,523)
Timing differences not provided for in deferred tax arise principally from the utilisation of tax losses not previously recognised.
Deferred tax has been provided at a rate of 17% (2018: 17%) which will be the effective corporation tax rate from 1 April 2020. The Group
has available further unused UK tax losses of £31m (2018: £37m) to carry forward against future taxable profits. A substantial element of
these losses relates to activities which are not forecast to generate the level of profits needed to utilise these losses. A deferred tax asset
has been provided to the extent considered reasonable by the Directors, where recovery is expected to be recognisable within the
foreseeable future. The unrecognised deferred tax asset in respect of these losses amounts to £4.5m (2018: £5.3m).
(c) Deferred tax asset
Accelerated capital allowances
Future tax losses
(d) Deferred tax liabilities
Defined benefit pension schemes
Fair value adjustments
(e) Reconciliation of deferred tax asset
As at 1 October
Origination of timing differences
Reclassification of opening pension scheme asset as a liability
At 30 September
2019
£000
625
791
1,416
2019
£000
(8,944)
(1,654)
(10,598)
2019
£000
1,592
(176)
—
1,416
2018
£000
566
1,026
1,592
2018
£000
(7,149)
(2,763)
(9,912)
2018
£000
2,057
(336)
(129)
1,592
80
Renew Holdings plc Annual Report and Accounts 2019
7 Income tax expense continued
(f) Reconciliation of deferred tax liability
As at 1 October
Acquisition of subsidiary undertaking
Arising on fair value adjustments
Reclassification of opening pension scheme asset as a liability
Defined benefit pension schemes – income statement
Defined benefit pension schemes – SOCI
At 30 September
8 Dividends
Interim (related to the year ended 30 September 2019)
Final (related to the year ended 30 September 2018)
Total dividend paid
Interim (related to the year ended 30 September 2019)
Final (related to the year ended 30 September 2018)
Total dividend paid
2019
£000
(9,912)
—
1,110
—
(556)
(1,240)
(10,598)
2018
£000
(3,892)
(2,970)
707
129
(1,969)
(1,917)
(9,912)
2019
Pence/share
2018
Pence/share
3.83
6.67
10.50
£000
2,885
5,020
7,905
3.33
6.00
9.33
£000
2,506
3,756
6,262
Dividends are recorded only when authorised and are shown as a movement in equity rather than as a charge in the income statement.
The Directors are proposing that a final dividend of 7.67p per Ordinary Share be paid in respect of the year ended 30 September 2019.
This will be accounted for in the 2019/20 financial year.
9 Earnings per share
Earnings before exceptional items
and amortisation
Exceptional items and amortisation
Basic earnings per share
– continuing activities
Loss for the year from
discontinued operations
Basic earnings per share
Weighted average number of shares
Earnings
£000
30,444
(8,187)
2019
EPS
Pence
40.43
(10.88)
DEPS
Pence
40.13
(10.79)
Earnings
£000
23,970
(14,785)
2018
EPS
Pence
35.48
(21.88)
DEPS
Pence
35.28
(21.76)
22,257
29.55
29.34
9,185
13.60
13.52
—
22,257
—
29.55
75,308
—
29.34
75,856
(2,412)
6,773
(3.57)
10.03
(3.55)
9.97
67,558
67,938
The dilutive effect of share options is to increase the number of shares by 548,000 (2018: 380,000) and reduce basic earnings per share
by 0.21p (2018: 0.06p).
81
Renew Holdings plc Annual Report and Accounts 2019FINANCIAL STATEMENTS
NOTES TO THE ACCOUNTS CONTINUED
10 Intangible assets
Cost:
At 1 October 2017
Addition
Eliminated on disposal
At 1 October 2018 and 30 September 2019
Impairment losses/amortisation:
At 1 October 2017
Charge for year
Impairment
Eliminated on disposal
At 1 October 2018
Charge for year
At 30 September 2019
Carrying amount:
At 30 September 2019
At 30 September 2018
At 30 September 2017
The carrying amounts of goodwill classified as cash generating units ("CGUs") are as follows:
Britannia Construction Ltd
V.H.E. Construction PLC
P.P.S. Electrical Ltd
Seymour (C.E.C.) Holdings Ltd and its subsidiary
West Cumberland Engineering Ltd and its subsidiary
Amco Group Holdings Ltd and its subsidiaries
Lewis Civil Engineering Ltd and its subsidiaries
Clarke Telecom Ltd
Nuclear Decontamination Services Ltd
Giffen Holdings Ltd and its subsidiaries
QTS Group Ltd and its subsidiaries
Contractual
rights and
customer
relationships
£000
16,002
17,469
(2,495)
Goodwill
£000
64,590
54,193
(13,501)
105,282
30,976
6,608
—
6,893
(13,501)
—
—
—
105,282
105,282
57,982
2019
£000
1,253
1,796
227
4,017
207
18,168
6,556
11,143
199
7,523
13,323
4,157
—
(2,495)
14,985
6,528
21,513
9,463
15,991
2,679
2018
£000
1,253
1,796
227
4,017
207
18,168
6,556
11,143
199
7,523
54,193
105,282
54,193
105,282
82
Renew Holdings plc Annual Report and Accounts 2019
10 Intangible assets continued
QTS Group Ltd
Goodwill of £54,193,000 was acquired on the acquisition of QTS Group Ltd and has been reviewed for impairment one year after the
acquisition and then on an ongoing basis as required by IFRS 3. No such impairment was identified.
Amortisation charges in respect of intangible assets with a finite life are recorded within administrative expenses in the income statement.
The amortisation policy is disclosed in the accounting policies and approximates to a period of five years.
In order to test goodwill for impairment the Group performs value in use calculations by preparing cash flow forecasts for each
cash generating unit derived from the most recent financial budgets and strategic plans approved by management going forward
three years, and then extrapolates cash flows based on conservative estimated growth rates according to management’s view of longer
term prospects for each CGU. The CGUs are deemed to be the subsidiaries to which the goodwill relates. Management used growth rates
deemed to be appropriate to each CGU after reviewing the particular market conditions related to the sector in which each CGU operates.
A perpetual growth rate range of 2% (2018: 3%) per annum has been used. The range of discount rates used within each CGU is 9.6% – 13%
(2018: 7.5%). The Board considers the rates appropriate as, based on publicly available information, they represents the rates that a market
participant would require for these assets. The Board has chosen the discount rates having taken into account the cost of funds to the
Group and the risks associated with the markets in which the CGUs operate. Other than changes to the discount rates the key assumption
which would impact the carrying value of goodwill is the margin generated by each CGU. Whilst the sensitivities vary according to CGU,
for a material impairment to take place the discount rate would have to increase by 6.3% (2018: 14.6%) or the assumed operating margins
would have to decrease by 36% (2018: 50%) before a material impact on any single CGU.
11 Property, plant and equipment
Freehold land
and buildings
£000
Plant, vehicles
and equipment
£000
Cost:
At 1 October 2017
Additions
Disposals
Acquisition of subsidiary
At 1 October 2018
Additions
Disposals
At 30 September 2019
Depreciation:
At 1 October 2017
Charge for year
Disposals
At 1 October 2018
Charge for year
Disposals
At 30 September 2019
Net book value:
At 30 September 2019
At 30 September 2018
At 30 September 2017
2,338
60
—
2,971
5,369
688
—
6,057
188
95
—
283
201
—
484
5,573
5,086
2,150
12,378
3,283
(5,599)
5,451
15,513
6,413
(4,744)
17,182
1,031
4,261
(4,403)
889
5,360
(4,426)
1,823
15,359
14,624
11,347
The net book value of assets under finance leases at 30 September 2019 was £8,438,000 (2018: £6,995,000).
During the year £1,677,000 (2018: £1,932,000) of depreciation was charged against assets held under finance leases.
83
Total
£000
14,716
3,343
(5,599)
8,422
20,882
7,101
(4,744)
23,239
1,219
4,356
(4,403)
1,172
5,561
(4,426)
2,307
20,932
19,710
13,497
Renew Holdings plc Annual Report and Accounts 2019FINANCIAL STATEMENTS NOTES TO THE ACCOUNTS CONTINUED
12 Inventories
Land
Raw materials
£1.9m (2018: £1.7m) of inventories are pledged as security for liabilities.
13 Assets held for resale
Property
This office property has been actively marketed but disposal has been delayed by current market conditions.
The building is carried at net realisable value based on an annual independent third party valuation.
14 Investment in joint venture
a) Movement in year
At 1 October
Dividend received
Equity accounted share of net profits
At 30 September
b) Summarised financial information related to equity accounted joint venture
Current assets
Trade and other receivables
Cash and cash equivalents
Total assets
Current liabilities
Trade and other payables
Current tax liabilities
Total liabilities
Net assets reported by equity accounted joint venture (100%)
Revenue (100%)
Expenses (100%)
Net profit after tax (100%)
c) Results of equity accounted joint venture (33%)
Group share of profit before tax
Group share of tax
Group share of profit after tax
2019
£000
731
1,901
2,632
2019
£000
1,500
2019
£000
123
(80)
96
139
2019
£000
—
544
544
544
(106)
(22)
(128)
(128)
416
2,128
(1,841)
287
2019
£000
118
(22)
96
2018
£000
—
1,691
1,691
2018
£000
1,500
2018
£000
237
(114)
—
123
2018
£000
297
70
367
367
(101)
57
(44)
(44)
323
2,559
(2,559)
—
2018
£000
—
—
—
The Group, through a subsidiary undertaking, has the following interest in the joint venture:
Switchgear & Substation Alliance Ltd
The joint venture was acquired as part of the acquisition of Giffen Holdings Ltd.
Country of
incorporation
Principal
activity
Percentage of
shares held
UK
Engineering
33%
84
Renew Holdings plc Annual Report and Accounts 2019
15 Trade and other receivables
Trade receivables
Contract assets
Other receivables
Prepayments and accrued income
2019
£000
43,196
70,364
468
4,595
2018
£000
46,118
79,980
1,522
1,756
118,623
129,376
The Directors consider that the carrying amount of trade, contract assets and other receivables approximates to their fair value.
Prior to the adoption of IFRS 15, construction contract receivables arising under IAS 11 were included in Amounts due from construction
contract customers. Following the adoption of IFRS 15, £79,980,000 has been reclassified as contract assets being unbilled revenue.
The Group has a variety of credit terms depending on the customer. These terms generally range from 30 to 60 days.
Included in trade and other receivables are debtors with a carrying value of £4.0m (2018: £5.1m) which are past due at the reporting date
for which the Group has not provided as there has not been a significant change in credit quality and the Group believes that the amounts
are still considered recoverable since there is no objective evidence that these financial assets are impaired. The Group does not hold any
collateral over these balances. £1.1m (2018: £1.5m) of these balances relate to certified retentions.
The average age of these receivables is 331 days (2018: 345 days).
Ageing of past due but not impaired receivables:
30 – 180 days
180 – 365 days
Greater than 1 year
16 Construction contracts
Contracts in progress at the balance sheet date:
Amounts due from construction contract customers included in trade and other receivables
Amounts due from construction contract customers included in contract assets
Amounts due to construction contract customers included in contract liabilities
Contract costs incurred plus recognised profits less recognised losses to date
Less: progress billings
2019
£000
953
1,062
1,984
3,999
2018
£000
360
2,433
2,259
5,052
2019
£000
2018
£000
43,161
70,364
(4,355)
109,170
46,105
79,980
(6,971)
119,114
3,681,291
3,818,338
(3,572,121)
(3,699,224)
109,170
119,114
At 30 September 2019 retentions held by customers amounted to £10.0m (2018: £12.2m). Advances received from customers for contract
work amounted to £4.4m (2018: £7.0m).
Amounts due from construction contract customers which are past due at the reporting date amounted to £4.0m (2018: £5.1m).
This amount includes retention balances of £1.1m (2018: £1.5m). The Group does not hold any collateral over these balances or other trade
and other receivables.
Contract revenue recognised in the year amounted to £599.9m (2018: £541.5m).
85
Renew Holdings plc Annual Report and Accounts 2019FINANCIAL STATEMENTS
NOTES TO THE ACCOUNTS CONTINUED
17 Cash and cash equivalents
Cash at bank
Cash in hand
18 Trade and other payables
Contract liabilities
Trade payables
Other taxation and social security
Other payables
Accruals and deferred income
2019
£000
11,655
12
11,667
2019
£000
4,355
61,393
11,692
5,996
81,014
164,450
Following the adoption of IFRS 15, Amounts due to construction contract customers has been reclassified as Contract liabilities.
19 Borrowings
Bank loans repayable:
Within one year
Within two to five years
2019
£000
8,752
13,123
21,875
2018
£000
9,168
11
9,179
2018
£000
6,971
60,932
11,451
6,538
94,021
179,913
2018
£000
8,752
21,873
30,625
The QTS acquisition was partially funded by a £35m loan from HSBC, repayable by equal instalments over a 4 year period.
The bank loans are secured by a fixed and floating charge over the Group’s UK assets.
20 Obligations under finance leases
Amounts payable under finance leases:
Within one year
Within two to five years
Less: future finance charges
Present value of lease obligations
Less: amount due for settlement within twelve months
Amount due for settlement after twelve months
Minimum lease payments
Present value of minimum
lease payments
2019
£000
2,696
3,350
6,046
(286)
5,760
2018
£000
2,222
2,387
4,609
(256)
4,353
2019
£000
2,546
3,214
5,760
—
5,760
(2,546)
3,214
2018
£000
2,100
2,253
4,353
—
4,353
(2,100)
2,253
It is the Group’s policy to lease certain of its plant, vehicles and equipment under finance leases. The average outstanding lease term
is 3 years (2018: 3 years). For the year ended 30 September 2019, the average effective borrowing rate was 3% (2018: 3%). Interest rates
are fixed at the contract date. All leases are on a fixed repayment basis and no arrangement has been entered into for contingent
rental payments.
All lease obligations are denominated in sterling. The fair value of the Group’s lease obligations approximates to their carrying amount.
The Group’s obligations under finance leases are secured on the asset to which the lease relates.
86
Renew Holdings plc Annual Report and Accounts 2019
21 Provisions
At 1 October 2018
Provision transferred from accruals/(released) during the year
At 30 September 2019
Non-current liabilities
Current liabilities
At 30 September 2019
Property
obligations
£000
349
114
463
452
11
463
Other
provisions
£000
2,000
(2,000)
—
—
—
—
Total
£000
2,349
(1,886)
463
452
11
463
Property obligations represent commitments on leases for properties which the Group does not occupy and where the Group does not
expect to receive income sufficient to cover the full commitment. The provision represents outflows which are expected to occur to the
end of the lease commitment.
22 Other financial instruments
The Group’s principal financial instruments comprise bank loans, cash and short-term deposits and obligations under finance leases.
The main purpose of these financial instruments is to provide finance for the Group’s operations. The Group has various other financial
instruments such as trade receivables and trade payables that arise directly from its operations.
It is, and has been throughout the period under review, the Group’s policy that no trading in financial instruments shall be undertaken.
The disclosures below provide information about the contractual terms of the Group’s interest bearing deposits, loans and borrowings.
Interest rate profile of financial assets and liabilities
2019
Assets
Sterling
Dollar
Liabilities
Sterling
2018
Assets
Sterling
Dollar
Liabilities
Sterling
Financial assets/(liabilities)
Fixed rate
interest rate
%
Fixed
rate
£000
Floating
rate
£000
—
—
—
11,161
494
11,655
(5,760)
(5,760)
(21,875)
(21,875)
(27,635)
(27,635)
Fixed rate
interest rate
%
Financial assets/(liabilities)
Fixed
rate
£000
Floating
rate
£000
Total
£000
11,161
494
11,655
Total
£000
7,440
1,728
9,168
—
—
—
7,440
1,728
9,168
(4,353)
(4,353)
(30,625)
(30,625)
(34,978)
(34,978)
—
—
3.0
—
—
3.0
The interest bearing assets accrue interest at prevailing market rates. Generally the Group holds deposits which are repayable on demand.
The sterling interest bearing liabilities accrue interest at a rate which is linked to the lender’s base rate or LIBOR.
The maturity of the fixed rate financial liabilities is disclosed in Note 20. The fixed rate liabilities have a weighted average period of 3 years
(2018: 3 years).
87
Renew Holdings plc Annual Report and Accounts 2019FINANCIAL STATEMENTS NOTES TO THE ACCOUNTS CONTINUED
22 Other financial instruments continued
Fair value of financial assets and liabilities
There are no material differences between fair value and the book value of the Group’s financial assets and liabilities.
Financial risks
The Group has exposure to a number of financial risks through the conduct of its operations. Risk management is governed by
the Group’s operational policies, guidelines and authorisation procedures which are outlined in the Corporate governance statement.
The key financial risks resulting from financial instruments are credit, liquidity, currency and market risk.
a) Credit risk
Credit risk is the risk of loss if a customer fails to meet its financial obligations and results primarily from the Group’s trade and other
receivables. The degree to which the Group is exposed to this risk depends on the individual financial situation of each specific customer.
The Group assesses the credit worthiness of every customer prior to entering into any contract and requires appropriate evidence of
financial capability on a case by case basis. The Group reviews trade and other receivables for impairment on a regular basis and
information relating to the ageing of receivables is provided in Note 15. The Group does not use any form of invoice discounting
or debt factoring.
b) Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Board is responsible for
ensuring that the Group has sufficient liquidity to meet its financial liabilities as they fall due and does so by monitoring cashflow forecasts
and budgets. The Board has considered the cashflow forecasts for the next twelve months which show that the Group expects to operate
within its working capital facilities throughout the year.
The Board aims to maintain a strong capital base so as to ensure investor and market confidence and to sustain the future of the business.
The capital structure of the Group consists of equity attributable to equity holders of the Company as disclosed in Note 23 and reserves
as disclosed in Note 24. The Group arranges loans and short term overdraft facilities and hire purchase facilities as the Board deems
necessary. The Group does not have any derivative or non-derivative financial liabilities other than those disclosed in Notes 19 and 20
and the retirement benefit obligations disclosed in Note 27. An analysis of the maturity profile for finance lease liabilities is given in
Note 20.
c) Currency risk
The principal exposure of the Group to currency risk (i.e. exposure to gains or losses on foreign exchange which would be recognised in
the income statement) has been in respect of an inter-company loan amounting to £28,000 (2018: £Nil). The foreign exchange charge to
finance costs amounted to £Nil (2018: £247,000). Exchange rate movements on translation of Lovell America, Inc’s net assets are charged
to the cumulative translation adjustment within total equity. The exchange profit arising on the translation of Lovell America Inc’s net
assets was £28,000. The total equity statement would be impacted by £4,000 for each $0.01 movement in exchange rates.
All functional currencies of the Group operations are denominated in sterling, with the exception of the US operations whose functional
currency is the US dollar.
d) Market risk
Market risk is the risk that changes in market prices will affect the Group’s income or the carrying amount of its holding of financial
instruments. The principal risk relates to interest rates where the Group’s risk is limited to the rates applying to its interest bearing
short-term deposits and its bank loan. A reduction in market interest rates could lead to a reduction in the Group’s interest income
and a reduction in its interest costs. Consequently a 1% decrease in market interest rates would reduce annual finance costs by
£10,000 for every £1m of outstanding loan.
The Group’s hire purchase financial liabilities are all at fixed rates of interest.
88
Renew Holdings plc Annual Report and Accounts 2019 23 Share capital
Allotted, called up and fully paid:
75,329,224 (2018: 75,267,507) Ordinary Shares of 10p each
2019
£000
2018
£000
7,533
7,527
The holders of Ordinary Shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share
at meetings of the Company.
On 5 February 2019 61,717 Ordinary Shares were issued pursuant to the Group’s Long-Term Incentive Plan.
Share options
Renew Holdings plc Long Term Incentive Plan
At the Annual General Meeting held on 25 January 2012 the shareholders approved the long term incentive plan ("LTIP") which succeeded
the Renew Holdings plc 2004 Executive Share Option Scheme as the Directors believed that the LTIP was a more effective method
of aligning executive and shareholder interests.
As at 30 September 2019, there were 724,226 options outstanding under the scheme. On 3 December 2018, options to subscribe for
a further 319,126 Ordinary Shares were granted. During the year 125,700 options were exercised and no options lapsed.
The options are exercisable at a nominal cost or at the par value of an Ordinary Share three years after the date of grant subject to the
achievement of certain performance criteria. Details of the options are given in the Directors’ Remuneration Report. To the extent that
there is a gain arising in respect of the approved options noted above, the option holder will forfeit LTIP options to the same value.
Vesting of one half of the options is dependant on absolute growth in the Company’s Total Shareholder Return (‘TSR’), and the other
half is dependant on the Company’s TSR performance as compared to the TSR achieved by other companies in a comparator group
of companies selected by the Remuneration Committee. All TSR calculations are based on the average of the opening and closing share
price over a 30 day period prior to the commencement and the end of the performance period.
The absolute TSR growth target requires the Company’s TSR over the three year performance period to grow by more than 25%. For TSR
growth between 25% and 100%, the half of the option which is subject to the absolute TSR growth target vests on a straight-line basis
from nil vesting at 25% growth, to 100% vesting at 100% growth. There will be no vesting if TSR growth is 25% or less.
The comparator group TSR performance target measures the Company’s TSR over the 3 year performance period against the TSR of a
group of companies selected by the Remuneration Committee. If the Company’s TSR performance falls below the median performance
of the comparator group then the options lapse forthwith. If the Company is ranked within the top decile of the comparator group the
options shall vest in full. If the Company’s TSR performance is ranked between the median position and the top decile of the comparator
group then the options shall vest on a straight line basis from nil, at or below the median position, to 100% at the top decile.
89
Renew Holdings plc Annual Report and Accounts 2019FINANCIAL STATEMENTS
NOTES TO THE ACCOUNTS CONTINUED
24 Reserves
At 1 October 2017
Transfer from income statement for the year
Dividends paid
Recognition of share based payments
New shares issued
Exchange differences
Actuarial movement recognised in pension schemes
Movement on deferred tax relating to the pension schemes
Share
premium
account
£000
9,635
Capital
redemption
reserve
£000
3,896
Cumulative
translation
reserve
£000
1,305
Share based
payments
reserve
£000
680
42,049
18
6
At 1 October 2018
51,684
3,896
1,311
698
Transfer from income statement for the year
Dividends paid
Recognition of share based payments
New shares issued
Exchange differences
Actuarial movement recognised in pension schemes
Movement on deferred tax relating to the pension schemes
220
(122)
28
Retained
earnings
£000
6,284
6,773
(6,262)
5,477
(1,917)
10,355
22,257
(7,905)
3,543
(1,240)
At 30 September 2019
51,904
3,896
1,339
576
27,010
There is no available analysis of goodwill written off against reserves in respect of subsidiaries that were acquired prior to 1989 and
therefore, in accordance with the guidance of IAS 36, the Directors are not able to state this figure.
Capital redemption reserve
This reserve represents the combined impact of share buy-backs and cancellations in previous years.
Cumulative translation reserve
This reserve represents the foreign exchange movement on translating the opening net assets of Lovell America, Inc.
Share based payments reserve
Renew Holdings plc Long Term Incentive Plan
Fair value has been independently measured by PricewaterhouseCoopers LLP using a Monte Carlo model methodology. The fair value
determined at the grant date of the equity settled share based payments is expensed on a straight-line basis over the vesting period,
based on the Board’s estimate of shares that will eventually vest.
£110,000 (2018: £(18,000)) has been credited/(charged) to administrative expenses in accordance with IFRS 2. There is no impact on net
assets since an equivalent amount has been (charged)/credited to the share based payments reserve. 125,700 options were exercised
during the year. The value per option represents the fair value of the option less the consideration payable.
The expected volatility has been calculated based on weekly historical volatility of the Company’s share price over the three years prior
to the date of grant. The risk free rate of return has been based on the yields available on three year UK government bonds as at the date
of grant.
Options granted under the Renew Holdings plc Long Term Incentive Plan over the Company’s Ordinary Shares at 30 September 2019
were as follows:
Date of grant
24 November 2016
22 November 2017
3 December 2018
Total
Awards outstanding at 30 September 2019
– Directors and employees
Exercise price
Price at date of grant
Maximum option life
159,100
246,000
10.0p
394.0p
10 years
10.0p
428.75p
10 years
319,126
10.0p
350.00p
10 years
724,226
Assumed option life for purposes of valuation
2.85 years
2.86 years
2.83 years
Expected volatility
Risk free interest rate
Value per option
28%
0.29%
289.0p
25%
0.52%
262.0p
28%
0.75%
226.0p
90
Renew Holdings plc Annual Report and Accounts 2019 25 Capital and leasing commitments
Commitments under non-cancellable operating leases:
Under one year
Two to five years
Five or more years
Land and
buildings
£000
1,733
4,343
636
6,712
Other
£000
1,785
2,388
—
4,173
Total
2019
£000
3,518
6,731
636
10,885
Total
2018
£000
3,727
5,949
1,327
11,003
During the year £6,710,000 (2018: £5,209,000) was recognised as an expense in the income statement in respect of operating leases.
With regard to the operating leases held by the Group as lessor, the Group recognised £252,000 (2018: £247,000) of rental income
in the income statement for 2019, relating to sub-letting of surplus premises.
The future minimum sub-lease receipts expected to be received under non-cancellable operating leases which all relate to land and
buildings are as follows:
Receivables under non-cancellable operating leases:
Under one year
Two to five years
2019
£000
296
73
369
2018
£000
320
370
690
The Group had capital commitments at 30 September 2019 of £910,000 (2018: £1,011,000).
26 Contingent liabilities
Under the terms of the Group’s banking agreement, security over the Group’s UK assets has been granted to the Group’s bankers.
Liabilities have been recorded based on the Directors’ best estimate of uncertain contract positions, known legal claims, investigations
and legal actions in progress. The Group takes legal advice as to the likelihood of the success of claims and actions and no liability is
recorded where the Directors consider, based on that advice, that the action is unlikely to succeed, or that the Group cannot make a
sufficiently reliable estimate of the potential obligation. The Group also has contingent liabilities in respect of other issues that may
have occurred, but where no claim has been made and it is not possible to reliably estimate the potential obligation (see Note 1d).
27 Employee benefits: Retirement benefit obligations
Defined benefit pension schemes
The Group operates two defined benefit pension schemes, the Lovell Pension Scheme and the Amco Pension Scheme. Both schemes
have been closed to new members and to further benefits accrual for many years.
IAS 19 "Employee Benefits"
The Directors have adopted the accounting required by IAS 19. The Directors have discussed the assumptions used in determining
the actuarial valuations set out below with independent pensions advisors and have determined that they are appropriate. The Lovell
scheme’s valuation at 30 September 2019 shows a surplus of £24,073,000 based on the assumptions set out below. The Amco scheme
shows a surplus of £1,481,000 based on the assumptions used in its valuation which are similar to those used for the Lovell scheme
except where the Directors, in consultation with the scheme’s advisors, consider it appropriate to vary them due to the different
characteristics of the Amco scheme and its membership profile. The Directors have determined that it is appropriate to recognise the
surplus in both schemes as, having reviewed the rules of both schemes, they are of the view that the employer has an unconditional
right to those surpluses.
91
Renew Holdings plc Annual Report and Accounts 2019FINANCIAL STATEMENTS
NOTES TO THE ACCOUNTS CONTINUED
27 Employee benefits: Retirement benefit obligations continued
IAS 19 "Employee Benefits" continued
The following disclosures required by IAS 19 have been based on the most recent actuarial valuation as at 30 September 2019 carried out
by Lane Clark & Peacock LLP, Consulting Actuaries, in respect of the Lovell scheme and Capita Employee Benefits (Consulting) Limited in
respect of the Amco scheme using the following assumptions:
Lovell Pension Scheme
Rate of increase in salaries
LPI increases to pensions in payment
Discount rate
Inflation assumption (CPI)
Inflation assumption (RPI)
Increases in deferred pensions
Amco Pension Scheme
Rate of increase in salaries
LPI increases to pensions in payment
Discount rate
Inflation assumption (CPI)
Inflation assumption (RPI)
Increases in deferred pensions
As at
30 September
2019
As at
30 September
2018
As at
30 September
2017
4.0%
4.2%
1.9%
2.1%
3.2%
3.1%
2.1%
3.0%
1.8%
2.1%
3.1%
2.1%
4.0%
4.3%
2.9%
2.2%
3.3%
3.1%
2.3%
3.1%
2.9%
2.3%
3.3%
2.3%
4.0%
4.2%
2.6%
2.1%
3.2%
3.1%
3.2%
2.7%
2.6%
2.2%
3.2%
2.2%
The mortality tables adopted for the valuation of the Lovell scheme are the S2NA tables with future improvements in line with the
Continuing Mortality Investigations 2018 model with long term improvement rates of 1.25% per annum for both males and females. The
Directors believe that this analysis provides a more reliable estimate of the mortality characteristics of the scheme’s membership. Under
these assumptions, a 65 year old male pensioner is forecast to live for a further 22.3 years and the further life expectancy of a male aged
65 in 2039 is 23.7 years.
The mortality tables adopted for the valuation of the Amco scheme are the S3PA Mortality tables with future improvements in line with the
Continuing Mortality Investigations 2018 model with long term improvement rates of 0.5% per annum for both males and females. The
Directors believe that this analysis provides a more reliable estimate of the mortality characteristics of the scheme’s membership. Under
these assumptions, a 65 year old male pensioner is forecast to live for a further 22.1 years and the further life expectancy of a male aged
65 in 2039 is 23.5 years.
The assets in the Lovell scheme were:
Annuities
Diversified portfolio
Cash
Total
Value as at
30 September
2019
£000
89,317
106,775
666
196,758
Current
allocation
45%
54%
1%
100%
Value as at
30 September
2018
£000
85,850
81,202
2,117
169,169
Value as at
30 September
2017
£000
91,400
81,273
778
173,451
Current
allocation
51%
48%
1%
100%
Current
allocation
53%
47%
—
100%
During 2011 and 2016, the Trustees of the Lovell scheme, in consultation with the Directors, used scheme assets to purchase annuities
which match certain pension liabilities in a transaction known as a "buy in". This asset provides protection against falls in gilt yields and
risks in the performance of other asset classes.
The assets in the Amco scheme were:
Annuities
Diversified portfolio
Cash
Total
Value as at
30 September
2018
£000
6,255
7,739
418
14,412
Value as at
30 September
2017
£000
6,614
7,524
201
Current
allocation
43%
54%
3%
100%
14,340
Current
allocation
46%
53%
1%
100%
Value as at
30 September
2019
£000
6,685
8,329
213
15,227
Current
allocation
44%
55%
1%
100%
92
Renew Holdings plc Annual Report and Accounts 2019 27 Employee benefits: Retirement benefit obligations continued
IAS 19 "Employee Benefits" continued
During 2013, the Trustees of the Amco scheme, in consultation with the Directors, used scheme assets to purchase annuities which match
certain pension liabilities in a transaction known as a "buy in". This asset provides protection against falls in gilt yields and risks in the
performance of other asset classes.
Scheme Funding Levels and Actuarial Valuations
Lovell Pension Scheme
The scheme actuary carried out the triennial valuation of the Lovell Pension Scheme as at 31 March 2018. The scheme showed a deficit of
£0.3m compared to £12.1m when measured as at 31 March 2015. The Group has reached an agreement with the Trustees which commits
the Group to paying annual contributions of £4,260,000 per annum until 31 July 2023 by which point the Scheme’s buyout deficit is
expected to be cleared. The next Triennial valuation is due on 31 March 2021.
For accounting purposes under IAS19, actuaries use different assumptions than for the triennial valuation. The major difference relates
to assumptions concerning the future return on assets of the scheme which includes a number of return seeking assets invested with
BlackRock Asset Management. The key sensitivity for the valuation of the scheme under IAS19 is the selection of the discount rate which
is the major determinant in measuring scheme liabilities. A reduction of 0.1% in the discount rate would increase scheme liabilities by
£2.8m. Sensitivity analysis has been performed on the other key assumptions, and a reasonably possible change is not considered
likely to give rise to a materially different valuation to the surplus.
Amco Pension Scheme
The scheme actuary carried out the triennial valuation of the Amco Pension Scheme as at 31 December 2016. The scheme showed a
deficit of £3.4m compared to £0.9m when measured as at 31 December 2013. The subsidiary undertaking has agreed a revised recovery
plan with the Trustees which commits the subsidiary undertaking to paying annual contributions of £504,000 which is expected to result
in the elimination of this deficit by 31 October 2020. This recovery plan aims to eliminate the deficit under the Statutory Funding Objective
of the Pensions Act 2004. The subsidiary undertaking may be required to make further contributions to achieve a buy out of all pension
liabilities. The necessity and quantum of these contributions will be remeasured by the scheme actuary at the next triennial valuation
which will be measured as at 31 December 2019.
For accounting purposes under IAS19, actuaries use different assumptions than for the triennial valuation. The major difference relates
to assumptions concerning the future return on assets of the scheme which includes a number of return seeking assets invested with
BlackRock Asset Management. The key sensitivity for the valuation of the scheme under IAS19 is the selection of the discount rate which
is the major determinant in measuring scheme liabilities. A reduction of 0.1% in the discount rate would increase scheme liabilities by
£0.2m. Sensitivity analysis has been performed on the other key assumptions, and a reasonably possible change is not considered
likely to give rise to a materially different valuation to the surplus.
Recognition of Pension Schemes’ Surplus
Having taken legal advice with regard to the rights of the Company under the trust deeds and rules, the Directors do believe there is
a right to recognise a pension surplus on an accounting basis for both schemes. The Directors do not believe that the surplus on an
accounting basis will result in a surplus on an actuarial funding basis. However, the Directors are required to account for the plans’ surplus
as required by IFRS. As the Group has a legal right to benefit from the surplus, under IAS 19 and IFRIC 14, it must recognise the economic
benefit it considers to arise from either a reduction to its future contributions or a refund of the surplus. This is a technical adjustment
made on an accounting basis. Management do not believe there is an asset ceiling under IFRIC 14 which limits the economic benefit
available. There is no cash benefit from the surplus.
Scheme Governance
Both the Lovell Pension Scheme and the Amco Pension Scheme have boards of trustees chaired by an independent professional trustee,
Capital Cranfield Trustees Ltd. The Lovell Pension Scheme also has member-elected trustees who must be members of the scheme. Both
Renew Holdings plc for the Lovell Pension Scheme, and Amalgamated Construction Ltd for the Amco Pension Scheme have the right to
appoint employer-nominated trustees although neither has elected to do so other than to appoint Capital Cranfield Trustees Ltd.
The Lovell Pension Scheme trustees are advised by Lane, Clark & Peacock LLP on both actuarial and investment matters. The Lovell
Scheme investments are independently managed by BlackRock Asset Management who are set a target return against which the trustees
monitor their performance on a regular basis. Annuities purchased in both 2011 and 2016 are held by Legal & General and Just Retirement.
The Amco Pension Scheme trustees are advised by Capita Employee Benefits (Consulting) Ltd on both actuarial and investment matters.
The Amco Scheme investments are independently managed by BlackRock Asset Management who are set a target return against which
the trustees monitor their performance on a regular basis.
Diversified Portfolio
BlackRock Asset Management’s portfolio, described above as "diversified portfolio", can consist of a wide range of underlying,
return-seeking assets including but not restricted to equities, bonds, gilts, cash, commodities and other openly traded assets.
93
Renew Holdings plc Annual Report and Accounts 2019FINANCIAL STATEMENTS NOTES TO THE ACCOUNTS CONTINUED
27 Employee benefits: Retirement benefit obligations continued
IAS 19 "Employee Benefits" continued
The following amounts at 30 September were measured in accordance with the requirements of IAS 19.
Lovell Pension Scheme
Movements in scheme assets and obligations
Total fair value of scheme assets brought forward
Interest on scheme assets
Employer contributions
Benefits paid
Running costs
Actual return on scheme assets less interest on scheme assets
Total fair value of scheme assets carried forward
Present value of scheme obligations brought forward
Interest on scheme obligations
Current and past service costs
Past service cost and settlements
Benefits paid
Actuarial movement due to experience on benefit obligation
Actuarial movement due to changes in financial assumptions
Actuarial movement due to changes in demographic assumptions
2019
£000
2018
£000
169,169
4,832
4,310
(9,449)
(1)
27,897
196,758
149,834
4,262
45
4,000
(9,449)
(310)
25,776
(1,473)
173,451
4,412
4,323
(11,879)
—
(1,138)
169,169
163,759
4,104
64
—
(11,879)
2,404
(7,437)
(1,181)
Total fair value of scheme obligations carried forward
172,685
149,834
Surplus in the scheme
Deferred tax
Net surplus
Amount charged to operating profit:
Current and past service costs
Running costs
Amount credited to other financial income:
Interest on scheme assets
Interest on scheme obligations
Net pension interest
Amounts recognised in the statement of comprehensive income:
Actual return on scheme assets less interest on scheme assets
Actuarial movement due to changes in assumptions on scheme obligations
Actuarial movement
Movement in the net scheme surplus during the year:
Net scheme surplus brought forward
Current and past service costs
Running costs
Employer contributions
Past service cost and settlements
Net pension interest
Actuarial movement
Net scheme surplus carried forward
24,073
(8,426)
15,647
(45)
(1)
(46)
4,832
(4,262)
570
27,897
(23,993)
3,904
19,335
(6,767)
12,568
(64)
—
(64)
4,412
(4,104)
308
(1,138)
6,214
5,076
19,335
9,692
(45)
(1)
4,310
(4,000)
570
3,904
24,073
(64)
—
4,323
—
308
5,076
19,335
On 26 October 2018, the High Court handed down a judgment involving the Lloyds Banking Group’s defined benefit pension schemes.
The judgment concluded the schemes should be amended to equalise pension benefits for men and women in relation to guaranteed
minimum pension benefits. The issues determined by the judgment arise in relation to many other defined benefit pension schemes.
The impact of additional liabilities amounted to £4,000,000 for the Lovell Pension Scheme which is disclosed within past service
costs and settlements.
94
Renew Holdings plc Annual Report and Accounts 2019 27 Employee benefits: Retirement benefit obligations continued
IAS 19 "Employee Benefits" continued
The following amounts at 30 September were measured in accordance with the requirements of IAS 19.
Amco Pension Scheme
Movements in scheme assets and obligations
Total fair value of scheme assets brought forward
Expected return on scheme assets
Employer contributions
Benefits paid
Actual return on scheme assets less interest on scheme assets
Total fair value of scheme assets carried forward
Present value of scheme obligations brought forward
Interest on scheme obligations
Past service cost and settlements
Benefits paid
Actuarial movement due to changes in financial and demographic assumptions
Total fair value of scheme obligations carried forward
Surplus in the scheme
Deferred tax
Net surplus
Amount credited/(debited) to other financial income:
Interest on scheme assets
Interest on scheme obligations
Net pension interest
Amounts recognised in the statement of comprehensive income:
Actual return on scheme assets less interest on scheme assets
Actuarial movement due to changes in assumptions on scheme obligations
Actuarial movement
Movement in the net scheme surplus during the year:
Net scheme surplus/(deficit) brought forward
Employer contributions
Past service cost and settlements
Net pension interest
Actuarial movement
Net scheme surplus carried forward
2019
£000
2018
£000
14,412
14,339
398
969
(1,916)
1,364
15,227
13,324
353
260
(1,916)
1,725
13,746
1,481
(518)
963
398
(353)
45
1,364
(1,725)
(361)
1,088
969
(260)
45
(361)
1,481
370
1,449
(1,656)
(90)
14,412
15,099
372
—
(1,656)
(491)
13,324
1,088
(381)
707
370
(372)
(2)
(90)
491
401
(760)
1,449
—
(2)
401
1,088
On 26 October 2018, the High Court handed down a judgment involving the Lloyds Banking Group’s defined benefit pension schemes.
The judgment concluded the schemes should be amended to equalise pension benefits for men and women in relation to guaranteed
minimum pension benefits. The issues determined by the judgment arise in relation to many other defined benefit pension schemes.
The impact of additional liabilities amounted to £260,000 for the Amco Pension Scheme which is disclosed within past service cost
and settlements.
95
Renew Holdings plc Annual Report and Accounts 2019FINANCIAL STATEMENTS NOTES TO THE ACCOUNTS CONTINUED
27 Employee benefits: Retirement benefit obligations continued
IAS 19 "Employee Benefits" continued
Lovell Pension Scheme
Actual return on scheme assets less interest
on scheme assets
As a percentage of the assets at the end of the year
Total amount recognised in the statement
of comprehensive income
As a percentage of the obligations at the end of the year
2019
£000
27,897
14.2%
3,904
2.3%
2018
£000
(1,138)
(0.7)%
5,076
3.4%
2017
£000
(14,565)
(8.4)%
(2,506)
(1.5)%
2016
£000
22,781
12.0%
(12,348)
(6.8)%
2015
£000
18,145
11.0%
10,664
7.1%
The Lovell scheme has been in operation for many years and, after taking advice from the Group’s pensions advisors, the Directors have
determined that it is not possible to allocate the assets and liabilities of the scheme between the various Group companies. The surplus
for the scheme is accounted for in the individual financial statements of Renew Holdings plc which is legally the sponsoring employer
for the plan.
Amco Pension Scheme
Actual return on scheme assets less interest
on scheme assets
As a percentage of the assets at the end of the year
Total amount recognised in the statement
of comprehensive income
As a percentage of the obligations at the end of the year
2019
£000
1,364
9.0%
(361)
(2.6)%
2018
£000
(90)
(0.6)%
401
3.0%
2017
£000
(680)
(4.7)%
417
2.8%
2016
£000
930
6.1%
2015
£000
(297)
(2.1)%
(1,881)
(10.8)%
(1,785)
(12.0)%
The Amco scheme’s sole employer is the Company’s wholly owned subsidiary, Amalgamated Construction Ltd.
Defined contribution pension schemes
The Group operates a number of defined contribution pension schemes and individual stakeholder pension plans for its employees. The
Group made contributions of £10,115,000 (2018: £6,432,000) into these plans during the year. There are also £435,000 (2018: £376,000)
of accruals relating to these plans.
28 Related parties
The Group has a related party relationship with its key management personnel who were Directors of the Company during the year:
P Scott, A Liebenberg, S Wyndham-Quin, DM Forbes, J Bishop, DA Brown and S Dasani, whose total compensation amounted to
£2,082,000 (2018: £1,801,000) all of which was represented by short-term employment benefits, including £332,000 (2018: £268,000)
relating to share option charges, in accordance with IFRS 2. An analysis of this compensation is given in Note 6.
There were no other transactions with key management personnel in the year.
29 Alternative performance measures
Renew uses a variety of alternative performance measures (‘APM’) which, although financial measures of either historical or future
performance, financial position or cash flows, are not defined or specified by IFRSs. The Directors use a combination of APMs and
IFRS measures when reviewing the performance, position and cash of the Group.
The Directors believe that APMs provide a better understanding of the underlying trading performance of the business because they
remove the impact of non-trading related accounting adjustments. Furthermore, they believe that the Group’s shareholders use these
APMs when assessing the performance of the Group and it is therefore appropriate to give them prominence in the Annual Report
and Accounts.
The APMs used by the Group are defined below:
Net Cash/(Debt) – This is the cash and cash equivalents less bank debt. This measure is visible in Note 31. The Directors consider this
to be a good indicator of the financing position of the Group.
96
Renew Holdings plc Annual Report and Accounts 2019 29 Alternative performance measures continued
Adjusted operating profit (£38.329m) and adjusted profit before tax (£37.750m) – Both of these measures are reconciled to total
operating profit and total profit before tax on the face of the consolidated income statement. The Directors consider that the removal
of exceptional items and amortisation provides a better understanding of the underlying performance of the Group. The equivalent
GAAP measures are operating profit (£27.541m) and profit before tax (£26.962m).
Adjusted operating margin (6.4%) – This is calculated by dividing operating profit before exceptional items and amortisation of
intangible assets (£38.329m) by group revenue including share of joint venture (£600.631m) both of which are visible on the face of the
income statement. The Directors believe that removing exceptional items and amortisation from the operating profit margin calculation
provides a better understanding of the underlying performance of the Group. The equivalent GAAP measure is operating profit margin
(4.6%) which is calculated by dividing operating profit (£27.541m) from group revenue including share of joint venture (£600.631m).
Adjusted earnings per share (40.43p) – This measure is reconciled to the earnings per share calculation based on earnings before
exceptional items and amortisation in Note 9. The Directors believe that removing exceptional items and amortisation from the EPS
calculation provides a better understanding of the underlying performance of the Group.
Group Revenue (£600.631m) – This measure is visible on the face of the income statement as Revenue: Group including share
of joint venture.
Group order book, Engineering Services order book and Specialist Building order book – This measure is calculated by the Directors
taking a conservative view on secured orders and visible workload through long-term frameworks.
Engineering Services revenue (£564.478m) – This measure is visible in Note 2 part (a) business analysis as Engineering Services
Revenue including share of joint venture. The Directors consider this to be a good indicator of the underlying performance of the Group’s
Engineering Services business.
Adjusted Engineering Services operating profit (£39.410m) – This measure is visible in Note 2 part (a) business analysis as Engineering
Services operating profit before exceptional items and amortisation of intangible assets. The Directors consider this to be a good
indicator of the underlying performance of the Group’s Engineering Services business. The GAAP equivalent measure is engineering
services operating profit (£32.622m) which is also visible in Note 2 part (a).
Adjusted Engineering Services operating profit margin (7.0%) – This is calculated in the same way as adjusted operating profit margin
but based on the adjusted Engineering Services operating profit (£39.410m) and the Engineering Services revenue (£564.478m) figures
as set out above. The equivalent GAAP measure is engineering services operating profit margin (5.8%) which is calculated by dividing
engineering services operating profit (£32.622m) from engineering services revenue including share of joint venture (£564.478m).
Organic growth (8.4%) – This has been calculated by taking the Engineering Services revenue growth year on year excluding the impact
of any acquisitions.
30 Reconciliation of net cash flow to net debt
Increase in net cash and cash equivalents
Decrease/(increase) in bank borrowings
Increase/(decrease) in net cash from cash flows
Net (debt)/cash at 1 October
Net debt at 30 September
31 Analysis of net debt
Cash and cash equivalents
Bank loans
Net debt
2019
£000
2,488
8,750
11,238
(21,446)
(10,208)
2018
£000
2,212
(27,525)
(25,313)
3,867
(21,446)
At 1 October
2018
£000
9,179
(30,625)
(21,446)
Cash
flows
£000
At 30 September
2019
£000
2,488
8,750
11,238
11,667
(21,875)
(10,208)
97
Renew Holdings plc Annual Report and Accounts 2019FINANCIAL STATEMENTS NOTES TO THE ACCOUNTS CONTINUED
32 Acquisition of subsidiary undertaking – QTS Group Ltd
On 10 May 2018, the Company acquired the whole of the issued share capital of QTS Group Ltd ("QTS") for a cash consideration of £80m.
The acquisition was funded by a placement of 12,676,056 new ordinary shares raising £45m, and a four year term loan of £35m provided
by HSBC Bank plc.
The value of the assets and liabilities of QTS at the date of acquisition were:
Book value
£000
Adjustments
£000
Fair value
£000
Non-current assets
Intangible assets – goodwill
– other
Property, plant and equipment
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total assets
Non-current liabilities
Deferred tax liabilities
Current liabilities
Trade and other payables
Obligations under finance leases
Current tax liability
Total liabilities
Net assets
—
—
9,331
9,331
879
11,553
4,126
16,558
25,889
1
1
(13,571)
(140)
(118)
(13,829)
(13,828)
12,061
54,193
17,469
(907)
70,755
—
—
—
—
70,755
(2,816)
(2,816)
—
—
—
—
(2,816)
67,939
54,193
17,469
8,424
80,086
879
11,553
4,126
16,558
96,644
(2,815)
(2,815)
(13,571)
(140)
(118)
(13,829)
(16,644)
80,000
Goodwill of £54,193,000 arises on acquisition and has been reviewed for impairment one year after the acquisition as required by IFRS 3.
The goodwill is attributable to the expertise and workforce of the acquired business. Other intangible assets provisionally valued at
£17,469,000, which represent customer relationships and contractual rights, were also acquired and will be amortised over their useful
economic lives in accordance with IFRS 3. Deferred tax has been provided on this amount. Amortisation of this intangible asset
commenced from June 2018.
Fair value adjustments arising from the acquisition
In accordance with IFRS 3, the Board will review the fair value of assets and liabilities using information available up to 12 months after
the date of acquisition. Fair value has been calculated using Level 3 inputs as defined by IFRS 13.
Property, plant and equipment
The Directors reviewed the depreciation policy for property, plant and equipment which is now aligned with the Group policy. Prior to the
acquisition, the directors of QTS used a reducing balance depreciation policy for motor vehicles and vans. Leasehold improvements were
not written off over the duration of the lease. The consequence of this was that, in the opinion of the Directors, the fair value of property,
plant and equipment was overstated at the point of acquisition. As a result, the Directors carried out a valuation of property, plant and
equipment in accordance with IAS 36. The impact of this was to reduce fixed assets, increase deferred tax assets and goodwill.
Deferred tax liabilities
A deferred tax asset has been recognised in relation to the adjustment to property, plant and equipment noted above, whilst a deferred
tax liability has been recognised in relation to the amortisation of other intangible assets.
Goodwill impairment review
The Board has reviewed the goodwill arising on acquisition for impairment as required by IFRS 3. No such impairment was identified.
98
Renew Holdings plc Annual Report and Accounts 2019 COMPANY BALANCE SHEET
at 30 September
Fixed assets
Tangible assets
Investments
Current assets
Assets held for resale
Debtors due after one year
Debtors due within one year
Cash at bank
Creditors: amounts falling due in less than one year
Net current liabilities
Total assets less current liabilities
Creditors: amounts falling due after more than one year
Net assets
Capital and reserves
Share capital
Share premium account
Capital redemption reserve
Share based payments reserve
Profit and loss account
Equity shareholders’ funds
Approved by the Board and signed on its behalf by:
D M Forbes
Chairman
26 November 2019
Note
2019
£000
2018
£000
E
F
G
H
H
I
J
L
781
164,325
165,106
1,500
24,074
62,452
48
88,074
(121,355)
(33,281)
131,825
(21,549)
110,276
7,533
51,904
3,896
576
46,367
110,276
679
167,325
168,004
1,500
19,335
65,503
48
86,386
(125,729)
(39,343)
128,661
(28,641)
100,020
7,527
51,684
3,896
698
36,215
100,020
99
Renew Holdings plc Annual Report and Accounts 2019FINANCIAL STATEMENTS COMPANY STATEMENT OF COMPREHENSIVE INCOME
for the year ended 30 September
Profit/(loss) for the year attributable to equity holders of the parent company
Items that will not be reclassified to profit or loss:
Movement in actuarial valuation of the defined benefit pension scheme
Movement on deferred tax relating to the pension scheme
Total items that will not be reclassified to profit or loss
Items that are or may be reclassified subsequently to profit or loss:
Total items that are or may be reclassified subsequently to profit or loss
2019
£000
15,519
3,904
(1,366)
2,538
—
—
2018
£000
(11,714)
5,076
(1,777)
3,299
—
—
Total comprehensive income for the year attributable to equity holders of the parent company
18,056
(8,415)
COMPANY STATEMENT OF CHANGES IN EQUITY
for the year ended 30 September
Share
capital
£000
6,259
Share
premium
account
£000
9,635
Capital
redemption
reserve
£000
Share based
payments
reserve
£000
3,896
680
1,268
42,049
18
At 1 October 2017
Transfer from profit and loss account
for the year
Dividends paid
New shares issued
Recognition of share based payments
Movement in actuarial valuation of
the defined benefit pension scheme
Movement on deferred tax relating
to the pension scheme
At 30 September 2018
7,527
51,684
3,896
698
Transfer from profit and loss account
for the year
Dividends paid
New shares issued
Recognition of share based payments
Movement in actuarial valuation of
the defined benefit pension scheme
Movement on deferred tax relating
to the pension scheme
6
220
(122)
Retained
earnings
£000
50,892
(11,714)
(6,262)
Total equity
shareholders’
funds
£000
71,362
(11,714)
(6,262)
43,317
18
5,076
5,076
(1,777)
36,215
15,519
(7,905)
(1,777)
100,020
15,519
(7,905)
226
(122)
3,904
3,904
(1,366)
(1,366)
At 30 September 2019
7,533
51,904
3,896
576
46,367
110,276
100
Renew Holdings plc Annual Report and Accounts 2019
NOTES TO THE COMPANY ACCOUNTS
A Accounting policies
(i) Basis of accounting
Renew Holdings plc (the "Company") is a company limited by shares and domiciled in the UK.
The accounts have been prepared on the going concern basis and in accordance with FRS 102, under the historical cost convention.
In determining that the going concern basis is appropriate the Directors have reviewed budgets, including cash flow forecasts, and
concluded that the Company has adequate cash resources to continue trading for the foreseeable future.
The presentation currency of these financial statements is sterling. All amounts in the financial statements have been rounded to the
nearest £1,000.
The Company’s results are included in the consolidated financial statements of the Group. The consolidated financial statements of
Renew Holdings plc are prepared in accordance with International Financial Reporting Standards as adopted by the EU. In these financial
statements, the Company is considered to be a qualifying entity (for the purposes of this FRS) and has applied the exemptions available
under FRS 102 in respect of the following disclosure:
• Cash Flow Statement and related notes.
As the consolidated financial statements of Renew Holdings plc include the equivalent disclosures, the Company has also taken the
exemptions under FRS 102 available in respect of the following disclosures:
• the disclosure required by FRS 102.11 Basic Financial Instruments and FRS 102.12 Other Financial Instrument Issues in respect of financial
instruments not falling within the fair value accounting rules of Paragraph 36(4) of Schedule 1.
A summary of the more important Company accounting policies, which have been applied consistently, is set out below:
(ii) Investments in subsidiaries
Investments in subsidiaries are recorded at cost less provision for impairment.
(iii) Tangible fixed assets
Tangible fixed assets are stated at cost less accumulated depreciation. Where parts of an item of tangible fixed assets have different
useful lives, they are accounted for as separate items of tangible fixed assets, for example land is treated separately from buildings.
The Company assesses at each reporting date whether tangible fixed assets are impaired.
Provision is made at rates calculated to write off the cost of each asset, less estimated residual value, evenly over its expected useful
life as follows:
Freehold land
– no depreciation charge
Freehold buildings
– fifty years
Plant, vehicles and equipment – three to ten years
(iv) Leasing commitments
Rentals under operating leases are charged to the profit and loss account on a straight-line basis over the term of the lease.
(v) Taxation
Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the profit and loss account except to
the extent that it relates to items recognised directly in equity or other comprehensive income. Current tax is the expected tax payable
or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the balance sheet date,
and any adjustment to tax payable in respect of previous years.
Deferred tax is provided, except as noted below, on timing differences that have arisen but not reversed by the balance sheet date, where
the timing differences result in an obligation to pay more tax, or a right to pay less tax, in the future. Timing differences arise because of
differences between the treatment of certain items for accounting and taxation purposes. In accordance with FRS 102 ‘The Financial
Reporting Standard’, deferred tax is not provided on permanent timing differences. Unrelieved tax losses and other deferred tax assets
are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future
taxable profits. Deferred tax is measured at the tax rates that are expected to apply in the periods when the timing differences are
expected to reverse, based on tax rates and law enacted or substantively enacted at the balance sheet date.
101
Renew Holdings plc Annual Report and Accounts 2019FINANCIAL STATEMENTS NOTES TO THE COMPANY ACCOUNTS CONTINUED
A Accounting policies continued
(vi) Basic financial instruments – trade and other debtors/creditors
Trade and other debtors are recognised initially at transaction price less attributable transaction costs. Trade and other creditors
are recognised initially at transaction price plus attributable transaction costs. Subsequent to initial recognition they are measured
at amortised cost using the effective interest method, less any impairment losses in the case of trade debtors.
(vii) Related party transactions
Interest is neither recognised nor charged on balances outstanding with fellow subsidiaries as they are repayable on demand.
Where the Company enters into financial guarantee contracts to guarantee the indebtedness of other companies within its Group, the
Company treats the guarantee contract as a contingent liability until such time as it becomes probable that the Company will be required
to make a payment under the guarantee.
(viii) Foreign currencies
Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies are retranslated at the rate of exchange ruling at the balance sheet date.
Exchange differences are taken to the profit and loss account.
(ix) Employee benefits
Defined benefit pension scheme
The Company’s net asset/(liability) in respect of the defined benefit scheme is calculated by estimating the amount of future benefit that
employees have earned in return for their service in prior periods; that benefit is discounted to determine its present value. The fair value
of any scheme assets is deducted. The Company determines the net interest income/(expense) on the net defined benefit asset/(liability)
for the period by applying the discount rate as determined at the beginning of the annual period to the net defined benefit asset/(liability)
taking account of changes arising as a result of contributions and benefit payments. The discount rate is the yield at the balance sheet
date on AA credit rated bonds denominated in the currency of, and having maturity dates approximating to the terms of, the Company’s
obligations. A valuation is performed annually by a qualified actuary using the projected unit credit method. The Company recognises
net defined benefit scheme assets to the extent that it is able to recover the surplus. Changes in the net defined benefit asset/(liability)
arising from employee service rendered during the period, net interest on net defined benefit asset/(liability), and the cost of scheme
introductions, benefit changes, curtailments and settlements during the period are recognised in profit or loss. Remeasurement of
the net defined benefit asset/(liability) is recognised in other comprehensive income in the period in which it occurs.
Defined contribution pension schemes
A defined contribution scheme is a post-employment benefit scheme under which the Company pays fixed contributions into a separate
entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution
pension schemes are recognised in expense in the profit and loss account in the periods during which services are rendered
by employees.
Share based payments
FRS 102 “The Financial Reporting Standard” requires a fair value to be established for any equity settled share based payments. Fair value
has been independently measured using a Monte Carlo valuation model. The fair value determined at the grant date of the equity settled
share based payments is expensed on a straight-line basis over the vesting period based on the Directors’ estimate of shares that will
eventually vest.
(x) Dividends
Dividends unpaid at the balance sheet date are only recognised as a liability at that date to the extent that they are appropriately
authorised and are no longer at the discretion of the Company. Unpaid dividends that do not meet these criteria are disclosed
in the notes to the financial statements.
B Profit and loss account
As permitted by Section 408 of the Companies Act 2006, the Company has not presented its own profit and loss account. The profit after
taxation for the financial year dealt with in the accounts of the Company was £15,519,000 (2018: loss £11,714,000).
The audit fee charged within the profit and loss account amounted to £83,000 (2018: £75,000).
102
Renew Holdings plc Annual Report and Accounts 2019 C Employee numbers and remuneration
The average monthly number of employees, all of whom were administrative staff including Executive
Directors, employed in continuing activities during the year was:
At 30 September:
Cost of staff, including Executive Directors, during the year amounted to:
Wages and salaries
Social security costs
Other pension costs
Share based payments
Directors’ emoluments
Aggregate emoluments
Highest paid director: aggregate emoluments
2019
Number
2018
Number
27
27
£000
3,133
341
188
(122)
3,540
£000
2,082
797
28
26
£000
2,745
338
168
18
3,269
£000
1,801
663
Details of individual Directors’ emoluments and pension contributions can be found in Note 6 to the consolidated accounts.
D Dividends
Interim (related to the year ended 30 September 2019)
Final (related to the year ended 30 September 2018)
Total dividend paid
Interim (related to the year ended 30 September 2019)
Final (related to the year ended 30 September 2018)
Total dividend paid
2019
Pence/share
2018
Pence/share
3.83
6.67
10.50
£000
2,885
5,020
7,905
3.33
6.00
9.33
£000
2,506
3,756
6,262
Dividends are recorded only when authorised and are shown as a movement in equity rather than as a charge in the income statement.
The Directors are proposing that a final dividend of 7.67p per Ordinary Share be paid in respect of the year ended 30 September 2019.
This will be accounted for in the 2019/20 financial year.
E Tangible fixed assets
Cost:
At 1 October 2018
Additions
At 30 September 2019
Depreciation:
At 1 October 2018
Charge for year
At 30 September 2019
Net book value:
At 30 September 2019
At 30 September 2018
Freehold land
and buildings
£000
Plant, vehicles
& equipment
£000
701
—
701
96
10
106
595
605
149
158
307
75
46
121
186
74
Total
£000
850
158
1,008
171
56
227
781
679
103
Renew Holdings plc Annual Report and Accounts 2019FINANCIAL STATEMENTS NOTES TO THE COMPANY ACCOUNTS CONTINUED
F Investments
Shares at cost:
At 1 October 2018 and 30 September 2019
Provisions:
At 1 October 2018 and 30 September 2019
Provided during the year
At 30 September 2019
Net book value:
At 30 September 2019
At 30 September 2018
Details of subsidiary undertakings are included in Note S.
G Assets held for resale
Property
Subsidiary
undertakings
£000
297,825
130,500
3,000
133,500
164,325
167,325
2019
£000
1,500
2018
£000
1,500
This office property has been actively marketed but disposal has been delayed by current market conditions. The building is carried at net
realisable value based on an annual independent third party valuation.
H Debtors due after one year
Pension scheme asset (see Note R)
Due within one year:
Trade debtors
Due from subsidiary undertakings
Corporation tax
Other debtors
Prepayments and accrued income
I Creditors: amounts falling due within one year
Bank loans and overdraft (secured)
Trade creditors
Other taxation and social security
Due to subsidiary undertakings
Other creditors
Accruals and deferred income
104
2019
£000
24,074
2018
£000
19,335
35
13
56,374
63,086
3,123
49
2,871
62,452
86,526
2019
£000
88,597
2,678
538
20,937
157
8,448
121,355
2,128
21
255
65,503
84,838
2018
£000
87,971
565
635
29,515
186
6,857
125,729
Renew Holdings plc Annual Report and Accounts 2019 J Creditors falling due after more than one year
Bank loans
Deferred tax
Bank loans and overdraft repayable:
Within one year
Within two to five years
2019
£000
13,123
8,426
21,549
88,597
13,123
2018
£000
21,873
6,768
28,641
87,971
21,873
101,720
109,844
Under the terms of the Renew Holdings plc’s group banking agreement, security has been granted over the Company’s assets.
Deferred tax liability:
Defined benefit pension scheme
Accelerated capital allowances
£000
£000
8,426
—
8,426
6,767
1
6,768
K Derivatives and other financial instruments
Currency exposures
The principal exposure of the Company to currency risk (i.e. exposure to gains or losses on foreign exchange which would be recognised
in the profit and loss account) was in respect of an inter-company loan. At 30 September 2019, this loan was £28,000 (2018: £Nil).
Fair value of financial assets and liabilities
There are no material differences between fair value and the book value of the Company’s financial assets and liabilities.
L Share capital
Allotted, called up and fully paid:
75,329,224 (2018: 75,267,507) Ordinary Shares of 10p each
2019
£000
2018
£000
7,533
7,527
The holders of Ordinary Shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share
at meetings of the Company.
On 5 February 2019 61,717 Ordinary Shares were issued pursuant to the Group’s Long-Term Incentive Plan.
Share options
Renew Holdings 2004 Executive Share Option Scheme
The Company operates a share option scheme, the Renew Holdings plc 2004 Executive Share Option Scheme. The scheme has both
an Approved and Unapproved element. The difference between the two elements is that the Approved scheme has the advantage
of certain HMRC approved tax benefits.
Both elements have the same general terms and conditions. Options issued under the scheme must be held for three years before they
can vest and become exercisable. They must be exercised within ten years from the date of grant.
105
Renew Holdings plc Annual Report and Accounts 2019FINANCIAL STATEMENTS NOTES TO THE COMPANY ACCOUNTS CONTINUED
L Share capital continued
Share options continued
Renew Holdings plc Long Term Incentive Plan
At the Annual General Meeting held on 25 January 2012 the shareholders approved the long term incentive plan ("LTIP") which succeeded
the Renew Holdings plc 2004 Executive Share Option Scheme as the Directors believed that the LTIP was a more effective method of
aligning executive and shareholder interests.
As at 30 September 2019, there were 724,226 options outstanding under the scheme. On 3 December 2018, options to subscribe for
a further 319,126 Ordinary Shares were granted. During the year 125,700 options were exercised and no options lapsed.
The options are exercisable at a nominal cost or at the par value of an Ordinary Share three years after the date of grant subject to the
achievement of certain performance criteria. Details of the options are given in the Directors’ Remuneration Report. To the extent that
there is a gain arising in respect of the approved options noted above, the option holder will forfeit LTIP options to the same value.
Vesting of one half of the options is dependant on absolute growth in the Company’s Total Shareholder Return (‘TSR’), and the other
half is dependant on the Company’s TSR performance as compared to the TSR achieved by other companies in a comparator group
of companies selected by the Remuneration Committee. All TSR calculations are based on the average of the opening and closing
share price over a 30 day period prior to the commencement and the end of the performance period.
The absolute TSR growth target requires the Company’s TSR over the three year performance period to grow by more than 25%. For TSR
growth between 25% and 100%, the half of the option which is subject to the absolute TSR growth target vests on a straight-line basis
from nil vesting at 25% growth, to 100% vesting at 100% growth. There will be no vesting if TSR growth is 25% or less.
The comparator group TSR performance target measures the Company’s TSR over the 3 year performance period against the TSR of a
group of companies selected by the Remuneration Committee. If the Company’s TSR performance falls below the median performance
of the comparator group then the options lapse forthwith. If the Company is ranked within the top decile of the comparator group the
options shall vest in full. If the Company’s TSR performance is ranked between the median position and the top decile of the comparator
group then the options shall vest on a straight line basis from nil, at or below the median position, to 100% at the top decile.
M Share based payments reserve
Renew Holdings plc Long Term Incentive Plan
Fair value has been independently measured by PricewaterhouseCoopers LLP using a Monte Carlo model methodology. The fair value
determined at the grant date of the equity settled share based payments is expensed on a straight-line basis over the vesting period,
based on the Board’s estimate of shares that will eventually vest.
£(122,000) (2018: £18,000) has been (credited)/charged to administrative expenses in accordance with FRS 102. There is no impact on net
assets since an equivalent amount has been debited/(credited) to share based payments reserve. 125,700 options were exercised during
the year. The value per option represents the fair value of the option less the consideration payable.
The expected volatility has been calculated based on weekly historical volatility of the Company’s share price over the three years prior
to the date of grant. The risk free rate of return has been based on the yields available on three year UK government bonds as at the
date of grant.
Options granted under the Renew Holdings plc Long Term Incentive Plan over the Company’s Ordinary Shares at 30 September 2019
were as follows:
Date of grant
24 November 2016
22 November 2017
3 December 2018
Total
Awards outstanding at 30 September 2018
– Directors and employees
Exercise price
Price at date of grant
Maximum option life
159,100
246,000
10.0p
394.0p
10 years
10.0p
428.75p
10 years
319,126
10.0p
350.00p
10 years
724,226
Assumed option life for purposes of valuation
2.85 years
2.86 years
2.83 years
Expected volatility
Risk free interest rate
Value per option
28%
0.29%
289.0p
25%
0.52%
262.0p
28%
0.75%
226.0p
106
Renew Holdings plc Annual Report and Accounts 2019 N Capital and leasing commitments
Annual commitments under non-cancellable operating
leases expiring in:
Under one year
Two to five years
Five or more years
Land and
buildings
£000
269
709
118
1,096
Other
£000
27
28
—
55
Total
2019
£000
296
737
118
1,151
Total
2018
£000
290
811
296
1,397
During the year £326,000 (2018: £203,000) was recognised as an expense in the profit and loss account in respect of operating leases.
The Company had no capital commitments at 30 September 2019 (2018: £nil).
O Contingent liabilities
The Company has guaranteed performance bonds in respect of certain contracts and leasing arrangements in the normal course
of business of its subsidiary undertakings.
Under the terms of the Group’s banking agreement, security over the Company’s assets has been granted to the Group’s bankers.
The Company is a participant together with a number of subsidiary undertakings in the Group’s banking arrangements, and as a result
has risks associated with the financial status and performance of the other companies within the Group.
P Defined contribution pension scheme
The Company operates a defined contribution pension scheme with individual stakeholder pension plans for its employees.
The Company made contributions of £188,000 (2018: £167,000) into these plans during the year. There are also £12,000 (2018: £12,000)
of accruals relating to these plans.
Q Related parties
The Company has a related party relationship with its key management personnel who are the Main Board Directors: P Scott,
A Liebenberg, S Wyndham-Quin, DM Forbes, J Bishop, DA Brown and S Dasani, whose total compensation amounted to £2,082,000
(2018: £1,801,000) all of which was represented by short-term employment benefits including £235,000 (2018: £268,000) relating
to share options exercised during the year. An analysis of this compensation is given in Note 6 of the consolidated accounts.
There were no other transactions with key management personnel in the year.
R Employee benefits: Retirement benefit obligations
Defined benefit pension schemes
The Company operates a defined benefit pension scheme, the Lovell Pension Scheme. The scheme has been closed to new members
and to further benefits accrual for many years.
The Directors have discussed the assumptions used in determining the actuarial valuation set out below with independent pensions
advisors and have determined that they are appropriate. The Lovell scheme’s valuation at 30 September 2019 shows a surplus of
£24,073,000 based on the assumptions set out below.
The Directors have determined that it is appropriate to recognise the surplus as, having reviewed the rules of the Lovell scheme, they are
of the view that the employer has an unconditional right to that surplus.
107
Renew Holdings plc Annual Report and Accounts 2019FINANCIAL STATEMENTS NOTES TO THE COMPANY ACCOUNTS CONTINUED
R Employee benefits: Retirement benefit obligations continued
Defined benefit pension schemes continued
The following disclosures required by FRS 102 have been based on the most recent actuarial valuation as at 30 September 2018 carried
out by Lane Clark & Peacock LLP, Consulting Actuaries, using the following assumptions:
Rate of increase in salaries
LPI increases to pensions in payment
Discount rate
Inflation assumption (CPI)
Inflation assumption (RPI)
Increases in deferred pensions
As at
30 September
2019
As at
30 September
2018
As at
30 September
2017
4.0%
4.2%
1.9%
2.1%
3.2%
3.1%
4.0%
3.5%
2.4%
2.0%
3.0%
2.9%
4.0%
3.0%
3.7%
2.0%
3.0%
2.9%
The mortality tables adopted for the valuation of the Lovell scheme are the S2NA tables with future improvements in line with the
Continuing Mortality Investigations 2018 model with long term improvement rates of 1.25% per annum for both males and females.
The Directors believe that this analysis provides a more reliable estimate of the mortality characteristics of the scheme’s membership.
Under these assumptions, a 65 year old male pensioner is forecast to live for a further 22.3 years and the further life expectancy of
a male aged 65 in 2039 is 23.7 years.
The assets in the Lovell scheme were:
Annuities
Diversified portfolio
Cash
Total
Value as at
30 September
2019
£000
89,317
106,775
666
196,758
Current
allocation
45%
54%
1%
100%
Value as at
30 September
2018
£000
85,850
81,202
2,117
169,169
Value as at
30 September
2017
£000
91,400
81,273
778
173,451
Current
allocation
51%
48%
1%
100%
Current
allocation
53%
47%
—
100%
During 2011 and 2016, the Trustees of the Lovell scheme, in consultation with the Directors, used scheme assets to purchase annuities
which match certain pension liabilities in a transaction known as a "buy in". This asset provides protection against falls in gilt yields and
risks in the performance of other asset classes.
Scheme Funding Level and Actuarial Valuation
The scheme actuary carried out the triennial valuation of the Lovell Pension Scheme as at 31 March 2018. The scheme showed a deficit of
£0.3m compared to £12.1m when measured as at 31 March 2015. The Group has reached an agreement with the Trustees which commits
the Group to paying annual contributions of £4,260,000 per annum until 31 July 2023 by which point the Scheme’s buyout deficit is
expected to be cleared. The next Triennial valuation is due on 31 March 2021.
For accounting purposes under FRS 102, actuaries use different assumptions than for the triennial valuation. The major difference
relates to assumptions concerning the future return on assets of the scheme which includes a number of return seeking assets invested
with BlackRock Asset Management. The key sensitivity for the valuation of the scheme under FRS 102 is the selection of the discount rate
which is the major determinant in measuring scheme liabilities. A reduction of 0.1% in the discount rate would increase scheme liabilities
by £2.8m. Sensitivity analysis has been performed on the other key assumptions, and a reasonably possible change is not considered
likely to give rise to a materially different valuation to the surplus.
The scheme rules permit the return of any surplus funds to the Company on the winding up of the scheme.
Actual return on scheme assets less interest
on scheme assets
As a percentage of the assets at the end of the year
Total amount recognised in the statement
of comprehensive income
As a percentage of the obligations at the end of the year
2018
£000
(1,138)
(0.7)%
5,076
3.4%
2017
£000
(14,565)
(8.4)%
(2,506)
(1.5)%
2016
£000
22,781
12.0%
(12,348)
(6.8)%
2015
£000
18,145
11.0%
10,664
7.1%
2019
£000
27,897
14.2%
3,904
2.3%
108
Renew Holdings plc Annual Report and Accounts 2019 R Employee benefits: Retirement benefit obligations continued
Scheme Funding Level and Actuarial Valuation continued
The following amounts at 30 September were measured in accordance with the requirements of FRS 102.
Movements in scheme assets and obligations
Total fair value of scheme assets brought forward
Interest on scheme assets
Employer contributions
Benefits paid
Running costs
Actual return on scheme assets less interest on scheme assets
Total fair value of scheme assets carried forward
Present value of scheme obligations brought forward
Interest on scheme obligations
Current and past service costs
Past service costs and settlements
Benefits paid
Actuarial movement due to experience on benefit obligation
Actuarial movement due to changes in financial assumptions
Actuarial movement due to changes in demographic assumptions
2019
£000
2018
£000
169,169
4,832
4,310
(9,449)
(1)
27,897
196,758
149,834
4,262
45
4,000
(9,449)
(310)
25,776
(1,473)
173,451
4,412
4,323
(11,879)
—
(1,138)
169,169
163,759
4,104
64
—
(11,879)
2,404
(7,437)
(1,181)
Total fair value of scheme obligations carried forward
172,685
149,834
Surplus in the scheme
Deferred tax
Net surplus
Amount charged to operating profit:
Current and past service costs
Running costs
Amount credited to other financial income:
Interest on scheme assets
Interest on scheme obligations
Net pension interest
Amounts recognised in the statement of comprehensive income:
Actual return on scheme assets less interest on scheme assets
Actuarial movement due to changes in assumptions on scheme obligations
Actuarial movement
Movement in the net scheme surplus during the year:
Net scheme surplus brought forward
Current and past service costs
Running costs
Employer contributions
Past service costs and settlements
Net pension interest
Actuarial movement
Net scheme surplus carried forward
24,073
(8,426)
15,647
(45)
(1)
(46)
4,832
(4,262)
570
27,897
(23,993)
3,904
19,335
(6,767)
12,568
(64)
—
(64)
4,412
(4,104)
308
(1,138)
6,214
5,076
19,335
9,692
(45)
(1)
4,310
(4,000)
570
3,904
24,073
(64)
—
4,323
—
308
5,076
19,335
On 26 October 2018, the High Court handed down a judgment involving the Lloyds Banking Group’s defined benefit pension schemes.
The judgment concluded the schemes should be amended to equalise pension benefits for men and women in relation to guaranteed
minimum pension benefits. The issues determined by the judgment arise in relation to many other defined benefit pension schemes.
The impact of additional liabilities amounted to £4,000,000 (2018: £Nil) for the Lovell Pension Scheme and is disclosed as past
service costs and settlements.
109
Renew Holdings plc Annual Report and Accounts 2019FINANCIAL STATEMENTS NOTES TO THE COMPANY ACCOUNTS CONTINUED
S Subsidiary undertakings
Renew Holdings plc acts as the holding company of the Group. The principal activity of the Group during the year was as contractors
in Engineering Services and Specialist Building. The subsidiary undertakings and joint ventures are listed below.
Subsidiary undertakings and joint ventures
Amco Group Holdings Ltd
Britannia Group Ltd
Clarke Telecom Ltd
Inhoco 3520 Ltd
Lewis Civil Engineering Ltd
QTS Group Ltd
Renew Corporate Director Ltd
Renew Fleet Management Ltd
Renew Group Ltd
Renew Ltd
Renew Nominees Ltd
Renew Pension Trustee Company Ltd
Renew Property Developments Ltd
Seymour (C.E.C.) Holdings Ltd
Shepley Engineers Ltd
V.H.E. Construction PLC
VHE Land Projects Ltd
YJL Homes Ltd
YJL Ltd
YJL Pension Trustee Company Ltd
Lovell America, Inc
Amalgamated Construction (Scotland) Ltd
Amalgamated Construction Ltd
Amco Engineering Ltd
Amco Group Ltd
Amco Giffen Ltd (formerly Amco Group Trustees Ltd)
Amco Rail Engineering Ltd
Amco Rail Ltd
Britannia Construction Ltd
David Lewis Civil Engineering Ltd
Geodur UK Ltd
Giffen Holdings Ltd
Giffen Group Ltd
‘Hire One’ Ltd
Knex Pipelines & Cables Ltd
Mothersill Engineering Ltd
Nuclear Decontamination Services Ltd
P.P.S. Electrical Ltd
QTS Rail Ltd
QTS Specialist Plant Services Ltd
QTS Training Ltd
Renew Civil Engineering Ltd
Renew Construction Ltd
Renew Specialist Services Ltd
Seymour (Civil Engineering Contractors) Ltd
VHE (Civil Engineering) Ltd
VHE Equipment Services Ltd
VHE Technology Ltd
Walter Lilly & Co Ltd
West Cumberland Engineering Ltd
YJL Construction Ltd
YJL Infrastructure Ltd
YJL London Ltd
Switchgear & Substation Alliance Ltd
Inject-O-Matic Guarantee Ltd
Owned by Renew Holdings plc
Owned by Renew Holdings plc
Owned by Renew Holdings plc
Owned by Renew Holdings plc
Owned by Renew Holdings plc
Owned by Renew Holdings plc
Owned by Renew Holdings plc
Owned by Renew Holdings plc
Owned by Renew Holdings plc
Owned by Renew Holdings plc
Owned by Renew Holdings plc
Owned by Renew Holdings plc
Owned by Renew Holdings plc
Owned by Renew Holdings plc
Owned by Renew Holdings plc
Owned by Renew Holdings plc
Owned by Renew Holdings plc
Owned by Renew Holdings plc
Owned by Renew Holdings plc
Owned by Renew Holdings plc
Owned by Renew Holdings plc
Owned by subsidiary
Owned by subsidiary
Owned by subsidiary
Owned by subsidiary
Owned by subsidiary
Owned by subsidiary
Owned by subsidiary
Owned by subsidiary
Owned by subsidiary
Owned by subsidiary
Owned by subsidiary
Owned by subsidiary
Owned by subsidiary
Owned by subsidiary
Owned by subsidiary
Owned by subsidiary
Owned by subsidiary
Owned by subsidiary
Owned by subsidiary
Owned by subsidiary
Owned by subsidiary
Owned by subsidiary
Owned by subsidiary
Owned by subsidiary
Owned by subsidiary
Owned by subsidiary
Owned by subsidiary
Owned by subsidiary
Owned by subsidiary
Owned by subsidiary
Owned by subsidiary
Owned by subsidiary
Owned by subsidiary
Owned by subsidiary
Incorporation & principal
place of business
Proportion of Ordinary
Shares held by the Company
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
Scotland
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
USA
Scotland
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
Scotland
Scotland
Scotland
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
33.3%
28.9%
The registered office of Amalgamated Construction (Scotland) Ltd is 5 Carradale Crescent, Glasgow, G68 9LE.
The registered office of Lovell America Inc, is 9200 Rumsey Road, Columbia, Maryland, MD 21045, USA.
The registered office of Switchgear & Substation Alliance Ltd is Hamilton Office Park, 31 High View Close, Leicester, LE4 9LJ.
The registered office of QTS Group Ltd and its subsidiaries is Rench Farm, Dromclog, Strathaven, Lanarkshire, ML10 6QJ.
The registered office of all other subsidiary undertakings is 3175 Century Way, Thorpe Park, Leeds, LS15 8ZB.
110
Renew Holdings plc Annual Report and Accounts 2019 DIRECTORS, OFFICERS AND ADVISORS
(Non-executive Chairman)
(Chief Executive Officer)
(Chief Financial Officer)
(Independent non-executive)
(Independent non-executive)
(Executive Director)
Nominated advisor and broker
Numis Securities Limited
London Stock Exchange Building
10 Paternoster Square
London
EC4M 7LT
Company Secretary
S Wyndham-Quin CA
Company number
650447
Registered address
3175 Century Way
Thorpe Park
Leeds
LS15 8ZB
Website address
www.renewholdings.com
Directors
D M Forbes
P Scott
S Wyndham-Quin CA
S Dasani
D A Brown
A Liebenberg
Registrars
Link Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
Auditor
KPMG LLP
1 Sovereign Square
Sovereign Street
Leeds
LS1 4DA
Financial PR
Walbrook PR Ltd
4 Lombard Street
London
EC3V 9HD
111
Renew Holdings plc Annual Report and Accounts 2019FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Annual General Meeting
29 January 2020
Results
Announcement of interim results – May 2020
Preliminary announcement of full year results – November 2020
Share Portal
The Share Portal is a secure online site where you can manage your shareholding quickly and easily. To register for the Share Portal
just visit www.signalshares.com.
Dividend Re-investment Plan
Link’s Dividend Re-investment Plan offers a convenient way for shareholders to build up their shareholding by using dividend money
to purchase additional shares. For more information please call +44 (0)371 664 0381 (Calls are charged at the standard geographic rate
and will vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate). Lines are open between
09:00 - 17:30, Monday to Friday excluding public holidays in England and Wales. Alternatively, you can email shares@linkgroup.co.uk
or log on to www.signalshares.com.
Donate your shares to charity
If you have only a small number of shares which are uneconomical to sell you may wish to donate them to charity free of charge through
ShareGift (Registered Charity 1052686). Find out more at www.sharegift.org or by telephoning 020 7930 3737.
Share fraud warning
Share fraud includes scams where investors are called out of the blue and offered shares that often turn out to be worthless
or non-existent, or an inflated price for shares they own. These calls typically come from fraudsters operating in “boiler rooms”
that are mostly based abroad. If you are offered unsolicited investment advice you should:
• Check the Financial Services Register at www.fca.org.uk to ensure they are authorised.
• Call the FCA Consumer Helpline on 0800 111 6768 or use the share fraud reporting form at www.fca.org.uk/scams.
If you use an unauthorised firm you will not have access to the Financial Ombudsman Service or Financial Services Compensation
Scheme (“FSCS”).
Link’s customer support centre
By phone +44 (0)871 664 0300 (Calls cost 12p per minute plus your phone company’s access charge. Calls outside the United
Kingdom will be charged at the applicable international rate). Lines are open between 09:00 – 17:30, Monday to Friday excluding
public holidays in England and Wales. By email Shareholderenquiries@linkgroup.co.uk.
112
Renew Holdings plc Annual Report and Accounts 2019
OUR SUBSIDIARY BUSINESSES
Clarke Telecom
Unit E
Madison Place
Northampton Road
Manchester
M40 5AG
Tel: 0161 785 4500
Lewis Civil Engineering
Mwyndy Cross Industries
Cardiff Road
Pontyclun
Rhondda Cynon Taff
CF72 8PN
Tel: 01443 449 200
Seymour Civil Engineering
Seymour House
Harbour Walk
Hartlepool
TS24 0UX
Tel: 01429 233 521
Shepley Engineers
Robinson House
Westlakes Science Park
Moor Row
Cumbria
CA24 3HY
Tel: 01946 599 022
Engineering services
AmcoGiffen
Whaley Road
Barugh
Barnsley
South Yorkshire
S75 1HT
Tel: 01226 243 413
QTS
Rench Farm
Drumclog
Strathaven
South Lanarkshire
ML10 6QJ
Tel: 01357 440 222
VHE
Whaley Road
Barugh
Barnsley
South Yorkshire
S75 1HT
Tel: 01226 320 150
Specialist building
Walter Lilly
Knollys House
17 Addiscombe Road
Croydon
Surrey
CR0 6SR
Tel: 020 8730 6200
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9
Renew Holdings plc
3175 Century Way
Thorpe Park
Leeds
LS15 8ZB
tel: 0113 281 4200
fax: 0113 281 4210
web: www.renewholdings.com
Company Number: 650447
Registered in England & Wales